By Brazil Stock Guide – TIM SA (B3: TIMS3; NYSE: TIMB) posted record adjusted net income of R$1.04 billion in the second quarter, a 6.2% increase from a year earlier, as service revenue grew and stronger operating leverage lifted margins and cash generation.
The figures were disclosed by TIM Brasil in an earnings release on Monday. On a reported basis, net income slipped 0.6% to R$970 million after the carrier booked R$72.1 million in nonrecurring operating costs.
Net revenue rose 5.5% to R$6.97 billion, led by a 5.7% increase in service revenue to R$6.79 billion. First-half net revenue reached R$13.77 billion, up 6% from the same period of 2025.
Adjusted earnings before interest, taxes, depreciation and amortization increased 7% to R$3.59 billion. The adjusted Ebitda margin widened 0.7 percentage point to 51.5% as revenue outpaced the 4% growth in normalized operating expenses.
Adjusted Ebitda after leases climbed 7.8% to R$2.80 billion, with the margin expanding 0.8 percentage point to 40.2%. TIM attributed the performance to service-revenue growth, cost discipline and renegotiations of infrastructure contracts.
Mobile service revenue rises as postpaid base expands
Mobile service revenue increased 4.6% to R$6.37 billion, while average monthly revenue per mobile user rose 5% to a record R$34.30.
The postpaid business accounted for about 70% of mobile service revenue. Postpaid sales grew 5.8%, supported by new customers and price adjustments introduced during the first quarter.
TIM ended June with 33.67 million postpaid connections, up 6.8% from a year earlier. Excluding machine-to-machine lines, the postpaid base increased 4.7% to 26.13 million customers.
The prepaid business remained under pressure. Revenue fell 6.9%, while the customer base declined 8% to 28.21 million lines amid intense competition and weaker recharge frequency.
TIM’s total mobile base edged down 0.5% to 61.88 million users. The company’s market share stood at 22.4% in May, down 0.9 percentage point from a year earlier, according to data from Brazil’s telecommunications regulator Anatel.
Revenue from customer-platform operations more than doubled to R$63 million, driven by mobile advertising. Other mobile revenue rose 26.9%, supported by business-to-business services and internet-of-things projects.
Fixed-line revenue jumps 27%
Fixed-service revenue climbed 27% to R$416 million, reflecting growth at TIM Ultrafibra and the consolidation of technology-services provider V8.Tech.
Ultrafibra revenue rose 9.5% to R$247 million. Its customer base increased 12.5% to 899,000, while fiber-to-the-home connections expanded 15% to 896,000.
The carrier launched TIM Ultracombo in July, combining mobile and fiber services in a single package. The offer is designed to accelerate customer acquisition and make greater use of the fiber infrastructure incorporated through I-Systems.
TIM’s business-services division booked R$192 million in new projects during the quarter, the highest level in the company’s historical series. Business-to-business service revenue excluding wholesale operations rose 16.6% over the 12 months through June to R$1.75 billion.
Demand was led by corporate connectivity, internet of things, data partnerships and V8.Tech services, particularly in logistics, utilities, agribusiness and smart cities.
Cash generation outpaces revenue
Operating cash flow, measured as adjusted Ebitda after leases minus capital expenditure, rose 8.7% to R$1.87 billion. The corresponding margin widened 0.8 percentage point to 26.8%.
Free operating cash flow increased 10.1% to R$1.24 billion. For the first half, the measure advanced 19.2% to R$1.70 billion.
Capital expenditure totaled R$935 million, up 6% from a year earlier and equivalent to 13.4% of net revenue. Spending was focused on network infrastructure, information technology and the integration of I-Systems’ fiber assets.
Cash and securities fell 17.2% from a year earlier to R$4.53 billion at the end of June. TIM cited the acquisition of the remaining stake in I-Systems, the early payment of 2025 dividends and the repayment of a debenture installment.
Total debt after hedging reached R$17.05 billion, an increase of R$292 million from the second quarter of 2025. Liabilities incorporated from V8.Tech and I-Systems more than offset a reduction in financial debt.
Credit provisions and financial expenses increase
Provisions for doubtful accounts jumped 38.1% to R$264 million. TIM said the increase mainly reflected a specific business and wholesale customer, as well as the expansion of the postpaid base, which carries greater credit exposure.
The net financial result deteriorated 51.8% to a loss of R$569 million. The year-earlier period had benefited from a favorable court decision and stronger returns from the fund associated with Brazil’s 5G deployment.
Higher lease interest expenses and the consolidation of I-Systems also weighed on the quarter. Reported pretax income declined 3.6% to R$1.13 billion.
Adjusted earnings per share rose to R$0.43 from R$0.40. Lower income-tax and social-contribution expenses supported the adjusted bottom line after TIM approved R$400 million in interest on equity, compared with R$300 million a year earlier.
The board approved the R$400 million shareholder distribution on June 17. TIM expects total shareholder remuneration of R$5.3 billion to R$5.5 billion in 2026.
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