UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 31, 2023
Commission File Number: 001-39570
TIM S.A.
(Exact name of Registrant as specified in its Charter)
João
Cabral de Melo Neto Avenue, 850 – North Tower – 12th floor
22775-057 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form
40-F ☐
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).
Yes ☐ No ☒
TIM S.A. and SUBSIDIARY
QUARTERLY INFORMATION on
June 30, 2023
TIM S.A.
QUARTERLY INFORMATION
June 30, 2023
Contents
Independent auditors’ report on quarterly information |
1 |
Individual and consolidated quarterly information |
|
Balance sheets |
3 |
Statements of income |
5 |
Statements of comprehensive income |
6 |
Statements of changes in shareholders' equity |
7 |
Statements of cash flows |
9 |
Statements of added value |
11 |
Performance comment |
12 |
Notes to the individual and consolidated quarterly information |
37 |
Directors' statement on quarterly information |
123 |
Statement of the Executive Officers on the quarterly information |
124 |
Statement of the Executive Officers on the Independent auditors' report |
125 |
Report on the review of quarterly information
Independent auditor’s review report on quarterly information
Shareholders, Directors and Officers of
TIM S.A.
Rio de Janeiro - RJ
Introduction
We have reviewed the accompanying individual and consolidated interim financial
information, contained in the Quarterly Information Form (ITR) of Tim S.A. (the “Company”) for the quarter ended June 30,
2023, comprising the balance sheet as of June 30, 2023, and the statements of income and of comprehensive income for the three and six-month
periods then ended, and the statements of changes in shareholders’ equity and of cash flows for the six-month period then ended,
including the explanatory notes.
Management is responsible for the preparation of the individual and consolidated
interim financial information in accordance with NBC TG 21 – Interim Financial reporting, and IAS 34 – Interim Financial Reporting,
issued by the International Accounting Standards Board (IASB), as well as for the fair presentation of this information in conformity
with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of the Quarterly Information
Form (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with the Brazilian and international
standards on review engagements (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information performed by the Independent Auditor
of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Report on the review of quarterly information
Conclusion on the individual and consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying individual and consolidated interim financial information included in the quarterly information referred
to above are not prepared, in all material respects, in accordance with NBC TG 21 and IAS 34 applicable to the preparation of Quarterly
Information Form (ITR) and presented consistently with the rules issued by the Brazilian Securities and Exchange Commission (CVM).
Other matters
Statements of value added
The abovementioned quarterly information includes the individual and consolidated
statement of value added (SVA) for six-month period ended June 30, 2023, prepared under Company’s Management responsibility and
presented as supplementary information by IAS 34. These statements have been subject to review procedures performed together with the
review of the quarterly information with the objective to conclude whether they are reconciled to the interim financial information and
the accounting records, as applicable, and if its format and content are in accordance with the criteria set forth by the NBC TG 09 –
Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that they were not prepared,
in all material respects, consistently with the overall individual and consolidated interim financial information.
Rio de Janeiro, July 31, 2023
ERNST & YOUNG
Auditores Independentes S/S Ltda.
CRC SP-015199/F
Fernando Alberto S. Magalhães
Contador CRC SP-133169/O
TIM S.A. and TIM S.A. and SUBSIDIARY |
BALANCE SHEETS |
June 30, 2023 and December 31, 2022 |
(In thousands of reais) |
|
|
|
|
|
|
|
|
|
|
Parent Company |
|
Consolidated |
|
Note |
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
Assets |
|
55,706,609 |
|
52,925,205 |
|
56,408,367 |
|
|
|
|
|
|
|
Current assets |
|
9,280,856 |
|
9,828,112 |
|
10,364,415 |
Cash and cash equivalents |
4 |
3,067,012 |
|
1,785,100 |
|
2,548,713 |
Securities |
5 |
271,607 |
|
2,190,635 |
|
2,190,635 |
Trade accounts receivable |
6 |
3,567,703 |
|
3,739,452 |
|
3,421,094 |
Inventory |
7 |
374,429 |
|
236,117 |
|
236,117 |
Recoverable income tax and social contribution |
8.a |
166,575 |
|
361,349 |
|
361,349 |
Taxes, fees and contributions to be recovered |
9 |
748,903 |
|
820,338 |
|
831,661 |
Prepaid expenses |
10 |
480,950 |
|
198,506 |
|
278,851 |
Derivative financial instruments |
37 |
265,543 |
|
239,189 |
|
239,189 |
Leases |
17 |
29,036 |
|
30,643 |
|
30,643 |
Other amounts recoverable |
18 |
80,218 |
|
26,519 |
|
26,519 |
Other assets |
12 |
228,880 |
|
200,264 |
|
199,644 |
|
|
|
|
|
|
|
Non-current assets |
|
46,425,753 |
|
43,097,093 |
|
46,043,952 |
Long-term receivables |
|
5,792,243 |
|
4,579,313 |
|
5,426,136 |
Securities |
5 |
13,444 |
|
12,929 |
|
12,929 |
Trade accounts receivable |
6 |
236,303 |
|
238,683 |
|
238,683 |
Recoverable income tax and social contribution |
8.a |
835,036 |
|
517,878 |
|
517,878 |
Taxes, fees and contributions to be recovered |
9 |
1,004,562 |
|
889,472 |
|
895,408 |
Deferred income tax and social contribution |
8.c |
1,287,407 |
|
526,700 |
|
1,367,586 |
Judicial deposits |
11 |
1,421,681 |
|
1,377,560 |
|
1,377,560 |
Prepaid expenses |
10 |
89,485 |
|
80,258 |
|
80,258 |
Derivative financial instruments |
37 |
499,434 |
|
662,433 |
|
662,433 |
Leases |
17 |
207,768 |
|
208,003 |
|
208,003 |
Other financial assets |
12 |
162,958 |
|
- |
|
- |
Other assets |
13 |
34,165 |
|
65,397 |
|
65,398 |
|
|
|
|
|
|
|
Investment |
14 |
1,498,437 |
|
5,739,739 |
|
1,540,116 |
Property, plant and equipment |
15 |
23,084,886 |
|
19,775,260 |
|
22,661,152 |
Intangible |
16 |
16,050,187 |
|
13,002,781 |
|
16,416,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the individual and consolidated quarterly
information.
|
|
|
|
|
|
|
TIM S.A. and TIM S.A. and SUBSIDIARY |
BALANCE SHEETS |
June 30, 2023 and December 31, 2022 |
(In thousands of reais) |
|
|
|
|
|
|
|
|
|
Parent Company |
|
Consolidated |
|
Note |
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
Liabilities and Shareholders´ equity |
|
55,706,609 |
|
52,925,205 |
|
56,408,367 |
|
|
|
|
|
|
|
Total liabilities |
|
30,379,525 |
|
27,527,840 |
|
31,011,002 |
|
|
|
|
|
|
|
Current liabilities |
|
13,261,172 |
|
12,057,530 |
|
13,118,009 |
Suppliers |
19 |
3,650,934 |
|
4,385,356 |
|
4,237,229 |
Loans and financing |
21 |
2,170,578 |
|
1,264,967 |
|
1,264,967 |
Lease liabilities |
17 |
2,106,253 |
|
1,353,869 |
|
2,257,211 |
Derivative financial instruments |
37 |
353,306 |
|
343,142 |
|
343,142 |
Payroll and related charges |
|
346,170 |
|
343,541 |
|
343,541 |
Income tax and social contribution payable |
8.b |
47,084 |
|
78,351 |
|
78,351 |
Taxes, fees and contributions payable |
22 |
2,588,106 |
|
2,126,678 |
|
2,277,727 |
Dividends and interest on shareholders’ equity payable |
26 |
334,080 |
|
661,494 |
|
661,494 |
Authorizations payable |
20 |
510,706 |
|
507,685 |
|
507,685 |
Deferred revenues |
23 |
268,686 |
|
222,829 |
|
265,417 |
Other contractual obligations |
1.2.1 |
748,291 |
|
748,291 |
|
748,291 |
Other liabilities |
25 |
136,978 |
|
21,327 |
|
132,954 |
|
|
|
|
|
|
|
Non-current liabilities |
|
17,118,353 |
|
15,470,310 |
|
17,892,993 |
Loans and financing |
21 |
2,618,997 |
|
3,704,858 |
|
3,704,858 |
Derivative financial instruments |
37 |
- |
|
50,230 |
|
50,230 |
Lease liabilities |
17 |
10,995,296 |
|
8,595,004 |
|
10,574,654 |
Taxes, fees and contributions payable |
22 |
12,077 |
|
13,540 |
|
13,540 |
Provision for legal and administrative proceedings |
24 |
1,288,667 |
|
1,112,153 |
|
1,112,156 |
Pension plan and other post-employment benefits |
38 |
5,825 |
|
5,825 |
|
5,825 |
Authorizations payable |
20 |
1,089,394 |
|
1,150,531 |
|
1,165,705 |
Deferred revenues |
23 |
637,814 |
|
666,612 |
|
666,612 |
Other liabilities |
25 |
470,283 |
|
171,557 |
|
599,413 |
|
|
|
|
|
|
|
Shareholders´ equity |
26 |
25,327,084 |
|
25,397,365 |
|
25,397,365 |
Share Capital |
|
13,477,891 |
|
13,477,891 |
|
13,477,891 |
Capital reserves |
|
419,413 |
|
408,602 |
|
408,602 |
Profit reserves |
|
10,914,879 |
|
11,514,879 |
|
11,514,879 |
Equity valuation adjustments |
|
(3,844) |
|
(3,844) |
|
(3,844) |
Treasury shares |
|
(163) |
|
(163) |
|
(163) |
Profit for the period |
|
518,908 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the individual and consolidated quarterly
information.
|
|
|
|
|
|
|
|
|
|
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF INCOME |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais, except as otherwise stated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company |
|
Notes |
|
2Q23 |
|
June 2023 |
|
2Q22 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
|
Net revenue |
28 |
|
5,863,260 |
|
11,512,527 |
|
4,961,410 |
|
9,688,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services provided and goods sold |
29 |
|
(2,932,540) |
|
(5,987,277) |
|
(2,345,250) |
|
(4,645,726) |
Gross income |
|
|
2,930,720 |
|
5,525,250 |
|
2,616,160 |
|
5,042,878 |
|
|
|
|
|
|
|
|
|
|
Operating revenues (expenses): |
|
|
|
|
|
|
|
|
|
Selling expenses |
29 |
|
(1,372,827) |
|
(2,741,414) |
|
(1,305,367) |
|
(2,510,247) |
General and administrative expenses |
29 |
|
(418,199) |
|
(866,595) |
|
(448,087) |
|
(896,960) |
Equity in earnings |
14 |
|
(23,086) |
|
111,708 |
|
(117,497) |
|
(126,171) |
Other revenues (expenses), net |
30 |
|
(77,782) |
|
(176,563) |
|
(44,124) |
|
(113,519) |
|
|
|
(1,891,894) |
|
(3,672,864) |
|
(1,915,075) |
|
(3,646,897) |
|
|
|
|
|
|
|
|
|
|
Income before financial revenues and expenses |
|
|
1,038,826 |
|
1,852,386 |
|
701,085 |
|
1,395,981 |
|
|
|
|
|
|
|
|
|
|
Financial revenues (expenses): |
|
|
|
|
|
|
|
|
|
Financial revenues |
31 |
|
316,216 |
|
670,652 |
|
329,305 |
|
725,704 |
Financial expenses |
32 |
|
(741,297) |
|
(1,429,089) |
|
(709,043) |
|
(1,348,355) |
Foreign exchange variations, net |
33 |
|
(722) |
|
(3,567) |
|
9,799 |
|
4,730 |
|
|
|
(425,803) |
|
(762,004) |
|
(369,939) |
|
(617,921) |
|
|
|
|
|
|
|
|
|
|
Income before income tax and social contribution |
|
|
613,023 |
|
1,090,382 |
|
331,146 |
|
778,060 |
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution |
8.d |
|
13,449 |
|
(51,474) |
|
(51,608) |
|
(93,157) |
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to the Company’s shareholders (expressed in R$ per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
34 |
|
0.26 |
|
0.43 |
|
0.12 |
|
0.28 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
34 |
|
0.26 |
|
0.43 |
|
0.12 |
|
0.28 |
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the individual and consolidated quarterly
information.
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF INCOME |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais, except as otherwise stated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
Notes |
|
2Q23 |
|
June 2023 |
|
2Q22 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
|
Net revenue |
28 |
|
5,863,260 |
|
11,503,415 |
|
5,368,081 |
|
10,095,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services provided and goods sold |
29 |
|
(2,932,540) |
|
(5,744,233) |
|
(2,676,925) |
|
(4,977,401) |
Gross income |
|
|
2,930,720 |
|
5,759,182 |
|
2,691,156 |
|
5,117,874 |
|
|
|
|
|
|
|
|
|
|
Operating revenues (expenses): |
|
|
|
|
|
|
|
|
|
Selling expenses |
29 |
|
(1,372,827) |
|
(2,852,794) |
|
(1,451,309) |
|
(2,656,189) |
General and administrative expenses |
29 |
|
(418,199) |
|
(868,181) |
|
(448,576) |
|
(897,449) |
Equity in earnings |
14 |
|
(23,086) |
|
(41,679) |
|
(14,041) |
|
(22,716) |
Other revenues (expenses), net |
30 |
|
(77,782) |
|
(178,190) |
|
(45,004) |
|
(114,399) |
|
|
|
(1,891,894) |
|
(3,940,844) |
|
(1,958,930) |
|
(3,690,753) |
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
1,038,826 |
|
1,818,338 |
|
732,226 |
|
1,427,121 |
|
|
|
|
|
|
|
|
|
|
Financial revenues (expenses): |
|
|
|
|
|
|
|
|
|
Financial revenues |
31 |
|
316,216 |
|
691,401 |
|
335,884 |
|
732,283 |
Financial expenses |
32 |
|
(741,297) |
|
(1,337,014) |
|
(784,641) |
|
(1,423,953) |
Foreign exchange variations, net |
33 |
|
(722) |
|
(3,567) |
|
9,799 |
|
4,730 |
|
|
|
(425,803) |
|
(649,180) |
|
(438,958) |
|
(686,940) |
|
|
|
|
|
|
|
|
|
|
Income before income tax and social contribution |
|
|
613,023 |
|
1,169,158 |
|
293,268 |
|
740,181 |
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution |
8.d |
|
13,449 |
|
(130,250) |
|
(13,730) |
|
(55,278) |
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to the Company’s shareholders (expressed in R$ per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
34 |
|
0.26 |
|
0.43 |
|
0.12 |
|
0.28 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
34 |
|
0.26 |
|
0.43 |
|
0.12 |
|
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF COMPREHENSIVE INCOME |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais) |
|
|
|
|
|
|
|
|
|
|
|
Parent Company |
|
|
2Q23 |
|
June 2023 |
|
2Q22 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
|
|
|
|
|
|
|
|
|
Other items in comprehensive income |
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
See the accompanying notes to the individual and consolidated quarterly
information.
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF COMPREHENSIVE INCOME |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
2Q23 |
|
June 2023 |
|
2Q22 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
|
|
|
|
|
|
|
|
|
Other items in comprehensive income |
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
626,472 |
|
1,038,908 |
|
279,538 |
|
684,903 |
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY |
Periods ended June 30, 2023 |
(In thousands of reais) |
|
|
|
|
|
|
Profit reserves |
|
|
|
|
|
|
|
|
|
|
Share Capital |
|
Capital reserve |
|
Legal reserve |
|
Reserve for expansion |
|
Additional dividends/interest on shareholders’ equity proposed |
|
Tax incentive Reserve |
|
Treasury shares |
|
Equity valuation adjustments |
|
Retained earnings |
|
Total |
Balances on January 01, 2023 |
13,477,891 |
|
408,602 |
|
1,250,448 |
|
7,540,020 |
|
600,000 |
|
2,124,411 |
|
(163) |
|
(3,844) |
|
- |
|
25,397,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,038,908 |
|
1,038,908 |
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
- |
- |
- |
- |
- |
|
- |
|
- |
|
1,038,908 |
|
1,038,908 |
Total contribution from shareholders and distribution to shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive plan (note 27) |
|
- |
|
10,811 |
|
- |
|
- |
|
- |
|
|
|
|
|
- |
|
- |
|
10,811 |
Allocation of net profit for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on Shareholders’ Equity (note 26) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
(520,000) |
|
(520,000) |
Additional dividends/interest on shareholders’ equity distributed |
|
- |
|
- |
|
- |
|
(600,000) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(600,000) |
Distribution of reserve for expansion (Note 26) |
|
- |
|
- |
|
- |
|
600,000 |
|
(600,000) |
|
|
|
|
|
- |
|
- |
|
- |
Total contribution from shareholders and distribution to shareholders |
|
- |
|
10,811 |
|
- |
|
- |
|
(600,000) |
|
- |
|
- |
|
- |
|
(520,000) |
|
(1,109,189) |
Balances at June 30, 2023 |
13,477,891 |
|
419,413 |
|
1,250,448 |
|
7,540,020 |
|
- |
|
2,124,411 |
|
(163) |
|
(3,844) |
|
518,908 |
|
25,327,084 |
See the accompanying notes to the individual and consolidated quarterly
information.
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY |
Six-month period ended June 30, 2022 |
(In thousands of reais) |
|
|
|
|
|
|
Profit reserves |
|
|
|
|
|
|
|
|
|
|
Share Capital |
|
Capital reserve |
|
Legal reserve |
|
Reserve for expansion |
|
Tax incentive reserve |
|
Treasury shares |
|
Equity valuation adjustments |
|
Retained earnings |
|
Total |
Balances on January 01, 2022 |
13,477,891 |
|
401,806 |
|
1,175,215 |
|
8,103,035 |
|
1,958,301 |
|
(4,857) |
|
(4,285) |
|
- |
|
25,107,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
684,903 |
|
684,903 |
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
684,903 |
|
684,903 |
Total contribution from shareholders and distribution to shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive plan (note 27) |
|
- |
|
29,545 |
|
- |
|
- |
|
|
|
|
|
- |
|
- |
|
29,545 |
Purchase of treasury shares, net of disposals |
|
- |
|
- |
|
- |
|
- |
|
|
|
(25,080) |
|
- |
|
- |
|
(25,080) |
Allocation of net profit for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on Shareholders’ Equity (note 26) |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
(465,000) |
|
(465,000) |
Total contribution from shareholders and distribution to shareholders |
|
- |
|
29,545 |
|
- |
|
- |
|
- |
|
(25,080) |
|
- |
|
(465,000) |
|
(460,535) |
Balances at June 30, 2022 |
13,477,891 |
|
431,351 |
|
1,175,215 |
|
8,103,035 |
|
1,958,301 |
|
(29,937) |
|
(4,285) |
|
219,903 |
|
25,331,474 |
See the accompanying notes to the individual and consolidated quarterly
information.
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF CASH FLOWS |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company |
|
Consolidated |
|
Note |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
Operational activities |
|
|
|
|
|
|
|
|
|
Income before income tax and social contribution |
|
|
1,090,382 |
|
778,060 |
|
1,169,158 |
|
740,181 |
Adjustments to reconcile income to net cash generated by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
29 |
|
3,392,038 |
|
2,804,621 |
|
3,611,664 |
|
3,088,653 |
Equity in earnings |
14 |
|
(111,708) |
|
126,171 |
|
41,679 |
|
22,716 |
Residual value of property, plant and equipment and intangible written off |
|
|
2,813 |
|
(52,899) |
|
79,887 |
|
(52,154) |
Interest on asset retirement obligation |
|
|
10,175 |
|
420 |
|
15,350 |
|
5,318 |
Provision for legal and administrative proceedings |
24 |
|
172,935 |
|
120,643 |
|
172,932 |
|
120,643 |
Inflation adjustment on judicial deposits and legal and administrative proceedings |
|
|
105,828 |
|
79,549 |
|
105,828 |
|
79,549 |
Interest, monetary and exchange rate variations on loans and other financial adjustments |
|
|
75,151 |
|
437,421 |
|
2,126 |
|
440,000 |
Yield from securities |
|
|
(26,148) |
|
(160,925) |
|
(26,148) |
|
(160,925) |
Interest on lease liabilities |
32 |
|
613,700 |
|
523,212 |
|
512,126 |
|
590,047 |
Lease interest |
33 |
|
(13,860) |
|
(13,822) |
|
(13,860) |
|
(13,822) |
Provision for expected credit losses |
29 |
|
286,767 |
|
282,440 |
|
305,792 |
|
297,293 |
Long-term incentive plans |
27 |
|
10,811 |
|
29,545 |
|
10,811 |
|
29,545 |
|
|
|
5,608,884 |
|
4,954,436 |
|
5,987,345 |
|
5,187,044 |
Reduction (increase) in operating assets |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
712,456 |
|
(397,135) |
|
671,860 |
|
(382,105) |
Taxes, fees and contributions to be recovered |
|
|
(100,770) |
|
581,022 |
|
(106,200) |
|
578,474 |
Inventory |
|
|
(138,311) |
|
(77,593) |
|
(138,311) |
|
(77,593) |
Prepaid expenses |
|
|
(195,497) |
|
(149,839) |
|
(211,325) |
|
(335,232) |
Judicial deposits |
|
|
14,920 |
|
35,756 |
|
14,920 |
|
35,756 |
Other assets |
|
|
(47,395) |
|
(82,823) |
|
(41,316) |
|
(82,386) |
Increase (decrease) in operating liabilities |
|
|
- |
|
|
|
- |
|
|
Payroll and related charges |
|
|
2,629 |
|
(18,133) |
|
2,629 |
|
(18,133) |
Suppliers |
|
|
(1,339,636) |
|
(207,888) |
|
(1,722,734) |
|
(244,656) |
Taxes, fees and contributions payable |
|
|
357,177 |
|
14,968 |
|
327,913 |
|
118,741 |
Authorizations payable |
|
|
(104,422) |
|
(2,263,630) |
|
(104,422) |
|
(2,262,154) |
Payments for legal and administrative proceedings |
24 |
|
(161,290) |
|
(110,567) |
|
(161,290) |
|
(110,567) |
Deferred revenues |
|
|
3,263 |
|
(36,723) |
|
(25,530) |
|
(21,735) |
Other liabilities |
|
|
(174,393) |
|
(73,218) |
|
(208,821) |
|
(91,981) |
Cash generated by operations |
|
|
4,437,615 |
|
2,168,633 |
|
4,284,718 |
|
2,293,473 |
Income tax and social contribution paid |
|
|
(197,279) |
|
- |
|
(197,279) |
|
- |
Net cash generated by operating activities |
|
|
4,240,336 |
|
2,168,633 |
|
4,087,439 |
|
2,293,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF CASH FLOWS |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais) |
|
|
|
Parent Company |
Consolidated |
|
|
|
Note |
|
June 2023 June 2022 |
June 2023 |
|
June 2022 |
Investment activities |
|
|
|
|
|
|
|
|
|
Securities |
|
|
1,944,661 |
|
3,641,150 |
|
1,944,661 |
|
3,641,150 |
Capital increase in subsidiary Cozani |
|
|
- |
|
(250,722) |
|
- |
|
- |
Cash arising from merger (Note 1) |
|
|
421,835 |
|
- |
|
- |
|
- |
Cash from the acquisition of Cozani (Note 1) |
|
|
- |
|
- |
|
- |
|
193,382 |
Consideration for the acquisition of Cozani |
|
|
- |
|
(6,410,794) |
|
- |
|
(6,410,794) |
Additions to property, plant and equipment and intangible |
|
|
(2,214,227) |
|
(2,376,116) |
|
(2,214,227) |
|
(2,377,628) |
Other |
|
|
15,702 |
|
(8,887) |
|
15,702 |
|
(8,887) |
Net cash generated by (used in) investment activities |
|
|
167,971 |
|
(5,405,369) |
|
(253,864) |
|
(4,962,777) |
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
New loans |
|
|
- |
|
1,249,128 |
|
- |
|
1,249,128 |
Amortization of loans |
|
|
(133,136) |
|
(487,559) |
|
(133,136) |
|
(487,559) |
Interest paid- Loans |
|
|
(107,407) |
|
(70,742) |
|
(107,407) |
|
(70,742) |
Payment of lease liability |
|
|
(800,060) |
|
(616,054) |
|
(916,254) |
|
(697,426) |
Interest paid on lease liabilities |
|
|
(634,006) |
|
(515,535) |
|
(706,693) |
|
(565,799) |
Derivative financial instruments |
|
|
18,966 |
|
(96,055) |
|
18,966 |
|
(96,055) |
Purchase of treasury shares, net of disposals |
|
|
- |
|
(25,082) |
|
- |
|
(25,082) |
Dividends and interest on shareholders´ equity paid |
|
|
(1,470,752) |
|
(667,194) |
|
(1,470,752) |
|
(667,194) |
Net cash applied in financing activities |
|
|
(3,126,395) |
|
(1,229,093) |
|
(3,315,276) |
|
(1,360,729) |
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
1,281,912 |
|
(4,465,829) |
|
518,299 |
|
(4,030,033) |
Cash and cash equivalents at the beginning of the period |
|
|
1,785,100 |
|
5,228,615 |
|
2,548,713 |
|
5,228,615 |
Cash and cash equivalents at the end of the period |
|
|
3,067,012 |
|
762,786 |
|
3,067,012 |
|
1,198,582 |
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the individual and consolidated quarterly
information.
TIM S.A. and TIM S.A. and SUBSIDIARY |
STATEMENT OF VALUE ADDED |
Periods ended June 30, 2023 and 2022 |
(In thousands of reais) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
Revenues |
|
|
|
|
|
|
|
Gross operating revenue |
16,200,727 |
|
13,507,536 |
|
16,239,128 |
|
14,014,445 |
Losses on doubtful accounts receivable |
(286,767) |
|
(282,440) |
|
(305,793) |
|
(297,293) |
Discounts granted, returns and others |
(2,860,398) |
|
(1,545,169) |
|
(2,861,001) |
|
(1,548,281) |
|
13,053,562 |
|
11,679,927 |
|
13,072,334 |
|
12,168,871 |
Supplies acquired from third parties |
|
|
|
|
|
|
|
Costs of services provided and goods sold |
(2,370,604) |
|
(1,663,697) |
|
(1,907,189) |
|
(1,752,989) |
Materials, energy, third-party services and others |
(1,931,731) |
|
(1,738,693) |
|
(2,003,086) |
|
(1,829,720) |
|
(4,302,335) |
|
(3,402,390) |
|
(3,910,275) |
|
(3,582,709) |
Retentions |
|
|
|
|
|
|
|
Depreciation and amortization |
(3,392,038) |
|
(2,804,621) |
|
(3,611,664) |
|
(3,088,653) |
Net added value generated |
5,359,189 |
|
5,472,916 |
|
5,550,395 |
|
5,497,509 |
Value added received in transfer |
|
|
|
|
|
|
|
Equity in earnings |
111,708 |
|
(126,171) |
|
(41,679) |
|
(22,716) |
Financial revenues |
854,229 |
|
810,642 |
|
874,978 |
|
817,222 |
|
965,937 |
|
684,471 |
|
833,299 |
|
794,506 |
Total added value to be distributed |
6,325,126 |
|
6,157,387 |
|
6,383,694 |
|
6,292,015 |
|
|
|
|
|
|
|
|
Added value distribution |
|
|
|
|
|
|
|
Personnel and expenses |
|
|
|
|
|
|
|
Direct remuneration |
372,933 |
|
335,063 |
|
372,933 |
|
335,063 |
Benefit |
117,235 |
|
104,552 |
|
117,235 |
|
104,552 |
FGTS |
37,571 |
|
33,281 |
|
37,571 |
|
33,281 |
Other |
24,929 |
|
29,535 |
|
24,929 |
|
29,535 |
|
552,668 |
|
502,431 |
|
552,668 |
|
502,431 |
Taxes, fees and contributions |
|
|
|
|
|
|
|
Federal |
1,137,858 |
|
1,096,526 |
|
1,283,426 |
|
1,119,590 |
State |
1,312,541 |
|
1,820,686 |
|
1,317,241 |
|
1,901,714 |
Municipal |
50,271 |
|
47,764 |
|
49,950 |
|
47,936 |
|
2,500,670 |
|
2,964,976 |
|
2,650,617 |
|
3,069,240 |
Third-party Capital Remuneration |
|
|
|
|
|
|
|
Interest |
1,614,053 |
|
1,426,914 |
|
1,521,979 |
|
1,502,513 |
Rentals |
612,821 |
|
575,586 |
|
613,516 |
|
530,351 |
|
2,226,874 |
|
2,002,500 |
|
2,135,495 |
|
2,032,864 |
Other |
|
|
|
|
|
|
|
Social investment |
6,006 |
|
2,577 |
|
6,006 |
|
2,577 |
|
6,006 |
|
2,577 |
|
6,006 |
|
2,577 |
Shareholder's Equity Remuneration |
|
|
|
|
|
|
|
Dividends and interest on shareholders´ equity |
520,000 |
|
465,000 |
|
520,000 |
|
465,000 |
Retained earnings |
518,908 |
|
219,903 |
|
518,908 |
|
219,903 |
|
1,038,908 |
|
684,903 |
|
1,038,908 |
|
684,903 |
See the accompanying notes to the individual and consolidated quarterly
information.
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_008.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_009.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_010.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_011.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_012.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_013.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_014.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_015.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_016.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_017.jpg)
![](https://www.sec.gov/Archives/edgar/data/1826168/000129281423003323/image_018.jpg)
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TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
1.1. Corporate Structure
TIM S.A. (“TIM” or “Company”) is a public limited
company with Registered office in the city of Rio de Janeiro, RJ, and a subsidiary of TIM Brasil Serviços e Participações
S.A. (“TIM Brasil”). TIM Brasil is a subsidiary of the Telecom Italia Group that holds 66.59% of the share capital of TIM
S.A on June 30, 2023 (66.59% on December 31, 2022).
The TIM group (“Group”) comprises TIM and its associated company
I-Systems.
The Company holds an authorization for Landline Switched Telephone Service
(“STFC”) in Local, National Long-Distance and International Long-Distance modes, as well as Personal Mobile Service (“SMP”)
and Multimedia Communication Service (“SCM”), in all Brazilian states and in the Federal District.
The Company’s shares are traded on B3 – Brasil, Bolsa, Balcão
(“B3”). Additionally, TIM has American Depositary Receipts (ADRs), Level II, traded on the New York Stock Exchange
(NYSE) – USA. As a result, the company is subject to the rules of the Securities and Exchange Commission (“CVM”) and
the Securities and Exchange Commission (“SEC”). To comply with good market practices, the company adopts as a principle
the simultaneous disclosure of its financial information in both markets, in reais, in Portuguese and English.
As of June 30, 2023, TIM holds a 49% equity interest (49% as of December
31, 2022) in the company I-Systems (associate), formerly FiberCo Soluções de Infraestrutura S.A. (“FiberCo”),
and held 100% on December 31, 2022 in the company Cozani RJ Infraestrutura e Rede de Telecomunicações S.A. (“Cozani”)
- subsidiary. Considering that the merger and the consequent extinction of Cozani became effective, for all purposes and effects, on April
1, 2023, consequently, TIM S.A. has no ownership interest at Cozani on June 30, 2023.
