THE TIM released the financial results for the 2nd quarter of 2020. The operator recorded a drop of 23.9% in normalized net income and reduced net revenue by 6.5%. The balance sheet was impacted by the pandemic of the new coronavirus, with a drop in handset sales, a decrease in prepaid recharges and low adherence to postpaid plans.
Financial highlights of TIM Brasil
|Indicator||2nd quarter of 2020||2nd quarter of 2019||Difference|
|Normalized net income||R $ 260 million||R $ 342 million||-23.9%|
|Normalized EBITDA (earnings before interest, taxes, depreciation and amortization)||R $ 1.97 billion||R $ 1.96 billion||+ 0.9%|
|Normalized EBIDTA margin||49.6%||46.0%||3.6 p.p|
|Net Revenue||R $ 3.98 billion||R $ 4.26 billion||-6.5%|
|Standardized cost of operation||R $ 2.00 billion||R $ 2.30 billion||-12.8%|
|Capex (investments)||R $ 673 million||R $ 945 million||-28.8%|
In the second quarter of 2019, TIM had net income of R $ 2.02 billion due to tax credit and deferred tax adjustments in the previous period. Without this normalization, net income for the 2nd quarter of 2020 would have fallen by 87.1%.
Store closings impact mobile revenue
The mobile business had net revenue of R $ 3.67 billion, down 4.2% year-on-year. The indicator was impacted by the reduction in prepaid revenue (-10.7%), mainly by the decrease in recharges – the operator explains that the retraction reached more than 20% at the end of March. Postpaid shrank 1.1%, and TIM says that the closing of physical stores reduced the pace of hiring new plans and slowed migrations.
The closing of stores also had an impact on product revenue (sale of handsets), which reached R $ 61 million – a drop of 69.4% in the annual comparison. In addition, the cost of goods sold fell by 65.8%.
TIM ended the quarter with 52.03 million mobile lines (-5.3%), of which 30.7 million belong to prepaid and 21.3 million to postpaid. The operator has a 23.2% market share, behind Vivo and Claro. In the quarter, the operator deactivated 794 thousand chips, an increase of 613% in relation to the same previous period.
The operator also grew its M2M base (credit card machines, vehicle trackers and other IoT devices) by 18%, with 3.9 million accesses. ARPU (average spend per user) grew 0.9%, reaching R $ 23.4.
In recent news, the operator revamped the postpaid portfolio TIM Black, which now includes international roaming in countries in the Americas but removes the franchise for video services.
TIM Live reaches 600 thousand accesses and reaches BH and Brasília
In the fixed segment, TIM had net revenue of R $ 255 million, of which R $ 148 million represents TIM Live accesses, the company’s fixed broadband product. The figure is still discreet in the company’s total revenue, but there was an annual growth of 29% over the same period last year.
TIM Live’s ARPU grew by 7.6% and reached R $ 83.9, a rise justified by the increase in offers with FTTH technology (optical fiber to the customer’s home), which have higher speeds and more expensive monthly fees.
The company ended the period with 606 thousand broadband accesses, an increase of 19.6% in the annual comparison. 40% of the base has speeds above 100 Mb / s, and the operator has already informed its customers that there will be a price increase.
TIM Live coverage reached 2.8 million home passed households with FTTH, while the service offered via copper remained at 3.6 million households. The service is present in 27 cities, with a recent launch in Belo Horizonte and Brasília, outside the Plano Piloto. The commercial launch will be done 100% online.
TIM announces Massive MIMO and solution for remote areas
One of the news released to shareholders is the creation of sites unplugged, that is, disconnected cell towers. The project consists of building infrastructure for antennas in remote locations, such as roads, inland areas and inaccessible locations.
In these locations, the operator will use solar energy and satellite connection, allowing it to take 4G to remote areas without the need for fiber optic cables or the availability of electricity via utilities. Recently, TIM pledged to bring 4G to all 5,570 Brazilian municipalities. Currently, the operator serves 3,517 municipalities with the technology.
In addition, TIM announced the implementation of Massive MIMO technology in 4G. The standard allows to increase capacity of simultaneous connections up to three times without adding spectrum. The process consists of equipping the towers with more antennas and transmitters, and the operator says that 200 cities will receive the technology in 2020.
Partnership with C6 increased account opening
Another point in the presentation to shareholders is the partnership with C6 Bank. TIM had already released internet bonuses for prepaid, control and TIM Beta customers who recharge or pay the invoice using the bank’s services. The operator also promises internet bonuses for TIM Black postpaid customers to be launched “soon”.
In the first three weeks, the partnership increased the daily average of opening accounts by 8 times, totaling 200 thousand new customers for fintech and 52% of recharges were made to TIM numbers. The operator receives a fee per active customer referred to the bank.