Slide 1: Telecom Argentina Company Presentation 2Q19
TELECOM ARGENTINA Company Presentation August 2019 2Q19
Slide 2: Forward-looking statements disclaimer
This presentation may contain statements that could constitute forward-looking statements, including, but not limited to (i) the Company’s expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; (ii) the synergi
Slide 3: Disclaimer
The Company has accounted for the effects of inflation adjustment adopted by Resolution 777/18 of the Comisión Nacional de Valores (“CNV”), which establishes that the restatement for inflation will be applied to the annual financial statements, for intermediate and special periods ended as of Decemb
Slide 4: Agenda
MACRO OVERVIEW BUSINESS HIGHLIGHTS AGENDA FINANCIALS Q&A 3
Slide 5: Agenda: Macro Overview
MACRO OVERVIEW BUSINESS HIGHLIGHTS AGENDA FINANCIALS Q&A 4
Slide 6: Macro - Evolution so far and where we stand
2Q18 3Q18 4Q18 1Q19 2Q19 +86% YoY FX RATE Average 41,25 43,35 44,15 44,76 42,46 FX 2Q18: 39,15 (EoM) $23.58 36,85 35,95 37,72 37,70 37,35 28,85 27,41 Average 24,96 FX 2Q19: 20,54 $44.01 abr-18 may-18 jun-18 jul-18 ago-18 sep-18 oct-18 nov-18 dic-18 ene-19 feb-19 mar-19 abr-19 may-19 jun-19 Source :
Slide 7: Macro - Evolution so far and where we stand
2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19e -1,2% GDP -3,8% -3,7% (% YoY) Source : INDEC & Bloomberg Consensus -5,8% -6,2% 10,8% 10,1% 9,6% 9,0% 9,1% MACRO - UNEMPLOYMENT (% ) EVOLUTION SO FA R A N D W H E R E 2Q18 3Q18 4Q18 1Q19 2Q19e W E S TA N D : Source : INDEC & Bloomberg Consensus ACTIV
Slide 8: Households' wallet allocation and price increases
Telecommunication services’ wallet share Utility wallet share evolution across Latin America has remained fairly stable 26% 25% 26% 24% 24% 5,6% 23% 5,4% 5,4% 5,4% 19% 18% 20% 5,1% 5,1% 5,0% 15% 17% 12% 14% 11% 9% 6% 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2019 HOUSEHOLDS’ Argentina Source
Slide 9: Agenda: Business Highlights
MACRO OVERVIEW BUSINESS HIGHLIGHTS AGENDA FINANCIALS Q&A 8
Slide 10: 1H19 Highlights
1H19 REVENUES P$ 94.8 bn Highlights Margin : EBITDA P$ 31.8bn 33.6% Fixed Voice Broadband ARPU ARBU: $ 341 ARPU: $ 867 (per month) Pay TV Mobile ARPU: $915 ARPU: $ 247 Mobile subs in Argentina : 18.6 mm Broadband : 4.1 mm 13.1mm SUBSCRIBERS Fixed Voice : 3.4 mm 4G Pay TV: 3.4 mm CLIENTS ► The Board
Slide 11: Initiatives and Projects
Initiatives and Projects CLIENTS NETWORK COMPANY CULTURE • BSS Transformation • Cloud Strategy and - #Fan DC Evolution • Back Office • Operational Model Transformation -4UP • Digital Experience • OSS System • Talent Management PILLARS OF THE Transformation • Digital Office • Commercial • Communicati
Slide 12: Telecom Revenues
REVENUES BREAKDOWN YoY EVOLUTION 6,5% 0,4% -10% 15,6% 33,8% TELECOM REVENUES Revenues 21,1% 98.667 88.581 coming from mobile still the Mobile Broadband 22,6% Pay TV most prevalent Fixed & Data Handsets Other 1H18 1H19 business of all In P$ Million REVENUES COMPOSITION 6.175 94.756 14.756 20.016 21.4
Slide 13: Mobile in Argentina: No. 1 in flow share
MOBILE POSTPAID MOBILE ARPU SUBSCRIBERS POSITIVE CLIENTS INFLOW 2,7% 37% 2,3% 350 ,00 40% 83,3 ,025 0 300 ,00 60,5 66,5 40,1 250 ,00 ,020 0 13,8 ,015 0 200 ,00 276 247 150 ,00 ,010 0 63% 100 ,00 ,005 0 60% 50,0 0 - - 2H18 2H19 MOBILE IN 1H18 1H19 ARGENTINA: Prepaid Postpaid 2Q18 3Q18 4Q18 1Q19 2Q19
Slide 14: Internet and CATV
BROADBAND SUBSCRIBERS BROADBAND SPEEDS BB ARPU In Million 03% 1.800,00 Broadband subscribers Of total subscribers with 2,0% +49K 49% 1.600,00 compared with 2Q18 speeds between 20 and 100 02% Mb 1.400,00 1,5% 02% 1.200,00 29% 979,0 INTERNET AND 49% 867,0 1.000,00 4,08 4,13 01% C AT V 800,00 71% 51% 0