1.2. Corporate Reorganization
1.2.1. Business combination - Cozani
On April 14, 2022, TIM, Telefônica Brasil S.A. and Claro S.A. (“Buyers”)
delivered to Oi Móvel S.A. – Under court-ordered reorganization (“Seller”, “Assignor” or “Oi
Móvel”) the closing notification regarding the process of acquisition of the Seller’s mobile assets, based on the approvals
by the Administrative Council for Economic Defense (CADE), upon signature of an Agreement on Control of Concentrations, whose decision
has already become final and unappealable, and by the National Telecommunications Agency (ANATEL), particularly with the publication of
Acts 4.949/2022, 4.950/2022 and 4.951/2022, in addition to meeting or waived by the Buyers, as the case may be, all precedent contractual
conditions.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
On April 20, 2022, TIM S.A., together with the Buyer companies, after complying
with the previous conditions established by CADE and ANATEL, concluded the acquisition transaction, with TIM, which currently holds 100%
of the share capital of Cozani, a company that corresponds to the part of the unit of assets, rights and obligations of Oi Móvel
acquired by Company.
On July 5, 2022, TIM and Oi Móvel signed a Letter of Intent to guarantee
the maintenance and continuity of the mobile services provided at the Comandante Ferraz Antarctic Station (EACF) until the end of the
term on February 21, 2024 of Cooperation Agreement 12.000/2019-001/00, signed on February 21, 2019 by the Federal Government, through
the Navy Command, and by Telemar Norte Leste and Oi Móvel at the time. The signing arrangements for the First Amendment to said
Cooperation Agreement, which formalizes the result of said negotiations, were concluded on December 9, 2022. On June 6, 2023, through
Order 115/2023/COGE/SCO, Anatel certified the fulfillment of said determination.
On August 15, 2022, TIM signed the Radiofrequency Availability Agreement
with Oi to allow Oi to meet the targets for the implementation of fixed wireless access systems provided for in the General Plan of Universalization
Targets for the Universalization of the Switched Fixed Telephone Service Provided in the Public Regime (PGMU-IV), approved by Decree 9619/2018.
The purpose of such agreement, as provided for by ANATEL, is to enable the continuity of the targets already achieved, and the fulfillment
of non-complied and enforceable targets. The agreement is effective until the end of Oi’s STFC concession on December 31, 2025,
and is registered as the service becomes available.
On October 20, 2022, TIM published Offers aimed at enabling the execution
of an Industrial Network Exploration Agreement (“Offer – Industrial Network Exploration”) and Temporary and Onerous
Assignment of Rights of Use of Radiofrequency (“Offer – Radiofrequency”), under the terms defined by the ACC (Agreement
on Control of Concentrations) signed with CADE. The offers in question were published on TIM’s website and presented to CADE on
the same date, within the period established by the ACC (up to 6 months from Closing), and should be available for 36 months.
On December 20, 2022, TIM published offers intended to enable the signing
of a Contract for the Temporary and Onerous Assignment of Rights of Use of the 900 MHz Radiofrequency, having as its object the radio
frequencies acquired from Oi Móvel in said frequency band (“Offer – 900 MHz Radiofrequency”) under the terms
set forth by the ACC entered into with CADE. The ACC is waiting a certificate of compliance from CADE. The offers in question were published
on TIM’s website and presented to CADE on the same date, within the period established by the ACC (up to 8 months from Closing),
and should be available for 36 months.
The ACC is waiting a certificate of compliance from CADE.
On June 30, 2023, the total consideration recorded for the acquisition
of Cozani was R$ 7,211.6 million.
Considering the agreed purchase amounts, we have the following balances
recorded as contractual obligations on June 30, 2023:
| (i) | The amount of R$ 634.3 million reais was
withheld by TIM, as provided for in the purchase agreement, mainly to meet the possible need for additional price adjustments to be
made, which could be identified in the 120 days after the acquisition date. According to the material fact disclosed on September
19, 2022, as a result of the differences found in the assumptions for calculating the topics: (i) Working Capital and Net Debt, (ii)
Capex and (iii) Net Additions, the amount of R$ 634.3 million, (R$ 712 million updated on June 30, 2023) remained fully
retained by the Company until the date of October 4, 2022, that the preliminary decision was handed down by the 7th
Business Court of the Judicial District of Rio de Janeiro determining the deposit in court
by the Buyers, with TIM being responsible for depositing the updated amount up to that date of R$ 670 million in an account linked
to the court-ordered reorganization process of Oi Móvel S.A. Said deposit will remain in an account linked to the Court pending
the installation of the Court of Arbitration. For further details, see Note 11; |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| (ii) | The amount of R$ 77 million recognized as contingent
consideration, as of the reporting date of this financial information, is pending payment, awaiting the outcome of the arbitration decision. |
On June 30, 2023, both obligations reached the total amount of R$ 748
million (R$ 748 million on December 31, 2022).
TIM also paid, on April 20, 2022, on behalf of SPE Cozani, the amount
of R$ 250.7 million to the Seller, as remuneration, for up to 12 months of service provision in the transition phase, recorded under
“Prepaid expenses” and signed an annual contract term for the use of transport infrastructure capacity with Brasil Telecom
Comunicação Multimídia S.A., involving the payment of decreasing amounts which, at present value, total approximately
R$ 476 million.
Identifiable assets acquired and liabilities assumed
On December 31, 2022, the fair value of the identifiable assets acquired
and liabilities assumed from Cozani on the date of acquisition by TIM S.A. is finalized, according to the purchase price allocation
report (“Price purchase allocation”). On this date, the analysis indicates assets and liabilities presented below:
|
|
Fair values recognized on acquisition |
Assets
|
|
|
Cash and cash equivalents |
|
193,382 |
Trade accounts receivable |
|
362,379 |
Prepaid expenses |
|
165,111 |
Recoverable taxes |
|
13,535 |
Deferred income tax and social contribution |
|
705,388 |
Property, plant and equipment (Note 15) |
|
3,518,477 |
Intangible assets (Note 16) |
|
3,599,811 |
|
|
8,558,083 |
|
|
|
Liabilities |
|
|
Suppliers |
|
(183,227) |
Lease liabilities (Note 17) |
|
(2,929,449) |
Taxes payable |
|
(157,595) |
Deferred revenues |
|
(95,135) |
Other liabilities |
|
(617,518) |
|
|
(3,982,924) |
Total net identifiable assets at fair value |
4,575,159 |
Goodwill on acquisition (Note 16) |
2,636,426 |
Total consideration |
7,211,585 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The assets acquired and liabilities assumed related
to Cozani (“net assets”) by TIM on the acquisition date and the impacts on the Company’s consolidated results, which
reflect the results of the Company acquired as of April 30, 2022, are summarized below:
|
Cozani
|
Equity interest of the acquiree |
100% |
Shareholders’ equity of Cozani at book value on 04/30/2022 |
1,282,579 |
Shareholders’ equity of Cozani at fair value on 04/30/2022 |
4,575,159 |
Surplus of radio frequencies (i) |
3,038,951 |
Surplus of customers’ portfolio (ii) |
253,629 |
|
|
Contribution to the net revenue Group as of the date of acquisition until 12/31/2022 |
1,231,518 |
Contribution to the Group with loss since the acquisition date until 12/31/2022 |
(626,258) |
Net revenue of acquiree in the year 2022 |
2,297,351 |
Loss of the acquiree in the year 2022 |
(1,910,638) |
| (i) | The intangible asset value refers
to the adjustment in the authorizations item reflecting the fair value of the acquired grants and the spectrum
assessment was carried out using the market approach, with the application of a transaction multiple. The average useful life is 17.68
years; |
| (ii) | The evaluation of the customer portfolio was conducted using the profitability
approach, using the MPEEM (Multi-period excess earning method) method based on a calculation
of cash flows from future economic benefits attributable to the customer base. The average useful life is 7.67 years. |
The goodwill paid of R$ 2,636,426
comprises the value of future economic benefits arising from synergies expected from the acquisition. The recognized goodwill has already
been deducted for tax purposes since the date of the corporate acquisition of the company Cozani by TIM S.A., which took place on April
1, 2023.
Merger of Cozani
According to the Material Fact disclosed by the Company
on February 27, 2023, the completion of the Merger would still depend on the conclusion of the operational procedures related to the systemic
parameterization and obtaining prior consent from ANATEL, which took place when the Act 3532/2023 was published.
On March 31, 2023, the Board of Directors (“BoD”)
acknowledged the obtaining of said consent and verified compliance with the other conditions to grant full effectiveness to the Merger.
Accordingly, the BoD declared that said Merger and the consequent extinction of Cozani became effective, for all purposes and effects,
on April 1, 2023. The approved Acquisition did not give rise to a capital increase, nor issue of new shares of the Company, or changes
in the Company’s shareholding, therefore, there is no need to talk about exchange of shares or right to withdraw.
The purpose of this acquisition is to streamline the corporate structure
of TIM S.A., eliminate overlapping authorizations for exploring the SMP service, standardize the services provided by the Companies, and
also, as a result, concentrate activities related to the provision of personal mobile telecommunication services in a single company,
in addition to optimize operating costs and efficiently allocate investments due to the integration of acquired assets.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The changes in Cozani’s equity between the date of the report (December
31, 2022) and the merger (April 1, 2023) were incorporated into the balance sheet of TIM Participações S.A., as set forth
in the protocol of merger. As a result of the merger, all operations of Cozani were transferred to TIM S.A., which succeeded it in all
its assets, rights and obligations, universally and for all purposes of law.
The net assets as of December 31, 2022, is summarized below:
Assets |
|
|
Liabilities |
|
Current |
1,376,107 |
|
Current |
1,900,283 |
Non-current |
3,987,996 |
|
Non-current |
2,422,684 |
Long-term receivables |
846,823 |
|
|
|
Property, plant and equipment |
2,885,893 |
|
|
|
Intangible assets |
255,280 |
|
|
|
|
|
|
Net assets |
1,041,136 |
Total assets |
5,364,103 |
|
Total liabilities |
5,364,103 |
| 2. | Preparation basis and presentation of individual and consolidated quarterly information |
The individual and consolidated quarterly information was prepared and
is being presented according to the accounting practices adopted in Brazil, which comprises the CVM standards and pronouncements, guidance
and interpretations issued by the Accounting Pronouncement Committee (“CPC”) and in compliance with the International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
Additionally, the Company considered the guidelines provided for in Technical
Guideline OCPC 07 - Evidencing upon Disclosure of General Purpose Financial-Accounting Reports in the preparation of its quarterly information.
In this way, the relevant information specific to the quarterly information is being evidenced and correspond to those used by the management
in its duties.
The main accounting policies applied in the preparation of this quarterly
information are defined below and / or presented in their respective notes. Those policies were consistently applied in the years presented.
a. General criteria for preparation and disclosure
The individual and consolidated quarterly information was prepared considering
the historical cost as value basis and financial assets and liabilities (including derivative financial instruments) measured at fair
value.
Assets and liabilities are classified according to their degree of liquidity
and collectability. They are reported as current when they are likely to be realized or settled over the next 12 months. Otherwise, they
are recorded as non-current. The exception to this procedure involves deferred income tax and social contribution balances (assets and
liabilities) and provision for lawsuits and administrative proceedings that are fully classified as non-current.
On June 30, 2023, the Company reported a profit of R$ 1,038,908.
The Company’s current liabilities exceeded total current assets by R$ 3,980,316, caused by the acquisition of Cozani and payment
of obligations related to the 5G license. The Company understands that the aforementioned investments will bring relevant benefits and
operational efficiency. On June 30, 2023, the Company’s shareholders’ equity is positive by R$ 25,327,084.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
In connection with the preparation of this quarterly information, Company’s
Management made analyses which confirms that the operating cash flow is positive; therefore, there is no evidence of uncertainties about
the going concern.
The presentation of Statement of Value Added (Demonstração
do Valor Adicionado – “DVA”) is required by the Brazilian Corporate Legislation and accounting practices adopted in
Brazil applicable to listed companies. The DVA was prepared according to the criteria set forth in CPC Technical Pronouncement No. 09
- “Statement of Value Added”. IFRS does not require the presentation of this statement. As a consequence, according to the
IFRS, this statement is presented as supplementary information, without affecting the quarterly information.
Interests paid are classified as financing cash flow in the statement of
cash flows as it represents costs of obtaining financial resources.
b. Functional and presentation currency
The currency of presentation of the quarterly information is the Real (R$),
which is also the functional currency of the Company, its associated company and subsidiary.
Foreign currency transactions are recognized at the exchange rate on the
date of the transaction. Monetary items in foreign currency are translated into Brazilian reais at the foreign exchange rate prevailing
on the balance sheet date, informed by the Central Bank of Brazil. Foreign exchange gains and losses linked to these items are recorded
in the statement of income.
Operating segments are components of the entity that carry out business
activities from which revenues can be obtained and expenses incurred. Its operating results are regularly reviewed by the entity's main
operations manager, who makes decisions on resource allocation and evaluates segment performance. For the segment to exist, individualized
financial information is required.
The main operational decision maker in the Company, responsible for the
allocation of resources and periodically evaluating performance, is the Executive Board, which, along with the Board of Directors, are
responsible for making the strategic decisions of the company and its management.
The Group's strategy is focused on optimizing results, and all the operating
activities of the Group are concentrated in TIM and its subsidiary Cozani. Although there are diverse activities, decision makers understand
that the company represents only one business segment and do not contemplate specific strategies focused only on one service line. All
decisions regarding strategic, financial planning, purchases, investments and investment of resources are made on a consolidated basis.
The aim is to maximize the consolidated result obtained by operating the SMP, STFC and SCM licenses.
| d. | Consolidation procedures |
Subsidiaries are all the entities in which the Group retains control.
The Group controls an entity when it is exposed to, or has a right over the variable returns arising from its involvement with the entity
and has the ability to interfere in those returns due to its power over the entity. The subsidiaries are fully consolidated as of the
date control is transferred to the Group. Consolidation is interrupted beginning as of the date in which the Group no longer holds control.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
If the Group loses control exercised over a subsidiary, the corresponding
assets (including any goodwill) and liabilities of the subsidiary are written-off at their book values on the date the control is lost,
and the write-off of the book value of any non-controlling interests on the date when control is lost (including any components of other
comprehensive income attributed to them) also occurs. Any resulting difference as a gain or loss is recorded in income (loss). Any retained
investment is recognized at its fair value on the date control is lost.
Due to the merger of Cozani on April 01, 2023 described in Note 1,
the Company incorporated all asset and liability balances of its former parent company and presents consolidated balances for the statements
of income, statements of comprehensive income, statements of cash flows and statements of value added due to Cozani’s individual
statements of income for the period January−March 2023 making up the consolidated balances throughout 2023.
| e. | Business combination and goodwill |
Business combinations are accounted for under the acquisition
method. The cost of an acquisition is measured for the consideration amount transferred, which is valuated on fair value basis on the
acquisition date, including the value of any non-controlling interest in the acquiree, regardless of their proportion. For each business
combination, the buyer must measure the non-controlling interest in the acquired business at the fair value of based on its interest in
the net assets identified in the acquired business. Costs directly attributable to the acquisition are accounted for as expense when incurred.
The purchase accounting method is used to record the acquisition of subsidiaries
by the Group. The acquisition cost is measured as the fair value of the assets acquired, equity instruments (i.e.: shares) and liabilities
incurred or assumed by the acquirer on the date of the change of control. Identifiable assets acquired, contingencies and liabilities
assumed in a business combination are initially measured at fair value on the date of acquisition, regardless of the proportion of any
minority interest. The portion exceeding the transferred consideration of the Company's interest in the acquired identifiable net assets,
is recorded as goodwill. Should the consideration transferred be less than the fair value of the net assets of the acquired subsidiary,
the difference is recognized directly in the statement of income as a revenue once concepts and calculations applied are reviewed.
On acquiring a business, the Group assesses the financial assets and
liabilities assumed in order to rate and to allocate them in accordance with contractual terms, economic circumstances and pertinent conditions
on the acquisition date, which includes segregation by the acquired entity of built-in derivatives existing in the acquired entity’s
host contracts.
Any contingent payments to be transferred by the acquiree will be
recognized at fair value on the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed
to be an asset or liability should be recognized in accordance with CPC 48 in the statement of income.
Initially, goodwill is initially measured as being the excess
of consideration transferred in relation to net assets acquired (acquired identifiable assets and assumed liabilities) measured at fair
value on acquisition date. If consideration is lower than fair value of net assets acquired, the difference must be recognized as gain
in bargain purchase in the statement of income on the acquisition date.
After initial recognition, the goodwill is carried at cost less any
accumulated loss for the impairment losses. For impairment testing purposes, goodwill acquired in a business combination is, from the
acquisition date, allocated to each cash-generating units of the Group that are expected to benefit by the synergies of combination,
regardless of other assets or liabilities of the acquiree being allocated to those units.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
When the goodwill is part of a cash generating unit and a portion
of this unit is disposed of, the premium associated with the disposed portion should be included in the cost of the operation when calculating
gains or losses in the disposal. The goodwill disposed under these circumstances of this operation is determined based on the proportional
values of the portion disposed of, in relation to the cash generating unit maintained.
The Group measures the lease liabilities assumed
at the present value of the remaining payments as if the lease agreement acquired were a new lease agreement at the acquisition date.
Right-of-use assets were measured at an amount equivalent to the lease liabilities and adjusted to reflect the favorable or unfavorable
terms of these leases compared to market terms. Considering that the off-market nature of said lease is reflected in the right-of-use
asset, the Group does not recognize separately an intangible asset or liability relating to favorable or unfavorable terms in relation
to market value.
| f. | Approval of quarterly information |
This individual and consolidated quarterly information was approved by
the Company's Board of Directors on July 31, 2023.
| g. | New standards, ammendments and interpretations of standards |
The following new standards/amendments were issued by the Accounting
Pronouncement Committee (“CPC”) and International Accounting Standards Board (IASB), are effective for the year ended June 30,
2023.
Amendments to CPC 37 (R1), CPC 48, CPC 29, CPC 27,
CPC 25 and CPC 15 (R1).
The amendments to the above pronouncements are due to the
annual changes related to the cycle of improvements between 2018 and 2020, such as:
| • | Onerous Contracts – Cost of Fulfilling a
Contract; |
| • | Property, Plant and Equipment – Proceeds
before Intended Use; and |
| • | References to Conceptual framework. |
The validity of these proposed changes must be established
by regulatory agencies that approve them and to fully comply with international accounting standards, the entity must apply them in annual
periods beginning on or after January 01, 2022.
Onerous Contracts – Cost of Fulfilling a Contract
An onerous contract is a contract under which the unavoidable
costs of fulfilling the obligations arising from the contract (i.e., costs that the Group cannot avoid since it has the contract) exceed
the expected economic benefits to be received.
The amendments specify that, when assessing whether a
contract is onerous or loss-making, an entity needs to include costs that directly relate to a contract to supply goods or services,
including incremental costs (for example, direct labor costs and materials) and an allocation of costs directly related to contract activities
(for example, depreciation of equipment used to fulfill the contract and costs of managing and supervising the contract). General and
administrative costs are not directly related to a contract and are excluded unless explicitly charged to the counterparty under the
terms of the contract.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The Group evaluated the contracts and did not identify
material changes in the quarterly information.
Property, Plant and Equipment – Proceeds before Intended
Use;
The amendment precludes entities from deducting from
the cost of a property, plant and equipment item any proceeds from sales of produced items in bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the products
of selling the items, and the costs of producing the items, in the statement of income.
Under the transition rules, the Group applies the
amendments retrospectively only to property, plant and equipment items available for use or after the beginning of the earliest period
presented when the entity first applies the amendment (the date of first-time adoption).
These changes had no impact on the Group’s individual
and consolidated quarterly information as there were no sales of such items produced by property, plant and equipment made available for
use or after the beginning of the earliest period presented.
References to the Conceptual Framework
The amendments replace a reference to an earlier version
of the IASB Conceptual Framework with a reference to the current version issued in March 2018, without materially changing its requirements.
The amendments add an exception to the recognition
principle of IFRS 3/CPC 15 (R1) Business Combinations to avoid issuing potential ‘day 2’ gains or losses arising
from liabilities and contingent liabilities that would be within the scope of IAS 37/CPC 25 Provisions, Contingent Liabilities
and Contingent Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37
or IFRIC 21, respectively, rather than the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.
The amendments also add a new paragraph to IFRS 3
to clarify that contingent assets do not qualify for recognition on the acquisition date.
Pursuant to the interim provisions, the Group applies
the amendments prospectively, i.e., for business combinations that occur after the start of the annual reporting period in which it first
applies the amendments (the date of first-time adoption).
These changes had no impact on the Group’s consolidated
quarterly information since there were no assets, liabilities or contingent liabilities within the scope of these changes that arose during
the period.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary
as first-time adopter
The amendment allows a subsidiary that chooses to
apply paragraph D16(a) of IFRS 1/CPC 37 (R1) - First-time Adoption of International Accounting Standards to measure cumulative
translation differences using the amounts reported in the consolidated quarterly information of the parent company, based on the parent
company’s transition date to IFRS, if no adjustments have been made for consolidation procedures and for the effects of the business
combination in which the parent company acquired the subsidiary. This amendment also applies to an associate or joint venture that elects
to apply paragraph D16(a) of IFRS 1.
These changes had no impact on the Group’s
consolidated quarterly information as it is not a first-time adopter.
IFRS 9/CPC 48 Financial Instruments - Rates in the ’10 percent’
test for writing-off financial liabilities
The amendment clarifies the rates that an entity includes
when assessing whether the terms of a new or modified financial liability are materially different from the terms of the original financial
liability. These rates include only rates paid or received between the borrower and the lender, including rates paid or received by the
borrower or the lender on behalf of the other.
In accordance with the interim provisions, the Group
applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period
in which the entity first applies the amendment (the date of first-time adoption). These changes had no impact on the Group’s consolidated
quarterly information, as there were no changes to the Group’s financial instruments during the period.
The following new standards were issued by Comitê de Pronunciamentos
Contábeis [Accounting pronouncements committee] (CPC) and the International Accounting Standards Board (IASB), but are
not in effect for the period ended on June 30, 2023.
| · | Amendments to IAS 1: Classification of Liabilities as Current or Non-current
(equivalent to revision 20 of the Accounting Pronouncements Committee) |
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS
1, related to CPC 26, aiming to specify the requirements for classifying the liabilities as current or non-current. The changes enlighten:
| • | What is the meaning of a right to defer the settlement; |
| • | That the right to postpone settlement must exist
on the base date of the report; |
| • | That this classification is not affected by the likelihood
that an entity will exercise its right to postpone settlement |
| • | That the terms of a liability would not affect its
classification only if a derivative embedded in a convertible liability was an equity instrument |
Amendments are valid for periods started on January 1, 2023 and must be
applied on a retrospective basis. The Group currently assesses the impact that the changes will have on current practice and whether existing
loan agreements may require renegotiation.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| · | Amendments to IAS 8: Definition of Accounting Estimates |
(equivalent to revision 20 of the Accounting Pronouncements Committee)
In February 2021, IASB issued amendments to IAS 8/CPC 23, in
which the definition of ‘accounting estimates’ is introduced. The amendments clarify the distinction between changes in accounting
estimates and changes in accounting policies and correction of errors. In addition, they clarify how entities use measurement and input
techniques to develop accounting estimates.
The amendments will be effective for periods beginning on or after January
1, 2023, and will apply to changes in accounting policies and estimates that occur on or after the beginning of that period. If disclosed,
early adoption is allowed.
Amendments are not expected to have a significant impact on the Group’s
financial statements.
| · | Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of
Accounting Policies (equivalent to revision 20 of the Accounting Pronouncements Committee) |
In February 2021, IASB issued amendments to IAS 1/CPC 26 (R1))
and IFRS Practice Statement 2 Making Materiality Judgments, in which guides and examples are provided to help entities to apply
materiality judgment to the disclosure of accounting policies. The aim of amendments is to assist entities in the disclosure of accounting
policies that are most useful by replacing the requirement for disclosure of significant accounting policies to material accounting policies
and adding guides about how entities should apply the concept of materiality to make decisions about the disclosure of accounting policies.
The amendments to IAS 1 are applicable for periods started as
of or after January 1, 2023, with early adoption allowed. Since the amendments to Practice Statement 2 provide non-mandatory guides about
the application of material definition to the accounting policy information, an adoption date is not required for this amendment.
The Group is currently revisiting the accounting policy
disclosures to confirm that they are consistent with the required changes.
| · | Amendments to IAS 12: Deferred Tax Related to Assets and Liabilities
Arising from a Single Transaction (equivalent to the Committee’s revision 20 of accounting pronouncements) |
In May 2021, the Board released amendments to IAS 12,
which narrow the scope of the initial recognition exception under IAS 12 so that it no longer applies to transactions that give rise
to equal taxable and deductible temporary differences.
The amendments shall apply to transactions occurring in annual
periods beginning on or after the earliest comparative period presented. Furthermore, at the beginning of the earliest comparative period
presented, a deferred tax asset (provided there is sufficient taxable profit available) and a deferred tax liability must also be recognized
for all deductible and taxable temporary differences associated with leases and decommissioning obligations.
The Group is currently assessing the impact of these changes.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 3. | Estimates and areas where judgment is significant in the application of the Company's accounting policies |
Accounting estimates and judgments are continuously assessed. They are
based on the Company's historical experience and on other factors, such as expectations of future events, considering the circumstances
present on the base date of quarterly information.
By definition, the resulting accounting estimates will rarely be the same
as the actual results. The estimates and assumptions that present a significant risk, with the probability of causing a material adjustment
to the book values of assets and liabilities for the fiscal period, are covered below.
(a) Impairment loss on non-financial assets
and investments in subsidiary and associated company.
Impairment losses occur when book value of an asset or cash generating
unit exceeds its recoverable value, which is the highest of fair value less selling costs and value in use. Calculation of fair value
less selling costs is based on information available on similar assets’ selling transactions or market prices less additional costs
to dispose of the asset. The calculation of value in use is based on the discounted cash flow model.
Any reorganization activities with which the Company is not committed to
on the reporting date of the quarterly information or significant future investments that could improve the asset base of the cash generating
unit under test are excluded for impairment testing purposes.
The main non-financial assets for which this assessment was made are goodwill
recorded by the Company (Note 16) and its tangible and intangible assets.
Net investments in the subsidiary and associated company are valued after
applying the equity method to determine whether there is any objective evidence of impairment. The recoverable amount of an investment
in an associated company must be determined for each investment, unless the associated company does not generate cash inflows on an ongoing
basis that are largely independent of those generated by the entity’s other assets. The investment in an associated company was
valued as described in Note 14.
(b) Income tax and social contribution (current
and deferred)
Income tax and social contribution (current
and deferred) are calculated according to interpretations of current legislation and CPC 32 / IAS 12. This process typically involves
complex estimates to determine taxable income and temporary differences. In particular, the deferred assets on tax losses, negative basis
of social contribution and temporary differences is recognized in proportion to the probability that future taxable income is available
and can be used. The measurement of the recoverability of deferred income tax on tax losses, negative basis of social contribution and
temporary differences takes the history of taxable income into account, as well as the estimate of future taxable income (note 8.c).
(c) Provision for legal
and administrative proceedings
The legal and administrative proceedings are analyzed by the Management
along with its legal advisors (internal and external). The Company considers factors in its analysis such as hierarchy of laws, precedents
available, recent court judgments, their relevance in the legal system and payment history. These assessments involve Management’s
judgment (note 24).
(d) Fair value of derivatives and other financial
instruments
The financial instruments presented in the balance sheet at fair value
are measured using valuation techniques that consider observable data or observable data derived from market (note 37).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(e) Unbilled revenues
Since some cut dates for billing occur at intermediate dates within the
months of the year, as the end of each month there are revenues earned by the Company, but not actually invoiced to its customers. These
unbilled revenues are recorded based on estimate that takes into consideration historical consumption data, number of days elapsed since
the last billing date, among others (note 28).
(f) Leases
The Company has a significant number of the lease contracts in which it
acts a lessee (Note 17), and with the adoption of the accounting standard IFRS 16 / CPC 06 (R2) – Leases, on January
1, 2019, certain judgments were exercised by Company’s management in measuring lease liabilities and right-of-use assets, such as:
(i) estimate of the lease term, considering non-cancellable period and the period covered by options to extend the contract term, when
the exercise depends only from the Company, and this exercise is reasonably certain; and (ii) using certain assumptions to calculate the
discount rate.
The company is not able to readily determine the interest rate implicit
on the lease and, therefore, considers its incremental rate on loans to measure lease liabilities. Incremental rate on the lessee’s
loan is the interest rate that the lessee would have to pay when borrowing, for a similar term and with a similar guarantee, the resources
necessary to obtain the asset with a value similar to the right of use asset in a similar economic environment. The company estimates
the incremental rate using observable data (such as market interest rates) when available and considers aspects that are specific to the
Company (such as the cost of debt) in this estimate.
(g) Fair value of the intangible assets
Intangible assets are measured at historical cost less accumulated amortization
and impairment losses.
The cost of intangible assets acquired in a business combination corresponds
to their fair value at acquisition date. After the initial recognition, the intangible assets are stated at cost, less accumulated amortization
and impairment losses.
(h) Business combination
Business combinations are accounted for under the acquisition
method. The cost of an acquisition is measured for the consideration amount transferred, which is valuated on fair value basis on the
acquisition date, including the value of any non-controlling interest in the acquiree, regardless of their proportion. For each business
combination, the buyer must measure the non-controlling interest in the acquired business at the fair value of based on its interest in
the net assets identified in the acquired business. Costs directly attributable to the acquisition are accounted for as expense when incurred.
For further information, see Notes 1.2.1 and 2.e.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 4. | Cash and cash equivalents |
They are financial assets measured at amortized cost using the effective
interest rate method.
The Company’s Management determines the classification of its financial
assets upon initial recognition.
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
Cash and banks |
|
27,470 |
|
59,679 |
|
59,959 |
Free availability financial investments: |
|
|
|
|
|
|
CDBs / Repurchases |
|
3,039,542 |
|
1,725,421 |
|
2,488,754 |
|
|
|
|
|
|
|
|
|
3,067,012 |
|
1,785,100 |
|
2,548,713 |
Bank certificates of deposit (“CDBs”) and committed transactions
are nominative securities issued by banks and sold to the public as a form of fund raising. Such securities may be traded during the contracted
term, at any time, without significant loss in their value and are used for the fulfilment of short-term obligations by the company.
The average remuneration of CDB investments in 2023 is 102.05% p.a. (100.12%
on December 31, 2022) of the variation of the interbank deposit certificate – CDI.
Comprise financial assets measured at fair value through profit or loss.
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
FUNCINE (i) |
|
13,444 |
|
12,929 |
|
12,929 |
Fundo Soberano (ii) |
|
116 |
|
179 |
|
179 |
FIC: (iii) |
|
|
|
|
|
|
Government bonds (a) |
|
147,939 |
|
1,323,409 |
|
1,323,409 |
CDB (b) |
|
7,292 |
|
20,371 |
|
20,371 |
Financial bills (c) |
|
50,845 |
|
398,879 |
|
398,879 |
Other (d) |
|
65,415 |
|
447,797 |
|
447,797 |
|
|
285,051 |
|
2,203,564 |
|
2,203,564 |
|
|
|
|
|
|
|
Current portion |
|
(271,607) |
|
(2,190,635) |
|
(2,190,635) |
Non-current portion |
|
13,444 |
|
12,929 |
|
12,929 |
Due to the scenario of severe stress observed recently in the securities’
market, the Company opted to reduce its position in funds, migrating a large part of the funds to fixed income operations (Bank Deposit
Certificates - CDBs) with first-class banks.
