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: February 9, 2021

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 – 12^th 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 TIM S.A. subsidiary

FINANCIAL STATEMENTS on

December 31, 2020

TIM S.A. and TIM S.A. and SUBSIDIARY

FINANCIAL STATEMENTS

December 31, 2020

Contents

Independent auditor’s report on individual and consolidated financial statements

To the board of directors and shareholders of

TIM S.A.

Opinion

We have audited the individual and consolidated financial statements of TIM S.A. (the “Company”), identified as Individual and Consolidated, respectively, which comprise the balance sheet as at December 31, 2020, and the statements of income, of comprehensive income, of changes in shareholders equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the individual and consolidated financial position of TIM S.A. as at December 31, 2020, and its individual and consolidated financial performance and cash flows for the year then ended in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants, the professional standards issued by the Brazil’s National Association of State Boards of Accountancy (CFC) and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter, including any commentary on the findings or outcome of our procedures, is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the individual and consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Provision for tax related contingencies

The Company has tax matters under discussion at various procedural levels, in the amount of R$16,985 million, for which, based on opinion and its legal counsel, a provision for contingencies of R$399 million was set up in the individual and consolidated statement of financial position as at December 31, 2020, while R$16,586 million were disclosed by the Company as possible losses as disclosed in note 24.

The determination of the amount of the provision and the amounts disclosed depends on critical judgments made by management, based on the analysis of the proceedings and the corresponding prognosis for their final resolution by its legal advisors. The audit of management’s assessment of the likelihood of loss in tax proceedings is complex, highly subjective and based on interpretations of tax legislation and court decisions, since there is significant uncertainty in the estimates as to the outcome of court decisions, how formerly adjudged cases have evolved and the position of the tax authorities.

In addition, in view of the magnitude of the amounts involved, any changes in estimates or assumptions that impact the determination of the loss prognosis may have significant impacts on the Company’s financial statements. Accordingly, this was considered a key audit matter.

How our audit conducted this matter

Our audit procedures included, among others: (a) obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of tax claims, including management’s process to determine whether the technical merits are more-likely-than-not to be sustained in court and over the generation of the report produced by the information technology system that support this process; (b) to test the Company’s assessment of the probability of losses over tax claims, our audit procedures included, among others, involving our tax professionals to assess the Company’s technical merits regarding certain matters in dispute, obtaining and analyzing external legal opinions, obtaining internal and external legal counsel confirmation letters, meeting with internal legal counsel to discuss certain tax disputes, and obtaining a representation letter from the Company’s internal legal counsel; and (c) assessed the adequacy of the disclosures made by the Company in note nº 24 in respect of provision for tax related contingencies.

Based on the result of audit procedures performed in the provision for tax contingencies and related disclosures, which is consistent with management’s assessment, we understand that the measurement of tax claims assessed as probable and possible loss, as well as the respective disclosures in note nº 24 are acceptable in the context of the individual and consolidated financial statements taken as a whole.

Other matters

Statements of value added

The individual and consolidated statements of value added (SVA) for year ended December 31, 2020, prepared under the responsibility of Company management, and presented as supplementary information for purposes of IFRS, were submitted to audit procedures conducted together with the audit of the Company’s financial statements. To form our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content comply with the criteria defined by NBC TG 09 – Statement of Value Added. In our opinion, these statements of value added were prepared fairly, in all material respects, in accordance with the criteria defined in abovementioned accounting pronouncement, and are consistent in relation to the overall individual and consolidated financial statements.

Other information accompanying the individual and consolidated financial statements and the auditor’s report

Management is responsible for such other information, which comprise the Management Report.

Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the individual and consolidated financial statements

Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the individual and consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and its subsidiaries’ financial reporting process.

Auditor’s responsibilities for the audit of the individual and consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the scope and timing of the planned audit procedures and significant audit findings, including deficiencies in internal control that we may have identified during our audit.

We also provided those charged with governance with a statement that we have complied with relevant ethical requirements, including applicable independence requirements, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Rio de Janeiro, February 09, 2021.

ERNST & YOUNG

Auditores Independentes S.S.

CRC-2SP015199/O-6

Fernando Alberto S. Magalhães

Accountant CRC-1SP133169/O-0

See the accompanying notes to the individual and consolidated financial statements.

See the accompanying notes to the individual and consolidated financial statements

See the accompanying notes to the individual and consolidated financial statements.

See the accompanying notes to the individual and consolidated financial statements.

See the accompanying notes to the individual and consolidated financial statements.

See the accompanying notes to the individual financial statements.

See the accompanying notes to the individual and consolidated financial statements.

See the accompanying notes to individual and consolidated financial statements.

COMMENTS ON THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020

Dear Shareholders,

The management of TIM S.A. ("TIM S.A.", "Company" or "TIM") presents the Management Report and Analysis of 2020 Results, together with the Individual and Consolidated Financial Statements and the Independent Auditors’ Report for the fiscal year ended on December 31, 2020.

The Financial Statements have been prepared in accordance with Brazilian Standards and the International Financial Reporting Standards (IFRS), as defined by the IASB.

The operational and financial information for 2020, unless when stated otherwise, is presented in Brazilian Reais (R$) based on consolidated amounts and pursuant to the Brazilian Corporate Law.

Due to the reverse merger of TIM Participações S.A. by TIM S.A. (former wholly owned subsidiary of TIM Participações S.A.) at the end of August 2020, 2020 full year results present TIM S.A.’s figures, in accordance with said company’s Financial Statements. In order to provide an adequate comparison from the economic standpoint, 2019 data disclosed reflect that in TIM Participações’ financial statements as of December 31, 2019.

Company Profile

TIM S.A. is a publicly-held company with shares traded on the São Paulo Stock Exchange (B3) and with American Depositary Receipts (ADRs) listed on the New York Stock Exchange (NYSE). In 2020, for the thirteenth consecutive year, TIM was included in the select group of companies comprising the Corporate Sustainability Index (ISE), reinforcing its commitment to economic, social and environmental sustainability. Moreover, TIM is the only telecommunications company to participate in Novo Mercado, a listing segment acknowledged for complying with B3's highest corporate governance levels.

TIM S.A. is controlled by TIM Brasil Serviços e Participações S.A., a subsidiary of the Telecom Italia group. Through the sharing of experiences and the adoption of a good practices policy, the Company exchanges experiences with its parent company and accumulates synergies that benefit all its clients. TIM operates in the mobile, fixed and long-distance telephony, as well as data transmission markets throughout Brazil and in the ultra-broadband market encompassing certain states of the country.

1. Message from the Management

The year 2020 was marked by the pandemic of COVID-19, which imposed great challenges on society as a whole, with impacts on public health and economics. Measures to combat the pandemic through isolation and social distance have substantially affected the daily lives of our customers and our operations, with repercussions on marketing, customer service and the management of our network. As challenging as this context was, the Company proved to be antifragile, reinvented itself and presented solid results at the end of 2020.

Pandemic Challenges and TIM's Response

The pandemic impacts were mainly concentrated at the end of the first quarter and throughout the second, and imposed (i) the closing of points of sale, with a reduction in our commercial activity; (ii) transition to a 100% virtual work model; (iii) alteration of voice and data traffic on our network; (iv) change in the relevance of telecommunications services for customers' lives; and (v) less economic activity and income availability. To manage this situation and turn it into an evolution, for TIM, it was necessary to focus on execution, with agility in decision making, prioritization and digital courage.

TIM's response was based on supporting its employees, customers and society in general, carrying out, among others, the following measures:

Antifragile: Turning Adversity into Opportunities

If the first semester was marked by the most serious impacts of the pandemic, the second showed a recovery in the annual growth rate of service revenue (+1.6% in 2H versus -0.9% in 1H) to end the year with growth positive 0.4%, versus 2019. The rapid migration to a virtual work model for the almost 10,000 employees showed productivity gains throughout the Company, which were fundamental for this evolution in performance.

Among the initiatives implemented in 2020, the following stand out; (i) the continuous evolution of the volume-to-value approach; (ii) the introduction of new offer concepts such as TIM + Vantagens, the Market Place for Entertainment and the combo with financial services from Banco C6; (iii) the

reduction in churn and recovery in the addition of customers; (iv) the solid execution in our operation and broadband; (v) the continuous advancement of our network and IT infrastructure; and (vi) the relentless pursuit of cost efficiency and investments.

The positive impacts of these initiatives were evident in the results of the different business lines:

The development of our infrastructure is a fundamental pillar of the strategy to improve the customer experience. Therefore, in 2020 we placed an emphasis on ensuring connectivity for our customers and expanding residential broadband service.

For another year, TIM ensured its leadership in 4G, having the largest and best coverage in this technology. We closed 2020 with more than 3,877 thousand cities and set a goal to cover all municipalities in the country by 2023. Our mobile network was once again certified as a leader in 4G availability and experience by OpenSignal.

In the fixed network, we exceeded the mark of 108 thousand kilometers of optical fiber in backbone and backhaul, demonstrating our commitment to the improvement of our transport network. We also expanded our coverage of the TIM Live residential broadband service, reaching 3.2 million households in FTTH and 6.4 million total households.

Efficiency and Cash Generation

The efficiency approach is increasingly in the culture of the entire Company, permeating the different processes in all areas. In addition, the digital transformation process, which has an impact on both the Company's costs and customer satisfaction, continues at great speed, with significant results in the adoption of digital channels such as the Meu TIM app (+ 12% in the number of unique users on the platform), electronic payments (75% of adoption, +10 p.p. versus 2019), digital invoices (77% adoption, +11 pp versus 2019), leadership in payments through the PIX platform, among telecommunications operators, amid other indicators. In the past two years, this transformation has contributed to an average cost reduction of more than 10% in the lines affected by the projects.

In 2020, the reduction in the level of bad debt (2.3% of Gross Revenue) also contributed to an excellent performance in expenses, which directly reflected the increase in relevance that the telecommunications service gained in the customers' view. All collection curves improved over the 12 months, closing the year above 90%.

The combination of all these factors on the operational and financial fronts produced, once again, the highest EBITDA in TIM's history, reaching R$ 8.4 billion, with a margin of 48.5% in the year, and also an excellent level of operating cash flow of R$ 4.6 billion. As a result, we closed the year with a solid financial position, a strong cash position of more than R$ 4.6 billion and low indebtedness.

Conclusion and Perspectives

The capacity to act quickly and assertively, taking advantage of opportunities brought by the changes imposed by the external environment and keeping the focus on executing the strategy were the hallmarks of 2020. This combination made it possible to deliver the main goals defined for the year, even in a highly challenging scenario and many uncertainties.

The expectation for the year 2021 is to accelerate the recovery process, both in terms of the economy in general and the results of the Company itself. We hope to increasingly capitalize on initiatives on the digital transformation and new business fronts that, combined with the evolution of the mobile segment consolidation process and definitions of 5G technology, will create great opportunities for TIM and the telecom industry.