Slide 15: Flow: Reaching new markets
Flow is now available in the provinces of Jujuy, Tucuman, Flow expanded its La Rioja, Catamarca and Santiago del Estero. National footprint This allowed the company to to the north of the capture new classic and convergent TV subscribers. Country The clients who have the Flow Box and a Netflix accou
Slide 16: Agenda: Financials
MACRO OVERVIEW BUSINESS HIGHLIGHTS AGENDA FINANCIALS Q&A 15
Slide 17: Consolidated Results: Revenues and EBITDA
REVENUES SERVICE -10% -12% +36% 107,078 +38% 98,667 94,756 88,581 7307,0 6.838 42899,0 39.534 87.449 81.743 C O N S O L I D AT E D 64.179 59.133 R E S U LT S 1H18 1H19 1H18 IAS 29 1H19 IAS 29 1H18 1H19 1H18 IAS 291H19 IAS 29 IAS 29 Adjustment EBITDA EBITDA EVOLUTION +29% -17% -12% -8% 36,3% 34,3% 35
Slide 18: EBITDA 1H19 - 1H18
IAS 29EBITDA 1H19 – 1H18 IFRS, Million of P$ YoY Variation -P$6,522;-17% Fees for services, Ss. Revenues & Handsets maint. and Programming and EBITDA 1H18 other incomes Sales Handsets Costs Labor Costs ITX Costs materials Taxes Commissions & Adv content Costs Others* EBITDA 1H19 150% 49000 38.361 13
Slide 19: Operating Income and Net Income
OPERATING INCOME NET INCOME (Attributable to controlling company IFRS, Million of P$, Percentage In million of P$ 1H18 IAS 29 1H19 IAS 29 ∆$ 1H18 IAS 29 1H19 IAS 29 ∆$ ∆% Operating Income $ 19.142 $ 9.359 -$ 9.783 D&A $ 19.219 $ 22.480 $ 3.261 17% Financial Results -$ 19.618 $ 4.826 $ 24.444 Financi
Slide 20: Capex Evolution
CAPEX EVOLUTION TECHNICAL CAPEX BREAKDOWN Million of P$ +2% 40% 23.572 24.120 48% CAPEX: 8% Continuous 4% investment 1H18 1H19 Network and Technology Installations and CPE efforts to improve International Capex Other our network and % REVENUES 22% 25% services ✓The Company completed the logic unific
Slide 21: International Operations: Paraguay
REVENUES EBITDA REVENUES BREAKDOWN Million of US$ Million of P$ 8,0% 15,0% 11,0% Browsing Voice Data 100 95 37 35 TV 26,0% Others 40,0% 1H18 1H19 1H18 1H19 I N T E R N AT I O N A L O P E R AT I O N S : PA R A G U AY Subscribers Marketshare Fixed Network Capacity Future Projects (thousands homepassed
Slide 22: Sources of Hedging
OPERATIVE FLOWS BALANCE SHEET Liabilities Asset Denominated Denominated in In ARS ARS 68% Revenues in US$ Liabilities Denominated (around 10%) In US$ match the 60% Assets OPEX in US$ Denominated Shareholders In US$ Equity Revenues Opex P$ US$ US$ Assets include PP&E, Intangible assets and cash and i
Slide 23: Key Figures
In Million P$ LTM2Q19 ✓Revenues 193,366(*) ✓ EBITDA 62,472(*) ✓Gross Debt* 98,374 ✓Cash & Equivalents* 19,858 ✓Net Debt* 75,268 ✓ Capex 52,544(*) KEY FIGURES ✓ EBITDA-Capex 9,929 Ratios EBITDA / Margin 32.3% Gross Debt / EBITDA 1.57x Net Debt / EBITDA 1.20x (*) The figures were calculated applying t
Slide 24: Debt News & Maturity Schedule
On July 11, 2019, the Company placed international bonds for a total amount of US$400mm maturing in 2026. The settlement date was July 18, 2019. The Company received offers for more than US$ 2bn. Around 50% of the Bond’s subscribers came from USA, followed by Europe and Asia with 30% and 7%, respect
Slide 25: Debt Stock
Debt Principal as of June 30, 2019 U$S P$ GUA Total (U$S) ✓ CV 5 year Bond Class A 500 - - 500 ✓ Ve n d o r F i n a n c i n g 65 - - 65 ✓ IFC Loan 350 - - 350 ✓ IFC New Loan 310 - - 310 ✓ IIC Loan 88 - - 88 D E B T S TO C K ✓ Te r m L o a n d u e 2 0 2 2 400 - - 400 In U$S Million ✓ Deutsche Bank Lo
Slide 26: Agenda: Q&A
MACRO OVERVIEW BUSINESS HIGHLIGHTS AGENDA FINANCIALS Q&A 25
Slide 27: Investor Relations Contact
Investor Relations Contact Telephone: (5411) 4968 3628 E-mail: relinver@teco.com.ar