Telecom Argentina Sa Class B · BCBA:TECO2
Telecom Argentina Sa Class B — Telecom Argentina Stet France Telecom — Debt Investor Presentation (December 2002)
33 slides from Telecom Argentina Sa Class B's debt investor presentation, Dec 23, 2002
Slide 1: Form 6-K Report of Foreign Issuer
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 December 23, 2002 Telecom Argentina STET-France Telecom S.A. (Exact name of registrant as specified in its charter) Telecom Argentina S
Slide 2: Table of Contents
Telecom Argentina STET-France Telecom S.A. TABLE OF CONTENTS Sequential Page Item Number 1. Information from Bondholder’s Meeting-New York, London and Buenos Aires (December 9th, 11th, and 17th, 2002)……………… 3
Slide 3: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Telecom Argentina STET-France Telecom S.A. Date: December 23, 2002 By: /s/ Christian Chauvin Name: Chris
Slide 4: Informational Meeting with Bondholders
Informational Meeting with Bondholders New York, London and Buenos Aires December 9, 11 and 17 th, 2002 UNAUDITED DATA
Slide 5: Informational purposes notice
This document is solely for informational purposes and is neither an offer to purchase nor a solicitation of an offer to sell any security. Securities may not be offered or sold in the United States absent registration or an exemption from registration requirements. This document is not being delive
Slide 6: Table of Contents
Table of Contents ã Argentine Crisis and Impact on Telecom Group ã Company Overview and Third Quarter Results ã Operational Restructuring Efforts ã Conclusions & Debt Restructuring Update 2
Slide 7: Argentine Macroeconomic Variables
Argentine Macroeconomic Variables Exchange Rate (1) • Following 11 years of a fixed exchange rate P$ / US$ regime, the Argentine peso was devalued in 4.50 3.87 January 2002 and has shown significant 4.00 3.61 3.62 3.50 3.03 3.69 3.74 3.52 volatility throughout the year 3.63 3.00 2.50 2.15 2.92 • The
Slide 8: Political Instability & General Uncertainty
Political Instability & General Uncertainty • Argentina had five different Presidents during the two-month period of December 2001 to January 2002 • An agreement with the IMF is still pending • The Federal and most Provincial Governments have not completed a restructuring of their debt obligations –
Slide 9: Changes in the Regulatory Environment
Changes in the Regulatory Environment • In January 2002, the government issued Public Emergency Law Nº 25,561 and Decree “The pesification of public Nº 293/02, freezing and prohibiting the service tariffs in January 2002 left public service providers indexation of public service tariffs with a signi
Slide 10: Update on Tariff Negotiation Discussions
Update on Tariff Negotiation Discussions • On August 9, 2002 the Renegotiation Committee requested that the Company “As of today, no tariff present emergency tariff increases with the increases have been corresponding justifications for such increases approved for telecommunications providers. – The
Slide 11: Impact of the Crisis on Telecom Group
Impact of the Crisis on Telecom Group 11,879 12,000 Evolution of Outstanding Debt and EBITDA $MM • Management has responsibly 10,000 managed the Company’s balance sheet 8,000 • The significant increase in 6,000 leverage in 2002 is a direct result of the devaluation 4,000 3,002 3,002 3,078 3,078 3,25
Slide 12: Table of Contents
Table of Contents ã Argentine Crisis and Impact on Telecom Group ã Company Overview and Third Quarter Results ã Operational Restructuring Efforts ã Conclusions & Debt Restructuring Update 8
Slide 13: Introduction to Telecom Group
Introduction to Telecom Group “Telecom Argentina is Argentina’s leading Voice - Data - VAS full service telecommunications operator.“ Wireless - PCS ESOP Internet - ASP 4.68% Directories 50% Common e-commerce stock Nortel 50% 68% Inversora 54.74% Int’l Carrier GROUP Preferred shares 32% 40.58% TELEC
Slide 14: Telecom Group at a glance
Telecom Group at a glance • Revenues*: P$2,945 MM • Employees: 14,112 • Fixed lines in service: 3,610,000 (82% residential, 18% business) • Cellular subscribers: 2,152,000 in Argentina (largest celco) and 546,000 in Paraguay • Internet subscribers: 176,000 (largest ISP in Argentina) • Fixed and cell
Slide 15: Summary of 3rd Quarter 2002 Results
Summary of 3rd Quarter 2002 Results • Fixed lines in service continue to decline due to the on-going deterioration of the economic environment – Relatively little variation in 3Q 2002 versus previous quarters • Wireless subscribers have held steady, but with a continued migration from postpaid to pr
Slide 16: Fixed Line Operating Performance
Fixed Line Operating Performance Evolution of Lines in Service (In thousands) “Due to normal seasonability the traffic 3,894 3,914 3,892 3,892 increased by 3% compared to the 3,840 3,746 3,632 3,610 previous quarter.“ 174 181 161 198 187 159 153 175 120 120 120 73 78 100 64 52 Total Traffic Evolutio
Slide 17: Fixed Line Operating Performance (cont'd)