(i)As
of December 2017, the Company, with the aim of using tax deductibility benefit for income tax purposes, started investing in the
National Film Industry Financing Fund (FUNCINE). The average remuneration in 2023 was 0.68% p.a. (0.09% p.a. in 2022).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(ii)
Fundo Soberano is composed only of federal government bonds. The average remuneration in 2023 was 99.60%
p.a. of the variation of the Interbank Deposit Certificate - CDI (99.94% on December 31, 2022).
(iii) The
Company invests in open FIC's (Quota Investment Fund). Funds are mostly made up of federal government bonds and papers from financial
institutions, mostly AAA (highest quality). The average remuneration of FICs in 2023 was 95.81% p.a. of the variation of the Interbank
Deposit Certificate - CDI (107.19% p.a. on December 31, 2022).
(a) Government
bonds are fixed income financial instruments issued by the National Treasury to finance the activities of the Federal Government.
(b) The
CDB operations are emitted by the banks with the commitment of stock buyback by the bank itself and with predetermined taxes.
(c) The
Financial bills is a fix income tittle emitted by financial institutions with the objective of a long-term fund raising.
(d) Is
represented by: Debentures, FIDC, commercial notes, promissory notes, bank credit note.
| 6. | Trade accounts receivable |
These are financial assets measured at amortized cost, and refer to accounts
receivable from users of telecommunications services, from network use (interconnection) and from sales of handsets and accessories. Accounts
receivable are recorded at the price charged at the time of the transaction. The balances of accounts receivable also include services
provided and not billed (“unbilled”) up to the balance sheet date. Trade accounts receivable are initially recognized at fair
value and, subsequently, measured at amortized cost using the effective interest rate method less provision for expected credit losses
(“impairment”).
The provision for expected credit losses was recognized as a reduction
in accounts receivable based on the profile of the subscriber portfolio, the aging of overdue accounts receivable, the economic situation,
the risks involved in each case and the collection curve, at an amount deemed sufficient by Management, as adjusted to reflect current
and prospective information on macroeconomic factors that affect the customers’ ability to settle the receivables.
The fair value of trade accounts receivable is close to the book value
recorded on June 30, 2023 and December 31, 2022.
The average rate considered in calculating the present value of accounts
receivable recorded in the long term is 0.58% p.m. (0.58% p.m. on December 31, 2022).
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
Trade accounts receivable |
3,804,006 |
|
3,978,135 |
|
3,659,777 |
|
|
|
|
|
|
Gross accounts receivables |
4,414,330 |
|
4,540,225 |
|
4,241,515 |
|
|
|
|
|
|
Billed services |
2,208,469 |
|
2,055,009 |
|
2,149,579 |
Unbilled services |
981,560 |
|
909,760 |
|
929,669 |
Network use (interconexion) |
650,768 |
|
981,978 |
|
550,416 |
Goods sold |
556,152 |
|
572,103 |
|
590,476 |
Contractual assets (note 23) |
17,053 |
|
19,828 |
|
19,828 |
Other accounts receivable |
328 |
|
1,547 |
|
1,547 |
|
|
|
|
|
|
Provision for expected credit losses |
(610,324) |
|
(562,090) |
|
(581,738) |
|
|
|
|
|
|
Current portion |
(3,567,703) |
|
(3,739,452) |
|
(3,421,094) |
Non-current portion |
236,303 |
|
238,683 |
|
238,683 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The movement of the provision for expected credit losses, accounted for
as an asset reduction account, was as follows:
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
(6 months) |
|
(12 months) |
|
(12 months) |
|
|
|
|
|
|
Opening balance |
562,090 |
|
746,819 |
|
746,819 |
Balance of merged company |
23,737 |
|
- |
|
- |
Supplement to expected losses |
286,767 |
|
585,699 |
|
626,218 |
Write-off of provision |
(262,270) |
|
(770,428) |
|
(791,299) |
|
|
|
|
|
|
Closing balance |
610,324 |
|
562,090 |
|
581,738 |
In 2022, the change in the closing balance of the provision for expected credit losses occurred
due to the supplement to expected losses, net of reversal and write-off of already accrued invoices.
The aging of accounts receivable is as follows:
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Total |
4,414,330 |
|
4,540,225 |
|
4,241,515 |
|
|
|
|
|
|
Falling due |
3,194,545 |
|
3,575,228 |
|
3,221,416 |
Overdue (days): |
|
|
|
|
|
≤30 |
340,373 |
|
262,644 |
|
286,324 |
≤60 |
121,107 |
|
81,939 |
|
82,533 |
≤90 |
106,583 |
|
68,391 |
|
73,581 |
>90 |
651,722 |
|
552,023 |
|
577,661 |
Inventories are presented at the average acquisition cost. A loss is recognized
to adjust the cost of Handsets and accessories to the net realizable value (selling price), when this value is less than the average acquisition
cost.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Total inventory |
374,429 |
|
236,117 |
|
236,117 |
|
|
|
|
|
|
Inventory |
391,213 |
|
248,768 |
|
248,768 |
Mobile handsets and tablets |
257,022 |
|
138,951 |
|
138,951 |
Accessories and prepaid cards |
101,153 |
|
78,330 |
|
78,330 |
TIM chips |
33,038 |
|
31,487 |
|
31,487 |
|
|
|
|
|
|
Losses on adjustment to realizable amount |
(16,784) |
|
(12,651) |
|
(12,651) |
| 8. | Income tax and social contribution |
| 8.a | Recoverable income tax and social contribution |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Recoverable income tax and social contribution |
1,001,611 |
|
879,227 |
|
879,227 |
|
|
|
|
|
|
Income tax |
708,472 |
|
645,192 |
|
645,192 |
Social contribution |
293,139 |
|
234,035 |
|
234,035 |
|
|
|
|
|
|
Current portion |
(166,575) |
|
(361,349) |
|
(361,349) |
Non-current portion |
835,036 |
|
517,878 |
|
517,878 |
In September 2021, the Federal Supreme Court (STF), with general repercussions,
established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement
using the SELIC rate in cases of undue payment. The specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to
date, in the amount of R$ 535 million (principal). In 2021, R$ 11 million was recognized as inflation adjustment. In 2022, R$ 61
million was recognized as inflation adjustment. In 2023, R$ 28 million was recognized as inflation adjustment. Totaling R$ 635
million, recorded in non-current assets, since the realization of the gain by the Company becomes probable. The Company is awaiting the
final decision.
| 8.b | Income tax and social contribution payable |
Current income tax and social contribution charges are calculated on the
basis of the tax laws enacted, or substantially enacted, up to the balance sheet date.
The legislation allows companies to opt for quarterly or monthly payment
of income tax and social contribution. In 2023 the company has chosen to make the monthly payment of income tax and social contribution.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Income and social contribution tax payable |
47,084 |
|
78,351 |
|
78,351 |
|
|
|
|
|
|
Income tax |
- |
|
34,207 |
|
34,207 |
Social contribution |
47,084 |
|
44,144 |
|
44,144 |
|
|
|
|
|
|
Current portion |
(47,084) |
|
(78,351) |
|
(78,351) |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
8.c Deferred income tax and social contribution
Deferred income tax and social contribution are recognized on (1) tax losses
and accumulated tax loss carryforwards; and (2) temporary differences arising from differences between the tax basis of assets and liabilities
and their book values in the quarterly information. Deferred income tax is determined using the tax rates (and tax laws) enacted, or substantially
enacted, up to the balance sheet date. Subsequent changes in tax rates or tax legislation may modify the deferred tax credit and debit
balances.
Deferred tax assets on income tax and social contribution are recognized
only in the event of a profitable track record and/or when the annual forecasts prepared by the Company.
The balances of deferred income tax and social contribution assets and
liabilities are shown in the balance sheet at their net amounts, when there is both a legal right and an intention to offset them at the
time when the current taxes are ascertained, usually in relation to the same legal entity and the same taxation authority. Thus, deferred
tax assets and liabilities belonging to different entities are in general shown separately, not at their net amounts.
On June 30, 2023 and December 31, 2022, the prevailing tax
rates were 25% for income tax and 9% for social contribution. In addition, there is no statute of limitation in regard to the income tax
and social contribution carried forward losses, which it can be offset by up to 30% of the taxable profit reached at each fiscal year,
according to the current tax legislation.
The amounts recorded are as follows:
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Losses carried forward – income tax and social contribution |
45,717 |
|
95,927 |
|
225,882 |
Temporary differences: |
|
|
|
|
|
Provision for legal and administrative proceedings |
458,180 |
|
381,865 |
|
381,865 |
Provision for expected credit losses |
237,487 |
|
198,933 |
|
220,911 |
Lease of LT Amazonas infrastructure |
35,816 |
|
34,657 |
|
34,657 |
Profit sharing |
32,869 |
|
49,989 |
|
49,989 |
Taxes with enforceability suspended (i) |
830,003 |
|
642,479 |
|
711,897 |
Amortized Goodwill – TIM Fiber (ii) |
(34,560) |
|
(34,560) |
|
(34,560) |
Derivative financial instruments |
(183,476) |
|
(161,174) |
|
(161,174) |
Capitalized interest - 4G and 5G |
(299,271) |
|
(281,468) |
|
(281,468) |
Deemed costs – TIM S.A. |
(27,785) |
|
(32,177) |
|
(32,177) |
Adjustments of standard IFRS 16 (iii) |
658,759 |
|
468,113 |
|
596,495 |
Accelerated depreciation (iv) |
(812,322) |
|
(663,303) |
|
(715,041) |
Fair value adjustment I–Systems (former FiberCo) (v) |
(249,477) |
|
(249,477) |
|
(249,477) |
Impairment loss (vi) |
450,469 |
|
- |
|
557,932 |
Amortized Goodwill – Cozani |
(44,819) |
|
- |
|
|
Amortization of surplus |
62,697 |
|
45,592 |
|
45,591 |
Other |
127,123 |
|
31,304 |
|
146,218 |
|
1,287,410 |
|
526,700 |
|
1,497,540 |
|
|
|
|
|
|
Deferred income tax and social contribution on tax losses and negative bases not recognized yet |
- |
|
- |
|
(129,954) |
|
1.287,410 |
|
526,700 |
|
1,367,586 |
|
|
|
|
|
|
Deferred active tax portion |
2.939.120 |
|
1.948.859 |
|
2,971,437 |
Deferred tax liability |
(1,651,710) |
|
(1,422,159) |
|
(1,603,851) |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(i) Mainly
represented by the Fistel fee (TFF) for the financial years 2020, 2021, 2022 and 2023 of TIM S.A. at a parent company level and, at a
consolidated level, the TFF referring to Cozani's 2022 financial year is also added. The Operating Inspection Fee (TFF) for the years
2020, 2021, 2022 and 2023 of TIM S.A. and TFF for 2022 of Cozani had its payments suspended by virtue of an injunction and, therefore,
still do not have a specific date for payment. See Note 22 for details.
(ii) Represented
by the goodwill on the business combination of companies TIM Fiber RJ and SP acquired by TIM in 2012, partially realized in November 2021
after the completion of the transaction for the sale of 51% of the equity interest in I-Systems to IHS.
(iii) Represents
the addition of new contracts. The temporary difference of the IFRS 16 contracts is due to the difference in the timing of recognition
of the accounting and tax expense, under the terms of the current legislation.
(iv) As
of the 1Q20, TIM S.A. excludes the portion of acceleration of depreciation of movable assets belonging to property, plant and equipment
from the calculation basis of the IRPJ and CSLL, due to their uninterrupted use in three operating shifts, supported by technical expert
report, as provided for in Article 323 of the RIR/2018, or by the adequacy to the tax depreciation provided for in IN 1700/2017.
Such tax adjustment generated a deferred liability of R$ 761 million until June 30, 2023 (R$ 663 million up to December 31,
2022) and applied as of January 1, 2020.
(v) Refers
to deferred charges on the fair value of the non-controlling interest calculated in the sale of Fiber Co (currently I-Systems), which
took place in November 2021, from TIM S.A. to IHS Fiber Brasil - Cessão de Infraestruturas Ltda (see Note 14).
(vi) Represents
the deferred charges recorded, referring to the impairment of tangible assets.
Expectation of recovery of tax credits
The estimates of recoverability of tax credits were calculated taking into
consideration financial and business assumptions available on June 30, 2023.
Based on these projections, the company has the following expectation of
recovery of credits:
Parent Company
Deferred income tax and
social contribution |
Tax losses and negative basis |
|
Temporary differences |
|
Total |
2023 |
45,717 |
|
595,602 |
|
587,807 |
2024 |
- |
|
213,750 |
|
114,959 |
2025 |
- |
|
181,414 |
|
103,704 |
>2026 |
- |
|
1,902,637 |
|
2,132,650 |
Total |
45,717 |
|
2,893,403 |
|
2,939,120 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The company based on a history of profitability and based on projections
of future taxable results, constitutes deferred income tax credits and social contribution on all of its tax losses, negative social contribution
basis and temporary differences.
The Company used credits from tax losses and the negative basis of social
contribution in the amount of R$ 50,211 throughout 2023 (R$ 123,948 in 2022).
8.d Expense with current and deferred income tax
and social contribution
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
Current income tax and social contribution taxes |
|
|
|
|
|
|
|
Income tax for the period |
(101,357) |
|
(82,906) |
|
(101,615) |
|
(82,906) |
Social contribution for the period |
(48,516) |
|
(29,132) |
|
(48,611) |
|
(29,132) |
Tax incentive – SUDENE/SUDAM (i) |
100,155 |
|
50,905 |
|
100,155 |
|
50,905 |
|
(49,718) |
|
(61,133) |
|
(50,071) |
|
(61,133) |
Deferred income tax and social contribution |
|
|
|
|
|
|
|
Deferred income tax |
(9,248) |
|
(23,547) |
|
(66,911) |
|
4,304 |
Deferred social contribution |
7,492 |
|
(8,477) |
|
(13,267) |
|
1,551 |
|
(1,756) |
|
(32,024) |
|
(80,178) |
|
5,855 |
|
|
|
|
|
|
|
|
|
(51,474) |
|
(93,157) |
|
(130,249) |
|
(55,278) |
|
|
|
|
|
|
|
|
|
The reconciliation of income tax expense and social contribution calculated
by applying the combined tax rates with the values reflected in the result is shown below:
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
Income before income tax and social contribution |
1,090,382 |
|
778,060 |
|
1,169,158 |
|
740,181 |
Combined tax rate |
34% |
|
34% |
|
34% |
|
34% |
Combined tax rate on income tax and social contribution |
(370,730) |
|
(264,540) |
|
(397,514) |
|
(251,662) |
(Additions) / deletions: |
|
|
|
|
|
|
|
Equity in earnings |
37,981 |
|
(42,898) |
|
(14,171) |
|
(7,723) |
Permanent additions and exclusions: |
|
|
|
|
|
|
|
Non-taxable revenues |
11,317 |
|
19,053 |
|
11,317 |
|
19,053 |
Non-deductible expenses for tax purposes |
(10,350) |
|
(11,792) |
|
(10,350) |
|
(11,792) |
Tax incentive – SUDENE/SUDAM (i) |
100,155 |
|
50,905 |
|
100,155 |
|
50,905 |
Tax benefit related to interest on shareholders’ equity |
176,800 |
|
158,100 |
|
176,800 |
|
158,100 |
Other amounts |
3,353 |
|
(1,985) |
|
999 |
|
(12,159) |
|
319,256 |
|
171,383 |
|
267,264 |
|
196,384 |
Income tax and social contribution recorded in the income (loss) for the period |
(51,474) |
|
(93,157) |
|
(130,250) |
|
(55,278) |
Effective rate |
4.72% |
|
11.97% |
|
11.14% |
|
7.47% |
(i) As
mentioned in note 26 c.3, in order for investment grants not to be computed in taxable income, they must be recorded as a tax incentive
reserve, which can only be used to absorb losses or be incorporated into the share capital. The Company has tax benefits that fall under
these rules.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 9. | Taxes, fees and contributions to be recovered |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Taxes, fees and contributions to be recovered |
1,753,465 |
|
1,709,810 |
|
1,727,069 |
|
|
|
|
|
|
ICMS (i) |
1,405,972 |
|
1,314,811 |
|
1,323,604 |
PIS / COFINS (ii) |
98,105 |
|
194,449 |
|
194,452 |
IRRF (Withholding income tax) on interest earning bank deposits |
146,791 |
|
111,962 |
|
120,417 |
Other |
102,597 |
|
88,588 |
|
88,596 |
|
|
|
|
|
|
Current portion |
(748,903) |
|
(820,338) |
|
(831,661) |
Non-current portion |
1,004,562 |
|
889,472 |
|
895,408 |
(i) The amounts of recoverable ICMS (state VAT) are mainly comprised by:
(a) credits on the acquisition of property, plant
and equipment directly related to the provision of telecommunication services (credits divided over 48 months).
(b) ICMS amounts paid under the tax substitution regime
from goods acquired for resale, mainly mobile handsets, chips, tablets and modems sold by TIM.
(ii) The Recoverable PIS/COFINS amounts mainly refer to credits
from a legal proceeding filed by TIM Celular S.A. (ultimately merged into TIM S.A., as well as TIM S.A.itself), with a favorable final
decision in Higher Courts which discussed the exclusion of the ICMS from the PIS and COFINS calculation bases.
The Company, through declaration, offset credits arising from the ICMS
exclusion from the PIS and COFINS calculation basis until March 31, 2023, totaling R$ 3,517 million.
The current balance is mostly composed of credits arising from the non-cumulative taxation regime.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Prepaid expenses |
570,435 |
|
278,764 |
|
359,109 |
Fistel (i) |
210,884 |
|
- |
|
|
Advertisements not released (ii) |
50,105 |
|
2,361 |
|
2,361 |
Rentals and insurance |
71,716 |
|
64,544 |
|
64,544 |
Incremental costs for obtaining customer contracts (iii) |
179,034 |
|
178,543 |
|
178,543 |
IT Services (iv) |
23,743 |
|
21,500 |
|
21,500 |
Contractual prepaid expenses (v) |
- |
|
- |
|
77,810 |
Other |
34,953 |
|
11,816 |
|
14,351 |
|
|
|
|
|
|
Current portion |
(480,950) |
|
(198,506) |
|
(278,851) |
Non-current portion |
89,485 |
|
80,258 |
|
80,258 |
(i) During the first half of 2023, the amounts of R$ 94 million and
R$ 328 million were paid, related to TFF da Cozani and Condecine/CFR of TIM S.A. and Cozani, respectively. These amounts are monthly
recognized in income.
(ii) Represent prepaid payments of advertising expenses for products and
services of the TIM brand that are recognized in the result according to the period of serving the advertisement.
(iii) It is substantially represented by incremental costs related to sales
commissions paid to partners for obtaining customer contracts arising from the adoption of IFRS 15/ CPC 47, which are deferred to the
result in accordance with the term of the contract and/or economic benefit, usually from 1 to 2 years.
(iv) They represent prepayments of IT services expenses for network and
migration of information to the “cloud”.
(v) It refers to the payment in April 2022 (acquisition date of Cozani)
of TSA (Transition Service Agreement), in the amount of R$ 250,722 as remuneration, for up to 12 months of service provision in Cozani’s
transition phase.
They are recorded at historical cost and updated according to current legislation.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Judicial deposits |
1,421,681 |
|
1,377,560 |
|
1,377,560 |
|
|
|
|
|
|
Civil |
1,017,394 |
|
974,482 |
|
974,482 |
Labor |
91,409 |
|
117,583 |
|
117,583 |
Tax |
210,314 |
|
184,435 |
|
184,435 |
Regulatory |
114 |
|
113 |
|
113 |
Online attachment (i) |
102,450 |
|
100,947 |
|
100,947 |
(i) Refer to legal blockages directly in the company's current accounts
and financial investments linked to certain legal proceedings. This amount is periodically analyzed and when identified, reclassification
is made to one of the other specific accounts of the legal deposit item.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Civil
These are court deposits to guarantee the execution of civil proceedings
where the Company is challenging the amounts involved. Most of these proceedings refer to lawsuits filed by customers, involving issues
of consumer rights, among others.
There are some processes with differentiated matters, for instance, in
which the value set by ANATEL for vacating certain transmission sub-bands is discussed, enabling the implementation of 4G technology.
In this case, the amount deposited updated in court under discussion is R$ 80,721 (R$ 77,854 on December 31, 2022).
In a Material Fact released on October 4, 2022, a preliminary decision
was handed down by the 7th Business Court of the Judicial District of Rio de Janeiro determining the deposit in court by the
Buyers (TIM, Telefônica Brasil S.A. and Claro S.A.) of approximately R$ 1.53 billion – of which approximately R$ 670
million by TIM – in an account linked to the court-ordered reorganization process of Oi Móvel S.A., where it will be safeguarded
until a later decision by the arbitration court. Said deposit will remain in an account linked to the Court pending the installation of
the Court of Arbitration.
On October 19, 2022, TIM deposited the amount of R$ 670 million (R$ 733
million, restated on June 30, 2023) in guarantee for the Judgment of the 7th Corporate Court of the Judicial District of Rio
de Janeiro. Said deposit will remain in an account linked to the Court pending the installation of the Court of Arbitration.
Labor
These are amounts deposited in court as guarantees for
the execution and the filing of appropriate appeals, where the relevant matters or amounts involved are still being discussed. The total
amount has been allocated between the various claims filed by registered employees and third-party service providers.
Tax
The Company has legal deposits in the total, restated and estimated amount
of R$ 210,314 on June 30, 2023, relating to tax matters, made to support several ongoing legal discussions. Such deposits mainly
relate to the following discussions:
| (a) | Use of credit in the acquisition of electricity directly
employed in the production process of companies, matter with positive bias in the judiciary. The current value of the deposits related
to this discussion is R$ 37,563 (R$ 36,417 as of December 31, 2022). |
| (b) | CPMF levy on loan conversion operations into the
Company’s equity; recognition of the right not to collect the contribution allegedly levied on the simple change of ownership of
current accounts due to merger. The current value of the deposits related to this discussion is R$ 5,486 (R$ 5,295 on December
31, 2022). |
| (c) | Constitutionality of the collection of the functioning
supervision fee (TFF -Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The
current value of the deposits related to this discussion is R$ 23,200 (R$ 22,178 on December 31, 2022). |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| (d) | Non-homologation of compensation of federal debts
withholding income tax credits (IRRF) for the alleged insufficiency of credits, as well as the deposit made for the purposes of release
of negative Certificate of debts. The current value of the deposits related to this discussion is R$ 11,875 (R$ 11,557 on December
31, 2022). |
| (e) | Incidence of ISS on import services and third parties;
alleged lack of collection in relation to ground cleaning and maintenance service of BRS (Base Radio Station), the ISS itself, the ISS
incident on co-billing services and software licensing (blackberry). Guarantee of the right to take advantage of the benefit
of spontaneous denunciation and search for the removal of confiscatory fines in the case of late payment. The current value of the deposits
related to this discussion is R$ 11,369 (R$ 8,651 on December 31, 2022). |
| (f) | Accessory services provided for in the agreement
69/98 ICMS incident on the provision of communication services of the amounts charged for ACCESS, Membership, Activation, qualification,
availability, subscription and use of the services, among others. The current value of the deposits related to this discussion is R$ 3,701
(R$ 3,623 on December 31, 2022). |
| (g) | Requirement by ANATEL of the public price for the
administration of numbering resources. The current value of the deposits related to this discussion is R$ 3,866 (R$ 3,766 on
December 31, 2022). |
| (h) | Deposit made by TIM S.A. – Unconstitutionality
and illegality of the collection of FUST (Fund for Universalisation of Telecommunications Services). The right not to collect FUST, failing
to include in its calculation base the revenues transferred by way of interconnection and EILD (Industrial Exploitation of Dedicated Line),
as well as the right not to suffer the retroactive collection of the differences determined in function of not observing sum 7/2005 of
ANATEL. The current value of the deposits related to this discussion is R$ 65,992 (R$ 63,967 on December 31, 2022). |
| (i) | ICMS - Miscellaneous. Deposits made in several processes
that discuss ICMS charges, mainly related to discussions on loan, DIFAL, exempt and non-taxed services, ICAP and Covenant 39. The current
value of the deposits related to this discussion is R$ 22,071 (R$ 7,691 on December 31, 2022). |
| (j) | Charges related to cases of Jornal do Brasil
that were directed to the company. The current value of the deposits related to this discussion is R$ 15,018 (R$ 11,524 on December
31, 2022). |
| 12. | Other financial assets |
The initial recognition of an equity instrument in the balance sheet is
carried at its fair value as of the acquisition or issue date. Such financial assets and liabilities are subsequently measured at fair
value through profit or loss. Changes arising from the fair value measurement, where applicable, shall be recognised in the result when
incurred, under the line of financial income.
On March 26, 2020, TIM S.A. and BANCO C6 S.A. concluded the negotiations
over a strategic partnership aimed at developing combined offerings with special benefits to the customer bases of Partners.
In July 2020, the first offering was launched in partnership
with Banco C6, with special conditions to TIM customers who are also C6 customers. The innovating partnership provides great potential
to generate value for both companies through user base growth and greater client loyalty.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
On February 1, 2021, TIM announced that, within the scope of this partnership,
the right to exercise Subscription Warrant equivalent to the indirect interest of approximately 1.44% of Banco C6’s share capital
Banco C6 as a result of meeting, in December 2020, the 1st level of the agreed targets. Subsequently, the Company exercised
its option to acquire and convert C6 shares, which represents approximately 1.44% of the Bank. It is worth highlighting that once the
option is exercised, TIM started holding a minority position and does not have a position of control or significant influence in the management
of C6.
The Company exercised its option to acquire and convert C6 shares, which
represents 1.44% of ownership interest at Banco C6, which totals R$ 162,958.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Other assets |
263,045 |
|
265,661 |
|
265,042 |
|
|
|
|
|
|
Advances to employees |
35,746 |
|
7,092 |
|
7,092 |
Advances to suppliers |
24,250 |
|
31,422 |
|
31,437 |
Amounts receivable from TIM Brasil (Note 35) |
22,664 |
|
22,790 |
|
22,790 |
Amounts receivable from incentivized projects |
31,758 |
|
63,034 |
|
63,034 |
Recoverable INSS |
72,549 |
|
69,794 |
|
69,794 |
Other |
76,078 |
|
71,529 |
|
70,895 |
|
|
|
|
|
|
Current portion |
(228,880) |
|
(200,264) |
|
(199,644) |
Non-current portion |
34,165 |
|
65,397 |
|
65,398 |
The ownership interest in associated company or subsidiary is valued using
the equity accounting method.
Cozani
As mentioned in Note 1.2, on April 20, 2022, TIM S.A. (jointly with
other buyers Telefônica Brasil S.A. and Claro S.A.), after complying with the precedent conditions established by the Administrative
Council for Economic Defense (CADE) and ANATEL, concluded the process of acquiring the mobile assets of Oi Móvel S/A – Under
court-ordered reorganization.
With the conclusion of the Transaction, TIM S.A. now holds 100% of the
share capital of Cozani, a company that corresponds to the part of the unit of assets, rights and obligations of Oi Móvel acquired
by the Company. On April 1, 2023, TIM S.A. acquired Cozani, therefore, for all effects, the latter was dissolved and consequently,
for all purposes and effects, TIM S.A. does not have equity interest in Cozani as of June 30, 2023. TIM S.A. had 100% in the
share capital of Cozani on December 31, 2022.
I-Systems
In December 2020, the company Fiber Co (current I-Systems) was established
and was 100% controlled by TIM S.A. In November 2021, as a result of the spin-off of net assets of the broadband business and the
creation of I-Systems (formerly FiberCo) with subsequent sale of 51% of its equity interest on behalf of IHS, TIM S.A. assessed the
transaction as a loss of control and stopped consolidating it, recording the investment in an associated company, in the amount of R$ 1,612,957
at fair value for the remaining minority interest (non-controlling) of 49%.
TIM S.A. has 49% (49% on December 31, 2022) in the share capital of
I-Systems. The following table represents summarized financial information about the investments of I-Systems:
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
June 2023 |
|
December 2022 |
Assets |
1,926,688 |
|
1,820,223 |
Current and non-current assets |
268,274 |
|
291,799 |
Tangible and intangible assets |
1,658,414 |
|
1,528,424 |
|
|
|
|
Liabilities and shareholders’ equity |
1,926,688 |
|
1,820,223 |
Current and non-current liabilities |
589,713 |
|
398,189 |
Shareholders’ equity |
1,336,975 |
|
1,422,034 |
|
|
|
|
Company’s proportional interest |
49% |
|
49% |
Investment value (Note 14.b) |
1,498,437 |
|
1,540,116 |
Net loss for the period |
(85,059) |
(125,687) |
Company’s proportional interest |
49% |
49% |
Company’s interest in the associated company’s income
(loss) |
(41,679) |
(61,587) |
| a) | Interest in subsidiaries and associated company |
|
|
Associated companies |
|
Subsidiary |
|
Total |
|
|
June 2023
I-Systems |
|
December 2022
I-Systems |
|
Cozani up to 03/31/2023 |
|
December 2022
Cozani |
|
June 2023 |
|
December 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of shares |
|
1,794,287,995 |
|
1,794,287,995 |
|
- |
|
3,002,872 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest in total capital |
|
49% |
|
49% |
|
- |
|
100% |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
1,336,975 |
|
1,422,034 |
|
- |
|
4,199,623 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period/year (i) |
|
(85,059) |
|
(125,687) |
|
- |
|
(626,258) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings |
|
(41,679) |
|
(61,587) |
|
153,387 |
|
(492,165) |
|
111,708 |
|
(553,752) |
Amortization of surplus |
|
- |
|
- |
|
(53,781) |
|
(134,093) |
|
(53,781) |
|
(134,093) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment amount |
|
1,498,437 |
|
1,540,116 |
|
- |
|
4,199,623 |
|
1,498,437 |
|
5,739,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(i) The subsidiary’s results show the changes from the acquisition
date. The date of acquisition and transfer of control was April 20, 2022 and the results of the subsidiary were consolidated as of April
30, 2022, as the financial information available is closest to the date of transfer of control.
Cozani’s shareholders’ equity as of April 30, 2022 was adjusted
to comply with the Company’s accounting practices, reflecting a decrease of approximately R$ 1,641 million, mainly related
to the impairment of tangible assets, recording of onerous capacity contract and deferred taxes.
| b) | Changes in investment in subsidiaries and associated
companies: |
|
I-Systems (associated company) |
|
Cozani
(merged subsidiary) |
|
Total |
|
|
|
|
|
|
Balance of investment on December 31, 2022 |
1,540,116 |
|
4,199,623 |
|
5,739,739 |
Amortization of surplus up to March 31, 2023 |
- |
|
(53,781) |
|
(53,781) |
Equity in earnings |
(41,679) |
|
153,387 |
|
111,708 |
Cozani shareholders’ equity – acquired by TIM S.A. |
- |
|
(1,194,523) |
|
(4,299,229) |
Surplus of radio frequency and customer list |
|
|
(3,104,706) |
|
|
Balance of investment on June 30, 2023 |
1,498,437 |
|
- |
|
1,498,437 |
| 15. | Property, plant and equipment |
Property, plant and equipment are stated at acquisition and/or construction
cost, less accumulated depreciation and impairment losses (the latter only if applicable). Depreciation is calculated based on the straight-line
method over terms that take into account the expected useful lives of the assets and their residual values. The amounts of property, plant
and equipment recorded on Cozani’s acquisition were adjusted to its recoverable amounts and after the merger are recorded at TIM
S.A. On June 30, 2023 and December 31, 2022, the Company has no other indication of impairment in its property, plant and equipment.
