As filed with the Securities and Exchange Commission on May 4, 2018
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
(Amendment No. 1)
¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
OR
¨ SHELL COMPANY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 001-14491
TIM PARTICIPAÇÕES S.A.
(Exact name of Registrant as specified in its charter)
TIM HOLDING COMPANY |
THE FEDERATIVE REPUBLIC OF BRAZIL |
(Translation of Registrant’s name into English) |
(Jurisdiction of incorporation or organization) |
João Cabral de Melo Neto Avenue, 850 – North Tower – 12th
floor
22775-057 Rio de Janeiro, RJ, Brasil
(Address of principal executive
offices)
Adrian Calaza
Chief Financial Officer and Investor Relations Officer
TIM Participações S.A.
João Cabral de Melo Neto Avenue, 850 – North Tower – 12th floor
22775-057 Rio de Janeiro, RJ, Brazil
Tel: 55 21 4109-4167
ri@timbrasil.com.br
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class |
Name of each exchange on which registered |
Common Shares, without par value* |
New York Stock Exchange |
American Depositary Shares, as evidenced by American Depositary Receipts, each representing five Common Shares |
New York Stock Exchange |
* Not for trading, but only in connection with the listing of American Depositary Shares on the New York Stock Exchange |
|
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Title of Class |
Number of Shares Outstanding |
Common Shares, without par value |
2,421,032,479 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes x No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filers,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Emerging growth company ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
¨ U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
¨ Item 17 ¨ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
¨ Yes x No
Explanatory Note
This Amendment No. 1 to the Annual Report on Form 20-F of TIM Participações S.A. (the “Company”) amends the Company’s Annual Report on Form 20-F for the year ended December 31, 2017 (the “Original 20-F”), which was filed with the Securities and Exchange Commission on April 6, 2018. The Company is filing this Amendment No. 1 solely to furnish Exhibit 101, which was not included in the Original 20-F. Exhibit 101 includes information about the Company in eXtensible Business Reporting Language (XBRL).
Except as described above, this Amendment No. 1 does not amend any information set forth in the Original 20-F, and the Company has not updated disclosures included therein to reflect any events that occurred subsequent to April 6, 2018.
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and are otherwise not subject to liability under those sections.
PART III
EXHIBIT INDEX
101.INS* |
XBRL Instance Document |
101.SCH* |
XBRL Taxonomy Extension Schema Document |
101.CAL* |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
XBRL Taxonomy Extension Presentation Linkbase Document |
* In accordance with Rule 406T(b)(2) of Regulation S-T, this eXtensible Business Reporting Language (XBRL) information is furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to the annual report on Form 20-F on its behalf.
Dated: May 4, 2018
TIM PARTICIPAÇÕES S.A. | |
By: |
/s/ Stefano De Angelis |
|
Name: Stefano De Angelis |
|
Title: Chief Executive Officer |
By: |
|
|
Name: Adrian Calaza |
|
Title: Chief Financial Officer and Investor Relations Officer |
Document and Entity Information |
12 Months Ended |
---|---|
Dec. 31, 2017
shares
| |
Document And Entity Information | |
Entity Registrant Name | TIM PARTICIPACOES SA |
Entity Central Index Key | 0001066116 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity a Well-known Seasoned Issuer | No |
Entity a Voluntary Filer | No |
Entity's Reporting Status Current | No |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 2,421,032,479 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2017 |
STATEMENT OF INCOME - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Profit or loss [abstract] | |||
Revenue | R$ 16,233,959 | R$ 15,617,413 | R$ 17,142,265 |
Cost of services provided and goods sold | (7,740,150) | (7,693,406) | (8,306,857) |
Gross income | 8,493,809 | 7,924,007 | 8,835,408 |
Operating income (expenses): | |||
Selling expenses | (4,575,177) | (4,719,029) | (4,822,974) |
General and administrative expenses | (1,424,643) | (1,258,722) | (1,195,277) |
Other income (expenses), net | (560,637) | (522,060) | 434,283 |
Total income expense | (6,560,457) | (6,499,811) | (5,583,968) |
Operating income | 1,933,352 | 1,424,196 | 3,251,440 |
Financial income (expenses): | |||
Financial income | 512,565 | 750,450 | 862,708 |
Financial expenses | (1,009,653) | (1,156,485) | (1,115,524) |
Foreign exchange variations, net | (748) | (4,845) | 2,409 |
Finance income cost | (497,836) | (410,880) | (250,407) |
Income before income and social contribution taxes | 1,435,516 | 1,013,316 | 3,001,033 |
Income and social contribution taxes | (201,009) | (262,889) | (915,591) |
Net income for the year | R$ 1,234,507 | R$ 750,427 | R$ 2,085,442 |
Earnings per share attributed to the Company' shareholders (in R$ per share) | |||
Basic earnings per share | R$ 0.51 | R$ 0.31 | R$ 0.86 |
Diluted earnings per share | R$ 0.51 | R$ 0.31 | R$ 0.86 |
STATEMENT OF COMPREHENSIVE INCOME - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Profit or loss [abstract] | |||
Net income for the year | R$ 1,234,507 | R$ 750,427 | R$ 2,085,442 |
Item not to be reclassified to income: | |||
Remeasurement of post-employment benefit obligations, net of taxes | (694) | (204) | (416) |
Item to be reclassified to income subsequently: | |||
Cash flow hedge | 2,190 | (2,190) | 0 |
Total comprehensive income for the year | R$ 1,236,003 | R$ 748,033 | R$ 2,085,026 |
1. Operations |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Operations Abstract | |
Operations | 1.a Corporate Structure
TIM Participações S.A. (“TIM Participações” and/or the “Company”) is a publicly-held corporation based in the city of Rio de Janeiro, State of Rio de Janeiro, and a subsidiary of TIM Brasil Serviços e Participações S.A. (“TIM Brasil”). TIM Brasil is a subsidiary of the Telecom Italia Group and holds 66.58% of the capital of TIM Participações as of December 31, 2017, (66.58% as of December 31, 2016). The main purpose of the Company and its subsidiaries (the “Group”) is to control companies providing telecommunications services, including personal mobile telecom services and others, in their licensed areas. The services provided by TIM Participações’ subsidiaries are regulated by Agência Nacional de Telecomunicações (“Anatel”).
The Company’s shares are traded on B3 (formerly BM&F/Bovespa). Additionally, TIM Participações trades its Level II American Depositary Receipts (“ADRs”) on the New York Stock Exchange (“NYSE”) in the US. Accordingly, the Company is subject to the rules of the Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”) and the US Securities and Exchange Commission (“SEC”). In accordance with good market practice, TIM Participações adopts the practice of simultaneously releasing its financial information in Reais in both markets, in Portuguese and English.
Corporate Reorganization
On July 25, 2017, the meeting of the Board of Directors of the Company approved the corporate restructuring of the subsidiaries TIM Celular S.A. and Intelig Telecomunicações Ltda. (“Intelig”) through the takeover of TIM Celular by Intelig. On September 6, 2017, the corporate action involving the transformation of Intelig’s articles of association from a Limited Liability Company to a Limited Liability Corporation (not listed), and Intelig has its corporate name changed to TIM S.A. as the first phase of the restructuring. The corporate reorganization is expected to take place in 2018, which may have an impact on the financial statements of the Company as a result of the potential recording of deferred income tax and social contribution assets on tax losses carried forward and the negative base of social contribution generated by TIM S.A., as presented in Note 10.
Direct subsidiaries
(a) TIM Celular S.A. (“TIM Celular”)
The Company holds 100% of TIM Celular´s capital stock. This subsidiary provides Landline Telephone Services (“STFC”) - Domestic Long Distance and International Long Distance voice services, Personal Mobile Services (“SMP”) and Multimedia Communication Services (“SCM”) in all Brazilian states and in the Federal District.
(b) TIM S.A. (formerly called “Intelig”)
The Company also holds 100% of TIM S.A.’s shares of capital stock. This company provides STFC – Local voice services and SCM services in all Brazilian states and in the Federal District. |
2. Basis for preparation and disclosure of the financial statements |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Basis For Preparation And Disclosure Of Financial Statements | |
Basis for preparation and disclosure of the financial statements | The financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.
The significant accounting policies applied to the preparation of these financial statements are described below and/or presented in the respective notes. These policies have been consistently applied to the years presented, unless otherwise indicated.
a. General preparation and disclosure criteria
The financial statements were prepared taking into account the historical cost as the value basis, with financial assets and liabilities (including derivative financial instruments) measured at fair value.
Assets and liabilities are reported according to their degree of liquidity and collectability. They are reported as current when they are likely to be realized or settled over the next 12 months. Otherwise, they are recorded as non-current. The only exception to this procedure involves deferred income tax and social contribution balances, both assets and liabilities are classified as long term.
b. Functional currency and presentation currency
The presentation currency for the financial statements is the the Brazilian Real (R$), which is also the functional currency for all the companies consolidated in these financial statements.
Transactions in foreign currency are recognized at the exchange rate on the date of the transaction. Monetary items in foreign currency are converted into Reais at the exchange rate on the date of the balance sheet as informed by the Central Bank of Brazil. Exchange gains and losses linked to these items are recorded in the statement of income.
c. Segment information
Operating segments are the entity’s components which carry out business activities in relation to which revenue can be obtained and expenses incurred. Their operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions on the allocation of resources and to assess the performance of each segment. For a component to be deemed a segment, separate financial information must be available for it.
The Company’s chief operating decision maker, responsible for allocating resources and for periodic performance evaluation, is the Executive Board. The Executive Board and the Board of Directors are jointly responsible for making strategic decisions and for managing the Group.
The Group’s strategy is to optimize the consolidated results of TIM Participações. This strategy includes optimizing the operations of each group company, in addition to taking advantage of the synergies generated between them. Notwithstanding the various business activities, the chief operating decision maker sees the Group as a single business segment, and does not take into account specific strategies intended for a particular line of service. All decisions on strategic, financial, purchasing, investment and investment planning are made on a consolidated basis. Therefore, the Group’s goal is to maximize the consolidated result obtained by exploiting the SMP, STFC and SCM licenses.
d. Consolidation procedures
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is liable or has rights to variable returns from its involvement with the subsidiaries, and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Consolidation is discontinued from the date on which the Group loses the control over that entity.
The purchase accounting method is used for recording acquisitions of subsidiaries by the Group. The acquisition cost is measured at the fair value of assets offered, equity instruments (e.g. shares) issued and liabilities incurred or assumed by the acquirer at the date on which control is exchanged. Identifiable assets acquired, contingencies and liabilities assumed in a business combination are initially measured at their fair value as at the acquisition date, irrespective of the proportion of any minority interest. The excess of the acquisition cost over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income as revenue, after a review of the concepts and calculations used.
Transactions between Group companies, as well as balances and unrealized gains and losses on these transactions, are eliminated. The accounting policies of subsidiaries have been adjusted to ensure consistency with the accounting policies adopted by TIM Participações. The date of the financial statements used in the consolidation is the same for all Group companies.
e Approval of the financial statements
The financial statements were approved by the Company’s Board of Directors on April 5, 2018.
f. New standards, changes and interpretations of standards not yet in force
(i) The following amendments to standards published by the International Accounting Standards Board (IASB) are effective for annual periods beginning on or after January 1, 2017:
Improvements to IFRS 2014-2016: The annual improvements projects provide a tool for making non-urgent, but necessary amendments to IFRSs, with the aim of removing inconsistencies and clarifying the meaning of certain paragraph of the standard. The amendments related to IFRS 12 Disclosure of Interests in other Entities, aimed clarifying the scope of the standard, are effective for annual periods beginning on or after January 1, 2017, whereas the rest of the improvements are effective for annual periods beginning on or after January 1, 2018. The amendments related to such IFRSs do not have an impact on the Company’s consolidated financial statements since, as of December 31, 2017, the Company does not have interests that are classified as held for sale, as held for distribution or as discontinued operations.
Amendments to IAS 7, Disclosure Initiative: The amendments to IAS 7 require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from 2017 Consolidated Financial Statements cash flows, such as the issuance and repayments of loans, and non-cash changes, such as unpaid acquisitions, sales and exchange differences. The Company has considered these amendments in the preparation of these consolidated financial statements, as disclosed at Note 37.
Amendments to IAS 12, Recognition of Deferred Tax Assets for Unrealised Losses: The amendments clarify the requirements on recognition of deferred taxes when the tax base of an asset exceeds its fair value. These amendments do not have a significant impact on the results or financial position of the Company’s consolidated financial statements as at December 31, 2017.
(ii) The following new standards were issued by the IASB, but are not effective for the fiscal year 2017. The early adoption of these standards, although encouraged by the IASB, has not been implemented by management.
IFRS 9 - Financial instruments
In July 2014, the International Accounting Standards Board (“IASB”) issued the final version of IFRS 9, which replaced IAS 39 and all previous versions of IFRS 9. This standard is applicable to years beginning on or after January 1, 2018.
This standard is applicable to financial assets and liabilities, and covers issues relating to the classification, measurement, impairment and derecognition of financial assets and liabilities, as well as a new and less restrictive accounting model for hedging, requiring an economic relationship between the hedged item and the hedging instrument being the same as determined by the Company at inception date. Likewise, the new standard modifies the criteria for documentation of hedging relationships.
With regard to classification, this standard requires entities to classify their financial assets as measured at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss, based on the following assumptions:
(i) Business model of the entity relating to the management of financial assets; and
(ii) Characteristics of the contractual cash flow of the financial asset.
Regarding the classification of financial liabilities, this standard substantially maintains the requirements set forth in IAS 39, according to which entities must classify most financial liabilities as subsequently measured at amortized cost, except for derivative financial instruments, financial guarantee agreements and commitments to grant loans at interest rates that are lower than those used in the market, among others.
Regarding impairment, the new standard establishes the recognition of the expected credit loss, according to which the entities must recognize a provision for expected losses in financial assets measured at amortized cost. The Company will apply the the simplified approach and record the expected losses on the financial assets lifetime.
The Company understands that the principal impacts of the adoption of the new standards relate to: (i) the documentation of the business model for financial assets, which may give rise to changes to the measurement and classification of financial assets into three possible categories; and (ii) the new model for the calculation of impairment of financial assets, particularly regarding trade receivables which, in some cases, will result in the early recognition of these losses at the initial measurement.
The Company estimates that the impact from the adoption of the new impairment model will increase by approximately R$ 130 million in the Allowances for doubtful accounts previously recognized under IAS 39.
IFRS 15 – Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, which replaced IAS 18. This standard is applicable to years beginning on or after January 1, 2018.
IFRS 15 provides for the principles to be used by entities regarding the disclosure of useful information to users of the financial statements regarding the nature, amount, period and uncertainty of revenue and cash flow originated from contracts with customers. The basic principle of this pronouncement is that the entity must recognize revenue from the transfer of goods or services promised to customers at an amount that reflects the consideration that the company expects to receive in exchange for these goods or services. By applying this pronouncement, the entity must take into account the terms of the contracts, and all material facts and circumstances.
In accordance with this standard, the entities must apply this pronouncement using one of the following methods:
(i) Retrospectively to each prior reporting period presented in accordance with IAS 8 - Accounting Policies, Changes in Estimates and Correction of Errors, subject to the expedients provided for in this standard (“full retrospective method”); or
(ii) Retrospectively with the cumulative effect of the initial application of this pronouncement being recognized at the date of initial application (“modified retrospective method”).
The Company decided to adopt IFRS 15 retrospectively, with the cumulative effect of the initial application being recognized as at the date of the initial application on January 1, 2018. Accordingly, as provided for in this standard, the Company will record the cumulative effect as at the date of the initial application of the standard as an adjustment to the initial balance of retained earnings (or another component of shareholders’ equity, as appropriate). In accordance with this transition method, the entity will use this pronouncement retrospectively only for contracts that are still in force as at the date of the initial application.
Currently, the Company offers commercial packages that basically combine equipments or mobile handsets with fixed or mobile telecom services, being that the revenue from services is recognized separately, in accordance with their nature and based on their relevant fair values.
Identification of contracts
The Company performed a comprehensive review of the commercial offers in force, in order to identify the relevant contractual clauses and other contractual elements that may be significant in terms of the adoption of the new accounting standard.
Identification of performance obligations
Upon the adoption and effectiveness of the contract, the entity must assess the goods or services that were contractually promised to the customer, identifying as a “performance obligation” each commitment made to customers regarding the transfer of the following items:
(i) Distinct goods or services (or a bundle of goods or services); or
(ii) Distinct goods or services that are substantially the same, and that have the same pattern of transfer the customers.
Goods or services promised to customers are deemed to be “distinct” when the following criteria are fulfilled:
(a) Customers are able to benefit from the goods or services, whether separately or jointly with other resources that are readily available to them (that is, the good or service is deemed to be “distinct”); and
(b) The entity’s promise to transfer the good or service to customers can be separated from other commitments undertaken under the contract (that is, the commitment to transfer the good or service is “distinct” within the context of the contract).
Upon reviewing its contracts, the Company concluded that its currently commercial package have only two performance obligations being provided on a “bundle offering”: (i) sale and/or rental of equipment or mobile handsets; and (ii) fixed or mobile telecom services and broadband (internet) services. Accordingly, the Company will recognize revenue when, or to the extent that, it satisfies the performance obligations by transferring the goods or services that were promised to the customer. An asset will be deemed to be “transferred” when, or to the extent that, the customer obtains the control of the asset.
Allocation of price to performance obligation
The entity must take into account the contractual terms, as well as its usual business practices, to determine the price of a transaction. The “transaction price” is the consideration that the entity is entitled to receive in exchange for the goods or services promised to the customer, which may include both fixed and variable amounts.
The Company must allocate the transaction price to each performance obligation (each distinct good or service) at an amount that reflects the consideration that the Company expects to receive in exchange for the transfer of the distinct goods or services promised to the customer, while the transaction price will be proportionally allocated to each performance obligation identified in the contract, based on the individual sales price of each good or service.
The standalone selling price has been defined by the Company, based on a price list that considers costs plus margin, and the individual sales price of the Company or the market, or the contract price, which would be similar to that provided for in contracts with similar conditions.
Therefore, the adoption of the new revenue standard will result in the early recognition of revenue from sales of equipment or mobile handsets, which are usually recognized upon the transfer of control to the customer, basically due to the allocation of discounts to the two performance obligations related to the sale of packages that include telecom services, plus equipment/handsets. The difference between the carrying value of the sales of the equipment and/or mobile handsets, and the amount received from the customer will be recorded as a contractual asset and/or liability at the beginning of the contract. Revenue from telecom services, in turn, will be recognized in the income statements based on the allocation of the transaction price, and to the extent that services are being provided to customers.
Costs of obtaining the contract
The entity must recognize in assets the incremental costs of obtaining the contract if the entity expects to recover such costs. “Incremental costs” are those incurred by the entity to obtain a contract, but which would not have been incurred if the company had not obtained the contract.
Therefore, these amounts will be recognized in assets, and subsequently amortized affecting the income statement, in accordance with the transfer to the customer of the goods or services to which the asset refers. Also, the Company will recognize impairment losses in the income statement, to the extent that the carry value of the recognized asset exceeds the remaining amount of the consideration that the Company expects to receive in exchange for the goods or services relating to the asset.
