Telecom Argentina Sa Class B · BCBA:TECO2
Telecom Argentina Sa Class B — FY2017 Earnings Presentation
32 slides from Telecom Argentina Sa Class B's earnings presentation, March 2018
Slide 1: Telecom Argentina Earnings Release FY2017
TELECOM ARGENTINA Earnings Release March 2018 FY2017
Slide 2: 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 and capital
Slide 3: Agenda
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 2
Slide 4: Agenda: Macro and Industry Overview
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 3
Slide 5: Macro: High reserves accumulation, amidst increases of FX rates
EXTERNAL FRONT A central element of the Central Bank’s policy MACRO: HIGH during 2017 was the accumulation of RESERV ES international reserves. In this regard, international reserves experienced an A C C U M U L AT I O N , CENTRAL BANK RESERVES (Billion U$S) 55.1 increase of almost U$S 15.8Bn during
Slide 6: Macro: Increases in activity consolidate, but inflation may take longer to decline
DOMESTIC ACTIVITY & MACRO: INCREASES INFLATION IN ACTIVIT Y C O N S O L I D AT E , B U T HOUSEHOLD CONSUMPTION Revised official figures as of 4Q17 Overall household consumption continues to show a I N F L AT I O N M AY TA K E 3.5% 4.0% 4.2% 4.0% strong recovery from past year levels. Nonetheless,
Slide 7: Agenda: Vision & Strategy
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 6
Slide 8: Vision & Strategy
VISION & Leader in solutions and convergent connectivity services, with an agile ST R AT E GY structure and focused on our customers VALUED ADDED PROPOSAL COVERAGE CONVERGENT SYSTEMS & & CLIENT EXPERIENCE NETWORK CAPACITY SERVICES COMPANY TRANSFORMATION 7
Slide 9: Agenda: Business Highlights
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 8
Slide 10: FY17 Highlights
FY17 14 Highlights Revenues P$ 65.2 bn +22% YoY +P$ 11.9 bn P$ 41.0 bn +34% YoY +P$ 10.4 bn +34% YoY +39% YoY EBITDA P$ 19.4 bn +P$ 4.9 bn P$ 15.2 bn +P$ 4.2 bn Fixed Voice ARBU: $ 152.3 +56% YoY Cable TV and Broadband ARPU Broadband ARPU: $ 359.6 +33% YoY ARPU: $ 796.3 +41% YoY Mobile ARPU: $ 142.3
Slide 11: Revenues Breakdown
REVENUES BREAKDOWN MOBILE SERVICES T E LE COM REVENUES +22% INTERNET +57% In P$ Million 5% 5% 34,289 17,048 12% 28,049 10,832 FY16 FY17 53% FY16 FY17 25% FIXED SERVICES FIXED VOICE +33% + INTERNET Mobile Fixed Voice + Internet +35% Handsets & Equipments Data Paraguay 19,797 16,220 14,923 12,004 FY16
Slide 12: Mobile in Argentina: Capturing Value
MOBILE SUBSCRIBERS DATA PENETRATION DATA USAGE In Million MOBILE IN Monthly unique users in million MBOU/ MONTH ARGENTINA : 19.5 19.0 +14% +75% 9.7 C APTURING VALUE In P$ Million 8.6 6,4 6.6 33% 35% 1,813 1,038 FY16 FY17 Prepaid Postpaid FY16 FY17 FY16 FY17 SERVICE REVENUES BROWSING ARPU Browsing Vo
Slide 13: Mobile 4G Evolution
MOBILE 4G EVOLUTION QO 4G COVERAGE (1) 4G CLIENTS ® 4G TRAFFIC Millions of 4G clients % 4G data traffic over the total data traffic Cll, 173 x2.9 xl8 Location with 4G coverage . t id across the country. 5.5 1.9 im — fe) Dec-15 Dec-16 Dec-17 85% | 22 [ ] ; ; i] ; ; ; ; ] ‘i q = 4G clients average dat
Slide 14: Fixed – Home Convergence Strategy
FIXED SERVICES SUBS UBB SUBS evolution ARNET + VOICE evolution FIXED – HOME +106% YoY +220% CO N V E RG E N C E Lines in Service: 3.8 mm ST R AT E GY P U S H E S UBB OFFER Internet Access: 1.7 mm HOME CONVERGENCE STRATEGY FY16 FY17 VOICE ARBU BROADBAND ARPU & CHURN FIXED DATA +28% +23% 387.7 In P$ M
Slide 15: Revenues Breakdown Pay TV Services Cablevisión
REVENUES BREAKDOWN PAY TV SERVICES +31% CABLEVISIÓN 24,589 3% REVENUES 6% 4,099 18,750 In P$ Million 2,412 20,490 16,338 31% 50% FY16 FY17 Cable TV Premium TV 10% INTERNET Cable TV Premium TV Internet Mobile Other +67% 12,865 7,697 FY16 FY17 14
Slide 16: Fixed Services
UNIQUE SUBSCRIBERS SUBSCRIBERS DISTRIBUTION Number of subs in thousand 10% 10% F I X E D S E RV I C E S 3,918 46% 49% 3,912 44% 41% FY16 FY17 FY16 FY17 Cable TV Bundled Broadband INTERNET SUBSCRIBERS Number of subs in thousand 2,335 2,183 +7% YoY FY16 FY17 15
Slide 17: Fixed Services
CABLE TV SUBSCRIBERS CABLEVISIÓN FLOW SUBSCRIBERS Number of subs in million Number of subs in thousand 687.8 F I X E D S E RV I C E S 3,528 3,503 254.5 4.5 1.4 FY16 FY17 FY16 FY17 Flow Box Flow App TOTAL ARPU & CHURN PREMIUM SUBSCRIBERS 0.4 1000 887 +44% 900 0.35 800 0.3 625 700 600 0.25 500 0.2 400