The estimated costs of dismantling towers and equipment on rented properties
are capitalized and depreciated over the estimated useful lives of these assets. The Company recognizes the present value of these
costs in property, plant and equipment with a counter-entry to the liability “provision for future asset retirement”. Interest
incurred on updating the provision is classified within financial expenses.
Gains and losses on disposal are determined by comparing the amounts of
these disposals with the book value at the time of the transaction and are recognized in “other operating expenses (revenue), net”
in the statement of income.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| · | Changes in property, plant and equipment |
|
Parent Company |
|
Balance in December 2022 |
Additions |
Write-offs |
Transfers |
Addition by merger |
Balance in June 2023 |
|
Total cost of property, plant and equipment, gross |
54,530,017 |
2,683,375 |
(53,956) |
- |
11,371,149 |
68,530,585 |
Commutation/transmission equipment |
28,749,731 |
- |
(42,513) |
1,765,336 |
6,527,485 |
37,000,039 |
Fiber optic cables |
783,396 |
- |
- |
762 |
- |
784,158 |
Leased handsets |
2,956,156 |
- |
(2,180) |
108,415 |
920,690 |
3,983,081 |
Infrastructure |
6,921,727 |
- |
(5,371) |
133,952 |
572,350 |
7,622,658 |
Informatics assets |
1,780,652 |
- |
(2,062) |
19,707 |
- |
1,798,297 |
General use assets |
957,396 |
- |
(263) |
15,596 |
9,202 |
981,931 |
Right-of-use in leases |
11,493,062 |
941,907 |
(865) |
- |
3,341,422 |
15,775,526 |
Land |
39,802 |
- |
- |
- |
- |
39,802 |
Construction in progress |
848,095 |
1,741,468 |
(702) |
(2,043,768) |
- |
545,093 |
|
|
|
|
|
|
|
Total Accumulated Depreciation |
(34,754,757) |
(2,453,034) |
51,142 |
- |
(8,289,050) |
(45,445,699) |
Commutation/transmission equipment |
(20,101,222) |
(1,134,004) |
42,658 |
- |
(6,088,197) |
(27,280,765) |
Fiber optic cables |
(583,854) |
(30,703) |
- |
- |
- |
(614,557) |
Leased handsets |
(2,677,840) |
(82,381) |
1,045 |
- |
(920,672) |
(3,679,848) |
Infrastructure |
(4,404,860) |
(181,484) |
5,240 |
- |
(587,153) |
(5,168,257) |
Informatics assets |
(1,675,605) |
(23,482) |
2,061 |
- |
- |
(1,697,026) |
General use assets |
(698,448) |
(24,976) |
138 |
- |
(7,706) |
(730,992) |
Right-of-use in leases |
(4,612,928) |
(976,004) |
- |
- |
(685,322) |
(6,274,254) |
Total property, plant and equipment, net |
19,775,260 |
230,341 |
(2,814) |
- |
3,082,099 |
23,084,886 |
Commutation/transmission equipment |
8,648,509 |
(1,134,004) |
145 |
1,765,336 |
439,288 |
9,719,274 |
Fiber optic cables |
199,542 |
(30,703) |
- |
762 |
- |
169,601 |
Leased handsets |
278,316 |
(82,381) |
(1,135) |
108,415 |
18 |
303,233 |
Infrastructure |
2,516,867 |
(181,484) |
(131) |
133,952 |
(14,803) |
2,454,401 |
Informatics assets |
105,047 |
(23,482) |
(1) |
19,707 |
- |
101,271 |
General use assets |
258,948 |
(24,976) |
(125) |
15,596 |
1,496 |
250,939 |
Right-of-use in leases |
6,880,134 |
(34,097) |
(865) |
- |
2,656,100 |
9,501,272 |
Land |
39,802 |
- |
- |
- |
- |
39,802 |
Construction in progress |
848,095 |
1,741,468 |
(702) |
(2,043,768) |
- |
545,093 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Balance in December 2021 |
Additions |
Write-offs |
Transfers |
Balance in June 2022 |
|
Total cost of property, plant and equipment, gross |
49,159,678 |
3,165,777 |
(63,340) |
- |
52,262,115 |
Commutation/transmission equipment |
25,854,454 |
(919) |
(30,647) |
1,450,223 |
27,273,111 |
Fiber optic cables |
778,512 |
- |
- |
3,689 |
782,201 |
Leased handsets |
2,806,454 |
535 |
(15,459) |
83,314 |
2,874,844 |
Infrastructure |
6,443,285 |
- |
(4,067) |
352,021 |
6,791,239 |
Informatics assets |
1,756,340 |
- |
(237) |
9,061 |
1,765,164 |
General use assets |
916,845 |
- |
(639) |
14,297 |
930,503 |
Right-of-use in leases |
9,779,327 |
1,133,598 |
(11,753) |
- |
10,901,172 |
Land |
40,794 |
- |
(640) |
- |
40,154 |
Construction in progress |
783,667 |
2,032,563 |
102 |
(1,912,605) |
903,727 |
|
|
|
|
|
|
Total Accumulated Depreciation |
(30,851,278) |
(2,028,392) |
46,413 |
- |
(32,833,257) |
Commutation/transmission equipment |
(18,187,994) |
(1,008,149) |
31,028 |
- |
(19,165,115) |
Fiber optic cables |
(522,205) |
(30,843) |
- |
- |
(553,048) |
Leased handsets |
(2,534,691) |
(76,028) |
10,992 |
- |
(2,599,727) |
Infrastructure |
(4,043,155) |
(190,799) |
3,797 |
- |
(4,230,157) |
Informatics assets |
(1,629,730) |
(26,572) |
230 |
- |
(1,656,072) |
General use assets |
(649,229) |
(24,790) |
366 |
- |
(673,653) |
Right-of-use in leases |
(3,284,274) |
(671,211) |
- |
- |
(3,955,485) |
Total property, plant and equipment, net |
18,308,400 |
1,137,385 |
(16,927) |
- |
19,428,858 |
Commutation/transmission equipment |
7,666,460 |
(1,009,068) |
381 |
1,450,223 |
8,107,996 |
Fiber optic cables |
256,307 |
(30,843) |
- |
3,689 |
229,153 |
Leased handsets |
271,763 |
(75,493) |
(4,467) |
83,314 |
275,117 |
Infrastructure |
2,400,130 |
(190,799) |
(270) |
352,021 |
2,561,082 |
Informatics assets |
126,610 |
(26,572) |
(7) |
9,061 |
109,092 |
General use assets |
267,616 |
(24,790) |
(273) |
14,297 |
256,850 |
Right-of-use in leases |
6,495,053 |
462,387 |
(11,753) |
- |
6,945,687 |
Land |
40,794 |
- |
(640) |
- |
40,154 |
Construction in progress |
783,667 |
2,032,563 |
102 |
(1,912,605) |
903,727 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The construction in progress represent the cost of projects in progress
related to the construction of networks and/or other tangible assets in the period of their construction and installation, until the moment
they come into operation, when they will be transferred to the corresponding accounts of these assets.
|
Consolidated |
|
Balance
in December 2021 |
Additions
/ depreciation |
Write-offs |
Transfers |
Acquisitions
of subsidiary (Note 1.2) (*) |
Balance
in June 2022 |
Total cost of
property, plant and equipment, gross |
49,159,678 |
3,167,289 |
(63,340) |
- |
11,455,227 |
63,718,854 |
Commutation/transmission
equipment |
25,854,454 |
(919) |
(30,647) |
1,450,223 |
7,245,512 |
34,518,623 |
Fiber optic cables |
778,512 |
- |
- |
3,689 |
756 |
782,957 |
Leased handsets |
2,806,454 |
535 |
(15,459) |
83,314 |
- |
2,874,844 |
Infrastructure |
6,443,285 |
- |
(4,067) |
352,021 |
701,025 |
7,492,264 |
Informatics assets |
1,756,340 |
- |
(237) |
9,061 |
336,123 |
2,101,287 |
General use assets |
916,845 |
- |
(639) |
14,297 |
212,022 |
1,142,525 |
Right-of-use in leases |
9,779,327 |
1,133,598 |
(11,753) |
- |
2,929,449 |
13,830,621 |
Land |
40,794 |
- |
(640) |
- |
- |
40,154 |
Construction in progress |
783,667 |
2,034,075 |
102 |
(1,912,605) |
30,340 |
935,579 |
|
|
|
|
|
|
|
Total Accumulated
Depreciation |
(30,851,278) |
(2,268,987) |
46,413 |
- |
(6,997,956) |
(40,071,808) |
Commutation/transmission
equipment |
(18,187,994) |
(1,073,061) |
31,028 |
- |
(5,915,990) |
(25,146,017) |
Fiber optic cables |
(522,205) |
(30,860) |
- |
- |
(25) |
(553,090) |
Leased handsets |
(2,534,691) |
(76,028) |
10,992 |
- |
- |
(2,599,727) |
Infrastructure |
(4,043,155) |
(192,788) |
3,797 |
- |
(562,370) |
(4,794,516) |
Informatics assets |
(1,629,730) |
(25,430) |
230 |
- |
(337,265) |
(1,992,195) |
General use assets |
(649,229) |
(24,075) |
366 |
- |
(182,306) |
(855,244) |
Right-of-use in leases |
(3,284,274) |
(846,745) |
|
- |
- |
(4,131,019) |
Total property,
plant and equipment, net |
18,308,400 |
898,302 |
(16,927) |
- |
4,457,271 |
23,647,046 |
Commutation/transmission
equipment |
7,666,460 |
(1,073,980) |
381 |
1,450,223 |
1,329,522 |
9,372,606 |
Fiber optic cables |
256,307 |
(30,860) |
- |
3,689 |
731 |
229,867 |
Leased handsets |
271,763 |
(75,493) |
(4,467) |
83,314 |
- |
275,117 |
Infrastructure |
2,400,130 |
(192,788) |
(270) |
352,021 |
138,655 |
2,697,748 |
Informatics assets |
126,610 |
(25,430) |
(7) |
9,061 |
(1,142) |
109,092 |
General
use assets |
267,616 |
(24,075) |
(273) |
14,297 |
29,716 |
287,281 |
Right-of-use in leases |
6,495,053 |
286,853 |
(11,753) |
- |
2,929,449 |
9,699,602 |
Land |
40,794 |
- |
(640) |
- |
- |
40,154 |
Construction in progress |
783,667 |
2,034,075 |
102 |
(1,912,605) |
30,340 |
935,579 |
|
|
|
|
|
|
|
(*) In June 2022, the allocation process related to the business
combination (PPA – Purchase Price Allocation) was in progress, the definite amounts, described in note 1.2, being obtained
in December 2022. In June 2022, the Company ecorded net tangible assets of R$ 4,457,271, however, at the end of the PPA
valuation in December 2022, the balance of net tangible assets as of the acquisition date was set at R$ 3,518,477.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The lease rights of use are represented by leased agreements of identifiable
assets within the scope of IFRS16 / CPC 06 (R2) standard. These rights refer to leases of network infrastructure, stores and kiosks, real
estate, land (Network) and fiber, as below:
|
Parent Company |
Right-of-use in lease |
Network infrastructure |
Shops & kiosks and real estate |
Land (Network) |
Fiber |
Total |
Balances at December 31, 2022 |
3,637,960 |
639,210 |
1,596,882 |
1,006,082 |
6,880,134 |
Additions by merger |
1,478,836 |
- |
1,177,264 |
- |
2,656,100 |
Additions |
457,863 |
118,804 |
305,228 |
60,012 |
941,907 |
Remeasurement |
51,678 |
(34,218) |
(18,325) |
- |
(865) |
Depreciation |
(454,927) |
(67,919) |
(208,353) |
(244,805) |
(976,004) |
Balances at June 30, 2023 |
5,171,410 |
655,877 |
2,852,696 |
821,289 |
9,501,272 |
Annual depreciation rates |
12.29% |
11.71% |
12.65% |
7.83% |
|
Parent Company
Right-of-use in lease |
Network infrastructure |
Shops & kiosks and real estate |
Land (Network) |
Fiber |
Total |
Balances at December 31, 2021 |
3,048,509 |
541,312 |
1,504,233 |
1,400,999 |
6,495,053 |
Additions |
742,282 |
132,322 |
206,818 |
52,176 |
1,133,598 |
Remeasurement |
(2,192) |
(4,669) |
(4,892) |
- |
(11,753) |
Depreciation |
(257,827) |
(63,615) |
(111,445) |
(238,324) |
(671,211) |
Balances at June 30, 2022 |
3,530,772 |
605,350 |
1,594,714 |
1,214,851 |
6,945,687 |
Annual depreciation rates |
11.35% |
11.00% |
11.38% |
7.12% |
|
Consolidated
Right-of-use in lease |
Network infrastructure |
Shops & kiosks and real estate |
Land (Network) |
Fiber |
Total |
Balances at December 31, 2021 |
3,048,509 |
541,312 |
1,504,233 |
1,400,999 |
6,495,053 |
Sa Balance of acquired company |
214.3142 |
|
786,307 |
|
2,929,449 |
Additions |
742,282 |
132,322 |
206,818 |
52,176 |
1,133,598 |
Remeasurement |
(2,192) |
(4,669) |
(4,892) |
- |
(11,753) |
Depreciation |
(397,688) |
(63,615) |
(147,117) |
(238,325) |
(846,745) |
Balances at June 30, 2022 |
5,534,053 |
605,350 |
2,345,349 |
1,214,850 |
9,699,602 |
|
|
|
|
|
|
Annual depreciation rates |
11.35% |
11.00% |
11.38% |
7.12% |
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
|
Annual fee % |
Commutation / transmission equipment |
|
08–14.29 |
Fiber optic cables |
|
4–10 |
Leased handsets |
|
14.28–50 |
Infrastructure |
|
4–20 |
Informatics assets |
|
10–20 |
General use assets |
|
10–20 |
In 2022, pursuant to IAS 16 / CPC 27, approved by a CVM Deliberation 73,
the Company assessed the useful life estimates for their property, plant and equipment, concluding that there were no significant changes
or alterations to the circumstances on which the estimates were based that would justify changes to the useful lives currently in use.
Intangible assets are measured at historical cost less accumulated amortization
and impairment losses (if applicable) and reflect: (i) the purchase of authorizations and rights to use radio frequency bands, and (ii)
software in use and/or development. Intangible assets also include: (i) infrastructure right-of-use of other companies, and (ii) goodwill
on expectation of future profits in purchases of companies.
Amortization charges are calculated using the straight-line method over
the estimated useful life of the assets contracted and over the terms of the authorizations. The useful life estimates of intangible assets
are reviewed regularly.
Any financial charges on funds raised (that is, without a specific destination)
and used to obtain a qualifying asset, meaning an asset that requires a significant time to be ready for use, are capitalized as a portion
of the cost of the asset when it is likely to bring future economic benefits to the entity and such costs can be accurately measured.
These costs are amortized throughout the estimated useful lives of the assets. Within this concept, we had the capitalization of charges
for the 700MHz 4G license between 2014 and 2019 and we had the capitalization of charges on the acquisition of the 5G license for the
radio frequency not readily available and other obligations related to such radio frequency between 2021 and 2023. This capitalization
occurred when the asset was considered available for use by Management. As of the second quarter of 2023, the capitalization of interest
and charges on this asset ended. These costs are amortized over the estimated useful lives.
The values of permits for the operation of SMP and rights to use radio
frequencies, as well as software, goodwill and others are demonstrated as follows:
The cost of intangible assets acquired in a business combination corresponds
to their fair value at acquisition date. After the initial recognition, the intangible assets are stated at cost, less accumulated amortization
and impairment losses.
Intangible assets with undefined useful lives are not amortized but tested
for impairment on an annual basis, individually or at cash generating unit level.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| (a) | Changes in intangible assets |
|
Parent Company |
|
Balance in December 2022 |
Additions/ Amortization |
Addition by merger |
Write-offs |
Transfers |
Capitalized interest |
Balance in June 2023 |
|
Total cost of intangible assets, gross |
38,732,905 |
492,507 |
6,446,789 |
(13) |
- |
95,678 |
45,767,866 |
Right to use software |
20,876,377 |
- |
1,366,860 |
(13) |
485,597 |
- |
22,728,821 |
Authorizations |
11,250,610 |
8,843 |
4,598,839 |
- |
2,890,938 |
- |
18,749,230 |
Goodwill (i) |
3,112,169 |
- |
- |
- |
- |
- |
3,112,169 |
Infrastructure right-of-use - LT Amazonas |
201,778 |
- |
- |
- |
5,811 |
- |
207,589 |
List of clients |
- |
- |
253,629 |
- |
- |
- |
253,629 |
Other assets |
339,417 |
- |
227,461 |
- |
1,415 |
- |
568,293 |
Intangible assets under development |
2,952,554 |
483,664 |
- |
- |
(3,383,761) |
95,678 |
148,135 |
|
|
|
|
|
|
|
|
Total Accumulated Amortization |
(25,730,124) |
(885,223) |
(3,102,345) |
13 |
- |
- |
(29,717,679) |
Right to use software |
(18,454,058) |
(492,653) |
(1,355,500) |
13 |
- |
- |
(20,302,198) |
Authorizations |
(6,984,930) |
(362,458) |
(1,586,245) |
- |
- |
- |
(8,933,633) |
Infrastructure right-of-use - LT Amazonas |
(86,488) |
(5,287) |
- |
- |
- |
- |
(91,775) |
List of clients |
|
(8,284) |
(30,312) |
- |
- |
- |
(38,596) |
Other assets |
(204,648) |
(16,541) |
(130,288) |
- |
- |
- |
(351,477) |
|
|
|
|
|
|
|
|
Total intangible assets, net |
13,002,781 |
(392,716) |
3,344,444 |
- |
- |
95,678 |
16,050,187 |
Right to use software (c) |
2,422,319 |
(492,653) |
11,360 |
- |
485,597 |
- |
2,426,623 |
Authorizations (f) |
4,265,680 |
(353,615) |
3,012,594 |
- |
2,890,938 |
- |
9,815,597 |
Goodwill (d) |
3,112,169 |
- |
- |
- |
- |
- |
3,112,169 |
Infrastructure right-of-use - LT Amazonas (e) |
115,290 |
(5,287) |
- |
- |
5,811 |
- |
115,814 |
List of clients |
- |
(8,284) |
223,317 |
- |
|
|
215,033 |
Other assets |
134,769 |
(16,541) |
97,173 |
- |
1,415 |
- |
216,816 |
Intangible assets under development |
2,952,554 |
483,664 |
- |
- |
(3,383,761) |
95,678 |
148,135 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Balance in December 2021 |
Additions/ Amortization |
Write-offs |
Transfers |
Balance in June 2022 |
|
Total cost of intangible assets, gross |
34,630,541 |
2,678,865 |
(3,200) |
- |
37,306,206 |
Right to use software |
19,911,004 |
- |
- |
508,016 |
20,419,020 |
Authorizations |
11,151,497 |
27,136 |
(3,200) |
7,088 |
11,182,521 |
Goodwill |
475,743 |
1,950,720 |
- |
- |
2,426,463 |
Infrastructure right-of-use - LT Amazonas |
186,221 |
- |
- |
15,557 |
201,778 |
Other assets |
333,116 |
- |
- |
3,714 |
336,830 |
Intangible assets under development |
2,572,960 |
701,009 |
- |
(534,375) |
2,739,594 |
|
|
|
|
|
|
Total Accumulated Amortization |
(24,045,462) |
(848,776) |
3,200 |
- |
(24,891,038) |
Right to use software |
(17,432,018) |
(516,021) |
- |
- |
(17,948,039) |
Authorizations |
(6,357,666) |
(315,519) |
3,200 |
- |
(6,669,985) |
Infrastructure right-of-use - LT Amazonas |
(76,697) |
(4,616) |
- |
- |
(81,313) |
Other assets |
(179,081) |
(12,620) |
- |
|
(191,701) |
|
|
|
|
|
|
Total intangible assets, net |
10,585,079 |
1,830,089 |
- |
- |
12,415,168 |
Right to use software (c) |
2,478,986 |
(516,021) |
- |
508,016 |
2,470,981 |
Authorizations (f) |
4,793,831 |
(288,383) |
- |
7,088 |
4,512,536 |
Goodwill (d) |
475,743 |
1,950,720 |
- |
- |
2,426,463 |
Infrastructure right-of-use - LT Amazonas (e) |
109,524 |
(4,616) |
- |
15,557 |
120,465 |
Other assets |
154,035 |
(12,620) |
- |
3,714 |
145,129 |
Intangible assets under development |
2,572,960 |
701,009 |
- |
(534,375) |
2,739,594 |
The intangible assets in progress represent the cost of projects in progress
related to the intangible assets in the period of their construction and installation, until the moment they come into operation, when
they will be transferred to the corresponding accounts of these assets. From December 2021 to April 2023 includes the amounts for acquisition
values of the 5G License, which were transferred to goods in service (“Authorizations”) in April 2023, as per note 16.f.
(i) In December 2022, with the acquisition of Cozani (see Notes 1.2
and 16.d), definitive goodwill was recorded in the business combination of R$ 2,636,426. In June 2022, the Company recorded
a provisional goodwill of R$ 1,950,720.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Consolidated |
|
Balance in December 2021 |
Additions/ Amortization |
Write-offs |
Transfers |
Acquisitions of subsidiary (Note 1.2*) |
Balance in June 2022 |
|
Total cost of intangible assets, gross |
34,630,541 |
2,678,865 |
(3,200) |
- |
7,154,551 |
44,460,757 |
Right to use software |
19,911,004 |
- |
- |
508,016 |
1,366,860 |
21,785,880 |
Authorizations |
11,151,497 |
27,136 |
(3,200) |
7,088 |
4,479,613 |
15,662,134 |
Goodwill |
475,743 |
1,950,720 |
- |
- |
- |
2,426,463 |
Infrastructure right-of-use - LT Amazonas |
186,221 |
- |
- |
15,557 |
- |
201,778 |
Other assets |
333,116 |
- |
- |
3,714 |
1,308,078 |
1,644,908 |
Intangible assets under development |
2,572,960 |
701,009 |
- |
(534,375) |
- |
2,739,594 |
|
|
|
|
|
|
|
Total Accumulated Amortization |
(24,045,462) |
(892,508) |
3,200 |
- |
(3,780,967) |
(28,715,737) |
Right to use software |
(17,432,018) |
(517,706) |
- |
- |
(1,347,360) |
(19,297,084) |
Authorizations |
(6,357,666) |
(351,671) |
3,200 |
- |
(1,381,802) |
(8,087,939) |
Infrastructure right-of-use - LT Amazonas |
(76,697) |
(4,616) |
- |
- |
- |
(81,313) |
Other assets |
(179,081) |
(18,515) |
- |
|
(1,051,805) |
(1,249,401) |
|
|
|
|
|
|
|
Total intangible assets, net |
10,585,079 |
1,786,357 |
- |
- |
3,373,584 |
15,745,020 |
Right to use software (c) |
2,478,986 |
(517,706) |
- |
508,016 |
19,500 |
2,488,796 |
Authorizations (f) |
4,793,831 |
(324,535) |
- |
7,088 |
3,097,811 |
7,574,195 |
Goodwill (d) |
475,743 |
1,950,720 |
- |
- |
- |
2,426,463 |
Infrastructure right-of-use - LT Amazonas (e) |
109,524 |
(4,616) |
- |
15,557 |
- |
120,465 |
Other assets |
154,035 |
(18,515) |
- |
3,714 |
256,273 |
395,507 |
Intangible assets under development |
2,572,960 |
701,009 |
- |
(534,375) |
|
2,739,594 |
|
|
|
|
|
|
|
(*) In June 2022, the allocation process related to the business combination
(PPA – Purchase Price Allocation) was in progress, the definite amounts, described in note 1.2, being obtained in December 2022.
In June 2022, the Company recorded net intangible assets of R$ 3,373,584, however, at the end of the PPA valuation in December 2022,
the balance of net intangible assets as of the acquisition date was set at R$ 3,599,811.
(b) Amortization rates
|
Annual fee % |
|
|
Software licenses |
20 |
Authorizations |
5–50 |
Right to use infrastructure |
5 |
Other assets |
7–10 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(c) Software licenses
The costs associated with maintaining software are recognized as
expense, as incurred. Development costs that are directly attributable to software product design and testing, and are identifiable and
exclusive, controlled by the Group, are recognized as intangible assets when the capitalization criteria are met.
Directly attributable costs that are capitalized as part of the software
product are related to employee costs directly allocated in its development.
(d) Goodwill registered
The Company has the following goodwills, based on
the expected future profitability on June 30, 2023 and December 31, 2022:
Goodwill on the acquisition of Cozani
As described in Note 1.2.1, in April 2022 the
Company acquired 100% of Cozani, with a total consideration paid of R$ 7,211,585 and identifiable assets, net of liabilities assumed,
at a fair value of R$ 4,575,159. Therefore, having a remaining amount of goodwill allocated from R$ 2,636,426, which
is recorded on June 30, 2023 and December 31, 2022.
The Company
describes the accounting practice adopted in business combinations in the Note 2e that initially, goodwill is initially measured
as being the excess of consideration transferred in relation to net assets acquired (acquired identifiable assets and assumed liabilities).
After initial
recognition, the goodwill is carried at cost less impairment losses (if any). For purposes of impairment testing, goodwill acquired in
a business combination is, as of the acquisition date, allocated to the respective cash-generating units that are expected to benefit
from the combination. In the case of the TIM group, the goodwill was allocated to the mobile cash generating unit, which is the only one
identified so far.
Goodwill from TIM Fiber SP and TIM Fiber RJ acquisitions
– TIM Celular S.A. (merged by Intelig, current TIM S.A.) acquired, at the end of 2011, the companies Eletropaulo Telecomunicações
Ltda. (which subsequently had its trade name changed to TIM Fiber SP Ltda. – “TIM Fiber SP”) and AES Communications
Rio de Janeiro S.A. (which subsequently had its trade name changed to TIM Fiber RJ S.A. – “TIM Fiber RJ”). These companies
were SCM providers in the main municipalities of the Greater São Paulo and Greater Rio de Janeiro areas, respectively. TIM Fiber
SP Ltda. and TIM Fiber RJ. S.A. were merged into TIM Celular S.A. on August 29, 2012. TIM Celular S.A. recorded the goodwill allocation
related to the purchase of the companies TIM Fiber SP and TIM Fiber RJ, at the end of the purchase price allocation process, in the amount
of R$ 1,159,649.
In November 2021, the Company concluded the drop-down of liquid assets
related to the residential broadband business linked to the secondary network infrastructure to the wholly-owned subsidiary FiberCo and
sold 51% of the equity interest in FiberCo, currently named I- Systems, on behalf of IHS. Currently, due to the closing of the transaction,
TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the
amount of R$ 1,051,477. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority
(non-controlling) interest of 49% in I-Systems. Consequently, with the closing of this deal in November 2021, the goodwill initially
recorded on the acquisition of the companies Fiber RJ and Fiber SP was reduced to R$ 108,171 and this balance was recorded on June
30, 2023 and December 31, 2022.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
On August 31, 2020, with the merger of TIM Participações
S.A. by TIM S.A., the Company recorded the goodwill arising from the merger of the net assets of TIM Participações, which
were originated in acquisition transactions as described below:
Goodwill acquisition of "Intelig" by
TIM Participações – the goodwill arising from the acquisition of TIM S.A. (formerly ”Intelig")
in December 2009 in the amount of R$ 210,015 is represented/based on the expectation of future profitability of the Company. Its
recoverability is tested annually, through the impairment testing.
Goodwill from the acquisition of minority interests in TIM Sul and TIM
Nordeste – TIM Participações S.A. (merged by TIM S.A. in August 2020) acquired in 2005, all the shares of the
minority shareholders of TIM Sul and TIM Nordeste, in exchange for shares issued by TIM Participações, converting these
companies into full subsidiaries. The goodwill resulting from this transaction amounted to R$ 157,556.
Impairment test
As required by the accounting standard, the Company tests goodwill
on business combinations.
The methodology and assumptions used by Management for the aforementioned
impairment test is summarized below:
The management of the Company understands that the smallest unit generating
cash for impairment testing of goodwill in the acquisition of the companies previously described covers the business at the consolidated
level, therefore it covers the consolidated group. This methodology is aligned with the company's strategic direction. It is important
highlighting that the group’s results are essentially represented by TIM S.A., but with the acquisition of Cozani in 2022, it started
generating results in the TIM S.A. as of April 30, 2022. The Company understands that the consolidated results of TIM S.A. represent a
single cash-generating unit for purposes of impairment testing of assets with indefinite useful lives, in accordance with IAS 36/CPC 01.
On December 31, 2022, the impairment test was performed by comparing
the book value with the fair value minus the disposal costs of the asset, as foreseen in IAS 36 / CPC 01.
For the calculation of fair value, the level of hierarchy within which
the measurement of the fair value of the asset (cash generating unit) is classified was considered. For the company, as there is only
one CGU this was classified in its entirety as Level 1, for the disposal costs we consider that it is irrelevant considering the variation
between the fair value level 1 and the book value of the cash generating unit.
The fair value of Tier 1 instruments comprises instruments traded on active
markets and based on market prices quoted at the balance sheet date. A market is considered active when the quoted prices are readily
and regularly available from an Exchange, distributor, broker, industry group, pricing service or regulatory agency, and these prices
represent actual market transactions which occur regularly on a purely commercial basis.
Company’s shares are traded on B3 – Brasil, Bolsa, Balcão
(“B3”) with code (TIMS3) and have a regular trading volume that allows the measurement (Level 1) as the product between the
quoted price for the individual asset or liability and the amount held by the entity.
In 2022, the measurement was made based on the value of the share at the
balance sheet closing date and sensitivity tests were also performed and in none of the scenarios was identified any indication of impairment,
being the fair value determined higher than the book value. Therefore, being the fair value higher than the book value, it is not necessary
to calculate the value in use. Therefore, the calculations carried out at the consolidated level essentially contemplate the results
and accounting balances of TIM S.A., so the management of the Company concludes that the use of the fair value less of cost of sales
methodology is adequate to conclude that there is no provision for impairment since the fair value less the cost of sales is higher than
the total book value of the cash generating unit.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
On June 30, 2023, the Company carried out the analysis of all tangible,
intangible assets and investments and did not identify any impairment indicators.
(e) Right to use infrastructure - Lt Amazonas
The company has signed infrastructure rights agreements with companies
that operate electricity transmission lines in the Northern Region of Brazil. These contracts fall within the scope of IFRIC 4 / ICPC
3 as financial commercial leases.
Additionally, the Company has signed network infrastructure sharing agreements
with Telefónica Brasil S.A., also in the North Region. In these, the two operators optimize resources and reduce their respective
operating costs.
(f) Authorizations
4G License
In this item are recorded the values related to the
acquisition of Lot 2 in the auction of the 700 MHz band in the amount of R$ 1,739 million, in addition to the costs related to the cleaning
of the frequency of the 700 MHZ band acquired, which totalled R$1,199 million, in nominal values. As it is a long-term obligation, the
amount payable of R$ 1,199 million was reduced by R$ 47 million by applying the concept of adjustment to present value (“AVP”).
The aforementioned license fell under the concept of qualifying asset. Consequently, the financial charges on resources raised without
a specific destination, used for the purpose of obtaining a qualifying asset, were capitalized between the years 2014 and 2019.
