UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 
 FORM 20-F/A (Amendment No. 1) (Mark One) ☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________________ to ________________ OR ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date 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(Translation of Registrant’s name into English)
  THE FEDERATIVE REPUBLIC OF BRAZIL(Jurisdiction of incorporation or organization)
  João Cabral de Melo Neto Avenue, 850 – North Tower – 12th floor22775-057 Rio de Janeiro, RJ, Brasil(Address of principal executive offices) Adrian CalazaChief Financial Officer and Investor Relations OfficerTIM Participações S.A.João Cabral de Melo Neto Avenue, 850 – North Tower – 12th floor 22775-057 Rio de Janeiro, RJ, BrazilTel: 55 21 4109-4167ri@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 registeredCommon Shares, without par value*

   New York Stock ExchangeAmerican 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 OutstandingCommon 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.


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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☐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. Yes☒No☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer☒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 whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: ☐U.S. GAAP ☒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☐No☒


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EXPLANATORY NOTE  This Amendment No. 1 on Form 20-F/A (the “Amendment”) is being filed by TIM Participações S.A. (“TIM” the “Company,” “we,” “our,” or “us”) to amend the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019, originally filed with the U.S. Securities Exchange Commission on April 30, 2020 (the “Original Filing”). The Company is filing this Amendment solely to replace our consolidated financial statements included in the Original Filing in order to include (i) the Ernst & Young Auditores Independentes S.S. reports of independent registered public accounting firm as pages F-4 to F-7, and (ii) the PricewaterhouseCoopers Auditores Independentes report of independent registered public accounting firm as pages F-8 to F-9, which were not included in the Original Filing.  This Amendment consists solely of the cover page and this explanatory note. Except as described above, this Amendment does not amend any information set forth in the Original Filing or reflect any events that occurred subsequent to the filing of the Original Filing on April 30, 2020. Accordingly, this Amendment should be read in conjunction with the Original Filing and with our filings with the U.S. Securities Exchange Commission subsequent to the Original Filing.


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SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to annual report on its behalf. Dated: May 1, 2020 TIM PARTICIPAÇÕES S.A.By:

   /s/ Pietro LabriolaName:

   Pietro LabriolaTitle:

   Chief Executive Officer
    By:

   /s/ Adrian CalazaName:

   Adrian CalazaTitle:

   Chief Financial Officer and Investor Relations Officer


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TIM Participações S.A. and Subsidiary Consolidated Financial Statements as at December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019 and Reports of Independent Registered Public Accounting Firm


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TIM PARTICIPAÇÕES S.A.  CONSOLIDATED FINANCIAL STATEMENTS  As at December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019   Contents    Report of Independent Registered Public Accounting Firm, EY

   F-4Report of Independent Registered Public Accounting Firm, PWC

   F-8Audited financial statementsBalance sheets

   F-9Income statements

   F-11Statements of comprehensive income

   F-12Statements of changes in shareholders’ equity

   F-13Cash flow statements

   F-16Notes to the financial statements

   F-18


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Shareholders and the Board of Directors of TIM Participações S.A.  Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of TIM Participações S.A. and subsidiary (the “Company”) as of December 31, 2019, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.  We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 30, 2020 expressed an unqualified opinion thereon.  Adoption of IFRS 16, Leases As discussed in Note 2 to the consolidated financial statements, effective January 1, 2019, the Company changed its method of accounting for leases as a result of the adoption of IFRS 16,Leases.  Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.  We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.  Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.   F-4


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**** Provision for tax contingenciesDescription of the Matter

   As discussed in Note 23 of the consolidated financial statements, the Company is party to numerous tax contingencies claims and proceedings at different jurisdictional levels, which amount to R$16,530 million, for which a provision for contingencies amounting to R$334 million was recorded in the consolidated financial statements, while R$16,196 million was disclosed by the Company as losses possible to occur. The determination of the provision value and the amounts disclosed involve significant Management judgments, based on their analysis of the matters, the opinion of internal and external legal counsel and the estimation of their ultimate resolution.

   

   Auditing management’s assessment of the probability of a loss on tax claims is complex, judgmental and based on interpretations of tax laws and legal rulings, as there is significant estimation uncertainty related to the ultimate outcome of court decisions, the evolution of jurisprudence and the position of the tax authorities.How We Addressed the Matter in Our Audit

   We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of tax claims, including management’s process to determine whether the technical merits are more-likely-than-not to be sustained in court and over the generation of relevant reports produced by information technology systems that support this process.

   To test the Company’s assessment of the probability of a loss on tax claims, our audit procedures included, among others, involving our tax professionals to assess the Company’s technical merits;  evaluating legal opinions or other third-party advice obtained by the Company; independently corresponding with certain key external tax and legal advisers of the Company; obtaining analyzed these independent second opinions from other legal and tax advisors for certain key matters; evaluating the Company’s assessment  using our knowledge of, and experience with, the application of tax laws by the relevant tax authorities. We assessed the adequacy of the disclosures made by the Company in respect of provision for tax contingencies.PIS and COFINS tax recoverableDescription of the Matter

   As described in Note 9 to the consolidated financial statements, in 2019 the Company recognized a tax receivable for R$3.023 million as a result of a favorable outcome of the court proceedings initiated in prior years, without possibility of appeal. The favorable court judgments recognized the right to exclude the state tax on goods and services (ICMS) from the calculation base for the Company’s contributions to the PIS (Programa de Integração Social) and to COFINS (Contribuição para Financiamento da Seguridade Social) for the periods covered in the litigation processes. The Company has received the authorization from the competent authority in Brazil to start realizing those credits by offsetting current federal tax obligations.

   

   Auditing management’s assessment of the amount of the tax credit is complex and judgmental as the credit amount and the basis for its calculation are not explicit in the court ruling. The estimation of the timing and amount of utilization of the tax credit involved estimating the Company ́s future revenues, among other assumptions. Those assumptions could be affected by future market and economic conditions.How We Addressed the Matter in Our Audit

   We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and classification of tax credits, including controls over the estimation of the timing of utilization, the calculation of future federal taxes payable and related management assumptions.

   To test the Company’s PIS and COFINS tax credits our audit procedures included, among others, involving our tax professionals to assess the Company’s assumptions regarding the proper methodology applied to measure the amount of the tax credits; independently corresponding with certain key external tax and legal advisers of the Company; testing the underlying data used by management in performing their calculations; evaluating the Company’s assessment using our knowledge of, and experience with, the application of tax laws by the relevant tax authorities. We assessed the adequacy of the disclosures made by the Company in respect of this topic.
 F-5


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Leases Recognition Accounting Standard Adoption (IFRS 16)Description of the Matter

   As mentioned above and more fully described in Notes 2 and 14 to the consolidated financial statements, the Company adopted IFRS 16, “Leases” using the full retrospective approach. The first-time adoption of this standard resulted in the recognition of a right of use (ROU) assets and correspondent lease liability of R$5,256 million as of January 1, 2019. The Company has a significant volume of operational lease contracts due to various network infrastructure sharing agreements amongst various telecom operators in the market, with payments recorded on a straight-line basis over the contract terms. Certain aspects of adopting IFRS 16 required management to exercise significant judgment, such as the determination of the incremental borrowing rate (IBR) and the classification of individual leases based on their contractual terms.

   

   Auditing management’s initial adoption of the standard was complex due to the significant judgment by management in applying the lease standard to a large volume of contracts in the Company’s lease portfolio. Furthermore, the determination of the IBR was complex and judgmental due to the assumptions involved, such as the credit rating of its borrowings, the observable debt yields used to constructing the yield curve and adjustments to borrowings terms to match the lease terms. These assumptions might be affected by future market or economic conditions.How We Addressed the Matter in Our Audit

   We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the application of accounting policy elections to its portfolio of leases and over management’s computation of the IBR, including testing of the controls implemented by the Company to review the reasonableness of the key assumptions for the determination of the IBR and controls over the completeness and accuracy of management’s identification of the leases in the Company’s contract portfolio.

   

   To test the  Company’s implementation of IFRS 16 our audit procedures included, among others, testing the completeness of the population of contracts that meet the definition of a lease under IFRS 16; testing the lease classification made by management against the contractual terms; testing the accuracy of the Company’s calculations of right of use assets and lease liabilities; evaluating management’s methodology for developing the IBR and benchmarking significant underlying assumptions with industry and market data. We assessed the adequacy of the disclosures made by the Company in this area. **** /s/ Ernst & Young Auditores Independentes S.S.  We have served as the Company ́s auditor since 2019.  Rio de Janeiro, Brazil April 30, 2020  F-6


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Shareholders and the Board of Directors of TIM Participações S.A.  Opinion on Internal Control over Financial Reporting We have audited TIM Participações S.A. and subsidiary’ internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, TIM Participações S.A. and subsidiary (the “Company”) maintained, in all material respects effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.  We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2019, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and the related notes and our report dated April 30, 2020 expressed an unqualified opinion thereon.  Basis for Opinion The Company ́s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company ́s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.  We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.  Definitions and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  /s/ Ernst & Young Auditores Independentes S.S.  Rio de Janeiro, Brazil April 30, 2020 F-7


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Report of Independent Registered Public Accounting Firm  To the Board of Directors and Shareholders of TIM Participações S.A.  Opinion on the Financial Statements  We have audited the consolidated balance sheet of TIM Participações S.A. and its subsidiaries (the “Company”) as of December 31, 2018, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.  Basis for Opinion  These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.  We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.  Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.   /s/ PricewaterhouseCoopers Auditores Independentes Rio de Janeiro, RJ, Brazil April 10, 2019  We served as the Company's auditor from 2010 to 2019.  F-8


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TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETSDecember 31, 2019 and December 31, 2018(In thousands of Reais)Notes

   2019

   

   2018Asset

   

   40,348,924

   

   31,957,889Current Assets

   

   8,454,129

   

   5,998,126Cash and cash equivalents

   4

   2,284,810

   

   1,075,530Marketable securities

   5

   654,479

   

   784,841Trade accounts receivable

   6

   3,184,780

   

   2,838,808Inventory

   7

   203,278

   

   183,059Indirect taxes, charges and contributions recoverable

   8

   420,284

   

   280,254Direct taxes, charges and contributions recoverable

   9

   1,395,193

   

   347,505Prepaid expenses

   11

   175,868

   

   272,060Derivative Financial Instruments

   36

   16,602

   

   50,769Financial leases

   15

   4,931

   

   22,491Regulatory credits recoverable

   16

   33,090

   

   41,612Other current assets

   

   80,814

   

   101,197Non-current assets

   

   31,894,795

   

   25,959,763Long-term receivables

   

   4,614,305

   

   4,074,137Marketable securities

   5

   3,849

   

   5,229Trade accounts receivable

   6

   103,075

   

   130,308Indirect taxes, charges and contributions recoverable

   8

   823,349

   

   912,511Direct taxes, charges and contributions recoverable

   9

   2,367,607

   

   558,016Deferred income tax and social contribution

   10

   ‐

   

   801,971Judicial Deposit

   12

   1,006,899

   

   1,345,113Prepaid expenses

   11

   69,656

   

   74,381Derivative Financial Instruments

   36

   29,909

   

   30,639Financial leases

   15

   151,447

   

   185,558Other current assets

   

   58,514

   

   30,411Property, plant and equipment

   13

   17,612,164

   

   11,203,622Intangible

   14

   9,668,326

   

   10,682,004
  The accompanying notes are an integral part of the financial statements.  F-9


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TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETSYears ended December 31(In thousands of Reais)Notes

   2019

   

   2018Total liabilities and shareholders’ equity

   

   40,348,924

   

   31,957,889Total  Liability

   

   17,917,106

   

   12,163,052Current Liabilities

   

   8,117,479

   

   7,075,379Suppliers

   17

   3,923,035

   

   4,323,374Loans and financings

   19

   1,384,180

   

   698,728Financial leases

   15

   873,068

   

   205,048Derivative Financial Instruments

   36

   858

   

   2,373Payroll and related charges

   

   218,421

   

   211,685Indirect taxes, charges and contributions payable

   20

   463,606

   

   451,169Direct taxes, charges and contributions payable

   21

   296,305

   

   332,333Dividends and interest on shareholders’ equity payable

   24

   577,837

   

   370,105Authorizations payable

   18

   88,614

   

   65,464Deferred revenues

   22

   281,930

   

   406,867Other current liabilities

   

   9,625

   

   8,233Non-current Liabilities

   

   9,799,627

   

   5,087,673Loans and financings

   19

   644,908

   

   964,289Derivative Financial Instruments

   36

   3,547

   

   9,245Financial leases

   15

   6,907,802

   

   1,735,026Indirect taxes, charges and contributions payable

   20

   2,997

   

   2,772Direct taxes, charges and contributions payable

   21

   212,310

   

   209,880Deferred income tax and social contribution

   10

   47,734

   

   ‐Provision for legal and administrative proceedings

   23

   840,637

   

   849,408Pension plan and other post-employment benefits

   37

   5,782

   

   2,850Authorizations payable

   18

   237,723

   

   348,336Deferred revenues

   22

   827,182

   

   906,600Other current liabilities

   

   69,005

   

   59,267Shareholders’ equity

   24

   22,431,818

   

   19,794,837Capital Stock

   

   9,866,298

   

   9,866,298Capital reserves

   

   410,650

   

   412,091Profit reserves

   

   12,159,162

   

   9,524,124Accumulated other comprehensive income

   

   (1,088)

   

   847Treasury shares

   

   (3,204)

   

   (8,523)
  The accompanying notes are an integral part of the financial statements.  F-10


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TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOMEYears endedDecember 31(In thousands ofReais, except as otherwise stated)Notes

   

   2019

   2018

   2017Revenue

   26

   

   17,377,194

   16,981,329

   16,233,959Costs of services provided and goods sold

   27

   

   (7,433,731)

   (7,701,418)

   (8,002,077)Gross income

   

   

   9,943,463

   9,279,911

   8,231,882Operating income (expenses)Selling expenses

   27

   

   (4,986,289)

   (4,970,780)

   (4,575,177)General and administrative expenses

   27

   

   (1,717,859)

   (1,608,319)

   (1,424,643)Other income (expenses), net

   28

   

   1,275,542

   (283,289)

   (298,710)(5,428,606)

   (6,862,388)

   (6,298,530)Operating income

   

   

   4,514,857

   2,417,523

   1,933,352Financial income (expenses)Financial income

   29

   

   1,430,171

   412,733

   512,565Financial expenses

   30

   

   (1,408,053)

   (951,439)

   (1,009,653)Foreign exchange variations, net

   31

   

   (908)

   1,373

   (748)21,210

   (537,333)

   (497,836)Income before income and social contribution taxes

   

   

   4,536,067

   1,880,190

   1,435,516Income and social contribution taxes

   32

   

   (913,940)

   664,911

   (201,009)Net income for the year

   

   

   3,622,127

   2,545,101

   1,234,507Earnings per share attributed to the Company’s shareholders (in R$ per share)Basic earnings per share

   33

   

   1.50

   1.05

   0.51Diluted earnings per share

   33

   

   1.50

   1.05

   0.51
  The accompanying notes are an integral part of the financial statements. F-11


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TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYCOMPREHENSIVE INCOME STATEMENTPeriods ended December 31, 2019 and 2018(In thousands of Reais)2019

   

   2018

   

   2017Net income for the year

   

   3,622,127

   

   2,545,101

   

   1,234,507Other components of comprehensive incomeItem not to be reclassified to income:Pension plan and other post-employment benefits

   

   (2,932)

   

   (215)

   

   (1,052)Deferred taxes

   

   997

   

   73

   

   358Item to be subsequently reclassified to income:Cash flow hedge

   

   -

   

   -

   

   3,318Deferred taxes

   

   -

   

   -

   

   (1,128)Total comprehensive income for the year

   

   3,620,192

   

   2,544,959

   

   1,236,003
  The accompanying notes are an integral part of the financial statements. F-12


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TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYSTATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFiscal years ended December 31(In thousands of Reais)Profit reservesCapital Stock

   

   Capital reserves

   

   Legal reserve

   

   Reserve for expansion

   

   Tax benefit reserve

   

   Treasury shares

   

   Accumulated other comprehensive income

   

   Retained earnings

   

   TotalBalances as at December 31, 2018

   9,866,298

   

   412,091

   

   838,692

   

   7,267,574

   

   1,417,858

   

   (8,523)

   

   847

   

   ‐

   

   19,794,837Total comprehensive income for the yearNet income for the year

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   3,622,127

   

   3,622,127Remeasurement of post-employment benefit obligation

   

   -

   

   -

   

   -

   

   -

   

   ‐

   

   -

   

   (1,935)

   

   -

   

   (1,935)Total comprehensive income for the year

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   (1,935)

   

   3,622,127

   

   3,620,192Total contributions from shareholders and distributions to shareholdersStock options (Note 24.b)

   

   -

   

   (1,441)

   

   -

   

   -

   

   

   

   ‐

   

   -

   

   -

   

   (1,441)Purchases of treasury shares, net of disposals

   

   -

   

   -

   

   -

   

   -

   

   

   

   5,319

   

   -

   

   -

   

   5,319Allocation of net profit for the year:Legal Reserve (note 24)

   

   -

   

   -

   

   171,398

   

   -

   

   

   

   -

   

   -

   

   (171,398)

   

   ‐Interest on equity (note 24)

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   

   

   (995,438)

   

   (995,438)Constitution of tax benefit reserve (note 24)

   

   -

   

   -

   

   

   

   ‐

   

   194,161

   

   -

   

   -

   

   (194,161)

   

   ‐Constitution of reserve for expansion (note 24)

   

   -

   

   -

   

   -

   

   2,261,130

   

   

   

   -

   

   -

   

   (2,261,130)

   

   ‐Unclaimed dividends (note 24)

   

   -

   

   -

   

   -

   

   8,349

   

   

   

   -

   

   -

   

   ‐

   

   8,349Total contributions from shareholders and distributions to shareholders

   

   ‐

   

   (1,441)

   

   171,398

   

   2,269,479

   

   194,161

   

   5,319

   

   ‐

   

   (3,622,127)

   

   (983,211)Balances as at December 31, 2019

   9,866,298

   

   410,650

   

   1,010,090

   

   9,537,053

   

   1,612,019

   

   (3,204)

   

   (1,088)

   

   ‐

   

   22,431,818
   F-13


---



TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYSTATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFiscal years ended December 31(In thousands of Reais)Profit reservesCapital Stock

   

   Capital reserves

   

   Legal reserve

   

   Reserve for expansion

   

   Tax benefit reserve

   

   Treasury shares

   

   Accumulated other comprehensive income

   

   Retained earnings

   

   TotalBalances as at December 31, 2017

   9,866,298

   

   416,162

   

   718,759

   

   5,894,060

   

   1,271,403

   

   (16,487)

   

   989

   

   ‐

   

   18,151,184Impact of initial adoption of new accounting pronouncements (note 2.f)

   

   ‐

   

   ‐

   

   ‐

   

   (62,119)

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   (62,119)Balances as at December 31, 2017, adjusted

   9,866,298

   

   416,162

   

   718,759

   

   5,831,941

   

   1,271,403

   

   (16,487)

   

   989

   

   ‐

   

   18,089,065Total comprehensive income for the yearNet income for the year

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   2,545,101

   

   2,545,101Remeasurement of post-employment benefit obligation

   

   -

   

   -

   

   -

   

   -

   

   ‐

   

   -

   

   (142)

   

   -

   

   (142)Total comprehensive income for the year

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   ‐

   

   (142)

   

   2,545,101

   

   2,544,959Total contributions from shareholders and distributions to shareholdersStock options (Note 24.b)

   

   -

   

   (4,071)

   

   -

   

   -

   

   

   

   ‐

   

   -

   

   -

   

   (4,071)Purchases of treasury shares, net of disposals

   

   -

   

   -

   

   -

   

   -

   

   

   

   7,964

   

   -

   

   -

   

   7,964Allocation of net profit for the year:Legal Reserve (note 24)

   

   -

   

   -

   

   119,933

   

   -

   

   

   

   -

   

   -

   

   (119,933)

   

   ‐Interest on equity (note 24)

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   

   

   (849,994)

   

   (849,994)Constitution of tax benefit reserve (note 24)

   

   -

   

   -

   

   

   

   

   

   146,455

   

   -

   

   -

   

   (146,455)

   

   ‐Constitution of reserve for expansion (note 24)

   

   -

   

   -

   

   -

   

   1,428,719

   

   

   

   -

   

   -

   

   (1,428,719)

   

   ‐Unclaimed dividends (note 24)

   

   -

   

   -

   

   -

   

   6,914

   

   

   

   -

   

   -

   

   ‐

   

   6,914‐Total contributions from shareholders and distributions to shareholders

   

   ‐

   

   (4,071)

   

   119,933

   

   1,435,633

   

   146,455

   

   7,964

   

   ‐

   

   (2,545,101)

   

   (839,187)Balances as at December 31, 2018

   9,866,298

   

   412,091

   

   838,692

   

   7,267,574

   

   1,417,858

   

   (8,523)

   

   847

   

   ‐

   

   19,794,837
  The accompanying notes are an integral part of the financial statements.  F-14


---



TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYSTATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFiscal years ended December 31(In thousands of Reais)Profit reservesShare capital

   

   Capital reserve

   

   Legal reserve

   

   Reserve for expansion

   

   Tax benefit reserve

   

   Treasury shares

   

   Accumulated other comprehensive income

   

   Retained earnings

   

   TotalBalances as at December 31, 2016

   9,866,298

   

   405,239

   

   657,034

   

   5,103,908

   

   1,158,910

   

   (3,369)

   

   (507)

   

   -

   

   17,187,513Total comprehensive income for the yearNet income for the year

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   1,234,507

   

   1.234.507Remeasurement of post-employment benefit obligation

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   (694)

   

   -

   

   (694)Cash flow hedge

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   2,190

   

   -

   

   2.190Total comprehensive income for the year

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   1,496

   

   1,234,507

   

   1.236.003Total contributions from shareholders and distributions to shareholdersStock options (Note 24.b)

   

   -

   

   10,923

   

   -

   

   -

   

   

   

   -

   

   -

   

   -

   

   10.923Purchases of treasury shares, net of disposals

   

   -

   

   -

   

   -

   

   -

   

   

   

   (13,118)

   

   -

   

   -

   

   (13.118)Allocation of net income for the year:Legal reserve (Note 24)

   

   -

   

   -

   

   61,725

   

   -

   

   

   

   -

   

   -

   

   (61,725)

   

   -Dividends declared (Note 24)

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   

   

   (103,325)

   

   (103.325)Interest on shareholders’ equity (Note 24)

   

   -

   

   -

   

   -

   

   -

   

   

   

   -

   

   

   

   (189,991)

   

   (189.991)Reserve for tax benefit (Note 24)

   

   -

   

   

   

   

   

   

   

   112,493

   

   -

   

   -

   

   (112,493)

   

   -Reserve for expansion (Note 24)

   

   -

   

   -

   

   -

   

   766,973

   

   

   

   -

   

   -

   

   (766,973)

   

   -Dividends recorded directly in shareholder’s equity

   

   -

   

   -

   

   -

   

   23,179

   

   

   

   -

   

   -

   

   -

   

   23.179-Total contributions from shareholders and distributions to shareholders

   

   -

   

   10,923

   

   61,725

   

   790,152

   

   112,493

   

   (13,118)

   

   -

   

   (1,234,507)

   

   (272.332)Balances as at December 31, 2017

   9,866,298

   

   416,162

   

   718,759

   

   5,894,060

   

   1,271,403

   

   (16,487)

   

   989

   

   -

   

   18,151,184
  The accompanying notes are an integral part of the financial statements.   F-15


---





TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYSTATEMENT OF CASH FLOWSFiscal years ended December 31(In thousands of Reais)Notes

   

   2019

   

   2018

   