Slide 18: Capex: Network Deployment to Improve Capacity and Quality
CAPEX EVOLUTION C A P E X: N E T WO R K D E P LOY M E N T TO Million of P$ -2% I M P R O V E C A PA C I T Y 11,386 11,143 FTTH DEPLOYMENT AND QUALIT Y In available commercial zones 4Q 3,687 +22% 4,505 FY16 FY17 1Q17 2Q17 3Q17 4Q17 % REVENUES 21% 17% Between 2018-2020 Telecom will invest U$S Million
Slide 19: Agenda: Financials
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 18
Slide 20: Consolidated Results: Revenues and EBITDA
REVENUES EBITDA SERVICE REVENUE GROWTH IFRS, Million of P$, Percentage ∆ OF SERVICE REVENUES IFRS, Million of P$, Percentage ∆ OF REVENUES +22% IN ARGENTINA: +26% IN ARGENTINA: +23% IN PARAGUAY: +21% +34% CO N S O L I DAT E D IN PARAGUAY: +13% 65,186 19,356 R E S U LTS 53,240 4Q 17,923 14,424 4Q
Slide 21: Consolidated Results: Operating and Net Income
OPERATING INCOME NET INCOME (Attributable to Telecom) IFRS, Million of P$, Percentage IFRS, Million of P$, Percentage CO N S O L I DAT E D 3G / 4G Disposal and In million of P$ FY16 FY17 ∆$ R E S U LTS Period D&A Spectrum Amortization impairment of PP&E Total Operating Income $ 7,843 $ 12,112 $ 4,26
Slide 22: Free Cash Flow, Net Financial Position
FCF IFRS, Million of P$. Last 12 months F R E E C A S H F LOW, OPERATING FREE CASH FLOW NET FINANCIAL 19,356 11,143 1,163 POSITION 5,892 9,376 4,192 3,260 EBITDA Capex ∆ WK & 2,400 others 189 341 FCF GENERATION Net Debt Operating Taxes Net Interest FX Dividend Net Debt FY16 Free Cash & Others Variat
Slide 23: Consolidated Results: Cablevisión Revenues and EBITDA
REVENUES EBITDA IFRS, Million of P$, Percentage IFRS, Million of P$, Percentage +34% +39% CO N S O L I DAT E D 40,952 15,155 R E S U LTS 30,571 4Q 11,174 4Q 3,893 +34% 10,931 8,334 +41% 2,753 20,125 7,295 14,226 4,694 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 % REVENUES EBITDA EVOLUTION 33% 36% 36% 37
Slide 24: Consolidated Results: Cablevisión Operating and Net Income
OPERATING INCOME NET INCOME IFRS, Million of P$, Percentage (Attributable to Cablevisión) IFRS, Million of P$, Percentage In million of P$ FY16 FY17 ∆$ Operating Income $ 8,343 $ 11,169 $ 2,826 CO N S O L I DAT E D +34% 11,169 Other Income $ 103 $ 29 -$ 74 Financial Results -$ 2,374 -$ 2,612 -$ 237
Slide 25: Free Cash Flow, Net Financial Position
FCF F R E E C A S H F LOW, IFRS, Million of P$. Last 12 months NET FINANCIAL OPERATING FREE CASH FLOW 15,115 11,681 POSITION 2,034 1,606 5,470 6,936 2,669 113 6,451 EBITDA Capex ∆ WK & 823 others Net Debt Operating Taxes Net Interest FX Dividend Net Debt FY16 Free Cash & Others Variations Payments2
Slide 26: Agenda: The Merger
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 25
Slide 27: Transaction Summary and Capital Ownership
TRANSACTION SUMMARY T R A N S AC T I O N Telecom Argentina S.A. incorporated Cablevisión S.A. in an all stock transaction S U M M A RY A N D Telecom issued 1,184.5 mm new shares for Cablevisión S.A. shareholders C A P I TA L All resulting company share classes have equal economic and voting ri
Slide 28: Key Figures
REVENUES FY17 – U $ S m m ( 1 ) EBITDA FY17 – U $ S m m ( 1 ) +63% +78% KEY FIGURES 6,404 3,933 2,082 2,471 1,168 914 + + EBITDA margin 30% 37% 33% COMBINED REVENUES BREAKDOWN (FY17)) COMBINED CLIENTS B Y S E G M E N T I N A R G E N T I N A Devices 8% Fixed BB 19% Fixed Voice 8% 3.8mm 4.1mm Pay TV s
Slide 29: Combined Figures as of December 31, 2017
CO M B I N E D In U$Smm – FY17 T E O (1) C V S A (2) C o m b i n e d (3) FIGURES AS OF Revenues 3,933 2 ,47 1 6,4 0 4 DECEMBER 31, EBITDA 1,168 914 2,082 2017 Gross Debt 656 585 1,241 Net Debt 175 346 521 Capex 672 705 1,377 R a t i o s (4) Gross Debt / EBITDA 0.63x 0.72 x 0.67x Net Debt / EBITDA 0.
Slide 30: Merger: Next Steps
NEXT STEPS M E RG E R BACK END FRONT END NETWORK F U Preferred Network, N SAP integration, CRM implementation, C Capex Optimization, T New ERP platform, Big Data, I O Deployment of new sites N Processes integrationS Customer Centric S and fiber optic P A R T N E R S Significant cost synergies potent
Slide 31: Agenda: Q&A
AG E N DA MACRO AND INDUSTRY OVERVIEW VISION & STRATEGY BUSINESS HIGHLIGHTS FINANCIALS THE MERGER Q&A 30
Slide 32: Investor Relations Contact
Investor Relations Contact Telephone: (5411) 4968 3628 E-mail: relinver@teco.com.ar