Slide 1: Telecom Argentina 4Q16 Earnings Release
Telecom Argentina 4Q16 Earnings Release Conference Call Presentation
Slide 2: Disclaimer
Disclaimer This presentation may include statements that could constitute forward-looking statements, including, but not limited to, the Company’s and it’s management expectations for the Company’s future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity a
Slide 3: Agenda
Agenda Macro Overview Vision & Strategy Business Highlights Financials Q&A 2
Slide 4: Macro: Capital inflows strengthen reserves
Macro: Capital inflows strengthen reserves EXTERNAL FRONT Central Bank Reserves International Reserves showed an increase of U$S 13,2 Bn during 2016, (Billion U$S) mainly explained by a rise during 4Q16 in deposits denominated in 38,8 foreign currency, due to cash inflows generated via government’s
Slide 5: Macro: Activity turnaround yet to come, inflation continues its declining trend
Macro: Activity turnaround yet to come, inflation continues its declining trend DOMESTIC ACTIVITY & INFLATION Household consumption Overall household consumption shows weak signs of recovery as Revised official figures as of 3Q16 of 4Q16 and remains depressed, after being affected by important incre
Slide 6: Agenda
Agenda Macro Overview Vision & Strategy Business Highlights Financials Q&A 5
Slide 7: Vision & Business Anchors
Vision & Business Anchors ANCHORS Gain share in Individuals, Drive Transform Households and Companies Operational Excellence Customer Experience Segments STRATEGIC HIGHWAYS 6
Slide 8: Strategic Highways
Strategic Highways WHERE WE STAND 2017 ACTION ITEMS Infrastructure and investment plan Capex Plan for 2016-2018 > P$ 40 bn; Capex 2017 > P$13 billion P$11.4 bn were already executed in 2016 Implementation of virtualized core infraestructure 01 01 +37% 4G sites 5.5 million customers Custome
Slide 9: Strategic Highways
Strategic Highways WHERE WE STAND 2017 ACTION ITEMS Cloud Services New offers for the enterprise Development of vertical platforms management Alliances with Microsoft, ICT portfolio of services for SMEs Microstrategy and Oracle to promote Cloud Services 06 Content Management Redefinition of
Slide 10: New telecommunication convergent model
New telecommunication convergent model VISION Leader in solutions and convergent connectivity services, with an agile structure and focused on our customers VOICE MULTISERVICE NETWORK BENEFITS A LWAYS O N MULTIPLE ACCESSES COST OPTIMIZATION CLIENT DATA SIMPLIFICATION OF PROCESSES MULTIFUNCIONAL DE
Slide 11: Agenda
Agenda Macro Overview Vision & Strategy Business Highlights Financials Q&A 10
Slide 12: FY16 Highlights
FY16 Highlights BUSINESS Mobile Fixed Retail Mobile grew 27% achieving P$25,971 Retail Fixed Voice gained 41% to P$4,654 million million during FY16. ARBU is 48% higher, reaching P$112.4 Mobile Internet in Argentina grew 73% YoY per month in 4Q16 Browsing represents 39% of revenue mix New
Slide 13: Group Revenues: Growth acceleration continued due to higher usage and price adjustments
Group Revenues: Growth acceleration continued due to higher usage and price adjustments RETAIL In P$ Million GROUP REVENUE MIX Fixed Voice Mobile In P$ Million 41% +27% Retail Fixed Voice 8% 9% 4,654 25,971 BB and Fixed Data 16% 17% 3,304 1.321 20,374 7.116 43% 38% 4Q 925 4Q 5.158 47% 1.241 27% 6.60
Slide 14: Fixed – Consolidated growth in UBB connections
Fixed – Consolidated growth in UBB connections MOST DEMANDED SPEEDS DATA / ICT REVENUES Thousand of clients 6Mb subs IFRS Million of P$ +64% +162k, 31% +21% +53% 2.919 681 519 1.780 1.470 963 FY15 FY16 FY13 FY14 FY15 FY16 % of CB 29% 39% Data / ICT Revenues increased due to the FX variation in contr