   2017Operating activitiesIncome before income and social contribution taxes

   

   

   4,536,067

   

   1,880,190

   

   1,435,516Adjustments to reconcile income with net cash from operationsDepreciation and amortization

   

   

   5,128,981

   

   3,954,321

   

   4,013,671(Gain) loss on the sale of property, plant and equipment (leaseback)

   

   

   ‐

   

   -

   

   1,801Residual value of property, plant and equipment and intangible assets written off

   

   

   32,411

   

   9,700

   

   54,104Interestfrom obligations arising from asset retirement obligation

   

   

   226

   

   648

   

   428Provision for legal and administrative proceedings

   23

   

   547,691

   

   551,191

   

   372,469Monetary adjustments to deposits, administrative and legal proceedings

   

   

   200,469

   

   297,529

   

   97,805Interest, monetary and exchange variations of borrowings and other financial adjustments

   

   

   (950,675)

   

   (35,450)

   

   521,570Lease interest payable

   30

   

   821,463

   

   266,328

   

   257,305Lease interest receivable

   29

   

   (6,422)

   

   (25,664)

   

   (22,709)Provision for doubtful debts

   27

   

   748,291

   

   544,881

   

   316,387Stock options

   25

   

   3,443

   

   (1,424)

   

   10,92311,061,945

   

   7,442,250

   

   7,059,270Decrease (increase) in operating assetsTrade accounts receivable

   

   

   (1,027,131)

   

   (1,028,791)

   

   99,674Taxes and contributions recoverable

   

   

   (1,601,276)

   

   175,116

   

   162,705Inventory

   

   

   (20,219)

   

   (59,274)

   

   20,149Prepaid expenses

   

   

   100,917

   

   56,792

   

   (40,490)Judicial Deposit

   

   

   296,486

   

   30,478

   

   (53,217)Other current assets

   

   

   5,059

   

   133,831

   

   (26,129)Increase (decrease) in operating liabilitiesPayroll and related charges

   

   

   6,736

   

   (50,765)

   

   50,171Suppliers

   

   

   (401,200)

   

   331,736

   

   523,419Taxes, charges and contributions

   

   

   40,045

   

   187,170

   

   (177,478)Authorizations payable

   

   

   (100,182)

   

   (104,582)

   

   (895,964)Payments for legal and administrative proceedings

   23

   

   (715,203)

   

   (536,646)

   

   (439,670)Deferred revenues

   

   

   (204,355)

   

   (193,599)

   

   (415,651)Other current liabilities

   

   

   (215,063)

   

   (40,373)

   

   (165,598)Cash generated by operations

   

   

   7,226,559

   

   6,343,343

   

   5,701,191Income tax and social contribution paid

   

   

   (161,833)

   

   (213,956)

   

   (297,079)Net Cash from Operations

   

   

   7,064,726

   

   6,129,387

   

   5,404,112Cash from Investment ActivitiesMarketable securities

   

   

   131,742

   

   (21,460)

   

   (288,658)Additions to property, plant and equipment and intangible assets

   

   

   (3,853,484)

   

   (3,831,906)

   

   (4,147,907)Cash received from property, plant and equipment sales

   

   

   -

   

   -

   

   13,850Receipt of financial leases

   

   

   9,100

   

   22,946

   

   22,140
 F-16


---



TIM PARTICIPAÇÕES S.A. AND SUBSIDIARYSTATEMENT OF CASH FLOWSFiscal years ended December 31(In thousands of Reais)Notes

   

   2019

   

   2018

   

   2017Net cash used in investment activities

   

   

   (3,712,642)

   

   (3,830,420)

   

   (4,400,575)Cash from financing activitiesNew borrowing

   

   

   1,000,000

   

   166,548

   

   646,853Repayment of borrowing

   

   

   (723,500)

   

   (3,359,074)

   

   (2,890,565)Interest paid – borrowing and financings

   

   

   (96,649)

   

   (193,333)

   

   (380,005)Payment of financial lease

   

   

   (800,621)

   

   (9,898)

   

   (14,340)Interest paid - Leases

   

   

   (785,091)

   

   (242,512)

   

   (204,849)Derivative Financial Instruments

   

   

   32,761

   

   37,044

   

   17,677Purchases of treasury shares, net of disposals

   

   

   435

   

   5,317

   

   (13,118)Dividends and interest on shareholders’ equity paid

   

   

   (770,139)

   

   (588,247)

   

   (332,658)Net cash used in financing activities

   

   

   (2,142,804)

   

   (4,184,155)

   

   (3,171,005)Increase (decrease) in cash and cash equivalents

   

   

   1,209,280

   

   (1,885,188)

   

   (2,167,468)Cash and cash equivalents at the beginning of the year

   

   

   1,075,530

   

   2,960,718

   

   5,128,186Cash and cash equivalents at the end of the year

   

   

   2,284,810

   

   1,075,530

   

   2,960,718  2019

   

   2018

   

   2017Non – cash transactionsAdditions to property, plant and equipment and intangible assets, without cash effects

   

   

   (6,653,985)

   

   (38,944)

   

   (48,957)Increase in lease liabilities, without cash effects

   

   

   6,653,985

   

   38,944

   

   48,957
  The accompanying notes are an integral part of the financial statements.   F-17


---



TIM PARTICIPAÇÕES AND SUBSIDIARY  NOTES TO THE FINANCIAL STATEMENTS As at December 31 (In thousands of Reais, except as otherwise stated)
  1.   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 held 66.58% of the capital of TIM Participações as at December 31, 2019 and 2018.  The main purpose of the Company and its subsidiary (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’ subsidiary are regulated by the 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") – USA. Accordingly, the Company is subject to the rules of the Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”) and the U.S. Securities and Exchange Commission (“SEC”). In accordance with market best practice, TIM Participações adopts the practice of simultaneously releasing its financial information inReaisin 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 act transforming Intelig into a closely-held joint stock company was annotated, and its corporate name was changed to TIM S.A. On September 30, 2018, the Company’s Management had obtained from third parties all approvals and consents required to perform the said restructuring. As a result, the Company’s Management proceeded with the merger on October 31, 2018, based on the net book assets of TIM Celular, in the amount of R$17,035,254, in accordance with the valuation report issued by independent experts. Also, as a result of this corporate restructuring, the amount of R$952,368 relating to deferred income tax assets arising from tax losses and the negative base of TIM S.A. were recognized on September 30, 2018 (Note 10).  The changes in TIM Celular’s equity between the date of the report and the merger were transferred, absorbed and incorporated into the operating income of TIM S.A., as set forth in the protocol of the merger. As a result of the merger, all TIM Celular operations were transferred to TIM S.A., which succeeded it in all its assets, rights and liabilities, universally and for all purposes of the law.  Direct subsidiary – TIM S.A.  TIM S.A. (current name of INTELIG TELECOMUNICAÇÕES LTDA. and successor by merger of TIM CELULAR S.A.) F-18


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The Company holds 100% of TIM S.A.’s
capital. This subsidiary provides Landline Telephone Services (“STFC”) -
Domestic Long-Distance and International Long-Distance Voice Services, Personal
Mobile Service (“SMP”) and Multimedia Communication Services (“SCM”) in all
Brazilian states and in the Federal District.  2.   Basis for preparation and
disclosure of the financial statements  The consolidated 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 consolidated
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 this financial statements are described below and/or presented in the
respective notes. These policies were 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 base value as well as 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 exception to this procedure
involves deferred income tax and social contribution balances (assets and
liabilities) and contingent liabilities that are fully classified as
long-term.  Interests paid are classified as
financing cash flow in the statement of cash flows as it represents costs of
obtaining financial resources.   b.Functional currency and
presentation currency  The presentation currency for the financial statements is theReal(R$), which is also the functional currency for the company 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 intoReaisat the exchange rate on the date of the balance sheet published 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 components of the entity that develop
business activities from which revenue can be obtained and in relation to which
expenses are incurred. Their operating results are regularly reviewed bythe entity’s chief operating decision maker to make decisions on
the allocation of resources and to assess the performance of each segment. For a
segment to exist, it must have separate financial information
available. F-19


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  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 decision makers see the Group as a single
business segment and do not take into account specific strategies intended for a
particular line of service. All decisions on strategic, financial, purchasing,
investment and fund investment planning are made on a consolidated
basis.The aim is to
maximize the consolidated result obtained by exploring the SMP, STFC and SCM
licenses.  d.Consolidation
procedures  Subsidiaries are all entities over which
the Group holds control. The Group controls an entity when it is liable or has
rights to variable returns on the basis of 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. The consolidation is discontinued from the date that
the Group loses control over that entity.  The purchase accounting method is used
to record the acquisition of subsidiaries by the Group. The acquisition cost is
measured as the fair value of the acquired assets, equity instruments (e.g.
shares) issued and liabilities incurred or assumed by the acquirer at the date
when 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 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
applied.  Transactions between Group companies, as
well as balances, unrealized gains and losses related to these transactions, are
eliminated. The accounting policies of the subsidiary were adjusted to ensure
consistency with the accounting policies adopted by TIM Participações. The dates
of the financial statements used in the consolidation are the same for all Group
companies.  e. Approval of the financial
statements  These financial statementswereapproved by the Company’s Board of Directors on April 17,
2020.  f. New standards,
amendments and interpretations of standards F-20


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  I) Among the new standards that became effective as of January
1, 2019 issued by the IASB, the following standards had a material impact on the
Company’sconsolidatedfinancial statements:  IFRS 16 –
“Leases”  In July 2014, the IASB issued IFRS 16, which replaced IAS 17 and
refers to annual periods beginning on or after January 1, 2019 and approved by
the CVM on December 21, 2017.  The new standard establishes the principles for 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, with a term of 12 months or less, or contracts in
which the value of the underlying assets is low.In accordance with this standard, lessees must
apply this pronouncement to lease agreements in two ways:  (i)
    Retrospectively for each previous 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 an adjustment to the
      opening balance of retained earnings (or other component of the
      shareholders’ equity, as appropriate) as at the date of initial
      application.
  The Company decided to adopt IFRS16 retrospectively, while the
cumulative effect of the initial application is recognized on the date of
initial application, that is, January 1, 2019. Additionally, the Company decided
to take practical steps in its initial adoption of the standard, such as: (i)
non-revaluation of financial lease agreements previously recognized according to
IAS 17 upon initial measurement of financial lease liabilities, according to the
new accounting pronouncement, and IFRIC 4; (ii) exclusion of lease agreements
expiring in the next 12 months and unlikely to be renewed by the Company and the
exclusion of leasing contracts considered of low value; (iii) non-application of
this new standard to agreements not previously identified as leases, using IAS
17 and IFRIC 4; and (iv) application of a single discount rate to the leasing
portfolio with reasonably similar characteristics (such as leasing with a
similar remaining leasing period for a similar class of underlying assets in a
similar economic setting).  The Company had a significant number of lease agreements under
which it is the lessee. Currently, a portion of these contracts are recognized
as operating leases, and their payments are recorded on a straight-line basis
throughout the period of the contract.The Company concluded the study of impacts of
this new standard on its financial statements, which included: (i) an estimation
of the lease term, considering a non-cancelable period and the periods covered
by options to extend the lease term, where such exercise depends only on the
Company and is reasonably certain; (ii) a detailed review of the nature of the
various lease agreements inherent in the telecommunications industry; (iii) use
of assumptions to calculate the discount rate, which was based on the
incremental interest rate for the period of the agreement, among other things.
Furthermore, given therelevance of the infrastructure lease agreements, specifically
for transmission towers, the Company decided to separately recognize the lease
and non-lease components for this class of assets. F-21


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The increase in lease liabilities due to the recognition of the
right-of-use of the assets results in an increase in the Company's net debt,
being the depreciation and interest charges recognized in the statement of
income as a replacement of the operating lease expenses.  In qualitative terms, the main transactions to be impacted by
the new standard include: lease of vehicles, lease of stores and kiosks in
shopping malls, lease of sites, land and sharing of infrastructure.  The table below presents the principal effects of the adoption
of IFRS16 in the opening balances as at January 1, 2019.  Originally reported
    Adjustments
    Balances under IFRS 16Jan 1st, 2019
    
    Jan 1st, 2019Assets
    31,957,889
    5,256,114
    37,214,003Current assets
    5,998,126
    (8,742)
    5,989,384Trade accounts receivable
    2,838,808
    ‐
    2,838,808Inventories
    183,059
    ‐
    183,059Prepaid expenses (a)
    272,060
    (8,742)
    263,318Other assets
    2,704,199
    
    2,704,199Non-current assets
    25,959,763
    5,264,856
    31,224,619Long-term receivables
    4,074,137
    (471)
    4,073,666Trade accounts
      receivable
    130,308
    
    130,308Prepaid expenses (a)
    74,381
    (471)
    73,910Other assets
    3,869,448
    
    3,869,448Property, plant and equipment (b)
    11,203,622
    5,265,327
    16,468,949Intangible assets
    10,682,004
    
    10,682,004
  Liabilities and Shareholders’ Equity
    31,957,889
    5,256,114
    37,214,003Total Liabilities
    12,163,052
    5,256,114
    17,419,166Current Liabilities
    7,075,379
    785,065
    7,860,444Financial leasing (c)
    205,048
    785,065
    990,113Other liabilities
    6,870,331
    
    6,870,331Non-Current Liabilities
    5,087,673
    4,471,049
    9,558,722Financial leasing (c)
    964,289
    4,471,049
    5,435,338Deferred income tax and social contribution
    ‐
    
    ‐Other Liabilities
    4,123,384
    
    4,123,384Shareholders’ Equity
    19,794,837
    ‐
    19,794,837Capital
      stock
    9,866,298
    
    9,866,298Revenue reserves
    9,928,539
    
    9,928,539
 F-22


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
    During the fiscal year ended December 31, 2019, the new
accounting standards had the following impact on the income
statement:  Statements of incomeBalances
      without
    Adjustments
    Balances
      withIFRS
16
    IFRS
  16Net revenue from services
    16,597,155
    ‐
    16,597,155Net revenue from products
    780,039
    ‐
    780,039Net revenue
    17,377,194
    ‐
    17,377,194Cost of services provided and goods sold (a),
      (d)
    (4,494,914)
    1,193,407
    (3,301,507)12,882,280
    1,193,407
    14,075,687(4,554,127)
    122,278
    (4,431,849)Operating income (expenses)Selling expenses (e)
    (4,800,325)
    70,935
    (4,729,390)General and administrative expenses (f)
    (1,029,343)
    51,343
    (978,000)Other revenues (expenses), net
    1,275,541
    ‐
    1,275,5418,328,153
    1,315,685
    9,643,838Depreciation and amortization (g)
    (4,188,837)
    (940,144)
    (5,128,981)Financial income (expenses)
    613,533
    (592,323)
    21,210Income before income and social contribution
      taxes
    4,752,849
    (216,782)
    4,536,067Income and social contribution taxes (h)
    (987,646)
    73,706
    (913,940)Net income for the year
    3,765,203
    (143,076)
    3,622,127
   There is no material impact on other comprehensive results or
basic diluted earnings per share.  Statement of Cash FlowsBalances
      without
    Adjustments
    Balances
      withIFRS
16
    IFRS
  16Net income for the period before income tax and social
      contribution
    4,752,850
    (216,783)
    4,536,067Adjustments to reconcile net income to net cash generated
      by activitiesLease interest payable
    229,139
    592,324
    821,463Depreciation and amortization
    4,188,837
    940,144
    5,128,981Net cash from operations
    5,749,042
    1,315,684
    7,064,726Net cash invested in investment activities
    (3,721,742)
    -
    (3,721,742)Net cash used in financing activities
    (827,120)
    (1,315,684)
    (2,142,804)Increase in cash and cash
      equivalents
    1,209,280
    -
    1,209,280Cash and cash equivalents at the
      beginning of the year
    1,075,530
    -
    1,075,530Cash and cash equivalents at the
      end of the year
    2,284,810
    -
    2,284,810
 F-23


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The principal adjustments arising from the new standard are as
follows:  (a) Reclassification of the agreement
for reciprocal assignment with consideration for fiber optic infrastructure
previously classified as prepaid expenses (Note 11) for property, plant and
equipment – right-of-use under lease; (b) Recognition of the asset –
right-of-use under lease of the lease payments eligible for the new
standard; (c) Increase in the Company’s net debt
due to the recognition of the lease liability as required by the
standard; (d) Leasing – infrastructure (network,
land and fiber optics); (e) Leasing – stores & kiosks and
vehicles; (f) Leasing – administrative buildings
and vehicles; (g) Recognition of the depreciation of
the assets mentioned above; (h) Tax impact on the adjustments from
the new standard.  IFRIC 23  – Uncertainty about the treatment of income
taxes  The Interpretation deals with the accounting of taxes on profit
in cases where the tax treatments involve uncertainty affecting the application
of IAS 12 - Income Tax and does not apply to taxes outside the scope of IAS 12,
nor specifically includes the requirements relating to interest and fines
associated with uncertain tax treatments. The Interpretation specifically
addresses the following: How to apply the tax legislation to specific
  transactions or circumstances;Or if the tax authorities would accept a
  specific tax treatment adopted by the entity. If the entity considers that a
  given tax treatment may not be accepted, the entity must use estimates (most
  probable or expected amount) to determine the tax treatment (taxable income,
  tax bases, tax liabilities not used, tax assets not used), income tax rates
  and others. This decision must rely on the method that provides the best
  estimates for resolution of the uncertainty.
  The Company’s Management concluded that the application of this
standard did not significantly impact the financial statements, since the most
important judicial proceedings involving income tax and social contribution, as
disclosed in Note 23, are considered by the administration and the legal
counsels as being “more likely than not” in the arguments of the judicial
spheres.   II) The following new standards were
issued by International Standards Board (IASB) but are not in force for the
period ended December 31, 2019.  ·IFRS 17 –
Insurance contracts  In May 2017, the IASB issued IFRS 17 –
Insurance Contracts. The generalpurpose of IFRS 17 is to
provide an accounting model for insurance contracts that is most useful and
consistent for insurers. F-24


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   ·IFRS 3:
Definition of business  In October 2018, the IASB issued changes
to the business definition in IFRS 3 to help entities determine whether an
acquired set of activities and assets consists of or not in a business. They
clarify the minimum requirements for a company, eliminate the assessment of
whether market participants are capable of replacing any missing elements,
include guidance to help entities assess whether an acquired process is
substantive, better delimit business and product definitions, and introduce an
optional fair value concentration test. New illustrative cases have been
provided along with the changes.  As the changes apply prospectively to
transactions or other events that occur on or after the first application, the
Company will not be affected by these changes on the transition date.  ·IAS 8:
Definition of material omission  In October 2018, the IASB issued
amendments to IAS 1 and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors to align the definition of 'material misstatement' or
'material misstatement' across the standards and clarify certain aspects of the
definition. The new definition states that: "the information is material if its
omission, misstatement or obscureness could reasonably influence decisions that
major users of general purpose financial statements make on the basis of those
financial statements, which provide financial information about entity-specific
reporting.  These changes are not expected to have a
significant impact on the Company's consolidated financial
statements.   3   
Estimates and areas where judgment is significant in the application of the
Company’s accounting policies  Accounting estimates and judgments are
continuously reassessed. They are based on the Company ́s historical experience
and other factors, such as 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
in the book values of assets and liabilities in subsequent fiscal years are
shown below:  *(a)   Impairment losses on
non-financial assets*  Losses due to impairment take place when
the book value of an asset or cash generating unit exceeds its respective
recoverable value, which is considered as the fair value less costs to sell
and/or the value in use, whichever is greater. The calculation of the fair value
less costs to sell is based on information available from sales transactions
involving similar assets or market prices, less additional costs that would be
incurred todispose of those assets. The
value in use is based on the discounted cash flow model. F-25


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Any reorganization activities to which
the Company has not yet committed itself on 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 purpose of
impairment testing.  The main non-financial assets valued
this way were goodwill based on the future profitability recorded by the Company
(Note 14) and its tangible assets.  *(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 and IAS 12. This process
normally includes complex estimates to define the taxable income and temporary
differences. In particular, deferred tax assets on 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 and can be offset.
The measurement of the recoverability of deferred income tax and social
contribution losses carry-forward and of temporary differences takes into
account the history of taxable income, as well as estimates of future 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 review takes into account factors such as the hierarchy of laws,
case law available, recent court decisions, their relevance to the legal order,
as well as payment history. Such reviews involve 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 evaluation techniques that take
into account observable data or observable data derived from the market (Note
36).  *(e)   Unbilled
revenue*  Considering that some billing cut-off
dates occur on intermediate dates within the months, at the end of each month
there will be revenue already earned by the Company but not effectively billed
to the customers. This unbilled revenue is recorded based on estimates which
take into account data on usage, the number of days since the last billing date,
among other factors (Note 26).  *(f)   Leasing*  The Company has a significant number of
lease agreements in which it is the lessee, whereby with the adoption of
accounting standard IFRS 16 – Leasing, as disclosed in Note 2.f., the Company’s
Management made certain judgments when measuring the lease liability and the
right-of-use assets, such as:(i) an estimation of the lease term, considering a
non-cancelable period and the periods covered by options to extend the lease
term, where suchexercise depends only on the Company and is reasonably certain;
(ii) use of certain assumptions to calculate the discount rate. F-26


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The Company is not able to readily
determine the interest rate implicit in the lease and therefore considers its
incremental rate on loans to measure lease liabilities. The incremental rate is
the interest rate that the Company would have to pay when borrowing, for a
similar term and with similar collateral, the resources necessary to obtain the
asset with similar value to the asset with similar right of use in a similar
economic environment. Therefore, this assessment requires management to consider
estimates when no observable rates are available. Or when they need to be
adjusted to reflect the terms and conditions of a lease. The Company estimates
the incremental rate using observable data (such as market interest rates) when
available and considers in this estimate aspects that are specific to the
Company (such as the cost of the subsidiary's debt). The Company ́s average
incremental rate is 10.55% for an average lease term as described in note 13.   4    Cash and cash
equivalents  These are financial assets measured at
amortized cost through the effective interest rate method. The Company’s
Management determines the classification of its financial assets upon initial
recognition.  2019
    
    2018Cash and banks
    
    101,928
    
    93,960Unrestrictedly available financial
      investments:CDBs/Repurchases
    
    2,182,882
    
    981,5702,284,810
    
    1,075,530
  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 during 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 on the Company’s investments in CBDs and Repurchases is 99.95% (100.27%
at December 31, 2018) of the Interbank Deposit Certificate (“CDI”)
rate.  5    Marketable
securities  2019
    
    2018FUNCINE (3)
    
    3,849
    
    5,229Fundo Soberano (4)
    
    7,329
    
    14,472FIC: (1)Government securities
    
    179,390
    
    292,708Repo transactions (2)
    
    216,196
    
    289,352Financial bills
    
    105,857
    
    96,868Other (5)
    
    145,707
    
    91,441658,328
    
    790,070Current portion
    
    (654,479)
    
    (784,841)Non-current portion
    
    3,849
    
    5,229
  (1) In August 2017, the
Company invested in open-ended Investment Funds in Units (“FICs”). The Funds are
mostly made up of government securities and instruments of first-tier financial
institutions. In 2019, the average yield of FICs was 99.67% (100.81 % as in
December 31, 2018) of the variation of theCDI rate.  (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 are used by the fund with the purpose of
remunerating the capital available in cash.  (3) In
December 2017, in order to use the tax benefit of deductibility for income and
social contribution tax purposes the Company invested the amount of R$3 million
in the National Film Industry Financing Fund (“FUNCINE”). In 2018, the Company
opted to make new investments in FUNCINE in the months of October and December
in the total amount of R$2.4 million. In June 2019, the Company made new
investments in the amount of R$2.2 million. The average remuneration in 2019 of
FUNCINE was 9.18%.  (4)
“Fundo Soberano” includes federal securities only. The average remuneration in
2019 was 97.62%of the variation of theCDI
rate.  (5)
Represented by: Debentures, FIDC, Trade Bills, Promissory Notes, Bank Credit
Notes. F-27


