Slide 1: First Quarter of Fiscal Year 2012 Earnings Results Conference Call Presentation
First Quarter of Fiscal Year 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: Consumption maintains its impetus
Market Overview: Consumption maintains its impetus 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 Balance
Slide 5: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 4
Slide 6: Business Highlights
Business Highlights Strong top of mind strengthens market position MOBILE VAS +44% YoY; 52% of services revenues Internet revenues up 31% YoY in 1Q12 FIXED Bundling voice with fixed/wireless broadband NGN & FTTC deployments in key locations position TEO as first mover in these technologies As from F
Slide 7: Mobile: Leadership in net adds with a view to MNP
Mobile: Leadership in net adds with a view to MNP TEO vs. market growth • #1 in Revenue Share Million of lines • #1 Postpaid net adds +7% +7% 55,2 • MNP Promotions: 54,5 51,4 50,9 • Focus on customer life extension • Focus on packages to enhance customer satisfaction 36,3 +6% 36,7 34,6 +5% 34,5 • AR
Slide 8: Mobile: Value Added Service
Mobile: Value Added Service Service Revenue Breakdown SAC & SRC Million ARS – Argentine Market as % of Service Revenues – Before capitalization of SAC & SRC 10.983 +29% 16,4% 15,3% 8.483 Retail & 5.727 3,6% Advertising 3,5% Wholesale +12% +28% Voice 3.101 3,8% 5.095 Handset 4,2% subsidies 2.432 Data
Slide 9: Paraguay Mobile Market: 3G services driving expansion
Paraguay Mobile Market: 3G services driving expansion Mobile lines Thousand of lines (includes 3G modems) • Successful adoption of Personal Brand restyling +16% • Increasing EBITDA margins thanks to high VAS revenue growth +14% • Outstanding postpaid growth; backed on Mobile 2.149 2.203 internet ser
Slide 10: Mobile Revenues: Data & Internet, key drivers of growth
Mobile Revenues: Data & Internet, key drivers of growth Evolution of revenues 1Q11 – 1Q12 IFRS, Million of ARS, Percentage +822 (+29%) 51 3.705 123 102 367 165 14 2.883 YoY Variation +18% +3% +38% +80% +34% +34% 1Q11 Retail Wholesale* Data Internet Equipment Nucleo* 1Q12 Revenues Voice Voice (Paragu
Slide 11: Broadband: Sustained revenue and customer expansion
Broadband:: Sustained revenue and customer expansion Broadband Evolution of Accesses • Bundling and new products contributes to Thousand of broadband accesses control churn +13% • Arnet Play video streaming supports +14% 4.441 4.526 4.009 customer retention 3.911 • Arnet Turbo increases bandwidth an
Slide 12: Fixed voice: Commercial offers based on simplicity
Fixed voice: Commercial offers based on simplicity • Simple offer proposition: Pricing & bundling: Evolution of Lines in Service Thousand of lines in service Unlimited local minutes 100-200-300 calls per month - no time limits +0,7% +0,8% ADSL + Video Streaming + 3G services • ARBU up 7% YoY in 1Q12
Slide 13: Fixed Services: BB + ICT continue to accelerate growth
Fixed Services: BB + ICT continue to accelerate growth Evolution of revenues 1Q11 – 1Q12 IFRS, Million of ARS, Percentage +170 (+14%) 109 -10 1.421 28 44 -1 1.251 39% Regulated Regulated 42% YoY +21% +31% +8% -1% -36% Variation Non Regulated 61% Non 58% Regulated Revenues Retail Voice Wholesale Data
Slide 14: Evolution of CAPEX
Evolution of CAPEX Capex Evolution PP&E Capex Breakdown Million of ARS Others +32% 3.192 Mobile 7% access 2.424 IT 24% 15% +25% 2.318 PP&E 1.852 18% +49% 690 Fixed 36% access 462 +48% Intangible +53% 874 492 Core & Assets 572 333 Infraestructure1 +53% 198 129 2010 2011 1Q11 1Q12 % Revenues 17% 17% 1
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 +23% 6.015 4.874 +24% 5.126 4.134 +15% 1.436 1.648 2010 2011 1Q11 1Q12 2010 2011 1Q11 1Q12 Regulated OPBDA 14% 12% 13% 11% 33% 33% 35% 32% Revenues Margin *OPBDA = Operating Prof
Slide 17: TEO Group: Consolidated Costs
TEO Group: Consolidated Costs Consolidated Costs1 as % of Revenues Operating Costs1 1Q12 Labor Costs Others2 68,0% 19% 65,5% 26% 8,8% ITX Costs 8,0% 13% Taxes Marketing & 20,5% 20,1% Sales 30% 12% Taxes 9,0% 8,7% Marketing & ITX costs 12,7% Labor costs 13,2% Sales 15,2% Others2 17,3% • Strong moment
Slide 18: TEO Group: Consolidated Results
TEO Group: Consolidated Results Operating Profit Net Income IFRS, Million of ARS, Percentage 3.857 +22% 2.542 +30% 29 3.162 1.949 Non 14 Controlling Interest +11% +30% 2.513 708 +8% 640 1.033 1.935 958 Attributable to 10 6 Telecom +10% (Owners of 634 698 the parent) 2010 2011 1Q11 1Q12 2010 2011 1Q1
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 6.227 3.420 1.348 455 211 60 915 OPBDA Capex ∆ WK & others 3.262 Net Financial Position 2.982 Telecom Argentina 716 (1) 1.712 Telecom Personal 2.370 (2) Nucleo (Paraguay) (104) Net Financial Oper
Slide 20: Agenda
Agenda • Market Overview • Business Highlights • Financials • Q&A Session 19