Slide 15: Fixed – ARBU increase driven by price adjustments in monthly fees
Fixed – ARBU increase driven by price adjustments in monthly fees ARBU DRIVERS OF ARBU INCREASE P$/Month 112,4 Price Adjustments +48% 105,1 BUSINESS SEGMENT February 2016 From P$77 to P$95 (Δ23%) 93,7 September 2016 From P$95 to P$115 (Δ21%) 80,9 February 2017 From P$115 to P$140 (Δ22%)
Slide 16: Mobile in Argentina: Enhancing our value proposition
Mobile in Argentina: Enhancing our value proposition CUSTOMER BASE (Mill) SERVICE REVENUE MIX Browsing SMS + Content Voice BROWSING Prepaid 13.0 (*) In P$ Million 19.5 Postpaid 6,5 40% 38% 3.335 AVG AMOUNT OF PREPAID 2.827 RECHARGE 24% 2.202 2.468 +32% 32% 1Q16 2Q16 3Q16 4Q16 39% 28% Dec-15 Dec-16 F
Slide 17: Mobile – 4G evolution
Mobile – 4G evolution 4G Subs Evolution 5.5 4.3 2.5 3.0 2.0 1.0 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 16
Slide 18: Capex: Network deployment to improve network capacity and quality
Capex: Network deployment to improve network capacity and quality CAPEX EVOLUTION TECHNICAL CAPEX BREAKDOWN Million of P$ *Core & infrastructure refers to network related capex, including quality +13% +45% and innovation capex 11.386 10,100 8,957 2,256 Spectrum 3,530 7.844 5.427 42% 30% 15% 13% FY14
Slide 19: Agenda
Agenda Macro Overview Vision & Strategy Business Highlights Financials Q&A 18
Slide 20: TEO Group: Consolidated Results
TEO Group: Consolidated Results REVENUES EBITDA IFRS, Million of P$, Percentage IFRS, Million of P$, Percentage +33% +31% 14,424 53,240 +25% +21% 10,866 4,216 4Q 40,496 14.422 4Q +15% 32% +22% 21% 3.202 3Q 11.906 3.453 13.412 3Q 37% 33% 2.529 10.094 3.361 2Q 7.564 8.702 2.501 34% 33.341 35% 12.951 2
Slide 21: TEO Group: Consolidated costs and EBITDA evolution
TEO Group: Consolidated costs and EBITDA evolution EBITDA FY15 – FY16 YoY IFRS, Million of P$ Variation +3,558;+33% EBITDA Margin 26.8% -0.3% +0.6% -0.5% +0.1% +1.0% +0.3% -1.0% 27.1% As % of Revenues 12% 5% 18% 10% 9% 9% 10% *Others include bad debt expenses, provisions, VAS costs and others Figure
Slide 22: TEO Group: Consolidated Results
TEO Group: Consolidated Results OPERATING INCOME NET INCOME IFRS, Million of P$, Percentage (Attributable to Telecom) IFRS, Million of P$, Percentage 3G/4G Spectrum Results on write- Period D&A Total Amortization down of PP&E FY15 4,114 324 199 4,637 +42% FY16 5,860 338 383 6,581 +26% 17% +14% 7,843
Slide 23: TEO Group: Net Income Evolution
TEO Group: Net Income Evolution in million of P$ Net Interests FY15 FY16 -$ 526 -$ 1,483 Gains on Mutual Funds & IFRS, Million of P$ $ 601 $ 348 other inv. FX results net of NDF -$ 1,140 -$ 1,055 instruments Others -$ 37 -$ 54 Total -$ 1,102 -$ 2,244 Price Effect on Financial Results NET DEBT Avg. F
Slide 24: TEO Group: FCF, Net Financial Position
TEO Group: FCF, Net Financial Position IFRS, Million of P$. Last 12 months FREE CASH FLOW OPERATING FREE CASH FLOW 14.424 11.386 1.344 2.000 EBITDA Capex Δ WK & 1.269 340 others 5.892 2.277 1.694 1.700 FCF GENERATION - QoQ Net Debt Operating Taxes Net Interest FX Dividend Net Debt FY15 Free Cash & O
Slide 25: Interest Coverage
Low leverage levels supported by sound financial strategy LEVERAGE Telecom Argentina has maintained low levels of 14.424 financial leverage, although indebtedness has Net Debt/ EBITDA 10.866 increased since the 2nd stage of frecuency allocation 7.564 8.702 0,4 x corresponding to the 2014 Spectrum
Slide 26: Agenda
Agenda Macro Overview Vision & Strategy Business Highlights Financials Q&A 25