5G License
In 2021, there was a record regarding the acquisition
of the 5th Generation (“5G”) mobile telephony radio frequencies.
In November 2021, TIM participated in the 5G Auction
and was the winner of several lots in the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands. These licenses will be paid over a period of
10 to 20 years, subject to restatement at the Selic rate. In December 2021, the Company signed the Terms of Authorization for these radio
frequencies, generating the accounting of an intangible asset related to the licenses in the amount of R$ 884 million and the obligations
related to said licenses (among them, disbursements with costs of the public notice and disbursement obligations with the management entities
described below) in the amount of R$ 2,680 million.
Aiming
to fulfill the additional obligations, the Company foresees, according to the notice, that there will the constitution of managing entities,
which are only intended to fulfill the commitments provided for in the Auction. The companies that win the Auction must disburse only
the amounts provided for in the public notice so that such entities comply with the defined obligations. There are additional obligations
provided for related to 3.5GHz radio frequency (the band cleaning obligation, interference solution, among others), which must be complied
with by the Band Management Entity (“EAF”), and related to 26GHz radio frequency (connectivity project for public schools),
which must be complied with by the Entity Managing the Connectivity of Schools (“EACE”).
On the signature date of the terms, in December 2021,
the 2.3GHz and 26GHz radio frequencies were readily available for use by the Company (operating assets), generating the registration
in 2021 in “Authorizations” of the amounts related to the licenses (R$ 614 million) and the obligations related to the
26GHz license, which will be fulfilled through EACE (R$ 550 million). The disbursements with EACE (R$ 633 million), provided
for in the Public Notice, will occur in 5 semi-annual installments between 2022 and 2024, and are monetarily restated by the IGP-DI.
The Company evaluated the application of the concept of adjustment to present value (“AVP”) upon initial recognition (R$ 83
million).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The 3.5GHz radio frequency was not readily available, requiring spectrum
cleaning activities to be available for use, and, thus, it was registered in assets in progress (R$ 270 million). Therefore, the
obligations related to this activity, to be carried out by EAF (R$ 2,104 million) were also recorded under assets in progress. The
disbursements with the EAF, as provided for in the Public Notice, were restated by the IGP-DI until the disbursement dates. Such disbursements
took place in 2 installments in 2022 (R$ 1,090 million in February and R$ 1,133 million in May) to EAF.
Furthermore, as described above, the Company capitalizes
loan costs for qualifying assets that require a substantial period of time to be in a condition for use as intended by Management. This
concept includes the 3.5GHz radio frequency. On June 30, 2023, the Company recorded R$ 82 million in intangible assets referring
to interest calculated based on the Selic rate (R$ 259 million in 2022) incurred on the 3.5GHz radio frequency and did not capitalize
the inflation adjustments of amounts due to EAF in 2023 since there is no further balance to disburse with this entity (R$ 99 million
in 2022). These balances were recorded as goods in progress until the asset was available for the use intended by Management. In the second
quarter of 2023, the asset was considered available for use by the Company, ceasing such capitalization. Thus, the transfer of goods in
progress to the line of authorizations in service was carried out.
Thus, the total effect on the Company’s intangible
assets on June 30, 2023 referring to 5G radio frequencies and related obligations was R$ 3,930 million (R$ 3,866 million in
2022) and there are no more balances of assets in progress relating to 5G licenses on June 30, 2023 (R$ 2,753 million in 2022) and
R$ 3,930 million in Authorizations (R$ 1,113 million in 2022).
When entering into a contract, the Company assesses whether the contracts
signed are (or contain) a lease. An agreement is (or contains) a lease if it transmits the right to control the use of an identified asset
for a period of time in exchange for consideration.
Leases whose the Company is a lessee are capitalized at the lease's commencement
at the lower of the fair value of the leased asset (right-of-use) and the present value of payments provided for in contract, and lease
liability as a counterparty. Interest related to the leases is taken to income as financial costs over the term of the contract.
Leases in which the Company, as a lessor, transfers substantially all the
risks and rewards of ownership to the other party (lessee) are classified as finance leases. These lease values are transferred from the
intangible assets of the Company and are recognized as a lease receivable at the lower of the fair value of the leased item and/or the
present value of the receipts provided for in the agreement. Interest related to the lease is taken to income as financial revenue over
the contractual term.
Asset leases are financial assets or liabilities classified and/or measured
at amortized cost.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Assets
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
LT Amazonas |
|
182,512 |
|
179,305 |
|
179,305 |
Sublease “resale stores” – IFRS 16 |
|
54,292 |
|
59,341 |
|
59,341 |
|
|
236,804 |
|
238,646 |
|
238,646 |
|
|
|
|
|
|
|
Current portion |
|
(29,036) |
|
(30,643) |
|
(30,643) |
Non-current portion |
|
207,768 |
|
208,003 |
|
208,003 |
The table below presents the schedule of cash receipts for the agreement
currently in force, representing the estimated receipts (nominal values) in the signed agreements. These balances differ from those shown
in the books since, in the case of the latter, the amounts are shown at present value.
The amounts below represent the parent company and consolidated balances.
|
Up to June 2024 |
July 2024 to June 2029 |
July 2029 onwards |
Nominal values |
Present value |
|
55,433 |
196,058 |
129,005 |
380,496 |
236,804 |
LT Amazonas (i) |
30,811 |
155,509 |
128,902 |
315,222 |
182,512 |
Sublease “resale stores” – IFRS 16 |
24,622 |
40,549 |
103 |
65,274 |
54,292 |
(i) LT Amazonas
As a result of the contract signed with LT Amazonas, the Company signed
network infrastructure sharing agreements with Telefónica Brasil S.A. In these agreements, the company and Telefónica Brasil
S.A. share investments made in the Northern Region of Brazil. The company has monthly amounts receivable from Telefónica Brasil
S.A. for a period of 20 years, adjusted annually by the IPC-A. The discount rate used to calculate the present value of the installments
due is 12.56% per annum, considering the date of signing the agreement.
(ii) Subleases - Stores - IFRS 16
The Company, due to sublease agreements for third parties in some of its
stores, recognized the present value of short and long term receivables, which are equal in value and term to the liability cash flows
of the contracts called “resale stores”. The impact on lease liabilities is reflected in the group “Leases - Shops &
Kiosks and Real Estate”.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Liabilities
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
LT Amazonas (i) |
|
334,701 |
|
327,505 |
|
327,505 |
Sale of Towers (leaseback) (ii) |
|
1,713,985 |
|
1,730,214 |
|
1,730,214 |
Other (iv) |
|
156,070 |
|
158,314 |
|
158,314 |
Subtotal |
|
2,204,756 |
|
2,216,033 |
|
2,216,033 |
|
|
|
|
|
|
|
Other leases (iii): |
|
|
|
|
|
|
Leases – Network Infrastructure |
|
6,039,042 |
|
4,084,433 |
|
6,123,914 |
Leases - Shops & kiosks & real estate |
|
766,647 |
|
746,028 |
|
746,028 |
Leases - Land (Network) |
|
3,193,133 |
|
1,820,804 |
|
2,664,315 |
Leases – Fiber |
|
897,971 |
|
1,081,575 |
|
1,081,575 |
Subtotal leases IFRS 16 / CPC 06 (R2) |
|
10,896,793 |
|
7,732,840 |
|
10,615,832 |
Total |
|
13,101,549 |
|
9,948,873 |
|
12,831,865 |
|
|
|
|
|
|
|
Current portion |
|
(2,106,253) |
|
(1,353,869) |
|
(2,257,211) |
Non-current portion |
|
10,995,296 |
|
8,595,004 |
|
10,574,654 |
The amount of interest paid in the period ended June 30, 2023 related
to IFRS 16 / CPC 06 (R2) in the parent company was R$ 556,128 (R$ 743,907 in the year ended December 31, 2022) and in consolidated,
R$ 1,001,311 in the year ended December 31, 2022.
In accordance with CPC 15 (R1), in a business combination, lease liabilities
must be measured at the present value of the remaining lease balance as if the lease agreement acquired was a new lease agreement on the
acquisition date. The impact on Lease Liabilities on the acquisition date (April 20, 2022) was R$ 2,929,449 (Note 1.2.1).
In 2023, the amount of R$ 57 million was paid, referring to fines
applied related to the decommissioning process of sites acquired from Cozani (merged on April 01, 2023).
Changes to the lease liabilities are shown in note 37.
The table below presents the future payment schedule for the agreements
in force, representing the estimated disbursements (nominal values) in the signed agreements. These nominal balances differ from those
shown in the books since, in the case of the latter, the amounts are shown at present value:
Parent Company
|
Up to June 2024 |
July 2024 to June 2029 |
July 2029 onwards |
Nominal values |
Present value |
Total - Lease liability |
3,045,899 |
8,931,318 |
9,356,997 |
21,334,214 |
13,101,549 |
|
|
|
|
|
|
LT Amazonas (i) |
69,086 |
295,376 |
245,001 |
609,463 |
334,701 |
Sale and leaseback of Towers (ii) |
305,958 |
1,455,413 |
1,768,940 |
3,530,311 |
1,713,985 |
Other (iii) |
38,799 |
151,550 |
13,841 |
204,190 |
156,070 |
|
|
|
|
|
|
Total other leases (iv) |
2,632,056 |
7,028,979 |
7,329,215 |
16,990,250 |
10,896,793 |
Leases – Network infrastructure |
1,300,160 |
4,033,783 |
4,130,940 |
9,464,883 |
6,039,042 |
Leases - Shops & kiosks & real estate |
206,893 |
538,205 |
487,376 |
1,232,474 |
766,647 |
Leases - Land (Network) |
614,385 |
1,974,874 |
2,710,899 |
5,300,158 |
3,193,133 |
Leases – Fiber |
510,618 |
482,117 |
- |
992,735 |
897,971 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
i) LT Amazonas
The Company executed agreements for the right to use the infrastructure
of companies that operate electric power transmission lines in Northern Brazil (“LT Amazonas”). The terms of these agreements
are for 20 years, counted from the date on which the assets are ready to operate. The contracts provide for monthly payments to the electric
power transmission companies, restated annually at the IPCA.
The discount rate used to calculate the present value of the installments
due is 14.44% per annum, considering the signing date of agreements with transmission companies.
ii) Sale and leaseback of Towers
The Company entered into two Sales Agreements with American Tower do Brasil
Cessão de Infraestruturas Ltda. (“ATC”) in November 2014 and January 2015 for up to 6,481 telecommunications towers
then owned by TIM Celular, for an amount of approximately R$ 3 billion, and a Master Lease Agreement (“MLA”) for part
of the space on these towers for a period of 20 years from the date of transfer of each tower, under a sale and leaseback transaction,
with a provision for monthly rental amounts depending on the type of tower (greenfield or rooftop). The sales agreements provided for
the towers to be transferred in tranches to ATC, due to the need to meet certain conditions precedent.
In total, 5,873 towers were transferred, being 54,336 and 5,483 in the
years 2017, 2016 and 2015, respectively. This transaction resulted in a sales amount of R$ 2,651,247, of which R$ 1,088,390
was booked as deferred revenue and will be amortized over the period of the contract (note 23).
The discount rates used at the date of the transactions, ranging from 11.01%
to 17.08% per annum, were determined based on observable market transactions that the company (the lessee) would have to pay on a similar
lease and/or loan.
(iii) It is substantially represented by lease transactions in transmission towers.
(iv) Other leases:
In addition to lease agreements mentioned above, the Company also has lease
agreements that qualify within the scope of IFRS 16 / CPC 06 (R2).
The present value, principal and interest value on June 30, 2023 for
the above contracts was estimated month-to-month, based on the average incremental rate of the Company’s loans, namely 14.08% (13.24%
in 2022).
Lease agreements within the scope of IFRS 16/CPC 06 (R2) acquired
through the acquisition from Cozani were remeasured on the acquisition date to reflect the Company’s expectation of the lease term
and average incremental rate of loans. The amount recorded on the acquisition date was R$ 2,929,449.
The lease amounts considered low-value or short-term (less than 12 months)
were recognized as rental expenses and totaled R$ 16,357 on June 30, 2023 (R$ 40,723 on December 31, 2022).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 18. | Regulatory credits recoverable |
These refer to Fistel credit amounts arising from the reduction of the
client base, which may be offset by future changes in the base, or used to reduce future obligations, and are expected to be used in the
reduction of the TFF contribution (operating supervision fee) due to Anatel.
On June 30, 2023, this credit is R$ 80,218 (R$ 26,519 on December
31, 2022).
Accounts payable to suppliers are obligations payable for goods or services
that were acquired in the usual course of business. They are initially recognized by fair value and subsequently measured by amortized
cost using the effective interest rate method. Given the short maturity of these obligations, in practical terms, they are usually recognized
at the value of the corresponding invoice.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Supplier |
3,650,934 |
|
4,385,356 |
|
4,237,229 |
|
|
|
|
|
|
Local currency |
3,261,597 |
|
4,089,977 |
|
3,940,624 |
Suppliers of materials and services (i) |
3,167,581 |
|
4,003,003 |
|
3,842,435 |
Interconnection (ii) |
63,726 |
|
64,228 |
|
67,724 |
Roaming (iii) |
211 |
|
603 |
|
1,857 |
Co-billing (iv) |
30,079 |
|
22,143 |
|
28,608 |
|
|
|
|
|
|
Foreign currency |
389,337 |
|
295,379 |
|
296,605 |
Suppliers of materials and services (i) |
169,093 |
|
161,042 |
|
161,042 |
Roaming (iii) |
220,244 |
|
134,337 |
|
135,563 |
|
|
|
|
|
|
Current portion |
3,650,934 |
|
4,385,356 |
|
4,237,229 |
(i) Represents the amount to be paid to suppliers in the acquisition of
materials and in the provision of services applied to the tangible and intangible asset or for consumption in the operation, maintenance
and administration, in accordance with the terms of the contract between the parties.
(ii) Refers to as the use of the network of other fixed and mobile operators
such cases where calls are initiated on the TIM network and terminated on the other operators.
(iii) Refers to calls made when the customer is outside their registration
area and is considered a visitor on the other network.
(iv) Refers to calls made by the customer when choosing another long-distance
operator.
The Company entered into contracts with banks to assist its suppliers who
requested drawee risk operations. In such operations, suppliers transfer their credit rights against the Company to the banks, with no
right of recourse, aiming to receive them in advance by applying a discount. After carrying out the operations, the Company currently
has the banks as creditors of the notes assigned by the suppliers in the original value and term of the assigned credit rights, without
any associated financial charge or benefit. Trade notes payable related to these operations remain classified under “suppliers”. On
June 30, 2023, the Company has approximately R$ 116 million (R$ 260 million as of December 31, 2022) related to the drawee risk
operation.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 20. | Authorizations payable |
On June 30, 2023 and December 31, 2022, the Company and its subsidiary
have the following commitments with ANATEL:
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Renewal of authorizations (i) |
225,591 |
|
216,627 |
|
231,801 |
Updated ANATEL liability (ii) |
184,0 |
|
186,307 |
|
186,307 |
Authorizations payable (iii) |
1,190,444 |
|
1,255,282 |
|
1,255,282 |
|
1,600,100 |
|
1,658,216 |
|
1,673,390 |
|
|
|
|
|
|
Current portion |
(510,706) |
|
(507,685) |
|
(507,685) |
Non-current portion |
1,089,394 |
|
1,150,531 |
|
1,165,705 |
| (i) | To provide the SMP, the Company obtained authorizations
of the right to use radio frequency for a fixed term, renewable.[13] In the option for the extension of the right of this use,
it is due the payment of the amount of 2% on the net revenue of the region covered by the authorization that ends each biennium. As of
June 30, 2023, the balances falling due related to the renewal of Authorizations in the parent company were R$ 184,065 (R$ 216,627
as of December 31, 2022) and represented the amount of R$ 231,801 as of December 31, 2022. |
| (ii) | On December 5, 2014, the company signed the authorization
term of the 700 MHz band and paid the equivalent of R$1,678 million, recording the remaining balance in the amount of R$ 61 million as
commercial liability, according to the payment method provided for in the notice. |
On June 30, 2015, the company filed a lawsuit questioning the
collection of the excess nominal value of R$ 61 million, restated at GP-DI totaling R$ 226 million (R$ 186 million as of
December 31, 2022), which is still pending trial.
| (iii) | As described in Note 16.f, in November 2021,
TIM participated in the 5G Auction of the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands for the deployment of the 5th Generation mobile
telephony, winning several lots in these radio frequencies. In December 2021, the Terms of Authorization were signed, characterizing the
actual acquisition of the right over the lots of these radio frequencies. |
For the amounts related to radio frequencies (R$ 884 million
upon initial registration), Selic rate interest is levied, and the Company will make annual payments for a period of 20 years (1st
installment paid in December 2021 and 2nd installment paid in December 2022 in the amounts of R$ 46,274 and
R$ 52,005, respectively). Regarding amounts related to disbursement obligations with EAF and EACE entities (R$ 2,737 million
upon initial registration, of which R$ 2,654 million net of adjustment do present value), there is a monetary restatement by IGP-DI,
and disbursements will occur until 2024. The contributions to EAF were fully made in 2022 (R$ 1,090 million in February and R$ 1,133
million in May). The first contribution from EACE took place in April 2022, in the amount of R$ 137 million; the first contribution
to EACE took place in October 2022, in the amount of R$ 134 million, while the third contribution took place in April 2023, in the
amount of R$ 134 million (the three contributions totaled R$ 405 million).
[13] The renewal time varies according to the bid notice and extension conditions
approved by the Agency.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
On June 30, 2023, the outstanding balance, considering the amounts
related to radio frequencies and contributions to be made in the EACE entity, is R$ 1,190 million (R$ 1,255 million as of December 31,
2022).
The authorizations payable on June 30, 2023 due in long-term is in
accordance with the following schedule:
|
|
Parent Company |
|
|
June 2023 |
2024 |
|
247,628 |
2025 |
|
55,689 |
2026 |
|
55,689 |
2027 |
|
55,689 |
2028 |
|
55,689 |
2029 |
|
55,689 |
2030 |
|
55,689 |
>2031 |
|
507,632 |
|
|
1,089,394 |
The primary authorizations held by TIM S.A. on June 30, 2023, as well
as their expiration dates, are shown in the table below:
|
|
Maturity date |
Authorization instruments |
800 MHz,
900 MHz and
1,800 MHz |
Additional frequencies
1800 MHz |
1900 MHz and
2100 MHz
(3G) |
2500 MHz
V1 band
(4G) |
2500 MHz
(P band)
(4G) |
700 MHz
(4G) |
2.3 GHz
(5G) |
3.5 GHz
(5G) |
26 GHz
(5G) |
Amapá, Roraima, Pará, Amazonas and Maranhão |
Mar 2031 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
Part of AR92 (PA), Feb 2024 |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Rio de Janeiro and Espírito Santo |
Mar 2031 |
ES - Dec 2032 |
Apr 2038 |
Oct 2027 |
Part of AR21 (RJ), Feb 2024 |
Dec 2029 |
Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, Tocantins, Distrito Federal, Goiás, Rio Grande do Sul (except county of Pelotas and region) and municipalities of Londrina and Tamarana in Paraná |
Mar 2031 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
Part of AR61 (DF), Feb 2024 |
Dec 2029 |
South – Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
São Paulo |
Mar 2031 |
Previous balance - December 2032 |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
|
|
|
|
|
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Paraná (except counties of Londrina and Tamarana) |
Nov 2028 (800MHz); Dec 2032 (900 & 1800MHz) |
Dec 2032 |
Apr 2038 |
Oct 2027 |
AR41, except Curitiba and the Metropolitan Region, Feb 2024
AR41, Curitiba and Metropolitan Region, July 2031 |
Dec 2029 |
Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
Santa Catarina |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
Municipality and region of Pelotas, in the state of Rio Grande do Sul |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
Pernambuco |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
Part of AR81, July 2031 |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Ceará |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Paraíba |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Rio Grande do Norte |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Alagoas |
Dec 2023 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Piauí |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Minas Gerais (except the counties of Sector 3 of the PGO for 3G radio frequencies, leftovers and 5G) |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
Part of AR31, Feb 2030 |
Dec 2029 |
Dec 2041 |
Dec 2041 |
Dec 2031 (lots I&J) & Dec 2041 (lot H) |
Bahia and Sergipe |
800 MHz – Nov 2028 1800 MHz – Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
- |
Dec 2029 |
- |
Dec 2041 |
Dec 2031 |
Terms already renewed for 15 years.
Only complementary areas in specific states.
Considering the Acquisition and consequent dissolution of Cozani, the authorizations
held primarily by Cozani that currently make up the list of radio frequencies held by TIM, are shown in the table below:
|
Maturity date |
Authorization instruments |
900 MHz |
1,800 MHz |
Additional frequencies
1800 MHz |
1,900 MHz and
2,100 MHz |
2,500 MHz
V2 band |
SP (except AR 11) |
- |
Dec 2032 |
- |
- |
Oct 2027 |
SP (AR 11) |
|
Dec 2032 |
- |
- |
Oct 2027 |
Paraná and Santa Catarina |
Dec 2032 |
Dec 2032 |
- |
- |
Oct 2027 |
Acre, Rondônia, Mato Grosso, Tocantins, Distrito Federal |
Dec 2032 |
Dec 2032 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
Rio Grande do Sul |
Dec 2032 |
- |
Dec 2032 |
- |
Oct 2027 |
Mato Grosso do Sul (Sector 22) and Goiás (Sector 25) |
Dec 2032 |
Dec 2032 |
- |
Apr 2038 |
Oct 2027 |
Mato Grosso do Sul (except Sector 22) and Goiás (except Sector 25) |
Dec 2032 |
Dec 2032 |
Dec 2032 |
Apr 2038 |
Oct 2027 |
|
|
|
|
|
|
|
Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas |
Mar 2031 |
Mar 2031 |
- |
- |
Oct 2027 |
Rio de Janeiro and Espírito Santo |
Mar 2031 |
- |
- |
- |
Oct 2027 |
Amazonas, Roraima, Amapá, Pará, Maranhão, Minas Gerais and Espírito Santo |
- |
Mar 2031 |
- |
- |
Oct 2027 |
Bahia, Sergipe, Rio de Janeiro and Minas Gerais |
- |
- |
- |
Apr 2038 |
Oct 2027 |
Terms already renewed for 15 years.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
They are classified as financial liabilities measured at the amortized
cost, and represented by non-derivative financial liabilities that are usually traded before maturity.
In the initial recognition, they are recorded at the fair value and after
the initial recognition they are measured based on the effective interest rate method. Appropriations of financial expenses according
to the effective interest rate method are recognized in income, under financial expenses.
|
|
|
|
Parent Company |
|
Consolidated |
Description |
Currency |
Charges |
Maturity |
June 2023 |
December 2022 |
December 2022 |
KFW Finnvera (ii) |
USD |
Libor 6M+ 0.75% p.a. |
Jan 2024–Dec 2025 |
119,820 |
173,381 |
173,381 |
Scotia¹ (ii) |
USD |
1.2410–3.2300% p.a. |
Dec 2023–Apr 2024 |
1,448,770 |
1,568,683 |
1,568,683 |
BNP Paribas (ii) |
BRL |
7.0907% p.a. |
Jan 2024 |
514,870 |
515,265 |
515,265 |
Debêntures² (ii) |
BRL |
IPCA + 4.1682% p.a. (i) |
June 2028 |
1,838,606 |
1,771,797 |
1,771,797 |
BNDES (i) |
BRL |
IPCA + 4.2283% p.a. |
Nov 2031 |
393,791 |
394,139 |
394,139 |
BNB³ (i) |
BRL |
IPCA + 1.2228%–1.4945% |
Feb 2028 |
230,819 |
249,400 |
249,400 |
BNDES (i) |
BRL |
TJLP + 1.95% p.a. |
Aug 2025 |
242,899 |
297,160 |
297,160 |
Total |
|
|
|
4,789,575 |
4,969,825 |
4,969,825 |
|
|
|
|
|
|
|
Current |
|
|
|
(2,170,578) |
(1,264,967) |
(1,264,967) |
Non-current |
|
|
|
2,618,997 |
3,704,858 |
3,704,858 |
¹ Rates on outstanding debts on 12/31/2022 with Scotia Bank are between
1.4748% and 3.2300% p.a.
² The
automatic decrease of up to 0.25 bps is estimated in remunerative interest and will comply with sustainable targets established in the
indenture.
³ BNB interest rates already include a 15% discount for payment.
4 The debt with KFW Finninvera had its index amended, changing
from Libor to SOFR, with the first fixing valid from January/2024.
Insurances
(i) Certain receivables from TIM S.A.;
(ii) Do not have a guarantee.
The Company's financing, contracted with BNDES, was obtained for the
expansion of the mobile telephone network and has restrictive contractual clauses that provide for the fulfilment of certain financial
and non-financial rates calculated every quarter. Financial indices are: (1) Shareholders' equity over total assets; (2) EBITDA on net
financial expenses; (3) Total financial debt on EBITDA and (4) Short-term net financial debt to EBITDA. The Company has been complying
with all the established ratios.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The table below shows the position of financing and available lines
of credit:
|
|
|
|
|
Remaining amount |
|
Type |
Currency |
Date of opening |
Term |
Total value |
Amount used up to June 30, 2023 |
BNB (i) |
IPCA |
Jan 2020 |
July 2023 |
752,479 |
503,351 |
249,128 |
Total R$: |
|
|
|
752,479 |
503,351 |
249,128 |
Objective:
(i) Support to TIM's investment plan for the years 2020 to 2022
in the region of operation of Banco do Nordeste do Brasil.
Company’s loans and financing on June 30, 2023 due in long-term is
in accordance with the following schedule:
2024 |
|
|
135,709 |
2025 |
|
|
200,358 |
2026 |
|
|
719,718 |
2027 |
|
|
719,718 |
2028 |
|
|
680,993 |
2029 |
|
|
55,714 |
2030 |
|
|
55,714 |
2031 |
|
|
51,073 |
|
|
|
2,618,997 |
The nominal value of the loans and financing is consistent with their respective
payment schedule.
|
|
Nominal value |
|
|
|
2023 |
|
1,069,820 |
2024 |
|
1,236,468 |
2025 |
|
200,358 |
2026 |
|
719,718 |
2027 |
|
719,718 |
2028 |
|
680,993 |
2029 |
|
55,714 |
2030 |
|
55,714 |
2031 |
|
51,071 |
|
|
4,789,574 |
Fair value of loans
In Brazil, there is no consolidated long-term debt market with the characteristics
verified in the financing obtained from KFW Finnvera, which has the Finnish development agency Finnvera as guarantor. Both are financing
for the purchase of equipment and, therefore, have a character of subsidy and promotion of commercial activity between the company and
certain suppliers. For the purposes of fair value analysis, considering the characteristics of this transaction, the company understands
that its fair value is equal to that recorded on the balance sheet.
With respect to proceeds contracted with the Bank of Nova Scotia, BNP
Paribas, Debentures and BNDES and BNB, the fair value of these loans is considered to be the present value of the long position of the
swap contracts that protect the Company from changes in exchange rates and interest. The fair value of the operations on June 30, 2023
is, respectively, R$ 1,418,534, R$ 40,560, R$ 1,800,588, R$ 380,155 and R$ 214,085.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 22. | Taxes, fees and contributions payable |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Taxes, fees and contributions payable |
2,600,183 |
|
2,140,218 |
|
2,291,267 |
|
|
|
|
|
|
Value added tax on goods and services - ICMS |
218,583 |
|
212,043 |
|
222,120 |
ANATEL’s taxes and fees (i) |
2,171,356 |
|
1,698,025 |
|
1,798,967 |
Imposto sobre Serviço [Service tax] - ISS |
65,465 |
|
65,881 |
|
65,664 |
PIS/COFINS [Social integration program/Social security] |
67,319 |
|
62,324 |
|
102,157 |
Other (ii) |
77,460 |
|
101,945 |
|
102,359 |
|
|
|
|
|
|
Current portion |
(2,588,106) |
|
(2,126,678) |
|
(2,277,727) |
Non-current portion |
12,077 |
|
13,540 |
|
13,540 |
(i) In 2020, to minimize the impacts of the pandemic, Provisional Act 952,
dated April 15, 2020, was enacted, authorizing the postponement of payment of taxes, such as TFF, Condecine and CFRP, in the amount of
R$ 790 million, to August 31, 2020. In the third quarter of 2020, the Company made a partial payment in the amount of R$ 300
million referring to CFRP and Condecine, but due to a preliminary injunction in court, there was no need to pay the Fistel (TFF) in the
amount of R$ 490 million, which remains outstanding until the final and unappealable decision.
In 2021, there was the partial payment of fees of approximately R$ 300
million related to CFRP and Condecine and the remaining amount of R$ 480 million related to 2021 Fistel (TFF) remains suspended,
with no defined date for payment based on injunction also issued by the Regional Court of the 1st Region.
In 2022, there was the partial payment of fees of approximately R$ 300
million related to CFRP and Condecine and the remaining amount of R$ 482 million related to 2022 Fistel (TFF) remains suspended,
with no defined date for payment based on injunction also issued by the Regional Court of the 1st Region.
Until December 31, 2022, there was the recognition of R$ 215.6 million
in default interest on Fistel (TFF) amounts related to fiscal years 2020, 2021 and 2022 with suspended payment by preliminary injunction
and R$ 52.6 million recorded in 2021 and R$ 163 million in 2022.
In 2023, the amount related to the principal of TFF is BRL 265 million
and there was recognition of BRL 120 million in interest for late payment on the Fistel amounts (TFF) for the years 2020, 2021, 2022 and
2023, adjusted until June 30, 2023.
(ii) The breakdown of this account mainly refers to the company's adhesion
to the Tax Recovery Program – REFIS from 2009 for payment of installments of the outstanding debts of federal taxes (PIS –
Social Integration Program, COFINS – Contribution to Social Security Financing, IRPJ – Corporate Income Tax and CSLL –
Social Contribution on Net Profit), whose final maturity will be on October 31, 2024.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Deferred revenue |
906,500 |
|
889,441 |
|
932,029 |
|
|
|
|
|
|
Prepaid services (i) |
196,011 |
|
151,355 |
|
193,944 |
Government grants (ii) |
- |
|
860 |
|
860 |
Anticipated revenue |
41,350 |
|
43,561 |
|
43,561 |
Deferred revenues on sale of towers (iii) |
653,683 |
|
680,731 |
|
680,731 |
Contractual liabilities (iv) |
15,456 |
|
12,934 |
|
12,933 |
|
|
|
|
|
|
Current portion |
(268,686) |
|
(222,829) |
|
(265,417) |
Non-current portion |
637,814 |
|
666,612 |
|
666,612 |
(i) Referring to the recharge of voice credits and data not yet used by
customers relating to prepaid system services that are appropriate to the result when the actual use of these services by customers.
(ii) Referring to the release of resources related to the financing line
with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to June 30, 2023 is R$ 203 million. The
Company has no outstanding balances as of June 30, 2023 (R$ 860 as of December 31, 2022). This amount was amortized by the lifespan
of the financed asset and was appropriated in the group of “other net revenues (expenses)” (note 30).
(iii) Referring to the amount of revenue to be appropriated by the sale
of the towers (note 17).
(iv) Contracts with customers. The table below includes information on
the portion of trade accounts receivable, from which contractual assets and liabilities originate.
