Slide 1: 2Q14 Earnings Release Conference Call Presentation
Telecom Argentina 2Q14 Earnings Release Conference Call Presentation
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 2
Slide 4: 2Q14 confirms the slowdown trend in the economic activity
2Q14 confirms the slowdown trend in the economic activity Economic activity per sector Wages Central Bank Reserves Total Financial interm. National Wages - ∆ % YoY Central Bank Reserves (Billion U$S) Electricity, gas & water Agriculture Social services & Healthcare 29.4% 24.5% 25.9% 29.5% 32.3% 46.4
Slide 5: Agenda
Agenda Market Overview Business Highlights Financials Q&A 4
Slide 6: Business Highlights
Business Highlights 81% Smartphone 56% 65% 73% 73% Revenues up +23% driven by: sellout* Smartphone - Mobile internet (+56%) due to increase in unique users penetration 27% 29% 30% and ARPU 23% 23% - Non regulated fixed revenues grew +28%, Data (+55%) 2Q13 3Q13 4Q13 1Q14 2Q14 and Broadband (26%) in t
Slide 7: Mobile - continuous improvement in value proposition
Mobile - continuous improvement in value proposition: focus on postpaid and future proof revenue mix Mobile Customer Evolution Million of lines / Month/million of customers AR$/Month ARPU & Mob. Internet Unique User Browsing ARPU Mobile Unique Internet User YoY var +9% 71.6 +0.5 MM 65.5 +30% subs. +
Slide 8: Growth supported by improved revenue mix but affected by traditional prepaid services
Growth supported by improved revenue mix but affected by traditional prepaid services Revenue Service Revenue Million AR$ – Argentine Market particip. per subs Breakdown Traditional Prepaid Services 22% -17% 31% +26%19,129 (Pay-per-use) 8% 12% 10,788 Browsing & Content Prepaid +62% +63% 3,126 +22% (
Slide 9: Fixed: Growth in BB accesses and expansion in ICT services
Fixed: Growth in BB accesses thru improved service provisioning and competitive bundling offer, and expansion in ICT services Evolution of BB Thousand of broadband accesses, thousand of net adds BB ARPU & AR$/Month Accesses Churn Evolution +92k; +6% +20% 134.0 138.0 147.9 123.6 125.5 1.5% 1.4% 1.3%
Slide 10: Consolidated revenue growth propped up by Data, Internet & Handsets
Consolidated revenue growth propped up by Data, Internet & Handsets Evolution of revenues 1H13 – 1H14 IFRS, Million of ARS, Percentage +2,872; +23% 880 181 15,585 267 510 166 312 1 313 12,713 242 FIXED MOBILE IN ARGENTINA NUCLEO YoY Variation +10% +55% +26% +3% +8% +9% +56% +71% +32% 1H13 Voice Data
Slide 11: Capex: Focus in Capacity and Coverage to ensure continuous service quality improvement
Capex: Focus in Capacity and Coverage to ensure continuous service quality improvement Capex Evolution Million of ARS FTTx Rollout 4,851 +3x +49% 887 3,257 +5% +46% 2,265 Intangible Assets 842 1,554 459 +10% 2Q13 3Q13 4Q13 1Q14 2Q14 +64% 3,964 417 PP&E +59% PP&E 2,415 1,806 Capex breakdown 1,137 Oth
Slide 12: 3G/4G Spectrum auction: Total Frequencies available
3G/4G Spectrum auction auction:: Total Frequencies available 3G: Cap 50 Mhz LTE / 4G: 60 Mhz SOUTH NORTH AMBA** 1,900 Mhz 30 30 35 AWS* 90 Price per Mhz (in 1.0 4.4 0.6 Price per Mhz (in 9.44 million U$S) million U$S) 850 Mhz 7.5 700 Mhz 90 Price per Mhz (in 6.0 Price per Mhz (in 9.87 million U$S) m
Slide 13: Agenda
Agenda Market Overview Business Highlights Financials Q&A 12
Slide 14: TEO Group: Consolidated Results
TEO Group: Consolidated Results IFRS, Million of ARS, Percentage IFRS, Million of ARS, Percentage Revenues OIBDA* % of Revenues Personal - Mobile 69% Fixed Business 16% +23% Broadband 10% +15% Nucleo - Mobile 5% 15,585 4,119 +23% 7,564 +14% 12,713 6,570 3,624 27,287 2Q 2Q 22,117 +22% 8,119 +10% 2,00
Slide 15: TEO Group: Consolidated costs and OIBDA evolution
TEO Group: Consolidated costs and OIBDA evolution Operating Income Before Depreciation and Amortization 1H13 – 1H14 IFRS, Million of ARS YoY +495; +14% Variation 605 880 14 664 316 149 385 2,009 68% 105 156 47% 35% 32% 35% 25% 4,119 18% 18% 3,624 11% 1% OIBDA 1H13 Ss. Revenues Handsets Handsets ITX
Slide 16: TEO Group: Consolidated Results
TEO Group: Consolidated Results Net Income Operating Income attributable to IFRS, Million of ARS, Percentage IFRS, Million of ARS, Percentage Telecom in million of AR$ 1H13 1H14 Net Interests $ 253 $ 238 FX results & results on NDF -$ 62 -$ 228 Others $ 23 $ 144 Total $ 214 $ 154 +14% +19% 4,518 +27
Slide 17: TEO Group: FCF, Net Financial Position & Hedging Strategy
TEO Group: FCF, Net Financial Position & Hedging Strategy IFRS, Million of ARS - Last 12 months Free Cash Flow Operating free Cash Flow 2,063 8,059 5,562 898 858 342 1,645 1,599 378 OIBDA Capex Δ WK & others 5,094 3,807 Net Financial Position Net Financial Net Financial Telecom Argentina 1,650(1) Op
Slide 18: Net Financial Position (financial instruments at fair value)
Net Financial Position (financial instruments at fair value) IFRS, Million of AR$ Fair Value NFP Investments in AR Bonds Fair Value Book Value Government Bonds 876 - Non Non--restructured Bonds Government Bonds 1,153 Dollar Linked Bonds 54 Dollar Linked Bonds 50 - Under Argentine jurisdiction Notes
Slide 19: Dividends: Paying dividends 5 years in a row
Dividends: Paying dividends 5 years in a row Evolution of Dividend In million of AR$ Declared Comparison Dividend LATAM TELCOS 42% 37% TELECOM ARGENTINA 1,202 1,000 807 3.6% 3.8% Dividend Yield Pay out Ratio 2012 2013 2014 Dividend Payment Total Dividend AR$ 1.24 per outstanding share in circulation
Slide 20: Agenda
Agenda Market Overview Business Highlights Financials Q&A 19