TIM Participacoes : 2019 - 2021 Strategic Plan

TIM PARTICIPAÇÕES S.A.

Publicly-held Company CNPJ/MF nº 02.558.115/0001-21

NIRE 33 300 276 963

MATERIAL FACT

STRATEGIC PLAN 2019-2021 AND GUIDANCE RELEASE

TIM Participações S.A. ("Company") (B3: TIMP3 e NYSE: TSU), in compliance with Article 157 of Law No 6,404 and the provisions of CVM Instruction No 358, hereby informs its shareholders, the market in general and other interested parties that Telecom Italia Group released today its forecasts for 2019-2021 period. In this context, TIM updated the forecasts of its Strategic Plan 2018-2020, released to the market through a Material Fact dated March 6th, 2018.

This update occurs after a year with considerable positive results, and the Company has shown its resilience and execution capacity aiming its short term objectives of the 2018-2020 Plan, even under a challenging external environment.

2018-2020 Plan

KPIi	Short Term Objective	2018 Results
Service Revenues Growth (YoY)	5-7%	5%
EBITDA Growth (YoY) / % EBITDA Margin	Double-digit growth	10%
EBITDA - CAPEX over Net Revenues	≥13%	15%

This environment was characterized by a macroeconomic recovery slower than previously expected by the market in general and by TIM, added to a more competitive scenario.

TIM, however, in this new triennium, reaffirms its commitment with (i) the preservation of an austere approach in cost controls, aiming to raise the profitability of its operation, and that is why maintains the target of reaching the level of 40% of EBITDA Margin in 2020, as well as (ii) an efficient capital allocation, characterized by the CAPEX destination to infrastructure (network and IT) extension and modernization projects, and (iii) the continuous expansion of the cash generation characterized by the growth of EBITDA - CAPEX over Revenues indicator to the level of 20%.

2018-2020

2019-2021

KPIi

Short Term

Long Term

Short Term

Long Term

5-7%

CAGR '17-'20

Mid to High-Single Digit

CAGR '18-'21 Mid-Single DigitDouble Digit

≥40% in 2020

Growth

n/a

~R$ 12 bi (∑'18-'20) / ~20%

≥40% in 2020

~R$ 12,5 bi (∑'19-'21)

≥13%

≥ 20%

≥20%

Lastly, TIM presents, as an attachment to this Material Fact, additional details about the 2019-2021 Strategic Plan and its guidance.

Rio de Janeiro, February 21st, 2019.

TIM Participações S.A.

Adrian Calaza

Investor Relations

and Chief Financial Officer

i The projected values for the indicators do not consider the adoption of the new IFRS 15 and 16 accounting standards and are presented under a pro-forma view to facilitate comparability with the Company's results.

CONFIDENTIAL - MARKET SENSITIVE

2019-2021 Strategic Plan

Key strategic priorities for 2019-2021 plan

Areas

Key priorities

• • Mobile Pre Paid - Offer simplification to improve customer experience with continued evolution of digital channels

• • Mobile Post Paid Consumer ("the Controle wave")

  • - Growth based on a «Mobile Challenger» approach pushing migration from prepaid

  • - Leverage the benefits of 4G coverage leadership

  • - Customer long term relationship driven by loyalty initiatives

• • Opportunity to gain relevance in overall business revenues leveraging on:

  • - Revision of value proposition

  • - More convergent approach offering E2E solutions

  • - Increase in efficiency and sales productivity

• • Increased role in IoT growing ecosystem (beyond connectivity)

• • New revenues opportunity from being a Platform provider (analytics, BD, mobile advertising, etc.)

• • Content offer aggregation to support Mobile + Fixed service revenue growth

• • Fiber deployment acceleration (backbone, backhaul and FTTH), with FTTH offer in selected regions

• • Launch of global deals for Network Access, according to spectrum mix evolving towards significant use of 4G vs. 2G and 3G by 2021

• • Successful Efficiency Plan still leveraging TIM results

• • Accelerate Digital Transformation in customer facing activities and internal process and systems

• • Continuous margin improvement, reaching more than 40% in 2020, due to rigid cost control (Opex growth below inflation)

Blended ARPU

(R$)

Mid to High single digit growth (CAGR)

Postpaid Churn

(monthly %)

Double digit decrease

'17

'18

'19

'20

'21

2018

2021

Opportunity size by 2021

~1 bln	>30	mln
Reais		lines

FTTCITY 601>1,500

FTTH

(mln HH)

2018

1.1>4

2018

Digital Interactions

(mln)

2021

2021

+12 mln

2018

2021

TIM Brasil 2019-'21 Targets

GOALS

Revenue

Growth SustainabilityImprove Profitability

DRIVERS

• • Further improve mobile ARPU

• • Expand Residential BB Revenues contribution

• • Tap B2B opportunity

• • Accelerate digitalization efficiencies

• • Maintain zero-based approach and traditional initiatives

• • Improve risk management models

  SHORT TERM (2019)

  TARGETS

  Service Revenues

  Growth:

  3% - 5% (YoY)

  EBITDA Growth:

  Mid to High single digit growth (YoY)

  LONG TERM TARGETS

  Service Revenues

  Growth:

  Mid single digit (CAGR '18-'21)

  EBITDA Margin:

  ≥40% in 2020