2. Economic and Industry Overview

2.1 Macroeconomic Scenario

Despite the positive outlook for 2020, the year has been substantially impacted by the atypical and unpredictable new Coronavirus - COVID 19 pandemic, that brought, in addition to an immeasurable human onus, an expressive burden for Brazilian and the World’s economy. Such impact can be verified in the drop of Brazilian Gross Domestic Product (GDP) projections of -4.36% for the period, according to the latest FOCUS report¹ for 2020, compared to an expected growth of 2.30% in the first FOCUS report² for the same year.

However, after a devastating first semester, when pandemic caused the closing of business, a strong reduction in mobility and large capital outflow, which had already begun in 2019, the scenario has changed during the second semester, with emphasis for the strong GDP growth in the third quarter, boosted by an uneven recovery between the industries, with manufacturing and commerce with average levels above the pre-crisis period and services still significantly low. Activity level did not resume to 2019 levels at year end, but the drop was lower than projected in mid-2020.

Inflation, measured by the Extended Consumer Price Index (IPCA), ended 2020 at 4.52%³, highest annual rate since 2016. IPCA exceeded the midpoint of the target, which was 4.00% for the year. Inflation was mostly impacted by a rise in the price of Food and Drink, up by 14.09% in the year, and the largest contribution for the inflation measured by the index.

On the currency front, the US Dollar appreciated sharply vis-à-vis the Brazilian Real in 2020, ending the year at R$ 5.19⁴ after reaching R$5.93⁵ in May, the highest nominal exchange rate since the implementation of the Brazilian Real. The rate showed strong volatility during the year amid factors such high tax risk from a sharp increase in public spending due to the pandemic, the halt in the tax and administrative reforms, as well as the SELIC rate reaching the historical minimum level, which contributed to a strong exchange rate variation during the year. The trade balance ended the year with a US$ 50.9 billion⁶ surplus, up by 8.3% compared to 2019, the industries’ performance by the daily average shows growth of 6% in agriculture and cattle raising, drop of 2.7% in extractivism and of 11.3% in heavy industry.

As to the international scenario, the beginning of the COVID-19 vaccination in most countries, which is perceived as the beginning of the return to normalcy, coupled with the election of Joe Biden as the President of the United States, possibly due to a perspective of reducing international tensions, although the expectation of an agreement in the House of Representatives concerning the new tax package has not yet materialized, are factors that weight in to an increase in projections for global economy growth, which posted a strong recovery in the 3^rd quarter of 2020. The GPD of the countries part of the Organization for Economic Co-operation and Development (OEDC) has fallen 10.5% in the second quarter however it has increased 9% in the third. IMF has reviewed its projection for global economy growth in 2020 from -5.2% to -4.4%⁷

¹ Estimated by the FOCUS report issued by the Central Bank (BACEN) on December 31, 2020.

² Estimated by the FOCUS report issued by the Central Bank (BACEN) on January 3, 2020.

³ Source: Brazilian Institute of Geography and Statistics.

⁴ Source: Brazilian Central Bank

⁵ Source: Brazilian Central Bank

⁶ Source: Ministry of Economy

⁷ Source: Institute of Applied Economic Research

2.2 Particularities of the Telecommunications Industry

The Brazilian telecommunications industry is marked by strong competition and by the effective regulation of the National Telecommunications Agency (ANATEL), whose mission is "to foster the development of the country's telecommunications, in order to provide it with a modern and efficient telecommunications infrastructure, capable of providing the society with adequate, diversified and fair-priced services throughout the entire country.”

However, such strategy has been impacted by fiercer competition in the Brazilian market, seen in the presence of more aggressive offers considering the content provided to clients and a reduction in the prices offered by operators in general, which to a certain extent limited the Company's capacity to pass on cost increases or to propose adhesion to higher value offers.

Despite the impacts from the severe crisis brought by the new COVID-19 pandemic and all restrictive actions imposed to contain its spread, the industry maintained the growth trend in data consumption, requiring operators to adapt their network, facing challenges to deliver an even more robust infrastructure, amid an environment of more rational investments, with site densification projects, frequency refarming and aggregation of carriers in two or three frequencies. Furthermore, TIM continues to boost sharing initiatives focused on 4G and network transportation. This evolution in the Company`s network allows the significant expansion of 4G network traffic, providing customers with a better user experience, both in terms of performance, with faster download and upload speeds and lower latency, and indoor coverage and greater penetration.

The expectation of a new ANATEL auction related to the 5G technology has brought up local discussions. The implementation of this technology will bring highly significant results, enabling new business models, encouraging an increasingly connected society and clearing the way for the implementation of advances in research and development.

Lastly, the growing demand for Fixed Broadband has consolidated the perception of internet access as an essential resource for the population, which has been confirmed by customer base expansion and TIM Live's net additions.

3. TIM Services

3.1 Business

TIM is recognized by its strong brand and the reputation of an innovative and disruptive company, capable of meeting the market’s new consumption standards market. The proactive approach allows the Company a leading position in the transformation of the business model in telecommunications. The change in the customers' consumption profile and the emergence of new technologies foster a rupture in the telecommunications industry, based on the consumption of data, contents and digital services.

The offers' pioneering and innovative spirit are the Company's trademarks, which has a complete portfolio both for individual clients and corporate solutions for small, medium and large companies. In addition to the traditional voice and data services, TIM offers fixed ultra-broadband, TIM Live and fixed broadband service through the mobile network, utilizing WTTx technology and 5GDDS (under testing), and also seeks new sources of revenue, through pioneering initiatives in new business fronts, such as financial services and customer base monetization, mobile advertising and IoT.

Also, in the portfolio, the Company offers a series of digital contents and services in its packages, increasing the mobile devices' functionalities within its customers’ routines. The capacity to manage a complete and diversified portfolio gives TIM the possibility to offer customized packages to its customers and propose convergent offers in certain regions.

As proof of this advantage, in 2020, TIM entered into the first partnership between a telecom company and a digital bank. Offers launched together with C6 Bank add advantages to the portfolio, by providing more convenience and adding new experiences to Control and Postpaid plans offers. Another important innovation launched in the year was targeted at TIM Black Família customers, who now rely on a marketplace for OTT services, offering a greater flexibility to choose the entertainment content included in their plan and the distinguished service of the TIM Concierge. Innovative offers coupled with solid operation has ensured the portfolio’s advantage and greater acquisition quality.

3.2 Strategy:

TIM’s 2020 strategy was based on five pillars indicated below, each focused on the Company’s main stakeholders (customers, employees and shareholders) and, together, they aim to redesign customer experience and make TIM the best choice by market value, supported by its leading position in mobile ultra-broadband and its variety of innovative offers:

All five strategic pillars mentioned above are directly linked to our commitment to user experience, which is one of the three founding pillars of the TIM brand (including innovation and quality). This is the proposed structure’s main purpose, in which the customer is in the center of the decision-making process.

4. Human Resources

The Human Resources Department is structured to ensure the best practices in people management, to support the evolution process at the Company, aligned with the technological transformations and business challenges that include the commitment to sustainability and promotion of diversity and inclusion.

It is fundamental to rely on an engaged team to exceed challenges and fetch better results. At TIM, the relationship of transparency and respect with all levels strengthens the pride of belonging and the clarity about our direction. These factors are differential in the development of our employer brand.

In 2020, we achieved another record of adhesion (97%) in the Climate and Engagement Survey. This growth reflects our commitment to listening to people and the credibility of the Climate Management process at TIM.

Some practices were highlighted in the annual Climate and Engagement Survey, which showed significant results, such as the increase in general favorability by 3 percentage points, reaching 84%, and placing TIM 12p.p. above Mercer's Global Telecom Market, a consulting partner responsible for research.

Among the dimensions highlighted in the comparison with 2019, the biggest developments (equal to or greater than 7 p.p.) are in Process Improvement, Healthy Work Environment, Career and Ability to Achieve Goals. This confirms that the actions taken during the year 2020 were perceived positively by our employees.

The results of the Climate and Engagement Survey at TIM in 2020 consolidate the team's high engagement and also indicate that in 2021 we need to focus on specific areas that are not on the same level as TIM and that there is an opportunity for improvement. In addition, it will be necessary to investigate the most critical areas in recognition and reward, in order to act on people's perception of perceived remuneration.

The culture of integrity and attractive careers also stand out among the factors most recognized by our team, reflecting the high engagement and success of actions such as TIM Talks Experience 2020 and Diversity and Inclusion campaigns.

4.1. People

TIM ended 2020 with 9,421 employees across Brazil. The employees, with their stories and knowledge, represent the Company's intellectual capital and are the engines of business development.

Approximately 70.1% of the employees have completed higher education or attend college and 10.0% have postgraduate degrees. The numbers and results show that TIM has a diverse and highly-qualified staff to meet its challenges. The workforce is complemented by 68 interns and 234 young apprentices.

4.2. Development and Training

TIM employees have access to a well-structured training and development offer to evolve within the company and build a successful career. TIM invested more than R$ 10.8 million in training and development of its employees in 2020.

To guide the careers of its employees, TIM identifies and monitors individual performance to guide activities with more assertiveness. The Company evaluates the dedication and differentiated performance of its professionals through different performance management tools and encourages and provides opportunities for development and learning.

Here at TIM, throughout the year 2020 we focused on supporting the company's evolution and transformation towards the TELCO digital model, with a specific focus on the development of new capabilities, necessary to achieve the objectives of the company's strategic and industrial plan. The objective has also been to strengthen and disseminate digital and social learning approaches, consistent with the accelerations brought about by the pandemic situation, as well as to develop specific programs for selected audiences and themes. Thus, we are able to offer our employees the best training and distance learning initiatives.

Among the programs that stood out the most, are:

TIM Talks: We offer all employees a 4-week program of innovative learning experiences, covering topics related to business, technology, environment, health, diversity and inclusion, skills of the future, among others, also enabling society to participate with events open to the outside.

Internship Program: To attract the best students in the market and train our future professionals, the Internship Program brings students to TIM with energy, determination, initiative, a sense of team and, especially, interest in challenges and innovation. The program has an important focus on the assumptions of diversity and inclusion, in the context of TIM's ambitions and plans in ESG matters and is structured through a dedicated journey of training and development initiatives, including initiatives with Job Rotation and Job Shadowing, among others.

Support Plan in the context of the COVID Pandemic 19: Throughout 2020, due to the pandemic of the new coronavirus, TIM carried out training actions focused on topics such as mental, emotional, self-care, well-being and we also provide integration content in digital format. In addition, we have transformed 100% of our training actions into distance learning.

Onboarding: Considering the digital transformation processes that TIM started a few years ago, accelerated by the needs of the pandemic, a new Onboarding program was designed to engage and prepare new employees for day-to-day activities. The main changes were the creation of a new brand, the inclusion of new targets, the digitization of 100% of the contents and a new governance model. The new program will be fully implemented in the first quarter of 2021.

Because we believe that diversity and inclusion are essential for valuing and engaging people, and play a fundamental role in the innovation process, we reinforce our position and commitment to the theme through the construction of diversity and inclusion policies, programs and initiatives, aligned with the business strategy, organizational culture and appreciation of the contribution of each employee at TIM.