Fixed Line Operating Performance (cont’d) Average measured services and monthly basic charge (In $ per month) * “LD rates have increased 22.9 21.4 19.4 19.5 21.1 21.0 19.7 20.9 since 1Q02 after the modification of discounts granted to customers.” 14.4 14.5 14.3 14.6 14.7 14.7 14.5 14.4 Dec'00 Mar'01
Slide 18: Wireless Operating Performance
Wireless Operating Performance Argentine cellular market Evolution of Cellular Subscribers (In thousands) as of September 30, 2002 2,058 2,163 2,180 2,194 2,136 2,108 2,116 2,152 Movicom - 1,260 CTI - Verizon Bell South 1,161 1,350 1,410 1,413 1,461 1,546 1,642 1.0MM subs 1.5MM subs 897 903 830 784
Slide 19: Wireless Operating Performance (cont'd)
Wireless Operating Performance (cont’d) Cellular usage in Argentina Evolution of Prepaid ARPU (ARPU in $ / MOU in minutes) (in $ per month per customer) * 113 15 101 98 93 14 89 83 12 12 12 76 80 11 10 11 9 7 6 6 6 7 5 6 35 30 28 28 26 24 26 22 6 6 5 6 5 6 7 4 Dec'00 M ar'01 Ju n ' 0 1 Sep'01 Dec'01
Slide 20: Internet Operating Performance
Internet Operating Performance Evolution of Dial-up Subscribers (In thousands) “The growth in Internet revenues was mainly due to higher ADSL sales, as a result of increased prices and higher penetration of 315 325 the service.” 254 278 234 162 156 148 Dec'00 M ar ' 01 Jun'01 Sep'01 Dec'01 M ar ' 0
Slide 21: Main Variations for the Nine-Month Period of Fiscal Year 2002
Main Variations for the Nine-Month Period of Fiscal Year 2002 - P$ 80 MM Management fee - P$ 44 MM Advertising + P$ 13 MM Data transmission - P$ 42 MM Salaries and social sec. contrib. + P$ 10 MM Cellular - P$ 30 MM Cost of cellular handsets + P$ 9 MM Internet - P$ 24 MM Material and supplies - P$ 3
Slide 22: Table of Contents
Table of Contents ã Argentine Crisis and Impact on Telecom Group ã Company Overview and Third Quarter Results ã Operational Restructuring Efforts ã Conclusions & Debt Restructuring Update 18
Slide 23: Summary of Operational Restructuring Efforts
Summary of Operational Restructuring Efforts • Human Resources – New organizational structure – Headcount reductions – Reduction in unionized and non-unionized labor costs • Sales and Marketing – Improved collection policies – Reduction in advertising costs – Reduction in commission expenses – Elimi
Slide 24: Reduction in Headcount and Labor Costs
Reduction in Headcount and Labor Costs Salaries & Social Security Contributions 450 “Savings in labor costs were 14,747 14,453 14,387 400 14,615 14,229 14,112 mainly achieved through 350 300 283 287 285 reductions in salaries of 250 10000 unionized and non-unionized 203 200 155 155 156 149 employees
Slide 25: Reduction in Advertising Costs and Improved Collections
Reduction in Advertising Costs and Improved Collections 100 4% Advert i sing 80 3% 3% 3% 60 2% 45 46 2% 38 40 25 25 1% 21 1% 1% 1% 20 13 17 20 21 6 6 1 5 0 7 5 5 0% - Jun'01 Sep'01 Dec'01 M ar'02 Jun'02 Sep'02 M M $ (non-adjusted figures) Inflation effect % o f Cons.Net Rev. Allow ance for doubt f u
Slide 26: Reduction in Cellular Commissions and Subsidies
Reduction in Cellular Commissions and Subsidies Cellular agent commissions * 179 200 “Savings in cost of cellular handsets were 152 mainly achieved since 1Q01 due to higher 40 124 150 entry barriers as the lease without charge of 112 98 handsets was suspended and handsets 77 100 subsidies were elimi
Slide 27: Reduction in CAPEX
Reduction in CAPEX Investments (In MM $) * 997 62% 909 139 66 813 35 168 309 219 6 470 136 690 559 534 150 180 1 328 50 41 108 130 1998* * 1999* * 2000* * 2001 9m'02 2002E Fixed Cellular Others y-o-y % reduction in Capex * Non-adjusted pesos ** Twelve months period ended December 31. 23
Slide 28: Effect of Cost Cutting on EBITDA
Effect of Cost Cutting on EBITDA 2,151 1,426 42% 48% Inflation “The successful operational effect restructuring has led to increased EBITDA in spite of a reduction in 352 Variation: 1,178 revenue.” P$(826) -70% 93 Selling Non- 80 Exp.* 1,074 adjusted (104) 49% figures 973 M. Fee 42 42% Revenues (25)
Slide 29: Table of Contents
Table of Contents ã Argentine Crisis and Impact on Telecom Group ã Company Overview and Third Quarter Results ã Operational Restructuring Efforts ã Conclusions and Debt Restructuring Update 25
Slide 30: Review of Major Events and Company Reaction
Review of Major Events and Company Reaction Event Impact Action • Devaluation of the Peso • Impact in financial debt • Suspension of principal and interest • Reduction in shareholders’ equity payments of • Decrease in Telecom’s market the financial debt capitalization • Restructuring process of fina
Slide 31: Debt Restructuring Update
Debt Restructuring Update • The Company announced the suspension of principal payments on April 2, 2002 and the suspension of interest payments on June 24, 2002 • The Company has initiated conversations with its main financial creditors with the objective of establishing a framework for the restruct
Slide 32: Disclaimer
Disclaimer This presentation may include statements that could constitute forward-looking statements, including, but not limited to the Company’s expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; the impac
Slide 33: Telecom
TELECOM —“
Telecom Argentina Stet France Telecom — Debt Investor Presentation (December 2002) on 6ix