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   6    Trade accounts
receivable  These are financial assets measured at
amortized cost, and refer to accounts receivable from users of
telecommunications services, from network use (interconnection) and from sales
of handsets and accessories. Accounts receivable are recorded at the price
charged at the time of the transaction. The balances of accounts receivable also
include services provided and not billed (“unbilled”) up to the balance sheet
date.Accounts receivable from clients are initially
recognized at fair value and subsequently measured at amortized cost using the
effective interest rate method less the provision for expected credit losses
("impairment").  The provision for expected credit losses was recognized as a
reduction in accounts receivable based on the profile of the subscriber
portfolio, the aging of overdue accounts receivable, the economic situation, the
risks involved in each case and the collection curve, at an amount deemed
sufficient by Management, as adjusted to reflect current and prospective
information on macroeconomic factors that affect the customers’ ability to
settle the receivables.  The fair value of trade accounts
receivable equals the carrying valuerecorded as at December 31,
2019 and 2018. A portion of the accounts receivable from clients is used to
secure the total amount of BNDES borrowing (Note 19). F-28


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 2019
    
    2018Trade accounts receivable
    3,287,855
    
    2,969,116Gross accounts
    receivable
    4,061,932
    
    3,656,044Billed services
    2,076,569
    
    1,733,229Unbilled services
    858,418
    
    774,484Network use
      (interconnection)
    438,168
    
    455,228Sale of goods
    670,573
    
    691,312Contractual asset (note
      22)
    15,142
    
    130Other accounts
    receivable
    3,062
    
    1,661Provision for expected credit
      losses
    (774,077)
    
    (686,928)Current portion
    (3,184,780)
    
    (2,838,808)Non-current portion
    103,075
    
    130,308
  The non-current portion includes the
amount of R$68.639 (R$102.960 on December 31, 2018) related to accounts
receivable from other telephone carriers, recorded at present value considering
the period and implicit interest rate in the transaction.  Change in provision for expected credit
losses, recorded as an asset reducing account, were as follows: 2019
    
    2018Opening balance
    686,928
    
    464,745Setup of provision (note
      27)
    748,291
    
    544,881Impact of adopting IFRS
    9
    -
    
    130,137Write-off of provision
    (661,142)
    
    (452,835)Final Balance
    774,077
    
    686,928
    The aging of accounts receivable is as follows: 2019
    
    2018Total
    4,061,932
    
    3,656,044Falling due
    2,576,307
    
    2,459,315Overdue up to 30 days
    328,457
    
    308,744Overdue up to 60 days
    146,200
    
    144,309Overdue up to 90 days
    149,852
    
    117,759Invoices overdue more than 90 days
    861,116
    
    625,917
 F-29


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   7    Inventory  Inventories are stated at average
acquisition cost. A loss is recognized to adjust the cost of handsets and
accessories to their net realizable value (selling price) when this amount is
less than the average acquisition cost.  2019
    
    2018Total inventories
    203,278
    
    183,059Inventory
    214,889
    
    189,826Mobile handsets and
      tablets
    146,295
    
    145,819Accessories and prepaid
      cards
    61,436
    
    33,621TIM chips
    7,158
    
    10,386Losses on adjustment to realizable
      amount
    (11,611)
    
    (6,767)
   8.   Indirect taxes, charges and
contributions recoverable  2019
    
    2018Indirect taxes, charges and contributions
      recoverable
    1,243,633
    
    1,192,765ICMS
    1,201,502
    
    1,152,741Others
    42,131
    
    40,024Current portion
    (420,284)
    
    (280,254)Non-current portion
    823,349
    
    912,511
   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
telecommunication services (credits divided over 48 months), and (ii) ICMS
amounts paid under the tax substitution regime from goods acquired for resale,
mainly mobile handsets, chips, tablets and modems sold by TIM.  9.   Direct taxes, charges and
contributions recoverable  2019
    
    2018Direct taxes, charges and contributions
      recoverable
    3,762,800
    
    905,521Income tax (IR) and social contribution (CS)
    (i)
    428,443
    
    414,408PIS / COFINS (ii)
    3,244,549
    
    384,093Others
    89,808
    
    107,020Current portion
    (1,395,193)
    
    (347,505)Non-current portion
    2,367,607
    
    558,016
 F-30


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  i) The amounts corresponding to income
and social contribution taxes are substantially related to: (a) advances made
over the period during which the use will take place at the closing of the
current year and any balances in the next year; and (b) other income and social
contribution tax credits from previous years whose current estimated period of
use will be more than 12 months later.  (ii) The PIS/COFINS amounts recoverable
mainly refer to credits from a legal proceedings filed by TIM Celular S.A.
(ultimately merged into TIM S.A., as well as TIM S.A. itself, with a favorable
final decision in Higher Courts which discussed the exclusion of the ICMS from
the PIS and COFINS tax bases. According to the Company's internal evaluation, we
expect to use such credits within the statute of limitations of up to 5
years.  In March 2017, the Federal Supreme Court (“STF”) recognized the
unconstitutionality of including ICMS amounts in the calculation base of PIS and
COFINS contributions. TIM S.A. (previously named “Intelig Telecomunicações
Ltda.”), as the surviving company from the merger of TIM Celular S.A. and other
entities existing in the Group in the past, which had filed proceedings of the
same nature), has been challenging this issue in court since 2006, with effects
retroactive to five years, as permitted by the legislation.  In  June 2019, by reason of a final and without appeal
decision and calculation of values, the amount of R$2,875 million was recorded,
being R$1,720 million of which corresponds to the principal, and R$1,155 million
to monetary adjustments (amounts relating to TIM Celular S.A., which merged into
TIM S.A. in October 2018).  In September 2019, because a final, non-appealable judgment was
entered and amounts were awarded, the amount of R$148 million was recorded, of
which R$75 million corresponds to the principal, and R$73 million to monetary
adjustments, and such amounts being related to TIM S.A. itself (when it still
did business under the name Intelig Telecomunicações Ltda.).  The amount recorded are updated monthly at the interest rate
equivalent to the reference rate of the Special Settlement and Custody System
(Selic), available on the website of the Brazilian Federal Revenue.   10.Deferred income tax and
social contribution  Deferred income tax and
socialcontribution are recognized on: (1) accumulated income tax
carried forward losses and negative basis of social contribution, 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 thebalance sheet date.
Subsequent changes in tax rates or tax legislation may modify the deferred tax
credit and debit balances. F-31


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Deferred tax assets on income tax and
social contribution are recognized only in the event of a profitable track
record and/or when the annual forecasts prepared by the Company, examined by the
Supervisory Board and Statutory Audit Committee and approved by other Management
bodies, indicate 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 the 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,
not at their net amounts.  As at December 31, 2019 and 2018, the
prevailing tax rates were 25% for income tax and 9% for social contribution. In
addition, there is no statute of limitation in regard to the income tax and
social contribution carried forward losses, which it can be offset by up to 30%
of the taxable profit reached at each fiscal year, according to the current tax
legislation.   F-32


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 The amounts recorded are as follows:  2019
    
    2018Losses carried forward – income tax and social
      contribution
    800,711
    
    896,100Temporary differences:Provision for legal and administrative
      proceedings
    295,853
    
    293,349Losses from doubtful accounts
    271,611
    
    244,428Adjustments to present value – 3G license
    7,182
    
    9,124Deferred income tax on accounting
adjustments
    56,208
    
    58,268Lease of LT Amazonas infrastructure
    27,434
    
    24,978Profit sharing
    23,704
    
    22,181Taxes with suspended enforceability
    12,872
    
    12,872Amortized goodwill – TIM Fiber
    (370,494)
    
    (370,494)Derivative financial instruments
    (13,139)
    
    (22,551)Capitalized interest on 4G authorization
    (291,783)
    
    (301,525)Deemed costs – TIM S.A.
    (67,748)
    
    (82,042)Exclusion of ICMS from PIS and COFINS calculation bases
    (1,023,928)
    
    ‐IFRS16 Lease
    209,234
    
    -Other
    87,214
    
    74,82124,931
    
    859,509Unrecognized deferred income tax and social contribution
      Taxes with suspended enforceability
    (72,665)
    
    (57,538)(47,734)
    
    801,971Deferred tax assets portion
    ‐
    
    801,971Deferred tax liabilities portion
    (47,734)
    
    ‐
  TIM S.A. As previously communicated to the market, TIM Celular S.A.
merged into TIM S.A. (previously named “Intelig Telecomunicações Ltda.”) on
October 31, 2018 with the main objective of reducing the operating costs of the
companies involved, creating synergies and enabling the achievement of the
corporate purposes of the two companies.Thus, after the merger, tax credits may also
arise from tax losses and negative social contribution base on the income of TIM
S.A., considering that the latter, based on the consolidated results of TIM
Celular after the said merger, estimates that the taxable income will be
sufficient to use the said deferred credits.  On September 30, 2018 the Company recorded total deferred tax
assets of R$952,368 arising from amounts that may be used as tax losses
(R$702,619) and the negative base of social contribution on income (R$249,749),
since all of the factors required for the merger were controlled by Management,
such as: (i) the feasibility studies regarding the use of tax benefits was
completed and approved by the Company’s governance bodies, as provided for in
CVM 371/02; (ii) definition of the actual corporate restructuring schedule upon
the merger; (iii) obtaining of approvals and/or consent of third parties (ANATEL
and BNDES) by the Company, among other factors.  Due to the final unappealable decision
issued by the Higher Courts in favor of TIM Celular S.A. (absorbed by TIM S.A.)
in the action that discussed the exclusion of the ICMS from the base of
calculation of PIS and COFINS contributions, a tax credit of R$2,875.5 million
(R$ 2,862.7 million inDecember 31, 2019), including
the principal amount and monetary adjustments, was recognized in the accounts in
June 2019. F-33


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  In September 2019,due to a final unappealable decision and
calculation of amounts, the amount of R$148 million (R$ 149 million in December
31, 2019), was recorded relating to TIM S.A.  For purposes of IRPJ and CSLL taxation, the Company’s
management, supported by the legal opinions of external counsels, decided to
defer it until the moment that the credit is financially available.Thus, a deferred tax liability was recorded regarding the full
amount of R$1,039.7 million.  Expectation of recovery of tax
credits  The estimates regarding the recovery of
tax assets were calculated taking into account the financial and business
assumptions available at the close of the tax year of 2019.  Based on these projections, the Company
expects to recover the credits as follows:  Deferred income tax and social
    contribution2020
    229,1512021
    275,4252022
    296,1352023
    -Tax losses and
      negative base
    800,711Temporary
      differences
    (848,445)Total
    (47,734)
  The subsidiary has set up deferred
income and social contribution tax credits on its total tax losses, negative
basis of social contribution and temporary differences, based on the history of
profitability and projected future taxable earnings.  The subsidiary used credits related to
tax losses carried forward and the negative basis of social contribution in the
amount of R$91,731for the period ended December 31, 2019 (R$85,812on December 31, 2018).  Unrecognized deferred tax
assets  Considering that TIM Participações S.A.
does not carry out activities that could generate taxable profits, deferred tax
credits arising from income tax and social contribution tax losses and temporary
differences, totaling R$125,876as at December 31, 2019 (R$107,092on December 31, 2018) were not recognized.    F-34


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 11.  Prepaid expenses 2019
    
    2018245,524
    
    346,441Advertising not released
      (1)
    854
    
    76,651Rentals and insurance
    75,809
    
    78,005Network Swap (2)
    ‐
    
    11,449Incremental costs for obtaining
      customer contracts (3)
    158,093
    
    173,056Others
    10,768
    
    7,280Current portion
    (175,868)
    
    (272,060)Non-current portion
    69,656
    
    74,381
  (1) Represents the early payment of
expenses from the advertising of TIM brand’s products and services, which were
recognized in income for the period during which the advertising was
broadcast.  (2) On April 1, 2010, the subsidiary TIM
S.A. and GVT entered into an onerous contract and a reciprocal agreement for the
assignment of fiber optic infrastructure (network swap), in order to expand
their respective areas of operation. Given the economic nature of the
transaction, the amount was recognized in the (current and non-current) prepaid
expenses and deferred revenue (current and non-current) and is amortized to
income according to the contract’s term. This contract is within the scope of
IFRS 16. Therefore, it was reclassified to right-of-use in leases under
property, plant and equipment, as shown in Note 2.f.  (3)This is mainly represented by incremental costs related to sales
commissions paid to sales agents in order to obtain customer contracts arising
from the adoption ofIFRS 15, which aredeferred to income according to the
term and/or economic benefit of the contract, which is usually two years.  12.  Judicial deposits  These are recorded at their historical costs and updated
according to the legislation in force:  2019
    
    20181,006,899
    
    1,345,113Civil
    355,093
    
    334,028Labor
    245,928
    
    492,000Tributary
    203,110
    
    299,310Regulatory
    111
    
    111Online attachment (*)
    202,657
    
    219,664
  (*) Refers to blocked judicial deposits
directly on the Company ́s bank accounts and financial investments related to
certain judicial proceedings. This amount is analyzed periodically and, when
identified, is reclassified to one of the other specific accounts of judicial
deposits.   F-35


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Civil  These are court deposits to guarantee
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 of consumer rights, among others.  There are some legal proceedings
challenging the amounts fixed by ANATEL to leave certain transmission sub-bands
to allow the implementation of 4G technology. In this case, the updated court
deposit amounted to R$69,326(R$66,700as at December 31, 2018).  Labor  These are amounts deposited in court as
guarantees for the execution and the filing of appropriate appeals, where the
relevant matters or amounts involved are still being discussed. The total amount
has been allocated between the various claims filed by registered employees and
third-party service providers.  The reduction is substantially due to
the closure of several court cases offset by the corresponding court
deposits.  Tax The Company and its
subsidiary have made court deposits related to various current tax court
proceedings. These deposits refer mainly to the following matters: (i)
    Use of credit for the purchase of electricity used
      directly by the companies for production purposes. The court is likely to
      give a favorable judgment. The current value of these deposits is
      R$73,326(R$74,358asat December 31, 2018).(ii)
    Liability for CPMF on the Company’s capitalization of
      loans; recognition of the right not to pay contributions allegedly due on
      mere changes in the ownership of current accounts as a result of a
      takeover. The current value of these deposits is R$10,342 (R$10,026 as at
      December 31, 2018).(iii)
    Constitutionality of the collection of the Operations
      Monitoring Charge (“TFF”) by a number of municipal authorities. The
      current value of these deposits is R$18,401(R$16,719as at December 31, 2018).(iv)
    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. The current value of these deposits
      is R$11,173(R$10,868as at December 31, 2018).(v)
    Liability for ISS (Tax on Services) on import services and
      outsourced services; alleged failure to pay for land clearance and Base
      Transceiver Station (“BTS”) maintenance services, for ISS on the Company’s
      services and for ISS on co-billing services and software licensing
      (Blackberry). The Company ́s right is to take advantage of the benefit of
      spontaneous declaration in order to reverse confiscatory fines for late
      payment. The current value of these deposits is R$7,878(R$7,519as at December 31,
2018).
  F-36


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (vi)
    Ancillary services provided for in ICMS Agreement 69/98
      related to ICMS levied on amounts related to communications services
      charged for access, subscription, activation, habilitation availability,
      subscription and use of services, among others. The current value of these
      deposits is R$3,457(R$4,793as at December 31, 2018).(vii)
    Requirement by ANATEL of the Public Price Referring to the
      Administration of Numbering Resources. The current value of these deposits
      is R$3,471 (R$3,380 as at December 31, 2018).(viii)
    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
      interconnection and Industrial Exploration of Dedicated Line (“EILD”)
      revenue, 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$57,943(R$56,088 as at December 31,
  2018).
   13   Property, plant and
equipment  Property, plant and equipment are stated
at 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. At December 31, 2019 and
2018 the Company has no indication of impairment in its fixed assets.  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
the liability “provision for future asset retirement”. Interest incurred on
updating the provision is classified within financial expenses.  Gains and losses on disposal are
determined by comparing the amounts of these disposals with the carrying values
at the time of the transaction and are recognized in “other operating expenses
(revenue), net” in the statement of income.  F-37


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 (a)Changes in
property, plant and equipment  Balance
      for Dec/18
    Adoption of IFRS 16
    Additions
    Disposals
    Transfers
    Other
      changes(*)
    Balance
      for Dec/19Total cost of
      property, plant and equipment, gross
    33,832,803
    5,256,114
    4,855,684
    (183,384)
    -
    (408,118)
    43,353,099Commutation/transmission
    equipment
    20,806,249
    ‐
    17,662
    (133,789)
    2,121,907
    -
    22,812,029Fiber optic cables
    762,175
    ‐
    ‐
    ‐
    51,414
    -
    813,589Leased handsets
    2,313,945
    ‐
    519
    (20,194)
    195,725
    -
    2,489,995Infrastructure (i)
    6,133,810
    ‐
    ‐
    (18,684)
    294,851
    (313,130)
    6,096,847Informatics assets
    1,679,328
    ‐
    ‐
    (9,366)
    51,289
    -
    1,721,251General use assets
    796,839
    ‐
    ‐
    (623)
    63,289
    -
    859,505Rights-of-use in leases (ii) (Note
      2.f)
    ‐
    5,256,114
    1,772,290
    ‐
    -
    (94,988)
    6,933,416Land
    40,794
    ‐
    ‐
    ‐
    ‐
    -
    40,794Construction
      in progress
    1,299,663
    ‐
    3,065,213
    (728)
    (2,778,475)
    -
    1,585,673Total of Accumulated
      depreciation
    (22,629,181)
    ‐
    (3,262,726)
    150,972
    ‐
    -
    (25,740,935)Commutation/transmission equipment
    (14,936,069)
    ‐
    (1,577,490)
    129,998
    ‐
    -
    (16,383,561)Fiber optic
      cables
    (345,532)
    ‐
    (65,035)
    ‐
    ‐
    -
    (410,567)Leased
      handsets
    (2,132,227)
    ‐
    (131,341)
    6,705
    ‐
    -
    (2,256,863)Infrastructure
      (i)
    (3,157,890)
    ‐
    (440,224)
    4,281
    ‐
    -
    (3,593,833)Informatics
      assets
    (1,512,114)
    ‐
    (62,561)
    9,366
    ‐
    -
    (1,565,309)General use
      assets
    (545,349)
    ‐
    (45,931)
    622
    ‐
    -
    (590,658)Right-of-use in leases (ii) (Note 2.f)
    ‐
    ‐
    (940,144)
    ‐
    ‐
    -
    (940,144)Total property, plant
      and equipment, net
    11,203,622
    5,256,114
    1,592,958
    (32,412)
    -
    (408,118)
    17,612,164Commutation/transmission equipment
    5,870,180
    ‐
    (1,559,828)
    (3,791)
    2,121,907
    -
    6,428,468Fiber optic
      cables
    416,643
    ‐
    (65,035)
    ‐
    51,414
    -
    403,022Leased
      handsets
    181,718
    ‐
    (130,822)
    (13,489)
    195,725
    -
    233,132Infrastructure
      (i)
    2,975,920
    ‐
    (440,224)
    (14,403)
    294,851
    (313,130)
    2,503,014Informatics
      assets
    167,214
    ‐
    (62,561)
    ‐
    51,289
    -
    155,942General use
      assets
    251,490
    ‐
    (45,931)
    (1)
    63,289
    -
    268,847Rights-of-use
      in leases (ii) (Note 2.f)
    ‐
    5,256,114
    832,146
    ‐
    -
    (94,988)
    5,993,272Land
    40,794
    ‐
    ‐
    ‐
    ‐
    -
    40,794Construction
      in progress
    1,299,663
    ‐
    3,065,213
    (728)
    (2,778,475)
    -
    1,585,673
    F-38


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Balance for
      Dec/17
    Additions/
      Depreciation
    Disposals
    Transfers
    Balance for
      Dec/18Total cost of property, plant and
      equipment, gross
    31,166,905
    2,746,039
    (80,141)
    ‐
    33,832,803Commutation/transmission equipment
    18,766,840
    8,974
    (48,203)
    2,078,638
    20,806,249Fiber optic cables
    683,971
    20
    ‐
    78,184
    762,175Leased handsets
    2,181,630
    ‐
    (15,675)
    147,990
    2,313,945Infrastructure
    5,652,840
    678
    (4,562)
    484,854
    6,133,810Informatics assets
    1,615,325
    9
    (9,511)
    73,505
    1,679,328General use assets
    739,439
    286
    (2,018)
    59,132
    796,839Land
    40,794
    ‐
    ‐
    ‐
    40,794Construction in progress
    1,486,066
    2,736,072
    (172)
    (2,922,303)
    1,299,663‐Total Accumulated
      depreciation
    (20,328,417)
    (2,371,362)
    70,598
    ‐
    (22,629,181)Commutation/transmission equipment
    (13,373,003)
    (1,610,326)
    47,260
    ‐
    (14,936,069)Fiber optic cables
    (290,699)
    (54,833)
    ‐
    ‐
    (345,532)Leased handsets
    (2,016,018)
    (124,709)
    8,500
    ‐
    (2,132,227)Infrastructure
    (2,697,878)
    (463,856)
    3,844
    ‐
    (3,157,890)Informatics assets
    (1,448,694)
    (72,885)
    9,465
    ‐
    (1,512,114)General use assets
    (502,125)
    (44,753)
    1,529
    ‐
    (545,349)Total property, plant and
      equipment, net
    10,838,488
    374,677
    (9,543)
    ‐
    11,203,622Commutation/transmission equipment
    5,393,837
    (1,601,352)
    (943)
    2,078,638
    5,870,180Fiber optic cables
    393,272
    (54,813)
    ‐
    78,184
    416,643Leased handsets
    165,612
    (124,709)
    (7,175)
    147,990
    181,718Infrastructure
    2,954,962
    (463,178)
    (718)
    484,854
    2,975,920Informatics assets
    166,631
    (72,876)
    (46)
    73,505
    167,214General use assets
    237,314
    (44,467)
    (489)
    59,132
    251,490Land
    40,794
    ‐
    ‐
    ‐
    40,794Construction in progress
    1,486,066
    2,736,072
    (172)
    (2,922,303)
    1,299,663
  The construction in progress represent
the cost of projects in progress related to the construction of networks and/or
other tangible assets in the period of their construction and installation,
until the moment they come into operation, when they will be transferred to the
corresponding accounts of these assets.  (*) Other changes include:  (i)
    In 2019, the "Sale of Towers (leaseback)" lease had its
      value remeasured for better alignment with the methodology of the new IFRS
      16, based on paragraph C11 of this new pronouncement and removed the
      projected inflation component on future receipts, in the amount of R$
      313,130.(ii)
    In the fourth quarter of 2019, the Company implemented a
      new tool that allowed Management to control and calculate in an automated
      manner the accounting effects arising from lease agreements. Through this
      new tool, it was possible to identify adjustments in the amount of
      R$94,988 of these assets (note 2).
    F-39