In 2020, the Diversity and Inclusion Program included an annual calendar of actions, based on the UN calendar; creation of the diversity committee, formed by senior leadership; launching of affinity groups, formed by employees from all levels, areas and regions; who work together in the design and implementation of inclusive actions for the pillars of gender, LGBTI + people, race, generations and people with disabilities. A Diversity Policy was also launched with premises and guidelines for the people management processes and reinforcement of the expected behaviors and behaviors of employees, partner companies, suppliers and other stakeholders in the value chain. Because it believes that information and knowledge is the first step in breaking paradigms and prejudices, the 2020 diversity program included an integrated communication and training plan for TIM leaders and professionals, with more than 40 actions and 2,300 trained employees. TIM Convida was also launched, a 100% digital event and open to society, with the aim of connecting TIM with companies, academia, specialists and society in general in an ecosystem of dialogue and reflection on the theme. In all, 6 editions of the event were held with over 50 thousand views on Youtube.

4.3. Long-Term Incentive Plan

The Long-Term Incentive Plan aims to grant TIM S.A.s shares or options for the purchase of shares to employees of the Company and its subsidiaries, thus seeking to promote the expansion, achievement and success of corporate goals, and ensuring the alignment of interests of shareholders and TIM's management.

On August 5^th, 2011, April 10^th, 2014^th, and April 19^th, 2018, TIM Participações S.A.'s General Shareholders' Meeting (incorporated by TIM S.A. on August 31, 2020) approved the long-term incentive plans; “Plan 2011-2013”, “Plan 2014-2016” and “Plan 2018-2020”, respectively, granted to the high management and those holding key positions at the Company and its subsidiaries.

The Plans for 2011-2013 and 2014-2016 cover the granting of options for the purchase of shares, while Plan 2018-2020 provides for the granting of shares (performance shares e restricted shares).

The exercise of options from Plan 2011-2013 is subject to specific performance targets, which could stop it, while the exercise of options of Plan 2014-2016 the achievement of goals can affect only the acquisition price of the shares. The Exercise Price is calculated by applying an adjustment, upwards or downwards, to the Share Base Price, as a result of the stock performance, considering the criteria provided for in each Plan.

The 2018-2020 Plan proposes to grant shares issued by the Company, subject to the participant's permanence in the Company and performance (achievement of specific goals). The number of shares may vary, upwards or downwards, as a result of the performance and eventually the granting of dividends, considering the criteria provided for in each Grant.

The options for the 2011-2013 and 2014-2016 Plans are effective for 6 years and TIM S.A. has no legal or non-formal obligation to repurchase or settle the options in cash. For the 2018-2020 Plan, the term has the same periodicity of 3 years related to its grace period (Vesting).

As approved by the Company's General Meeting, the Plans' management is looked after by the Board of Directors, subject to the Company's By-laws.

Specifically, for 2017, as the Company started the process to restructure its long-term incentive plan, on an exceptional basis and duly approved by the Board of Directors, the long-term incentive plan happened as bonus, with payment subject to the fulfillment of certain financial ratios at TIM and split in three annual installments.

4.3.1. Cycle for Stock Options 2011-2013

4.3.2. Cycle for Stock Options 2014-2016

4.3.3. Shares Cycle 2018-2020

5 Network

Infrastructure is one of the Company’s strategic pillars and TIM reinforces its investment commitment in 2020, seeking to offer more and better services. Recent changes to consumption pattern, as well as the increasing demand for quality requires a structured network expansion plan, supported by more robust technical analyses regarding the consumption pattern and the customers’ needs, as well as an extensive cultural transformation.

In spectrum usage, TIM continues its successful refarming project, expanding towards the 2.1GHz frequency, aiming for more efficiency and better performance. Regarding fiber, the Company continues its network expansion project to support the ultra-broadband converging network, increasing the availability of FTTH and FTTS.

As for sites, TIM plans to increase site density by using Biosites, which are sustainable, cheaper structures that are easier to install and have no visual impact on cities. In the context of big data, the Company is constantly evolving its analytical tools from a more complete base and proactive approach, aiming for a more efficient deployment of investments.

When it comes to corporate culture, the new technologies and customer expectations break the traditional model of telecommunications operators. In this scenario, TIM seeks to develop, motivate and engage its employees so that they can perform in a dynamic, innovative and collaborative environment based on an agile and flexible operating model.

5.1 Nationwide Coverage

TIM's infrastructure has a national reach, covering approximately 95% of the Brazilian urban population, being present in almost 3,877 cities. The Company also has extensive data coverage, maintaining its leading position in 4G coverage in the country.

Out of the R$ 3.89 billion invested in 2020, 92% were dedicated to network and information technology in line with the previous years, aiming to meet the growing data consumption. Infrastructure improvement and growth are supported by different projects, among which stand out the expansion of fiber optic network (backbone, backhaul and FTTH), densification of sites, frequency refarming and the aggregation of carriers in two or three frequencies, depending on the geographic location. Moreover, TIM has advanced its sharing initiatives focused on 4G and network transportation.

Among the main projects underway focused on the modernization and the continuous enhancement of our infrastructure, we highlight:

For another year, TIM maintains the leadership in 4G coverage, reaching 3,877 cities (95% of the country's urban population). The 20% YoY surge in network elements for this technology reinforces the Company's commitment to the evolution of the mobile network's infrastructure quality and capacity. As a result, 4G data traffic reached 90%, up by 5 p.p. compared to the previous year.

Moreover, the use of 700Mhz frequency in the development of LTE network continues to evolve, providing customers with a better user experience, both in terms of performance, with faster download and upload speeds and lower latency, and in indoor coverage and greater penetration.

In the end of 2020, TIM had 21,950 sites, 81% of which connected via high capacity backhaul in the same period.

In terms of transportation infrastructure, the Company reached 108,000 km of fiber optic for backbone and backhaul, a 7.5% expansion YoY.

The expansion of fixed broadband coverage evolved positively throughout 2020, surpassing 3.2 million homes passed with FTTH while FTTC ended the year at 3.7 million units. This totals 6.4 million homes passed in 35 cities (FTTH +FTTC)⁸.

Finally, with 1,668 active Biosites at the end of 2020, the development of Biosite installation projects is also aligned with the Company's corporate social responsibility values. These structures provide a solution for the densification of the mobile access network (antennas/towers) with an extremely low visual and urban impact. Biosites also contribute to the harmonization with the environment and urban infrastructure – having a multifunctional capability of aggregating telecommunications transmission, lighting and security cameras –, besides being cheaper and faster to install.

⁸ (+) Rio de Janeiro (RJ), São Gonçalo (RJ), Nilópolis (RJ), Nova Iguaçu (RJ), São João do Meriti (RJ), Duque de Caxias (RJ), São Paulo (SP), Mauá (SP), Poá (SP), Suzano (SP), Francisco Morato (SP), Franco da Rocha (SP), Diadema (SP), Salvador (BA), Lauro de Freitas (BA), Camaçari (BA), Feira de Santana (BA), Recife (PE), Olinda (PE), Jaboatão dos Guararapes (PE), Paulista (PE), Goiânia (GO), Aparecida de Goiânia (GO), Anápolis (GO), Manaus (AM), Betim (MG), Contagem (MG),Brasília (DF), Taguatinga (DF), Samambaia (DF) and Ceilândia (DF).

Currently, the Company is authorized to use more than 110 MHz, with 36 MHz in frequencies below 1 GHz distributed as follows:

5.2 Quality and Customer Experience

In a year of social distancing and the closing of brick-and-mortar stores in several Brazilian regions, the need to strengthen digital channels and the quality of customer caring processes became even more important. Therefore, mechanisms developed to simplify self-service and boost digital sales channels have been showing positive results.

Regarding sales, in 2020, pure postpaid acquisitions increased by 31.7% YoY, while consumer Control was up by 1.9% YoY and digital sales for TIM Live rose 11.2% YoY. Furthermore, digital recharges mix continued to gain relevance, with a 2 p.p. growth YoY.

In terms of customer caring processes, Meu TIM app remains a key tool to simplify processes, providing customers with greater transparency and control to manage their plans. The 12.3% YoY growth in the app’s monthly average of unique users demonstrates customer’s increasingly acceptance of this channel. Accordingly, the 36.4% YoY decline in human interactions also reinforces the channel’s importance, reducing dependency on call centers.

Another ingenious initiative explored by the Company is the use of artificial intelligence at the customer service center. These innovations bring benefits to customers, by implementing tools that can automatically detect possible problems in the services provided to the users, suggesting corrective measures or solving them. TIM’s cognitive self-service provide voice responses, in natural language and in real time, to consumers’ doubts or problems about the benefits of each plan, invoice payment, in addition to other services such as hiring data service, unblock lines, question information and others. In 4Q20, we had on average 3.5 million self-services per month through the cognitive assistant. In 2020, over 22 million calls began to be handled by the new Cognitive IVR.

As a result, 4G data traffic surpassed 90% (5 p.p. up) compared to the previous year.

6 Operational performance

6.1 Overview of the Brazilian Market

In 2020, mobile market reported a change of 292% YoY. A total base growth pace seen for the last time in 2015, when postpaid segment began its consolidation. In the past 12 months, postpaid net additions reached 9.6 million users (63% were human postpaid lines) and surpassed the 2.3 million drop in prepaid users for the first time in 5 years.

6.2 TIM’s performance

The postpaid base ended the year with 21.8 million lines (+1.7% YoY), 82.6% of which are human postpaid lines and 17.4% are M2M lines. In the period, this segment’s mix over total base reached 42.4% (+3.0 p.p. YoY).

Human postpaid reached net additions of 216,000 users in the year, ending 4Q20 with 18.0 million lines (+1.2% YoY). The first quarter, since the beginning of the social distancing measures caused by the pandemic, in which commercial operations maintained their pace. Therefore, the period’s result was positively impacted by gross additions growth (+18.9% QoQ and +3.5%YoY). Churn posted a new decrease, -1.0 p.p. YoY on the monthly rate, surpassing, already in 2020, the result forecast for 2022, according to the Company’s most recent three-year plan.

The prepaid base closed 2020 with 29.6 million users. Following the mobile market dynamics, net disconnections reached 3.4 million users in the past 12 months presenting a downturn, result of a significant reduction in the segment’s churn (-25.4% YoY). Positive net additions in the quarter, spending maintenance and the recovery in rechargers have been key for a positive evolution in the segment’s results since its most severe period.

Breakdown of customer base by technology:

6.3 Fixed Segment:

TIM Live base totaled 645,000 customers in 2020 (+14.0% YoY). Net additions in FTTH technology came to 131,000 in the full year. We ended the year in 34 cities with FTTH (+47.8% YoY), being 27 cities and 7 administrative regions.

The strategy of offering a distinguished standalone broadband service, with an OTT friendly approach, is shown in a strong result - with a positive evolution of higher value plans in the base mix (+16.2 p.p. YoY).