Financial impact
Based on the analysis performed, the Company expects an acceleration of the revenue recognition on equipment or mobile handsets, due to the allocation of discounts to the two performance obligations (equipment and services), in detriment of ongoing telecom revenue services, as well as higher amount of deferred costs related to incremental costs to obtain customer’s contract.
As a result, the Company estimates that the impact from the adoption of the new standard will increase retained earnings ranging from R$ 40 million to R$ 70 million, excluding impact of taxes.
IFRS 16 – Leases
In July 2014, IASB issued IFRS 16, which replaced IAS 17 and refers to annual periods beginning on or after January 1, 2019.
The new standard establishes the principles regarding the recognition, measurement, reporting and disclosure of leases, and requires the recognition by lessees of assets and liabilities arising from lease agreements, except for short term contracts, that is, contracts with a term of 12 months or less, or contracts where the value of underlying assets is low. In accordance with this standard, lessees must apply this pronouncement to lease agreements in two ways:
(i) Retrospectively to each prior reporting period presented in accordance with IAS 8 - Accounting Policies, Changes in Estimates and Correction of Errors; or
(ii) Retrospectively, with the cumulative effect of the initial application of this pronouncement, recognized as at the date of the initial application.
The Company decided to adopt IFRS16 retrospectively, while the cumulative effect of the initial application is recognized as at the date of initial application, that is, January 1, 2019.
The Company has a significant number of lease agreements under which it is the lessee. Currently, a part of these contracts is recognized as operating leases, and their payments are recorded on a straight line basis throughout the period of the contract.
The Company is currently analyzing its lease agreements, as well as their financial impacts, and it expects a significant increase in total assets and liabilities upon the initial adoption of the standard, due to the recognition of the rights to use “leased” assets and the liabilities under leases, respectively.
Additions of liabilities arising from leases due to the recognition of rights to use assets result in the corresponding increase in net debt, while depreciation and interest expenses are recognized in the statement of income, replacing operating lease expenses (“rent”). This accounting treatment will result in a positive impact on Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), with a corresponding increase in net cash from operations reported in cash flow.
The accounting effects will be examined as part of the implementation of IFRS 16. However, as a result of the volume of contracts and information required to determine the quantitative impact, the Company believes that the current estimate is not reasonably precise to be disclosed. Regarding the qualitative aspects, the main categories of transactions impacted by the new standard include: rental of vehicles, rental of stores and kiosks, rental of the towers and sharing of infrastructure.
There are no other present IFRS standards or IFRIC interpretations not yet in force that could have a significant impact on the financial statements of the Group. |
3. Estimates and critical judgment in the application of the Company's accounting policies |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Estimates And Critical Judgment In Application Of Companys Accounting Policies | |
Estimates and critical judgment in the application of the Company's accounting policies | Uses of accounting estimates and judgment are continuously reassessed. They are based on the Company’s historical experience and other factors, including expectations of future events, considering the circumstances as at the date of the financial statements.
By definition, the accounting estimates resulting from such assumptions rarely equal the actual outcome. The estimates and assumptions that present a significant risk of causing relevant adjustments to the book values of assets and liabilities for subsequent fiscal years are shown below:
(a) Impairment losses on non-financial assets
Impairment losses take place when the book value of an asset or cash generating unit exceeds the respective recoverable value, which is considered as the fair value less costs to sell or the value in use, whichever is greater. The calculation of fair value less costs to sell is based on information available from sales transactions involving similar assets or market prices, less any additional costs that would be incurred to dispose of those assets. The value in use is based on the discounted cash flow model. Cash flow derives from the Company’s business plan. Since this is an ongoing business, from the fifth projection year a perpetual rate of nominal growth of cash flow was estimated (Note 14).
Any reorganization activities to which the Company has not committed itself as at the financial statements disclosure date, or any material future investments aimed at improving the asset base of the cash generating unit being tested, are excluded for the purposes of impairment testing.
The recoverable value is sensitive to the discount rates used under the discounted cash flow method, as well as to the expected future cash receivables and the growth rates of revenue and expenses used for extrapolation purposes. Adverse economic conditions may lead to significant changes in these assumptions.
The main non-financial assets valued using this method include goodwill based on future profitability recorded by the Company (note 14).
(b) Income tax and social contribution (current and deferred)
Income tax and social contribution (current and deferred) are calculated in accordance with interpretations of the legislation currently in force. This process normally includes complex estimates to define the taxable income and temporary differences. In particular, deferred tax assets arising from income tax and social contribution losses and temporary differences are recognized to the extent that it is probable that future taxable income will be available against which they can be offset. The measurement of the recoverability of deferred income tax and social contribution losses carried forward, and of temporary differences, takes into account the estimates of taxable income (Note 10).
(c) Provision for legal and administrative proceedings Legal and administrative proceedings are analyzed by the Company’s Management and internal and external legal advisors. The Company’s reviews take into account factors such as the hierarchy of laws, the available case law, recent court decisions, their relevance to the hierarchy of laws, as well as the disbursement history of judicial proceedings. Such reviews involve the use of Management’s judgment (Note 23).
(d) Fair value of derivatives and other financial instruments
Financial instruments presented at fair value in the balance sheet are measured using valuation techniques that take into account observable data derived from the market (Note 37).
(e) Unbilled revenue
Considering that some billing cut-off dates occur at intermediate dates during each month, there is revenue already earned by the Company but not effectively billed to the customers at the end of each month. This unbilled revenue is recorded based on estimates which take into account customer’s usage data and the number of days since the last billing date, among other factors (Note 27).
f) Sale and leaseback
Sale and leaseback transactions involve the Group selling an asset and immediately acquiring the right to use the same asset by entering into a lease agreement with the buyer. The accounting treatment of sale and leaseback transactions depends on the substance of each transaction (by applying the principles of lease classification).
For financial sale and leaseback transactions, the total gain is deferred and amortized over the lease term. For operational sale and leaseback, generally the assets are sold at fair value, and consequently the gain or loss on the sale is immediately recognized in the income statement.
At the beginning of the lease term, the Company recognizes finance leases as assets and liabilities on its balance sheet at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the beginning of the lease.
The discount rate used in a sale and leaseback transaction is determined based on observable market transactions where the lessee would have to pay an amount on a similar lease contract or loan. The discount rates applied by Management to the transactions carried out during the year were significant to the calculation of the portion of the gain recorded through profit and loss, as well as the portion of the deferred gain which is amortized over the lease term. Please see Note 15(ii) for further details on the financial impact on such transaction. |
4. Cash and cash equivalents |
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Cash and cash equivalents [abstract] | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | These are financial assets classified as loans and receivables, which are accounted for at amortized cost using the effective interest rate method. The Company’s Management determines the classification of its financial assets upon initial recognition.
Bank Deposit Certificates (“CDBs”) and Repurchases are nominative securities issued by banks and sold to the public as a means of raising funds. Such securities can be traded throughout the contracted period, at any time, without any significant loss of value, and are used to repay the short term obligations of the Company.
The annual average return of the Company’s investments regarding CBDs and Repurchases is 100.92% (101.10% as at December 31, 2016) of the Interbank Deposit Certificate (“CDI”) rate. |
5. Marketable securities |
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Marketable securities |
(1) In August 2017, the Company invested in open-ended Investment Fund Units (“FICs”). These Funds are mostly made up of government securities and instruments of first-tier institutions. The average yield accrued in the period by FICs since the initial investment/inception is 104.17% of the CDI variation.
(2) “Repo Transactions” are securities issued by banks with a commitment to repurchase within one day at pre-established rates. These repo transactions are backed by federal government bonds, and they are used by the Fund to remunerate the capital available in cash.
(3) In December 2017, the Company opened a National Film Industry Financing Fund (“FUNCINE”) in the amount of R$3 million in order to obtain certain tax benefits for income taxes purposes.
Shares in a non-exclusive foreign exchange fund were purchased during 2015. The investment was intended to reduce foreign exchange risk on repayments to suppliers in foreign currency. For the year ended December 31, 2017, the Company redeemed the Foreign Exchange Fund entirely, in line with its financial strategy.
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6. Trade accounts receivable |
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Trade accounts receivable | These are financial assets classified as borrowing and receivables, which refer to accounts receivable from users of telecommunications services, from network use (interconnections) and from the sale 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. Accounts receivable from clients are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method less the allowance for doubtful accounts (“impairment”).
Allowances for doubtful accounts were recognized as a reduction in the accounts receivable based on the profile of the subscriber portfolio, the overdue aging of accounts receivable, the economic situation, the risks involved in each case and the collection curve, at an amount deemed sufficient to support future losses.
The fair value of trade accounts receivable equals the book value recorded as of December 31, 2017 and 2016. A portion of the accounts receivable from clients is used to secure the total amount of BNDES borrowing (Note 19).
Changes to the allowances for doubtful accounts were as follow:
The aging of the accounts receivable is as follows:
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7. Inventory |
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INVENTORIES | Inventory is stated at the average cost of acquisition. A loss is recognized to adjust the cost of handsets and accessories to the net realizable value (selling price) when this amount is less than the average acquisition cost.
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8. Indirect taxes and contributions recoverable |
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Indirect Taxes And Contributions Recoverable | |||||||||||||||||||||||||||||||||||||||||||||||||
Indirect taxes and contributions recoverable |
ICMS (value added tax on goods and services) amounts recoverable primarily refer to: (i) credits on the acquisition of property, plant and equipment directly related to the provision of telecommunications services (credits divided into 48 months), and (ii) ICMS amounts paid under the tax substitution regime from goods acquired for resale, mainly mobile handsets, SIM cards, tablets and modems sold by TIM. |
9. Direct taxes and contributions recoverable |
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Direct taxes and contributions recoverable |
(i) The amounts of income and social contribution taxes refer to prepayments over the year.
(ii) The PIS/COFINS amounts recoverable refer to: (i) credits arising from a lawsuit with a final decision favorable to the Company regarding the unconstitutionality of broadening the calculation base for these contributions under Law 9718/98; and (ii) credits calculated on goods and services used as inputs in its industrial process, in accordance with the applicable legislation. |
10. Deferred taxes |
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Deferred taxes | Deferred income tax and social contribution are recognized on: (1) accumulated income tax losses carried forward and social contribution negative basis, and (2) temporary differences arising from differences between the tax bases of assets and liabilities and their carrying 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 forecast prepared by the Company, examined by the Fiscal Council and Statutory Audit Committee and approved by other management bodies, indicates the likelihood of the future realization of those tax balances.
The balances of deferred income tax and social contribution assets and liabilities are shown in the balance sheet at their net amounts, when there is both a legal right and an intention to offset them at the time when current taxes are ascertained, usually in relation to the same legal entity and the same taxation authority. Thus, deferred tax assets and liabilities belonging to different entities are in general shown separately, rather than at their net amounts.
As at December 31, 2017 and 2016, the prevailing tax rates were 25% for income tax and 9% for social contribution. The tax incentives shown in Note 32 are also being considered as part of deferred taxes.
The amounts recorded are as follow:
TIM Celular
The subsidiary TIM Celular has set up deferred income tax and social contribution assets on its total carried forward income tax, social contribution and temporary differences, based on the historical profitability and projected future taxable earnings.
Based on these projections, the subsidiary expects to recover the deferred tax assets as follows:
The estimates regarding the recovery of tax assets were calculated taking into account the financial and business assumptions available at 2017 year end.
The subsidiary TIM Celular used credits related to carried forward income tax and social contribution in the amount of R$132,389 in the year ended December 31, 2017 (R$127,216 as at December 31, 2016).
Unrecognized deferred tax assets
Considering that TIM Participações S.A. does not carry out activities that may generate a taxable profit, deferred tax credits arising from income tax and social contribution tax losses and temporary differences, totaling R$102,860 as at December 31, 2017 (R$99,241 as at December 31, 2016), were not recognized.
In relation to the subsidiary TIM S.A, considering that the entity has provided constant history of taxable income and estimates sufficient future taxable income to offset the tax losses and negative base, the available tax credits totaling R$1,032,588 as at December 31, 2017 (R$1,126,463 as at December 31, 2016), of which R$961,183 refers to tax losses and negative base of social contribution and R$71,405 to temporary differences, were not recognized.
However, a deferred tax asset of R$70,729 was recognized in the year 2017, comprised by carry forward losses and temporary differences in the amount of R$10,364 and R$60,364, respectively, which are recorded net of deferred liabilities in the amount of R$94,912 related to the deemed cost on Property, Plant and Equipment accounted for in prior years. |
11. Prepaid expenses |
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Prepaid expenses |
(*) Represent prepaid expenses for the advertising of TIM brand’s products and services, which are recognized in income for the period when the advertising are broadcasted by the Agency.
(**) On April 1, 2010, the subsidiary TIM S.A entered into onerous contract and a reciprocal agreement for the assignment of fiber optic infrastructure (network swap) with GVT, in order to expand their respective areas of operations. Given the economic nature of the transaction, the amount was recognized in (current and non-current) prepaid expenses and deferred revenue (current and non-current). Both amounts are being recorded in the income statement in the same proportion over a period of ten years. |
12. Judicial deposits |
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Judicial deposits | These are recorded at their historical cost and updated according to the legislation in force:
(*) This amount refers to judicial deposits that have been restricted by Judge directly in the Company´s bank accounts, due to certain judicial proceedings against the Company. As soon as the Company´s management identifies the lawsuit related to such pledges, the restricted amount is reclassified from the “on line attachment” caption to the specific caption as stated above.
Civil
These are court deposits guaranteeing the execution of civil proceedings where the Company is challenging the amounts involved. Most of these proceedings refer to lawsuits filed by customers, involving issues related to consumers rights, among others.
There are lawsuits involving various issues, including challenging the amounts fixed by ANATEL for leaving certain frequency bands, to allow the implementation of 4G technology, after TIM Celular won the auction. In this case, the updated court deposit amounts to R$63,869 (R$59,546 as at December 31, 2016).
Labor These are amounts deposited in court in relation to guarantees of execution and the filing of relevant appeals, where the matters or amounts involved are still being discussed. The total balance is distributed among the several claims filed by the Company’s employees and third party service providers.
Tax The Company and its subsidiaries have placed court deposits for tax issues to back various current court proceedings. These deposits refer mainly to the following matters: (i) 2% increase in the ICMS rate for the Fund for the Eradication of Poverty (“FECP”) in the State of Bahia on prepaid telephone services provided by the Company. The current value of these deposits is R$92,066 (R$87,093 as at December 31, 2016).
(ii) Use of credit for the purchase of electricity used directly by the companies for production purposes. The court is tending towards to provide a favorable decision to the taxpayers in such matter. The current value of these deposits is R$71,722 (R$67,697 as at December 31, 2016).
(iii) Liability for the Provisional Contribution on Financial Transactions (“CPMF”) on the Company’s capitalization of loans; recognition of the right not to pay contributions allegedly due on changes to the ownership of current accounts as a result of a takeover. The current value of these deposits is R$9,687, considering the recent conversion into income in favor of the Federal Government (R$33,489 as at December 31, 2016).
(iv) Constitutionality of collection of the Operations Monitoring Charge (“TFF”) by a number of municipal authorities. The current value of these deposits is R$15,824 (R$13,542 as at December 31, 2016).
(v) Failure to approve the offsetting of federal debts against credits for Withholding Tax (“IRRF”) because it is alleged that the credits are insufficient, as well as the deposit placed to ensure the issue of a Tax Clearance Certificate (“CND”). The current value of these deposits is R$10,539 (R$10,036 as at December 31, 2016).
(vi) Liability for Services Tax (Imposto sobre Serviços - ISS”) on import services and outsourced services; alleged failure to pay for land clearance and Base Transceiver Station (“BTS”) maintenance services, and liability for ISS on the Company’s services and on Co-billing services and software licensing (Blackberry). The Company is seeking for its right to take advantage of the spontaneous complaint in order to remove the confiscatory fines for late payment. The current value of these deposits is R$7,056 (R$6,453 as at December 31, 2016).
(vii) Ancillary services provided for in ICMS Agreement 69/98 related to ICMS levied on communication services of amounts charged for access, joining, activation, enabling, availability, subscription and use of services, among others. The current value of these deposits is R$5,937 (R$5,745 as at December 31, 2016).
(viii) Volunteered reports of tax debits and consequent cancellation of charges of fines for late payment. The current value of these deposits is R$4,381 (R$4,222 as at December 31, 2016).
(ix) Deposit made by TIM S.A. related to the unconstitutionality and illegality of charging by the Telecommunications Services Universalization Fund (“FUST”). Plea for the recognition of the right not to pay FUST, and not to include in its calculation base revenue from interconnection and Industrial Exploration of Dedicated Lines (“EILD”), as well as for the right not to be charged retroactively for differences arising from failure to comply with ANATEL Ruling 7/2005. The current value of these deposits is R$53,128 (R$48,873 as at December 31, 2016). |
13. Property, Plant and Equipment |
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Property, plant and equipment [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment are stated at their acquisition and/or construction cost, less accumulated depreciation and impairment losses (the latter only if applicable). Depreciation is calculated based on the straight line method over terms that take into account the expected useful lives of the assets and their residual values. The estimated costs of dismantling towers and equipment on rented properties are capitalized and depreciated over the estimated useful lives of these assets. The Company recognizes the present value of these costs in property, plant and equipment with a counter-entry to liabilities account “Provision for future asset retirement”. Interest incurred on updating the provision is classified within financial expenses.
Gains and losses from disposals are determined by comparing the amounts of these disposals with their carrying values at the time of the transaction, and are recognized in “other income (expenses), net” in the statement of income.
On January 1, 2009 TIM S.A., on its first adoption of IFRS, used deemed cost to measure its property, plant and equipment assets. After this its property, plant and equipment have been demonstrated based on the historical cost of acquisition and/or construction. Both (deemed cost and historical cost) are deductible from the accumulated depreciation and from the impairment losses, if applicable.
(a) Changes in property, plant and equipment
Part of the amount classified as “Construction in progress” corresponds to the cost of intangible assets incurred during their construction and installation, until the date when the assets are ready for operations, at which time they are transferred to their relevant asset accounts.
Therefore, the amount of R$323,625 in the “Transfers” column was reclassified from the “construction in progress” account in property, plant and equipment, to the “intangible assets in progress” account in intangible assets for better presentation according to the nature of the assets.
(b) Depreciation rates
In 2017, pursuant to IAS 16, the Company and its subsidiaries assessed the useful life estimates for their property, plant and equipment, concluding that there were no significant changes to the circumstances on which the estimates were based that would justify changes to the useful lives currently in use. To determine the useful lives of the assets, the Company considers not just the type of the asset, but also the way it is used and the conditions to which the asset is subjected during its use. |
14. Intangible assets |
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Intangible Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets | Intangible assets are measured at historical cost less accumulated amortization and impairment losses (if applicable), and reflect: (i) the purchase of authorizations and rights to use radio frequency bands; and (ii) software in use and/or development. Intangibles also include: (i) purchases of the right to use the infrastructure of other companies; (ii) customer lists; (iii) goodwill on purchases of companies; and (iv) costs of commission paid to dealers to obtain new clients.