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Lease operation -
      network
    Lease operation -
      vehicles
    Lease operation – Stores
      & kiosks
    Lease operation -
      Property
    Lease operation – Land
      (Network)
    TotalBalances as at January 01, 2019
    2,625,145
    6,792
    375,286
    1,540,685
    708,206
    5,256,114Additions in the period, net of cancellation
    928,682
    5,045
    191,597
    322,067
    324,899
    1,772,290Remensuration
    5,841
    (500)
    5,895
    (138,967)
    32,743
    (94,988)Depreciation
    (387,526)
    (4,349)
    (93,306)
    (183,872)
    (271,091)
    (940,144)Balances as at December 31, 2019
    3,172,142
    6,988
    479,472
    1,539,913
    794,757
    5,993,272Useful Life - %
    10.98
    44.81
    21.04
    11.97
    31.25
  In the fourth quarter of 2019, the
Company implemented a new tool that allowed Management to control and calculate
in an automated manner the accounting effects arising from lease agreements.
Therefore, this new tool allowed Management to make individualized calculations,
both in relation to the measurement of the effects of assets and liabilities of
leases, and also in relation to the monthly calculation of depreciation and
interest that affect the result, which prior to the implementation of this new
tool were made considering an average depreciation term and discount rate for
each asset class (for example: land and infrastructure sharing).  Therefore, through this new tool, it was
possible to re-measure the depreciation and amortization accounts, financial
income (expenses) and, consequently, income tax and social contribution
resulting from the individualized calculations that were made.  (b)Depreciation rates  Annual Rate
      %Commutation/transmission equipment
    
    8 to
  14.29Fiber optic cables
    
    4 to 10Leased assets
    
    14.28 to
  50Infrastructure
    
    4 to 20Informatic assets
    
    10 to
    20General use assets
    
    10 to
20
  In 2019, pursuant to IAS 16, approved by
a CVM Deliberation, the Company and its subsidiaries assessed the useful life
estimates for their property, plant and equipment, concluding that there were no
significant changes or alterations to the circumstances on which the estimates
were based that would justify changes to the useful lives currently in use.   F-40


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 14.  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) the purchase of the right to use the infrastructure of other
companies, and (ii) goodwill on expectation of future profits in purchases of
companies.  Amortization charges are calculated
using the straight-line method over the estimated useful life of the assets
contracted and over the terms of the authorizations. The useful life estimates
of intangible assets are reviewed regularly.  Any financial charges on funds raised
(that is, without a specific destination) and used to obtain a qualifying asset,
meaning an asset that requires 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 to the entity and such costs can be accurately
measured. These costs are amortized throughout the estimated useful lives of the
assets. As at December 31, 2019 and 2018, the Company has no indication of
impairment in its intangible assets of defined and indefinite useful
life.  The amounts of the SMP authorizations
and rights to use radio frequencies, as well as software, goodwill and other
items, were recorded as follows:  (a)Changes in intangibles  Balance for
      Dec/18
    Additions/
      Amortization
    Transfers
    Other
      Changes (g)
    Balance for
      Dec/19Total cost of
      intangible assets, gross
    29,366,779
    961,213
    ‐
    (98,633)
    30,229,359Right to use
      software
    17,142,641
    ‐
    1,041,741
    ‐
    18,184,382Authorizations
    7,638,970
    26,968
    2,255,625
    (109,770)
    9,811,793Goodwill
    1,527,219
    ‐
    ‐
    ‐
    1,527,219Right to use
      infrastructure - LT Amazonas
    198,202
    ‐
    ‐
    (28,874)
    169,328Other
      assets
    307,654
    ‐
    19,708
    ‐
    327,362Intangible
      assets under development
    2,552,093
    934,245
    (3,317,074)
    40,011
    209,275Accumulated
      amortization
    (18,684,775)
    (1,876,258)
    ‐
    ‐
    (20,561,033)Right to use
      software
    (13,681,086)
    (1,412,080)
    ‐
    ‐
    (15,093,166)Authorizations
    (4,845,642)
    (432,771)
    ‐
    ‐
    (5,278,413)Right to use
      infrastructure - LT Amazonas
    (52,441)
    (7,763)
    ‐
    ‐
    (60,204)Other
      assets
    (105,606)
    (23,644)
    ‐
    ‐
    (129,250)Total intangible
      assets, net
    10,682,004
    (915,045)
    ‐
    (98,633)
    9,668,326Right to use
      software (c)
    3,461,555
    (1,412,080)
    1,041,741
    ‐
    3,091,216Authorizations
    2,793,328
    (405,803)
    2,255,625
    (109,770)
    4,533,380Goodwill
      (d)
    1,527,219
    ‐
    ‐
    ‐
    1,527,219Right to use
      infrastructure - LT Amazonas (e)
    145,761
    (7,763)
    ‐
    (28,874)
    109,124Other
      assets
    202,048
    (23,644)
    19,708
    ‐
    198,112Intangible
      assets under development (f)
    2,552,093
    934,245
    (3,317,074)
    40,011
    209,275
   F-41


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Balance
      Dec/17
    Additions/
      Amortization
    Transfers
    Disposals
    Capitalized
      interest
    Balance for
      Dec/18Total cost of intangible assets,
      gross
    28,549,552
    1,139,993
    (479,811)
    (1,270)
    158,315
    29,366,779Right to use software
    15,957,808
    ‐
    1,186,103
    (1,270)
    ‐
    17,142,641Authorizations
    6,391,394
    94,148
    1,153,428
    ‐
    ‐
    7,638,970Goodwill
    1,527,219
    ‐
    ‐
    ‐
    ‐
    1,527,219Costs with commissions to deferred sales
      representatives
    384,455
    ‐
    (384,455)
    ‐
    ‐
    ‐List of clients
    95,200
    ‐
    (95,200)
    -
    -
    ‐Right to use infrastructure - LT Amazonas
    198,202
    ‐
    ‐
    ‐
    ‐
    198,202Other assets
    270,687
    ‐
    36,967
    ‐
    ‐
    307,654Intangible assets under development
    3,724,587
    1,045,845
    (2,376,654)
    ‐
    158,315
    2,552,093Accumulated amortization
    (17,237,025)
    (1,799,914)
    350,894
    1,270
    ‐
    (18,684,775)Right to use software
    (12,265,391)
    (1,416,965)
    ‐
    1,270
    ‐
    (13,681,086)Authorizations
    (4,497,758)
    (347,884)
    ‐
    ‐
    ‐
    (4,845,642)Costs with commissions to deferred sales
      representatives
    (255,694)
    ‐
    255,694
    ‐
    ‐
    ‐List of clients
    (95,200)
    
    95,200
    -
    -
    ‐Right to use infrastructure - LT Amazonas
    (42,531)
    (9,910)
    ‐
    ‐
    ‐
    (52,441)Other assets
    (80,451)
    (25,155)
    ‐
    ‐
    ‐
    (105,606)Total intangible assets, net
    11,312,527
    (659,921)
    (128,917)
    ‐
    158,315
    10,682,004Right to use
      software (c)
    3,692,417
    (1,416,965)
    1,186,103
    ‐
    ‐
    3,461,555Authorizations
    1,893,636
    (253,736)
    1,153,428
    ‐
    ‐
    2,793,328Goodwill (d)
    1,527,219
    ‐
    ‐
    ‐
    ‐
    1,527,219Costs with commissions to deferred sales
      representatives (Note 11.3)
    128,761
    ‐
    (128,761)
    ‐
    ‐
    ‐Right to use infrastructure - LT Amazonas
(e)
    155,671
    (9,910)
    ‐
    ‐
    ‐
    145,761Other assets
    190,236
    (25,155)
    36,967
    ‐
    ‐
    202,048Intangible assets under development
      (f)
    3,724,587
    1,045,845
    (2,376,654)
    ‐
    158,315
    2,552,093
  Intangible assets under development
represents the cost of projects in progress related to the acquisition of 4G
authorizations and/or other intangible assets during the period of their
construction and installation, up to the moment when they enter into operation,
where they will be transferred to the corresponding accounts for these assets.
In addition, these intangible assets were assessed for impairment as at December
31, 2019 and 2018, with no necessary adjustment.  (b)Amortization rates  Annual rate
      %Right to use software
    20Authorizations
    5 to 50Right to use infrastructure
    5Other assets
    7 to
  10
   F-42


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 (c)Right to use software  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 controlled by the Group are recognized as
intangible assets when all 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 subsidiary have the
following goodwill based on expectations of future profitability as at December
31, 2019 and 2018:  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 based on the subsidiary’s expected
profitability. The recoverability of goodwill is tested annually through
impairment testing.  Goodwill from TIM Fiber SP and TIM Fiber
RJ acquisitions- At the end of 2011, the subsidiary acquired 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 in 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 the subsidiary TIM S.A. on August 29, 2012.  The subsidiary recorded the goodwill
allocation related to the purchase of the companies TIM Fiber SP and TIM Fiber
RJ, at the end of the purchase price allocation process, in the amount of
R$1,159,648.  Goodwill from 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 toR$157,556.  Impairment
test  As required by the accounting standards, the Company tests
goodwill on business combinations involving TIM Group companies annually for
impairment, and the methods and assumptions used by Management in the impairment
testing of goodwill mentioned above are summarized below:  The Company’s Management understands that the smaller cash
generating units, for the purposes of testing the impairment of goodwill on the
purchase of the aforementioned companies, refer to the business at a
consolidated level, and therefore should be assessed at the level of TIM
Participações. This methodology is aligned with the strategic direction of the
Company and its subsidiary.  F-43


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 In 2019 the impairment test was
performed comparing the carrying amount with the fair value less the costs of
disposal of the asset, as provided in IAS 36.  The fair value calculation considered
the hierarchy level within which the fair value measurement of the asset (cash
generating unit) is classified. For TIM Participações as there is only one CGU
this was classified in its entirety as Level 1, for the disposal costs we
consider that it is irrelevant considering the variation between the fair value
level 1 and the carrying amount of the cash generating unit.  The fair value of Level 1 instruments
comprises instruments traded in active markets and based on quoted market prices
at the balance sheet date. A market is viewed as active if quoted prices are
readily and regularly available from an exchange, distributor, broker, industry
group, pricing service or regulatory agency, and those prices represent actual
and regularly occurring market transactions on a purely commercial
basis.  In the case of TIM Participações, its
securities are traded on BOVESPA with a code (TIMP3) and have a regular trading
volume that allows the measurement (Level 1) as the product between the quoted
price for the individual asset or liability and the quantity held by the
entity.  The measurement was made based on the
share value on the balance sheet date and sensitivity tests were also performed
and in none of the scenarios was identified any indication of impairment, with
the fair value being higher than the carrying amount. Therefore, as the fair
value is higher than the carrying amount, it is not necessary to calculate the
value in use.  (e)Infrastructure use rights - LT
Amazonas  The subsidiary signed agreements for the
right to use the infrastructure of companies that operate electric power
transmission lines in Northern Brazil. Such agreements fell within the scope of
IFRIC 4 and are classified as financial leases.  Additionally, the subsidiary entered
into network infrastructure sharing contracts with Telefônica Brasil S.A. also
in the Northern region. In these contracts, both operators optimize resources
and reduce their operational costs (Note 15).  (f)Auction and payment of 4G License 700 MHz In 2018 the
Intangible assets in progress are substantially represented by costs for the
development of 4G technology, which included: (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, the subsidiary purchased Lot 2 in
      the Auction of the 700 MHz band in the amount of R$1,739 million. In
      December 2014, the Company made the payment of R$ 1,678 million, recording
      the remaining balance payable in the amount of R$ 61 million as a
      liability (note 18), as provided for in the announcement.The subsidiary is challenging the remaining balance with
      Anatel, which is subject to interest rates of 1% p.m. and monetary
      adjustment at the IGP-DI. These amounts are capitalized by the Company.
      The impact for the tax year ended December 31, 2019 was R$1,636(R$5,611on December 31, 2018) of interest and R$735(R$5,930on December 31, 2018) of monetary
      adjustments.
  F-44


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (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 in relation to the
      cleaning of the 700 MHZ frequency of the lot purchased was R$904 million.
      The Company also had an additional cost of R$295 million related to the
      portion that has not been bought in the auction, and that was subsequently
      split by ANATEL among the companies that won the auction, totaling R$1,199
      million.In order to perform the spectrum cleaning activities, in
      March 2015 TIM, together with other companies that won the auction, have
      constituted aRedistribution
      and Digitalization Management Entity for TV and RTV Channels, named
      “Entidade Administradora da Digitalização", or "EAD”. From 2015
      to 2018, TIM, along with the other companies that won the auction, will
      disburse amounts in accordance with the schedule provided for in the
      public notice to cover the EAD costs related to these cleaning activities.
      Because the amount payable of R$1,199 million relates to a long-term
      obligation, it was reduced by R$47 million through an adjustment to Net
      Present Value (“NPV”).
      The Company made the payments as at April 9, 2015, January
      26, 2017 and January 16, 2018 in the amounts of R$370,379, R$858,991 and
      R$142,862, respectively.
  The license mentioned above relates to
the concept of a qualifying asset. Consequently, the finance charges on funds
raised without a specific destination, used for the purpose of obtaining a
qualifying asset, are capitalized at the average rate of 6.90 % per annum in
connection with the borrowing and financing in force during the tax year. The
amount capitalized during the tax year ended December 31, 2019 was
R$38,375(R$152,480as at December 31, 2018).  In September 2019, the assets were
considered in operation by Management and from this date on, the capitalization
of interest and charges on this asset was closed  (g)Other changes  “Other changes” include:  (i)
    the remeasurement of amounts of authorizations in
      accordance with Anatel Resolution 695/18in the amount of
      R$109,770;(ii)
    interest capitalized as a result of the acquisition of the
      4G license, in accordance with IAS 23 in the amount of R$40,011, since the
      respective license is an asset that qualifies for interest
      capitalization.(iii)
    In 2019, the item "Right to use infrastructure - LT
      Amazonas", had its value remeasured for better alignment with the
      methodology of the new IFRS 16, removing the projected inflation component on
      future receipts, in the amount of
R$28,874.
    F-45


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  15   Financiale leases  Leases in which the Company, as the
lessee, substantially holds 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 leases is
taken to income as financial costs over the term of the contract.  The subsidiary 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 lease of the same asset by
the purchaser to the seller.  The subsidiary recognized a liability
corresponding to the present value of the compulsory minimum installments under
the agreement.  Leases in which the Company, as lessor,
substantially transfers the risks and benefits of the ownership to the other
party (the lessee) are classified as financial leases. These lease values are
transferred from the intangible assets of the Company and are recognized as a
lease receivable at the lower of the fair value of the leased item and/or the
present value of the receipts provided for in the agreement. Interest related to
the lease is taken to income as financial income over the contractual
term.  Asset leases are financial assets
registered and/or measured at amortized cost.  Assets  2019
    
    2018LT Amazonas
    
    156,378
    
    208,049156,378
    
    208,049Current portion
    
    (4,931)
    
    (22,491)Non-current portion
    
    151,447
    
    185,558
  LT Amazonas  As a result of the agreement entered
into with LT Amazonas, the subsidiary entered into network infrastructure
sharing agreements with Telefônica Brasil S.A. Under these agreements, the
subsidiary and Telefônica Brasil S.A. make joint 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 by IPC-A (Price Index Rate). The consolidated nominal
amount of future installments receivable by the subsidiary is R$316,641 (R$499,823 on December 31, 2018).  The table below includes the schedule of
cash receipts for the agreement currently in force. The amounts represent the
cash receipts estimated inthe signed agreements and are
stated at their nominal amounts. It is worthwhile noting that these balances
differ from those shown in the books since, in the case of the latter, the
amounts are shown at their present value: F-46


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Nominal
      amount
    
    Present
      ValueJanuary 2020 to December 2020
    
    23,206
    
    4,931January 2021 to December 2024
    
    92,826
    
    58,081January 2025 onwards
    
    200,609
    
    93,366316,641
    
    156,378
  The present value of installments
receivable is R$156,378(R$208,049asat December 31, 2018), consisting entirely of principal and
estimated as at the date of execution of agreements entered into with the
transmission companies, projecting future cash receipts discounted at 12.56% per
annum. In 2019, its value was reassessed to better align it with the methodology
of the new standard IFRS 16, removing the component of projected inflation on
future income, in the amount of R$ 48,991.  Regarding the values​​present in the leases, this is
represented by the principal amount without any projection of financial
charges.  Liabilities 2019
    
    2018LT Amazonas (i)
    
    276,233
    
    359,987Sale of towers (leaseback) (ii)
    
    1,192,596
    
    1,501,695Other (iv)
    
    115,973
    
    78,392Subtotal
    
    1,584,802
    
    1,940,074Other lease operations (Note 2.f) and
      (iii):
    
    
    
    -Lease– Network
    
    3,294,261
    
    -Lease – Vehicles
    
    3,005
    
    -Lease – Stores and kiosks
    
    255,857
    
    -Lease - Properties
    
    243,921
    
    -Lease - Land
    (network)
    
    1,600,456
    
    -Lease – Fiber
    
    798,568
    
    -Subtotal (IFRS 16)
    
    6,196,068
    
    -Total
    
    7,780,870
    
    1,940,074Current portion
    
    (873,068)
    
    (205,048)Non-current portion
    
    6,907,802
    
    1,735,026
  Interest paid in the period ended
December 31, 2019 regardingIFRS16 amounted to R$592,323.  Changes to the financial liabilities of
lease operations are shown in Note 36.  i) LT Amazonas  The subsidiary executed agreements for
the right to use the infrastructure of companies that operate electric power
transmission lines in Northern Brazil (“LT Amazonas”). The terms of these
agreements are for 20 years,counted from the date on
which the assets are ready to operate. The contracts provide for monthly
payments to the electric power transmission companies, restated annually at the
IPCA. F-47


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The table below presents the future
payment schedule for the agreements in force. These amounts represent the
estimated disbursements under the agreements executed with distributors and are
shown at their nominal amounts. These balances differ from those shown in the
books since, in the case of the latter, the amounts are shown at present
value:  Nominal amount
    
    Present valueJanuary 2020 to December 2020
    
    44,079
    
    8,451January 2021 to December 2024
    
    176,315
    
    103,464January 2025 onwards
    
    381,161
    
    164,318601,555
    
    276,233
  The consolidated nominal value of future
installments due from the Company is R$601,555. Its present value is R$276,233, composed entirely of principal and was estimated on 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 right to use balance of LT Amazonas also includes R$70,759
related to investments in property, plant and equipment made by the Company and
subsequently donated to the electric power transmission companies. These
donations are already included in the contract signed by the parties. In 2019,
its value was reassessed according to the IFRS 16 calculation methodology,
removing the component of projected inflation on future payments and maintaining
the original discount rate for calculating present value.  Regarding the values​​present in the leases, this is
represented by the principal amount without any projection of financial
charges.  ii)Sale and leaseback of
Towers  The subsidiary 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 an amount of approximately R$3 billion, and a Master
Lease Agreement (“MLA”) for part of the 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 provide for the towers to
be transferred in tranches to ATC, due to the need to meet certain conditions
precedent.  In total, 5,873 transfers of towers
occurred, being 54, 336 and 5,483 in the years 2017, 2016 and 2015,
respectively. This transaction resulted in a sales amount of R$2,651,247, of
which R$1,088,390 was booked as deferred revenue and will be amortized over the
period of the contract (Note 22).  The discount rate used in the
transaction was determined on the basis of observable market transactions that
the Company (the lessee) would have to pay under a similar lease or loan, as
mentioned below.  The table below includes the schedule of
payments of the agreement in force in relation to the MLA. The amounts represent
the disbursements estimated in the agreement signed with ATC, stated at their
nominal amounts. Itshould be noted that these
balances differ from those shown in the books since, in the case of the latter,
the amounts are shown at their present values: F-48


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Nominal amount
    
    Present valueJanuary 2020 to December 2020
    
    187,720
    
    32,734January 2021 to December 2024
    
    750,881
    
    449,470January 2025 onwards
    
    1,991,762
    
    710,3922,930,363
    
    1,192,596
  The consolidated nominal amount of the
sum of future installments payable by the subsidiary is R$2,930,363. The present value is R$1,192,596, consisting entirely of principal. The present value was
estimated by projecting future payments discounted at the discount rates used on
the transaction date, ranging from 11.01% to 17.08% per annum, and which were
determined on the basis of observable market transactions that the Company (the
lessee) would have to pay under a similar lease and/or loan. In 2019, its value
was reassessed according to the IFRS 16 calculation methodology, removing the
component of projected inflation on future payments and maintaining the original
discount rate for calculating present value.  Regarding the values​​present in the leases, this is
represented by the principal amount without any projection of financial
charges.  (iii)Other lease operations  In addition to the lease operations
mentioned above, the Company also has lease agreements that qualify within the
scope of IFRS16.  The following table shows the payment
schedule of those agreements in effect. The amounts represent the estimated
disbursements within the agreements signed and are shown at their face value.
The balances differ from those shown in the books, since in the latter case the
amounts are shown at present value:  Up to December 2020
    January 2021 to December 2024
    January 2025 onwards
    Nominal
      amount
    Present valuesTotal other lease operations
    1,388,262
    4,284,210
    3,617,001
    9,289,474
    6,196,068Lease operation - network
    623,670
    2,291,331
    2,059,339
    4.974341
    3,294,261Lease operation - vehicles
    5,039
    2,848
    -
    7,886
    3,005Lease operation – Stores & kiosks
    82,958
    174,338
    52,426
    309,721
    255,857Lease operation - Property
    51,317
    176,575
    156,560
    384,452
    243,921Lease operation – Land (Network)
    298,389
    1,035,594
    1,348,676
    2,682,660
    1,600,456Lease operation – Fiber
    326,889
    603,524
    -
    930,414
    798,568
  The present value, principal and
interest as at December 31, 2019 for the agreements above, was estimated on a
monthly basis, based on the average incremental rate of the Company’s loans,
namely 10.55%.  Lease amounts considered low, or lower
than 12 months, recognized in rental expenses amounted to R$82,110 on December
31, 2019.  F-49


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 (iv)Substantially represented by the
financial leases of transmission towers.   16. Regulatory credits recoverable  These refer to Fistel credit amounts
arising from the reduction of the client base, which may be offset by future
changes in the base, or used to reduce future obligations, and are expected to
be used toward settlement of the TFF payable to Fistel annually in the month of
March.  On December 31, 2019 this credit are up to R$ 33,090
(R$41,612 on December 31,
2018).    F-50


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 17.  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 practice they are usually
recognized at the invoice value.  2019
    
    20183,923,035
    
    4,323,374Local currency
    
    3,769,298
    
    4,158,599Suppliers of materials and services
      (a)
    
    3,667,152
    
    4,027,092Interconnection (b)
    
    67,396
    
    98,060Roaming (c)
    
    441
    
    162Co-billing (d)
    
    34,309
    
    33,285Foreign currency
    
    153,737
    
    164,775Suppliers of materials and services
      (a)
    
    116,057
    
    137,397Roaming (c)
    
    37,680
    
    27,378Current portion
    
    3,923,035
    
    4,323,374
  (a) Represent
the amounts to be paid to suppliers for acquisitions of materials and for the
provision of services relating to tangible and intangible assets or for
consumption in 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 area, who are therefore
considered visitors to other operator networks.  (d) This refers to calls made by a
customer who has used another long-distance operator.  18.  Authorizations payable  As at December 31, 2019, the Company and
its subsidiary had the following commitments to ANATEL: 2019
    
    2018Renewal of authorizations (i)
    199,363
    
    300,253Updated ANATEL liability (ii)
    126,974
    
    113,547326,337
    
    413,800Current portion
    (88,614)
    