The balances on June 30, 2023 and December 31, 2022, presented below, represent
the individual and consolidated amounts.
|
June 2023 |
|
December 2022 |
|
|
|
|
Accounts receivable included in trade accounts receivable |
2,306,389 |
|
2,182,403 |
Contractual assets |
17,053 |
|
19,828 |
Contractual liabilities |
(15,456) |
|
(12,934) |
The contracts with customers gave rise to the allocation of discounts under
combined loyalty offers, where the discount may be given on equipment and / or service, generating a contractual asset or liability, respectively,
depending on the nature of the offer in question.
Summary of the main variations in the period.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Contractual assets (liabilities) |
|
|
Balance on January 1, 2023 |
6,894 |
Additions |
5,435 |
Write-offs |
(10,732) |
Balance at June 30, 2023 |
1,597 |
|
Contractual assets (liabilities) |
|
|
Balance at January 1, 2022 |
2,326 |
Additions |
25,660 |
Write-offs |
(23,789) |
Balance at June 30, 2022 |
4,197 |
The balances of contractual assets and liabilities that represent the individual and consolidated
balances are expected to be realized according to the table below:
|
2023 |
2024 |
2025 |
Contractual assets (liabilities) |
3,629 |
(1,864) |
(167) |
|
|
|
|
The Company in line with paragraph 121 of IFRS 15, is not presenting
the effects of information on customer contracts with terms of duration of less than 1 year.
| 24. | Provision for judicial and administrative proceedings |
The Company is an integral part in judicial and administrative
proceedings in the civil, labor, tax and regulatory spheres, which arise in the normal course of its business.
The provision is constituted based on the opinions of the company's legal
advisors and management, for amounts considered sufficient and adequate to cover losses and risks considered probable. Situations where
losses are considered probable and possible are recorded and disclosure, respectively, by their updated values, and those in which losses
are considered remote are not disclosed.
The amounts below represent individual and consolidated balances.
The provision for judicial and administrative proceedings constituted,
updated, is composed as follows:
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Provision for judicial and administrative proceedings |
1,288,667 |
|
1,112,153 |
|
1,112,156 |
|
|
|
|
|
|
Civil (a) |
513,178 |
|
392,972 |
|
392,976 |
Labor (b) |
215,276 |
|
214,450 |
|
214,450 |
Tax (c) |
527,380 |
|
473,391 |
|
473,390 |
Regulatory (d) |
32,833 |
|
31,340 |
|
31,340 |
The changes in the provision for judicial and administrative proceedings,
consolidated amounts, are summarized below:
|
December 2022 |
|
Additions, net of reversals |
|
Payments |
|
Currency update |
|
June 2023 |
|
|
|
|
|
|
|
|
|
|
|
1,112,156 |
|
172,935 |
|
(161,290) |
|
164,866 |
|
1,288,667 |
|
|
|
|
|
|
|
|
|
|
Civil (a) |
392,976 |
|
99,604 |
|
(91,126) |
|
111,724 |
|
513,178 |
Labor (b) |
214,450 |
|
44,872 |
|
(65,686) |
|
21,640 |
|
215,276 |
Tax (c) |
473,390 |
|
26,367 |
|
(3,014) |
|
30,637 |
|
527,380 |
Regulatory (d) |
31,340 |
|
2,092 |
|
(1,464) |
|
865 |
|
32,833 |
|
December 2021 |
|
Additions, net of reversals |
|
Payments |
|
Currency update |
|
Jun/22 |
|
|
|
|
|
|
|
|
|
|
|
960,881 |
|
120,643 |
|
(110,567) |
|
92,836 |
|
1,063,793 |
|
|
|
|
|
|
|
|
|
|
Civil (a) |
309,019 |
|
67,725 |
|
(60,359) |
|
50,096 |
|
366,481 |
Labor (b) |
192,132 |
|
38,240 |
|
(47,039) |
|
15,871 |
|
199,204 |
Tax (c) |
429,951 |
|
14,424 |
|
(3,036) |
|
26,165 |
|
467,504 |
Regulatory (d) |
29,779 |
|
254 |
|
(133) |
|
704 |
|
30,604 |
The Company is subject to several legal actions and administrative procedures
proposed by consumers, suppliers, service providers and consumer protection agencies and treasury agencies, which deal with various matters
that arise in the normal course of the entities’ business. The main processes are summarized below:
a.1 Consumer lawsuits
The company is a party in lawsuits related to various claims filed by consumers,
in the judicial and administrative spheres. The aforementioned actions in the amount provisioned of R$ 180,151 (R$ 179,132 on
December 31, 2022) refer mainly to alleged improper collection, cancellation of contract, quality of services, unilateral contract
amendment and undue negative entry.
a.2 Consumer Protection Agencies
TIM is a party to legal and administrative lawsuits filed by the Public
Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics,
discusses: (i) alleged failures in the provision of network services; (ii) questions of quality in service; (iii) alleged violations
of the SAC [customer service hotline] decree; (iv) alleged contractual violations; (v) alleged misleading advertising; and (vi) discussion
of the collection of loyalty fines, in cases of robbery and theft of the device. The amount provisioned is equivalent to R$ 263,299
(R$ 168,987 as of December 31, 2022).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
In the Public Civil Action 0019710-80.2013.8.07.0001, filed by the
Public Prosecutor’s Office of the Federal District against TIM, which discusses the alleged intentional disconnection of calls from
Infinity plan clients, an increase in the provision from R$ 10 million to R$ 50 million was made (updated amount of R$ 146
million restated), considering the decision issued on 03/15/2023 by the Superior Court of Justice (STJ), where the Interlocutory Appeal
filed by TIM in the Motion for Reconsideration against Special Appeal 1832217/DF was dismissed.
a.3 Former trading partners
TIM is a defendant in lawsuits proposed by former trade partners claiming,
among others, amounts on the basis of alleged non-compliance with agreements. The provisioned amount is R$ 35,336 (R$ 27,740
on December 31, 2022).
a.4 Other
TIM is a defendant in other actions of essentially non-consumer objects
proposed by the most diverse agents from those described above, in which, among others, it is discussed: (i) share subscription; (ii)
claims for civil liability indemnification; (iii) upon the alleged breach of the contract, the provisioned amounts are equivalent to R$ 32,391
(R$ 14,642 as of December 31, 2022).
a.5 Social and environmental and infrastructure
The Company is a party to lawsuits involving various agents who discuss
aspects related to licensing, among which environmental licensing and infrastructure licensing (installation/operation). The amounts involved
and provisioned are equivalent to R$ 2,001 (R$ 2,471 on December 31, 2022).
a.6 ANATEL
The Company is a party to lawsuits in front of ANATEL, in which it is discussed:
(i) debit related to the collection of 2% of revenues from Value - Added Services–VAS and interconnection; (ii) pro-rata inflation
adjustment applied to the price proposal defined in the notice for the use of 4G frequencies; and (iii) alleged non-compliance with service
quality targets. There is no provisioned amount corresponding to these lawsuits as of June 30, 2023 and December 31, 2022.
b. Labor and social security lawsuits
These are processes involving several labor claims filed by both former
employees, in relation to matters such as overtime, differences in variable remuneration and legal overcome in other contract funds, as
well as by former employees of service providers, all of whom, taking advantage of the labor laws in force require it to keep the Company
in compliance with labor obligations does not abide by contractors hired for that purpose. Regarding social security claims, the amounts
refer to the legal difference in the levy of social security contributions on certain payments made by the company’s employees.
From the total of 1,667 Labor claims on June 30, 2023 (1,628 on December 31,
2022) filed against the company, the majority relate to claims involving former employees of service providers followed by lawsuits from
employees of their own and social security. The provisioning of these claims totals R$ 215,276 updated monetarily (R$ 214,450
as of December 31, 2022).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
c. Tax proceedings
|
|
June 2023 |
|
December 2022 |
Federal taxes |
270,351 |
|
260,206 |
State taxes |
174,041 |
|
130,816 |
Municipal taxes |
9,169 |
|
8,550 |
TIM S.A. proceedings (Purchase price allocation) |
73,819 |
|
73,819 |
|
527,380 |
|
473,391 |
|
|
|
|
|
The total recorded provision is substantially composed of the following
processes whose indicated values are estimated by the indices established by the federal government for late taxes, being linked to the
variation in the SELIC rate.
Federal taxes
The provision for TIM S.A. supports 100 proceedings and is mainly composed
of the following lawsuits:
| (i) | The provision supports 60 lawsuits related to challenges
involving the levy on CIDE, CPMF, CSLL, IRRF operations. Of this total, the amounts involved in the legal proceedings that seek recognition
of the right not to collect the CPMF allegedly incident on simultaneous transactions of purchase and sale of foreign currency and exchange
of account ownership arising from corporate incorporation, whose provisioned values, updated, equal to R$ 4,410 (R$ 4,303 on
December 31, 2022). |
| (ii) | The Company constituted a provision for a process
aimed to collecting the pension contribution withheld at the rate of 11% to which, allegedly, payments made by the company to other legal
entities should have been submitted as remuneration for various activities, whose provisioned and updated value is R$ 43,581 (R$ 42,171
on December 31, 2022). |
| (iii) | There is a provision for three lawsuits related to
FUST/FUNTTEL and its resulting ancillary obligations. Of these, two cases stand out in which the dispute mainly revolves around the spontaneous
reporting of the fine for the payment of the FUST. The amount relating to the fine and interest on the contribution to the FUST for the
year 2009, where the voluntary reporting benefit is not being recognized, provisioned and adjusted for inflation, is R$ 16,719
(R$ 16,169 as of December 31, 2022). |
Additionally, in the second quarter of 2019, the Company constituted
the provision for the FUST process, which seeks the unconstitutionality and illegality of the collection of FUST. Lawsuit for the recognition
of the right not to collect Fust, failing to include in its calculation base the revenues transferred by way of interconnection and EILD
(Dedicated Line Industrial Exploitation), as well as the right not to suffer the retroactive collection of the differences determined
due to not observing sum 7/2005 of ANATEL, in the amount of R$ 66,165 (R$ 64,140 on December 31, 2022).
| (iv) | The company made a provision for federal compensation
processes arising from a repurchase carried out in 2006, for which the documentary support was not robust enough after appraisals carried
out. The provisioned and updated value is R$ 71,073 (R$ 67,815 on December 31, 2022). |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
State taxes
The provision for TIM S.A. supports 113 proceedings and is mainly composed
of the following lawsuits:
| (i) | amounts involved in the assessments claiming the
reversal of ICMS debts, as well as documentary support for the verification of appropriated credits by the Company, whose restated provisioned
amounts are equivalent to R$ 36,910 (R$ 24,811 as of December 31, 2022). |
| (ii) | amounts allegedly not offered for taxation for the
provision of telecommunications services, whose updated amount was R$ 7,028 (R$ 6,757 as of December 31, 2022); |
| (iii) | collections due to alleged differences in both goods
receipts and shipments, in a quantitative inventory count, whose restated amounts are equivalent to R$ 18,147 (R$ 17,471 as
of December 31, 2022); |
| (iv) | amounts allegedly improperly credited relating to
CIAP credits, whose updated amounts are equivalent to R$ 16,789 (R$ 11,943 on December 31, 2022); |
| (v) | credits related to tax replacement operations, whose
restated amounts total R$ 10,860 (R$ 10,392 on December 31, 2022). |
| (vi) | alleged non-collection or allegedly undue appropriation
of credits related to the ICMS rate differential (DIFAL), whose updated amounts total R$ 16,059 (R$ 16,220 on December 31, 2022).
|
| (vii) | charge on subscription fees without deductible, whose
updated amounts is R$ 10,283 (without correspondent on December 31, 2022). |
Municipal taxes
It is also worth noting the amounts involved in the assessments that questions
the withholding and collection of the ISS-source of third-party services without employment relationship, as well as the collection of
its own ISS corresponding to services provided in co-billing.
TIM S.A. proceedings (Purchase price allocation)
There are tax lawsuits arising from the acquisition of former Intelig (current
TIM S.A.) due to the former parent company of the TIM Participações, which comprise the process of allocating the acquisition
price of the former Intelig and amount to R$ 73,819 (R$ 73,819 as of December 31, 2022).
d. Regulatory processes
ANATEL filed administrative proceedings against the Company for: (i) non-compliance
with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance
with the SMP, SCM and STFC regulations, among others.
On June 30, 2023, the amount indicated for the procedures for the
determination of non-compliance with obligations (“PADOs”), considering the inflation adjustment, classified with risk of
probable loss is R$ 32,833 (R$ 31,340 on December 31, 2022).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
e. Judicial and administrative proceedings whose losses are assessed
as possible
The Company has actions of a civil, labor, tax and regulatory nature involving
risks of loss classified by its legal advisors and the administration as possible, for which there is no provision for legal and administrative
proceedings constituted, and no adverse material effects are expected in the quarterly information, according to the values presented
below:
|
|
|
June 2023 |
|
December 2022 |
|
|
|
|
|
20,770,529 |
|
20,123,806 |
|
|
|
|
Civil (e. 1) |
1,542,244 |
|
1,418,874 |
Labor and Social Security (e. 2) |
390,305 |
|
360,942 |
Tax (e. 3) |
18,647,813 |
|
18,171,345 |
Regulatory (e. 4) |
190,167 |
|
172,645 |
Legal and administrative proceedings whose losses are assessed as possible
and monitored by Management are disclosed at their updated values.
The main lawsuits with risk of loss classified as possible, are described below:
e.1. Civil
|
|
June 2023 |
|
December 2022 |
Consumer actions (e. 1. 1) |
136,808 |
|
141,858 |
ANATEL (e.1.2) |
308,853 |
|
293,203 |
Consumer protection bodies (e.1.3) |
475,833 |
|
455,481 |
Former trading partners (e.1.4) |
262,942 |
|
230,360 |
Social and environmental and infrastructure (e.1.5) |
136,214 |
|
116,613 |
Other (e.1.6) |
221,594 |
|
181,359 |
|
1,542,244 |
|
1,418,874 |
|
|
|
|
|
|
|
|
e.1.1 Consumer lawsuits
They mainly refer to actions for alleged improper collection, cancellation
of contract, quality of services, defects and failures in the delivery of devices and undue negative entry.
e.1.2 ANATEL
The Company is a party to lawsuits in front of ANATEL, in which it is discussed:
(i) debit related to the collection of 2% of revenues from Value - Added Services–VAS and interconnection; (ii) pro-rata inflation
adjustment applied to the price proposal defined in the notice for the use of 4G frequencies; and (iii) alleged non-compliance with service
quality targets.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
e.1.3 Consumer protection agencies
TIM is a party to legal and administrative lawsuits filed by the Public
Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics,
discusses: (i) alleged failures in the provision of network services; (ii) alleged failure in the delivery of handsets; (iii) alleged
non-compliance with state laws; (iv) hiring model and alleged improper charges of Value-Added Services-VAS; (v) alleged violations of
the SAC decree; (vi) alleged contractual violations; and (vii) blocking of data.
e.1.4 Former trading partners
TIM is a defendant in actions proposed by several former trading partners
in which are claimed, among others, values based on alleged contractual defaults.
e.1.5 Social and environmental and infrastructure
The Company is a party to lawsuits involving various agents that discuss
aspects related to (1) environmental licensing and structure licensing (installation/operation) and (2) (i) electromagnetic radiation
emitted by Telecom structures; (ii) renewal of land leases for site installation; (iii) dumping on leased land for site installation;
(iv) presentation of registering data, among others.
e.1.6 Other
TIM is a defendant in other actions of essentially non-consumer objects
proposed by the most diverse agents from those described above, in which, among others, it is discussed: (i) amounts supposedly due as
a result of share subscription; (ii) claims for civil liability indemnification; (iii) alleged breach of contract.
e.2. Labor and Social Security
e.2.1. Social Security
The Company is a defendant in proceedings referring to the legal difference
regarding the levy of social security contributions in certain payments of the company’s employees in the years 2005 to 2011, in
the total restated amount of R$ 87,130 (R$ 80,456 on December 31, 2022).
e.2.2. Labor
There are 3,240 Labor claims as of June 30, 2023 (3,384 as of December
31, 2022) filed against the company and with possible risk, concerning claims involving former employees and employees of service providers
in the amount of updated R$ 303,175 (R$ 280,486 as of December 31, 2022).
e.3. Tax
|
June 2023 |
|
December 2022 |
|
|
|
|
|
18,647,813 |
|
18,171,345 |
|
|
|
|
Federal taxes (e. 3.1) |
3,156,387 |
|
3,275,840 |
State taxes (e. 3. 2) |
10,031,144 |
|
9,640,939 |
Municipal taxes (e. 3. 3) |
1,652,383 |
|
1,587,910 |
FUST, FUNTTEL and EBC (e.3.4) |
3,807,899 |
|
3,666,656 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The values presented are corrected, in an estimated way, based on the SELIC
rate. The historical amount involved is R$ 13,119,412 (R$ 13,014,078 as of December 31, 2022).
e.3.1. Federal taxes
The total amount assessed against TIM in relation to federal taxes
is R$ 3,156,387 on June 30, 2023 (R$ 3,275,840 on December 31, 2022). Of this value, the following discussions stand out mainly:
| (i) | Allegation of alleged incorrect use of tax credits
for carrying out a reverse merger, amortization of goodwill paid on the acquisition of cell phone companies, deduction of goodwill amortization
expenses, exclusion of goodwill reversal, other reflections and disallowances of compensations and deductions paid by estimate, allegedly
improper use of the SUDENE benefit due to lack of formalization of the benefit at the Internal Revenue Service (RFB), and failure to pay
IRPJ and CSLL due by estimate. The amount involved is R$ 1,723,088 (R$ 1,579,257 on December 31, 2022). The Company was notified
of the decision on April 28, 2021 and, as a result, the partial payment of R$ 1.4 billion was confirmed. |
| (ii) | Offset method for tax losses and negative bases.
The amount involved is R$ 299,726 (R$ 265,163 on December 31, 2022). |
| (iii) | Collection of CSLL on currency changes arising from
swap transactions accounted for by the cash regime. The amount involved is R$ 75,561 (R$ 73,307 on December 31, 2022). |
| (iv) | Collection of IRRF [withholding income tax] on income
of residents abroad, including those remitted by way of international roaming and payment to unidentified beneficiaries, as well as the
collection of CIDE on payment of royalties on remittances abroad, including remittances by way of international roaming. The amount involved
is R$ 305,858 (R$ 292,662 on December 31, 2022). |
| (v) | Collection of IRPJ, PIS/COFINS and CSLL debits arising
from non-homologation or partial homologation of compensations made by the company from credits of withholding taxes on financial investments
and negative balance of IRPJ. The amount involved is R$ 307,853 (R$ 437,419 on December 31, 2022). |
e.3.2. State taxes
The total amount charged against TIM S.A. in respect of state taxes on
June 30, 2023 is R$ 10,031,144 (R$ 9,640,939 on December 31, 2022). Of this value, the following discussions stand
out mainly:
| (i) | Non-inclusion in the ICMS calculation basis of unconditional
discounts offered to customers, as well as a fine for the alleged failure to comply with a related accessory obligation, including for
the failure to present the 60i record of the SINTEGRA file. The amount involved is R$ 1,288,199 (R$ 1,236,502 on December 31,
2022). |
| (ii) | Use of tax benefit (program for the promotion of
integrated and sustainable economic development of the Federal District - PRÓ-DF) granted by the taxing entity itself, but later
declared unconstitutional, as well as alleged improper credit of ICMS
arising from the interstate purchase of goods with tax benefit granted in the state of origin. The amount involved is R$ 415,623 (R$ 394,834
on December 31, 2022). |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| (iii) | Credit reversal and extemporaneous credit related
to acquisitions of permanent assets. The amount involved is R$ 732,607 (R$ 694,479 on December 31, 2022). |
| (iv) | Credits and chargebacks of ICMS, as well as the identification
and documentary support of values and information released in customer accounts, such as tax rates and credits granted in anticipation
of future surcharges (special credit), as well as credits related to tax substitution operations and exempt and untaxed operations. On
June 30, 2023, the involved amount is R$ 4,082,209 (R$ 3,835,583 on December 31, 2022). |
| (v) | Use of credit in the acquisition of electricity directly
employed in the production process of companies. The amount involved is R$ 159,734 (R$ 154,673 on December 31, 2022). |
| (vi) | Alleged conflict between the information contained
in ancillary obligations and the collection of the tax, as well as specific questioning of fine for non-compliance with ancillary obligations.
The amount involved is R$ 937,989 (R$ 900,731 as of December 31, 2022). |
| (vii) | Alleged lack of collection of ICMS due to the gloss
of chargebacks related to the prepaid service, improper credit of ICMS in the outputs of goods allegedly benefited with reduction of the
calculation base, as well as an allegation of improper non-inclusion of Value-Added Services (VAS) of the ICMS calculation base. The amount
involved is R$ 658,062 (R$ 625,202 on December 31, 2022). |
| (viii) | Launch of credits related to the return of mobile
devices lent on loan. The amount involved is R$ 142,518 (R$ 136,243 on December 31, 2022). |
| (ix) | Collection of ICMS related to subscription services
and their alleged improper non-inclusion in the ICMS calculation base due to their nature. The amount involved is R$ 353,971 (R$ 330,805
on December 31, 2022). |
e.3.3. Municipal taxes
The total assessed amount against TIM S.A. regarding municipal taxes with
possible risk is R$ 1,652,383 on June 30, 2023 (R$ 1,587,910 on December 31, 2022). Of this value, the following discussions
stand out mainly:
| (i) | Collection of ISS, as well as the punitive fine for
the absence of the supposed tax due, on several revenue accounts of the company. The amount involved is R$ 1,362,928 (R$ 1,281,547
on December 31, 2022). |
| (ii) | Collection of ISS on importation of services or services
performed in other municipalities. The amount involved is R$ 89,935 (R$ 86,520 on December 31, 2022). |
| (iii) | Constitutionality of the collection of the functioning
supervision fee (TFF -Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The
amount involved is R$ 139,431 (R$ 149,764 on December 31, 2022). |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
e.3.4. FUST and FUNTTEL
The total amount charged against TIM S.A. in relation to the contributions
to FUST and FUNTTEL with a possible risk rating is R$ 3,807,899 (R$ 3,666,656 on December 31, 2022). The main discussion, whose
historical amount is R$ 2,209,383 (R$ 2,208,814 on December 31, 2022) involves the collection of the contribution to FUST and
FUNTTEL (Fund for the technological development of Telecommunications) from the issuance by ANATEL of Sum no. 07/2005, aiming, among others,
and mainly, the collection of the contribution to FUST and FUNTTEL on interconnection revenues earned by mobile telecommunications service
providers, from the validity of Law 9998/2000.
e.4. Regulatory
ANATEL filed administrative proceedings against the Company for: (i) non-compliance
with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance
with the SMP, SCM and STFC regulations, among others.
On June 30, 2023, the value indicated for the PADOs (procedure for
determining non-compliance with obligations), considering the inflation adjustment, classified with possible risk was R$ 190,167
(R$ 172,645 on December 31, 2022).
On June 18, 2020, ANATEL's Board of Directors unanimously approved TIM's
conduct adjustment term (TAC) 001/2020, which had been negotiated since 2014 with the regulator.
On June 19, 2020 the Board of Directors of the company approved the said
TAC after final deliberation of the regulator and the signing of the term took place on June 25 of the same year. The agreement covers
sanctions totaling approximately R$ 638,991 (updated at the time), filed as a result of commitments represented in improvement actions
related to the macro-topics “Quality”, “Access Expansion”, “Rights and Guarantees of Users” and “Inspection”.
The Term includes actions to improve three pillars of action-customer experience,
quality and infrastructure - through initiatives associated with improvements in the licensing process of stations, efficient use of numbering
resources, evolution of digital service channels, reduction of Complaint Rates, repair of users and strengthening of transport and access
networks, among others. In addition, it contemplates the additional commitment to bring mobile broadband, through the 4G network, to 350
municipalities with less than 30 thousand inhabitants thus reaching more than 3.4 million people. The new infrastructure was implemented
in three years – more than 99% of the municipalities were served in the first two years and the remaining three municipalities were
served in November 2022 – with the Company guaranteeing the sharing regime with the other operators.
With the closing of the 1st TAC Year, the following commitments were certified
by the Agency: Reparation, Fund for the Defense of Diffuse Rights – FDD (phase 1) and Notifications; Numbering; Interconnection;
INCOME TAX; IGQ; Impediment; Internal controls; LTE 700 MHz; New 4G; Backhaul; Licensing backlog; Scope Commitment; Personal assistance;
Digital relationship; and Additional Commitments.
In June 2022, TIM concluded the 2nd year of the Conduct
Adjustment Term (TAC) entered into with Anatel, having carried out the activities planned for strict compliance with the purpose of achieving
the associated targets. In September 2022, the Impediment Commitments, Internal Controls and Additional Commitments received certificates
from the Agency related to the 2nd year target. Structuring commitments (LTE 700 MHz; New 4G; Backhaul), Numbering Resources, Face-to-Face
Service, Collaborative Portal, Digital Relationship and additional Commitments, all received statements of fulfillment of their respective
targets in July 2023.
In October 2022, TIM and Anatel signed the Amendment to renegotiate the
commitment related to Quality Indicators. Thus, the Perceived Quality Index (IQP) will be adopted to replace the General Quality Index
(IGQ), discontinued by the Agency.
In June 2023, TIM concluded the 3rd year of the Conduct
Adjustment Term (TAC) entered into with Anatel, having carried out the activities planned for strict compliance with the purpose of achieving
the associated targets. Regarding the Additional Commitments, Anatel has already issued a statement of fulfillment of the obligation
relating to the third year of the TAC, thus guaranteeing the general statement of fulfillment of the obligation for the implementation
of SMP with 4G or later technology in 350 (three hundred and fifty) municipalities under the terms agreed in the TAC.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
In July 2023, TIM started the fourth and final year of the Consent Decree.
The Company will continue fully implementing the internal monitoring mechanisms through the quarterly report on the evolution of the schedules
by the Governance Office in Management and Board of Directors.
The Company has met the TAC implementation schedule and has reported its
understanding to Anatel in cases where the Agency indicates signs of non-compliance in the Procedures for Assessing the Non-Compliance
with a Schedule Item (PADIC) that may be implemented.
Regarding the extension of the term of the authorizations to use the radio
frequencies associated with the SMP, the Company becomes liable for the contractual burden on the net revenue arising from the service
plans marketed under each authorization. However, since 2011 ANATEL began to include in the basis of calculation of said burden also the
revenues obtained with interconnection, and from 2012, and subsequent years, the revenues obtained with Value-Added Services, among others.
In the company's opinion, the inclusion of such revenues is improper because it is not expressly provided for in the terms of original
authorizations, so the collections received are discussed in the administrative and/or judicial sphere.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
Other liabilities |
607,261 |
|
192,884 |
|
732,367 |
|
|
|
|
|
|
Provision for future asset decommissioning |
236,889 |
|
23,659 |
|
289,606 |
Advance from customers |
21,092 |
|
12,887 |
|
15,068 |
Onerous capacity contract (i) |
150,559 |
|
- |
|
178,532 |
Other provisions for risk |
64,809 |
|
- |
|
83,923 |
Other (ii) |
133,912 |
|
156,338 |
|
165,238 |
Current portion |
(136,978) |
|
(21,327) |
|
(132,954) |
Non-current portion |
470,283 |
|
171,557 |
|
599,413 |
(i) As part of the Cozani acquisition, a transferred capacity contract
was identified in the transaction, where there is a take or pay obligation for a defined term. The amount recorded refers to the portion
of capacity that will not be used for the remaining contractual term.
(ii) On June 23, 2022, Complementary Law 194 was enacted, which, in short,
amended Law 5172, of October 25, 1966 (National Tax Code), and Complementary Law 87, of September 13, 1996 (Kandir Law), to consider essential
goods and services related to fuels, electric power, communications and collective transport and, as a consequence, pointed to the reduction
of ICMS on revenues earned by companies in such industries.
The Company will proactively transfer its effects to its customers, according
to the nature of its plans. However, such transfer depends on systemic developments that are in progress and will be concluded during
the course of 2023. On June 30, 2023, the amount of R$ 78.6 million (R$ 117 million on December 31, 2022) is recorded
under “Other”, referring to the difference between the amount of the tax rate reduction defined in the Complementary Law and
the amounts previously due, corresponding to the period necessary to carry out said systemic developments.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
a. Share capital
The share capital is recorded by the amount effectively raised from the
shareholders, net of the costs directly linked to the funding process.
The subscribed and paid-up share capital on June 30, 2023, is represented
by 2,420,804,398 common shares (2,420,804,398 common shares on December 31, 2022).
The Company is authorized to increase its share capital, by resolution
of the Board of Directors, regardless of statutory reform, up to the limit of 4,450,000,000 common shares.
b. Capital reserves
200 of Law No. 6,404/76, which provides for Joint-Stock Companies. This
reserve is composed as follows:
|
June 2023 |
|
December 2022 |
|
|
|
|
|
419,413 |
|
408,602 |
|
|
|
|
Special Reserve of goodwill |
353,604 |
|
353,604 |
Long-term incentive plan |
65,809 |
|
54,998 |
b.1 Special Reserve of goodwill
The special reserve of goodwill was constituted from the incorporation
of the net assets of the former parent company Tim Participações S.A. (note 16.d).
b.2 Long-term incentive plan
The balances recorded under these items represent the Company's expenses
related to the long-term incentive program granted to employees (note 27).
c. Profit reserves
c.1 Legal Reserve
It refers to the allocation of 5% of the net profit for the year ended
December 31 of each year, until the Reserve equals 20% of the share capital, excluding from 2018 the balance allocated to the tax incentive
reserve. In addition, the company may cease to constitute the legal reserve when this, added to the capital reserves, exceeds 30% of the
share capital.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
This Reserve may only be used to increase capital or offset accumulated
losses.
c.2 Statutory reserve for expansion
The formation of this reserve is foreseen in Paragraph 2 of art. 46 of
the bylaws of the company and is aimed at the expansion of social business.
The balance of profit that is not compulsorily allocated to other reserves
and is not intended for the payment of dividends is allocated to this reserve, which may not exceed 80% of the share capital. Reaching
this limit, it will be up to the General Meeting to decide on the balance, distributing it to shareholders or increasing capital.
c. 3 Tax Benefit Reserve
The Company enjoys tax benefits that provide for restrictions on the distribution
of profits. According to the legislation that establishes these tax benefits, the amount of tax that is no longer paid due to exemptions
and reductions in the tax burden may not be distributed to members and will constitute a reserve of tax incentive of the legal entity.
Such a reserve may only be used to absorb losses or increase the share capital. On June 30, 2023, the accumulated amount of benefits enjoyed
by the Company amounts to R$ 2,124,411 (R$ 2,124,411 on December 31, 2022).
The said tax benefit basically corresponds to the reduction of the
Corporate Income Tax (IRPJ) incident on the profit of the exploitation calculated in the units encouraged. The Company operates in the
area of the defunct Superintendence of development of the Amazon (SUDENE / SUDAM), being the tax incentive awards granted by state of
the Federation, for a period of 10 years, subject to renewal.
d. Dividends
Dividends are calculated in accordance with the bylaws and the Joint Stock
Company Act.
According to its latest bylaws, approved on August 31, 2020, the company
must distribute as a mandatory dividend each year ending December 31, provided that there are amounts available for distribution, an amount
equivalent to 25% of Adjusted Net Profit.
As provided in the company's bylaws, unclaimed dividends within 3 years
will revert to the company.