Amortization charges are calculated on the straight line method over the estimated useful life of the assets contracted and over the terms of the authorizations and, in the case of costs of commission over the term of the agreement, as mentioned in Note (h) below. The estimated useful lives of intangible assets are reviewed regularly.
Any financial charges on funds raised (that is, without a specific purpose) and used to obtain qualifying assets, which are assets that necessarily require a significant time to be ready for use, are capitalized as a portion of the cost of the asset when it is likely to bring future economic benefits for the entity, and such costs can be accurately measured. These costs are amortized throughout the estimated useful lives of the assets.
The amounts of the SMP authorization and rights to use radio frequencies, as well as software, goodwill and other items, were recorded as follows:
(a) Changes in intangibles
Intangible assets under development represents the cost of projects in progress related to the acquisition of 4G authorizations and/or other intangible assets during their construction and installation, up to the moment they are ready for operations, when they will be transferred to the corresponding accounts for these assets.
(b) Amortization rates
(c) Software rights to use
The costs associated with maintaining software are recognized as expenses as they are incurred. Identifiable and unique development costs that are directly attributable to the design and testing of software products, and which are controlled by the Group, are recognized as intangible assets when all of the capitalization criteria are met.
Directly attributable costs, which are capitalized as part of the software product, include costs for employees directly allocated to its development.
(d) Goodwill from previous years
The Company and its subsidiaries have the following goodwill based on expectations of future profitability as at December 31, 2017 and 2016:
Goodwill on acquisition of TIM S.A. - The goodwill arising from the acquisition of TIM S.A. (formerly, Intelig) in December 2009 in the amount of R$210,015 is represented by/based on the subsidiary’s expected profitability. The recoverability of goodwill is tested annually through impairment testing.
Goodwill from acquisitions of TIM Fiber SP and TIM Fiber RJ - TIM Celular acquired, at the end of 2011, Eletropaulo Telecomunicações Ltda. (which subsequently had its trade name changed to TIM Fiber SP Ltda. – “TIM Fiber SP”) and AES Communications Rio de Janeiro S.A. (which subsequently had its trade name changed to TIM Fiber RJ S.A. – “TIM Fiber RJ”). These companies were SCM providers to the main municipalities of the Greater São Paulo and Greater Rio de Janeiro areas, respectively.
TIM Fiber SP Ltda. and TIM Fiber RJ. S.A. were merged into TIM Celular S.A. on August 29, 2012.
The subsidiary TIM Celular recorded the goodwill allocation related to the purchase of the companies TIM Fiber SP and TIM Fiber RJ at the end of the process of purchase price allocation, at the amount of R$1,159,648.
Goodwill on the acquisition of minority interests in TIM Sul and TIM Nordeste - In 2005, the Company acquired all the shares of the minority shareholders of TIM Sul and TIM Nordeste, in exchange for shares issued by TIM Participações, converting these companies into full subsidiaries. The goodwill resulting from this transaction amounted to R$157,556.
As required by accounting standards, the Company annually tests the goodwill on business combinations involving TIM Group companies for impairment, and the methods and assumptions used by Management for suchimpairment testing of goodwill are summarized below:
The Company’s Management understands that the smaller cash generating unit used for testing the impairment of goodwill on purchases of the aforementioned companies encompasses the business at a consolidated level, and therefore should be assessed assessment at the level of TIM Participações. This methodology is aligned with the strategic direction of the Company and its subsidiaries, as well as with the market generally, in the sense of integrating the mobile and landline segments, in accordance with the assumptions below:
(i) At the time of purchase of these companies, the key reason for the purchase was to support and increase the competitiveness of the mobile business, to enter the residential and corporate broad band business, and to access the wholesale market, either directly or through swaps with other market operators in areas where TIM was not yet operating. In previous years, the Company believed that the cash generated by the Fiber and Intelig businesses could be regarded as being independent of the other lines of business, and so the goodwill impairment testing took into account only the cash flow directly related to these CGUs, which no longer makes sense due to the interdependence and/or synergies between mobile, landline and broadband operations;
(ii) In recent years there has been a migration of the usage of (and revenue from) voice services to data services, internationally and in particular in Brazil. The growing use of data has become a major challenge in terms of infrastructure, since the mobile sites now demand high capacity to provide an efficient data service. The main solution adopted by TIM was to introduce the Fiber to the Site (“FTTS”) approach, connecting towers/sites with a fiber optics network and installing small cells connected to this network, especially in Rio de Janeiro and São Paulo, in order to reduce congestion at mobile sites, increasing the transmission capacity and improving the quality of service. This led to a huge increase in the use of the TIM Fiber and TIM S.A. (Intelig) backbone for mobile services. This sharing of the network between mobile and fixed services makes it impossible to keep cash disbursements for CAPEX and OPEX separate between these two segments;
(iii) The behavior of telephone services customers is changing to become more data-centered, where customers are always “connected”, using either the operator network or public or private Wi-Fi, made possible as handsets become ever more advanced. Thus the telecoms companies are offering services and data packages to obtain income from the constant usage of data. Introducing offers as packages has made it impossible to separate cash revenue from the mobile segment and the fixed segment; and
(iv) From an organizational standpoint, the businesses of TIM Fiber and TIM S.A. (Intelig) are totally integrated into the mobile business. Consequently, the impairment testing of said goodwill used this CGU (TIM Participações) and the value in use method as its basis, with the following principal assumptions:
· Percentages of growth in the number of clients, in line with the Company’s business plan, prepared for 3+2 years; · Progressive decrease in the base of clients for prepaid services and, in accordance with the historical trend and the wider market, this is being offset with greater the penetration of postpaid services, in line with the Company’s business plan and prepared for 3+2 years, when the cash flow will stabilize and the growth can be estimated based on a perpetual growth rate; · Operation and maintenance costs estimates considering changes in the base of clients, occasional scale gains and inflation effects. The inflation rate expected by the Company for operational expenses (4.00% p.a. on average) is in line with the estimates prepared by representative market institutions; · Considering that is a going concern business, from the fifth year, a perpetual nominal growth groeth of cash flow of 2.50% p.a. was estimated;
· The discount rate (post-tax rate) for estimated future cash flow was 11.10% p.a., 15.24% is the equivalent discount rate to the same value in use excluding the impact of income taxes on future cash flow (pre-tax rate).
The result of impairment testing carried out as at December 31, 2017, showed no evidence of the need to recognize any losses.
(e) List of clients
As part of the purchase price allocation process involving the acquisitions of TIM Fiber SP Ltda. and TIM Fiber RJ S.A., contractual rights were identified for the companies acquired to provide future services. These contractual rights were evaluated based on their fair value as at the acquisition date and are being amortized in accordance with their estimated useful life as at the same date.
(f) Infrastructure use rights - LT Amazonas The subsidiary TIM Celular signed agreements for the right to use infrastructure with companies that operate electric power transmission lines in Northern Brazil. Such agreements fall within the scope of IFRIC 4 and are classified as financial leases.
Additionally TIM Celular entered into network infrastructure sharing contracts with Telefônica Brasil S.A., also in the Northern Region. Under these contracts, both operators optimize resources and reduce their operational costs (Note 16).
(g) Auction of and payment for 4G License 700 MHz Intangible assets in progress are substantially represented by costs for the development of 4G technology, which include: (i) amounts paid to obtain 4G Licenses; (ii) costs for cleaning the 700 MHZ frequency band; and (iii) financial costs capitalized on qualifiable assets, as detailed below: (i) On September 30, 2014, TIM Celular purchased Lot 2 in the Auction of the 700 MHz band for the amount of R$1,739 million. In December 2014, the Company paid R$1,678 million. The balance of R$61 million was recorded as a debt, as provided for in the call notice.
TIM Celular is challenging the remaining balance with Anatel, which is subject to interest rates of 1% p.m. and monetary adjustment by IGP-DI. These amounts are capitalized by the Company. The impact on the balance for the year ended December 31, 2017, was R$8,313 (R$8,586 as at December 31, 2016) of interest and R$443 (R$3,659 as at December 31, 2016) of monetary adjustments.
(ii) Additionally, as determined in the call notice, the Company has borne the costs for the cleaning of the frequency band purchased. The nominal amount due from the Company for the cleaning of the 700 MHZ frequency for the lot purchased was R$904 million. The Company had also an additional cost of R$295 million related to the portion that has not been bought at the auction and that was subsequently split by Anatel among the companies that won the auction, totaling R$1,199 million to be paid.
In order to perform the activities for cleaning the spectrum, in March 2015, TIM, together with the other companies that won the auction, constituted a Redistribution and Digitalization Management Entity for TV and RTV Channels, named “EAD”. From 2015 to 2018, TIM and the other companies that won the auction, will disburse amounts, according to the schedule provided for in the public notice, to afford, by means of the EAD, with the costs related to this cleaning activities. As the amount payable by TIM of R$1,199 million relates to a long term obligation, it was reduced by R$47 million through adjustment to present value (“AVP”). Monthly AVP interest is appropriated, as well as monetary adjustments based on the IGP-DI index. For the year ended December 31, 2017, the impact generated by the appropriation of AVP interest amounted to R$4,073 (R$14,239 as at December 31, 2016), while the impact from indexation was R$20,331 (R$43,619 as at December 31, 2016).
At April 9, 2015 and January 26, 2017, payments in the amounts of R$370,379 and R$858,991, respectively, were made to EAD.
The license mentioned above relates to the concept of a qualifying asset. Consequently, the finance charges on funds raised without a specific purpose, and used to obtain a qualifying asset, are capitalized at the average rate of 9.48% per annum in connection with the borrowing and financing valid for the period. The amount capitalized in the year ended December 31, 2017, was R$251,904 (R$260,756 as at December 31, 2016).
(h) Cost of deferred commission to dealers Beginning 2015, the Company launched new offers to corporate clients whereby contracts provide a minimum contract period of 24 months with a penalty clause in the case of early cancellation. This kind of contract allows amounts disbursed on commission to dealers for the acquisition of these clients to be capitalized as intangible assets with finite useful lives. The capitalized costs of these contracts will be amortized over the contract term, net of impairment adjustments. |
15. Financial leases |
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Financial leases | Leases under which the Company, as lessee, holds substantially all of the risks and benefits of ownership are classified as financial leases, which are capitalized at the beginning of the lease at the lower of the fair value of the leased item and the present value of the payments provided for in the agreement. Interest related to the lease is taken to income as financial expenses over the contract term.
The subsidiary TIM Celular entered into tower lease agreements as a lessee, arising from a sale and financial leaseback operation involving the sale of an asset and the concomitant leasing of the same asset by the purchaser to the seller.
The subsidiary TIM Celular recognized a liability corresponding to the present value of the compulsory minimum installments of the agreement.
Leases under which the Company, as lessor, transfers substantially all of the risks and benefitss of ownership to the other party (lessee) are classified as financial leases. These lease values are transferred from the intangible assets of the Company and are recognized as lease receivables at the lower of the fair value of the leased item and the present value of the payments provided for in the agreement. Interest related to the lease are taken to income as financial income over the contract term.
Asset leases are financial assets recorded within borrowing and receivables.
Assets
LT Amazonas
As a result of the agreement entered into with LT Amazonas, the subsidiary TIM Celular entered into network infrastructure sharing agreements with Telefônica Brasil S.A. Under these agreements, TIM Celular and Telefônica Brasil S.A. share investments in the Northern region of Brazil. The subsidiary has receivables against Telefônica Brasil S.A. that have to be paid on a monthly basis for a period of 20 years. These amounts are annually restated annually by the IPC-A (Customer Index Price). The consolidated nominal amount of future receivable by TIM Celular is R$510,592.
The table below includes the schedule of cash receipts of the agreement currently in force. The amounts represent the cash receipts estimated in the signed agreements, and are stated at their nominal amounts, which include the inflation projected up to the end of the agreement, and at their present values:
The present value of installments receivable is R$205,331 (R$204,762 in 2016), of which R$185,558 of principal and R$19,773 of interest were accrued to December 31, 2017. These amounts were estimated as at the date of execution of the agreements entered into with the transmission companies, projecting future cash receipts discounted at 12.56% per annum.
Liabilities
i) LT Amazonas
The subsidiary TIM Celular executed agreements for the right to use infrastructure owned by companies that operate electrical power transmission lines in Northern Brazil (“LT Amazonas”). The terms of these agreements are for 20 years, counted from the date on which the infrastructure is ready to operate. The contracts provide for monthly payments to the electrical power transmission companies, annually restated at the IPC-A.
The table below presents the future payment schedule for the agreements in force. These amounts represent the estimated disbursements under the agreements executed, and are shown at their nominal amounts, which include the inflation projected to the end of the agreement, and at their present values. These balances differ from those shown in the books value since are presented at present value:
The consolidated nominal value of future installments due from TIM Celular is R$970,077. The present value is R$351,063, composed of R$313,001 for the principal and R$38,062 for interest as at December 31, 2017, was estimated as at the date on which the agreements were signed with the transmission companies by projecting the future payments and discounting these at 14.44% per annum. Additionally, the amount of the right to use LT Amazonas also considers R$70,759 related to investments in property, plant and equipment made by TIM Celular and subsequently donated to the electrical power transmission companies. These donations are already included in the contracts signed by the parties.
ii) Sale and Leaseback of Towers
The subsidiary TIM Celular entered into two Sales Agreements with American Tower do Brasil Cessão de Infraestruturas Ltda. (“ATC”) in November 2014 and January 2015 for up to 6,481 telecommunications towers then owned by TIM Celular, for approximately R$3 billion, and a Master Lease Agreement (“MLA”) for part of the physical space on these towers for a period of 20 years from the date of transfer of each tower, under a sale and leaseback transaction, with a provision for monthly rental amounts depending on the type of tower (greenfield or rooftop). The sales agreements provided for the towers to be transferred in tranches to ATC in order to meet certain conditions precedent.
Until December 31, 2017, a total of six transfers have occurred, such as: on April 29, 2015, September 30, 2015, December 16, 2015, June 9, 2016, December 20, 2016, and on June 30, 2017. Therefore, 5,873 towers (336 in 2016 and 5,483 in 2015) have been transferred, representing 90.6% of the total agreement.
The effects on the accounts were as follow:
The table below includes the schedule of payments under the agreement in force regarding the MLA. The amounts represent the disbursements estimated in the agreements signed and are stated at their nominal amounts, which include the inflation projected up to the end of the agreement, and at their present values:
The consolidated nominal amount of the sum of future installments payable by TIM Celular is R$4,653,740. The present value is R$1,466,895, of which R$1,337,638 of principal and R$129,257 of interest as at December 31, 2017. The present value was estimated by projecting the future payments discounted at the discount rates used as at the dates of the transactions, ranging from 11.01% to 17.08% per annum, and which were determined on the basis of observable market transactions that the Company (lessee) would have to pay under a similar lease or loan.
iii) Substantially represented by the financial leases of new transmission towers and, in the year 2017, rights to use new towers were acquired in the amount of R$29,634, as provided for in the agreements entered into with American Tower on November 21, 2014. |
16. Regulatory credits recoverable |
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Regulatory Credits Recoverable | |
Regulatory credits recoverable | These refer to regulatory credit amounts (known as “FISTEL”, which is the fees due to the Telecommunications Inspection Fund) arising from the reduction of the client base, which may be offset against future changes in the base of subscribers or a reduction in future obligations to ANATEL. |
17. Suppliers |
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Suppliers | Supplier accounts payable are obligations to pay for goods or services that were purchased in the normal course of business. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method. Given the short maturity terms of these obligations, in practical terms they are usually recognized at their invoice values.
(a) Represents the amount to be paid to suppliers for the acquisition of materials and the provision of services relating to tangible and intangible assets or for consumption during operations, maintenance and management, as provided for in the agreement between the parties.
(b) This refers to the use of the networks of other landline and mobile telephone operators, with calls being initiated from TIM’s network and ending on the networks of other operators.
(c) This refers to calls made by customers outside their registration areas, who are therefore considered visitors to other operators’ networks.
(d) This refers to calls made by a customer who chooses another long-distance operator. |
18. Authorizations payable |
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Authorizations payable | As at December 31, 2017, the Company and its subsidiaries have the following commitments to ANATEL:
(i) In order to provide SMP services, the subsidiary TIM Celular obtained radio frequency authorizations for a fixed period, renewable for a further fifteen (15) years. The extension of the right of use includes the payment of an amount equal to 2% of the net revenue recorded in the regions covered by the Authorization, at the end of each biannual period. As at December 31, 2017, TIM Celular had accounts past due related to the renewal of Authorizations in the amount of R$262,513 (R$254,515 as at December 31, 2016).
(ii) At December 5, 2014, the subsidiary TIM Celular signed the Instrument of Authorization regarding the 700 MHz band (extract published in D.O.U. on December 8, 2014). The subsidiary paid an amount equivalent to R$1,678 million, recording the remaining balance of R$61 million as a financial debt, according to the payment method provided for in the call notice. With no bids for some lots in the Call Notice for the 700 MHZ band, TIM Celular, along with other bidders, had to bear a proportion of the costs regarding these unsold lots, as a result of the redistribution and digitalization of TV and RTV channels and solutions for interference problems with radio communications systems. Thus, the Digitalization Regulatory Entity (Entidade Administradora da Digitalização, or “EAD”) was organized, with respect to which the total commitment assumed by TIM Celular was R$1,199 million, to be paid in four (04) installments adjusted by the IGP-DI index, the first installment in the amount of R$370 million (30%) being deposited on April 9, 2015 (Note 14.g).
As a result of this additional cost assumed by TIM Celular, it should have been entitled to a discount on the final amount to be paid for the Authorization to use the 700 MHz band. However, the methodology used by ANATEL to calculate this amount was different from that included in the Call Notice, and so TIM Celular filed an administrative appeal, which was heard and denied in December 2014 (as were the appeals of the other Winning Bidders). As at June 30, 2015, TIM Celular filed a lawsuit questioning a surplus charge of R$61 million (R$98 million as at December 31, 2017), which is still pending trial (Note 14.g).
On February 15, 2016, the subsidiary TIM Celular signed an Addendum to the Terms of Authorization for the 700 MHz band (extracts published in the Federal Gazette on March 8, 2016), extending the date of payment of the second installment of 30% to the EAD, previously payable on January 31, 2016. The agency thus received from TIM Celular, on January 31, 2017, the amount of R$859 million, an installment of 60%, with respect to the installments for the years 2016 and 2017, with the remaining 10% payable on January 31, 2018, adjusted according to the IGP-DI.
On March 4, 2015, ANATEL: (i) accepted the request for the withdrawal of the application to extend the period of radio frequency use for Lot 208 (part of AR 92) of Bid No. 004/2012/PVCP/SPV–ANATEL; (ii) granted the application to extend the authorization for radio frequency use for lot 222 (part of AR 31) of the said bid; and (iii) granted the application for an extension of the period of authorization for radio frequency use in Bands D and E. On July 22, 2015, an Authorization Act extended the authorization to use the above radio frequencies.
(iii) On December 17, 2015, TIM Celular was ranked as the best bidder for the acquisition of two Type B lots (E-30 - AR41, Curitiba and metropolitan region and E-68 - AR81, Recife and metropolitan region) relating to Bidding Process 002/2015-SOR /SPR/ANATEL, at an offer price of R$57.5 million. The result was approved by the Steering Committee of ANATEL on June 1, 2016, and the Licensing Agreements were entered into on July 26, 2016, being 10% of the amount paid in July 2016, and the remainder being paid in June 2017.