7 Financial Performance

To better represent the financial performance and commercial trends, TIM normalizes some accounts of its Financial Statements, eliminating the impact of non-recurring items. These movements are mentioned whenever required.

Note: due to the reverse merger of TIM Participações S.A. by TIM S.A. (former wholly owned subsidiary of TIM Participações S.A.) by the end of August 2020, 2020 full year results present TIM S.A.’s figures, in accordance with the company’s financial statements (ITR and DFP). In order to provide an adequate comparison from the economic standpoint, 2019 data disclosed reflect that in TIM Participações’ financial statements as of 2019.

7.1 Operating Revenue

In 2020, Net Revenues totaled R$ 17,268 million, down by 0.6% YoY, reflecting reduced commercial activities due to the Covid-19 pandemic, which caused a 22.7% drop in Product Revenues. Despite the challenging macroeconomic scenario imposed by the pandemic, Net Service Revenues ended the year with a slight 0.4% increase, reflecting the gradual recovery trend throughout the second semester.

Breakdown of Net Revenues and other highlights are presented below:

Mobile Service Revenues (MSR) decreased R$38 million, or 0.2%, reaching R$15,610 million in the fiscal year ended December 31, 2020. This figure was mainly due to the sharper drop in prepaid segment, with a reduction in rechargers in the segment, in addition to reduced commercial activities in postpaid, an effect of the economic fallout of the COVID-19 pandemic.

Client Generated Revenues (CGR) composed by Local Voice Revenues, Long Distance Voice and Data & Content declined 0.1% YoY in 2020, driven by the same factors that impacted MSR.

Interconnection Revenues grew 10.7%, reaching R$ 528 million in the fiscal year ended December 31, 2020. The result was impacted by a higher MTR rate (Mobile Termination Revenue +10.2% YoY) and an increase in incoming traffic (+12.1% YoY). After successive cuts to MTR, the foreseen Anatel’s increase was applied in February 2020. The incidence of MTR on Net Service Revenues reached 2.6% in the year.

Other Mobile Revenues ended 2020 down by 8.5% YoY, at R$ 731 million. From the last quarter of 2020, this line began to be positively impacted by revenues from the partnership with C6 Bank. In 4Q20, the partnership’s Net Revenue totaled R$14.7 million (as per Note 27 to TIM S.A.’s Financial Statements). For the full year, the decrease is explained by the reduction of fees on other mobile service revenues. It should be noted that the performance of this line is still impacted mainly by revenues from network sharing and swap agreements, in line with the Company's strategy to expand the fiber optic transport infrastructure (backbone and backhaul) with higher efficiency in asset allocation (Capex and Opex).

Fixed Service Revenues totaled R$ 1,054 million, an 11.1% rise YoY, boosted by the growth in TIM Live (+27.9%) more than offsetting the 7.0% drop in revenues from other businesses in the fixed segment.

In 2020, TIM Live ARPU was R$ 87.2, 7.8% higher YoY, this performance is explained by the penetration of high value offers with faster speeds. In the year, TIM Live Revenue accounted for 60% of total Fixed mix vs. 52% in 2019.

Product Revenues totaled R$ 603 million, a decrease of 22.7% compared to 2019, significantly impacted by the closing of most of the Company’s brick-and-mortar stores, its main handset sales channel, from March to June, due to the social distancing measures adopted to fight the spread of the new coronavirus pandemic.

7.2 Operating Costs and Expenses

*Operating Costs normalized by adjustments to the sale-leaseback contract of towers (+R$ 2.6 million in 1Q20 and +R$ 1.5 million in 1Q19), tax credit due to the exclusion of ICMS from the calculation basis for PIS/COFINS (-R$ 75.2 million in 3Q19 and -R$ 1,720 million in 2Q19), legal and administrative services related to special projects (+R$27.2 million in 4Q20), legal services connected to the PIS/COFINS court decision (+R$ 4.4 million in 3Q19 and +R$ 3.5 million in 2Q19) and revision of loss prognosis for labor contingencies related to employees, tax contingencies and civil contingencies (+R$ 11.2 million in 3Q19 and +R$ 221.8 million in 2Q19) and contract losses (+R$ 22.4 million in 3Q19).

Reported Costs and Expenses totaled R$ 8,926 million in 2020, a 15.4% worsening from 2019. This line was negatively impacted in R$30 million in 2020 and positively in R$ 1,530 in 2019, a net result of the effects related to items explained in the footnote to the chart above. Without the non-recurring effects, Total Normalized Costs and Expenses declined 4.0% in the year, totaling R$ 8,896 million in 2020.

An analysis detailing the operational expenses for the year is presented below:

Personnel Expenses totaled R$1,004 million, down by 0.2% YoY, positively impacted by lower commercial personnel expenses due to the closing of brick-and-mortar stores in 2Q20 and, negatively, by organic elements such as inflation on wages and benefits in 1Q20 and 3Q20.

Selling Expenses dropped 10.3% YoY reaching R$3,010 million, reflecting another year marked by the structural trends, with efficiency gains from process digitalization and increased penetration of digital channels more than offsetting increased marketing expenses related to more exposure in the media. Furthermore, there was a reduction in FISTEL expenses and reduced sales in 2Q20, with decreased spending on commissions for recharges and for line activations.

Network and Interconnection increased by 12.8% YoY, compared to 2019. This performance was boosted by a higher mobile termination rate (MTR) as from February 2020 and increased Network costs, stemming from increase rental and infrastructure sharing and maintenance expenses.

Normalized General and Administrative Expenses (G&A) ended 2020 with growth of 4.9% compared to 2019. This increase is mostly explained by the net effect of: i) higher outsourced service expenses and rentals; and ii) lower expenses with professional services (especially hardware and software maintenance), cleaning and surveillance regular services and insurance.

Cost of Goods Sold (COGS) stood at R$ 756 million, a 18.9% drop YoY, mainly due to the closing of most of the Company’s brick-and-mortar stores, the main handset sales channel, from March to June, arising from the social distancing measures to fight the new coronavirus pandemic.

Provisions for Doubtful Accounts (Bad Debt) came to R$ 553, falling 26.1% YoY, reflecting the continuous efforts to enhance customer acquisition through more robust credit models and policies, as well as higher efficiency in collection and recovery. The collection curves have showed continuous improvement in the past few months and the line got back to 2.3% of TIM’s Gross Revenue.

Normalized Other Operating Revenues (Expenses) came to R$ 354 million, up by 8.1% YoY, in 2020, explained by a reduction on other operating revenues, due to lower revenues from late payment fines (the company stopped collecting fines of this nature when the pandemic began and resumed collection in August) and lower revenue from suppliers’ credits.

Subscriber Acquisition Costs (SAC = subsidy + commissioning + advertising expenses) totaled R$ 45.7 per gross addition in 2020, down by 11.6% YoY.

The SAC/ARPU ratio (payback per client) reached 1.8 month in 2020 from 2.2 months in 2019.

7.3 From EBITDA to Net Income

*Normalized EBITDA according to the items in the Costs section (+R$ 27.2 million in 4Q20, +R$ 2.6 million in 1Q20, -R$ 37.1 million in 3Q19, -R$ 1,494 million in 2Q19 and +R$ 1.5 million in 1Q19). Financial Results normalized by monetary correction on tax credit and labor, tax and civil contingencies (-R$ 64.6 million in 3Q19 and -R$ 1,051 million in 2Q19). Net income normalized by tax credit and other effects (-R$ 2.4 million in 4Q20 +R$ 35.2 million in 3Q19 and +R$ 865 million in 2Q19) and by adjustment to deferred taxes (+R$ 30.3 million in 1Q19).

EBITDA

Normalized EBITDA totaled R$ 8.4 billion in 2020, up 3.2% YoY. The main performance drivers were: (i) Mobile Service Revenue growth pick up following the most severe pandemic period, (ii) maintenance of Fixed Service Revenues solid growth, reflecting the acceleration of TIM Live, (iii) broadening of structural initiatives to control costs/expenses and (iv) strong reduction in variable costs due to decreased commercial activity, impacted by the pandemic fallout since the last weeks of March and lasting through the entirety of the second quarter.

Normalized EBITDA Margin reached 48.5% in 2020, a 1.8 p.p. growth YoY, maintaining the growth trend seen over the last 7 years.

Depreciation and Amortization (D&A) / EBIT

In 2020 D&A grew 7.8%, mainly explained by an increase in Depreciation of 4G Transmission Equipment and Right of Use, related to a larger Fixed Asset base from lease agreements. In 2020, Normalized EBIT was down by 4.7% YoY, while normalized EBIT margin ended the year at 16.5%, up by 0.7 p.p. Vs. 2019.

Net Financial Result

In 2020, Financial Result was negative R$ 807 million, versus -R$ 1,096 million in 2019 due to a higher revenue from monetary correction on PIS and COFINS credits (related to a higher balance of credits along 2020 versus 2019), a lower volume of PIS and COFINS over Interest on Equity distributions (due to the merger of TIM Participações into TIM S.A.) and a lower volume of interest on financing, that exceeded the lower revenue from interest on financial investments. The last three lines have declined on an annual comparison due to a lower basic interest rate. Additionally, there were increased financial revenues from mark-to-market of subscription warrant related to approximately 1.4% in C6 Bank’s capital stock.

Income Tax and Social Contribution

Normalized Income Tax and Social Contribution was negative R$ 166 million in 2020, versus + R$ 17 million in 2019. In the full year, the effective adjusted rate stood at -8.2%

Net Income

Net Income normalized by the effects explained above totaled R$ 1.9 billion, a 1.8% drop YoY, while normalized Earnings per Share (EPS) was R$ 0.77 compared to R$ 0.64 in the previous year.

Reported Net Income totaled R$ 1.8 billion, a 42.3% decline YoY with EPS of R$ 0.76 versus R$ 1.50 in 2019. This drop is explained by tax credits accounted for in 2019 and classified as non-recurring, as previously discussed.

7.4 Cash Flow, Debt and CAPEX

*Normalized EBITDA according to the items in the Costs section (+R$ 2.6 million in 1Q20, -R$ 37.1 million in 3Q19, -R$ 1,494 million in 2Q19 and +R$ 1.5 million in 1Q19).

Operating Free Cash Flow (OFCF) was positive by R$ 4,610 million, a growth of R$ 1,320 million vs. 2019. This result mainly a positive R$ 159 million Change in Working Capital in 2020 compared to -R$ 2,501 million in 2019, mainly due to PIS and COFINS credits accounted for in 2Q19 and 3Q19. Excluding this non-cash effects, Change in Working Capital ended 2020 adding R$ 1,100 million more cash than in 2019.

It is important to note that in 1Q20, the FISTEL payment was postponed (about R$ 790 million) – usually due in March – to August 31^st. In 3Q20, we paid nearly R$ 300 million related to taxes, related to Condecine and CFRP, negatively impacting Change in Working Capital and Cash Flow for that quarter. The remaining Fistel (TFF) amount is still suspended, without a defined payment date.