As of December 31, 2022, dividends and Interest on Shareholders’
Equity were calculated as follows:
|
December 2022 |
|
|
Net profit for the year |
1,670,755 |
(-) Non-distributable tax incentives |
(166,110) |
(-) Constitution of legal reserve |
(75,233) |
Adjusted Net Profit |
1,429,412 |
|
|
Minimum dividends calculated on the basis of 25% of adjusted profit |
357,353 |
|
|
Breakdown of dividends payable interest on equity: |
|
Interest on shareholders’ equity |
1,400,000 |
Total dividends and interest on shareholders´ equity distributed and proposed |
1,400,000 |
Income tax withheld (IRRF) on shareholders´ equity |
(196,970) |
Total dividends and interest on shareholders´ equity, net |
1,203,030 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Interest on shareholders' equity paid and/or payable is accounted for against
financial expenses which, for the purposes of presenting the quarterly information, are reclassified and disclosed as allocation of net
profit for the year, in changes in shareholders' equity.
During the year 2022, the amount of R$ 1,400,000 of interest on shareholders’
equity were distributed and additional amount of R$ 600,000 of dividends were proposed, which were approved at the General Meeting
on June 30, 2023, totaling R$ 2,000,000. During 2023, amounts of R$ 520,000 of interest on shareholders’ equity were distributed.
The amounts distributed in 2022 and 2023 are shown below:
Approval |
|
Payment |
|
Dividend |
|
|
|
|
|
03/22/2022 |
|
04/27/2022 |
|
195,000 |
06/15/2022 |
|
07/20/2022 |
|
270,000 |
09/12/2022 |
|
10/31/2022 |
|
235,000 |
09/12/2022 |
|
01/24/2023 |
|
245,000 |
12/12/2022 |
|
01/24/2023 |
|
455,000 |
03/30/2023 |
|
04/18/2023 |
|
600,000 |
|
|
|
|
2,000,000 |
|
|
|
|
|
04/19/2023 |
|
05/09/2023 |
|
230,000 |
06/12/2023 |
|
07/12/2023 |
|
290,000 |
|
|
|
|
520,000 |
The balance on June 30, 2023 of the item “dividends and interest
on shareholders' equity payable” totaling R$ 334,080 (R$ 661,494 on December 31, 2022) is composed of the outstanding
amounts of previous years in the amount of R$ 44,080 (R$ 61,494 on December 31, 2022) in addition to the amount of R$ 290,000,
settled on July 12, 2023 (R$ 600,000, distributed in 2023, approved during the Annual General Meeting held on March 30, 2023).
As set forth in the Law 6404/76 and the Bylaws of the Company, unclaimed
dividends - as established in the Joint Stock Company Law, dividends and Interest on Shareholders' Equity declared and unclaimed by shareholders
within 3 years, are reverted to shareholders' equity at the time of its prescription and allocated to a supplementary reserve to expand
businesses.
For the statement of cash flow, Interest on Shareholders’ Equity
and dividends paid to its shareholders are being allocated in the group of “financing activities”.
| 27. | Long-Term Incentive Plan |
2018-2020 Plan and 2021-2023 Plan
On April 19, 2018 and March 30, 2021, they were approved by the General
Meeting of shareholders of TIM S.A. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), long-term
incentive plans: “2018-2020 Plan” and “2021-2023 Plan” respectively, granted to senior directors and to those
who occupy the position of key positions in the Company.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The 2018-2020 and 2021-2023 Plans provide for the granting of shares (performance
shares and/or restricted shares).
The 2018-2020 and 2021-2023 Plans propose to grant participants shares
issued by the Company, subject to the participant’s permanence in the Company (achievement of specific goals). The number of shares
may vary, for more or for less, as a result of the performance and possibly of the dividend award, considering the criteria provided for
in each Grant.
For the 2018-2020 and 2021-2023 plan, the term of validity has the same
periodicity of 3 years related to its vesting. These Plans, in addition to considering the transfer of shares, also provides for the possibility
of making payment to participants of the equivalent amount in cash.
The total amount of the expense was calculated considering the value of
the shares and is recognized in the results over the vesting period.
Stock Program Table (Performance Shares and Restricted
Shares)
|
|
|
|
|
|
|
|
|
|
|
Identification of grant |
Shares granted |
Expiry date |
Grant Price |
Balance at the beginning of the period |
Granted during the period |
Transferred during the period |
Paid in cash |
Canceled during the period |
Balance at end of period |
Volume vested |
Performance change |
Additional
dividends |
Billed Volume |
Performance change |
Additional
dividends |
|
|
2021-2023 Plan
2022 Grant(s) |
1,227,712 |
Apr 2025 |
R$ 13.23 |
- |
1,227,712 |
- |
- |
- |
- |
- |
- |
(44,565) |
1,183,147 |
2021-2023 Plan
2021 Grant(s) |
3,431,610 |
May 2024 |
R$ 12.95 |
3,119,734 |
- |
(1,043,059) |
(87,605) |
(43,880) |
(2,883) |
(473) |
(130) |
(49,639) |
2,024,153 |
2018-2020 Plan
2020 Grant(s) |
796,054 |
Apr 2023 |
R$ 14.40 |
519,098 |
- |
(252,024) |
(63,029) |
(22,884) |
(2,593) |
(649) |
(236) |
(3,641) |
260,840 |
2018-2020 Plan
2019 Grant(s) |
930,662 |
July 2022 |
R$ 11.28 |
427,030 |
- |
(419,188) |
(137,064) |
(62,243) |
(7,842) |
(2,537) |
(1,195) |
- |
- |
2018-2020 Plan
2018 Grant(s) |
849,932 |
Apr 2021 |
R$ 14.41 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Total |
7,235,970 |
|
|
4,065,862 |
1,227,712 |
(1,714,271) |
(287,698) |
(129,007) |
(13,318) |
(3,659) |
(1,561) |
(97,845) |
3,468,140 |
Weighted average price of the balance of grants |
R$ 13.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The base price of the share of each share was calculated using the weighted
averages of TIM S.A.’s share price. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), considering
the following periods:
·
2018-2020 Plan – 1st Grant-traded volume and trading
price of TIM Participações shares for the period 03/01/2018–03/31/2018.
·
2018-2020 Plan – 2nd Grant-traded volume and trading
price of TIM Participações shares for the period 06/01/2019–06/30/2019.
·
2018-2020 Plan – 1st Grant-traded volume and trading
price of TIM Participações shares for the period 03/01/2020–03/31/2020.
·
2021-2023 Plan – 1st Grant-traded volume and trading
price of TIM S.A. shares for the period 03/01/2021–03/31/2021.
·
2021–2023 Plan – 2nd Grant - traded volume
and trading price of TIM S.A. shares in the period from March 01, 2022 to March 31, 2022.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
As of June 30, 2023, expenses related to said long-term benefit plans
totaled R$ 10,811 (R$ 30,365 as of June 30, 2022).
Termination of the Share Buyback Program and Approval of a New Program
On June 12, 2023, the Board of Directors became aware
of the termination of the Share Buyback Program approved at a meeting of the Company’s Board of Directors on May 5, 2021 and approved
a new share buyback program of its own issuance. The new program will start as of the date of the Board of Directors’ resolution,
remaining in effect until December 12, 2024, considering that acquisitions shall be made on the Stock Exchange (B3 S.A. – Brasil,
Bolsa, Balcão), at market prices, observing the applicable legal and regulatory limits.
Revenue from services rendered
The principal service revenue derives from monthly subscription, the provision
of separate voice, SMS and data services, and user packages combining these services, roaming charges and interconnection revenue. The
revenue is recognized as the services are used, net of sales taxes and discounts granted on services. This revenue is recognized only
when the amount of services rendered can be estimated reliably.
Revenues are recognized monthly, through billing, and revenues to be billed
between the billing date and the end of the month (unbilled) are identified, processed, and recognized in the month in which the service
was provided. These non-billed revenues are recorded on an estimated basis, which takes into account consumption data and number of days
elapsed since the last billing date.
Interconnection traffic and roaming revenue are recorded separately, without
offsetting the amounts owed to other telecom operators (the latter are accounted for as operating costs).
The minutes not used by customers and/or reload credits in the possession
of commercial partners regarding the prepaid service system are recorded as deferred revenue and allocated to income when these services
are actually used by customers.
The net service revenue item also includes revenue from new partnership
agreements (financial, education and advertising), and the amount of revenue recognized in the period ended June 30, 2023 is R$ 67,962
(R$ 70,090 on June 30, 2022).
Regarding the financial partnership, the Arbitration Procedure No. 28/2021/SEC8
was filed before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (“CCBC” and “Arbitration
Procedure”, respectively), by TIM against Banco C6 S.A., Carbon Holding Financeira S.A. and Carbon Holding S.A (together, “Defendants”),
through which the interpretation of certain clauses in the contracts that rule the partnership between the parties will be discussed.
In case of loss, the partnership may be terminated.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Revenues from sales of goods
Revenues from sales of goods (telephones, mini-modems, tablets and other
equipment) are recognized when the performance obligations associated with the contract are transferred to the buyer. Revenues from sales
of devices to trading partners are accounted for at the time of their physical delivery to the partner, net of discounts, and not at the
time of sale to the end customer, since the Company has no control over the good sold.
Contract identification
The Company monitors commercial contracts in order to identify the main
contractual clauses and other elements present in the contracts that could be relevant in the application of the accounting rule IFRS
15 / CPC47 – Revenue from Contracts with Customers.
Identification of the performance obligation
Based on the review of its contracts, the Company mainly verified the existence of the
following performance obligations:
(i) sale of equipment; and
(ii) provision of mobile, fixed and internet telephony services.
Thus, the Company started to recognize revenues when (or as) the Company
meets the performance obligation by transferring the asset or service promised to the customer; and the asset is considered transferred
when or as the customer obtains control of that asset.
Determining and Allocating the Transaction Price to the Performance Obligation
The Company understands that its commercial packages that combine services
and sale of cellular handsets with discounts. In accordance with IFRS 15 / CPC 47, the Company is required to perform the discount allocation
and recognize revenues related to each performance obligation based on their standalone selling prices.
Cost to obtain contract
All incremental costs related to obtaining a contract (sales commissions
and other costs of acquisition from third parties) are recorded as prepaid expenses and (as described in Note 11) amortized over
the same period as the revenue associated with this asset. Similarly, certain contract compliance costs are also deferred to the extent
that they relate to performance obligations under the customer agreement, i.e. when the customer obtains control over the asset.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
Net operating revenue |
11,512,527 |
|
9,688,604 |
|
11,503,415 |
|
10,095,275 |
|
|
|
|
|
|
|
|
Gross operating revenue |
16,200,727 |
|
13,507,536 |
|
16,239,128 |
|
14,014,445 |
|
|
|
|
|
|
|
|
Service revenue |
15,496,673 |
|
12,907,650 |
|
15,535,074 |
|
13,414,559 |
Service revenue-Mobile |
14,534,832 |
|
11,975,266 |
|
14,573,233 |
|
12,482,193 |
Service revenue - Landline |
961,841 |
|
932,384 |
|
961,841 |
|
932,366 |
|
|
|
|
|
|
|
|
Goods sold |
704,054 |
|
599,886 |
|
704,054 |
|
599,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deductions from gross revenue |
(4,688,200) |
|
(3,818,932) |
|
(4,735,713) |
|
(3,919,170) |
Taxes incidents |
(1,827,801) |
|
(2,273,764) |
|
(1,874,711) |
|
(2,370,902) |
Discounts granted |
(2,856,615) |
|
(1,540,572) |
|
(2,857,219) |
|
(1,543,672) |
Returns and other |
(3,784) |
|
(4,596) |
|
(3,783) |
|
(4,596) |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 29. | Operating costs and expenses |
|
Parent Company |
|
June 2023 |
|
June 2022 |
|
Cost of services rendered and goods sold |
Selling expenses |
General and administrative expenses |
Total |
|
Cost of services rendered and goods sold |
Selling expenses |
General and administrative expenses |
Total |
|
|
|
|
|
|
|
|
|
|
|
(5,987,277) |
(2,741,414) |
(866,595) |
(9,595,286) |
|
(4,645,726) |
(2,510,247) |
(896,960) |
(8,052,933) |
|
|
|
|
|
|
|
|
|
|
Personnel |
(36,386) |
(417,433) |
(218,390) |
(672,209) |
|
(28,490) |
(368,776) |
(212,382) |
(609,648) |
Third party services |
(333,900) |
(1,076,140) |
(406,697) |
(1,816,737) |
|
(310,350) |
(980,747) |
(404,015) |
(1,695,112) |
Interconnection and means of connection |
(1,846,323) |
- |
- |
(1,846,323) |
|
(1,214,652) |
- |
- |
(1,214,652) |
Depreciation and amortization |
(3,026,270) |
(162,713) |
(203,055) |
(3,392,038) |
|
(2,420,049) |
(143,665) |
(240,907) |
(2,804,621) |
Taxes, fees and contributions |
(17,164) |
(389,157) |
(13,860) |
(420,181) |
|
(19,638) |
(389,043) |
(11,272) |
(419,953) |
Rentals and insurance |
(258,856) |
(72,825) |
(10,172) |
(341,853) |
|
(244,558) |
(59,437) |
(9,490) |
(313,485) |
Cost of goods sold |
(468,358) |
- |
- |
(468,358) |
|
(406,634) |
- |
- |
(406,634) |
Advertising and advertising |
- |
(301,102) |
- |
(301,102) |
|
- |
(275,492) |
- |
(275,492) |
Losses on doubtful accounts receivable |
- |
(286,767) |
- |
(286,767) |
|
- |
(282,440) |
- |
(282,440) |
Other |
(20) |
(35,277) |
(14,421) |
(49,718) |
|
(1,355) |
(10,647) |
(18,894) |
(30,896) |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
Cost of services rendered and goods sold |
Selling expenses |
General and administrative expenses |
Total |
|
Cost of services rendered and goods sold |
Selling expenses |
General and administrative expenses |
Total |
|
|
|
|
|
|
|
|
|
|
|
(5,744,233) |
(2,852,794) |
(868,181) |
(9,465,208) |
|
(4,977,401) |
(2,656,189) |
(897,449) |
(8,531,039) |
|
|
|
|
|
|
|
|
|
|
Personnel |
(36,386) |
(417,433) |
(218,390) |
(672,209) |
|
(28,490) |
(368,776) |
(212,382) |
(609,648) |
Third party services |
(340,063) |
(1,145,491) |
(408,252) |
(1,893,806) |
|
(322,912) |
(1,069,618) |
(404,501) |
(1,797,031) |
Interconnection and means of connection |
(1,376,316) |
- |
- |
(1,376,316) |
|
(1,291,383) |
- |
- |
(1,291,383) |
Depreciation and amortization |
(3,245,843) |
(162,766) |
(203,055) |
(3,611,664) |
|
(2,706,191) |
(141,555) |
(240,907) |
(3,088,653) |
Taxes, fees and contributions |
(17,271) |
(412,104) |
(13,885) |
(443,260) |
|
(21,114) |
(429,592) |
(11,272) |
(461,978) |
Rentals and insurance |
(259,545) |
(72,828) |
(10,178) |
(342,551) |
|
(199,323) |
(59,437) |
(9,490) |
(268,250) |
Cost of goods sold |
(468,358) |
- |
- |
(468,358) |
|
(406,634) |
- |
- |
(406,634) |
Advertising and advertising |
- |
(301,102) |
- |
(301,102) |
|
- |
(279,271) |
- |
(279,271) |
Losses on doubtful accounts receivable |
- |
(305,793) |
- |
(305,793) |
|
- |
(297,293) |
- |
(297,293) |
Other |
(451) |
(35,277) |
(14,421) |
(50,149) |
|
(1,354) |
(10,647) |
(18,897) |
(30,898) |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The company makes contributions to public or private pension insurance
plans on a mandatory, contractual or voluntary basis while the employee is on the staff of the company. Such plans do not bring any additional
obligations to the Company. If the employee ceases to be part of the company's staff in the period necessary to have the right to withdraw
contributions made by sponsors, the amounts to which the employee is no longer entitled and which may represent a reduction in the company's
future contributions to active employees, or a cash refund of these amounts, are released as assets.
| 30. | Other net revenue (expense) |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
Revenues |
|
|
|
|
|
|
|
Revenue from grant, net |
860 |
|
5,162 |
|
860 |
|
5,162 |
Fines on telecommunications services |
35,265 |
|
33,397 |
|
35,492 |
|
34,907 |
Revenue on disposal of assets |
1,523 |
|
2,636 |
|
1,523 |
|
2,636 |
Other revenue |
31,662 |
|
32,013 |
|
31,655 |
|
32,713 |
|
69,310 |
|
73,208 |
|
69,530 |
|
75,418 |
Expenses |
|
|
|
|
|
|
|
FUST/FUNTTEL (i) |
(77,200) |
|
(64,448) |
|
(78,366) |
|
(67,350) |
Taxes, fees and contributions |
(534) |
|
(627) |
|
(534) |
|
(641) |
Provision for legal and administrative proceedings, net of reversal |
|
|
|
|
|
|
|
(157,102) |
|
(106,635) |
|
(157,104) |
|
(106,635) |
Expenses on disposal of assets |
(1,040) |
|
(4,245) |
|
(1,040) |
|
(4,245) |
Other expenses |
(9,997) |
|
(10,772) |
|
(10,676) |
|
(10,946) |
|
(245,873) |
|
(186,727) |
|
(247,720) |
|
(189,817) |
|
|
|
|
|
|
|
|
Other revenues (expenses), net |
(176,563) |
|
(113,519) |
|
(178,190) |
|
(114,399) |
(i) Representing the expenses incurred with contributions on the various
telecommunications revenues due to ANATEL, according to current legislation.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
Financial revenues |
670,652 |
|
725,704 |
|
691,401 |
|
732,283 |
Interest on financial investments |
204,624 |
|
311,446 |
|
225,097 |
|
317,194 |
Interest received from clients |
12,205 |
|
13,484 |
|
12,286 |
|
13,878 |
Swap interest |
309,245 |
|
197,590 |
|
309,245 |
|
197,590 |
Interest on lease |
13,860 |
|
13,822 |
|
13,860 |
|
13,822 |
Inflation adjustment (i) |
108,989 |
|
92,065 |
|
108,989 |
|
92,065 |
Other derivatives (ii) |
19,587 |
|
78,347 |
|
19,587 |
|
78,347 |
Other revenue |
2,142 |
|
18,950 |
|
2,337 |
|
19,387 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(i) A substantial part is related to monetary restatement on tax credits
and judicial deposits.
(ii) This is mainly the difference between the market value and the cost
of the share subscription options related to the operational partnership with Banco C6, started in 2020, to which the Company was entitled
in the period due to the achievement of targets. Until June 30, 2023, the Company obtained the subscription right related to the 9th
contractual target, generating an effect of R$ 19,587 (R$ 39,173 on June 30, 2022, related to 5th and 6th
contract targets). The market value was calculated based on information available in the last investment transaction carried out by the
partner and disclosed in the market. The disclosures of this derivative financial instrument are detailed in Note 37, which was measured
at fair value, and will subsequently be measured in the Company’s income, considering the risks related to arbitration disclosed
in Note 28.
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
Financial expenses |
(1,429,089) |
|
(1,348,355) |
|
(1,337,014) |
|
(1,423,953) |
Interest on loans and financing |
(50,097) |
|
(32,366) |
|
(50,097) |
|
(32,366) |
Interest on taxes and fees |
(116,934) |
|
(72,793) |
|
(120,284) |
|
(72,793) |
Swap interest |
(300,352) |
|
(312,985) |
|
(300,352) |
|
(312,985) |
Interest on lease |
(613,700) |
|
(523,212) |
|
(512,126) |
|
(590,047) |
Inflation adjustment (i) |
(202,616) |
|
(253,519) |
|
(207,793) |
|
(258,417) |
Discounts granted |
(24,512) |
|
(22,687) |
|
(24,512) |
|
(22,901) |
Other expenses |
(120,878) |
|
(130,793) |
|
(121,850) |
|
(134,444) |
(i) A major portion related to: (i) Monetary restatement of lawsuits, in
the amount of R$ 165,086 - see note 25 (R$ 92,836 as of June 30, 2022); and (ii) inflation adjustment on loans and financing
and authorizations, in the amount of R$ 27,355 (R$ 97,457 on June 30, 2022).
| 33. | Foreign exchange variations, net |
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
Revenues |
|
|
|
|
|
|
|
Loans and financing (i) |
143,104 |
|
26,854 |
|
143,104 |
|
26,854 |
Suppliers |
20,253 |
|
23,452 |
|
20,253 |
|
23,452 |
Swap (ii) |
10,698 |
|
13,767 |
|
10,698 |
|
13,767 |
Other |
9,521 |
|
20,867 |
|
9,521 |
|
20,867 |
|
183,576 |
|
84,940 |
|
183,576 |
|
84,940 |
Expenses |
|
|
|
|
|
|
|
Loans and financing (i) |
(10,698) |
|
(13,758) |
|
(10,698) |
|
(13,758) |
Suppliers |
(6,061) |
|
(10,650) |
|
(6,061) |
|
(10,650) |
Swap (ii) |
(143,104) |
|
(26,762) |
|
(143,104) |
|
(26,762) |
|
|
|
|
|
|
|
|
Other |
(27,280) |
|
(29,040) |
|
(27,280) |
|
(29,040) |
|
(187,143) |
|
(80,210) |
|
(187,143) |
|
(80,210) |
|
|
|
|
|
|
|
|
Foreign exchange variations, net |
(3,567) |
|
4,730 |
|
(3,567) |
|
4,730 |
(i) It mainly refers to foreign exchange variation on loans and financing in foreign currency.
(ii) Referring to derivative financial instruments to mitigate risks of foreign exchange variations
related to foreign currency debts (Note 37).
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The balances presented below represent the Parent Company and Consolidated
amounts.
(a) Basic
Basic profit per share is
calculated by dividing the profit attributable to the shareholders of the company by the weighted average amount of shares issued during
the period.
|
|
June 2023 |
|
June 2022 |
|
|
|
|
|
Income attributable to the shareholders of the company |
|
1,038,908 |
|
684,903 |
|
|
|
|
|
Weighted average number of common shares issued (thousands) |
|
2,420,811 |
|
2,420,462 |
|
|
|
|
|
Basic earnings per share (expressed in R$) |
|
0.43 |
|
0.28 |
(b) Diluted
Diluted earnings per share are calculated by adjusting the weighted average
amount of shares outstanding to assume the conversion of all potential dilutive shares.
|
|
June 2023 |
|
June 2022 |
|
|
|
|
|
Income attributable to Company's shareholders |
|
1,038,908 |
|
684,903 |
|
|
|
|
|
Weighted average number of common shares issued (thousands) |
|
2,420,811 |
|
2,420,682 |
|
|
|
|
|
Diluted earnings per share (in R$) |
|
0.43 |
|
0.28 |
On June 30, 2023, according to the calculation of diluted earnings
per share, the Company did not have potentially dilutive shares (220,000 on June 30, 2022) related to the long-term incentive plan,
as mentioned in Note 27.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
| 35. | Balances and transactions with related parties |
The balances of transactions with Telecom Italia Group companies, subsidiaries
and associated companies are as follows:
Assets
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
Telecom Italia Sparkle (i) |
|
1,729 |
|
2,770 |
|
2,770 |
Gruppo Havas (vi) |
|
49,911 |
|
- |
|
- |
TI Sparkle (iii) |
|
1,927 |
|
1,494 |
|
1,494 |
TIM Brasil (vii) |
|
22,664 |
|
22,790 |
|
22,790 |
Telecom Italia S.p.A. (ii) |
|
4,524 |
|
2,086 |
|
2,086 |
I-Systems (ix) |
|
9,657 |
|
14,762 |
|
14,762 |
Cozani (x) |
|
- |
|
456,185 |
|
- |
Other |
|
674 |
|
674 |
|
674 |
Total |
|
91,086 |
|
500,761 |
|
44,576 |
|
|
Liabilities |
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
December 2022 |
|
December 2022 |
|
|
|
|
|
|
|
Telecom Italia S.p.A. (ii) |
|
94,363 |
|
85,845 |
|
85,845 |
Telecom Italia Sparkle (i) |
|
4,654 |
|
4,436 |
|
4,436 |
TI Sparkle (iii) |
|
8,711 |
|
9,445 |
|
9,445 |
TIM Brasil (iv) |
|
10,858 |
|
10,858 |
|
10,858 |
Vivendi Group (v) |
|
1,822 |
|
3,457 |
|
3,457 |
Gruppo Havas (vi) |
|
76,189 |
|
65,618 |
|
65,618 |
I-Systems (viii) |
|
44,998 |
|
49,391 |
|
49,391 |
Cozani (x) |
|
- |
|
383,621 |
|
- |
Italtel (xi) |
|
21,164 |
|
13,348 |
|
13,348 |
Other |
|
14,743 |
|
8,862 |
|
8,862 |
|
|
|
|
|
|
|
Total |
|
277,502 |
|
634,881 |
|
251,260 |
|
|
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
|
|
|
|
Revenue |
|
|
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
Telecom Italia S.p.A. (ii) |
|
4,246 |
|
1,385 |
|
4,246 |
|
1,385 |
Telecom Italia Sparkle (i) |
|
1,793 |
|
1,657 |
|
1,793 |
|
1,657 |
TI Sparkle (iii) |
|
490 |
|
1,086 |
|
490 |
|
1,086 |
I Systems (ix) |
|
16,778 |
|
17,945 |
|
16,778 |
|
17,945 |
Cozani (x) |
|
- |
|
2,597 |
|
- |
|
- |
Total |
|
23,307 |
|
24,670 |
|
23,307 |
|
22,073 |
|
|
|
|
|
|
|
|
|
|
|
Cost / Expense |
|
|
|
|
Parent Company |
|
Consolidated |
|
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
|
Telecom Italia S.p.A. (ii) |
|
62,795 |
|
49,784 |
|
62,795 |
|
49,784 |
Telecom Italia Sparkle (i) |
|
9,406 |
|
7,686 |
|
9,406 |
|
7,686 |
TI Sparkle (iii) |
|
8,761 |
|
9,049 |
|
8,761 |
|
9,049 |
Vivendi Group (v) |
|
3,037 |
|
2,221 |
|
3,037 |
|
2,221 |
Gruppo Havas (vi) |
|
265,813 |
|
154,865 |
|
265,813 |
|
154,865 |
I Systems (viii) |
|
192,331 |
|
177,658 |
|
192,331 |
|
177,658 |
Cozani (x) |
|
- |
|
3,730 |
|
- |
|
- |
Other |
|
11,553 |
|
12,116 |
|
11,553 |
|
12,116 |
Total |
|
553,696 |
|
417,109 |
|
553,696 |
|
413,379 |
(i) | | amounts refer to roaming, Value-Added Services – VAS, transfer of means and
international voice-wholesale. |
(ii) | | The amounts refer to international roaming, technical assistance and value added services
– VAS and licensing for the use of a registered trademark, granting TIM. S.A. the right to use the “TIM” brand
upon payment of royalties in the amount of 0.5% of the Company’s net revenue, with payment made on a quarterly basis. |
(iii) | | Values refer to link rental, EILD rental, media rental (submarine cable) and signalling
service. |
(iv) | | Mainly refer to judicial deposits made on account of labor claims and transfers of employees. |
(v) | | the values refer to Value Added Services-VAS. |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
(vi) | | From the values described above, in the result, they refer to advertising services, of which,
R$ 243,227 (R$ 111,765 on June 30, 2022), are related to media transfers. |
(vii) | | Refer to judicial deposits made on account of labor claims. |
(viii) | | The amounts refer to fiber infrastructure capacity services. |
(ix) | | The amounts are related to services provided by TIM S.A., mainly related to network operation
and maintenance in the scope of Transition Service Agreement, signed when closing the transaction. |
(x) | | Refer to contracts related to the operation of telecommunications services, including interconnection,
roaming, assignment of means and use of radio frequencies, in addition to co-billing agreements. |
(xi) | | The amounts refer to the development of the software used in the billing of telecommunications
services |
The company has social investment actions that include donations,
projects developed by the Tim Institute and sponsorships. On June 30, 2023, the Company invested R$ 6,006 (R$ 2,577 on
June 30, 2022).
Sales and purchases involving related parties are carried out
at prices equivalent to those practiced in the market. Outstanding balances at the end of the year are not linked to guarantees and are
settled in cash. There were no guarantees provided or received in connection with any accounts receivable or payable involving related
parties.
Balances on equity accounts are recorded in the groups: trade accounts
receivable, prepaid expenses, suppliers and other current assets and liabilities.
| 36. | Management remuneration |
The key management personnel includes: statutory directors and the Board
of Directors. The payment of key management personnel for the provision of their services is presented below:
|
June 2023 |
|
June 2022 |
|
|
|
|
Short-term benefits |
11,536 |
|
15,359 |
Other long-term benefits |
- |
|
- |
Share-based remuneration |
4,187 |
|
23,061 |
|
15,723 |
|
38,420 |
| 37. | Financial instruments and risk management |
Among the financial instruments registered in the Company, there are derivatives
that are financial assets or liabilities measured at fair value through profit or loss. At each balance sheet date such assets/liabilities
are measured at their fair value. Interest, monetary correction, foreign exchange variation and variations arising from the fair value
measurement, where applicable, shall be recognized in the result when incurred, under the line of financial revenues or expenses.
Derivatives are initially recognized at fair value on the date the
derivative agreement is entered into, and are subsequently remeasured at fair value. The Company does not apply “hedge accounting”.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The
company carries out transactions with derivative financial instruments, without speculative purposes, only with the aim of i) reducing
risks related to foreign exchange variation and ii) managing interest rate exposure. The Company's derivative financial instruments are
specifically represented by swap and options contracts.
The
company's financial instruments are being presented in compliance with IFRS 9 / CPC 48.
The
main risk factors that the company is exposed to are as follows:
(i)
Exchange rate risks
The exchange rate risks relate to the possibility of the Company computing
i) losses derived from fluctuations in exchange rates by increasing the balances of debt with loans and financing obtained in the market
and the corresponding financial expenses or ii) increase in cost in commercial contracts that have some type of link to foreign exchange
variation. In order for these types of risks to be mitigated, the company performs: swap contracts with financial institutions with the
aim of canceling the impacts arising from the fluctuation of exchange rates on the balance sheet and financial result and commercial contracts
with foreign exchange band clauses with the aim of partially mitigating foreign exchange risks or derivative financial instruments to
reduce the remaining risks of foreign exchange exposure in commercial contracts.
On June 30, 2023 and December 31, 2022, the Company's loans and
financings indexed to the variation of foreign currencies are fully protected, both in terms and in value, by swap contracts. Gains or
losses on these swap contracts are recorded in the company's earnings.
(ii)
Interest rate risks
Interest rate risks relate to:
The possibility of variations in the fair value of the loans obtained by
the company indexed to TJLP, IPCA, fixed rate and/or TLP, when such rates pose a risk to the company’s perspective of not corresponding
proportionally to the rates relating to Interbank Certificates of Deposit (CDI). The Company opted to hedge the exposure linked to the
IPCA arising from the issuance of debentures, financing to BNDES (FINAME) and BNB and the exposure to a fixed rate linked to the debt
with BNP Paribas, all of them until maturity.
The possibility of an unfavorable movement in interest rates would cause
an increase in the financial expenses of the Company, as a result of the share of the debt and the passive positions that the Company
has in swap contracts linked to floating interest rates (percentage of the CDI). However, on June 30, 2023 and December 31,
2022, the Company maintains its financial resources applied to Interbank Certificates of Deposit (CDI), which substantially reduces this
risk.