The Authorizations held on a primary basis by TIM Celular as at December 31, 2017, as well as their maturity dates, are detailed below:
*Agreements already renewed for 15 years; therefore, TIM is not entitled to a further renewal period. ** Only complementary areas in particular States. |
19. Borrowing and financing |
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Borrowing and financing | These are recorded as financial liabilities measured at amortized cost, represented by non-derivative financial liabilities that are not usually traded before maturity.
Initially, it is recognized at fair value, and subsequently measured based on the effective interest rate method. The appropriation of financial expenses according to the effective interest rate method is recorded in the statement of income under caption “financial expenses”.
Guarantees: (1) Guaranteed by the Company and as collateral some receivables of TIM Celular (2) Bank escrow and Company as guarantor. (3) Guaranteed by the Company (4) No guarantee
The parent company TIM Participações does not have any borrowing or financing as at December 31, 2017.
The financing arranged by TIM Celular with BNDES was raised for the purpose of expanding the mobile phone network. It included covenants requiring certain financial ratios to be met, calculated semiannually. The subsidiary TIM Celular has complied with these financial ratios.
In April 2017, the Company obtained new loan from KfW/Finnvera by amount of nearly R$149 million. For the purpose of eliminating any risk of changes in the foreign exchange rate, a swap transaction was contracted in advance.
In April 2017, the Company prepaid the financing agreement signed in 2011 with the European Investment Bank, totaling R$602 million. This line was originally expected to mature in August 2019 and February 2020.
In March 2017, the Company prepaid the existing loan granted by Bank of America (“BOA”), in the amount of R$315 million. The original maturity of this debt was estimated to occur in September 2018.
In December 2017, the Company prepaid R$800 million of the debt to BNDES, reducing the debt balance of the facility. The prepayment did not change the original payment schedule, the last installment of which matures in July 2022. In January 2018, a further R$500 million was settled in advance without, however, changing the payment schedule.
All prepayments made were intended to enable the Company’s effective management of indebtedness and cash.
The table below sets forth the status of the financing and credit facilities available:
Purpose:
(1) Financing of TIM’s Innovation Projects for the years 2016, 2017 and 2018. To date, the Company has opted not to draw down the credit facility available. (2) Financing of purchases of imported equipment and services for the years 2015, 2016 and 2017. The amount of US$93 million was equivalent to R$310 million on the date of payment.
The PSI (Investment Sustainment Program) financing lines, obtained from BNDES, refer to specific programs of this institution and have interest rates lower than those used in BNDES’ ordinary operations. The balance as at December 31, 2017, corresponding to the adjustment of the subsidy granted by the BNDES for all the PSI lines is approximately R$89 million. This amount was recorded in “Deferred Revenue” under “Government Subsidies” (Note 22) line and deferred for the useful life of the asset being financed and appropriated to income in “Subsidy income” (Note 29).
The subsidiary TIM Celular has swap transactions to protect itself fully against any devaluation of the Brazilian currency against the US Dollar in relation to its borrowing and financing transactions. Nevertheless, this is not classified as hedge accounting.
The long term portions of borrowing and financing as at December 31, 2017, mature as follow:
The table below includes the schedule of nominal values of borrowing and financing estimated until the termination of the agreements.
Borrowing and financing fair value
In Brazil there is no consolidated long term debt market with the characteristics of the BNDES facilities. In addition to the returns on long term debt, the institutions take into account the social benefits of each project for which financing is granted. For the purpose of fair value analysis, given the absence of a similar market and the requirement that the projects address governmental interests, the fair value of the borrowing is usually taken to be as shown in the accounting records.
The amounts of PSI credit lines are recorded at fair value as at the withdrawal date, and the fair value is calculated considering the CDI rate at the withdrawal date.
Another transaction contracted with extremely specific features is the loan obtained from KFW Finnvera. This transaction is secured by Finnvera, a Finnish agency that operates as a development institution. Given the features of this transaction, the Company believes that its fair value is equal to the amount shown in the Company’s balance sheet.
Regarding the funds raised with Cisco Capital and KFW, current market conditions do not indicate the existence of any factor that might lead to a fair value for these transactions different to that shown in the accounting records. |
20. Indirect taxes, charges and contributions payable |
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Indirect taxes, charges and contributions payable |
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21. Direct taxes, charges and contributions payable |
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Direct taxes, charges and contributions payable | The current income tax and social contribution charges are calculated based on the tax laws enacted or substantially enacted up to the balance sheet date.
Brazilian tax legislation allows companies to choose quarterly or monthly payments of income tax and social contribution. From 2016 onward, the Company chose to make monthly payments of income tax and social contribution.
(*) Refers basically to the subsidiary TIM Celular joining, in 2009, the REFIS program, a federal fiscal program that permits the Companies to pay the debts due on federal taxes (PIS, COFINS, IR and CSLL) in installments, the final maturity of which will be on October 31, 2024. |
22. Deferred revenue |
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Deferred revenue |
(1) This refers to top-ups of voice and data credit not yet used by customers, involving pre-paid system services, which are appropriated to income when customers actually use these services.
(2) Refers to the release of funds under the credit facility from the BNDES Investment Sustainability Program (“BNDES PSI”). The total sum of the subsidies granted by the BNDES through December 31, 2017 was R$203 million. This amount is being amortized according to the useful life of the asset being financed and appropriated to the “Other income (expenses), net” (Note 29).
(3) Refers mainly to the transfer of onerous contracts and reciprocal infrastructure of fiber optics (Note 11).
(4) Refers to amounts to be appropriated from sales of towers (Note 15). |
23. Provision for legal and administrative proceedings |
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Provision for legal and administrative proceedings | The Company and its subsidiaries are parties to legal and administrative proceedings in the civil, labor, tax and regulatory spheres which arise in the normal course of their business.
The provision is set up at an amount deemed sufficient and adequate to cover losses and risks considered probable, based on an analysis by the Company’s legal consultants and by Management. Situations where losses are considered probable and possible are subject to disclosure for their adjusted amounts, and those where losses are considered remote are not disclosed.
The updated provision set up for legal and administrative proceedings is made up as follows:
The changes to the provision for legal and administrative proceedings can be summarized as follow:
The Company and its subsidiaries are subject to various legal and administrative proceedings filed against them by consumers, suppliers, service providers and consumer protection agencies, in connection with a number of issues that arise in the regular course of business of the entities. The main cases are summarized as follow:
a. Civil Claims
a.1. Consumer lawsuits
The subsidiaries are parties to lawsuits that refer to some claims that have been filed by consumers at the legal and administrative levels. These claims, which amount to R$88,636 (R$105,112 as at December 31, 2016), refer basically to alleged incorrect collections, contract cancellation, service quality, deficiencies and failures in equipment delivery, and unjustified inclusion in credit protection services.
a.2. Procon and Public Prosecutor’s Office
TIM is a party to court and administrative lawsuits filed by the Public Prosecutor’s Office and Procon (the Consumer Protection Agency) arising from consumer complaints that include: (i) alleged failure in relation to the provision of network services; (ii) challenges regarding the quality of client assistance; (iii) alleged violation of SAC Decrees; (iv) alleged violation of agreements; (v) alleged false advertising; and (vi) discussion about the charging of a loyalty fine in the case of thefts of handsets. The amounts involved total R$4,551 (R$4,705 as at December 31, 2016).
a.3. Former trade partners
TIM is a defendant in lawsuits filed by former trade partners claiming, among others, amounts based on alleged non-compliance with agreements. The amounts involved total R$13,152 (R$8,661 as at December 31, 2016).
a.4. Others
TIM is a defendant in other non-consumer lawsuits filed by different agents to challenge, among other: (i) renewal of lease agreements; (ii) share subscription; (iii) indemnities; (iv) alleged non-compliance with agreements; and (v) collection suit. The amounts involved total R$18,224 (R$20,120 as at December 31, 2016).
a.5 Social, environmental and infrastructure
The subsidiaries are parties to lawsuits involving different agents that challenge several licensing aspects, such as environmental licensing and structure licensing (installation/operation). The amounts involved total R$3,157 (R$3,390 as at December 31, 2016).
b. Labor claims
The main outstanding labor claims are summarized below:
Claims filed by former employees in relation to matters such as salary differences, wage parity, payments of variable compensation/commission, additional legal payments, overtime and other provisions established during the period prior to privatization, as well as by former employees of service providers who, in accordance with the labor legislation in force, have filed claims against the Company and/or its subsidiaries on the grounds that they are responsible for labor-related obligations that were not satisfied by service provider companies.
Of the 1,845 labor claims as at December 31, 2017, (1,074 as at December 31, 2016) filed against the Company and its subsidiaries, most of them relate to employment claims filed by employees as well as claims that involve former employees of service providers. The provision for these cases amounts to R$172,467, monetarily restated (R$81,876 as at December 31, 2016).
A significant portion of this provision relates to the organizational restructuring processes, especially the closure of the Client Relationship Centers (call centers), as well as processes relating to the internal sites of TIM, which resulted in the termination of staff. As at December 31, 2017, the provision for these cases amounts to R$21,758, monetarily restated (R$10,742 as at December 31, 2016).
The total provision recorded is substantially composed of the following proceedings, and the amounts indicated are estimated based on the indices established by the federal, state and/or municipal governments for taxes in arrears, being substantially linked to the variations in the SELIC (Special Settlement and Custody System) rate:
Federal taxes
The provision is substantially composed of the following proceedings:
(i) The provision for TIM Celular has been made in twelve cases referring to challenges to the taxes levied on Contribution for Intervention in the Economic Domain (“CIDE”), Provisional Contribution on Financial Transactions (“CPMF”), Social Contribution on Net Income (“CSLL”) and Withholding Income Tax (“IRFF”) transactions, the voluntary reporting of the penalty regarding FUST payments and ancillary obligations. Based on these cases, the main amounts relate to court actions in which TIM intends to assert its right not to pay the CPMF, allegedly due to simultaneous purchase and sale transactions of foreign currency and changes to accountholders as a result of mergers, the provision amounts for which, consider the recent conversion into income in favor of the Federal Government, currently total R$9,092 (R$33,172 as at December 31, 2016), as well as the amount corresponding to fines and interest on FUST contributions for the year 2009, which does not include benefits from voluntary reporting, for which the amount provisioned in August 2015 and updated is R$13,516 (R$12,683 as at December 31, 2016).
(ii) The provision for Intelig regarding federal taxes has been made for three cases challenging federal tax offsetting using the negative balance of IRPJ and the CSLL carried forward from periods prior to offsetting, totaling the updated amount of R$5,914 (R$6,077 as at December 31, 2016).
State taxes
The provision substantially relates to the following proceedings:
(i) The provision for TIM Celular covers forty-three proceedings, of which the most important are the amounts of tax assessments challenging the use of ICMS debits, as well as the documentation supporting the credits appropriated by the Company, for which the updated amount provided is R$14,610 (R$13,652 as at December 31, 2016), as well as amounts allegedly not subject to taxation, regarding the provision of telecommunication services, for which the updated amount is R$4,605 (R$4,183 as at December 31, 2016).
(ii) The provision for TIM S.A referring to state taxes covers seven proceedings, and includes the amounts of assessment questioning the documentation that supported the credits appropriated by the Company, for which the updated amount provided is R$6,940 (R$14,414 as at December 31, 2016).
Municipal taxes
These include the amounts involved in assessments questioning the withholding and payment of the ISS (Tax on Services) on services provided by third parties with no employment relationship, as well as the payment of own ISS regarding co-billing services.
TIM S.A. PPA
Tax proceedings arising from the acquisition of TIM S.A. and included in its purchase price allocation process, amount to R$85,595 (R$93,121 as at December 31, 2016).
d. Regulatory processes
ANATEL has brought administrative proceedings against the subsidiaries for: (i) failure to meet certain quality service indicators; (ii) defaults on certain obligations assumed under the Instruments of Authorization; and (iii) non-compliance with the regulations of SMP and STFC, among others.
As at December 31, 2017, the amount classified as representing a probable risk related to Procedures to Verify Breaches of Obligations (“PADOs”), after monetary adjustment, is R$30,796 (R$29,282 as at December 31, 2016).
e. Legal and administrative processes involving possible losses
Civil, labor, tax and regulatory actions have been filed against the Company and its subsidiaries involving a risk of loss that is classified as possible by the Company’s legal advisors and the Management. No provisions have been set up for these legal and administrative proceedings, and no materially adverse effects are expected on the financial statements, as shown below:
The administrative and legal proceedings assessed as representing possible losses and monitored by Management are disclosed at their updated values.
The main actions where the risk of loss is classified as possible are described below:
e.1. Civil
e.1.1. Lawsuits filed by consumers
These actions refer mainly to alleged undue billing, contract cancellation, service quality, deficiencies and failures in equipment delivery, and unjustified inclusion in bad debtors’ lists.
e.1.2. ANATEL
The subsidiaries are parties to lawsuits filed against ANATEL, due to the following reasons: (i) debit regarding the collection of 2% on the revenue obtained from value-added services – VAS and interconnection; (ii) pro rata monetary restatement applied to the price proposal established in the call notice for use of 4G frequencies; and (iii) alleged non-compliance with service quality targets.
e.1.3. Procon and Public Prosecutor’s Office
TIM is a party to court and administrative lawsuits filed by the Public Prosecutor’s Office and Procon (Consumer Protection Agency) arising from consumer complaints that include: (i) alleged failure in relation to the provision of network services; (ii) alleged failure in relation to the delivery of devices; (iii) alleged non-compliance with state legislation; (iv) contract model and alleged undue charging of Value-Added Services (“VAS”); (v) alleged violation of SAC Decrees; (vi) alleged violation of agreements; and (vii) blocking of data.
e.1.4. Former trade partners
TIM is a defendant in lawsuits filed by several former trade partners who are claiming, among others, amounts on the basis of alleged noncompliance with agreements.
e.1.5. Social, environmental and infrastructure
The subsidiaries are parties to lawsuits involving different agents challenging aspects related to: (1) Environmental licensing and Structure licensing (installation/operation); and (2) (i) electromagnetic radiation emitted by the Telecom structures; (ii) renewal of leasing land agreements to install sites; (iii) eviction from land leased to install sites; and (iv) presentation of registration data; among others.
e.2. Labor claims
There are 6,476 labor claims filed against the Company and its subsidiaries as at December 31, 2017, (6,039 as at December 31, 2016) related to claims made by former employees of service providers in the updated amount of R$763,505 (R$678,290 as at December 31, 2016).
A significant percentage of the existing proceedings relate to organizational restructuring processes, in particular the closure of the Client Relationship Centers (call centers), as well as processes relating to the internal sites of TIM, which resulted in the termination of employees. In addition, there are also lawsuits filed by outsourced service providers alleging an employment relationship with TIM, in the total updated amount of R$27,775 (R$9,256 as at December 31, 2016).
The Company is a party to public civil actions filed by the Labor District Attorney’s Office alleging irregular outsourcing practices and with collective moral damages due to outsourcing in the total updated amount of R$60,711 (R$60,351 as at December 31, 2016).
A group of actions has been filed in the State of Paraná, involving claims for damages in connection with contractual provisions stamped in the employees’ work register. According to an internal rule, TELEPAR undertook to supplement the retirement benefits of employees hired up until 1982. Prior to privatization, TELEPAR had proposed to implement this benefit by means of the payment of a certain amount in cash in the amount of R$3,210 as a possible risk and the amount of R$5,654 as a probable risk (R$3,521 updated as possible risk and R$711 updated as probable risk as at December 31, 2016).
It should also be pointed out that there is a group of labor claims, particularly in São Paulo and Rio de Janeiro, from former Gazeta Mercantil, Jornal do Brasil and JB Editora employees who have filed claims requesting the inclusion of Holdco as a defendant. Prior to the merger with TIM Participações, Holdco belonged to the Docas economic group, of which Gazeta Mercantil and Jornal do Brasil are part.
The remaining amounts relate to various labor claims lawsuits filed by former own employees and former employees of third parties.
e.2.1. Social Security
TIM Celular received a Debit Assessment Notice referring to alleged irregularities in the payment of social security contributions in connection with the payment of profit-sharing in the updated amount of R$4,995 (R$5,372 as at December 31, 2016). TIM Celular was also assessed for social security contributions that were allegedly due in connection with hiring bonuses, non-adjusted bonuses, payments to self-employed persons and sales incentives in the updated amount of R$9,868 (R$5,686 as at December 31, 2016).
TIM S.A. received Tax Assessments regarding alleged irregularity in the payment of social security contributions levied on profit sharing; the retention of 11% on service agreements; failure to pay Management’s fees and failure to properly fill out the FGTS–GFIP tax form, and erroneous GFIP declaration in the updated amount of R$43,756 (R$43,496 as at December 31, 2016).
e.3. Tax
The amounts are adjusted based on an estimate of the SELIC rate. The historical amount involved is equivalent to R$9,836,184.
e.3.1. Federal Taxes
Assessment against TIM Group for federal taxes amounting to R$3,752,877 as at December 31, 2017, (R$3,560,440 as at December 31, 2016). Of this total, the following issues stand out:
(i) Alleged error regarding the use of tax credits due to a reverse merger, amortization of goodwill paid on the acquisition of mobile phone companies, deduction of goodwill amortization expenses, exclusion of goodwill reversal, other effects and the disallowance of offsetting and estimated deductions paid, allegedly improper use of SUDENE benefits caused by a lack of formalization on these benefits on Federal Revenue Department (“RFB”) and a failure to pay the estimated IRPJ and CSLL amounts. The amount involved is R$2,552,068 (R$2,190,975 as at December 31, 2016).
(ii) Method of offsetting tax losses and negative bases. The amount involved is R$192,417 (R$93,245 historically) (R$185,001 as at December 31, 2016).
(iii) Collection of CSLL on monetary variations for swap transactions, registered through on a cash basis. The amount involved is R$62,312 (R$58,914 as at December 31, 2016).
(iv) Payment of IRRF on revenue from overseas residents, including those remitted for international roaming and payment to unidentified beneficiaries, as well as the collection of CIDE on royalties remitted overseas, including remittances for international roaming. The amount involved for Tim Celular is R$241,431 (R$229,061 as at December 31, 2016) and, for TIM S.A., the amount is R$56,469 (R$52,963 as at December 31, 2016).
(v) Charging of IRPJ, PIS/COFINS and CSLL debts for the non-approval or partial approval of offsetting carried out by the Company using credits from withholding tax on financial investments and negative IRPJ balance. The amount involved is R$396,103 (R$412,741 as at December 31, 2016).
e.3.2. State Taxes
Assessment against TIM Group for state taxes amounted to R$7,407,881 as at December 31, 2017 (R$6,982,809 as at December 31, 2016). Of the total amount, the following issues stand out:
(i) Failure to include unconditional discounts offered to customers in the ICMS calculation base, and a fine for alleged failure to comply with related ancillary obligations, including failure to submit Register 60i of the SINTEGRA file. The amount involved is R$1,244,936 (R$1,200,113 as at December 31, 2016).