Therefore, the main reasons for the improvement in Change in Working Capital (excluding the non-cash effects related to PIS and COFINS credits previously mentioned), in addition to the suspension of Fistel (TFF) payment, relates to an amount substantially less negative in Accounts Receivable, due to a significant improvement in the collection line in 2020, in addition to lower disbursements with legal and administrative proceedings.

CAPEX

In 2020, Investments increased by 1.0% YoY, totaling R$ 3,891 million and are still being allocated to infrastructure (92%), mainly to projects in IT, 4G technology through 700 MHZ, transport network and FTTH expansion (which received approximately 13% of 2020 investments).

DEBT AND CASH

Gross Debt in 4Q20 was R$ 10,257 million, up R$ 646 million YoY. The current balance includes (i) leasing recognition in the total amount of R$ 8,217 million (related to the sale of towers, the LT Amazonas project and leasing contracts with terms exceeding 12 months

pursuant to IFRS 16); (ii) bank debt in the amount of R$ 2,345 million and (ii) hedging derivatives⁹ position in the amount of R$ 304 million (reducing gross debt).

At the end of December, financings (after hedge) totaled R$ 2,041 million, comprised of agreements with foreign private banks and fully hedged in local currency. The average cost of debt excluding leases was 3.2% p.y. in 2020, down when compared to 6.9% p.y. in 2019.

In April, TIM’s Board of Directors approved the borrowing of R$ 1,000 million to enhance liquidity ahead of possible impacts that the COVID-19 pandemic could cause on the economy. Of that amount, R$ 574 million were borrowed from The Bank of Nova Scotia in the same month. During 2Q20 TIM assessed the best conditions for borrowing the remaining sum and in July the company contracted R$ 426 million from BNP Paribas. Also, in July, TIM fully paid its Debentures (~R$1,000 million) originally distributed in January 2019.

At the end of the year, Cash and Securities totaled R$ 4,646 million, an increase of R$ 1,706 million YoY.

The average cash yield was 2.8% p.y. in 2020, down compared to 5.9% p.y. in 2019, following the reduction of the Selic base rate.

In 4Q20, Net Debt totaled R$ 5,611 million, down by R$ 1,061 million compared to the same period of the prior year, when net debt was R$ 6,672 million. This reduction is explained by the growth of Cash and Short-term Investments outpacing the rise of debt and leasing balance. Net Debt excluding financial leasing effects, Net Debt-AL, would reach -R$ 2,767 million, in other words, a “net cash” position with an improvement of R$ 1,659 million compared to the previous year.

Net Debt/EBITDA stood at 0.67x in 2020. Excluding financial leases, Net Debt-AL/EBITDA-AL was -0.42x in 2020, down compared to -0.17x in 2019.

⁹ The Derivatives position is composed, also, by the subscription bonus in C6 Bank capital – Financial Statements, Note 37.

8 Environmental, Social & Governance

8.1 ESG: TIM’s commitment to a positive transformation to all stakeholders

TIM is a pioneer in Environmental, Social & Governance (ESG) topics in the Brazilian telecommunications industry. TIM has been part of B3’s Corporate Sustainability Index (ISE-B3) for 13 years and is the telecommunications company present in the index for the longest time. Since 2011, TIM voluntarily joined the Novo Mercado, the highest Corporate Governance Level of the Brazilian Stock Exchange, in addition to being the first and only telephony operator awarded as Pró-Ética (Pro-Ethics) by the Controller General of Brazil (“CGU”)

As a signatory of UN’s Global Compact since 2008 and member of the Human Rights Working Group of the Brazilian Global Compact Network since 2015, TIM develops projects linked to the Sustainable Development Goals (SDG) and recognizes data privacy, safe internet and access to information and freedom of speech as essential and non-negotiable rights.

TIM responds to the Carbon Disclosure Project (“CDP”), the largest climate change data base in world, providing information on greenhouse gas, since 2010 and TIM also records its emissions information in the Public Emissions Registry of the Brazilian GHG Protocol Program.

For the past 12 years, TIM has published the Sustainability Report to its stakeholders with information on the main financial and non-financial results, according to the Global Reporting Initiative (GRI) standards. The report is assured by an independent third party.

Our Policies on Social Responsibility, Human Rights, Diversity, Environment, Climate Change Management, Corporate Risk Management, Anti-Corruption, Relationship with Suppliers, Occupational Health and Safety, among others, are publicly available to all our stakeholders.

For its strong actions on ESG topics, TIM is included in domestic and international indexes and ratings, such as the Corporate Sustainability Index (ISE-B3), The Carbon Efficiency Index (ICO2-B3), ESG Brazil Index (S&P/B3), CDP Brazil Climate Resilience Index (ICDPR-70), FTSE4GOOD Emerging Markets, FTSE4GOOD Latin America, MSCI ACWI ESG Leaders, MSCI Emerging Markets ESG Leaders, among others, in addition to being certified by ISO 14001 since 2010.

8.2 Material topics

Given the Covid-19 pandemic, TIM has conducted a new stakeholder consultation process, in order to review its materiality, a good practice encouraged by specialists.

After a new round of interviews and surveys, four material topics have been updated and a new one has been added “Promotion of Diversity and Equal Opportunities”, as shown in the updated chart (in bold) below:

8.3 ESG Ambitions Plan

For TIM Group, managing its business is even more connected to a responsible management of aspects that go beyond financial ones and also create positive and long-lasting value to society. Therefore, together with TIM Italia, in the beginning of 2020, TIM made long-term environmental, social and governance commitments in its 2020-2022 Strategic Planning.

Ambitions are linked to UN’s Sustainable Development Goals and the Company’s materiality matrix.

The results of the ESG Plan will be disclosed soon.

8.4 Energy

Energy management is a material topic for TIM and one of its greatest challenges.

In 2020, 64% of TIM’s energy matrix came from renewable sources. By 2021, the Company expects to have 80% of its matrix from renewable sources, including 60 solar, hydro and biogas power plants, which will generate 38GWh of energy on a monthly basis, enough to power a 150,000-people city.

^(¹) Data adjusted after external appraisal.

By the end of 2020, TIM reached 1,679 active biosites. The biosites have a low visual impact and allow the aggregation of other services such as lighting, surveillance cameras, in addition to telecommunications transmissions.

8.5 Instituto TIM

In 2013, TIM founded Instituto TIM (www.institutotim.org.br) whose mission is to provide democratic access to science, technology and innovation in order to foster human development in Brazil. More than 700,000 people in all Brazilian states and the Federal District have benefited from the Institute’s education and inclusion projects, some have also been internationally awarded (Governarte Award - BID 2015).

During 2020, Instituto TIM’s projects have been adapted so that they could continue, despite the challenging COVD-19 scenario. The Instituto TIM-OBMEP Scholarships continued to support the 200 medal winners of the Brazilian Public School Math Olympics (OBMEP in Portuguese), who entered public universities and come from low-income families. In 2020, 50 new students have been selected to receive the scholarships. The aid to students is the result of the partnership between Instituto TIM and the National Institute for Pure and Applied Mathematics (IMPA).

Academic Working Capital (AWC) is the entrepreneurial education program developed by Instituto TIM that offers mentoring and financial support to college students who want to turn their course conclusion papers into technology-based businesses. In its 6th edition, AWC brought novelties and a new evaluation criterion: the project’s contribution to Brazil’s challenges after the COVID-19 pandemic. Other differences were the transformation of in person workshops into virtual meetings and a new calendar, with activities held from August to May 2021, when the Investment Fair will take place - date of the beginning of the program’s 2021 edition. Since its inception in 2015, about 180 projects from 470 university students have been supported by AWC and 50 startups have been created. Some of them turned out to be successful businesses, such as Mvisia, a startup participating in the program’s first edition, which in 2020 had 51% of its capital stock acquired by WEG, a Brazilian multinational company manufacturing electronic devices.

Science education is one of Instituto TIM's lines of action. Through its partnership with Garatéa-ISS, a science and aerospace education program for children, three Brazilian projects have already been sent to the International Space Station (ISS), supported by NASA. The initiative makes Brazil the first country outside North America to participate in the Student Spaceflight Experiments Programs. The winning experiment of the 2019/2020 Garatéa was executed by students from the state of Mato Grosso, with the goal of discovering if a person who is lactose-intolerant could eat this product in space using medicines. The project has been sent to the Space Station in December on board of SpaceX;

The Bateria do Instituto TIM (Institution TIM’s percussion band) - project that fosters the inclusion of children, young people and adults, many of whom are disabled, through music - continued in 2020 in a virtual format, named “Percussion Band at Your Home”. The initiative enabled rehearsals to continue through video classes sent every week to the students. To close the activities for the year and contribute to the families’ Christmas - most of them in vulnerability situation - the members and technical team received food boxes.

TIM Tec, Instituto TIM’s free online courses program, registered 100,000 registrations in the platform and a 200% increase in the number of accesses in the first four months of 2020, compared to the same period in 2019. The platform gained more visibility as the search for distance learning increased during the pandemic. TIM Tec is now part of the Aprendendo Sempre initiative, a coalition of several civil society organizations to offer free online courses.

To minimize the social impacts brought by COVID-19, Instituto TIM decided to join forces with the initiative organized by Instituto Biomob NGO to ensure food is provided to families of people with disabilities in the low-income communities in the cities of Petrópolis, Duque de Caxias, Mesquita and Rio de Janeiro. Through the Mútua-Gesto Solidário campaign, over 600 families received monthly food boxes, an initiative that ensured food security for at least 3,000 people in vulnerability situation.

8.6 Private Social Investment

Social investment initiatives include donations, Instituto TIM’s projects and sponsorships. In 2020 more than R$ 12 million was invested in social benefit, as detailed below:

For more information on ESG, visit TIM’s Sustainability Report, that presents the main financial, social and environmental results, in addition to important topics to the Company’s business and sustainability governance, as well as our commitment to sustainable development.

9 Corporate Governance

9.1 The Only Telecom Company in Novo Mercado

On August 3^rd, 2011 TIM joined the "Novo Mercado", a listing segment that brings together companies committed to the best corporate governance practices.

The migration to Novo Mercado resulted in benefits for all shareholders. The required rules, aligned with the best corporate governance practices of markets such as the United States and Europe, promote greater liquidity and valuation of shares, allowing broader access to international markets, in addition to promoting the strengthening of the institutional image and increasing confidence in the Company.

Additionally, TIM belongs to the select group of companies that comprise the portfolios of the Corporate Governance Index (IGC), the B3’s Stock Index with Differentiated Tag Along (ITAG) and of the Corporate Sustainability Index (ISE), made of companies committed to managing economic, environmental and social risks.

9.2 Corporate Governance at TIM

TIM Participações is a publicly-held Company, managed by the Board of Directors and an Executive Board and supervised by a Fiscal Council and a Statutory Audit Committee.

The duties and responsibilities of the Board of Directors, the Executive Board, the Fiscal Council and the Statutory Audit Committee are determined by Brazilian legislation, the Company's Bylaws, the Novo Mercado Listing Rules, the Internal Rules of the Board of Directors, the Internal Rules of the Fiscal Council and the Internal Rules of the Statutory Audit Committee.