    (65,464)Non-current portion
    237,723
    
    348,336
 F-51


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (i)
    In order to provide SMP services, the company obtained
      radio frequency authorizations for a fixed period, renewable for a further
      15 years. The extension of the right-of-use includes the payment of 2% of
      the net revenue recorded in the regions covered by the authorization that
      ends every two years. As at December 31, 2019, the subsidiary had balance
      due related to the renewal of authorizations in the amount of
      R$199,363(R$300,253as at December 31, 2018).(ii)
    On December 05, 2014 the subsidiary signed an
      Authorization Instrument for the 700 MHz band and paid an amount
      equivalent to R$1,678 million, recording the remaining balance of R$61
      million as a trade liability, according to the payment method provided for
      in the call notice. Due to the absence of bids for some lots in the Call
      Notice for the 700 MHZ band, the subsidiary, along with other bidders, had
      to bear a proportion of the costs of these lots. Thus, the EAD was
      organized, with respect to which the total commitment assumed by the
      subsidiary was R$1,199 million. This amount was paid in four installments
      adjusted by the IGP-DI (Daily General Price Index) (Note 14.f).
      As at June 30, 2015, the subsidiary filed a lawsuit
      challenging a surplus charge of R$61 million (R$127 million as at December
      31, 2019), which is still pending
trial.
  The authorizations held on a primary
basis by TIM S.A. as at December 31, 2019, as well as their maturity dates, are
detailed below:  Maturity
      dateAuthorization instruments
    450
MHz
    800 MHz,
      900 MHz
      and
      1,800
    MHz
    Additional
      frequencies
      1,800
    MHz
    1,900 MHz
      and
      2,100 MHz
      (3G)
    2,500 MHz
      V1 Band
      (4G)
    2,500 MHz
      (P** Band
      (4G)
    700 MHz
      (4G)Amapá, Roraima, Pará, Amazonas and Maranhão
    -
    March, 2031*
    April, 2023
    April, 2023
    October, 2027
    Part
      of AR92 (PA) – February, 2024*
    December, 2029Rio de Janeiro and Espírito Santo
    October, 2027
    March, 2031*
    ES -
      April, 2023
    April, 2023
    October, 2027
    Part
      of AR21 (RJ) – February, 2024*
    December, 2029Acre, Rondônia,
      Mato Grosso, Mato Grosso do Sul, Tocantins, Distrito Federal, Goiás, Rio
      Grande do Sul (except the municipality of Pelotas and region) and the
      municipalities of Londrina and Tamarana, in Paraná
    PR -
      October, 2027
    March, 2031*
    April, 2023
    April, 2023
    October, 2027
    Part
      of AR61 (DF) – February, 2024*
    December, 2029São
      Paulo
    -
    March, 2031*
    Countryside - April, 2023
    April, 2023
    October, 2027
    -
    December, 2029Paraná (except
      the municipalities of Londrina and Tamarana)
    October, 2027
    September, 2022*
    April, 2023
    April, 2023
    October, 2027
    AR41,
      except Curitiba and Metropolitan Region - February, 2024*
      AR41,
      Curitiba and Metropolitan Region - July, 2031
    December,
    2029Santa
      Catarina
    October, 2027
    September, 2023*
    April, 2023
    April, 2023
    October, 2027
    -
    December,
    2029Municipality and
      region of Pelotas, in the State of Rio Grande do Sul
    -
    April, 2024*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Pernambuco
    -
    May,
      2024*
    -
    April, 2023
    October, 2027
    Part of AR81-July,
      2031
    December,
    2029Ceará
    -
    November, 2023*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Paraíba
    -
    December, 2023*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Rio Grande do
      Norte
    -
    December, 2023*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Alagoas
    -
    December, 2023*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Piauí
    -
    March, 2024*
    -
    April, 2023
    October, 2027
    -
    December,
    2029Minas Gerais
      (except the municipalities of the PGO sector 3 for 3G the radio
      frequencies and others)
    -
    April, 2028*
    April, 2023
    April, 2023
    October, 2027
    Part
      of AR31 - February, 2030*
    December,
    2029Bahia and
      Sergipe
    -
    August, 2027*
    -
    April, 2023
    October, 2027
    -
    December,
    2029
  *Agreements already renewed for 15 years,
and therefore TIM is not entitled to a further renewal period. ** Only complementary areas in some specific States. F-52


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  19. Borrowing and financing  These are recorded as financial
liabilities measured at amortized cost, being represented by non-derivative
financial liabilities that are not usually traded before maturity.  They are initially recognized at fair
value, and subsequently measured based on the effective interest rate method.
The appropriation of financial expenses based on the effective interest rate
method is recorded in income, under financial expenses.  Description
    Currency
    Charges
    Maturity
    Dec/2019
    Dec/2018BNDES (1)
    URTJLP
    TJLP to TJLP + 2,52 %
      p.a.
    Jul/22
    240,008
    578,312BNDES (1)
    UM143
    SELIC + 2.52%
      p.a.
    Jul/22
    374,461
    489,421BNDES (PSI) (1)
    R$
    3.50%p.a.
    Jan/21
    18,071
    56,804KFW (2)
    USD
    Libor 6M+ 1.35%
      p.a.
    Apr/19
    -
    43,420KFW Finnvera (2)
    USD
    Libor 6M+ 0.75%
      p.a.
    Jan/24 to
      Dec/25
    330,217
    378,595Debentures (2)
    R$
    104.1% of the
      CDI
    Jul/20
    1,025,965
    -Cisco Capital (3)
    USD
    2.50%
    p.a.
    Dec/20
    40,366
    116,465Total
    
    
    
    2,029,088
    1,663,017Current
    
    
    
    (1,384,180)
    (698,728)Non-current
    
    
    
    644,908
    964,289
  Guarantees: (1)Guaranteed by the holding company TIM
Participações and collateral of some receivables of the subsidiary. (2)Guaranteed by the holding company TIM
Participações. (3)No guarantee.  F-53


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The financing arranged by the subsidiary
with BNDES was raised for the purpose of expanding the mobile phone network. The
agreements include covenants that require certain financial and non-financial
indexes calculated every six months. The Company, TIM Participações, has
complied with these financial ratios. The financial indexes are: (1)
Shareholders' equity over total assets; (2) EBITDA over net financial expenses;
(3) Total financial debt over EBITDA and (4) Short-term net financial debt over
EBITDA.  In May 2018, the Company obtained a new
line of credit in the amount of R$ 1,500 million from BNDES to finance
investments in fixed assets (Capex) for the three-year period 2017-2019 with a
term of use up to December 2019. As of March 2019, with the contracting of
Finame Direto, the Company replaced the sub-credit "B" of this contract
(equivalent to R$ 390 million). This new credit line in the amount of R$ 390
million with Finame, a company of the BNDES system, aimed at improving the
conditions of one of the sub-credits, of equal value, contracted with BNDES in
May 2018, both in terms of term and cost. The cost of this line is TLP (Long
Term Interest Rate) plus interest of up to 1.44% per year and its availability
extends until December 2020, without any reimbursement obligations.  The table below sets forth the status of
the financing and credit facilities available:  Type
    Currency
    Date of
      opening
    Term
    Total
      amount
    Undrawn
      balance
    Amount used as at
      December 31, 2019
    Amount expired until
      December 31, 2019BNDES (1)
    TJLP
    May/18
    Dec/19
    1,090,000
    -
    -
    1,090,000BNDES (2)
    TJLP
    May/18
    Dec/19
    20,000
    -
    -
    20,000FINAME
    TLP
    Mar/19
    Dec/20
    390,000
    390,000
    -
    -Total R$
    
    
    
    1,500,000
    390,000
    -
    1,110,000
  Purpose:  (i)
    Support for the TIM investment plan for the years 2017 to
      2019 including, but not limited to, the acquisition of Brazilian
      equipment.(ii)
    Investment in social projects involving the
      community.(iii)
    Investment solely toward the purchase of machinery and
      equipment, industrial systems and/or other components manufactured in the
      country.
  The Investment Sustainment Program
(“PSI”) 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, 2019, corresponding to the adjustment
of the subsidy granted by the BNDES for all the PSI lines, was approximately
R$42 million. This amount was recorded in “Deferred revenue” under the
“Government subsidies” (Note 22) line and deferred for the useful life of the
asset being financed and appropriated to income in “Subsidy income” (Note
28).   F-54


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 In January 2019, the Company, through
its subsidiary, issued the first simple non-convertible debentures, unsecured,
in the amount of R$ 1,000 million. The issue aimed at reinforcing the Company's
working capital and will mature in July 2020, being remunerated at 104.10%
CDI.  The subsidiary has swap transactions to
protect itself fully against any devaluation of the Brazilian currency against
the US Dollar in its borrowing and financing transactions. Nevertheless, this is
not classified as hedge accounting (see note 36).   F-55


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 The long-term portions of borrowing and
financing as at December 31, 2019 mature as follows:   2021
    
    305,1712022
    
    206,3242023
    
    33,4342024
    
    78,6942025
    
    21,285644,908
  The nominal value of loans is consistent
with their respective payment schedule.  Borrowing 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 purposes of the fair value analysis, based on management's analyses any
difference between nominal and fair value is immaterial in the context of the
financial statements and debt of the company.  The amount of PSI
credit lines is recorded at fair value as at the withdrawal date, and the fair
value is calculated considering the CDI rate as at the withdrawal
date.  Another transaction contracted with
extremely specific features is the financing obtained from KFW Finnvera. This
transaction is secured by Finnvera, a Finnish development agency. Given the
features of this transaction, the Company believes that its fair value is equal
to that shown in the balance sheet.  Regarding the funds raised with Cisco
Capital, 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  2019
    
    2018Indirect
      taxes, charges and contributions payable
    
    466,603
    
    453,941Value
      added tax on goods and services - ICMS
    
    377,105
    
    361,558ANATEL
      taxes and charges
    
    22,009
    
    21,320ISS
    
    61,673
    
    59,764Others
    
    5,816
    
    11,299Current
      portion
    
    (463,606)
    
    (451,169)Non-current portion
    
    2,997
    
    2,772
   F-56


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
    21. 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.   2019
    
    2018Direct taxes, charges and contributions
      payable
    
    508,615
    
    542,213Income
      tax and social contribution
    
    346,097
    
    372,467PIS/COFINS
    
    130,327
    
    76,072Other
      (*)
    
    32,191
    
    93,674Current
      portion
    
    (296,305)
    
    (332,333)Non-current portion
    
    212,310
    
    209,880
  (*) The composition of this account
refers mainly to the subsidiary’s adherence to the Tax Recovery Program – REFIS,
as of 2009. For installment payment of debts due on federal taxes (PIS, COFINS,
IR and CSLL) whose final maturity will be on October 31, 2024.  22.  Deferred revenue  2019
    
    2018Deferred revenues
    
    1,109,112
    
    1,313,467Prepaid services to be provided (1)
    
    186,310
    
    301,621Government grants (2)
    
    42,159
    
    63,731Network swap (3)
    
    2,713
    
    11,449Anticipated receipts
    
    11,651
    
    18,626Deferred revenue for sale of towers (4)
    
    843,017
    
    897,112Contractual liability (5)
    
    23,262
    
    20,928Current portion
    
    (281,930)
    
    (406,867)Non-current portion
    
    827,182
    
    906,600
  (1) This refers to the reloading of
voice and data credits not yet used by customers involving prepaid system
services, which are appropriated to income when customers actually avail
themselves of these services.  (2) Refers to the release of funds under
the credit facility from the BNDESInvestment Sustainment
Program. The total sum of the subsidies granted by the BNDES through December
31, 2019, was R$203 million and the amount outstanding at December 31, 2019 and
R$42,159 (63,731 at December 31, 2018). This amount is being amortized according
to the useful life of the asset being financed and appropriated to the “Other
income (expenses), net” (Note 28). F-57


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (3) Refers mainly to the transfer of
onerous contracts and reciprocal fiber optic infrastructure (Note
11).  (4) Refers to amounts to be appropriated
from sales of towers (Note 15).  (5) Contracts with customers.  As at December 31, 2019, the balance of
contractual assets and liabilities was as follows:  2019
    
    2018Accounts receivable included in trade accounts
      receivable
    2,413,865
    
    2,189,931Contractual asset (note 6)
    15,142
    
    130Contractual liabilities
    (23,262)
    
    (20,928)
  Contracts with customers gave rise to the allocation of
discounts under combined loyalty offers, where discounts may be given on
equipment and/or services, generating a contractual asset or liability,
respectively, depending on the nature of the offer in question.  Summary of the main changes during the fiscal year:  Contractual asset
      (liability)2019
    2018Balances as at January 1, 2019
    (20,798)
    (12,305)Additions
    1,845
    (23,545)Write-offs
    10,833
    15,052Balances as at December 31, 2019
    (8,120)
    (20,798)
  The estimated realization of the balances of contractual assets
and liabilities is described below:  2020
    2021Contractual asset (liability)
    
    (5,953)
    (2,167)
 In accordance with paragraph 121 of IFRS 15, the Company is not
presenting the effects of the information on contracts with customers that are
effective for less than one year.   23. Provision for legal and administrative
proceedings  The Company and its subsidiary are
parties to legal and administrative proceedings in the civil, labor, tax and
regulatory spheres which arise in the normal course of their
business. F-58


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  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 or possible are subject to
registration and disclosure, respectively, 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:  2019
    
    2018Provision for
      legal and administrative proceedings
    
    840,637
    
    849,408Civil
      (a)
    
    212,702
    
    111,301Labor
      (b)
    
    261,837
    
    435,438Tax
      (c)
    
    333,717
    
    271,214Regulatory
      (d)
    
    32,381
    
    31,455
 The changes in the provision for legal
and administrative proceedings can be summarized as follows:  Dec/2018
    
    Additions, net of reversals
    
    Payments
    
    Monetary adjustment
    
    Dec/2019849,408
    
    547,691
    
    (715,203)
    
    158,741
    
    840,637Civil
      (a)
    111,301
    
    348,012
    
    (335,640)
    
    89,028
    
    212,701Labor
      (b)
    435,438
    
    96,235
    
    (301,971)
    
    32,136
    
    261,838Tax
      (c)
    271,214
    
    103,354
    
    (77,341)
    
    36,490
    
    333,717Regulatory
      (d)
    31,455
    
    90
    
    (251)
    
    1,087
    
    32,381
  Dec/2017
    
    Additions, net of
      reversals
    
    Payments
    
    Monetary
      adjustment
    
    Dec/2018528,320
    
    551,191
    
    (536,647)
    
    306,544
    
    849,408Civil
      (a)
    132,422
    
    239,705
    
    (324,803)
    
    63,977
    
    111,301Labor
      (b)
    184,311
    
    225,864
    
    (114,450)
    
    139,713
    
    435,438Tax
      (c)
    180,643
    
    84,990
    
    (96,346)
    
    101,927
    
    271,214Regulatory
      (d)
    30,944
    
    632
    
    (1,048)
    
    927
    
    31,455
  The Company and its subsidiary are
subject to various legal and administrative proceedings filed against them by
consumers, suppliers, service providers, consumer protection agencies and public
financeagencies, in connection with
a number of issues that arise in the regular course of business of the entities.
The main cases are summarized below: F-59


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  a.    Civil
proceedings  a.1. Consumer lawsuits  The Company is party 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$135,290 (R$86,039as at December 31, 2018) basically refer to alleged incorrect
collections, contract cancellation, service quality, deficiencies and failures
in equipment delivery, and unjustified inclusion in credit protection
services.  a.2. Consumer protection
agencies  TIM is a party to court and
administrative lawsuits filed by the Public Prosecutor’s Office, Procon and
other consumer protection agencies arising from consumer complaints that
include: (i) alleged failure to provide network services; (ii) challenges
related to the quality of client assistance; (iii) alleged violation of SAC
Decree; (iv) alleged violation of agreements; (v) alleged false advertising; and
(vi) discussion of the amounts charged by the Company to its customers related
to loyalty fines in the case of handset theft. The amounts involved total
R$31,221(R$5,814as at December 31, 2018).  a.3. Former trade
partners  TIM is a defendant in lawsuits filed by
former trade partners claiming, among others, amounts on the basis of alleged
non-compliance with agreements. The amounts involved total R$12,812(R$10,378as at December 31, 2018).  a.4. Others  TIM is a defendant in other non-consumer
lawsuits filed by different agents to challenge, among others: (i) the renewal
of lease agreements; (ii) share subscription; (iii) indemnities; (iv) alleged
non-compliance with agreements; and (v) collection suits. The amounts involved
total R$27,039(R$3,060as at December 31, 2018).  a.5   Social, environmental and
infrastructure  The Company is party to lawsuits
involving various agents challenging several licensing aspects, such as
environmental licensing and structure licensing (installation/operation). The
amounts involved total R$498 (R$239as at December 31, 2018).  a.6   ANATEL  The subsidiaries are parties to lawsuits
filed against ANATEL, challenging: (i) a debit related to the collection of 2%
on revenue from value added services (“VAS”) and interconnection; (ii)pro
ratamonetary 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. The amounts involved are equivalent to R$1,340 (R$1,270 as at
December 31, 2018). F-60


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  b. Labor proceedings  Below is a summary of the key labor
proceedings claims with a likelihood of loss considered probable:  Refer to various labor claims filed by
former employees in relation to issues such as salary differences, parity,
payment of variable compensation/commission, legal additions, overtime and other
provision set forth in the period preceding the privatization process, and also
claims filed by former employees of service providers who, taking advantage of
the labor legislation currently in force, require the Company and/or its
subsidiary to be held liable for labor obligations not complied with by the
service providers contracted.  Of the total number of 2,408 labor
claims as at December 31, 2019 (3,948 as at December 31, 2018) filed against the
Company and its subsidiary, most of them relate to claims involving former
employees of service providers, followed by claims filed by the Company’s own
employees. The provision for these proceedings amounts to R$252,968, monetarily restated (R$426,570as at December 31, 2018).  A significant portion of this provision
refers to organizational restructuring procedures, of which the Company
highlights the closing of the activities of the call centers, as well as
proceedings related to TIM’s internal sites, which led to the termination of
employee contracts. As at December 31, 2019, the provision for these proceedings
totaled R$57,859, monetarily restated (R$27,981as at December 31, 2018).  c.Tax processes  2019
    
    2018Federal
      taxes
    155,495
    
    82,033State taxes
    93,790
    
    103,546Municipal taxes
    8,227
    
    1,713TIM S.A.
      proceedings (purchase price allocation)
    76,205
    
    83,922333,717
    
    271,214
  The total provision recorded is
substantially composed of the following proceedings, and the amounts indicated
are estimated using the indices established by the federal government for taxes
in arrears, being linked to the variations in the SELIC rate:  Federal taxes  The provision is substantially composed
of the following proceedings:  a.
    The provision for TIM S.A. has been made for 37 cases
      challenging the taxes levied on CIDE, CPMF, CSLL and IRRF transactions,
      the voluntary reporting of the penalty regarding FUST payments and
      ancillary obligations. From these cases, the main amounts relate to court
      actions in which TIM intends to have the right not to pay the CPMF (a
      Federal contribution on financial movements) allegedly due to
      simultaneous purchase and sale transactions in foreign currency and
      changes to accountholders as a result of mergers, with updated provision
      amounts totaling R$9,560 (R$ R$9,335 as at December 31, 2018), as well as
      the amount corresponding to the fine and interest on FUST contribution for
      the year 2009, which does not include the benefits of voluntary reporting,
      for which the amount provided and updated is R$14,564 (R$14,060 as at
      December 31, 2018).
  F-61


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  b.
    The Company set up a provision for a lawsuit seeking to
      collect social security contribution withheld at a rate of 11%, to which
      payments made by the Company to other legal entities as compensation for
      sundry activities should have supposedly been subject. The amount
      provisioned and updated is R$37,977 (R$36,685 as at December
      2018).c.
    Additionally, in the second quarter of 2019, the Company
      set up a provision for the FUST process alleging the unconstitutionality
      and illegality of FUST charges. Action for recognition of the right of not
      paying FUST and not including the revenues transferred as interconnection
      and EILD (Industrial Exploration of Dedicated Line) in the Company’s
      calculation base, as well as the right of not being charged retroactively
      for the differences due to non-compliance with ANATEL Precedent 7/2005, in
      the amount of R$58,116 (no corresponding amount on December 31,
      2018).
   State taxes  The provision is substantially composed
of the following proceedings:  The provision for TIM S.A. supports
forty-one lawsuits, among which are (i) the amounts involved in the assessments
that question the reversal of ICMS debts, as well as the documentary support for
proving credits appropriated by the Company, whose amounts provisioned, updated,
are equivalent to R$ 23,558 (R$ 42,628 as of December 31, 2018), (ii) amounts
supposedly not offered for taxation by the rendering of telecommunications
services, which, updated, amount to R$ 5,037 (R$ 4,829 as of December 31, 2018),
as well as (iii) collections due to alleged differences both of goods entries
and exits, in a quantitative stock survey procedure, whose updated amounts
amount to R$ 15,460 (provisioned process on 03/2019, with no correspondent as of
December 31, 2018).  Municipal taxes  These include the amounts involved in
assessments questioning the withholding and payment of the ISS-source 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,
totaling R$76,205(R$83,922 as at December 31, 2018).  d.Regulatory processes F-62


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  ANATEL has brought administrative
proceedings against the Group 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, 2019, the amount
classified as a probable risk related to Procedures to Verify Breaches of
Obligations (“PADOs”), after monetary adjustments, amounted to R$32,381(R$31,455 as at December 31, 2018).   e.Legal and administrative processes
involving possible losses  Civil, labor, tax and regulatory actions
have been filed against the Company and its subsidiary involving a risk of loss
classified as possible by the Company’s legal advisors and the Management. No
provision has been set up for these legal and administrative proceedings, and no
materially adverse effects are expected on the financial statements, as shown
below:  2019
    
    201818,395,727
    
    18,734,644Civil (e.1)
    1,032,637
    
    1,046,521Labor and social security (e.2)
    459,020
    
    523,236Tax
      (e.3)
    16,196,077
    
    16,530,061Regulatory (e.4)
    707,993
    
    634,826
  The administrative and legal proceedings
assessed as 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   2019
    
    2018Actions filed by
      consumers (e.1.1)
    374,860
    
    405,635ANATEL
      (e.1.2)
    220,526
    
    207,657Consumer
      Protection Agencies (e.1.3)
    32,847
    
    84,231Former trade
      partners (e.1.4)
    180,226
    
    173,213Social and
      environmental, and infrastructure (e.1.5)
    125,201
    
    71,574Other
      (e1.6)
    98,977
    
    104,2111,032,637
    
    1,046,521
  e.1.1. Actions filed by
consumers  These actions refer particularly to
alleged incorrect billing, contract cancellation, service quality, deficiencies
and failures in equipment delivery, and unjustified inclusion in bad debtors’
lists.  e.1.2. ANATEL F-63


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The Company is party to lawsuits filed
against ANATEL, for the following reasons: (i) debit regarding the collection of
2% on revenue obtained from VAS and interconnection; (ii)pro ratamonetary restatement applied
to the price proposal established in the call notice for the use of 4G
frequencies; and (iii) alleged non-compliance with service quality
targets.  e.1.3. Consumer Protection
Agencies  The Company is a party to court and
administrative lawsuits filed by the Public Prosecutor’s Office, Procon and
other consumer protection agencies arising from consumer-related complaints that
include: (i) alleged failure to provide network services; (ii) alleged failure
to deliver devices; (iii) alleged non-compliance with state legislation; (iv)
contract model and alleged incorrect charging for VAS; (v) alleged violation of
SAC Decrees; (vi) alleged violation of agreements; and (vii) blocking of
data.  e.1.4. Former trade partners  The Company is a defendant in
actions filed by several former trade partners who are claiming, among other
items, amounts arising from alleged non-compliance with agreements.  e.1.5. Social, environmental and
infrastructure  The Company is party to lawsuits
involving different parties that challenge aspects related to: (1) environmental
licensing and structure licensing (installation/operations), 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.1.6 Others  The Company is a party to other
lawsuits of an essentially non-consumer-related nature filed by various agents
other than those described above, in which the discussions involve: (i) renewals
of lease agreements, (ii) share subscription lawsuits, (iii) compensation
lawsuits, (iv) alleged breach of contract, and (v) lawsuits involving
charges.  e.2. Labor claims  e.2.1. Social
security  The
Company's subsidiary received a Debit Assessment Notice, related to
the alleged irregularity in the payment of social security contributions related
to the payment of Profit Sharing, in the amount of R$ 538, adjusted (R$ 538 on
December 31, 2018) and also suffered a tax assessment related to alleged social
security contributions levied on hiring bonus; unadjusted bonus; consideration
for self-employed activities and sales incentives in the updated amount of R$
9.693 at December 31, 2019.  The Company's subsidiaryreceived Tax
Underpayment Assessments regarding alleged irregularity related to the payment
of social security contributions levied on profit sharing; failure to pay
Management’s fees and failure properly to fill out the FGTS – GFIP tax form, and
an erroneous GFIP declaration in the F-64