(ii) Use of tax benefit (Program for Promoting the Integrated and Sustainable Economic Development of the Federal District – “PRÓ-DF”) granted by the tax authority itself, but subsequently declared unconstitutional, and the alleged undue crediting of ICMS on interstate purchases of goods with tax benefits granted in the state of origin. The amount involved is R$1,055,667 (R$985,842 as at December 31, 2016).
(iii) Credit reversal and late use of credit for purchase of fixed assets. The amount involved for TIM Celular is R$784,654 (R$907,777 as at December 31, 2016), and the amount involved for TIM S.A. is R$19,950 (R$19,534 as at December 31, 2016).
(iv) ICMS credits booked and debits reversed, as well as the identification and supporting documentation for amounts and information passed to customer bills, such as tax rates and credit granted, as well as credits related to transactions with tax substitution, and exempt and non-taxable transactions. The amount involved for TIM Celular is R$1,698,409 (R$1,230,516 as at December 31, 2016), and the amount involved for TIM S.A. is R$128,875 (R$111,625 as at December 31, 2016).
(v) The use of credit to purchase electricity for the companies’ production processes. The amount involved is R$131,625 (R$322,722 as at December 31, 2016).
(vi) Alleged failure to pay tax on network lease operations where the tax originally deferred was allegedly not paid in the subsequent phase, pursuant to Agreement 128/98. The amount involved is R$120,880 (R$112,537 as at December 31, 2016).
(vii) Liability for ICMS and FECOP (State Anti-Poverty Fund) on fixed asset purchases and other transactions, and on the provision of telecommunications services in specific cases determined by the law. The amount involved is R$175,729 (R$169,431 as at December 31, 2016).
(viii) The alleged conflict between the ancillary obligations data and the payment of the tax, and specific questioning regarding the fine charged due to noncompliance with ancillary obligations. The amount involved is R$253,443 (R$234,006 as at December 31, 2016).
(ix) Alleged failure to pay ICMS arising from debts reversed regarding pre-paid services, as well as alleged undue ICMS credit regarding outgoing goods allegedly benefiting from a reduction in the calculation base. The amount involved is R$73,722 (R$69,195 as at December 31, 2016).
(x) Taxation of international roaming services. The amount involved is R$45,917 (R$39,665 as at December 31, 2016).
(xi) Credits booked for the return of cell phones on free leases. The amount involved is R$185,526 (R$105,418 as at December 31, 2016).
(xii) Cancellation of telecommunications services due to improper invoicing/subscription fraud, and the alleged incorrect use of credit and the duplication of ICMS. The amount involved is R$23,797 (R$22,499 as at December 31, 2016).
(xiii) Collection of ICMS tax on subscription services excluded from the ICMS calculation base due to their classification as non-telecoms services. The amount involved is R$112,848, with no corresponding amount as at December 31, 2016.
e.3.3. Municipal Taxes
The total assessment against TIM Group for municipal taxes is R$658,783 as at December 31, 2017 (R$509,613 as at December 31, 2016). Of this amount, the following issues stand out:
(i) Payment of ISS and of a punitive fine for failure to pay the alleged tax on various revenue accounts of the Company. The amount involved is R$136,732 (R$128,145 as at December 31, 2016).
(ii) Collection of ISS on imports of services. The amount involved is R$269,547 (R$183,962 as at December 31, 2016).
(iii) Constitutionality of collection of the Operations Monitoring Charge (“TFF”) by municipal authorities in several locations. The amount involved is R$107,519 (R$66,939 as at December 31, 2016).
e.3.4. FUST and FUNTTEL
The amount assessed against TIM Group for contributions to FUST and FUNTTEL is R$2,709,076 as at December 31, 2017 (R$2,779,295 as at December 31, 2016). The principal discussion involves the payment of the contributions to FUST and FUNTTEL (Telecommunications Technical Development Fund) from the issue by ANATEL of Ruling No. 07/2005, relating primarily to the payment of the FUST and FUNTTEL contributions on interconnection revenue earned by telecommunications service providers, from the effective date of Law No. 9998/2000.
e.4. Regulatory issues
ANATEL has filed administrative proceedings against the subsidiaries for: (i) not complying with certain quality indicators; (ii) defaulting on other obligations under Instruments of Authorization and; (iii) not complying with SMP and STFC regulations, among others.
As at December 31, 2017, the amount stated for Breach of Obligation procedures (locally PADOs), considering the monetary restatement that was considered a possible loss was R$178,908 (R$69,572 as at December 31, 2016).
On obtaining an extension of the authorization to use radio frequencies associated with SMP, the subsidiary TIM Celular incurs contractual charges on net revenue from service plans sold under each authorization. However, ANATEL has included interconnection revenue in the calculation base for these charges since 2011, and revenue from value-added services since 2012. In our opinion, this revenue should not be included because it is not expressly stipulated in the original Instruments of Authorization, and therefore the charges received are discussed in the administrative and/or legal spheres. |
24. Provision for decommissioning costs |
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Provision for decommissioning costs | The changes in the provison for decommissioning costs are set forth below:
The provision is recorded based on the following assumptions:
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25. Shareholders' equity |
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Shareholders' equity | a. Share captial
The share capital is stated at the amount effectively raised from shareholders, net of the costs directly linked to the issuance process.
When a company within the Group purchases shares in the Company, aiming at holding them as treasury shares, the amount paid, including any directly attributable additional costs, is deducted from the Company’s shareholders’ equity until the shares are cancelled or reissued. When these shares are reissued subsequently, any amount received, net of additional costs directly attributable to the transaction, is included in shareholders’ equity.
The Company is authorized to increase its capital based on a resolution by the Board of Directors, without amending the bylaws, up to the limit of 4,450,000,000 common shares.
The subscribed and paid up capital is represented as follows:
b. Capital reserves
The use of capital reserves is in compliance with the provisions of Article 200 of Law No. 6404/76, which refers to joint stock companies. These reserves are comprised of:
b.1 Special goodwill reserve
The special goodwill reserve arose from the following transactions:
(i) Takeover of the former subsidiaries TIM Sul and TIM NE - acquisition of minority shares
In 2005, the Company acquired all the shares held by the minority shareholders of TIM Sul S.A. and TIM Nordeste Telecomunicações S.A. This acquisition was carried out by issuing new shares in TIM Participações S.A., converting those companies into full subsidiaries. At that time, this transaction was recorded at the book value of the shares, with no goodwill being recorded arising from the difference between the market value and the shares negotiated.
When first adopting IFRS, the Company used the exemption that allows a subsidiary, when it adopts international accounting practices subsequent to its parent company having adopted IFRS, to consider the balances previously reported to the parent company for consolidation purposes. In the balance sheet, upon the transition to IFRS, the Company recorded the acquisition price based on the market value of the shares of TIM Participações S.A. at that time, recording goodwill amounting to R$157,556.
(ii) Acquisition of the shares of Holdco - purchase of TIM S.A
On December 30, 2009, the Special General Meeting of TIM Participações approved the takeover of Holdco, a company that held 100% of the equity of Intelig, by TIM Participações. As a result of this transaction, the Company issued 127,288,023 shares.
Based on the former Brazilian accounting principles (“BR GAAP”), the acquisition was recorded at the net book value of the assets acquired as at the base date of November 30, 2009.
When IFRS was first adopted, the acquisition was recorded as at the base date of December 31, 2009, taking into account the market value of the common and preferred shares of TIM Participações as at December 30, 2009, amounting to R$739,729. The difference between this amount and the book value recorded under the former BR GAAP (R$516,725) created goodwill against capital reserves of R$223,004.
b.2 Stock options
The balances recorded for these items represent the expenses of the Company and its subsidiaries for the stock options granted to their employees (Note 26).
During 2017, as a result of the Stock Option Plan (Note 26), the Company disposed of 1,548,732 shares, being 197,132 shares at a unit cost of R$4.16, which is equivalent to R$821, and 1,351,600 shares at a unit cost of R$10.21, which is equivalent to R$13,796. Additionally, by means of the Stock Repurchase Program launched in October 2017, the Company acquired 2,354,685 shares at the unit price of R$11.70, which is equivalent to R$27,734. As a result, the net effect on the stock repurchase transaction was R$13,118.
b.3 Tax benefit reserve
TIM Celular enjoys tax benefits that provide restrictions on the distribution of profits of this subsidiary. According to the legislation establishing such tax benefits, the amount of taxes waived as a result of exemptions and reductions in the tax charge may not be distributed to shareholders, and must be registered as a tax incentive reserve of the legal entity. This reserve should only be used for the offsetting of losses or a capital increase. The accumulated amount of benefits enjoyed by TIM Celular as at December 31, 2017 and December 31, 2016 was R$1,271,404 and R$1,158,911, respectively.
The aforementioned tax benefit basically corresponds to a reduction in the income tax charges estimated on the exploitation profit from the Company´s operation in the incentive region or “exploitation zone”. The Company operates in the area of the former Superintendence for the Development of the Amazon (“SUDENE/SUDAM”), and the tax benefit reports are granted by the state, for a period of ten years, subject to extension.
c Profit reserves
c.1 Legal reserve
This refers to 5% of the profit for every year ended December 31, until the legal reserve equals 20% of the capital stock. Also, the Company is authorized to stop setting up a legal reserve when, together with the capital reserves, it exceeds 30% of the capital stock.
This reserve can be used only for a capital increase or for the offsetting of accumulated losses.
c.2 Statutory reserve for expansion
This reserve is set up based on paragraph 2, Article 46 of the Company’s bylaws, and is intended for the expansion of the Company´s business.
The balance of profits that are not compulsorily allocated to other reserves and not allocated for the payment of dividends, is allocated to this reserve, which may not exceed 80% of the capital stock. Once this limit has been reached, it is incumbent on the shareholders’ meeting to decide if such reserve should be either distributing to shareholders or increasing the capital.
d. Dividends and Interest on shareholders’ equity (JCP)
Dividends are calculated in accordance with the bylaws and Brazilian Corporate Law.
As stipulated in the latest bylaws approved on April 12, 2016, the Company must distribute a mandatory dividend for each business year ended December 31, provided that funds are available for distribution, equivalent to 25% of the profit. As provided for in the Company’s bylaws, dividends not claimed within three years will be reversed to the Company.
As at December 31, 2017, dividends and interest on equity were calculated as shown below:
The balance of dividends and interest on shareholders’ equity payable as at December 31, 2017 includes amounts not settled in previous years, in the amount of R$40,266 (R$57,447 as at December 31, 2016).
Changes in dividends and interest on equity to be paid is detailed below:
Interest on shareholders’ equity paid and/or payable is recorded against financial expenses which, for the purposes of presentation of the financial statements, are reclassified and disclosed as part of the allocation of net income for the year, in changes in shareholders’ equity. Interest on shareholders’ equity received and/or receivable is recorded against financial revenue, with an
impact on the equity accounting income. For disclosure purposes, the impacts on income are eliminated, and a reduction is recorded in the investment balance.
Regarding the statement of cash flow, interest on shareholders’ equity and dividends paid to shareholders were classified as “Financing Activities” . |
26. Stock options |
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Stock options | 2011-2013 Plan and 2014-2016 Plan
At the annual meeting on August 5, 2011, and April 10, 2014, the shareholders of TIM Participações S.A. approved the long term incentives plans, respectively the “2011-2013 Plan” and the “2014-2016 Plan,” for senior management and the key executives of the Company and its subsidiaries.
The exercise of options under the 2011-2013 Plan depends on the achievement of specific performance targets, while the exercise of options under the 2014-2016 Plan is not subject to this condition. The Exercise Price is calculated with an upward or downward adjustment to the Base Share Price, according to share performance, as provided for in each Plan.
Stock options are effective for six years, and TIM Participações has no legal or informal obligation to repurchase or settle the options in cash.
There were no new grants in 2017, only ascertainments regarding the next vestings, being the 3rd related to the 2014 grant, the 2nd related to the 2015 grant and the 1st related to the 2016 grant.
The variations in the quantity of options are presented below:
Below are the significant data included in the model:
The Base Share Price was calculated using the weighted prices of the shares of TIM Participações, during the following periods:
Using the accruals basis of accounting, the expenses related to the long term benefit plan are being accounted for on a monthly basis and, at the end of the year, totaled R$12,789 (R$3,802 as at December 31, 2016). |
27. Revenue |
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Revenue | Revenue from services rendered
The principal service revenue derives from monthly subscription, the provision of separate voice, SMS and data services, and user packages combining these services, roaming charges and interconnection revenue. The revenue is recognized as the services are used, net of sales taxes and discounts granted on services. This revenue is recognized only when the amount of services rendered can be estimated reliably.
The revenue is recognized monthly via invoicing, and billable revenue between the billing date and the end of the month (unbilled) are identified, processed and recognized in the month in which the service was rendered. Calculations of unbilled revenue from the previous month are reversed, and unbilled amounts are calculated at the end of each month, considering the revenue billed in the previous month.
Interconnection traffic and roaming revenue are recorded separately, without offsetting the amounts owed to other telecom operators (the latter are accounted for as operating costs).
The minutes not used by customers and/or top-up credits in the possession of commercial partners regarding the prepaid service system are recorded as deferred revenue and allocated to income when these services are actually used by customers.
Revenue from product sales
Revenue from product sales (telephones, mini-modems, tablets and other equipment) are recognized when the significant risks and benefits of the ownership of such products are transferred to the buyer.
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28. Operating costs and expenses |
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Operating costs and expenses |
The Company and its subsidiaries contribute to public and private pension insurance plans in a mandatory, contractual or voluntary manner during the time when the employee is working at the Company and its subsidiaries. These plans do not originate any additional obligation for the Company. When the employee leaves the Company or its subsidiaries during the period required for entitlement to receive the contributions made by the sponsors, the amounts to which the employee ceased to be entitled, and that may represent a reduction in the future contributions of the Company and its subsidiaries to its active employees, or a refund in cash of these amounts, are recorded in assets.
In the year ended December 31, 2017, the Company recorded the amounts of R$4,111, R$4,352 and R$5,286 (R$3,596, R$4,229 and R$3,732 in December 31, 2016) for post-employment benefits in the groups of cost of services provided and goods sold, sales expenses and general and administrative expenses respectively.
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29. Other income (expenses), net |
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Other income (expenses), net |
(*) During the year 2017, 54 towers were transferred under the 6th tranche to ATC, in accordance with the agreements entered into between the parties (Note 15). Leaseback arrangements were analyzed and classified as a financial lease, considering the requirements provided for in IAS17, approved by a Resolution of the CVM.
The risks and benefits of the assets were transferred to the purchaser as at the date of each transfer, and a net expense involving the disposal of these assets in the amount of R$1,802 in the period was recognized as other operating revenue (expenses).
(**) Expenses incurred with contributions on several telecommunications revenue due to ANATEL, according to the legislation in force. |
30. Financial income |
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Financial income |
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31. Financial expenses |
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Financial expenses |
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32. Foreign exchange variations, net |
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Foreign exchange variations, net |
The exchange variation for the year relates to borrowing and financing and suppliers in foreign currency. Derivative transactions were used to reduce their effects (Note 37). |
33. Income tax and social contribution expenses |
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Income tax and social contribution expenses |
The reconciliation of income tax and social contribution expenses calculated at the applicable tax rates, plus the amounts reflected in the statement of income, is set out below:
(*) As mentioned in Note 25 b.3, according to Article 443, item I, of Decree No. 3000/1999, investments in subsidies are not to be considered within the taxable income, and must be recorded as capital reserves, to be used only to offset losses or increase the capital stock. The subsidiary TIM Celular has tax benefits compliant with these rules. |
34. Earnings per share |
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Earnings per share | (a) Basic
Basic earnings per share are calculated by dividing the income attributable to the shareholders of the Company by the weighted average number of shares issued during the period.
(b) Diluted
Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding to assume the conversion of all dilutive potential shares.
The calculation of the diluted earnings per share considered 1,056 thousand shares (4.53 thousand shares in 2016) related to the 2nd and 3rd Grantings of Plan 2011-2013, and the 2nd and 3rd grantings of the 2014-2016 Plan, as mentioned in Note 26. |
35. Transactions with Telecom Italia Group |
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Transactions with Telecom Italia Group | The consolidated balances of transactions with the companies of Telecom Italia Group are as follow:
(1) These amounts refer to roaming, value-added services (“VAS”), international voice data – wholesale, among others. The “Telecom Argentina Group” consists of the companies Telecom Personal, Telecom Argentina and Nucleo. On March 8, 2016, Telecom Italia concluded the sale of its 100% interest in Telecom Argentina Group.
(2) These amounts refer to international roaming, technical post-sales assistance and VAS.
(3) These amounts refer to the development and maintenance of software used in invoicing for telecommunications services.
(4) These amounts refer to the lease of links and EILD, lease of means (submarine cables) and signaling services.
(5) These amounts refer to insurance coverage taken out for operating risks, civil liability and health insurance among others.
(6) These amounts refer mainly to judicial deposits related to labor lawsuits.
(7) These amounts refer to VAS.
(8) These amounts refer to publicity services.
In the third quarter of 2017, “Lan Group” changed its name to “TI Sparkle.”
The balance sheet account balances are recorded in the following groups: trade accounts receivable, prepaid expenses, suppliers and other current assets and liabilities.
The Company’s social initiatives include donations, projects undertaken by the TIM Institute, and sponsorships. In 2017, the Company invested R$5,014 million of its own funds in social benefits. |
36. Management Compensation |
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Management Compensation | Key Management personnel include the statutory officers and the Board of Directors. The compensation paid to key Management personnel for services rendered is shown below:
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37. Financial instruments and risk management |
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Financial instruments and risk management | The financial instruments registered by the Company and its subsidiaries include derivatives, which are financial liabilities measured at fair value through profit or loss. At each balance sheet date they are measured at their fair value. Interest, monetary adjustments, exchange variations and variations arising from measurement at fair value, where applicable, are recognized in income when incurred, under financial revenue or expenses.
Derivatives are initially recognized at fair value as at the date of the derivative agreement, and subsequently revised to fair value. The method used for recognizing any gain or loss depends on whether or not the derivative is assigned a hedge instrument in cases where hedge accounting is adopted.
Through its subsidiaries, the Company performs non-speculative derivative transactions, to: i) reduce the exchange variation risks; and ii) manage exposure to the interest risks involved. The Company’s derivative financial transactions consist specifically of swaps and foreign exchange fund contracts.
The Company’s financial instruments are presented, through its subsidiaries, in compliance with IAS 32.
Accordingly, the major risk factors to which the Company and its subsidiaries are exposed are as follow:
(i) Exchange variation risks
Exchange variation risks refer to the possibility of subsidiaries incurring: i) losses on unfavorable exchange rate fluctuations, which would increase the outstanding balances of borrowing contracted in the market along with the related financial expenses; or ii) increases in the cost of commercial agreements affected by exchange variations. In order to reduce this kind of risk, the subsidiaries: i) enter into swap contracts with financial institutions with the purpose of avoiding the impact of exchange rate variations on borrowing and financing; and ii) invest in foreign exchange funds with the purpose of reducing the impacts on commercial agreements.
On December 31, 2017, the borrowing and financing of the subsidiaries indexed to foreign currencies were fully hedged by swap contracts in terms of time and amount. Any gains or losses
arising from these swap contracts are charged to the earnings of the subsidiaries.