As active members responsible for the community in which they operate, the Company and its managers must guide their actions by legality and ethics, based on three fundamental principles: transparency, honesty and loyalty.

In conducting its business guided by good faith, in addition to ethics and loyalty, the Company seeks to: (i) act with transparency in business, (ii) foster fair competition; (iii) act with competitive excellence in the market; (iv) serve the welfare and growth of the community in which it operates; (v) enhance human resources; and (vi) foster sustainable development.

9.3 Disclosure Policy

In 2002, TIM Participações adopted a Disclosure/Negotiation Policy and Differentiation of Corporate Governance from NYSE, which the Company's management adhered to by signing the term of acceptance. As part of this policy, a code of conduct was established to be followed by all employees with access to privileged information and restrictions were imposed on negotiations with the Company's shares in certain periods.

The Company's Disclosure Policy provides the possibility of using the Portal Agência Estado, which can be accessed through the link: http://economia.estadao.com.br/fatos-relevantes/, pursuant to CVM instruction no. 547/2014, which allowed the disclosure of material facts in free access news portals.

9.4 Board of Directors

The Board of Directors comprises at least 5 (five) and at most 19 (nineteen) members, with a two-year tenure. Reelection is allowed. On December 31^st, 2020, the Board of Directors was formed by 10 (ten) members, of whom 4 (four) were independent directors. In 2020, the Board of Directors met 16 (sixteen) times in the exercise of its functions.

All decisions made by the Board of Directors are recorded in minutes, published and placed in the Board of Directors’ book of minutes, filed at the Company's headquarters.

The Board meets ordinarily at least six times per year and at most 12 times, and extraordinarily upon a call made by its Chairman, or by any two Directors, or by the Company's Chief Executive Officer. The Chairman of the Board may invite any member of the Executive Board, other executives of the Company and third parties who may contribute with opinions or recommendations related to the matters to be resolved. Those invited to attend Board meetings are not entitled to vote.

The Board of Directors has 4 (four) advisory committees: the Statutory Audit Committee, with its charter determined the Company’s Bylaws, the Compensation Committee, the Control and Risks Committee and Environmental, Social & Governance Committee, and one or more members may participate in both Committees simultaneously.

9.5 Executive Board

The Executive Board is the Company’s representative and executive management body, comprising at least three (3) and at most twelve (12) executive officers, elected by the Board of Directors for a two-year tenure, reelection allowed. They may be dismissed by the Board at any time. On December 31^st, 2020, the Company's Executive Board comprised 7 (seven) members. In 2020, the Executive Board met 48 (forty-eight) times in the exercise of its duties.

9.6 Fiscal Council

The Fiscal Council is responsible for overseeing the acts of the Company's management and for communication with shareholders, and it must function permanently. The Fiscal Council is formed of at least 3 (three) and at most 5 (five) sitting members, all independent professionals recognized by the market, with no other ties to the Company, each with a respective alternate, whether shareholders or not, elected by the General Meeting. On December 31^st, 2020, the Company's Fiscal Council was formed by 3 (three) members. In 2020, the Fiscal Council met 7 (seven) times in the exercise of its duties.

9.7 Statutory Audit Committee

The Statutory Audit Committee is a body directly linked to the Board of Directors, specializing in advisory and instruction, formed by at least 3 (three) and at most 5 (five) members, all of them independent. Currently, the Statutory Audit Committee has 3 (three) members.

The Statutory Audit Committee aims to supervise the quality and integrity of the financial reports, compliance with legal, regulatory and statutory standards, the adequacy of processes related to risk management and the activities of both internal and independent auditors, as well as to oversee and evaluate the signing of contracts of any type between the Company or its subsidiaries, on one side, and the controlling shareholder or its associated, affiliated companies, which are subject to common control or parent company control, or that otherwise constitute Company’s related parties, on the other side. Besides its ordinary attributions, the Statutory Audit Committee performs the function of the Company's Audit Committee, in accordance with the provisions of the Sarbanes Oxley Act, to which the Company is subject because it is registered in the US Securities and Exchange Commission – SEC. In 2020, the Statutory Audit Committee met 20 (twenty) times in the exercise of its duties.

The Statutory Audit Committee members analyzed the Financial Statements together with the Independent Auditor's Report and the Annual Management Report for the fiscal year ended on December 31^st, 2020 ("Annual Financial Statements for 2020"). Considering the information provided by the Company's Executive Board and the external audit of Ernst & Young Auditores Independentes S/S. (“EY”), as well as the proposal for allocation of net income for the year 2020, the Statutory Audit Committee assessed that this information and documents adequately reflect, in all relevant respects, the equity and financial positions of the Company and its subsidiaries. For this reason, they unanimously recommend the approval of the aforementioned documents by the Company's Board of Directors for referral to the Annual General Meeting, pursuant to the Brazilian Corporate Law.

9.8 Control and Risks Committee

The Control and Risks Committee is a collegiate advisory body directly linked to the Board of Directors and should consist of at least 3 (three) members and at most 5 (five) members of the Company's Board of Directors and has, among others, the duty of advising the Board of Directors in assessing internal controls and risk management measures and the compliance with governance rules. On December 31^st, 2020, the Control and Risks Committee was composed by 5 (five) members, of whom 2 (two) are independent members. In 2020, the Control and Risks Committee met 9 (nine) times in the exercise of its duties.

9.9 Compensation Committee

The Compensation Committee is a collegiate advisory body directly linked to the Board of Directors and must comprise at least 3 (three), and at most 5 (five), members of the Company's Board of Directors and its duties, among others, include advising the Board of Directors on the assessment of proposals to split the overall compensation approved by the General Meeting,

and deciding on compensation of the Company’s Statutory Officers and Senior Management. On December 31^st, 2020, the Compensation Committee was comprised by 3 (three) members, 1 (one) of them being an independent member. In 2020, the Committee met 6 (six) times in the exercise of its duties.

9.10 Environmental, Social & Governance Committee

The Environmental, Social & Governance Committee, created on December 10^th, 2020, is a collegiate advisory body directly linked to the Board of Directors and must comprise at least 3 (three), and at most 5 (five), members of the Company’s Board of Directors, and is responsible for advising the Board of Directors in developing and implementing the Environmental, Social & Governance strategy and principles, including, among other activities, recommend the guidelines and strategy applicable to the management of environmental, social and governance topics to the Company. On December 31^st, 2020, the Environmental, Social and Governance Committee was comprised by 5 (five) members, 2 (two) of whom are independent members.

9.11 Shareholding structure

The Company ended 2020 with a capital stock in the amount of R$ 13,477,890,507.55, represented by 2,420,804,398 common shares. TIM Brasil Serviços e Participações S.A. holds share control of TIM with approximately 67% of the shares.

9.12. Dividend Policy

According to the Bylaws, the Company must distribute as mandatory dividend, for each fiscal year ended on December 31^st, if there are amounts available for distribution, the amount equivalent to 25% of adjusted net income.

It is mandatory to maintain a legal reserve, to which the Company must allocate 5% of the net income of each fiscal year until the value of this reserve is equivalent to 20% of the capital.

The distribution of annual dividends is resolved by the Annual General Meeting.

9.13 Events of the Fiscal Year and Subsequent Events

Payment of Interest on Equity

On October 7^th and on December 10^th, 2020, TIM S.A. announced that the Company’s Board of Directors approved the distribution of R$ 500 million and R$ 583 million, respectively, as Interest on Equity (“IoE”). Payments were made on November 10^th, 2020 and January 22^nd, 2021, being October 19^th and December 18^th, 2020, the dates for identification of shareholders entitled to receive such amounts. Thus, the shares acquired after those dates will be ex-Interest on Equity rights. Therefore, TIM has declared the total amount of R$ 1,083 million as IoE in 2020 (total amount in 4Q20).

Result of Oi Mobile Assets Auction

On December 14, 2020, in continuity with the Material Facts disclosed on March 10, 2020, July 18, 2020, July 27, 2020, August 7, 2020, and September 7, 2020, TIM S.A. Has informed its shareholders and the market that the offer made by TIM, together with Telefónica Brasil S.A. and Claro S.A. (jointly the "Buyers"), was declared the winner of the bidding process of the sale of assets of the mobile telephony operation (Personal Mobile Service) of Grupo Oi ("UPI Ativos Móveis"). The Judicial Reorganization Court approved the proposal of the Buyers as the winner of the bidding process for the sale of UPI Ativos Móveis, after the favorable manifestations of the Public Prosecution Service of the State of Rio de Janeiro and the Judicial Administrator.

The total amount of the transaction is R$ 16,500 million plus the value of the compensation offered to Grupo Oi for the Take-or-Pay Data Transmission Capacity Contracts to be signed at the time of the transaction completion and whose NPV (net present value) corresponds to approximately R$ 819 million. From the amount of R$ 16,500 million, R$ 15,744 million refers to the Base Price of the offer and R$ 756 million corresponds to Transition Services to be rendered for up to 12 (twelve) months by Grupo Oi to the Buyers. TIM will disburse 44% of the values of Base Price and Transition Services, totaling approximately R$ 7,300 million. Concerning the Capacity Contract, the Company will be responsible for paying amounts that brought to present value total approximately R$ 476 million (58% of the NPV of the contract taking into consideration its specificities).

TIM will be entrusted with the following:

TIM obtains right to exercise subscription warrants at C6 Bank

On February 1^st, 2021, TIM announced that it obtained, within the scope of the strategic partnership (“Partnership”) signed with Banco C6 S.A. (“C6” or “Bank”) the right to exercise Subscription Warrants equivalent to an indirect stake of approximately 1.4% (one point four percent) of C6's capital stock as a result of reaching, in December 2020, the 1^st level of the agreed goals, which will be exercised when the Company's management deems to be more appropriate. It is important to note that the Subscription Warrants will grant TIM, when exercised, a minority position without control or significant influence over the management of C6.

C6 is a digital bank with outstanding growth in Brazil, being the institution that grew the most in the 3^rd quarter of 2020 and surpassing more than 4 million opened accounts until November. The Bank has approximately R$ 5.3 billion in total assets and transacts in its payment platform more than R$ 1.5 billion per month.

In less than a year, the Partnership between the companies generated a significant number of open accounts through the combined offers of telecommunications and financial services, which reinforces the relationship between TIM and C6 with significant results and confirms the innovative and centered character customer convenience.

Approval of the creation of a company to provide residential optic fiber infrastructure services

TIM S.A., in continuity with the 2020-2022 Strategic Plan, published on March 10, 2020, communicated on December 10, 2020, that TIM's Board of Directors, after analyzing the studies carried out and the non-binding proposals received, approved, in a meeting on that day, the formation of a company, in preparation for future segregation of assets and provision of residential optic fiber infrastructure services. This process is one of the intermediate steps in the transformation of TIM in the provision of broadband services and aims to create an open fiber infrastructure vehicle (“FiberCo”) attracting a strategic partner that will become a FiberCo shareholder.