(iii)
Credit risk inherent in the provision of services
The risk is related to the possibility of the company computing losses
derived from the inability of the subscribers to honor the payments of the invoiced amounts. To minimize this risk, the company preventively
performs credit analysis of all orders imputed by the sales areas and monitors the accounts receivable of subscribers, blocking the ability
to use services, among other actions, if customers do not pay their debts. There are no customers who have contributed more than 10% of
net accounts receivable on June 30, 2023 and December 31, 2022 or revenues from services rendered during the periods ended June 30,
2023 and June 30, 2022.
(iv)
Credit risk inherent in the sale of telephone sets and prepaid telephone cards
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The group's policy for the sale of telephone devices and the distribution
of prepaid telephone cards is directly related to the credit risk levels accepted during the normal course of business. The selection
of partners, the diversification of the portfolio of accounts receivable, the monitoring of loan conditions, the positions and limits
of orders established for traders, the formation of collateral are procedures adopted by the company to minimize possible collection problems
with its trading partners. There are no customers who contributed more than 10% of merchandise sales revenue during the periods ended
June 30, 2023 and 2022. There are no customers who contributed more than 10% of the net receivables from the sale of goods as of June
30, 2023 and December 31, 2022.
(v) Liquidity
risk
Liquidity risk arises from the need for cash before the obligations assumed.
The company structures the maturities of its non-derivative financial instruments and their respective derivative financial instruments
so as not to affect liquidity. See Notes 17 and 21.
The liquidity and cash flow management of the Company are carried out daily
to ensure that the operational cash generation and prior fund raising, when necessary, are sufficient to maintain its schedule of operational
and financial commitments.
All financial investments of the Company have daily liquidity and the Management
may, even in specific cases: i) revise the dividend payment policy; ii) issue new shares; and/or iii) sell assets to increase liquidity.
(vi)
Financial credit risk
The cash flow forecast is performed by the Finance Executive Board, which
monitors the continuous forecasts of the liquidity requirements to ensure that the Company has enough cash to satisfy its operating needs.
This forecast takes into account investment plans, debt financing, compliance with contractual clauses, compliance with internal goals
and, if applicable, external regulatory or legal requirements.
The risk is related to the possibility of the Company posting losses resulting
from difficulties in the redemption of short-term interest earning bank deposits and swap contracts, due to possible insolvency of counterparties.
The company minimizes the risk associated with these financial instruments by maintaining operations only with financial institutions
of recognized market strength, in addition to following a policy that establishes maximum levels of risk concentration per financial institution.
Fair value of derivative financial instruments:
The derivative financial instruments are presented below:
|
|
June 2023 |
|
December 2022 |
|
|
Assets |
Liabilities |
|
Assets |
Liabilities |
|
|
|
|
|
|
|
Derivative transactions |
|
282,895 |
353,306 |
|
276,951 |
393,372 |
Other derivatives (i) |
|
482,082 |
- |
|
624,671 |
- |
|
|
764,977 |
353,306 |
|
901,622 |
393,372 |
|
|
|
|
|
|
|
Current portion |
|
(265,543) |
(353,306) |
|
(239,189) |
(343,142) |
Non-current portion |
|
499,434 |
- |
|
662,433 |
50,230 |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Other derivatives are instruments of share subscription options represent
the option of the Company to subscribe 4.26% of the shares of C6 capital on June 30, 2023 (5.52% on December 31, 2022), where the Group/Company
paid a share subscription premium in the amount of R$ 24.7 million until June 30, 2023 (R$ 23.9 million until December 31, 2022).
As required by IFRS 9 / CPC 48, the financial instrument must be valued at its fair value that on June 30, 2023 and December
31, 2022 corresponds to R$ 482 million and R$ 624 million, respectively. The change for the period refers to the conversion
of shares, pursuant to Note 12.
The impact of the mark-to-market is calculated by the difference in the
fair value of the option less the amount paid for the share subscription premium. This financial instrument was measured at fair value
and subsequently revaluated and possible changes recorded in the Company’s financial income (loss) for the year, considering the
arbitration risks disclosed in Note 28.
The long-term derivative financial instruments at June 30,
2023 are due in accordance with the following schedule:
|
|
Assets |
|
|
|
2024 |
|
13,855 |
2025 |
|
485,579 |
>2026 |
|
- |
|
|
499,434 |
Non-derivative financial liabilities are substantially composed of accounts
payable with suppliers, dividends payable and other obligations, the maturity of which will occur in the next 12 months, except for loans
and financing and leases, the nominal flows of payments of which are disclosed in Notes 21 and 17.
Financial instruments measured at fair value:
|
June 2023 |
|
Level 1 |
|
Level 2 |
|
TOTAL |
|
|
|
|
|
|
Total assets |
285,051 |
|
927,935 |
|
1,212,986 |
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
285,051 |
|
927,935 |
|
1,212,986 |
|
|
|
|
|
|
Derivative financial instruments |
- |
|
282,895 |
|
282,895 |
Other derivatives |
- |
|
482,082 |
|
482,082 |
Securities |
285,051 |
|
- |
|
285,051 |
Other financial assets |
- |
|
162,958 |
|
162,958 |
|
|
|
|
|
|
Total liabilities |
- |
|
353,306 |
|
353,306 |
|
|
|
|
|
|
Financial liabilities at fair value through profit or loss |
- |
|
353,306 |
|
353,306 |
|
|
|
|
|
|
Derivative financial instruments |
- |
|
353,306 |
|
353,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2022 |
|
Level 1 |
|
Level 2 |
|
TOTAL |
|
|
|
|
|
|
Total assets |
2,203,564 |
|
901,622 |
|
3,105,186 |
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
2,203,564 |
|
901,622 |
|
3,105,186 |
|
|
|
|
|
|
Derivative financial instruments |
- |
|
276,951 |
|
276,951 |
Other derivatives |
|
|
624,671 |
|
624,671 |
Securities |
2,203,564 |
|
- |
|
2,203,564 |
|
|
|
|
|
|
Total liabilities |
- |
|
393,372 |
|
393,372 |
|
|
|
|
|
|
Financial liabilities at fair value through profit or loss |
- |
|
393,372 |
|
393,372 |
|
|
|
|
|
|
Derivative financial instruments |
- |
|
393,372 |
|
393,372 |
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
The fair value of financial instruments traded on active markets is based
on market prices quoted on the balance sheet date. A market is seen as active if quoted prices are ready and regularly available from
a stock exchange, distributor, broker, industry group, pricing service, or regulatory agency, and those prices represent real market transactions
and that occur regularly on purely commercial basis. These instruments are included in Level 1. The instruments included in Level 1 mainly
comprise the equity investments of bank certificates of deposit (CDB) and committed classified as securities for trading.
The fair value of financial instruments that are not traded on active markets
(e.g. over-the-counter derivatives) is determined through the use of valuation techniques. These valuation techniques maximize the use
of data adopted by the market where it is available and rely as little as possible on entity-specific estimates. If all relevant information
required for the fair value of an instrument is adopted by the market, the instrument is included in Level 2.
If relevant information is not based on data adopted by the market, the
instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include:
· | | Quoted market prices or quotes of financial
institutions or brokers for similar instruments. |
· | | The fair value of interest rate swaps
is calculated by the present value of estimated future cash flows based on the yield curves adopted by the market. |
· | | Other techniques, such as analysis of
discounted cash flows, available data of the last relevant transaction and analysis of results based on multiples of similar companies,
are used to determine the fair value of the remaining financial instruments. |
The fair values of currency derivative financial instruments and interest
rates of the Company were determined by means of future cash flows (active and passive position) using the contracted conditions and bringing
these flows to present value through discounts for the use of future interest rate disclosed by market sources. Fair values were estimated
at a specific time, based on available information and own evaluation methodologies.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Financial assets and liabilities by category
The financial instruments of the company by category can be summarized as follows:
June 30, 2023
Parent Company
|
Measured at amortized cost |
|
Fair value through profit or loss |
|
Total |
|
|
|
|
|
|
Assets, as per balance sheet |
8,609,721 |
|
1,212,987 |
|
9,822,708 |
|
|
|
|
|
|
Derivative financial instruments |
- |
|
282,895 |
|
282,895 |
Other derivatives |
- |
|
482,082 |
|
482,082 |
Trade accounts receivable and other accounts receivable, excluding prepayments |
3,804,006 |
|
- |
|
3,804,006 |
Securities |
- |
|
285,052 |
|
285,052 |
Cash and cash equivalents |
3,067,012 |
|
- |
|
3,067,012 |
Leases |
236,804 |
|
- |
|
236,804 |
Judicial deposits |
1,421,681 |
|
- |
|
1,421,681 |
Other financial assets |
- |
|
162,958 |
|
162,958 |
Other amounts recoverable |
80,218 |
|
- |
|
80,218 |
|
|
|
|
|
|
Liabilities, as per balance sheet |
23,367,875 |
|
353,306 |
|
23,721,181 |
|
|
|
|
|
|
Loans and financing |
4,789,574 |
|
- |
|
4,789,574 |
Derivative financial instruments |
- |
|
353,306 |
|
353,306 |
Suppliers and other obligations, excluding legal obligations |
4,394,381 |
|
- |
|
4,394,381 |
Lease liabilities |
13,101,549 |
|
- |
|
13,101,549 |
Other contractual obligations |
748,291 |
|
- |
|
748,291 |
Dividends and interest on shareholders' equity payable |
334,080 |
|
- |
|
334,080 |
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
December 31, 2022
Parent Company Consolidated
|
Measured at amortized cost |
|
Fair value through profit or loss |
|
Total |
|
Measured at amortized cost |
|
Fair value through profit or loss |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Assets, as per balance sheet |
7,405,960 |
|
3,105,186 |
|
10,511,146 |
|
7,851,215 |
|
3,105,186 |
|
10,956,401 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
- |
|
276,951 |
|
276,951 |
|
- |
|
276,951 |
|
276,951 |
Other derivatives |
- |
|
624,671 |
|
624,671 |
|
- |
|
624,671 |
|
624,671 |
Trade accounts receivable and other accounts receivable, excluding prepayments |
3,978,135 |
|
- |
|
3,978,135 |
|
3,659,777 |
|
- |
|
3,659,777 |
Securities |
- |
|
2,203,564 |
|
2,203,564 |
|
- |
|
2,203,564 |
|
2,203,564 |
Cash and cash equivalents |
1,785,100 |
|
- |
|
1,785,100 |
|
2,548,713 |
|
- |
|
2,548,713 |
Leases |
238,646 |
|
- |
|
238,646 |
|
238,646 |
|
- |
|
238,646 |
Judicial deposits |
1,377,560 |
|
- |
|
1,377,560 |
|
1,377,560 |
|
- |
|
1,377,560 |
Other amounts recoverable |
26,519 |
|
- |
|
26,519 |
|
26,519 |
|
- |
|
26,519 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, as per balance sheet |
20,713,839 |
|
393,372 |
|
21,107,211 |
|
23,448,704 |
|
393,372 |
|
23,842,076 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing |
4,969,825 |
|
|
|
4,969,825 |
|
4,969,825 |
|
|
|
4,969,825 |
Derivative financial instruments |
- |
|
393,372 |
|
393,372 |
|
- |
|
393,372 |
|
393,372 |
Suppliers and other obligations, excluding legal obligations |
4,385,356 |
|
- |
|
4,385,356 |
|
4,237,229 |
|
- |
|
4,237,229 |
Lease liabilities |
9,948,873 |
|
- |
|
9,948,873 |
|
12,831,865 |
|
- |
|
12,831,865 |
Other contractual obligations |
748,291 |
|
- |
|
748,291 |
|
748,291 |
|
- |
|
748,291 |
Dividends and interest on shareholders' equity payable |
661,494 |
|
- |
|
661,494 |
|
661,494 |
|
- |
|
661,494 |
Regular purchases and sales of financial assets are recognized on the trading
date - the date on which the Company undertakes to buy or sell the asset. Investments are initially recognized at fair value. After initial
recognition, changes in fair value are recorded in the profit and loss for the year, in the financial revenues and expenses’ group.
Financial
risk hedge policy adopted by the Company
The Company's policy establishes that mechanisms must be adopted to protect
against financial risks arising from the contracting of financing in foreign currency or indexed to the interest rate, in order to manage
said exposure.
The contracting of derivative financial instruments against foreign exchange
exposure shall occur simultaneously with the contracting of the debt that gave rise to such exposure. The level of coverage to be contracted
for such foreign exchange exposures shall be 100% of the risk, both in terms and in value. To cover interest rates, it is up to the Company
to elect or not to contract a hedging mechanism, as provided for in the internal policies.
On June 30, 2023, there are no margins or guarantees applied to transactions
with derivative financial instruments of the Company.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Based on mandatory market developments, we changed the index of our debt
with KFW/Finninvera from Libor to SOFR.
Likewise, for maintaining the hedge, we migrated the swap transaction with
Bank of America, which until then was indexed to Libor and became indexed to SOFR as of January 2024. Transition without any cash effect
and with the same cost as a percentage of the original CDI.
The selection criteria of financial institutions follow parameters that
take into account the rating provided by renowned risk analysis agencies, shareholders’ equity and levels of concentration of operations
and resources.
The operations with derivative financial instruments contracted by the
Company and in force on June 30, 2023 and December 31, 2022 are shown in the following table:
June 30, 2023
|
COUNTERPARTY |
|
|
% Coverage |
AVERAGE SWAP RATES |
Currency |
SWAP type |
Debt |
SWAP |
Total Debt |
Total swap
(long position)¹ |
|
Long position |
Short position |
USD |
LIBOR x DI |
KFW/
Finnvera |
JP Morgan and Bank of America |
121,263 |
121,263 |
100% |
LIBOR 6M + 0.75% p.a. |
79.00–92.59% CDI |
BRL |
IPCA x DI |
BNB |
XP and ITAU |
230,818 |
232,930 |
100% |
IPCA + 1.22–1.49% p.a. |
67.73–69.50% CDI |
USD |
PRE x DI |
The Bank of Nova Scotia |
Scotiabank |
1,448,770 |
1,449,809 |
100% |
1.73–3.80% p.a. |
CDI + 1.05–108.95% CDI |
BRL |
PRE x DI |
BNP Paribas |
BNP Paribas |
514,871 |
517,495 |
100% |
8.34% p.a. |
CDI + 1.07% |
BRL |
IPCA x DI |
DEBENTURE |
ITAU |
1,861,375 |
1,863,514 |
100% |
IPCA + 4.17% p.a. |
CDI + 0.95% |
BRL |
IPCA x DI |
BNDES |
XP |
393,791 |
394,966 |
100% |
IPCA + 4.23% p.a. |
96.95% CDI |
|
|
|
|
|
|
|
|
|
1 In certain swap contracts, long position includes the cost of income tax (15%)
and few debt contracts linked to IPCA were remeasured due to the deflation. After related taxes, coverage remains at 100%.
December 31, 2022
|
|
COUNTERPARTY |
|
|
% Coverage |
AVERAGE SWAP RATES |
Currency |
SWAP type |
Debt |
SWAP |
Total Debt |
Total swap
(Long position)¹ |
|
Long position |
Short position |
USD |
LIBOR x DI |
KFW/
Finnvera |
JP Morgan and Bank of America |
175,589 |
175,589 |
100% |
LIBOR 6M + 0.75% p.a. |
79.00–92.59% CDI |
BRL |
IPCA x DI |
BNB |
XP and ITAU |
249,400 |
249,166 |
100% |
IPCA + 1.22–1.49% p.a. |
67.73–69.50% CDI |
USD |
PRE x DI |
The Bank of Nova Scotia |
Scotiabank |
1,568,683 |
1,569,829 |
100% |
1.73–3.80% p.a. |
CDI + 1.05–108.95% CDI |
BRL |
PRE x DI |
BNP Paribas |
BNP Paribas |
515,265 |
517,727 |
100% |
8.34% p.a. |
CDI + 1.07% |
BRL |
IPCA x DI |
DEBENTURE |
ITAU |
1,796,843 |
1,796,843 |
100% |
IPCA + 4.17% p.a. |
CDI + 0.95% |
BRL |
IPCA x DI |
BNDES |
XP |
394,139 |
394,139 |
100% |
IPCA + 4.23% p.a. |
96.95% CDI |
|
|
|
|
|
|
|
|
|
1 In certain swap contracts, long position includes the cost of income tax (15%).
After related taxes, coverage remains at 100%.
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Position showing the sensitivity analysis – effect of variations
in the fair value of the swaps
For the purpose of identifying possible distortions arising from operations
with consolidated derivative financial instruments currently in force, a sensitivity analysis was performed considering the variables
CDI, US dollar (USD), Libor and IPCA, individually, in three distinct scenarios (probable, possible and remote), and their respective
impacts on the results obtained.
Our assumptions basically observed the individual effect of the CDI, USD,
Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were
used:
Sensitivity scenario |
Fair value in USD, EUR, BRL and IPCA(1) |
A) ∆ Accumulated variation in debt |
Fair value of the long position of the swap (+) |
Fair value of the short position of the swap (-) |
Swap result |
B) ∆ Accumulated variation in swap |
C) Final Result (B-A) |
|
|
|
|
|
|
|
|
|
|
June 2023 |
3,974,977 |
- |
3,974,977 |
(4,045,002) |
(70,026) |
- |
- |
|
|
|
|
|
|
|
|
|
CDI |
probable |
3,974,977 |
- |
3,974,977 |
(4,045,002) |
(70,026) |
- |
- |
possible |
3,974,577 |
(400) |
3,974,577 |
(4,065,671) |
(91,094) |
(21,068) |
(20,668) |
remote |
3,974,189 |
(787) |
3,974,189 |
(4,086,046) |
(111,857) |
(41,831) |
(41,044) |
USD |
probable |
3,974,977 |
- |
3,974,977 |
(4,045,002) |
(70,026) |
- |
- |
possible |
4,359,874 |
384,897 |
4,359,874 |
(4,045,002) |
314,871 |
384,897 |
- |
remote |
4,744,771 |
769,794 |
4,744,771 |
(4,045,002) |
699,768 |
769,794 |
- |
Libor |
probable |
3,974,977 |
- |
3,974,977 |
(4,045,002) |
(70,026) |
- |
- |
possible |
3,976,842 |
1,865 |
3,976,842 |
(4,045,002) |
(68,160) |
1,865 |
- |
remote |
3,978,707 |
3,731 |
3,978,707 |
(4,045,002) |
(66,295) |
3,731 |
- |
IPCA |
probable |
3,974,977 |
- |
3,974,977 |
(4,045,002) |
(70,026) |
- |
- |
possible |
3,881,858 |
(93,119) |
3,881,858 |
(4,045,002) |
(163,145) |
(93,119) |
- |
remote |
3,793,848 |
(181,129) |
3,793,848 |
(4,045,002) |
(251,155) |
(181,129) |
- |
(1) (KFW Finnvera, Scotia, BNB, BNP Paribas, Debenture and BNDES.
Risk variable |
Sensitivity scenario |
CDI |
USD |
Libor |
IPCA |
|
|
|
|
|
|
|
|
|
|
|
|
CDI |
Probable |
13.65% |
4.8192 |
5.73% |
3.16% |
Possible |
17.06% |
4.8192 |
5.73% |
3.16% |
Remote |
20.48% |
4.8192 |
5.73% |
3.16% |
USD |
Probable |
13.65% |
4.8192 |
5.73% |
3.16% |
Possible |
13.65% |
6.0240 |
5.73% |
3.16% |
Remote |
13.65% |
7.2288 |
5.73% |
3.16% |
Libor |
Probable |
13.65% |
4.8192 |
5.73% |
3.16% |
Possible |
13.65% |
4.8192 |
7.16% |
3.16% |
Remote |
13.65% |
4.8192 |
8.60% |
3.16% |
IPCA |
Probable |
13.65% |
4.8192 |
5.73% |
3.16% |
Possible |
13.65% |
4.8192 |
5.73% |
3.95% |
Remote |
13.65% |
4.8192 |
5.73% |
4.74% |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
As the Company has derivative financial instruments for the purposes of
protection of its respective financial liabilities, the changes in the scenarios are accompanied by the respective object of protection,
thus showing that the effects related to the exposure generated in the swaps will have their counterpart reflected in the debt.
For these transactions, the Company discloses the fair value of the object (debt) and the protective derivative financial instrument on
separate lines, as demonstrated above in the sensitivity analysis demonstration table, in order to report the company's net exposure in
each of the scenarios mentioned.
It is noteworthy that the operations with derivative financial instruments
contracted by the company have as sole objective the patrimonial protection. In this way, an improvement or worsening in their respective
market values will be equivalent to an inverse movement in the corresponding portions of the value of the financial debt contracted, object
of the derivative financial instruments of the company.
The sensitivity analyses for derivative financial instruments in force
on June 30, 2023 were carried out considering, basically, the assumptions related to changes in market interest rates and the change
in the US dollar used in swap contracts. The use of these assumptions in the analysis is due exclusively to the characteristics of derivative
financial instruments, which have exposure only to changes in interest and exchange rates.
Table with gains and losses on derivatives in the period
|
|
June 2023 |
|
June 2022 |
Net income (loss) from derivative operations |
|
(123,512) |
|
(128,390) |
Income (loss) from operations with other derivatives |
|
19,587 |
|
92,639 |
Capital Management
The Group's objectives in managing its capital are to safeguard its business
continuity capacity to offer return to shareholders and benefits to the other stakeholders besides maintaining a capital structure to
reduce this cost. To maintain or adjust the group's capital structure, management may review the dividend payment policy, return capital
to shareholders, or issue new shares or sell assets to reduce, for example, the level of debt.
Changes in financial liabilities
Changes in liabilities arising from financing activities such as loans
and financing, lease liabilities lease and financial instruments are presented below:
Parent Company
|
Loans and financing |
|
Lease liabilities |
|
Derivative financial instruments (Assets) Liabilities |
|
|
|
|
|
|
December 31, 2022 |
4,969,825 |
|
9,948,873 |
|
(508,251) |
Inflows |
- |
|
1,190,002 |
|
142,588 |
Balance of merged company |
- |
|
2,992,831 |
|
- |
Cancellations |
- |
|
(239,937) |
|
- |
Financial expenses |
192,697 |
|
643,846 |
|
(8,893) |
Foreign exchange variations, net |
(132,405) |
|
- |
|
132,405 |
Payments |
(240,542) |
|
(1,434,066) |
|
(169,521) |
|
|
|
|
|
|
June 30, 2023 |
4,789,575 |
|
13,101,549 |
|
(411,672) |
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Parent Company
|
Loans and financing |
|
Lease liabilities |
|
Derivative financial instruments (Assets) Liabilities |
|
|
|
|
|
|
December 31, 2021 |
3,845,465 |
|
9,063,539 |
|
(447,132) |
Inflows |
1,249,128 |
|
1,491,500 |
|
(99,701) |
Cancellations |
- |
|
(40,894) |
|
- |
Financial expenses |
197,236 |
|
526,080 |
|
115,394 |
Foreign exchange variations, net |
(13,096) |
|
- |
|
12,996 |
Payments |
(558,301) |
|
(1,131,589) |
|
(76,438) |
|
- |
|
|
|
- |
June 30, 2022 |
4,720,432 |
|
9,908,636 |
|
(494,881) |
Consolidated
|
Loans and financing |
|
Lease liabilities |
|
Derivative financial instruments (Assets) Liabilities |
|
|
|
|
|
|
December 31, 2021 |
3,845,465 |
|
9,063,539 |
|
(447,132) |
Inflows |
1,249,128 |
|
1,491,500 |
|
(99,701) |
Cozani acquisition – opening balance 04/30/2022 |
- |
|
2,929,449 |
|
- |
Cancellations |
- |
|
(40,895) |
|
- |
Financial expenses |
197,236 |
|
592,905 |
|
115,394 |
Foreign exchange variations, net |
(13,096) |
|
- |
|
12,996 |
Payments |
(558,301) |
|
(1,263,225) |
|
(76,438) |
|
|
|
|
|
|
June 30, 2022 |
4,720,432 |
|
12,773,273 |
|
(494,881) |
| 38. | Defined benefit pension plans and other post-employment benefits |
|
|
June 2023 |
|
December 2022 |
|
|
|
|
|
PAMEC/asset policy and medical plan |
|
5,825 |
|
5,825 |
ICATU, SISTEL and VIVEST
The Company sponsors defined benefit private pension and contribution plans
for a group of employees from the former TELEBRÁS system, which are currently under the administration of ICATU FUNDO MULTIPATROCINADO
and Fundação Sistel de Seguridade Social. In addition to the plans coming from the TELEBRÁS system, there is also
the plan administered by the VIVEST foundation resulting from the incorporation of AES Atimus.
Such supplementary pension plans, as well as medical plans, are briefly
explained below:
PBS assisted (PBS-Tele Celular Sul and PBS-Tele Nordeste Celular): SISTEL
benefit plan with a defined benefit feature. It includes retired employees who were part of the plans sponsored by the companies of the
old TELEBRÁS system;
PBS (PBS Tele Celular Sul and PBS Tele Nordeste Celular): pension plan for
active and assisted employees with defined benefit characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
TIMPREV Plan (South and Northeast): pension plan for active and assisted employees
with defined contribution characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;
Administration agreement: administration agreement for retirement payment
to retirees and pensioners of the company's predecessors. Said plan is managed by ICATU Fundo MULTIPATROCINADO;
PAMEC/Asset Policy: complementary health care plan for retirees of the Company's
predecessors;
AES Telecom: Complementary pension plan managed by Vivest,
which is the responsibility of TIM, due to the acquisition of AES Atimus, a company that belonged to the former Eletropaulo. Currently,
the plan is in the process of Withdrawal of Sponsorship with the National Superintendence of Complementary Pensions (PREVIC).
Fiber medical plan: Provision for maintenance of health plan as post-employment
benefit to former employees of AES Atimus (as established in Law 9656/98, articles 30 and 31), which was acquired and incorporated
by TIM.
The Company maintains a policy of monitoring the risks inherent in its
operations. As a result, as of June 30, 2023, the company had insurance contracts in force to cover operational risks, civil liability,
cyber risks, health, among others. The management of the company understands that the policies represent sufficient amounts to cover any
losses. The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows:
Modalities |
|
Maximum indemnity limits |
Operational risks |
|
R$ 590,376 |
General Civil Liability - RCG |
|
R$ 80,000 |
Cyber risks |
|
R$ 30,000 |
Automobile (executive and operational fleet) |
|
R$ 1,000 for optional civil liability (property damage and bodily harm) and R$ 100 for pain and suffering. |
40. Supplementary information to the cash flow
|
Parent Company |
|
Consolidated |
|
June 2023 |
|
June 2022 |
|
June 2023 |
|
June 2022 |
|
|
|
|
|
|
|
|
Non-cash transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment and intangible assets - with no effect on cash |
(1,090,002) |
|
(1,413,015)) |
|
(1,490,295) |
|
(1,449,134) |
Increase in lease liabilities - no effect on cash |
1,090,002 |
|
1,413,015 |
|
1,490,295 |
|
1,449,134 |
Assets and liabilities, net of merger effects |
3,877,394 |
|
- |
|
- |
|
- |
C6 Bank bonus warrant |
162,958 |
|
- |
|
162,958 |
|
- |
|
|
|
|
|
|
|
|
TIM S.A. NOTES TO THE QUARTERLY INFORMATION June 30, 2023 (In thousands of Reais, except as otherwise stated) |
Distribution of interest on shareholders’ equity
The Company’s Board of Directors approved the distribution
of
R$ 290,000 of interest on shareholders’ equity as of June 12, 2023. The payment took place on July 12, 2023, and the date for
identification of shareholders entitled to receive such amounts took place on June 22, 2023.
FISCAL COUNCIL’S OPINION
The Members of the Fiscal Council of TIM S.A.
("Company"), in the exercise of their attributions and legal duties, as provided in Article 163 of the Brazilian Corporate Law,
conducted a review and analysis of the quarterly financial statements, along with the limited review report of Ernst & Young Auditores
Independentes S/S (“EY”), for the period that ended on June 30th, 2023, and taking into account the information
provided by the Company's management and the Independent Auditors, consider the information appropriate for presentation to the Board
of Directors of the Company, in accordance to the Brazilian Corporate Law.
Rio de Janeiro, July 31st, 2023.
WALMIR URBANO KESSELI
Chairman of the Fiscal Council |
ANNA MARIA CERENTINI GOUVÊA GUIMARÃES
Member of the Fiscal Council |
Elias de
Matos Brito
Member of the Fiscal Council |
STATUTORY OFFICERS’ STATEMENT
Alberto Mario Griselli (Chief Executive
Officer and Investor Relations Officer), Andrea Palma Viegas Marques (Chief Financial Officer), Bruno Mutzenbecher Gentil (Business
Support Officer), Maria Antonietta Russo (People, Culture & Organization Officer), Mario Girasole (Regulatory and Institutional
Affairs Officer) and Fabiane Reschke (Legal Officer), as Statutory Officers of TIM S.A., declare, in accordance with article 27,
paragraph 1, item VI of CVM Resolution Nr. 80 of March 29th, 2022, that they have reviewed, discussed and agreed with the Company’s
Financial Statements for the period ended June 30th, 2023.
Rio de Janeiro, July 31st, 2023.
ALBERTO MARIO GRISELLI
Diretor Presidente e Diretor de Relações
com Investidores (Chief Executive Officer and Investor Relations Officer) |
ANDREA PALMA VIEGAS MARQUES
Diretora Financeira (Chief Financial Officer) |
MARIO GIRASOLE
Regulatory and Institutional Affairs Officer |
BRUNO MUTZENBECHER GENTIL
Business Support Officer |
FABIANE RESCHKE
Diretora Jurídica (Legal Officer)
|
MARIA ANTONIETTA RUSSO
People, Culture & Organization Officer
|
STATUTORY OFFICERS’ STATEMENT
Alberto Mario Griselli (Chief Executive
Officer and Investor Relations Officer), Andrea Palma Viegas Marques (Chief Financial Officer), Bruno Mutzenbecher Gentil (Business
Support Officer), Maria Antonietta Russo (People, Culture & Organization Officer), Mario Girasole (Regulatory and Institutional
Affairs Officer) and Fabiane Reschke (Legal Officer), as Statutory Officers of TIM S.A., declare, in accordance with Section 27,
paragraph 1, item V of CVM Resolution Nr. 80 of March 29th, 2022, that they have reviewed, discussed and agreed with the opinion
expressed on the Company’s Independent Auditors’ Report regarding the Company’s Financial Statements for the period
ended June 30th, 2023.
Rio de Janeiro, July 31st, 2023.
ALBERTO MARIO GRISELLI
Diretor Presidente
e Diretor de Relações com Investidores (Chief Executive Officer and Investor
Relations Officer) |
ANDREA PALMA VIEGAS MARQUES
Diretora Financeira (Chief Financial Officer) |
MARIO GIRASOLE
Regulatory and Institutional Affairs Officer |
BRUNO MUTZENBECHER GENTIL
Business Support Officer |
FABIANE RESCHKE
Diretora Jurídica (Legal Officer) |
MARIA ANTONIETTA RUSSO
People, Culture & Organization Officer |
|
|
|
|
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
TIM S.A. |
Date:
July 31, 2023 |
|
By: |
/s/ Alberto
Mario Griselli |
|
|
|
Alberto
Mario Griselli |
|
|
|
Chief
Executive Officer, Chief Financial Officer and Investor Relations Officer |
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