Besides the risks mentioned above, no other significant financial assets and liabilities are indexed to foreign currencies.
(ii) Interest rate risks
Interest rate risks relate to:
- The possibility of variations in the fair values of TJLP-indexed financing obtained by the subsidiary TIM Celular, when these rates are not proportional to the CDI. As at December 31, 2017, the subsidiary TIM Celular has no swap transactions linked to the TJLP.
- The possibility of unfavorable changes in interest rates would result in higher finance costs for the subsidiaries due to indebtedness and obligations assumed by the subsidiaries under the swap contracts indexed to floating interest rates (CDI percentage). However, as at December 31, 2017, the subsidiaries’ financial funds were invested in CDI, which considerably reduces such risk.
(iii) Credit risk inherent to the provision of services
This risk involves the possibility of the subsidiaries incurring losses arising from the inability of subscribers to pay the amounts billed to them. To minimize this risk, the subsidiaries engage in preventive credit analysis of all requests submitted by the sales area and monitor the accounts receivable from subscribers, freezing their ability to use the services, among other actions, in the event that customers do not pay their debts. No single customer contributed more than 10% of the net accounts receivable or revenue from services rendered as at December 31, 2017, December 31, 2016 or December 31, 2015.
(iv) Credit risk inherent in the sale of handsets and prepaid telephone cards
The policy of the subsidiaries when selling handsets and distributing prepaid telephone cards is directly related to the acceptable levels of credit risk during the normal course of business. The choice of partners, the diversification of the portfolio of accounts receivable, the monitoring of borrowing conditions, positions and order limits established for traders and the constitution of guarantees are among the procedures adopted by the subsidiaries to contain possible problems in collecting from their business partners. There are no customers that contributed more than 10% of net accounts receivable or sales revenue as at December 31, 2017, December 31, 2016 or December 31, 2015.
(v) Financial credit risk
The cash flow estimates are made and aggregated by the finance and treasury departments of the Company. This department monitors the ongoing estimated liquidity requirements to ensure that the Company has sufficient cash to meet its operating needs. This estimate takes into account investment plans, debt financing, compliance with contractual clauses, compliance with internal goals and, if applicable, compliance with regulatory, external or legal requirements.
This risk relates to the possibility of the Company and its subsidiaries incurring losses due to difficulty realizing their short term investments and swap contracts due to bankruptcy of the counterparties. The subsidiaries minimize the risk associated with these financial instruments by only contracting with sound financial institutions, and adopting policies that establish maximum risk concentration levels by institution.
Fair values of derivative financial instruments
The consolidated balances of transactions involving derivative financial instruments are as follow:
The consolidated balances of transactions involving financial derivative instruments with long term maturities as at December 31, 2017 are as follow:
Non-derivative financial liabilities are mainly comprised of suppliers, dividends payable and other obligations maturing in the next 12 months, except for loans and financing and financial leases, whose nominal payment flows are disclosed in Notes 19 and 15.
Consolidated financial assets and liabilities valued at fair value:
The fair values of financial instruments traded on active markets are based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. These instruments are included in Level 1. The instruments included in Level 1 mainly represent investments in Bank Deposit Certificates (“CDBs”) and Repurchases (“Repos”) classified as trading securities.
The fair values of financial instruments that are not traded on an active market (for example over-the-counter derivatives) are determined using valuation techniques. These valuation techniques maximize the use of observable market data, where available, and rely to the minimum extent possible on entity specific estimates. If all significant inputs required to determine the fair value of an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include: · Quoted market prices or financial institution quotes or dealer quotes for similar instruments. · The fair value of interest rate swaps is calculated as the present value of the estimated future cash flow based on observable yield curves. · Other techniques, such as discounted cash flow analysis, are used to determine the fair values of the remaining financial instruments.
The fair values of derivative financial instruments of the subsidiaries were determined based on the future cash flow (asset and liability position), taking into account the contracted conditions and bringing those flows to present value by means of discounting future interest rates disclosed in the market. The fair values were estimated at a specific time, based on information available and on the Company’s own valuation methodologies.
Financial instruments by category
The Company’s financial instruments by category can be summarized as follow:
Regular purchases and sales of financial assets are recognized as at the trade date - the date on which the Company undertakes to buy or sell the asset. Investments are initially recognized at fair value. After initial recognition, changes in the fair value are booked in income for the year as finance income and expenses.
Financial risk hedge policy adopted by the Company – Synthesis
The Company’s policy states that mechanisms must be adopted to hedge against financial risks arising from borrowing in foreign currency, so as to manage the exposure to the risks associated with exchange variations. Derivative financial instruments against exchange variations must be acquired simultaneously with the payment of the debt that gave rise to that exposure. The coverage level to be taken out for this exchange exposure is 100% of the risk, both in terms of maturity date and amount.
As at December 31, 2017, no types of margin or collateral apply to the Company’s or its subsidiaries’ transactions involving derivative financial instruments.
The criteria for choosing the financial institutions take into account the ratings provided by reliable risk rating agencies, shareholders’ equity and the levels of concentration of transactions and funding.
Transactions involving derivative financial instruments entered into by the subsidiaries and outstanding as at December 31, 2017 and December 31, 2016 are shown in the table below:
December 31, 2017
December 31, 2016
In March and April 2017, in line with its goal to control cash and reducing indebtedness, the Company jointly decided that, together with the prepayment of the BOA borrowing and BEI financing, it would reverse the swaps contracted with BOFA for the purpose of hedging the Company against the risks of variations in foreign exchange and interest rates.
In addition to the swap transactions mentioned in the tables above, the Company took advantage of a favorable moment, at the end of June 2016, to close a forward swap transaction in advance to ensure an attractive cost of 81.5% of the CDI rate for a financing agreement in foreign currency. The disbursement of the funds occurred on April 20, 2017, to KfW/Finnvera. The swap was closed based on the same payment flow to ensure full hedging, and has a notional value of approximately US$48 million. This transaction does not entail foreign exchange risk, since the initial US Dollar rates for this transaction (Debt and Swap) are equal at the inception date.
Sensitivity analysis – effect on the fair value of the swaps
In order to identify possible distortions arising from consolidated transactions involving derivative financial instruments currently outstanding, a sensitivity analysis was carried out taking into account three different scenarios (probable, possible and remote) and their respective impacts on the results, as follow:
Given the characteristics of the derivative financial instruments of the subsidiaries, the assumptions used basically took into account the effect of: i) the variations of the CDI; ii) LIBOR; and iii) the variations in the US Dollar used in the transactions, achieving the respective percentages and quotations indicated below:
As the subsidiaries hold derivative financial instruments in order to hedge their respective financial debt, the variations in the scenarios are monitored from the respective subject designated as hedge, thereby showing that the counterpart of the effects involving the exposure created by the swaps will be reflected in the debt. In the case of these transactions, the subsidiaries disclosed the fair value of the subject matter (debt) and the derivative financial instrument of the hedge on separate lines, as shown in the sensitivity analysis position above, so as to reveal the net exposure of its subsidiaries in each of the three scenarios mentioned.
Attention is drawn to the fact that the sole purpose of the transactions entered into by the subsidiaries involving derivative financial transactions is to protect their balance sheet positions. Therefore, any improvement or deterioration in their respective market values will represent an inverse movement in the corresponding installments of the financial debt contracted, which is the object of the subsidiaries’ derivative financial instruments. Sensitivity analyses referring to the derivative financial instruments outstanding as at December 31, 2017 were conducted, mainly taking into account the assumptions surrounding the variations in market interest rates and the variations in the US Dollar used in the swap agreements. The use of these assumptions in the analyses was driven by the characteristics of the derivative financial instruments, which represent exposure to interest rate and exchange variations only.
Position showing gains and losses on derivatives during the year
Capital management
The Group’s objectives when managing capital are to safeguard the Group ability to continue as a going concern in order to provide returns to shareholders and benefits to other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust its capital structure the Company can review its policy on paying dividends, return capital to the shareholders, issue new stock or sell assets to reduce its level of indebtedness, for example.
(*) The variation in the ratio includes the effect of the sale of towers. (**) Earnings before interest, tax, depreciation and amortization.
Changes in financing activities
Below the changes in liabilities arising from financing activities, such as borrowings and financing, finance lease and financial instruments:
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38. Insurance |
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Insurance | |||||||||||||
Insurance | The Company and its subsidiaries have a policy for monitoring the risks inherent to their operations. Accordingly, on December 31, 2017, the Company and its subsidiaries had insurance coverage against operating risks, third party liability and health risks, among others. The Management of the Company and its subsidiaries consider that the insurance coverage contracted is sufficient to cover eventual losses. The table below shows the main assets, liabilities or interests insured, and their respective amounts:
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39. Commitments |
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Commitments | Rentals
The Company and its subsidiaries rent equipment and property under many rental agreements with different maturity dates. Below is a list of the minimum commited rental payments under such agreements:
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40. Other Information |
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Other Information | |||||||||||||
Other Information | On June 20, 2016, OI S.A., Telemar Norte Leste S.A., OI Móvel S.A., Copart 4 Participações S.A., Copart 5 Participações S.A., Portugal Telecom International Finance B.V. and OI Brasil Holdings Coöperatief U.A. (jointly “OI”), filed for judicial reorganization with the 7th Business Court of Rio de Janeiro. The complaint states that the purpose of the action was to protect OI’s cash and assets while it negotiated a judicial reorganization plan with its creditors, so that it can continue to operate. The judicial reorganization was granted by the Court on June 29, 2016.
OI’s judicial reorganization plan was approved by the general meeting of its creditors held on December 19, 2017, and ratified by the Court of the judicial reorganization on January 8, 2018. The decision on the approval of the plan has not yet been published in the Official Gazette.
The judicial reorganization plan establishes that the partner supplier creditors will be paid under favorable conditions.
The conditions for the payment of the listed debts to creditors classified as suppliers/partners are as follow: · Payment of R$150, 20 days after the termination of the credit payment option; and · Payment of the remaining balance at a 10% discount in four annual installments (the first being on December 31, 2019, if the approval decision is published in 2018) plus the Reference Rate (“TR”) + 0.5% per annum.
For suppliers classified in the general payment modality, the payment of the listed credits is as follows: · 20-year grace period from the publication of the decision on the approval of the judicial reorganization; · Repayment of the principal in five annual and successive installments; · Payment of TR accumulated in the period only, together with the last installment; · Payments to creditors under this modality will be limited to a maximum of R$70 billion, and, if the credits exceed such amount, they will be subject to a pro rata reduction.
The relationship between TIM and OI arises principally from regulated interconnection operations and the sharing of infrastructure, which are necessary for both operators. Thus, the net asset position of TIM in relation to the judicial reorganization of OI as at June 20, 2016 is as follows:
On the basis of the information available as at the date of preparation of the financial statements, considering the approval of the judicial reorganization plan, TIM’s Management does not expect any significant loss with respect to accounts receivable outstanding with OI as at December 31, 2017. |
41.Subsequent events |
12 Months Ended |
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Dec. 31, 2017 | |
Disclosure of non-adjusting events after reporting period [abstract] | |
Subsequent events |
OI S.A.
The Company entered into a memorandum of understanding with OI S.A. in relation to the latter’s Judicial Reorganization, initiating an important stage of negotiations that aims to equalize their respective complaints and opens a new cycle of planning for infrastructure sharing, based on the same model of partnerships already used in the Brazilian telecommunication market. Based on such memorandum the Company will enter in a swap transaction with OI in order to exchange for certain operational assets (fiber optical).
Judicial proceedings
On February 19, 2018, the Company obtained a tax assessment notice issued by the State of São Paulo, in the amount of approximately R$344 million, challeging certain ICMS (Value-Added Tax) credits arising from part of the amounts paid as Whithhold Tax on purchases of certain products. In a preliminary risk analysis performed by the Company's management, the process is assessed as a possible loss.
On February 21, 2018, the Company obtained a tax assessment notice issued by the State of São Paulo in the amount of approximately R$ 335 million, challenging for a reduction of the ICMS tax basis (Value-Added Tax) due to the exclusion of prepaid credits granted to its customers. The Company understands that if they were included in the tax calculation basis, it would incur double taxation, therefore, in a preliminary risk analysis, this lawsuit is assessed as a possible loss. |
3. Estimates and critical judgment in the application of the Company's accounting policies (Policies) |
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Dec. 31, 2017 | |
Estimates And Critical Judgment In Application Of Companys Accounting Policies Policies | |
Impairment losses of non-financial assets | Impairment losses take place when the book value of an asset or cash generating unit exceeds the respective recoverable value, which is considered as the fair value less costs to sell or the value in use, whichever is greater. The calculation of fair value less costs to sell is based on information available from sales transactions involving similar assets or market prices, less any additional costs that would be incurred to dispose of those assets. The value in use is based on the discounted cash flow model. Cash flow derives from the Company’s business plan. Since this is an ongoing business, from the fifth projection year a perpetual rate of nominal growth of cash flow was estimated (Note 14).
Any reorganization activities to which the Company has not committed itself as at the financial statements disclosure date, or any material future investments aimed at improving the asset base of the cash generating unit being tested, are excluded for the purposes of impairment testing.
The recoverable value is sensitive to the discount rates used under the discounted cash flow method, as well as to the expected future cash receivables and the growth rates of revenue and expenses used for extrapolation purposes. Adverse economic conditions may lead to significant changes in these assumptions.
The main non-financial assets valued using this method include goodwill based on future profitability recorded by the Company (note 14). |
Income tax and social contribution (current and deferred) | Income tax and social contribution (current and deferred) are calculated in accordance with interpretations of the legislation currently in force. This process normally includes complex estimates to define the taxable income and temporary differences. In particular, deferred tax assets arising from income tax and social contribution losses and temporary differences are recognized to the extent that it is probable that future taxable income will be available against which they can be offset. The measurement of the recoverability of deferred income tax and social contribution losses carried forward, and of temporary differences, takes into account the estimates of taxable income (Note 10). |
Provision for legal and administrative proceedings | Legal and administrative proceedings are analyzed by the Company’s Management and internal and external legal advisors. The Company’s reviews take into account factors such as the hierarchy of laws, the available case law, recent court decisions, their relevance to the hierarchy of laws, as well as the disbursement history of judicial proceedings. Such reviews involve the use of Management’s judgment (Note 23). |
Fair value of derivatives and other financial instruments |
Financial instruments presented at fair value in the balance sheet are measured using valuation techniques that take into account observable data derived from the market (Note 37). |
Unbilled revenue | Considering that some billing cut-off dates occur at intermediate dates during each month, there is revenue already earned by the Company but not effectively billed to the customers at the end of each month. This unbilled revenue is recorded based on estimates which take into account customer’s usage data and the number of days since the last billing date, among other factors (Note 27). |
Sale and leaseback | Sale and leaseback transactions involve the Group selling an asset and immediately acquiring the right to use the same asset by entering into a lease agreement with the buyer. The accounting treatment of sale and leaseback transactions depends on the substance of each transaction (by applying the principles of lease classification).
For financial sale and leaseback transactions, the total gain is deferred and amortized over the lease term. For operational sale and leaseback, generally the assets are sold at fair value, and consequently the gain or loss on the sale is immediately recognized in the income statement.
At the beginning of the lease term, the Company recognizes finance leases as assets and liabilities on its balance sheet at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the beginning of the lease.
The discount rate used in a sale and leaseback transaction is determined based on observable market transactions where the lessee would have to pay an amount on a similar lease contract or loan. The discount rates applied by Management to the transactions carried out during the year were significant to the calculation of the portion of the gain recorded through profit and loss, as well as the portion of the deferred gain which is amortized over the lease term. Please see Note 15(ii) for further details on the financial impact on such transaction. |
4. Cash and cash equivalents (Tables) |
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Schedule of financial assets |
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5. Marketable securities (Tables) |
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Schedule of marketable securities |
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6. Trade accounts receivable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Accounts Receivable Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of trade account receivables |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the allowance for doubtful accounts |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of aging of the accounts receivable |
|
7. Inventory (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Inventory Tables | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories |
|
8. Indirect taxes and contributions recoverable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Indirect Taxes And Contributions Recoverable Tables | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of indirect taxes and contributions recoverable |
|
9. Direct taxes and contributions recoverable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Direct Taxes And Contributions Recoverable Tables | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of direct taxes and contributions recoverable |
|
10. Deferred taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Taxes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deferred taxes assets and liabilities |
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Schedule of the disclosure of detailed information about subsidiary expects to recover credits based on projections. |
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11. Prepaid expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of prepaid expense |
|
12. Judicial deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Judicial Deposits Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of detailed information about judicial deposits |
|
13. Property, Plant and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Plant And Equipment Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in property, plant and equipment |
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Schedule of Depreciation rates |
|
14. Intangible assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Moviment in intangible assets |
|
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Schedule of Amortization Rates |
|
15. Financial leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FinancialLeasesLinesLineItems [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease liabilities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LT Amazonas [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FinancialLeasesLinesLineItems [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease receivables |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease receivables nominal and present value |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease liabilities nominal and present value |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of Towers (leaseback) [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FinancialLeasesLinesLineItems [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease receivables |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finance lease liabilities nominal and present value |
|
17. Suppliers (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Suppliers Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplier accounts payable |
|
18. Authorizations payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Authorizations Payable Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Licenses payables |
|
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Schedule of authorizations payable |
|
19. Borrowing and financing (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowing And Financing Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of appropriation of financial expenses |
|
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Schedule of Credit Facilities |
|
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Schedule of long term portions of borrowing and financing |
The long term portions of borrowing and financing as at December 31, 2017, mature as follow:
The table below includes the schedule of nominal values of borrowing and financing estimated until the termination of the agreements.
|
20. Indirect taxes, charges and contributions payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indirect Taxes Charges And Contributions Payable Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of indirect taxes charges and contributions payable |
|
21. Direct taxes, charges and contributions payable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Direct Taxes Charges And Contributions Payable Tables | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of direct taxes charges and contributions payable |
|
22. Deferred revenue (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deferred revenue |
|
23. Provision for legal and administrative proceedings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||
Provision For Legal And Administrative Proceedings Tables | |||||||||||||||||||||||||||||||||||||||||||
Schedule of provision for legal and administrative proceedings |
|
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Schedule of reconciliation of provision for legal and administrative proceedings |
|
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Schedule of tax provision |
|
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Schedule of legal and administrative processes involving possible losses |
|
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Schedule of civil contingent liabilities |
|
||||||||||||||||||||||||||||||||||||||||||
Schedule of tax contingent liabilities |
|
24. Provision for decommissioning costs (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||
Provision For Decommissioning Costs Tables | |||||||||||||||||||||||||||||||||
Schedule of changes in the obligations deriving from future asset retirement |
|
25. Shareholders' equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders Equity Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of subscribed and paid up capital |
|
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Schedule of reserves |
|
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Schedule of dividends calculation |
|
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Changes in dividends and interest on equity to be paid |
|
26. Stock options (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variations in quantity of options | The variations in the quantity of options are presented below:
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Schedule of Significant data included in model |
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27. Revenue (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenue |
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28. Operating costs and expenses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Costs And Expenses Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of operating cost and expences |
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29. Other income (expenses), net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income Expenses Net Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income (expenses), net |
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30. Financial income (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Income Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial income |
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31. Financial expenses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Expenses Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial expenses |
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32. Foreign exchange variations, net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Exchange Variations Net Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of foreign exchange variations, net |
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33. Income tax and social contribution expenses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax And Social Contribution Expenses Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax and social contribution on profit or loss reconciliation |
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Schedule of income tax and social contribution expenses reconciliation |
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34. Earnings per share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earning per share | Basic earnings per share are calculated by dividing the income attributable to the shareholders of the Company by the weighted average number of shares issued during the period.