The FiberCo will operate in the wholesale market and providing fiber connectivity services for last-mile and transport network, for all market operators, with TIM as an anchor customer. This transaction aims to accelerate the growth of the residential broadband business and unlock the value of part of TIM's infrastructure.

TIM and FCA close unprecedented partnership for connected cars

TIM and Fiat Chrysler Automobiles (FCA) have established a partnership to offer connectivity solutions for vehicles of the Fiat, Jeep and RAM brands in Brazil from the first half of 2021. As part of the global strategy to develop ecosystems for connected services and enhance the digital experience of customers, future FCA’s launches in the country will feature eSIM, a virtual chip for onboard native Wi-Fi access, with the quality of TIM's 4G coverage and Internet of Things ("IoT") network.

The connectivity will allow the car to communicate actively and in real time with the customer, the FCA and the dealer network. FCA’s customers will benefit from a variety of services, from entertainment and security content to applications that interacts with the vehicle. It will also allow the remote identification of possible vehicle failures with the possibility of more agile and accurate diagnostics. All this thanks to the connected sensors, which continuously send data to the FCA.

The partnership strengthens TIM's presence in the segment of services provided to companies – B2B, inaugurating its operations in the vertical of connected cars that joins the solid portfolio of IoT solutions. At the same time, it enables the opening of new ways of reaching the customer in the segment of services provided to consumers – B2C, through the provision of "in-car" services.

Conclusion of TAC with ANATEL

On June 19^th, the Company's Board of Directors approved the execution of a Conduct Adjustment Term (TAC), between the Agência Nacional de Telecomunicações (ANATEL) and TIM S.A. (a wholly owned subsidiary of TIM Participações S.A.), after the Regulator's final decision at the 8^th Extraordinary Meeting of its Director Board, occurred on the previous day. The agreement, which is in the full phase of execution, as planned by the Company and under the strict monitoring of ANATEL, covers sanctions totaling approximately R$ 639 million, which will be filed due to assumed commitments and which may be represented in actions to improve quality and customer experience, evolution of digital service channels, reduction of complaint rates, as well as increase of network infrastructure in more than 2,000 locations. The company also made an additional commitment to take mobile broadband through the 4G network to around 350 municipalities with less than 30 thousand inhabitants. Three million people will benefit in the Northeast and North regions of the country, as well as in the northern of Minas Gerais and in Goiás, in cities where fourth generation technology is not yet available.

10. Independent Audit – CVM Normative Instruction 381

In 2020, Ernst & Young Auditores Independentes S.S. provided auditing services for our financial statements and other non-audit services, which are related to the review of the Company's Sustainability Report.

Such services did not exceed 5% of the total fees related to the external audit service.

In the opinion of the external auditors, the provision of other professional services not related to the external audit, described above, does not affect the independence or objectivity in conducting the external audit examinations carried out. The auditors have internal processes to ensure that these other services are evaluated internally, as well as pre-approved before any proposal is presented to TIM.

The Company also points out that it is subject to a policy, approved by the Board of Directors of its Parent Company on 07/30/2019, which governs the process of hiring external auditors as well as any services not related to the audit of the financial statements, establishing, among other things, that the contracting must be submitted to prior analysis by the Parent Company’s Statutory Audit Committee. This document also defines a list of services not related to the audit whose contracting is prohibited.

11. Capital Markets

TIM S.A.’s common shares are traded on the São Paulo Stock Exchange (B3) under the ticker “TIMS3” and the American Depositary Receipts (ADR) on the New York Stock Exchange (NYSE) under code TIMB.

The São Paulo Stock Exchange Index (Ibovespa) ended 2020 at 119,017 points, accumulating a 2.9% appreciation when compared to the previous year, and a market cap of R$ 3.9 trillion.

The Company ended 2020 with its common shares traded at R$ 14.65 on B3, a 5.9% YoY decrease, while the ADRs on NYSE ended at US$ 14.03, down by 26.1% YoY. In terms of market cap, TIM ended the year valued at R$ 35.5 billion or US$ 6.9 billion.

Final Remarks

TIM S.A., with the permanent goal of maintaining a continuous, balanced and sustainable growth, thanks its customers for their loyalty and reiterates its commitment to tirelessly seek mechanisms to return the preference through quality and a distinguished service. Acknowledgments are also extended to commercial partners, suppliers and financial institutions for their support and trust, and especially to the employees, without whom the goals would not have been achieved, and, finally to the shareholders, for their support and trust in the management of the business.

The Management

1.a The Corporate structure

TIM S.A. (“TIM” “Company” and/or “Enterprise”) 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 and held 66.58% of the capital of TIM S.A on December 31, 2020. On December 31, 2019, TIM S.A. was fully controlled by TIM Participações S.A. (which held 66.58% of the capital controlled by TIM Brasil), which subsequently, on August 31, 2020, was incorporated by its subsidiary.

The Company provides 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 (formerly BM&F/Bovespa). Additionally, TIM S.A. 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 Brazilian Securities and Exchange Commission (“CVM”) and the Brazilian Securities and Exchange Commission (“SEC”). In order 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.

In December 2020, TIM’s Board of Directors, after analyzing the studies prepared and the non-binding proposals received, approved, in a meeting held on December 10, 2020, the incorporation of a company, as preparation for future segregation of assets and provision of infrastructure services for residential optical fiber of TIM S.A., called FiberCo Soluções de Infraestrutura Ltda.

Corporate Reorganization

On July 29, 2020, the Board of Directors of the Company approved the submission to the Extraordinary General Meeting of the proposed merger of TIM Participações by TIM S.A.

The Extraordinary General Meeting was held on August 31, 2020, and approved, by a majority of votes, the incorporation of TIM Participações by TIM S. A, in accordance with the protocol and justification of Incorporation concluded between the administrations of the Companies on July 29, 2020.

As a result, the Company’s Management proceeded with the merger on August 31, 2020, based on the net book assets of TIM Participações, in the amount of R$ 355,323.

The changes in TIM Participações’s equity between the date of the report (March 31, 2020) and the merger (August 31, 2020) were transferred, absorbed and incorporated into the operating income of TIM Participações S.A. (incorporated), as set forth in the protocol of incorporation. As a result of the merger, all operations of TIM Participações were transferred to TIM S.A., which succeeded it in all its assets, rights and obligations, universally and for all purposes of law. This transaction had no economic or tax impact and the incorporated goodwill will not be used for the purposes of any tax offsets.

This corporate reorganization aimed to provide greater efficiency and simplification of the organizational structure of the TIM Group, making the structure of internal controls more efficient. In addition, the corporate reorganization provides a better tax efficiency in future distributions of Interest on shareholders’ equity, and also, greater integration of administrative and financial unities allowing a cut-off in operational costs and expenses, as well as improvement of synergies, which shall result in a more efficient operation. As a result from this transaction, there was no impact on the controlling and non-controlling shareholders.

After the Merger, TIM S.A. became a company listed in the special segment of listing Novo Mercado of B3 S.A. – Brazil, Bolsa, Balcão (“B3”) and with American Depositary Receipts (“ADRs”) traded on the New York Stock Exchange - New York Stock Exchange (“NYSE”). Starting to be traded with the codes TIMS3 on B3 and TIMB on the NYSE.

For the purposes of presenting the comparative balance, TIM SA’s asset and financial information remains unchanged, meeting the concept of legal entity for the presentation of the individual and consolidated financial statements.

Net assets on September 01, 2020 were summarized as follows:

(1) The Incorporated goodwill has the following breakdown:

2.       Preparation basis and presentation of the individual and consolidated financial statements

The individual and consolidated financial statements were prepared according to the accounting practices adopted in Brazil, which comprise the resolutions issued by the Brazilian Securities and Exchange Commission (CVM) and pronouncements, guidance and interpretations issued by the Accounting Pronouncement Committee (CPC) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and evidence all information of financial statements, and only them, which are consistent with those used by Management in its administration. 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 financial statements. Accordingly, relevant information of the financial statements is being evidenced and corresponds to the information used by management when administrating.

The significant accounting policies applied in the preparation of these financial statements are below and/or presented in its respective notes. Those policies were consistently applied in the years presented.

a. General criteria for preparation and disclosure

The individual and consolidated financial statements were 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 stated as non-current. The exception to this procedure involves deferred income tax and social contribution balances (assets and liabilities) and contingent liabilities that are fully classified as long-term.

The presentation of the Statement of Added Value is required by Brazilian corporate law and the accounting practices adopted in Brazil applicable to publicly-held companies. The Statement of Added Value was prepared in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Added Value". The IFRS do not require the presentation of this statement. Accordingly, in conformity with IFRS, this statement is presented as supplementary information, without prejudice to financial statements as a whole.

Interests paid are classified as financing cash flow in the statement of cash flows as it represents costs of obtaining financial resources.

b. Functional currency and presentation currency

The currency of presentation of the financial statements is the Real (R$), which is also the Company´s functional currency.

Transactions in foreign currency are recognized by the exchange rate on the date of 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 from the corporate reorganization mentioned in note 1, all the operating activities of the group are concentrated exclusively in TIM S.A. 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.

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.

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 acquisition cost of the Group's interest in the acquired identifiable net assets, is recorded as goodwill. Should the acquisition cost 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.

Intercompany transactions, as well as the balances and unrealized gains and losses in those transactions, are eliminated. The accounting policies of the subsidiary were adjusted to ensure consistency with the accounting policies adopted by TIM Participações S.A. The base date of the financial information used for consolidation purposes is the same for all the companies in the Group.

The comparative consolidated balances for 2019 have not been presented since FiberCo subsidiary was only established in December 2020. Thus, there are no consolidated balances in December 2019.

These financial statements were approved by the Board of Directors of the Company on February 9, 2021.

The following new standards were issued by the Accounting Pronouncement Committee (“CPC”) and International Accounting Standards Board (IASB), are effective for the year ended December 31, 2020.

The amendments to CPC 15 (R1) clarify that, to be considered a business, an integrated set of activities and assets must include, at least, an inflow of funds and a substantive process that together contribute significantly to the capacity to generate the outflow of funds. Moreover, it clarified that a business can exist without including all the inflows of funds and processes necessary to create outflows of funds. These amendments had no impact on the Company’s individual and consolidated financial statements, but may impact future periods if the Group enters into any business combination.

The amendments to Pronouncements CPC 38 and CPC 48 provide exemptions that apply to all hedge relationships directly affected by the benchmark interest rate reform. A hedge relationship is directly affected if the reform raises uncertainties about the period or the value of cash flows based on the benchmark interest rate of the hedged item or hedging instrument. These changes have no impact on the Company’s individual and consolidated financial statements, as it does not have interest rate hedging relationships.

·        Changes in CPC 26 (R1) and CPC 23: Definition of material

The amendments provide a new definition of material, stating that: “information is material if its omission, distortion or obfuscation can reasonably influence decisions that the main users of the general purpose quarterly information make based on this quarterly information, which provide financial information on entity’s specific report”. The amendments clarify that the materiality will depend on the nature or magnitude of the information, individually or combined with other information, in the context of the financial statements. A distorted information is material if it could reasonably be expected to influence decisions made by primary users. These amendments had no impact on the individual and consolidated financial statements, nor is it expected that there will be any future impact for the Company.

