Slide 1: 3Q15 Earnings Release Conference Call Presentation
Telecom Argentina 3Q15 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: Slow economic activity with a challenging external sector
“Slow economic activity with a challenging external sector” Economic activity per sector Wages Central Bank Reserves Total Construction National Wages - ∆ % YoY Central Bank Reserves (Billion U$S) Agriculture Electricity, gas & water 43.3 Public Admin & Defense 24.5% 25.9% 33.7% 32.7% 29.1% 29.6% 31
Slide 5: Agenda
Agenda Market Overview Business Highlights Financials Q&A 4
Slide 6: Highlights
Highlights BUSINESS Commercial Offer oriented towards Data & Internet Solid performance in value segments in 3Q15 Strong smartphone sell out of 98% in line with solid demand at 4G devices, but limited by constraints on imports. Solid growth of alternative sources of devices Pricing scheme simplifica
Slide 7: TEO Group – Consolidated results
TEO Group – Consolidated results Total Revenues, Million AR$, % EBITDA, Million AR$, % +22% +18% 33,341 28,590 +15% 27,287 24,183 8,702 +24% 7,664 7,564 6,186 FY13 FY14 9M14 9M15 Service Revenues , Million AR$, % +18% +21% 28,278 24,012 24,968 20,568 FY13 FY14 9M14 9M15 EBITDA EBITDA FY13 FY14 9M14
Slide 8: Group Revenues – focus on mix and trend
Group Revenues – focus on mix and trend AR$, Million Retail Fixed Voice Group Revenue Mix +13% 2,379 2,109 17% 846 3Q 723 704 12% 788 2Q Retail Fixed Voice 9% 8% 682 9% 745 1Q 14% 16% BB and fixed data 9M14 9M15 Broadband & Fixed Data Retail Mobile 49% 52% +34% 4,563 Internet 3,408 Mobile 35% 1.649
Slide 9: Fixed – UBB accesses increased significantly in 3Q15 propped by competitive offer
Fixed – UBB accesses increased significantly in 3Q15 propped by competitive offer BB Accesses BB ARPU & Churn Thousand of broadband accesses, thousand of net adds AR$/Month +54k; +3% +38% +64k; +4% 217.4 167.3 178.5 201.6 157.8 1,804 1,771 1,750 1,707 1.3% 1.2% 1.3% 1.4% 1.4% 3Q14 4Q14 1Q15 2Q15 3Q1
Slide 10: Fixed – ARBU sustained thru flat pricing + price adjustment in the monthly fee
Fixed – ARBU sustained thru flat pricing + price adjustment in the monthly fee ARBU AR$/Month In AR$ 20% Lines in Service Thousand of lines 69.6 64.4 60.1 60.5 4,106 4,093 4,077 4,064 4,054 58.1 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 Drivers of ARBU increase: increase: Monthly Fee Tariff
Slide 11: Mobile – 3Q15 postpaid migrating to a Data Centric offer
Mobile – 3Q15 postpaid migrating to a Data Centric offer Customer Base (Mln) TOWARDS Share of web traffic by device 19.8 19.41 Postpaid 1 6.3 6.3 13.5 13.2 Prepaid YoY 3Q14 3Q15 Source: Stat Counter, Q1 2015 Market Share2 33% 33% Hours of connection per user POSTPAID GROSS ADDS >390K 4.4 2,7 4.9 4,2
Slide 12: Mobile: Focus on data opportunity and revenue securization
Mobile: Focus on data opportunity and revenue securization Revenue Mix Users mix Bundle Prepaid Prepaid Mobile services revenue mix PxQ Postpaid Postpaid 40% 40% 9M14 9M15 9M14 9M15 9M14 9M15 33% 43% Data penetration, Data Usage MBOU/month ARPU Browsing AR$/month 26% Monthly unique users in million
Slide 13: Mobile – Data Centric Plans
Mobile – Data Centric Plans New Concept As a platform to Make Everything Possible EVOLUTION SIMPLIFICATION It is not only about EVOLUTION of New and simplified plans Technology, it is about how people adapted for every need. react to it. New Plans Past Current One on One Connectivity Focus plans con
Slide 14: Mobile – Strong Positioning in 4G
Mobile – Strong Positioning in 4G Main cities with 4G coverage Average ARPU 4G ARPU* 6% 21% Apr/May Jul/Aug Apr/May Jul /Aug DL & UL Speed 4G Customers Local Benchmark NETWORK ROLLOUT As of today more than 870 sites installed. >200% Presence in 188 locations of 18 provinces. Offering higher speed an
Slide 15: Capex – Highlighting Mobile accesses thru network deployment
Capex – Highlighting Mobile accesses thru network deployment Capex Evolution 4G Targets Million of AR$ 8,957 Coverage over total population +85% 6,791 +1.7X 3,530 +78% 2,256 Spectrum 3,819 4,851 5,427 4,535 Actual Dec-15 FY13 FY14 9M14 9M15 4G Sites % Revenues 18% 27% 16% 24% +1.6X Capex Breakdown 5
Slide 16: Agenda
Agenda Market Overview Business Highlights Financials Q&A 15
Slide 17: TEO Group: Consolidated Results
TEO Group: Consolidated Results Service Rev growth in Argentina Service Revenues 20,0% 21,9% 21,0% 24,4% 14,0% 3Q14 4Q14 1Q15 2Q15 3Q15 Revenues EBITDA IFRS, Million of AR$, Percentage IFRS, Million of AR$, Percentage 28,590 +18% +15% +24% 7,664 +22% 24,183 3Q 6,186 10,094 2,529 3Q +17% +22% 8,598 2
Slide 18: TEO Group: Consolidated costs and EBITDA evolution
TEO Group: Consolidated costs and EBITDA evolution EBITDA 9M14 – 9M15 IFRS, Million of AR$ +1,478; +24% YoY Variation 7 328 23 1,290 442 487 378 4,375 612 7,664 6,186 32% 28% 18% 21% 21% 15% 0% 1% -11% EBITDA 9M14 Ss. Revenues & Handsets Handsets Costs ITX Costs Labor Costs Taxes Other Marketing Fee
Slide 19: TEO Group: Net Income Evolution
TEO Group: Group: Net Income Evolution In Million of AR$ 9M14 9M15 3Q14 3Q15 Net Interests $ 231 -$ 255 -$ 7 -$ 168 Gains on Mutual Funds & $ 224 $ 300 other investments $ 77 $ 170 FX results -$ 205 -$ 194 $ 17 -$ 99 Results on NDF -$ 20 -$ 11 -$ 14 $ 36 Others $ 0 -$ 32 $3 -$ 12 Total $ 230 -$ 192
Slide 20: 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 1,696 10,180 6,143 1,003 3,034 3,526 5,786 107 90 EBITDA Capex Δ WK & others -1,586 861 Net Financial Operating Spectrum Net Interest FX Dividend Net Financial Taxe
Slide 21: Agenda
Agenda Market Overview Business Highlights Financials Q&A 20