(b) Diluted
Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding to assume the conversion of all dilutive potential shares.
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35. Transactions with Telecom Italia Group (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions With Telecom Italia Group Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of consolidated balances of transactions | The consolidated balances of transactions with the companies of Telecom Italia Group are as follow:
(1) These amounts refer to roaming, value-added services (“VAS”), international voice data – wholesale, among others. The “Telecom Argentina Group” consists of the companies Telecom Personal, Telecom Argentina and Nucleo. On March 8, 2016, Telecom Italia concluded the sale of its 100% interest in Telecom Argentina Group.
(2) These amounts refer to international roaming, technical post-sales assistance and VAS.
(3) These amounts refer to the development and maintenance of software used in invoicing for telecommunications services.
(4) These amounts refer to the lease of links and EILD, lease of means (submarine cables) and signaling services.
(5) These amounts refer to insurance coverage taken out for operating risks, civil liability and health insurance among others.
(6) These amounts refer mainly to judicial deposits related to labor lawsuits.
(7) These amounts refer to VAS.
(8) These amounts refer to publicity services.
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36. Management Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||
Management Compensation Tables | |||||||||||||||||||||
Schedule of key management personnel |
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37. Financial instruments and risk management (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments And Risk Management Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of consolidated derivative financial instruments |
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Schedule of long term maturities of financial derivative instruments |
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Schedule of consolidated financial assets and liabilities valued at fair value |
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Schedule of financial instruments by category |
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Schedule of derivative financial instruments outstanding | December 31, 2017
December 31, 2016
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Schedule of sensitivity analysis of derivative financial instrument |
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Schedule of risk variable of derivative financial instruments |
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Schedule of Position showing gains and losses with derivatives |
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Schedule of capital management |
(*) The variation in the ratio includes the effect of the sale of towers. (**) Earnings before interest, tax, depreciation and amortization. |
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Changes in liabilities arising from financing activities |
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38. Insurance (Tables) |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||
Insurance Tables | |||||||||||||
Schedule of main assets, liabilities or interests insured amounts |
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39. Commitments (Tables) |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||
Commitments Tables | |||||||||||||
Schedule of minimum committed rental payments |
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40. Other Information (Tables) |
12 Months Ended | ||||||||||||
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Dec. 31, 2017 | |||||||||||||
Other Information Tables | |||||||||||||
Schedule of other Information |
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4. Cash and cash equivalents (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Cash And Cash Equivalents Details | ||||
Cash and cash equivalents | R$ 40,283 | R$ 92,860 | ||
Short term bank deposits: | ||||
CDB/Repurchases | 2,920,435 | 5,035,326 | ||
Total cash and cash equivalents | R$ 2,960,718 | R$ 5,128,186 | R$ 6,100,403 | R$ 5,232,992 |
4. Cash and cash equivalents (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Cash And Cash Equivalents Details Narrative | ||
Return rate on cash and cash equivalent | 100.92% | 101.10% |
5. Marketable securities (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | R$ 768,611 | R$ 479,953 |
Current portion | (765,614) | (479,953) |
Non-current portion | 2,997 | 0 |
Foreign Exchange Fund [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | 0 | 479,953 |
FUNCINE [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | 2,997 | 0 |
FIC - Government Securities [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | 284,075 | 0 |
FIC - Repo Transactions [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | 236,095 | 0 |
Financial Bill [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | 161,789 | 0 |
Other [Member] | ||
MarketableSecuritiesLineLineItems [Line Items] | ||
Marketable Securities | R$ 83,655 | R$ 0 |
5. Marketable securities (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Cash flow hedges [member] | |
MarketableSecuritiesLineLineItems [Line Items] | |
Percentage of fund designated | 104.17% |
6. Trade accounts receivable (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | R$ 3,031,808 | R$ 3,313,721 | |
Allowance for doubtful accounts | (464,745) | (370,452) | R$ (351,381) |
Trade receivables | 2,567,063 | 2,943,269 | |
Current portion | 2,540,856 | 2,919,177 | |
Non-current portion | 26,207 | 24,092 | |
Billed services [Member] | |||
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | 1,390,616 | 1,175,091 | |
Unbilled services [Member] | |||
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | 610,570 | 653,333 | |
Network use [Member] | |||
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | 367,894 | 527,179 | |
Sale of goods [Member] | |||
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | 661,180 | 956,056 | |
Other accounts receivable [Member] | |||
TradeAccountsReceivableLineLineItems [Line Items] | |||
Trade receivables gross | R$ 1,548 | R$ 2,062 |
6. Trade accounts receivable (Details 1) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Trade Accounts Receivable Details 1 | ||
Opening balance | R$ 370,452 | R$ 351,381 |
Additions | 316,387 | 266,442 |
Write-off | (222,094) | (247,371) |
Closing balance | R$ 464,745 | R$ 370,452 |
6. Trade accounts receivable (Details 2) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | R$ 3,031,808 | R$ 3,313,721 |
Current [Member] | ||
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | 2,028,983 | 2,378,345 |
Past due for up to 30 days [Member] | ||
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | 271,560 | 231,024 |
Past due for up to 60 days [Member] | ||
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | 113,584 | 107,584 |
Past due for up to 90 days [Member] | ||
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | 109,568 | 135,164 |
Past due for more than 90 days [Member] | ||
TradeAccountsReceivableLineLineItems [Line Items] | ||
Trade receivables gross | R$ 508,113 | R$ 461,604 |
7. Inventory (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
InventoryLinesLineItems [Line Items] | ||
Inventory gross | R$ 133,899 | R$ 164,086 |
Losses on adjustment to realizable amount | (10,114) | (20,152) |
Inventory net | 123,785 | 143,934 |
Mobile Handsets And Tablets [Member] | ||
InventoryLinesLineItems [Line Items] | ||
Inventory gross | 107,195 | 132,857 |
Accessories And Pre-paid Cards [Member] | ||
InventoryLinesLineItems [Line Items] | ||
Inventory gross | 16,156 | 18,115 |
TIM Chips [Member] | ||
InventoryLinesLineItems [Line Items] | ||
Inventory gross | R$ 10,548 | R$ 13,114 |
8. Indirect taxes and contributions recoverable (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
IndirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Indirect taxes and contributions recoverable | R$ 1,335,587 | R$ 1,500,997 |
Current portion | (386,001) | (633,854) |
Non-current portion | 949,586 | 867,143 |
Imposto sobre Circulacao de Mercadorias Servicos [Member] | Indirect [Member] | ||
IndirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Indirect taxes and contributions recoverable | 1,296,255 | 1,465,088 |
Other [Member] | Indirect [Member] | ||
IndirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Indirect taxes and contributions recoverable | R$ 39,332 | R$ 35,909 |
9. Direct taxes and contributions recoverable (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
DirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Direct taxes and contributions recoverable | R$ 532,543 | R$ 535,704 |
Current portion | (323,040) | (334,806) |
Non-current portion | 209,503 | 200,898 |
Income Tax And Social Contribution On Income [Member] | Direct [Member] | ||
DirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Direct taxes and contributions recoverable | 434,823 | 431,005 |
PIS/COFINS [Member] | Direct [Member] | ||
DirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Direct taxes and contributions recoverable | 53,509 | 52,879 |
Other [Member] | Direct [Member] | ||
DirectTaxesAndContributionsRecoverableLineLineItems [Line Items] | ||
Direct taxes and contributions recoverable | R$ 44,211 | R$ 51,820 |
10. Deferred taxes (Details 1) - TIM Celular S.A. ("TIM Celular") [Member] R$ in Thousands |
Dec. 31, 2017
BRL (R$)
|
---|---|
DeferredTaxesLineLineItems [Line Items] | |
2018 | R$ 116,022 |
Carryforward losses | 116,022 |
Temporary differences | (190,758) |
Total credits recoverable | R$ (74,736) |
10. Deferred taxes (Details Narrative) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
DeferredTaxesLineLineItems [Line Items] | |||
Applicable tax rate for income tax | 14.00% | 25.94% | 30.51% |
Applicable tax rate for social contribution | 25.00% | 9.00% | |
TIM Celular S.A. ("TIM Celular") [Member] | |||
DeferredTaxesLineLineItems [Line Items] | |||
Credits related to tax carry forward losses | R$ 132,389 | R$ 127,216 | |
Deductible temporary differences for which no deferred tax asset is recognised | R$ 102,860 | R$ 99,241 |
11. Prepaid expenses (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Prepaid Expenses Details | ||
Advertising not released | R$ 124,387 | R$ 85,905 |
Rentals and insurance | 49,185 | 58,366 |
Network swap | 20,191 | 28,932 |
Other | 14,069 | 11,563 |
Prepaid expenses | 207,832 | 184,766 |
Current portion | (168,366) | (130,392) |
Non-current portion | R$ 39,466 | R$ 54,374 |
12. Judicial deposits (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | R$ 1,366,576 | R$ 1,294,125 |
Civil [Member] | ||
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | 344,204 | 471,922 |
Labor [Member] | ||
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | 493,705 | 468,009 |
Tax [Member] | ||
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | 286,375 | 291,745 |
Regulatory [Member] | ||
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | 111 | 111 |
Other [Member] | ||
JudicialDepositsLineItems [Line Items] | ||
Non-current portion | R$ 242,181 | R$ 62,338 |
15. Financial leases (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Finance lease receivables | R$ 205,331 | R$ 204,762 |
Current portion | (19,773) | (2,818) |
Non-current portion | 185,558 | 201,944 |
LT Amazonas [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Finance lease receivables | R$ 205,331 | R$ 204,762 |
15. Financial leases (Details 1) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Present value | R$ 205,331 | R$ 204,762 |
LT Amazonas [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Nominal amount | 510,592 | |
Present value | 205,331 | R$ 204,762 |
LT Amazonas [Member] | Up to December 2018 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Nominal amount | 21,905 | |
Present value | 19,773 | |
LT Amazonas [Member] | January 2019 to December 2022 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Nominal amount | 99,668 | |
Present value | 41,287 | |
LT Amazonas [Member] | January 2023 onwards [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Nominal amount | 389,019 | |
Present value | R$ 144,271 |
15. Financial leases (Details 2) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Finance lease liabilities | R$ 1,887,172 | R$ 1,802,238 |
Current portion | (176,925) | (96,604) |
Non-current portion | 1,710,247 | 1,705,634 |
LT Amazonas [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Finance lease liabilities | 351,063 | 351,798 |
Sale of Towers (leaseback) [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Finance lease liabilities | 1,466,895 | 1,411,055 |
Other [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Finance lease liabilities | R$ 69,214 | R$ 39,385 |
15. Financial leases (Details 3) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Present value | R$ 1,887,172 | R$ 1,802,238 |
LT Amazonas [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 351,063 | R$ 351,798 |
Nominal amount | 970,077 | |
LT Amazonas [Member] | Up to December 2018 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 38,062 | |
Nominal amount | 41,607 | |
LT Amazonas [Member] | January 2019 to December 2022 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 70,033 | |
Nominal amount | 189,311 | |
LT Amazonas [Member] | January 2023 onwards [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 242,968 | |
Nominal amount | R$ 739,159 |
15. Financial leases (Details 4) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Present value | R$ 1,887,172 | R$ 1,802,238 |
Sale of Towers (leaseback) [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 1,466,895 | R$ 1,411,055 |
Nominal amount | 4,653,740 | |
Sale of Towers (leaseback) [Member] | Up to December 2018 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 112,121 | |
Nominal amount | 180,551 | |
Sale of Towers (leaseback) [Member] | January 2019 to December 2022 [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 361,189 | |
Nominal amount | 771,486 | |
Sale of Towers (leaseback) [Member] | January 2023 onwards [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Present value | 993,585 | |
Nominal amount | R$ 3,701,703 |
15. Financial leases (Details Narrative) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialLeasesLineItems [Line Items] | ||
Finance lease receivables | R$ 205,331 | R$ 204,762 |
Leasing - Liabilities | 1,887,172 | 1,802,238 |
LT Amazonas [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Finance lease receivables | 205,331 | 204,762 |
Finance lease principal | 185,558 | |
Finance lease interest accrued | R$ 19,773 | |
Finance lease receivables interest rate | 12.56% | |
Leasing - Liabilities | R$ 351,063 | 351,798 |
Finance lease principal | 313,001 | |
Finance lease interest accrued | R$ 38,062 | |
Finance lease liabilities interest rate | 14.44% | |
Sale of Towers (leaseback) [Member] | ||
FinancialLeasesLineItems [Line Items] | ||
Leasing - Liabilities | R$ 1,466,895 | R$ 1,411,055 |
Finance lease principal | 1,337,638 | |
Finance lease interest accrued | R$ 129,257 |
18. Authorizations payable (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Authorizations Payable | ||
Renewal of authorizations | R$ 262,513 | R$ 254,515 |
700 MHz frequency band cleaning, Net of Present Value | 141,659 | 976,246 |
Updated ANATEL Debt | 98,451 | 89,695 |
Authorizations payable | 0 | 57,524 |
Guarantee insurance on authorizations | 4,077 | 8,652 |
Authorizations payable | 506,700 | 1,386,632 |
Current portion | (233,173) | (486,494) |
Non-current portion | R$ 273,527 | R$ 900,138 |
19. Borrowing and financing (Details 1) R$ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
BRL (R$)
| |
BorrowingAndFinancingLineItems [Line Items] | |
Amount used as at 2016 | R$ 579,817 |
Credit Facilities [Member] | BNDES [Member] | |
BorrowingAndFinancingLineItems [Line Items] | |
Currency | R$ |
Date of Opening | 15-Dec |
Term | 17-Dec |
Total amount | R$ 60,995 |
Remaining balance | 0 |
Amount used as at 2016 | R$ 0 |
Credit Facilities [Member] | BNDES 1 [Member] | |
BorrowingAndFinancingLineItems [Line Items] | |
Currency | TJLP |
Date of Opening | 15-Dec |
Term | 18-Dec |
Total amount | R$ 2,940 |
Remaining balance | 2,940 |
Amount used as at 2016 | R$ 0 |
Credit Facilities [Member] | KFW Finnvera [Member] | |
BorrowingAndFinancingLineItems [Line Items] | |
Currency | USD |
Date of Opening | 15-Dec |
Term | 18-Jun |
Total amount | R$ 150,000 |
Remaining balance | 51,094 |
Amount used as at 2016 | R$ 93,088 |
19. Borrowing and financing (Details Narrative) - BRL (R$) R$ in Thousands |
1 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
BorrowingAndFinancingLineItems [Line Items] | ||||
Borrowing and financing | R$ 3,339,084 | R$ 5,574,557 | ||
Deferred income | 1,471,363 | 1,873,644 | ||
Government grants [Member] | ||||
BorrowingAndFinancingLineItems [Line Items] | ||||
Deferred income | R$ 89,036 | R$ 117,758 | ||
First Tranche [Member] | ||||
BorrowingAndFinancingLineItems [Line Items] | ||||
Repayments of tranches | R$ 315,000 | |||
Existing Debt [Member] | ||||
BorrowingAndFinancingLineItems [Line Items] | ||||
Repayments of tranches | R$ 800,000 | |||
Borrowing and financing | 149,000 | |||
Existing Debt 1 [Member] | ||||
BorrowingAndFinancingLineItems [Line Items] | ||||
Borrowing and financing | R$ 602,000 |
21. Direct taxes, charges and contributions payable (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
DirectTaxesChargesAndContributionsPayableLineItems [Line Items] | ||
Direct taxes, charges and contributions payable | R$ 467,574 | R$ 622,566 |
Current portion | (260,786) | (363,726) |
Non-current portion | 206,788 | 258,840 |
Income Tax And Social Contribution On Income [Member] | ||
DirectTaxesChargesAndContributionsPayableLineItems [Line Items] | ||
Direct taxes, charges and contributions payable | 391,813 | 507,915 |
PIS/COFINS [Member] | ||
DirectTaxesChargesAndContributionsPayableLineItems [Line Items] | ||
Direct taxes, charges and contributions payable | 38,880 | 59,811 |
Other [Member] | ||
DirectTaxesChargesAndContributionsPayableLineItems [Line Items] | ||
Direct taxes, charges and contributions payable | R$ 36,881 | R$ 54,840 |
22. Deferred revenue (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | R$ 1,471,363 | R$ 1,873,644 |
Current portion | (480,431) | (812,340) |
Non-current portion | 990,932 | 1,061,304 |
Prepaid services [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | 388,301 | 716,650 |
Government grants [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | 89,036 | 117,758 |
Network swap [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | 20,191 | 28,932 |
Anticipated receipts [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | 22,627 | 18,554 |
Towers revenue [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Deferred revenue, net | R$ 951,208 | R$ 991,750 |
22. Deferred revenue (Details Narrative) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
DeferredRevenueLineItems [Line Items] | ||
Subsidies granted | R$ 1,471,363 | R$ 1,873,644 |
BNDES [Member] | ||
DeferredRevenueLineItems [Line Items] | ||
Subsidies granted | R$ 203 |
23. Provision for legal and administrative proceedings (Details 2) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | R$ 528,320 | R$ 478,482 |