The revised pronouncement outlines some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

These changes did not affect the individual and consolidated financial statements of the Company.

·        Changes in CPC 06 (R2): Covid-19 related benefits granted to leaseholders in lease agreements.

The amendments provide for the granting of benefits to lessees upon adoption of the guidelines of CPC 06 (R2) on the modification of the lease agreement, when accounting for the related benefits as a direct consequence of the Covid-19 pandemic.

As a practical expedient, a lessee may choose not to assess whether a benefit related to Covid-19 granted by the lessor is a modification of the lease agreement. The lessee who makes this option must account for any change in the lease payment resulting from the benefit granted in the lease agreement related to Covid-19 in the same way that it would account for the change by adopting CPC 06 (R2) if the change was not a modification of the lease agreement.

The following new standards were issued by the Accounting Pronouncement Committee (“CPC”) and International Accounting Standards Board (IASB), but are not effective for the year ended December 31, 2020.

In May 2017, the IASB issued IFRS 17 - Insurance Contracts (a standard not yet issued by CPC in Brazil, but which will be codified as CPC 50 - Insurance Contracts and will replace CPC 11 - Insurance Contracts), a new comprehensive accounting standard for insurance contracts that includes recognition and measurement, presentation and disclosure. As soon as it comes into force, IFRS 17 (CPC 50) will replace IFRS 4 - Insurance Contracts (CPC 11), issued in 2005. IFRS 17 applies to all types of insurance contracts (such as life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as certain guarantees and financial instruments with discretionary participation characteristics. Some scope exceptions apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements of IFRS 4, which are largely based on local accounting policies in force in previous periods, IFRS 17 provides for a comprehensive model for insurance contracts, covering all relevant accounting aspects. The focus of IFRS 17 is the general model, covering the following:

• A specific adaptation for contracts with direct participation characteristics (variable rate approach).

• A simplified approach (premium allocation approach), mainly for short-term contracts. IFRS 17 is effective for periods beginning on or after January 1, 2023, requiring the presentation of comparative amounts. Early adoption

is allowed if the entity also adopts IFRS 9 and IFRS 15 on the same date or before the first-time adoption of IFRS 17.

This standard does not apply to the Company

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 amendments clarify the following:

• What a right to postpone settlement means;

• 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 only if a derivative embedded in a convertible liability is itself an equity instrument would the terms of a liability not affect its classification. Amendments are valid for periods started on January 1, 2023 and must be applied on a retrospective basis.

The Company currently assesses the impact that the changes will have on current practice and whether existing loan agreements may require renegotiation.

Impact of COVID-19

In December 2019, an outbreak of a contagious disease, Coronavirus 2019 (COVID-19), began in mainland China, and since early 2020, the virus has spread to Europe, the United States and several other countries, including Brazil. The World Health Organization (WHO) has declared the Coronavirus (COVID-19) as a pandemic on March 11, 2020.

The COVID-19 outbreak developed rapidly in 2020 and measures taken to contain the virus affected economic activity, which in turn had implications for the Company’s operating results and cash flows. The lockdown was declared in several States in Brazil in March 2020.

Since then, the Company’s management has been monitoring the impacts and any material uncertainties related to events or conditions that may cast significant doubt on the entity’s ability to continue as an ongoing company. However, in 2020, the Company has a robust infrastructure and is part of an extremely important segment in this period of crisis, essential for the population, government and health system. After an internal analysis, there was no indication of impairment of assets or risks associated with the fulfilment of obligations, since the Company is not highly leveraged and still has credit lines available to be used in the event of a significant reduction in cash volume.

The Company is complying with the health and safety protocols established by authorities and agencies, is monitoring the evolution of the situation and closely assessing the impact of COVID-19 on its business.

It was predicted that COVID-19 pandemic its potential impact on general commercial activity and the global economy could reduce our customers’ demand for more expensive plans or services (e.g. roaming) or even lead to the plan cancellation or increase default, while may lead to disruptions in our supply chain, in the production or delivery of our suppliers or on our ability to deliver our products (such as new devices, or SIM cards) or to serve our network in a timely manner, and have a material adverse effect on our business and results of operations.

In 2020 and so far, we have not suffered any material impact on our operations. In June, stores resumed their activities with a positive impact on handset sales and the impacts on our businesses or our financial targets due to the pandemic were not material. However, we are still continuously monitoring government responses and

economic performance and we believe that a prolonged slowdown in local, regional or global economic conditions may affect the Company’s businesses.

3.       Critical estimates and judgments in applying 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 in the base date of the financial statements.

By definition, resulting accounting estimates are seldom equal to the respective actual incomes. 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

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 value-in-use calculation is based on the discounted cash flow model. The recoverable value of the cash-generating unit is defined as the higher of the fair value less sales costs and value in use.

Any reorganization activities with which the Company is not committed to on the reporting date of the Presentation of financial statements 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 15) and its tangible assets.

(b)       (Current and deferred) income tax and social contribution

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 10).

(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).

(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 27).

(f)       Leases

The Company has a significant number of the lease contracts in which it acts a lessee, and with the adoption of the accounting standard IFRS 16 / CPC 06 (R2) – Lease, on 01/01/2019, 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; (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 borrowing 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. Thus, this assessment of lease, considering non-cancellable period and the period covered by options to extend the contract term. 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.

They are financial assets measured at amortized cost using the effective interest rate method.

Company’s Management classifies its financial assets upon initial recognition.

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 annual average remuneration of the Company's investments related to CBD's and Repurchase and Resale Agreements is 101.24% (99.95% on December 31, 2019) of the variation of the Interbank Deposit Certificate – CDI.

The balances presented below for December 31, 2020 represent the individual and consolidated amounts:

(1) On December 2017, the Company, with the aim of using tax deductibility benefit for income tax and social contribution purposes, started investing in the National Film Industry Financing Fund (FUNCINE). The average remuneration in 2020 is negative by 0.34% (9.18% on December 31, 2019). The position on December 31, 2020 in the amount of R$ 7,061 (R$ 3,849 million in 2019).

(2) “Fundo Soberano” is composed only of federal government bonds. The average remuneration in 2020 is 87.71% (97.62% on December 31, 2019) of the variation of the Interbank Deposit Certificate (CDI).

(3) In August 2017, the Company invested in open FIC's (Quota Investment Fund). Funds are mostly made up of government bonds and papers from top-tier financial institutions. The average remuneration in 2020 of Investment Fund in Quotas was 112.72% (99.67 on December 31, 2019) of the variation of the Interbank Deposit Certificate (CDI). Government bonds are fixed income financial instruments issued by the National Treasury to finance the activities of the Federal Government.

(4) The CDB operations are issued by the banks with the commitment of stock buyback by the bank itself and with predetermined taxes.

(5) The Financial bills is a fix income tittle emitted by financial institutions with the objective of a long-term fund raising

(6) Is represented by: Debentures, FIDC, commercial notes, promissory notes, bank credit note.

The balances presented below for December 31, 2020 represent individual and consolidated amounts.

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 December 31, 2020 and 2019.

The average rate considered in calculating the present value of accounts receivable recorded in the long term is 0.22% (0.07% in 2019).

The movement of the provision for loss on expected settlement credits, accounted for as an asset reduction account, was as follows:

The aging of accounts receivable is as follows:

The balances presented below for December 31, 2020 represent the individual and consolidated amounts:

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.

The balances presented below for December 31, 2020 represent the individual and consolidated amounts:

The amounts of recoverable ICMS (state VAT) are mainly comprised by:

(i) credits on the acquisition of property, plant and equipment directly related to the provision of telecommunication services (credits divided over 48 months).

(ii) ICMS amounts paid under the tax substitution regime from goods acquired for resale, mainly mobile handsets, chips, tablets and modems sold by TIM.

The balances presented below for December 31, 2020 represent the individual and consolidated amounts:

(i) The amounts of income tax and social contribution are as substantially related to: (a) advances made over the period during which the use will take place at the closing of the current year and any balances in the next year; and (b) other income tax and social contribution credits from previous years whose current estimated period of use will be more than 12 months later.

(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. According to the Company's internal evaluation, we expect to use such credits within the statute of limitations of up to 5 years.

In March 2017, the Federal Supreme Court (“STF”) recognized the unconstitutionality of including ICMS amounts in the calculation base of PIS and COFINS contributions.  TIM S.A. (previously named “Intelig Telecomunicações Ltda.”), as the surviving company from the merger of TIM Celular S.A. and other entities existing in the Group in the past, which had

filed proceedings of the same nature, has been challenging this issue in court since 2006, with effects retroactive to five years, as permitted by the legislation.

In June 2019, by reason of a final and without appeal decision and calculation of amounts, the amount of R$ 2,875 million was recorded, being R$ 1,720 million of which corresponds to the principal, and R$ 1,155 million to inflation adjustments (amounts relating to TIM Celular S.A., which merged into TIM S.A. in October 2018).

In September 2019, because a final, non-appealable judgment was entered and amounts were awarded, the amount of R$ 148 million was recorded, of which R$ 75 million corresponds to the principal, and R$ 73 million to inflation adjustments, and such amounts being related to TIM S.A. itself (when it still did business under the name Intelig Telecomunicações Ltda.).

The amount recorded are updated monthly at the interest rate equivalent to the reference rate of the Special Settlement and Custody System (Selic), available on the website of the Brazilian Federal Revenue.

In 2020, TIM had utilized credits arising from the process of exclusion of ICMS from the calculation bases of PIS and COFINS, for payments of federal taxes, in the total amount of R$ 1.516 million. Of this amount, R$ 632 million of IRPJ and CSLL expenses were compensated in August 2020, relating to the year ended December 31, 2019, from the review of income taxes calculation to include in the bases of calculation of these taxes the indebtedness arising from the aforementioned process.

In December 2020, after partial use of TIM S.A credits, in the amount of R$ 1.578 million, it is still recorded in the amounts of R$ 1,391 billion, of which R$ 908 billion as principal and R$ 483 million as inflation adjustments (values that are related to TIM Celular S.A.); and R$ 151 million, of which R$ 75 million as principal and R$ 76 million as inflation adjustments (former Intelig Telecomunicações Ltda.).

The balances presented below for December 31, 2020 represent individual and consolidated amounts.

Deferred income tax and social contribution are recognized regarding the (1) accumulated tax losses and negative bases of social contribution and (2) temporary differences arising from differences between the tax basis of assets and liabilities and their book values in the financial statements. 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, examined by the Tax Council and Statutory Audit Committee and approved by other Management bodies, indicate the likelihood of the future realization of those tax credits.

The balances of deferred income tax assets and liabilities are presented at net value in balance sheet when there is the legal right and the intention of offsetting them upon calculation of current taxes, in general related to the same legal entity and the same tax authority. Accordingly, deferred tax assets and liabilities in different entities are in general presented separately, and not at net balance.

On December 31, 2020 and 2019, the rates in force 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: