Slide 1: Second Quarter 2012 Earnings Results Conference Call Presentation
Second Quarter 2012 Earnings Results Conference Call Presentation Financial data prepared under IFRS
Slide 2: Disclaimer
Disclaimer This presentation is based on audited financial statements and 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, dividen
Slide 3: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 2
Slide 4: Market Overview: Facing a more challenging scenario
Market Overview: Facing a more challenging scenario Real GDP* Consumption Trade & Fiscal Balance Billions USD, at current prices – Last 12 months Billions USD, at current prices – Last 12 months Trade Balance (Billions USD) Last 12 months ∆ YoY - constant prices ∆ YoY - constant prices Fiscal Balanc
Slide 5: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 4
Slide 6: Business Highlights
Business Highlights Successful start in MNP being #1 in customer choice Leaders in Postpaid net adds & revenue share MOBILE Mobile Internet revenues +82% YoY in 2Q12, driven mainly by smartphones Focus in bundling services and flat pricing FIXED Launch of cloud services for corporate ICT Data servic
Slide 7: Mobile: Headstart in MNP
Mobile: Headstart in MNP Subscriber Share Evolution Service Revenue Share evolution* Million of lines +7% +6% 55,6 54,5 52,3 50,9 TEO 34,5% 36,3 34,9 +6% 36,9 #2 34,6 +5% Player Others 29,8% #3 Player 18,2 17,4 +8% 18,7 TEO 16,3 +11% 2010 2011 1H11 1H12e 2009 2010 2011 1H12 +1,3 M subs. • Leader in
Slide 8: Mobile: Strong Resilience in Mobile Internet usage
Mobile: Strong Resilience in Mobile Internet usage Service Revenue Breakdown Mobile KPI Million ARS – Argentine Market 10.983 54,6 54,3 +29% +13% +10% ARPU 48,3 49,2 (ARS/Month) 8.483 5.727 +23% 6.222 Retail & +12% -6% Wholesale TOU -7% Voice 5.095 5.050 (SMS/Month) +10% 3.000 Data +50% 2.725 MOU 31
Slide 9: Paraguay Mobile Market: 3G services driving expansion
Paraguay Mobile Market: 3G services driving expansion Mobile lines Financials Thousand of lines (includes 3G modems) IFRS Million of ARS +13% 714 +53% +14% REVENUES 466 +25% 403 +67% 2.242 322 2.149 264 1.878 1.983 +31% OPBDA 158 149 114 2010 2011 1H11 1H12 2010 2011 1H11 1H12 Margin 34% 37% 35% 37%
Slide 10: Mobile Revenues: 3G services keep adding value & revenues
Mobile Revenues: 3G services keep adding value & revenues Evolution of revenues 1H11 – 1H12 IFRS, Million of ARS, Percentage +1.474 (+24%) 81 7.503 255 221 642 241 34 6.029 YoY Variation +13% +4% +32% +81% +34% +25% 1H11 Retail Wholesale* Data Internet Equipment Nucleo* 1H12 Revenues Voice Voice (Pa
Slide 11: Broadband: Launch of integrated cloud computing services
Broadband:: Launch of integrated cloud computing services Broadband Evolution of Accesses Thousand of broadband accesses • Bundling and new services contributes to 4.441 +11% 4.616 control churn +14% 4.143 3.911 • Launch of cloud data services • Data services +29% YoY in 2Q12 +12% 3.022 +14% 2.891 2
Slide 12: Fixed voice: 2Q12 resumes positive net adds in LIS
Fixed voice: 2Q12 resumes positive net adds in LIS Evolution of Lines in Service Thousand of lines in service • More than 10 thousand net adds in 2Q12 8.729 +0,3% 8.752 8.740 +0,1% 8.731 • Retail voice revenues increased 6% YoY due to packs of services 4.622 -0,2% 4.611 4.621 -0,8% 4.583 • Increasin
Slide 13: Fixed Services: Data Revenues accelerated in 2Q12
Fixed Services: Data Revenues accelerated in 2Q12 Evolution of revenues 1H11 – 1H12 IFRS, Million of ARS, Percentage +322 (+13%) 198 -11 2.877 67 2.555 71 -3 38% Regulated Regulated 42% YoY +25% +27% +6% -1% -22% Variation Non Non 62% Regulated 58% Regulated Revenues Retail Voice Wholesale Data Inte
Slide 14: Evolution of CAPEX
Evolution of CAPEX Capex Evolution PP&E Capex Breakdown Million of ARS +32% 3.192 Others IT 6% 2.424 Mobile 17% access 21% +25% 2.318 PP&E +25% 1.345 1.852 1.076 +22% 916 19% 751 37% Intangible +53% 874 Assets 572 325 +32% 429 Core & Fixed SAC/SRC access Infraestructure1 2010 2011 1H11 1H12 % Revenu
Slide 15: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 14
Slide 16: TEO Group: Consolidated Results
TEO Group: Consolidated Results Revenues OPBDA* IFRS, Million of ARS, Percentage IFRS, Million of ARS, 18.498 +26% 14.627 +21% +23% 6.015 10.380 4.874 8.584 +8% 5.254 3.139 +18% 2.905 4.450 2Q +1% 2Q 1.474 1.492 4.134 +24% 5.126 1Q +15% 1.431 1.647 1Q 2010 2011 1H11 1H12 2010 2011 1H11 1H12 Regulate
Slide 17: TEO Group: Consolidated Costs
TEO Group: Consolidated Costs Consolidated Costs1 as % of Revenues Operating Costs1 1H12 Labor Costs 69,9% Others2 66,4% 21% 7,8% 25% 8,4% ITX Costs 20,9% 13% Marketing & 19,9% Taxes Sales 9,1% 30% 11% 8,8% Taxes 14,4% Marketing & ITX costs 13,3% Labor costs Sales 16,0% Others2 17,7% • MNP implement
Slide 18: TEO Group: Consolidated Results
TEO Group: Consolidated Results Operating Profit Net Income attributable to Telecom IFRS, Million of ARS, Percentage 3.857 +22% 2.513 +30% 3.162 1.935 1.929 -2% 1.882 1.261 +1% 1.275 -13% 971 849 2Q 577 627 -8% 2Q +8% 958 1.033 1Q 634 +10% 698 1Q 2010 2011 1H11 1H12 2010 2011 1H11 1H12 O. Profit Mar
Slide 19: TEO Group: FCF and Net Financial Position
TEO Group: FCF and Net Financial Position IFRS, Million of ARS - Last 12 months Operating Free Cash Flow 6.249 3.461 1.505 185 80 819 258 OPBDA Capex ∆ WK & others 2.973 Net Financial Position Telecom Argentina 1.286 (1) 2.223 Telecom Personal 1.058 (2) 1.236 Nucleo (Paraguay) (121) Net Financial Op
Slide 20: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 19