Tax [Member] | ||
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | 180,643 | 216,423 |
Provison For Federal Taxes [Member] | ||
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | 33,907 | 57,393 |
Provison For State Taxes [Member] | ||
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | 59,403 | 64,280 |
Provison For Municipal Taxes [Member] | ||
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | 1,738 | 1,629 |
Provison For Intelig Proceedings (Purchase Price Allocation) [Member] | ||
ProvisionForLegalAndAdministrativeProceedingLineItems [Line Items] | ||
Other provision | R$ 85,595 | R$ 93,121 |
23. Provision for legal and administrative proceedings (Details 3) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
ProvisionForLegalAndAdministrativeProceedingItemsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | R$ 16,757,282 | R$ 16,278,920 |
Civil [Member] | ||
ProvisionForLegalAndAdministrativeProceedingItemsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | 1,286,252 | 1,698,901 |
Labor [Member] | ||
ProvisionForLegalAndAdministrativeProceedingItemsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | 763,505 | 678,290 |
Tax [Member] | ||
ProvisionForLegalAndAdministrativeProceedingItemsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | 14,528,617 | 13,832,157 |
Regulatory [Member] | ||
ProvisionForLegalAndAdministrativeProceedingItemsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | R$ 178,908 | R$ 69,572 |
23. Provision for legal and administrative proceedings (Details Narrative 3) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
ProvisionForLegalAndAdministrativeProceedingsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | R$ 16,757,282 | R$ 16,278,920 |
Tax Claim Municipal Taxes - Payment of ISS & Punitive Fine For Failure To Pay Alleged Tax [Member] | ||
ProvisionForLegalAndAdministrativeProceedingsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | 269,547 | 183,962 |
Tax Claim Municipal Taxes - Collection Of ISS On Imports Of Services [Member] | ||
ProvisionForLegalAndAdministrativeProceedingsLineItems [Line Items] | ||
Estimated financial effect of contingent liabilities | R$ 107,519 | R$ 66,939 |
24. Provision for decommissioning costs (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Provision For Decommissioning Costs Details | ||
Opening balance | R$ 21,726 | R$ 31,609 |
Reversal/disposals recorded throughout the year, net of additions | 649 | (11,029) |
Monetary adjustment for the year | 428 | 1,146 |
Closing balance | R$ 22,803 | R$ 21,726 |
24. Provision for decommissioning costs (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Provision For Decommissioning Costs Details Narrative | ||
Discount cash flow average debt cost | 12.43% | 8.92% |
25. Shareholders' equity (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Shareholders Equity Details | ||
Value paid up | R$ 9,913,415 | R$ 9,913,415 |
(-) Funding costs | (47,117) | (47,117) |
Net value paid up | R$ 9,866,298 | R$ 9,866,298 |
Number of common shares | 2,421,032,479 | 2,421,032,479 |
25. Shareholders' equity (Details 1) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Shareholders Equity Details 1 | ||
Special goodwill reserve | R$ 380,560 | R$ 380,560 |
Stock options | 35,601 | 24,678 |
Tax benefit reserve | 1,271,404 | 1,158,911 |
Capital reserves | R$ 1,687,565 | R$ 1,564,149 |
25. Shareholders' equity (Details 2) - BRL (R$) R$ / shares in Units, R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Shareholders Equity Details 2 | |||
Net income for the year | R$ 1,234,507 | R$ 750,427 | R$ 2,085,442 |
(-) Legal reserve constitution | (61,725) | (37,521) | |
(-) Tax incentives not to be distributed | (112,493) | (118,250) | |
Revised profit | 1,060,289 | 594,656 | |
Dividends to be distributed: | |||
Minimum dividends calculated considering 25% of the revised profit | 265,072 | 148,664 | |
Breakdown of dividends payable and interest on equity: | |||
Interest on shareholders' equity | 189,991 | 0 | |
Dividends | 103,325 | 148,664 | |
Total dividends distributed and proposed | 293,316 | 148,664 | |
IRRF tax on interest on equity | (28,244) | 0 | |
Total dividends and interest on shareholders' equity, net | R$ 265,072 | R$ 148,664 | |
Dividends per share (Reais per share) | R$ 0.11 | R$ 0.06 |
25. Shareholders' equity (Details 3) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Shareholders Equity Tables | ||
Balance as at December 31, 2016 | R$ 206,112 | |
Intermediate interest on equity (after IRRF) | 161,492 | |
Statute of limitations of dividends | (23,179) | |
Payment of dividends and interest on equity | (304,415) | |
Withholding tax on interest on equity for tax-exempt shareholders | 256 | |
Dividends proposed | 103,325 | R$ 148,664 |
Balance as at December 31, 2017 | R$ 143,591 | R$ 206,112 |
25. Shareholders' equity (Details Narrative) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 30, 2010 |
|
ShareholdersEquityItemsLineItems [Line Items] | |||
Capital reserves | R$ 1,687,565 | R$ 1,564,149 | |
Mandatory dividend percenatge | 25.00% | ||
Mandatory dividend not settled in previous years | R$ 40,266 | R$ 57,447 | |
Holdco Participacoes LTDA [Member] | |||
ShareholdersEquityItemsLineItems [Line Items] | |||
Number of shares authorised | 127,288,023 | ||
Goodwill | R$ 739,729 | ||
Proportion of ownership interests | 100.00% |
26. Stock options (Details Narrative) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Stock Options Details Narrative | |||
Expenses related to long term benefit plan | R$ 10,923 | R$ 3,802 | R$ 4,504 |
27. Revenue (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Revenue [abstract] | |||
Service revenue - Mobile | R$ 20,147,585 | R$ 20,188,962 | R$ 22,121,450 |
Service revenue - Landline | 1,285,930 | 1,178,856 | 1,003,185 |
Service revenue | 21,433,515 | 21,367,818 | 23,124,635 |
Goods sold | 1,177,559 | 1,377,771 | 2,646,866 |
Gross service and product revenue | 22,611,074 | 22,745,589 | 25,771,501 |
Deductions from gross revenue | |||
Taxes on service and product revenue | (5,027,406) | (5,694,886) | (6,248,310) |
Discounts given | (1,329,600) | (1,394,223) | (2,213,041) |
Returns and other | (20,109) | (39,067) | (167,885) |
Deductions from gross revenue | (6,377,115) | (7,128,176) | (8,629,236) |
Total Revenue | R$ 16,233,959 | R$ 15,617,413 | R$ 17,142,265 |
28. Operating costs and expenses (Details Narrative) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Operating Costs And Expenses Details Narrative | ||
Post-employment benefits recorded in cost of services provided and goods sold | R$ 4,111 | R$ 3,596 |
Post-employment benefits recorded in selling expenses | 4,352 | 4,229 |
Post-employment benefits recorded in general and administrative expenses | R$ 5,286 | R$ 3,732 |
29. Other income (expenses), net (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income | |||
Subsidy income, net | R$ 28,722 | R$ 28,134 | R$ 21,513 |
Fines on telecommunications services | 41,699 | 39,639 | 37,630 |
Income from disposal of assets (*) | 2,865 | 57,563 | 1,459,067 |
Other income | 171,273 | 181,234 | 50,528 |
Operating income | 244,559 | 306,570 | 1,568,738 |
Expenses | |||
FUST/FUNTTEL (**) | (140,878) | (163,955) | (168,351) |
Taxes, fees and contributions | (4,466) | (2,980) | (3,970) |
Provision for legal and administrative proceedings, net of reversals | (366,476) | (352,154) | (348,339) |
Expenses from disposal of assets (*) | (6,618) | (14,473) | (245,756) |
Other expenses | (24,831) | (21,987) | (23,124) |
Before amortization | (543,269) | (555,549) | (789,540) |
Amortization of authorizations | (261,927) | (273,081) | (344,915) |
Operating expense | (805,196) | (828,630) | (1,134,455) |
Other income (expenses), net | R$ (560,637) | R$ (522,060) | R$ 434,283 |
30. Financial income (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Financial Income Details | |||
Interest on financial intruments fair value through profit and loss | R$ 369,517 | R$ 477,667 | R$ 647,629 |
Interest received from clients | 38,227 | 43,340 | 60,208 |
Swap interest | 32,300 | 129,179 | 50,611 |
Interest on leasing | 22,709 | 25,756 | 24,045 |
Monetary adjustments | 39,694 | 61,628 | 71,888 |
Other income | 10,118 | 12,880 | 8,327 |
Financial income, net | R$ 512,565 | R$ 750,450 | R$ 862,708 |
31. Financial expenses (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Financial Expenses Details | |||
Interest on borrowing and financing | R$ (211,108) | R$ (199,077) | R$ (179,726) |
Interest paid to suppliers | (998) | (21,474) | (142,092) |
Interest on taxes and fees | (5,712) | (28,944) | (21,124) |
Swap interest | (85,362) | (230,642) | (308,216) |
Interest on leasing | (257,305) | (246,280) | (145,274) |
Monetary adjustments | (278,272) | (269,031) | (178,904) |
Discounts granted | (52,683) | (61,082) | (64,004) |
Other expenses | (118,213) | (99,955) | (76,184) |
Financial expenses, net | R$ (1,009,653) | R$ (1,156,485) | R$ (1,115,524) |
32. Foreign exchange variations, net (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
ForeignExchangeVariationsNetLineItems [Line Items] | |||
Gain | R$ 430,018 | R$ 1,699,045 | R$ 1,148,015 |
Loss | (430,766) | (1,703,890) | (1,145,606) |
Foreign exchange variations, net | (748) | (4,845) | 2,409 |
Loans and financing [Member] | |||
ForeignExchangeVariationsNetLineItems [Line Items] | |||
Gain | 287,777 | 1,162,987 | 0 |
Loss | (271,286) | (714,773) | (1,108,309) |
Suppliers [Member] | |||
ForeignExchangeVariationsNetLineItems [Line Items] | |||
Gain | 4,124 | 12,238 | 9,107 |
Loss | (6,819) | (8,213) | (28,949) |
Swaps [Member] | |||
ForeignExchangeVariationsNetLineItems [Line Items] | |||
Gain | 130,971 | 512,824 | 1,109,006 |
Loss | (147,356) | (960,635) | 0 |
Other [Member] | |||
ForeignExchangeVariationsNetLineItems [Line Items] | |||
Gain | 7,146 | 10,996 | 29,902 |
Loss | R$ (5,305) | R$ (20,269) | R$ (8,348) |
33. Income tax and social contribution expenses (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current income tax and social contribution | |||
Income tax for the year | R$ (203,932) | R$ (309,695) | R$ (358,188) |
Social contribution for the year | (77,148) | (110,997) | (132,754) |
Tax incentive - SUDENE/SUDAM (*) | 112,493 | 118,250 | 93,123 |
Current income tax | (168,587) | (302,442) | (397,819) |
Deferred income tax and social contribution | |||
Deferred income tax | (23,976) | 29,482 | (378,168) |
Deferred social contribution | (8,631) | 9,947 | (136,140) |
Deferred income tax | (32,607) | 39,429 | (514,308) |
Provision for income tax and social contribution | 185 | 124 | (3,464) |
Income and social contribution taxes | R$ (201,009) | R$ (262,889) | R$ (915,591) |
34. Earnings per share (Details) - BRL (R$) R$ / shares in Units, R$ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Earnings Per Share Details | |||
Income attributable to shareholders of the Company | R$ 1,234,507 | R$ 750,427 | R$ 2,085,442 |
Weighted average number of common shares issued (thousands) | R$ 2,420,016 | R$ 2,420,237 | R$ 2,420,237 |
Basic earnings per share (expressed in R$) | R$ 0.51 | R$ 0.31 | R$ 0.86 |
Income attributable to shareholders of the Company | R$ 1,234,507 | R$ 750,427 | R$ 2,085,442 |
Weighted average number of common shares issued (thousands) | R$ 2,241,072 | R$ 2,420,241 | R$ 2,420,325 |
Diluted earnings per share (expressed in R$) | R$ 0.51 | R$ 0.31 | R$ 0.86 |
35. Transactions with Telecom Italia Group (Details Narrative) R$ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
BRL (R$)
| |
Transactions With Telecom Italia Group Details Narrative | |
Social benefits | R$ 5,014 |
36. Management Compensation (Details) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Management Compensation Details | ||
Short term benefits | R$ 21,757 | R$ 18,523 |
Share-based payments | 6,791 | 1,200 |
Total Compensation | R$ 28,548 | R$ 19,723 |
37. Financial instruments and risk management (Details) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial Instruments And Risk Management | ||
Current portion, assets | R$ 53,875 | R$ 82,454 |
Non-current portion, assets | 26,915 | 134,468 |
Transactions involving derivatives, assets | 80,790 | 216,922 |
Current portion, liabilities | (14,044) | (36,163) |
Non-current portion, liabilities | (18,419) | (45,310) |
Transactions involving derivatives, liabilities | (32,463) | (81,473) |
Current portion, net | 39,831 | 46,291 |
Non-current portion, net | 8,496 | 89,158 |
Transactions involving derivatives, net | R$ 48,327 | R$ 135,449 |
37. Financial instruments and risk management (Details 1) - BRL (R$) R$ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | R$ 26,915 | R$ 134,468 |
Liabilities | 18,419 | R$ 45,310 |
2019 [Member] | ||
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | 20,006 | |
Liabilities | 6,588 | |
2020 [Member] | ||
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | 1,382 | |
Liabilities | 6,588 | |
2021 [Member] | ||
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | 1,382 | |
Liabilities | 1,747 | |
2022 onwards [Member] | ||
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | 4,145 | |
Liabilities | R$ 3,496 |
37. Financial instruments and risk management (Details 4) - Derivative Financial Instruments [Member] - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Currency | USD | USD |
SWAP Type | LIBOR X DI | LIBOR X DI |
COUNTERPARTY DEBT | KfW | BEI |
SWAP | JP Morgan | BOFA |
Total Debt | R$ 110,937 | R$ 622,980 |
Total Swap (Asset Side) | R$ 110,937 | R$ 622,980 |
% Coverage | 100.00% | 100.00% |
Asset Side | LIBOR 6M + 1.35% p.a. | LIBOR 6M + 1.22% p.a. |
Liability Side | 102.50% of CDI | 94.33% of CDI |
Currency | USD | |
SWAP Type | LIBOR X DI | |
COUNTERPARTY DEBT | BNP | |
SWAP | CITI, JP Morgan | |
Total Debt | R$ 260,522 | R$ 78,065 |
Total Swap (Asset Side) | R$ 260,522 | R$ 78,065 |
% Coverage | 100.00% | 100.00% |
Asset Side | LIBOR 6M + 2.53% p.a. | |
Liability Side | 97.42% of CDI | |
Currency | USD | USD |
SWAP Type | LIBOR X DI | LIBOR X DI |
COUNTERPARTY DEBT | KFW/ Finnvera | KfW |
SWAP | JP Morgan and BOFA | JP Morgan |
Total Debt | R$ 198,990 | R$ 182,046 |
Total Swap (Asset Side) | R$ 198,990 | R$ 182,046 |
% Coverage | 100.00% | 100.00% |
Asset Side | LIBOR 6M + 0.75% p.a. | LIBOR 6M + 1.35% p.a. |
Liability Side | 80.29% of CDI | 102.50% of CDI |
Currency | USD | USD |
SWAP Type | PRE X DI | LIBOR X DI |
COUNTERPARTY DEBT | CISCO | BOFA |
SWAP | Santander and JP Morgan | BOFA |
Total Debt | R$ 110,937 | R$ 324,860 |
Total Swap (Asset Side) | R$ 110,937 | R$ 324,860 |
% Coverage | 100.00% | 100.00% |
Asset Side | 2.13% p.a. | LIBOR 3M + 2.00% p.a. |
Liability Side | 87.54% of CDI | 103.60% of CDI |
Currency | USD | |
SWAP Type | PRE X DI | |
COUNTERPARTY DEBT | CISCO | |
SWAP | Santander and JP Morgan | |
Total Debt | R$ 294,138 | |
Total Swap (Asset Side) | R$ 294,138 | |
% Coverage | 100.00% | |
Asset Side | 2.18% p.a. | |
Liability Side | 88.05% of CDI | |
Currency | USD | |
SWAP Type | LIBOR X DI | |
COUNTERPARTY DEBT | KFW/Finnvera | |
SWAP | JP Morgan | |
Total Debt | R$ 121,038 | |
Total Swap (Asset Side) | R$ 121,038 | |
% Coverage | 100.00% | |
Asset Side | LIBOR 6M + 0.75% p.a. | |
Liability Side | 79.00% of CDI |
37. Financial instruments and risk management (Details 6) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Probable Scenario [Member] | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
CDI | 6.89% |
LIBOR | 1.84% |
USD | 330.80% |
Possible Scenario [Member] | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
CDI | 8.61% |
LIBOR | 2.30% |
USD | 413.50% |
Remote Scenario [Member] | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
CDI | 10.34% |
LIBOR | 2.76% |
USD | 496.20% |
37. Financial instruments and risk management (Details 7) R$ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
BRL (R$)
| |
Financial Instruments And Risk Management Details 7 | |
Net result from USD vs. CDI transactions | R$ (69,446) |
37. Financial instruments and risk management (Details 8) - BRL (R$) R$ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Financial Instruments And Risk Management Details 8 | ||||
Total borrowings and derivatives | R$ 4,642,617 | R$ 6,584,333 | ||
Leasing - Liabilities | 1,887,172 | 1,802,238 | ||
Lease - Assets | (205,331) | (204,762) | ||
Debts with ANATEL | 98,451 | 147,219 | ||
Less: Cash and cash equivalents | 2,960,718 | 5,128,186 | R$ 6,100,403 | R$ 5,232,992 |
Foreign exchange fund | 0 | (479,953) | ||
FIC (Note 5) | (765,614) | 0 | ||
Net Debt - Unaudited | 2,696,577 | 2,720,889 | ||
EBITDA | R$ 5,947,023 | R$ 5,209,368 | ||
Financial leverage ratio | 45.00% | 52.00% | ||
Reconciliation to net income for the year | ||||
Net Income for the year | R$ 1,234,507 | R$ 750,427 | ||
Depreciation and amortization | 4,013,671 | 3,785,172 | ||
Financial results, net | 497,836 | 410,880 | 250,407 | |
Income and social contribution taxes | 201,009 | 262,889 | R$ 915,591 | |
EBITDA | R$ 5,947,023 | R$ 5,209,368 |
37. Financial instruments and risk management (Details 9) (BRL) R$ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
BRL (R$)
| |
Borrowings and financing | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
Beginning balance | R$ 6,719,782 |
Additions | 646,854 |
Financial interests | 611,369 |
Foreign exchange variations, net | (16,491) |
Payments | (3,270,570) |
Other | 0 |
Ending Balance | 4,690,944 |
Finance lease | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
Beginning balance | 1,802,238 |
Additions | 48,957 |
Financial interests | 257,305 |
Foreign exchange variations, net | 0 |
Payments | (219,189) |
Other | (2,139) |
Ending Balance | 1,887,172 |
Financial instruments (assets) liabilities | |
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | |
Beginning balance | (135,449) |
Additions | 17,675 |
Financial interests | 53,062 |
Foreign exchange variations, net | 16,385 |
Payments | 0 |
Other | 0 |
Ending Balance | R$ (48,327) |
37. Financial instruments and risk management (Details Narrative) - BRL (R$) R$ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Assets | R$ 846,404 | R$ 696,875 |
Foreign Currency [Member] | United States of America, Dollars | ||
FinancialInstrumentsAndRiskManagementLineItems [Line Items] | ||
Notional value | R$ 48,000 | |
Percentage of CDI rate | 81.50% |
38. Insurance (Details) R$ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
BRL (R$)
| |
Operating risks [Member] | |
InsuranceLineItems [Line Items] | |
Amount of insured assets | R$ 38,171,870 |
General Third Party Liability [Member] | |
InsuranceLineItems [Line Items] | |
Amount of insured assets | R$ 80,000 |
Vehicles (Executive and Operational Fleets) [Member] | |
InsuranceLineItems [Line Items] | |
Description of insured assets | R$1,000 for Civil Liability Optional (Property Damages and Personal Injury) and R$100 for Moral Damages. |
39. Commitments (Details) R$ in Thousands |
Dec. 31, 2017
BRL (R$)
|
---|---|
Commitments Details | |
2018 | R$ 779,585 |
2019 | 812,717 |
2020 | 845,226 |
2021 | 879,035 |
2022 | 914,196 |
Total | R$ 4,230,759 |
40. Other Information (Details) R$ in Thousands |
Jun. 20, 2016
BRL (R$)
|
---|---|
Other Information Details | |
Interconnection | R$ 14,248 |
Other commercial relationship of infrastructure sharing | 1,677 |
Total | R$ 15,925 |
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