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 updated amount of R$1,559
(R$1,430 as at December 31, 2018).  e.2.2. Labor  There are 3,976 labor claims at December
31, 2019 (4,654 at December 31, 2018) filed against the Company and its
subsidiary, related to claims involving former employees and service providers
in the amount of R$459,020 updated (R$ 523,236 at December 31, 2018).  A significant portion of the existing
contingency relates to organizational restructuring processes, of which the
closure of the activities of the Customer Relationship Centers (call center)
stands out, as well as processes related to the company's internal sites,
which resulted in the dismissal of employees. In addition to these processes,
there are those carried out by third party service providers with requests for
employment with the company's, whose amounts total R$ 14,349 updated (R$ 16,709
as of December 31, 2018).  It should also be pointed out that there
is a group of labor claims, particularly in São Paulo and Rio de Janeiro, from
former employees of Gazeta Mercantil, Jornal do Brasil and JB Editora requesting
in court the inclusion in the liability center of Holdco, which before the
merger with TIM Participações, belonged to the Grupo Econômico Docas, of which
Gazeta Mercantil and Jornal do Brasil are part.  The other amounts are related to labor
lawsuits filed by former employees and third companies.  e.3. Tax  2019
    
    2018Federal taxes
      (e.3.1)
    4,279,570
    
    3,952,125State taxes
      (e.3.2)
    8,221,808
    
    8,904,916Municipal taxes
      (e.3.3)
    703,132
    
    693,616FUST, FUNTTEL
      and EBC (e.3.4)
    2,991,567
    
    2,979,40416,196,077
    
    16,530,061
  The amounts are adjusted based on an
estimate of the SELIC rate. The historical amount involved is equivalent to
R$11,549,274 (R$ 11,662,216 as of December 31, 2018).  Of the total amount of tax
litigations, R$3.474.714 relates to income taxes contingencies, which have been
assessed by Management and based on its internal and external experts, it
is notlikelythat the Company’s treatments will not be accepted
by the Brazilian tax authority.    F-65


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)  e.3.1. Federal taxes
 Assessment against the TIM Group for
federal taxes amounted to R$4,279,570as at December 31, 2019, (R$3,952,125as at December 31, 2018). Of this total, the following issues
stand out:  (i)
    Alleged errors in the use of tax credits due to a reverse
      merger, the 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 of these benefits in the Federal Revenue
      Department (“RFB”) and failure to pay the estimated IRPJ and CSLL amounts.
      The amount involved is R$2,672,754(R$2,543,851 as at December 31, 2018).(ii)
    Method of offsetting tax losses and negative bases. The
      amount involved is R$203,302(R$198,175 as at December 31, 2018).(iii)
    Collection of CSLL on monetary variations for swap
      transactions, recorded on a cash basis. The amount involved is R$66,164
      (R$64,537 as at December 31, 2018).(iv)
    Payment of IRRF on revenue from overseas residents,
      including those remitted for international roaming and payments to
      unidentified beneficiaries, as well as the collection of CIDE on royalties
      remitted overseas, including remittances for international roaming. The
      amount involved for the subsidiary is R$256,833(R$296,589 as at December 31, 2018).(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$427,233(R$412,715 as at December 31,
  2018).
  e.3.2. State taxes  Assessment against the Company for
state taxes amounting as at December 31, 2019 to R$8,221,808(R$8,904,916 as at December 31, 2018). 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$1,053,411(R$1,344,288 as at December 31, 2018).(ii)
    Use of tax benefits under the Program for Promoting the
      Integrated and Sustainable Economic Development of the Federal District
      granted by the tax authority itself, but subsequently declared an
      unconstitutional and alleged incorrect crediting of ICMS on interstate
      purchases of goods with tax benefits granted in the state of origin. The
      amount involved is R$887,67(R$1,110,827 as at December 31, 2018).(iii)
    Credit reversal and late use of credits for purchases of
      fixed assets. The amount involved for its subsidiary is R$731,864(R$767,142 as at December 31,
  2018).
    F-66


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (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
      prepayment of future recharges (special credit), as well as credits
      related to transactions involving tax substitution, exempt and non-taxable
      transactions. As at December 31, 2019, the amount involved for the
      subsidiary was R$3,284,473(R$3,340,448 as at December 31, 2018).(v)
    The use of credit to purchase electricity for the
      companies’ production processes. The amount involved is R$131,057(R$140,368 as at December 31, 2017).(vi)
    Alleged conflict between ancillary obligation data and the
      payment of the tax, and specific questioning regarding the fine charged
      due to non-compliance with ancillary obligations. The amount involved is
      R$138,684(R$116,880 as at December 31,
      2018).(vii)
    Alleged failure to pay ICMS arising from debts reversed
      regarding prepaid services, incorrect ICMS credits regarding outgoing
      goods allegedly benefiting from a reduction in the calculation base, as
      well as an alleged failure to include VAS of the ICMS calculation base.
      The amount involved is R$198,505(R$192,074 as at December 31, 2018).(viii)
    Credits booked for the return of cell phones on free
      lease. The amount involved is R$180,920(R$177,128 as at December 31, 2018).(ix)
    Collection of ICMS tax on subscription services and the
      alleged failure to include this in the ICMS calculation base due to its
      nature. The amount involved is R$249,659(R$139,758 as at December 31,
  2018).
  e.3.3. Municipal taxes  The total assessment against the TIM
Group for municipal taxes was R$703,132as at December 31, 2019, (R$693,616 as at December 31, 2018).
Of this amount, the following issues stand out:  a.
    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$147,572(R$142,355 as at December 31, 2018).b.
    Collection of ISS on import of services. The amount
      involved is R$300,669(R$283,620 as at December 31, 2018).c.
    Constitutionality of the collection of the TFF by
      municipal authorities in several locations. The amount involved is
      R$120,503(R$118,114 as at December 31,
      2018).
  e.3.4. FUST and FUNTTEL  The amount assessed against the TIM
Group for contributions to FUST and FUNTTEL is R$2,991,567(R$2,979,404 as at December 31, 2018). The principal discussion
involves the payment of the contributions to FUSTand FUNTTEL (the Telecommunications
Technical Development Fund) starting from the issueby ANATEL of Ruling No.
07/2005, relating primarily to the payment of the FUST and FUNTTEL contributions
on interconnection revenue earned by mobile telecommunications service
providers, from the effective date of Law No. 9.998/2000. F-67


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  e.4.Regulatory issues  ANATEL has filed administrative
proceedings against the subsidiary 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
other items.  As at December 31, 2019, the amount
stated for Breach of Obligation procedures (locally PADOs), considering the
monetary restatement that was considered possible loss was R$707,993(R$634,826 as at December 31, 2018). The variations mainly
resulted from the handling of the PADOs included in the Consent Decree- “TAC” negotiated with ANATEL and new revenue recorded in the
year 2019.  On August 22nd, 2019, Anatel's Board of
Directors unanimously approved TIM's Conduct Adjustment Term, which was under
negotiation since June 2018. The agreement covers a sanction reference value of
R$ 627 million. TIM's commitment foresees improvement actions in three pillars -
customer experience, quality and infrastructure - through initiatives associated
with improvements in the licensing process of stations, efficient use of
numbering resources, evolution of digital caring channels, reducing complaint
rates, repairing users and strengthening transport and access networks. In
addition, it includes an additional commitment to bring mobile broadband through
the 4G network to 366 municipalities with less than 30,000 inhabitants reaching
over 3.4 million people. The new infrastructure will be implemented in three
years - more than 80% in the first two years –with the sharing regime with the
other providers being guaranteed by the Company.  On obtaining an extension of the
authorization to use radio frequencies associated with SMP, the subsidiary TIM
S.A. 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 VAS since 2012.
In the Company's opinion, this revenue should not be included because it is not
expressly stipulated in the original Instruments of Authorization. Therefore,
the charges received are being discussed at the administrative and/or legal
levels.  24. Shareholders’ equity  a.Capital stock  The 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 the Company’s shares, intending to hold 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. As at December 31, 2019, the Company held 210,527 treasury
shares (784,317 for 2018) with a view to fulfilling the stock option plan (Note
25).  The Company is authorized to increase
its capital upon 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: F-68


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 2019
    
    2018Net value paid up
    
    9,866,298
    
    9,866,298Value paid up
    
    9,913,415
    
    9,913,415(-) Funding costs
    
    (47,117)
    
    (47,117)Number of common shares
    
    2,421,032,479
    
    2,421,032,479
   b.Capital
reserves  The use of capital reserves is in
accordance with the provisions of Article 200 of Law No. 6.404/76, which refers
to corporate entities. These reserves consist of:  2019
    
    2018410,650
    
    412,091Special goodwill reserve
    
    380,560
    
    380,560Stock options
    
    30,090
    
    31,531
  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 took place by issuing new shares of TIM
Participações S.A., converting those companies into full subsidiaries. At that
time, this transaction was recorded at the book value of the shares, no goodwill
being recorded arising from the difference between the market value and the
shares negotiated.  When first adopting IFRS, the Company
availed itself of 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 of 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 (Intelig)  As at December 30, 2009, the Special
General Meeting of TIM Participações approved the takeover of Holdco, a company
that held 100% of the equity of TIM S.A, 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”), theacquisition was recorded at
the net book value of the assets acquired on the base date of November 30,
2009. F-69


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  When IFRS was first adopted, the
acquisition was recorded on 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 on capital reserves of R$223,004.  b.2 Stock options  The balances recorded in these items
represent the expenses of the Company and its subsidiary for the share options
granted to their employees (Note 25).  In the year ended December 31, 2019 and
the year ended 2018, the Company sold 668,367 and 1,194,576 common shares,
respectively, to the beneficiaries of the Stock Option Plan (Note 25). These
shares were in the Company's treasury when the options were exercised at the
average book value of R$10.86 and R$10.34, respectively. Additionally, through
the Share Buyback Program launched in October 2017, the Company acquired 115,949
shares in 2019 (377,052 in 2018) at the price of R$15.22 and R$11.64,
respectively, equivalent to R$ 3,204 in 2019 (R$ 4,389 in 2018). As a result,
the net effect on the repurchase transaction of treasury shares was R$5,319
(R$7,964 in 2018).  c.Profit reserves  c.1 Legal reserve  This refers to 5% of the income for
every year ended December 31, until the legal reserve equals 20% of the capital
stock, excluding, as from 2018, the balance set aside for the tax incentive
reserve. Also, the Company is authorized to cease setting up a legal reserve
when, together with the capital reserves, it exceeds 30% of the capital
stock.  This reserve can be used only for
capital increases or the offsetting of accumulated losses.  c.2 Statutory reserve for expansion  This reserve is
set up based on paragraph 2, Article 46 of the Company’s bylaws and is intended
for the expansion of the corporate business.  The balance
of profit that is not compulsorily allocated to other reserves and that is
not allocated for the payment of dividends, is allocated to this reserve, which
may not exceed 80% of the capital. Once this limit is reached, it is incumbent
upon the shareholders’ meeting to decide on the balance, either distributing
this to shareholders or increasing the capital.  In December
2019, the Reserve for Expansion reached the limit defined in the Company's
bylaws. Therefore, the next meeting will propose a capital increase via
capitalization of the expansion reserve in the amount of R$ 1,644,013. This
increase may be made without the issuance of new shares in proportion to the
rights of shareholders. F-70


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  c.3 Tax benefit
reserve  The subsidiary was granted tax benefits
that provide for restrictions on the distribution of profits by this subsidiary.
According to the legislation establishing these 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
for the legal entity. This reserve should only be used for offsetting the losses
or capital increases. At December 31, 2019, the accumulated amount of benefits
enjoyed by the subsidiary was R$ 1,612,019 (R$1,417,858 at December 31,
2018).  This tax benefit basically corresponds
to a reduction in the IRPJ on income from exploration, recorded by the units
entitled to this benefit. The subsidiary operates in the area of the former
Superintendence for 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.   F-71


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 d.Dividends  Dividends are calculated in accordance
with the bylaws and Brazilian Corporate Legislation.  As stated in the most recent bylaws
approved on April 14, 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 revised 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, 2019, dividends and
interest on equity were calculated as shown below:  2019
    
    2018Net income for the year
    3,622,127
    
    2,545,101(-) Tax incentives not to be distributed
    (194,161)
    
    (146,455)(-) Legal reserve constitution
    (171,398)
    
    (119,932)Revised profit
    3,256,568
    
    2,278,714Minimum dividends calculated considering 25% of the
      revised profit
    814,142
    
    569,679Breakdown of dividends payable and interest on
      equity:Interest on shareholders’ equity
    995,438
    
    849,994Total dividends and interest on shareholders’ equity
      distributed and proposed
    995,438
    
    849,994IRRF on interest on shareholders’ equity
    (149,316)
    
    (125,757)Total dividends and interest on shareholders’ equity,
      net
    846,122
    
    724,237Dividends per share (amount in reais), net of
      IRRF
    0.35
    
    0.30
  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 in the
allocation of net income for the year/period, 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. As of December 31, 2019, the amount
provisioned was R$995,438, of which R$ 313,600 was paid over the year and the
remaining balance was recorded in the Company's current liabilities and
paid in January 2020.  Dividends not claimed – As provided for
in the Brazilian Corporate Law, dividends and interest on shareholders’ equity
that are declared but not claimed by shareholders for a period of three years
are reversed to the shareholders’ equity according to the statute of
limitations.  Regarding the statement of cash flow,
interest on shareholders’ equity and dividends paid to shareholders were
classified as “financing activities”.   F-72


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 25. Long-term incentive
plan  2011-2013 Plan, 2014-2016 Plan and
2018-2020 Plan  At the annual meeting on August 5, 2011,
April 10, 2014 and April 19, 2018, the shareholders of TIM Participações S.A.
approved the long-term incentive plans, respectively the “2011-2013 Plan”, the
“2014-2016 Plan” and the "2018-2020 Plan" for the senior Management and key
executives of the Company and its subsidiary.  The 2011-2013 and 2014-2016 Plans
involve granting options, while the 2018-2020 Plan provides for the granting of
shares.  The exercise of options under the
2011-2013 Plan depends on the achievement of specific performance targets, while
the exercise of options of 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.  The 2018-2020 Plan, in turn, proposes
granting to the participants shares issued by the Company, subject to certain
time and/or performance conditions (attainment of specific targets). The number
of shares may vary up or down depending on performance and possible declarations
of dividends, considering the criteria specified for each Grant.  Share options of the 2011-2013 and the
2014-2016 Plans are effective for six years, and TIM Participações has no legal
or informal obligation to repurchase or settle the options in cash. In the case
of the 2018-2020 Plan, the effectiveness period is the same as the vesting
period of three years. The 2018-2020 Plan, in turn, besides allowing for the
transfer of shares, also provides for the possibility of making payments to the
participants of the equivalent cash value.  The total amount of the expense is
recognized during the vesting period: that is, the period during which specific
vesting conditions must be met. On the date of each balance sheet, the Group
reviews its estimates for the number of options that will vest, considering
vesting conditions not related to the market and time with the
company.  It should also be taken into account
that in 2017 there were no new grants, only the calculations of the vesting
period from past grants.  The variations in the quantity of
shares/options are presented below:   F-73


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Date of
      grant
    Share
      options granted
    Maturity
      Date
    Exercise
      price
    Balance at
      beginning of 2019 financial year
    Granted in
      the period
    Exercised in
      the period
    Forfeited in
      the period
    Failing due
      in the period
    Balance at
      beginning of 2019 financial year2018-2020 Plan
      - 2a Grant
    930,662
    Jul/22
    R$
      11.28
    -
    930,662
    -
    (33,418)
    -
    897,2442018-2020 Plan – 1st Grant
    849,932
    Apr/21
    R$
      14.41
    466,514
    -
    (115,949)
    (97,228)
    -
    253,3372014-2016 Plan – 3rd Grant
    3,922,204
    Nov/22
    R$
      8.10
    895,522
    -
    (476,182)
    -
    -
    419,3402014-2016 Plan – 2nd Grant
    3,355,229
    Oct/21
    R$
      8.45
    292,523
    -
    (159,675)
    -
    -
    132,8482014-2016 Plan – 1st Grant
    1,687,686
    Sep/20
    R$
      13.42
    531,972
    -
    (32,511)
    (121,175)
    -
    378,2862011-2013 Plan – 3rd Grant
    3,072,418
    Jul/19
    R$
      8.13
    543,583
    -
    -
    -
    (543,583)
    -2011-2013 Plan – 2nd Grant
    2,661,752
    Sep/18
    R$
      8.96
    -
    -
    -
    -
    -
    -2011-2013 Plan – 1st Grant
    2,833,595
    Aug/17
    R$
      8.84
    -
    -
    -
    -
    -
    -Total
    19,313,478
    
    
    2,730,114
    930,662
    (784,317)
    (251,821)
    (543,583)
    2,081,055Average weighted price
      for the period
    R$
      11.23
    Date of
      grant
    Share
      options granted
    Maturity
      Date
    Exercise
      price
    Balance at
      beginning of 2018 financial year
    Granted in
      the period
    Exercised in
      the period
    Forfeited in
      the period
    Failing due
      in the period
    Balance at
      beginning of 2018 financial year2018-2020 Plan – 1st Grant
    849,932
    May/20
    14.41
    -
    849,932
    
    (383,418)
    -
    466,5142014-2016
      Plan – 3rd Grant
    3,922,204
    Nov/22
    8.10
    2,684,284
    
    (510,884)
    (1,277,878)
    -
    895,5222014-2016
      Plan – 2nd Grant
    3,355,229
    Oct/21
    8.45
    1,240,740
    
    (656,268)
    (291,949)
    -
    292,5232014-2016
      Plan – 1st Grant
    1,687,686
    Sep/20
    13.42
    658,720
    
    (27,424)
    (99,324)
    -
    531,9722011-2013
      Plan – 3rd Grant
    3,072,418
    Jul/19
    8.13
    694,936
    
    
    (151,353)
    -
    543,5832014-2016
      Plan – 2nd Grant
    2,661,752
    Sep/18
    8.96
    194,756
    
    
    
    (194,756)
    ‐2014-2016
      Plan – 1st Grant
    2,833,595
    Aug/17
    8.84
    -
    
    
    
    -
    ‐Total
    18,382,816
    
    
    5,473,436
    849,932
    (1,194,576)
    (2,203,922)
    (194,756)
    2,730,114Average weighted price for the
      period
    10.26
 F-74


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
    Below are the significant data included
in the model:  Date of
      grant
    Weighted average base
      price of shares during the vesting period of the grant
    Volatility
    Expected useful life
      of the option
    Annual interest rate
      without risk2011 Grant
    R$ 8.84
    51.73%
    p.a
    6 years
    11.94%
    p.a2012 Grant
    R$ 8.96
    50.46%
    p.a
    6 years
    8.89%
  p.a2013 Grant
    R$ 8.13
    48.45%
    p.a
    6 years
    10.66%
    p.a2014 Grant
    R$ 13.42
    44.60%
    p.a
    6 years
    10.66%
    p.a2015 Grant
    R$ 8.45
    35.50%
    p.a
    6 years
    16.10%
    p.a2016 Grant
    R$ 8.10
    36.70%
    p.a
    6 years
    11.73%
    p.a2018 Grant
    R$ 14.41
    NA
    3 years
    NA2019 Grant
    R$ 11.28
    NA
    3 years
    NA
  The Base Share Price was calculated
using the weighted prices of the shares of TIM Participações, during the
following periods: 2011-2013 Plan
  – 1st Grant- Volume traded and the trading price of the shares in TIM
  Participações in the 30 day period prior to July 20, 2011 (the date when the
  Board of Directors of TIM Participações approved the
  benefit).2011-2013
  Plan– 2nd Grant- Volume traded and the trading price of TIM Participações
  shares during the period July 1, 2012 to August 31, 2012.2011-2013
  Plan– 3rd Grant -Volume traded and the trading price of
  TIM Participações shares during the 30 day period preceding July 20,
  2013.2014-2016
  Plan– 1st Grant -Volume traded and the trading price of
  TIM Participações shares during the 30 day period preceding the date
  determined by the Board of Directors of TIM Participações (September 29,
  2014).2014-2016
  Plan– 2nd Grant -Volume traded and the trading price of
  TIM Participações shares during the 30 day period preceding the date
  determined by the Board of Directors of TIM Participações (September 29,
  2015).2014-2016
  Plan– 3rd Grant -Volume traded and the trading price of
  TIM Participações shares during the 30 day period preceding the date
  determined by the Board of Directors (September 29, 2016).2018-2020 Plan
  – 1st Grant -Volume traded and the trading price of TIM Participações
  shares during the period from March 1, 2018 to March 31, 2018.2018-2020 Plan
  – 2nd Grant -Volume traded and the trading price of Tim Participações
  shares during the period from June 1, 2019 to June 30, 2019.
 F-75


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The Company recognizes the impact of
review of its initial estimates, if any, in the statement of income, with a
contra-entry in shareholders’ equity. As at December 31, 2019 the expenses
related to said long-term benefit plans totaled R$2,359(R$ 4,291 as at December 31, 2018).   26. Net 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.  Revenues are recognized monthly, through
billing, and revenues to be billed between the billing date and the end of the
month (unbilled) are identified, processed, and recognized in the month in which
the service was provided. These non-billed revenues are recorded on an estimated
basis, which takes into account consumption data, number of days elapsed since
the last billing date.  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
reload 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  Revenues from product sales (telephones,
mini-modems, tablets and other equipment) are recognized when the performance
obligations associated with the contract are transferred to the buyer. Revenues
from sales of devices to trading partners are accounted for at the time of their
physical delivery to the partner, net of discounts, and not at the time of sale
to the end customer, since the Company has no control over the product
sold.  Contract Identification  The Company reviews all current
commercial contracts in order to identify the main contractual clauses and other
elements present in the contracts that could be relevant in the application of
the new accounting pronouncement.  Identification of performance
obligation  F-76


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Based on the review of its contracts,
the Company verified the existence of two performance obligations:  (i) sale of equipment; and (ii) provision of mobile, fixed and
internet telephony services.  Therefore, the Company began to
recognize revenues when, or as, the performance obligation is met when
transferring the good or service promised to the customer; the asset is
considered transferred when or as the customer obtains control of this
asset.  Determining and Allocating the
Transaction Price to the Performance Obligation  The Company understands that its
commercial packages that combine services and sale of cellular handsets with
discounts. In accordance with IFRS 15, the Company is required to perform the
discount allocation and recognize revenues related to each performance
obligation based on their standalone selling prices.  Prior to the adoption of the standard,
the Company recognized revenue from each element identified based on its
contractual price, with the discount on the sale of handsets being allocated
completely  to the price of the handset.  As a consequence of the adoption of the
new standard, an additional portion of the revenue was allocated to revenues
from sale of handsets at the beginning of the contract, representing an increase
in revenues from the sale of equipment in relation to previously adopted
accounting practice. The difference between the amount of revenue and the amount
of equipment sales revenue at the beginning of the contract was recognized at
the time each as a contractual asset, allocated to service revenue along the
contract period.  Cost to obtain contract  All incremental costs related to
obtaining a contract (sales commissions and other costs of acquisition from
third parties) are recorded as prepaid expenses and amortized over the same
period as the revenue associated with this asset. Similarly, certain contract
compliance costs are also deferred to the extent that they relate to performance
obligations under the customer agreement, i.e. when the customer obtains control
over the asset.  2019
    
    2018
    
    2017Net operational revenue
    17,377,194
    
    16,981,329
    
    16,233,959Gross operating
      revenue
    25,182,831
    
    24,232,404
    
    22,611,074Service revenue
    23,820,343
    
    23,065,648
    
    21,433,515Service revenue – Mobile
    22,145,033
    
    21,531,779
    
    20,147,585Service revenue – Landline
    1,675,310
    
    1,533,869
    
    1,285,930Goods
sold
    1,362,488
    
    1,166,756
    
    1,177,559Deductions from gross revenue
    (7,805,637)
    
    (7,251,075)
    
    (6,377,115)Taxes
    (4,939,980)
    
    (5,163,797)
    
    (5,027,406))Discounts given
    (2,843,670)
    
    (2,073,892)
    
    (1,329,600)Returns and
    other
    (21,987)
    
    (13,386)
    
    (20,109)
 F-77


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
    27. Operating costs and expenses   2019
    
    2018Cost of services
      provided and goods sold
    Selling
      expenses
    General and
      administrative expenses
    Total
    
    Cost of
      services
      provided and
      goods sold (*)
    Selling
      expenses
    General and
      administrative expenses
    Total(7,433,731)
    (4,986,289)
    (1,717,859)
    (14,137,879)
    
    (7,701,418)
    (4,970,780)
    (1,608,319)
    (14,280,517)Personnel
    (53,392)
    (624,353)
    (392,984)
    (1,070,729)
    
    (36,514)
    (637,177)
    (357,878)
    (1,031,569)Third-party services
    (569,242)
    (2,041,646)
    (512,643)
    (3,123,531)
    
    (518,762)
    (2,169,624)
    (451,990)
    (3,140,376)Interconnection and means of connection
    (1,419,464)
    ‐
    ‐
    (1,419,464)
    
    (2,513,176)
    ‐
    ‐
    (2,513,176)Depreciation and amortization
    (4,132,223)
    (256,898)
    (739,860)
    (5,128,981)
    
    (3,119,954)
    (162,804)
    (671,562)
    (3,954,320)Taxes, fees and contributions
    (32,120)
    (817,369)
    (18,846)
    (868,335)
    
    (31,754)
    (866,197)
    (18,333)
    (916,284)Rent and insurance
    (291,302)
    (121,795)
    (20,590)
    (433,687)
    
    (591,226)
    (146,877)
    (67,387)
    (805,490)Cost of goods sold
    (931,818)
    ‐
    ‐
    (931,818)
    
    (883,912)
    ‐
    ‐
    (883,912)Publicity and advertising
    ‐
    (355,234)
    ‐
    (355,234)
    
    ‐
    (421,588)
    ‐
    (421,588)Losses on doubtful accounts
    ‐
    (748,291)
    ‐
    (748,291)
    
    ‐
    (544,881)
    ‐
    (544,881)Other
    (4,170)
    (20,703)
    (32,936)
    (57,809)
    
    (6,120)
    (21,632)
    (41,169)
    (68,921)
    2017Cost of services
      provided and goods sold
    Selling
      expenses
    General and
      administrative expenses
    Total(8,002,077)
    (4,575,177)
    (1,424,643)
    (14,001,897)Personnel
    (48,802)
    (602,578)
    (305,036)
    (956,416)Third-party services
    (544,036)
    (2,049,994)
    (429,597)
    (3,023,627)Interconnection and means of connection
    (2,632,593)
    -
    -
    (2,632,593)Depreciation and amortization
    (3,280,524)
    (162,020)
    (571,126)
    (4,013,670)Taxes, fees and contributions
    (36,625)
    (919,018)
    (11,963)
    (967,606)Rent and insurance
    (609,595)
    (92,363)
    (62,954)
    (764,912)Cost of goods sold
    (846,839)
    -
    -
    (846,839)Publicity and advertising
    -
    (410,982)
    -
    (410,982)Losses on doubtful accounts
    -
    (316,387)
    -
    (316,387)Other
    (3,063)
    (21,835)
    (43,967)
    (68,865)
  F-78


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 The Company contribute to public and
private pension insurance plans in a mandatory, contractual or voluntary manner
during the time when employees are working at the Company. These plans do not
originate any additional obligation for the Company. When an employee leaves the
Company 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 future contributions of the Company to
active employees, or a refund in cash of these amounts, are recorded in
assets.  28. Other income (expenses), net   2019
    
    2018
    
    2017IncomeSubsidy income, net
    21,572
    
    25,305
    
    28,722Fines on telecommunications
      services
    50,499
    
    44,411
    
    41,699Revenue from disposal of assets
    2,214
    
    1,708
    
    2,865Other income (a)
    1,878,558
    
    282,041
    
    171,2731,952,843
    
    353,465
    
    244,559ExpensesFUST/FUNTTEL
(b)
    (137,169)
    
    (143,167)
    
    (140,878)Taxes, fees and
      contributions
    (4,024)
    
    (4,092)
    
    (4,466)Provision for legal and
      administrative proceedings, net of reversal(466,460)
    
    (452,463)
    
    (366,476)Expenses from disposal of
assets
    (7,055)
    
    (4,424)
    
    (6,618)Other expenses
    (62,593)
    
    (32,608)
    
    (24,831)(677,301)
    
    (636,754)
    
    (543,269)Other revenues (expenses), net
    1,275,542
    
    (283,289)
    
    (298,710)
  (a) The variation in the period refers
to: (i) credits from legal proceedings held by the Companywith a final decision in
favor of the Company in higher courts in 2019, which discussed the exclusion of
ICMS from the calculation base of PIS and COFINS contributions.  The amount
of R$ 1,795 million was recorded under other revenues in June 2019 (Note 9) and
(ii) amortization of deferred revenue from the sale of the towers (Note
15).  (b) Expenses incurred with contributions
on several telecommunications revenue amounts due to ANATEL, according to the
legislation in force.   29. Financial
income 2019
    
    2018
    
    2017Financial income
    1,430,171
    
    412,733
    
    512,565Interest on financial investments
    88,224
    
    119,548
    
    369,517Interest received from clients
    37,233
    
    36,793
    
    38,227Swap interest
    15,536
    
    17,001
    
    32,300Interest on leasing
    20,528
    
    25,664
    
    22,709Monetary adjustments (i)
    1,263,793
    
    207,191
    
    39,694Foreign exchange variation
    4,857
    
    6,536
    
    10,118
  (i)
    Includes the amount of R$1,228 million regarding the
      adjustment of credits from a legal proceeding of TIM Celular S.A.
      (absorbed by TIM S.A.) on the exclusion of ICMS from PIS and COFINS tax
      bases (Note 9).
 F-79


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
    30. Financial expenses  2019
    
    2018
    
    2017Financial expenses
    (1,408,053)
    
    (951,439)
    
    (1,009,653)Interest on borrowing and financing
    (116,735)
    
    (96,682)
    
    (211,108)Interest on taxes and fees
    (28,396)
    
    (15,409)
    
    (5,712)Swap interest
    (24,604)
    
    (32,424)
    
    (85,362)Interest on leasing
    (821,463)
    
    (266,328)
    
    (257,305)Monetary adjustment (2)
    (191,309)
    
    (340,175)
    
    (278,272)Discounted granted
    (36,047)
    
    (38,858)
    
    (52,683)Other expenses (1)
    (189,499)
    
    (161,563)
    
    (119,211)
  (1)Includes PIS/COFINS amounts on financial
events, mainly related to Interest on Shareholders Equity (JSCP). (2)Monetary adjustment relates mainly to
provision for legal and administrative proceedings.   31.Foreign exchange variations,net  2019
    
    2018
    
    2017RevenueBorrowing and financing
    22,494
    
    1,409
    
    287,777Suppliers
    9,004
    
    6,844
    
    4,124Swap
    40,742
    
    75,340
    
    130,971Others
    15,952
    
    13,937
    
    7,14688,192
    
    97,530
    
    430,018ExpensesBorrowing and financing
    (40,715)
    
    (75,298)
    
    (271,286)Suppliers
    (13,201)
    
    (11,925)
    
    (6,819)Swap
    (22,493)
    
    (1,409)
    
    (147,356)Others
    (12,691)
    
    (7,525)
    
    (5,305)(89,100)
    
    (96,157)
    
    (430,766)Exchange variations, net
    (908)
    
    1,373
    
    (748)
  Exchange variation in the year is
related to loans and financing and suppliers in foreign currency. The effect was
reduced by operations with derivatives (note 36).    F-80


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   32.Income tax and social contribution  2019
    
    2018
    
    2017Current income and social contribution taxesIncome tax for the
    year
    (155,521)
    
    (253,120)
    
    (203,932)Social contribution for the
      year
    (58,905)
    
    (92,502)
    
    (77,148)Tax incentive – SUDENE/SUDAM (l)
    156,594
    
    146,454
    
    112,493(57,832)
    
    (199,168)
    
    (168,587)Deferred income tax and social contributionDeferred income tax
    (625,516)
    
    651,632
    
    (23,976)Deferred social contribution
    (225,186)
    
    217,501
    
    (8,631)(850,702)
    
    869,133
    
    (32,607)Provision for income tax and social
      contribution contingencies
    (5,406)
    
    (5,054)
    
    185(856,108)
    
    864,079
    
    (32,422)(913,940)
    
    664,911
    
    (201,009)
  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 forth below:  2019
    
    2018
    
    2017Income before income tax and social contribution
    4,536,066
    
    1,880,190
    
    1,435,516Combined tax rate
    34%
    
    34%
    
    34%Combined tax rate on income tax and social
      contribution
    (1,542,262)
    
    (639,265)
    
    (488,075)(Additions)/exclusions:Unrecognized/recognized tax losses and temporary
      differences
    (18,783)
    
    920,745
    
    68,716Permanent additions and exclusions:Non-deductible expenses for tax purposes
    (10,958)
    
    (12,040)
    
    (6,638)Tax benefit related to interest on shareholders’ equity
    338,449
    
    288,998
    
    64,597Tax incentive (i)
    194,161
    
    146,454
    
    112,498Use of tax losses not previously recognized
    -
    
    -
    
    11,176Other amounts
    125,453
    
    (39,981)
    
    36,717628,322
    
    1,304,176
    
    287,066Income tax and social contribution recorded in income for
      the period
    (913,940)
    
    664,911
    
    (201,009)Actual rate
    20.15%
    
    (35.36%)
    
    14.00%
  (l) As mentioned in Note 24 c.3, for
investment subsidies not to be considered within the taxable income, they must
be recorded as tax incentive reserves, to be used only to offset losses or
increase capital. The Company has tax benefits (SUDENE/SUDAM) which comply with
these rules. F-81


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   33.  Earnings per share  (a)   Basic  Basic earnings per share are calculated
by dividing income attributable to shareholders of the Company by the weighted
average number of shares issued during the tax year. 2019
    
    2018
    
    2017Income attributable to shareholders of the
      Company
    
    3,622,127
    
    2,545,101
    
    1,234,507Weighted average number of common shares issued
      (thousands)
    
    2,420,481
    
    2,420,172
    
    2,420,016Basic earnings per share (expressed in R$)
    
    1.50
    
    1.05
    
    0.51
  (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.  2019
    
    2018
    
    2017Income attributable to shareholders of the
      Company
    
    3,622,127
    
    2,545,101
    
    1,234,507Weighted average number of common shares issued
      (thousands)
    
    2,421,018
    
    2,421,075
    
    2,421,072Diluted earnings per share (expressed in R$)
    
    1.50
    
    1.05
    
    0.51
  The calculation of the
diluted earnings per shareconsidered 537 thousand shares(903 thousand shares in
2018) related to the granting of Plan 2011-2013, and granting of the 2014-2016
Plan, as mentioned in Note 25.   34.  Balances and transactions with related
parties  The consolidated balances of
transactions with companies of the Telecom Italia Group are as
follows:  F-82


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Assets2019
    
    2018Telecom Italia Sparkle (1)
    
    1,949
    
    2,877TI Sparkle (3)
    
    2,007
    
    804TIM Brasil (4)
    
    5,429
    
    13,993Gruppo Havas (6)
    
    -
    
    75,600Other
    
    1,035
    
    1,092Total
    
    10,420
    
    94,366
   F-83


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Liabilities2019
    
    2018Telecom Italia
      S.p.A. (2)
    
    80,825
    
    89,433Telecom Italia Sparkle (1)
    
    6,531
    
    11,895TI Sparkle (3)
    
    3,731
    
    4,174TIM Brasil (4)
    
    6,056
    
    6,044Vivendi Group (5)
    
    1,164
    
    4,745Gruppo Havas (6)
    
    11,049
    
    62,686Other
    
    2,467
    
    107Total
    
    111,823
    
    179,084
  Revenue2019
    
    2018
    
    2017Telecom Italia S.p.A. (2)
    
    775
    
    858
    
    665Telecom Italia Sparkle (1)
    
    5,371
    
    5,809
    
    5,281TI Sparkle (3)
    
    2,052
    
    904
    
    692Total
    
    8,198
    
    7,571
    
    6,638
  Costs/Expenses2019
    
    2018
    
    2017Telecom Italia S.p.A. (2)
    
    93,188
    
    62,976
    
    8,440Telecom Italia Sparkle (1)
    
    24,914
    
    30,123
    
    26,775TI Sparkle (3)
    
    18,700
    
    18,035
    
    30,734Generali (7)
    
    -
    
    -
    
    3,254Vivendi Group (5)
    
    1,386
    
    9,439
    
    16,361Gruppo Havas (6)
    
    264,318
    
    301,752
    
    127,730Others
    
    18,713
    
    -
    
    3,102Total
    
    421,219
    
    422,325
    
    216,396
  ** (1)
    Ultimate parent company. These amounts refer to
      roaming, VAS, assignment of means and international voice data
      –wholesale, according to the contractual conditions between the
      parties.(2)
    These amounts refer to international roaming, technical
      post-sales assistance and VAS.
  On May 17, 2018, TIM Participações and
Telecom Itália signed a licensing agreement on the use of a registered trademark
and formally granted to TIM Participações and its subsidiary the right to use
the “TIM” trademark against the payment of royalties of 0.5% of the company’s
net revenues. The payment is made on a quarterly basis.  (3)
    The amounts refer to the leasing of links and EILD, lease
      of means (submarine cables) and signaling services according to the
      contractual conditions between the parties.(4)
    Direct controller of the Company. Amounts refer mainly to
      judicial deposits made due to labor claims.(5)
    Shareholder of TIM S.p.A. The figures refer to value added
      services - VAS.
  F-84


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   (6)
    Theamounts described above, in the income, refer to
      advertising services, of which R$ 172,956 (R$ 232,492 in 2018) are related
      to media transfers(7)
    The amounts refer to insurance coverage taken out for
      operating risks, civil liability and health insurance, among
      others.
  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 engages in social investment
actions that include donations, projects developed by the TIM Institute and
sponsorships. In 2019, the Company invested R$4,207 (R$ 4,637 in 2018) with its
own resources in social benefit.   35. Management remuneration  Key Management personnel includes the
statutory officers and the Board of Directors. The compensation of key
Management personnel for services rendered is shown below:  2019
    
    2018Short-term
      benefits
    22,524
    
    23,556Long-term
      benefits
    900
    
    3,351Share-based
      payments remuneration
    5,379
    
    10,23028,803
    
    37,137
   36. Financial instruments
and risk management  The financial instruments registered by
the Company and its subsidiary 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 as they are incurred, under financial
income 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 to recognize any gain or loss depends on whether
or not the derivative is assigned as a hedge instrument in cases where hedge
accounting is adopted.  Through its subsidiary, 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 swap contracts.  F-85


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 The Company’s financial instruments are presented, through its
subsidiary, in compliance with IFRS 9.  The major risk factors to which the Company and its subsidiary
are exposed are as follows:  (i) Exchange variation risks  Exchange variation risks refer to the
possibility of the subsidiary incurring: i) losses on unfavorable exchange rate
fluctuations, which would increase the outstanding balances of borrowing and
financing taken in the market along with the related cost expenses, or ii) an
increase in the cost of commercial agreements affected by exchange variations.
In order to reduce this kind of risk, the subsidiary enters into swap contracts
with financial institutions for the purpose of avoiding the impact of foreign
exchange fluctuations on the financial results, and trade agreements containing
sections that provide for foreign exchange bands with the purpose of partially
reducing exchange rate risks, or US Dollar stock options intended to reduce
foreign exchange exposure risks in business contracts.  As at December 31, 2019, the borrowing
and financing of the subsidiary indexed to foreign currency were fully hedged by
swap contracts in terms of time and amount. Any gains or losses arising from
these swap contracts are recorded in the results of the subsidiary.  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 value of TJLP and/or TLP-indexed financing taken by the subsidiary, when
these rates are not proportional to the CDI rate. As at December 31, 2019, the
subsidiary had no swap transactions linked to the TJLP and/or TLP.  - The possibility of unfavorable changes
in interest rates would result in higher finance costs for the subsidiary due to
the indebtedness and the obligations assumed by the subsidiary under the swap
contracts indexed to floating interest rates (CDI percentage). However, as at
December 31, 2019, the subsidiary’s financial funds were invested in CDIs and
this considerably reduces this risk.  (iii) Credit
risk inherent to providing services  The risk
involves the possibility of the subsidiary factoring in losses arising from the
inability of subscribers to pay the invoiced amounts. To keep this risk to a
minimum, the subsidiary undertakes preventive credit analyses of all orders
placed by the sales areas while monitoring the accounts receivable from
subscribers, blocking their ability to use the services, among other actions, in
the event that the customers do not pay their debts. There were no customers
contributing more than 10% of the net accounts receivable as at December 31,
2019 and 2018 or revenue from services rendered.  F-86


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 (iv) Credit
risk inherent to sales of handsets and prepaid phone cards  The policy of
the Group regarding the sale of handsets and the distribution of prepaid phone
cards is directly related to the levels of credit risk accepted during the
normal course of business. The selection of partners, the diversification of the
accounts receivable portfolio, monitoring loan conditions, positions and order
limits established for the traders and the constitution of real guarantees are
among the procedures adopted by the subsidiaries to reduce possible problems in
collecting from their commercial partners. There are no customers that have
accounted for more than 10% of the receivables from the sale of goods during the
period ending in December 2019 and 2018. The Company had one customer that
accounted for more than 10,6 % of the net trade accounts receivable from the
sale of goods as at December 31, 2019.  (v) Liquidity
risk  - Liquidity risk arises from the need
for cash to meet the Company's obligations. The Company structures the maturity
dates of its non-derivative financial instruments and of its respective
derivative financial instruments so as not to affect liquidity.  - The Company’s liquidity and cash flow
management is performed on a daily basis in order to ensure that the operating
cash generation and prior funding, whenever necessary, are sufficient to
maintain its schedule of operational and financial commitments.  - All
financial investments of the Company have daily liquidity, and Management may,
in specific cases: i) review the dividend payment policy, ii) issue new shares,
and/or iii) sell assets in order to improve liquidity.  (vi) Financial credit risk  The cash flow estimate is made and
aggregated by the Finance and Treasury department of the Company. This
department monitors the continuous liquidity requirements estimate 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 subsidiary incurring losses due to difficulties in realizing
their short-term investments and swap contracts due to bankruptcy of the
counterparties. The subsidiary minimizes the risk associated with these
financial instruments by operating only with sound financial institutions and
adopting policies that establish maximum risk concentration levels per
institution.  Fair value of derivative financial
instruments  The
consolidated derivative financial instruments are shown as follows:  2019
    
    
    2018Assets
    Liabilities
    Net
    
    Assets
    Liabilities
    NetTransactions involving derivatives
    
    46,511
    (4,405)
    42,106
    
    81,408
    (11,618)
    69,790Current portion
    
    16,602
    (858)
    15,744
    
    50,769
    (2,373)
    48,396Non-current portion
    
    29,909
    (3,547)
    26,362
    
    30,639
    (9,245)
    21,394
 F-87


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The consolidated financial derivative
instruments with long-term maturities as at December 31, 2019 were as
follows:  Assets
    
    Liabilities2021
    
    8,096
    
    (709)2022
    
    8,096
    
    (709)2023 onwards
    
    13,717
    
    (2,129)29,909
    
    (3,547)
  Non-derivative financial
liabilities mainly represent suppliers, dividends payable and other obligations
maturing in the next 12 months, except for borrowing 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:  2019Level
1
    
    Level
2
    
    TotalTotal assets
    658,328
    
    46,511
    
    704,839Financial assets valued at fair
      value
    658,328
    
    46,511
    
    704,839Derivatives used for hedging
      purposes
    -
    
    46,511
    
    46,511Securities
    658,328
    
    -
    
    658,328Total liabilities
    -
    
    4,405
    
    4,405Financial liabilities valued at
      fair value through profit or loss
    -
    
    4,405
    
    4,405Derivatives used for hedging
      purposes
    -
    
    4,405
    
    4,405
  2018Level
1
    
    Level
2
    
    TotalTotal assets
    790,070
    
    81,408
    
    871,478Financial assets valued at fair
      value
    790,070
    
    81,408
    
    871,478Derivatives used for hedging
      purposes
    -
    
    81,408
    
    81,408Securities
    790,070
    
    -
    
    790,070Total liabilities
    -
    
    11,618
    
    11,618Financial liabilities valued at
      fair value through profit or loss
    -
    
    11,618
    
    11,618Derivatives used for hedging
      purposes
    -
    
    11,618
    
    11,618
 F-88


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The fair value of financial instruments
traded on active markets is based on quoted market prices as 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 comprise
investments in CDBs and repurchases classified as trading securities.  The fair value of financial instruments
that are not traded on an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. These valuation
techniques maximize the use of observable market data when available and rely to
the minimum extent possible on entity specific estimates. If all significant
inputs required to fair value 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 institutions 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 fair
value for 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 this flow to its present value by means of the discounted future
interest rates disclosed in the market. The fair values were estimated at a
specific time, based on the 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 follows:  December 31, 2019Measured at amortized
      cost
    
    Fair value through
      profit or loss
    
    TotalAssets, per balance sheet
    6,769,032
    
    704,839
    
    7,473,872Derivative financial instruments
    -
    
    46,511
    
    46,511Trade accounts receivable and other accounts
      receivable, excluding prepayments
    3,287,855
    
    -
    
    3,287,855Marketable securities
    -
    
    658,328
    
    658,328Cash and cash equivalents
    2,284,810
    
    -
    
    2,284,810Leasing
    156,378
    
    -
    
    156,379Judicial deposits
    1,006,899
    
    -
    
    1,006,899Other assets to offset
    33,090
    
    -
    
    33,090
 F-89


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Measured at amortized cost
    
    Fair value through profit or loss
    
    Total14,310,830
    
    4,405
    
    14,315,235Liabilities per balance
    sheetBorrowing and
    financing
    2,029,088
    
    -
    
    2,029,088Derivative financial
      instruments
    -
    
    4,405
    
    4,405Suppliers and other obligations,
      excluding legal obligations
    3,923,035
    
    -
    
    3,923,035Leasing
    7,780,870
    
    -
    
    7,780,870Dividends
    payable
    577,837
    
    
    
    577,837
  December 31, 2018Measured at amortized cost
    
    Fair value through profit or loss
    
    TotalAssets per balance sheet
    5,639,420
    
    871,478
    
    6,510,898Derivative financial instruments
    -
    
    81,408
    
    81,408Trade accounts receivable and other accounts
      receivable, excluding prepayments
    2,969,116
    
    -
    
    2,969,116Marketable securities
    -
    
    790,070
    
    790,070Cash and cash equivalents
    1,075,530
    
    -
    
    1,075,530Leasing
    208,049
    
    -
    
    208,049Judicial deposits
    1,345,113
    
    -
    
    1,345,113Other assets to offset
    41,612
    
    -
    
    41,612
   Measured at amortized cost
    
    Fair value through profit or loss
    
    TotalLiabilities per balance sheet
    8,296,570
    
    11,618
    
    8,308,188Borrowing and financings
    1,663,017
    
    -
    
    1,663,017Derivative financial instruments
    -
    
    11,618
    
    11,618Suppliers and other obligations, excluding legal
      obligations
    4,323,374
    
    -
    
    4,323,374Leasing
    1,940,074
    
    -
    
    1,940,074Dividends payable
    370,105
    
    -
    
    370,105
 F-90


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  The 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 hedging against exchange
variations must be acquired simultaneously with the closing of the debt that
gave rise to that exposure. The coverage level for this exchange exposure is
100% of the risk, both in terms of maturity date and amount.  As at December 31, 2019, no types of
margins or collateral applied to the Company’s or the subsidiary’s transactions
involving derivative financial instruments.  The criteria for choosing the financial
institutions abide by parameters that take into account the rating provided by
reliable risk analysis agencies, shareholders’ equity and concentration levels
of transactions and funding.  The transactions involving derivative
financial instruments entered into by the subsidiaries and outstanding as at
December 31, 2019 and 2018 are shown in the table below:  December 31, 2019  COUNTERPARTY
    
    % Coverage
    AVERAGE SWAP
      RATECurrency
    SWAP
Type
    DEBT
    SWAP
    Total
    Debt
    Total
      Swap(Asset Side)
    
    Asset
    Side
    Liability
      SideUSD
    LIBOR X DI
    KFW/
      Finnvera
    JP Morgan e
      BOFA
    330,217
    330,217
    100%
    LIBOR 6M + 0.75% p.a.
    85,50% do CDIUSD
    PRE X DI
    CISCO
    Santander e JP
      Morgan
    40,366
    40,366
    100%
    2.50% p.a.
    84,50% do
      CDI
  December 31, 2018  COUNTERPARTY
    
    % Coverage
    AVERAGE SWAP
      RATECurrency
    Swap
type
    Debt
    SWAP
    Total
    Debt
    Total
      Swap(Asset Side)
    
    Asset
    Side
    Liability
      SideUSD
    LIBOR X DI
    KfW
    JP Morgan
    43,420
    43,420
    100%
    LIBOR 6M + 1.35%
      p.a.
    102.50% of
CDIUSD
    LIBOR X DI
    KFW/
      Finnvera
    JP Morgan and BOFA
    378,595
    393,387
    100%
    100% LIBOR 6M + 0.75% p.a.
    85,50% of CDIUSD
    PRE X DI
    CISCO
    Santander and JP
    Morgan
    116,466
    116,466
    100%
    2.18%
      p.a.
    88,20% of CDI
 F-91


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  In August 2018, the Company purchased US
Dollar call options in the amount of US$100 million, with a strike price of
R$4.00, in order to reduce the effects of foreign exchange variations on
business contracts. The options were divided into nine maturity brackets worth
US$11.1 million each (October 2018 to June 2019), and they were purchased for
the initial amount of R$11.7 million, taking into account a reference spot price
of R$3.7655 upon purchase. Due to the increase in US Dollar rates and a
reduction in the risk exposure of business contracts, the Company settled the
installments maturing in October 2018 and November 2018 in advance, for the
price of R$5.6 million, considering a reference spot price of 4.157 at the time
of the sale. In November 2018, considering the close maturity dates and the
reduced risk exposure in commercial agreements, the Company settled in advance
those maturing in December 2018 and in January and February 2019 in the amount
of R$1.0 million. The options remaining matured on June 15, 2019. The Company
did not have options transactions on December 31.    Position showing the sensitivity
analysis – effect of variations in the fair value of the swaps  In order to identify possible
distortions arising from consolidated derivative financial instrument
transactions 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 follows:  Description
    
    2019
    
    Probable Scenario
    
    Possible
      Scenario
    
    Remote
      ScenarioDebt in USD (Cisco and
      KFW)
    
    381,178
    
    381,178
    
    474,450
    
    567,104A) ∆ Aggregate debt variation
    
    
    
    
    
    93,272
    
    185,926Fair value of the asset
      side of the swap
    
    381,178
    
    381,178
    
    474,450
    
    567,104Fair value of the
      liability side of theswap
    
    (338,971)
    
    (338,971)
    
    (337,647)
    
    (336,387)Swap
result
    
    42,207
    
    42,207
    
    136,803
    
    230,717B) ∆ Aggregate swap variation
    
    
    
    
    
    94,596
    
    188,510C) Final result (B-A)
    
    
    
    
    
    (1,324)
    
    (2,584)
  Given the characteristics of the
derivative financial instruments of the subsidiaries, the Company's assumptions
basically took into account the effects of: i) the variation in the CDI, ii) the
variation of the LIBOR rate, and iii) the variation in the US Dollar rate used
in the transactions, achieving, respectively, the percentages and quotations
indicated below:  Risk
      variable
    Probable
      scenario
    Possible
      scenario
    Remote
      scenario(current)CDI
    4.40%
    5.50%
    6.60%LIBOR
    1.91%
    2.39%
    2.87%USD
    4.0307
    5.0384
    6.0461
 F-92


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  As the subsidiaries hold derivative
financial instruments to hedge their respective financial debt, the variations
in the scenarios are monitored from the respective subject of the 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 in 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 subject matter of the subsidiaries’
derivative financial instruments.  Sensitivity analyses referring to the
derivative financial instruments outstanding as at December 31, 2019 were
conducted basically taking into account the assumptions surrounding the
variations in market interest rates and the variation of the US Dollar used in
the swap agreements. The use of those assumptions in the analyses was
exclusively due to the characteristics of the derivative financial instruments,
which represent exposure to interest rate and exchange variations
only.    Position showing gains and losses with derivatives in the
period  2019Net income from USD vs.
      CDI transactions
    
    5,077
  Capital management  The Group’s objectives when managing
capital are to safeguard the Group’s ability to continue as a going concern in
order to provide returns to shareholders and benefits to other stakeholders, in
addition to maintaining 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, returning capital to the shareholders or
issuing new shares or selling assets to reduce its level of indebtedness, for
example.  The Financial Leverage Index as at
December 31, 2019 and December 31, 2018 can be summarized as below:  2019
    
    2018Balances
      with
    Adjustments
    Balances
      withoutIFRS
16
    IFRS
16Total borrowings and financings and derivatives (Note 19
      and 36)
    1,986,982
    ‐
    1,986,982
    
    1,593,227Lease - Liabilities (Note 15)
    7,780,870
    (6,196,068)
    1,584,802
    
    1,940,074Lease - Assets (Note 15)
    (156,378)
    ‐
    (156,379)
    
    (208,049)Less: Cash and cash equivalents (Note 4)
    (2,284,810)
    ‐
    (2,284,810)
    
    (1,075,530)FIC (Note 5)
    (654,479)
    ‐
    (654,479)
    
    (784,841)Net Debt
    6,672,185
    (6,196,068)
    476,116
    
    1,464,881EBITDA (1) (last 12 months) -
    Standardized
    9,643,838
    (1,315,684)
    8,328,153
    
    6,371,844Financial Leverage Index - Unaudited
    0.69
    4.71
    0.06
    
    0.23(1) Reconciliation to Net Income for the
    year:Adjusted Net Income
    3,622,127
    143,076
    3,765,203
    
    2,545,101Depreciation and
      amortization
    5,128,981
    (940,144)
    4,188,837
    
    3,954,321Net financial
      income
    (21,210)
    (592,323)
    (613,533)
    
    537,333Income tax and social
      contribution
    913,940
    73,706
    987,646
    
    (664,911)EBITDA (1)
    9,643,838
    (1,315,685)
    8,328,153
    
    6,371,844
  (1)EBITDA: Earnings before interest, tax, depreciation and
amortization (not an accounting metric)  F-93


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Changes in financial
liabilities  Changes in liabilities due to financing
activities, such as borrowing and financing, financial leasing and financial
instruments are presented below:  Borrowing and financing
    
    Financial
      leasing
    
    Derivative financial instruments
      (assets) liabilitiesDecember 31, 2018
    1,663,017
    
    1,940,074
    
    (69,790)Adoption of IFRS 16
    -
    
    5,256,114
    
    -Inflows
    1,000,000
    
    1,834,914
    
    -Financial expenses
    167,998
    
    821,463
    
    9,068Foreign exchange variations, net
    18,222
    
    -
    
    (14,145)Payments
    (820,149)
    
    (1,585,712)
    
    32,761Remeasurement IAS 17 (i) /
      IFRS16
    -
    
    (485,983)
    
    -December 31, 2019
    2,029,088
    
    7,780,870
    
    (42,106)
   (i) As mentioned in Note 2.f, the Company decided to adopt the
pronouncement IFRS 16 – Lease, retroactively with the effect of the application
as at January 1, 2019. Therefore, the lease previously classified as a financial
lease, using IAS 17, the book value of the right-of-use asset and of the lease
liability on the date of initial application of the standard, comprised the book
value of the lease asset and of thelease liability immediately prior to the application of this new
standard, in accordance with IAS 17. However, for such leases, as determined by
the new standard, the Company is required to become to measure the right-of-use
asset and the lease liability as from the initial application based on the new
standard. Thus, the lease previously measured in accordance with IAS 17 was
remeasured as at March 31, 2019, specifically with respect to the exclusion of
variable lease payments that depend on an index or a rate, given that the
projected inflation took into account for the period of the agreements
previously measured in accordance with IAS 17. F-94


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
   37. Defined benefit pension plans and other
post-employment benefits   2019
    
    2018PAMEC/ asset policy and medical plan
    
    5,782
    
    2,850
  ICATU, SISTEL and
FUNCESP  The Company has been
sponsoring a private pension plan with defined benefits for a group of employees
from the former TELEBRÁS system under the administration of the Fundação Sistel
de Seguridade Social – SISTEL and of ICATU Multi-sponsored fund. In addition to
the plans coming from the Telebrás System, there is also a plan managed by
Fundação CESP resulting from the merger of AES Atimus.  The pension plans
mentioned, as well as the medical plans, are briefly explained below:  PBS Assisted (PBS-A Tele
Celular Sul and PBS-A Tele Nordeste Celular): SISTEL's benefit plan,
which has defined benefit characteristics and includes inactive employees who
were part of the plans sponsored by the companies of the former TELEBRÁS
System;  PBS (PBS Tele Celular Sul
and PBS Tele Nordeste Celular): pension plan for
inactive employees, such plan being multi-sponsored, under administration of
ICATU Multi-sponsored fund;  Management
Agreement:management agreement for the payment of pensions to retirees
and pensioners, for the retirees of the Company's predecessors, under
administration of ICATU Multi-sponsored fund;  PAMEC/Asset
Policy:health care plan to the supplemented, for the retirees of the
Company's predecessors;  AES
Telecom:Part of the supplementary pension and pension plan PSAP,
managed by the CESP Foundation, which is the Company's responsibility, in view
of the acquisition of Eletropaulo Telecomunicações Ltda (AES Atimus), succeeded
by TIM Fiber SP LTDA, later incorporated to TIM Celular which was incorporated
by the Company.  F-95


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 Medical Plan
Fiber:Provision for the maintenance of a health plan as a
post-employment benefit to former employees of AES Atimus (as established in law
9656/98, articles 30 and 31), which was acquired and incorporated by TIM Celular
and later incorporated by the Company.  We present below the
actuarial position of liabilities and assets related to the retirement and
health care plans, as of December 31, 2019, according to the rules established
by IAS 19:  (a)Effects as of December
31:  Plans
    TotalsPBS
    PBS
      Assisted
    Management
      agreement
    PAMEC/Asset
      Policy
    AES
      Telecom
    Medical
      Plan
    2019
    2018Reconciliation of assets and liabilities as of
      12/31/19
    (*)
    (*)
    (*)Present value of actuarial liabilities
    40,427
    10,107
    151
    1,080
    11,099
    2,585
    65,449
    52,206Fair value of plan assets
    (43,991)
    (13,527)
    (425)
    -
    (8,982)
    -
    (66,925)
    (68,768)Present value of obligations in excess of fair value of
      assets
    (3,564)
    (3,420)
    (274)
    1,080
    2,117
    2,585
    (1,476)
    (16,562)Net actuarial liabilities / (assets)
    (3,564)
    (3,420)
    (274)
    1,080
    2,117
    2,585
    (1,476)
    (16,562)
  (*) No assets were
recognized by the sponsors, due to the impossibility of reimbursement of this
surplus, and the sponsor's contributions will not be reduced in the
future.    (b)Movement in net
actuarial liabilities / (assets)  PlansPBS
    PBS
      Assisted
    Management
      agreement
    PAMEC/Asset
      Policy
    AES
      Telecom
    Medical
      PlanActuarial Liabilities (Assets) at 12/31/18
    (14,964)
    (4,209)
    (239)
    884
    102
    1.864Expenditure (revenue) recognized in income
    (1,394)
    (391)
    (22)
    81
    100
    283Sponsor Contributions
    -
    -
    -
    (47)
    -
    (26)Recognized actuarial (gains) or losses
    12,794
    1,180
    (13)
    162
    1,915
    464Unrecognized actuarial gains or losses
    -
    -
    -
    -
    -
    -Net actuarial liabilities (assets) as of
      12/31/19
    (3,564)
    (3,420)
    (274)
    1,080
    2,117
    2,585
 F-96


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  (c)Reconciliation of the
present value of the obligations PlansPBS
    PBS
      Assisted
    Management
      agreement
    PAMEC/Asset
      Policy
    AES Telecom
    Medical
      PlanValue of liabilities at 12/31/18
    32,767
    8,285
    156
    884
    8,250
    1,864Cost of current service
    5
    -
    -
    -
    93
    108Interest on actuarial liability
    2,932
    738
    14
    81
    770
    175Benefits paid in the year
    (2,629)
    (719)
    (9)
    (47)
    (348)
    (27)Contributions paid by participants
    -
    -
    -
    -
    57
    -(Gains)/losses on liabilities
    7,352
    1,803
    (10)
    162
    2,277
    465Value of liabilities at 12/31/19
    40,427
    10,107
    151
    1,080
    11,099
    2,585
   (d)Reconciliation
of fair value of assets PlansPBS
    PBS
      Assisted
    Management
      agreement
    PAMEC/Asset
      Policy
    AES Telecom
    Medical
      PlanFair value of assets at 12/31/18
    47,731
    12,494
    395
    -
    8,148
    -Benefits paid in the year
    (2,629)
    (719)
    (9)
    -
    (348)
    -Effective return on assets in the year
    4,326
    1.128
    36
    -
    763
    -Actuarial gain (loss) on plan assets
    (5,437)
    624
    3
    -
    361
    -Contributions paid by participants
    -
    -
    -
    -
    58
    -Sponsor contributions poured into the plan
    -
    -
    -
    -
    
    -Fair value of assets at 12/31/19
    43,991
    13,527
    425
    -
    8,982
    -
   (e)Expenditure planned for
2020  PlansPBS
    PBS
      Assisted
    Management
      agreement
    PAMEC/Asset
      Policy
    AES Telecom
    Medical
      PlanCurrent service cost (with interest)
    15
    -
    -
    -
    125
    150Interest on actuarial liabilities
    2,650
    658
    10
    72
    774
    179Expected return on assets
    (2,893)
    (888)
    (29)
    -
    (627)
    -Interest on the effect of the (asset)/ liability
      limit
    243
    230
    19
    -
    -
    -Total net expense (income) to be recognized
    15
    -
    -
    72
    272
    329
 F-97


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
  Actuarial assumptions adopted in the
calculations  The main actuarial assumptions adopted in the
calculations were the following:  Nominal discount rate of the actuarial
      liability:
    PBS South: 6.81% /
      3.20%;
      PBS Northeast:
      6.83% / 3.22%;
      MA: 6.85% / 3.24%;
      PBS-A: 6.75% /
      3.14%;
      AES: 7.09% /
      3.47%;
      PAMEC: 6.77% /
      3.16%;
      FIBER: 6.96% / 3.34%Nominal wage growth rate:
    PBS e MA: Not
      Applicable
      MA and PBS-A: Not
      Applicable;
      AES: 5.57%/ 2.00%;
      PAMEC and FIBER: Not
      ApplicableBiometric general mortality table:
    PBS, MA and PBS-A:
      AT-2000 segregated by sex, softened by 10%Biometric disability entry table:
    PBS: Álvaro
      Vindas;
      MA, PBS-A and
      PAMEC: Not Applicable;
      AES and FIBER: Mercer Disability;Expected rate of turnover:
    PBS, MA, PBS-A and
      PAMEC: Nula
      AES and FIBER: 0.15/(time of
      service + 1), being null and void as from 50 yearsProbability of entry into retirement:
    PBS and FIBER:
      100% in 1st eligibility;
      MA: Not
      Applicable;
      AES: 3% per year
      between the first age of eligibility for early retirement and eligibility
      for normal retirement;
      MA, PBS-A and PAMEC: Not ApplicableEstimated long-term inflation rate
    PAMEC and FIBER: 7.64% / 3.25%Calculation method
    Projected Unit Credit
Method
    F-98


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 38. Insurance  The Company and its subsidiary have a
policy for monitoring the risks inherent in their operations. Accordingly, as at
December 31, 2019, the Company and its subsidiary had insurance coverage against
operating risks, third-party liability and health, among others. The Management
of the Company and its subsidiary consider that the insurance coverage is
sufficient to cover eventual losses. The table below shows the main assets,
liabilities or interests insured and their respective amounts:  Types
    
    Amount
      InsuredOperating risk
    
    R$ 32,274,029General Liability - RCG
    
    R$ 80,000Cybernetic risks (cyber)
    
    R$ 28,520Vehicles (executive and operational fleets)
    
    R$1,000 for civil liability optional (property damages and
      personal injury) and R$100 for moral
damages.
   39.       Subsequent
Events ****  ·
    Financing agreement with Banco do
      Nordeste do Brasil
  On January 31, 2020, the Company's
wholly-owned subsidiary signed a financing agreement with Banco do Nordeste do
Brasil, in the total amount of R$752,479: (i) R$325,071 at IPCA cost + 1.4386%
and subject to a 15% default bond; and, (ii) R$427,408 at IPCA cost + 1.7582%
and subject to a 15% default bond. The purpose of the facility is to finance
Capex in the Northeast and North of the states of Minas Gerais and Espírito
Santo from 2019 to 2022 with a total payment term of 8 years, being 3 grace
years and 5 years of amortization. The operation will be guaranteed by (i) a
bank guarantee proportional to 100% of the amount of each disbursement; and (ii)
a bond of receivables proportional to 5% of the amount of each disbursement. To
date, there were no disbursements.  ·
    Preliminary negotiations regarding
      Oi Mobile
  On March 10, 2020, TIM Participações
S.A. and its wholly-owned subsidiary TIM S.A., pursuant to Article 157 of Law
6,404 and the provisions of CVM Instruction 358, jointly inform its
shareholders, the general market and other interested parties that: TSA jointly
with TELEFÔNICA BRASIL S.A. (VIVO) expressed to Bank of America Merrill Lynch
(“BofA”), Oi Group’s financial advisor, their interest in initiating
negotiations targeting a potential joint acquisition of Oi Group's mobile
business, in whole or in part, so that, in the event of the completion of the
operation, each of the interested parties will receive a portion of that
business. The interest in the transaction arises from the perspective that this,
if materialized, will add value to the Company, generating benefits for its
customers and shareholders, by accelerating its growth, increasing operational
efficiency and quality of service. Additionally, the eventual conclusion of the
operation would bring benefits to the telecommunications market in general,
reinforcing its competitiveness and investment capacity.    F-99


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)  ·
    CVM approves category “A”
      registration request of TIM S.A.
  On March 18, 2020, TIM
PARTICIPAÇÕES SA and its wholly-owned subsidiary, TIM SA, following the Material
Fact published on October 28, 2019, communicate to their shareholders, to the
market in general and to the other interested parties that TSA received on March
17, 2020, Official Letter-RIC No. 4/2020/CVM/SEP informing about the granting of
registration as a publicly-held company in category “A” before the CVM (without
offering securities), pursuant to CVM Instruction 480/09.  The Company and TSA point out that there
wasno
applicationfor registration of an Offer of Securities, which is why this communication
should not be considered as a public offering of shares or other securities by
the Company or TSA. The only company   ·
    Partnership between TIM Brasil and
      Banco C6
  On March 26, 2020, TIM
S.A. and BANCO C6 S.A., jointly called “Partners”, concluded the negotiations
regarding a strategic partnership with the objective of developing combined
offers with special benefits for the Partners’ customer bases. For the first
time, digital banking and telecommunications services are joined in a single
proposition. The agreement also provides for the possibility of exploring sales
and payment channels synergies, expanding the distribution of offers and
optimizing costs.  The Partners highlight
the innovative character of the agreement they concluded, which is centered on
delivering convenience through the integration of essential services to
customers’ daily lives. This approach offers a great value creation potential
for both companies through client base growth and higher customer loyalty. In
this context, TIM wants to position itself ahead of the market, creating a
competitive differentiation factor based on innovation and service offerings.  This agreement does not
create a joint venture, therefore, TIM maintains the independence of its
operations. However, depending on the evolution of the results of this
partnership, TSA will become a minority shareholder in C6 through an
objective-based compensation mechanism.  The Company will keep its shareholders
and the market informed in accordance with the regulations in force.  ·
    Credit
  Agreement
  On April 7, 2020, due to global
macroeconomic uncertainty regarding COVID-19 and its possible impacts, TIM S.A.
executed a new credit agreement with The Bank of Nova Scotia in the amount of
R$574 million denominated in U.S. dollars, guaranteed by TIM Participações. The
cost post-hedge is 155.0% and disbursement occurred on April 22, 2020, with a
one year maturity.   ·
    COVID
  19
  In December 2019, an outbreak of a
contagious disease, the Coronavirus Disease 2019 (COVID-19), began in mainland
China and has since beginning of 2020, the virus spread through Europe, the US
and various other countries, including Brazil. The COVID-19 outbreak has
developed rapidly in 2020 and measures taken to contain the virus have affected
economic activity, which in turn may have implications on the Company's results
of operations and cash flows. Although the COVID-19 existed at December 31,
2019, it is the severity of the virus and the responses to the outbreak which
may have an impact on the entity's operations occurred post December 31,
2019.
   F-100


---



TIM PARTICIPAÇÕES AND
SUBSIDIARY  NOTES
TO THE FINANCIAL STATEMENTS As at
December 31 (In
thousands of Reais, except as otherwise stated)
 The Company analyzed IAS10
considerations for purpose of this subsequent event in order to conclude if
COVID-19 outbreak could present any impact in year-end financial statements
figures or if it would only be a disclosure requirement for Company’s financial
statements. The Covid-19 events arose after the reporting period and not
predictable by the Company or any also other market participants, as such the
outbreak is a non-adjusting event for the reporting period ending
December 31, 2019 and no adjustment needs to be made to amounts recognized
in the consolidated financial statements ended on December 31, 2019. Based
on all information available as at December 31st, 2019, it was not foreseeable
the COVID-19 could result a risk over the Company’s consolidated balance sheets
and the consolidated statements of income. The Company is
complying with the health and safety protocols established by the authorities
and agencies is monitoring the development of the situation and closely
evaluating the impact of the COVID-19 on its business. The COVID-19 pandemic and
its potential impact on general commercial activity and the global economy may
reduce demand from our clients on the more expensive plans or certain services
(e.g. roaming) or even lead to plan cancellations or increased default, while it
may lead to disruptions in our logistic chain, in our suppliers’ production or
deliveries or in our ability to deliver our products (such as new devices or SIM
cards) or to service our network on a timely basis, which may have a material
adverse effect on our business and results of operations. At this time,
we have not suffered any material impact to our operations. While it is too
early for us to predict the impacts on our business or our financial targets of
the expanding pandemic and the governmental responses to it, we would be
materially adversely affected by a protracted downturn in local, regional or
global economic conditions.   F-101