Telecom Argentina Sa Class B · BCBA:TECO2

Telecom Argentina Sa Class B — Q2 2016 Earnings Presentation

23 slides from Telecom Argentina Sa Class B's earnings presentation, 2016

  1. Slide 1: Telecom Argentina 2Q16 Earnings Release Conference Call Presentation

    Telecom Argentina 2Q16 Earnings Release Conference Call Presentation

  2. 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

  3. Slide 3: Agenda

    Agenda Macro Overview Business Highlights, Strategy & Performance Financials Q&A 2

  4. Slide 4: Macro: Challenging context signaled by a needed macro adjustment

    Macro: Challenging context signaled by a needed macro adjustment External Front Central Bank Reserves FX Rate (Billion U$S) Official FX Rate Blue FX Rate Official Closing of the gap Mean - 1Q16 = 14.48 14,92 31.4 FX (BCRA) Mean - 2Q16 = 14.23 30.6 29.6 30.5 25.6 14.92 13.01 Unification of 13.01 2013

  5. Slide 5: Macro: Private consumption impacted by economic context

    Macro: Private consumption impacted by economic context Retail & Electronic Appliances Sales 4% 2%  Retail sales show weak performance during 1H16 but with a strong decline since Dec 15.  In particular, sales of electronic appliances have registered important downfalls from -19% past year. Many pu

  6. Slide 6: Agenda

    Agenda Macro Overview Business Highlights, Strategy & Performance Financials Q&A 5

  7. Slide 7: Highlights

    6 Highlights BUSINESS FINANCIALS Mobile - Sustained growth driven by Data & Internet  Revenue growth in line with inflation rate  Solid position in value segments: postpaid adds  Service Revenues growth of 31% in Argentina, +337k subs in 2Q16, +5% YoY mainly driven by:  Refocus of handset busine

  8. Slide 8: Capital Ownership

    Capital Ownership Shareholders´ Structure as of March 8th, 2016 Fintech W de Argentina Telecom LLC Inversiones S.A.  On March 8th, 2016 the Telecom Italia Group completed the transfer of 51% of 68% 32% the shares of Sofora to Fintech Telecom, LLC (Ordinary shares) Preferred B Sofora (Listed in NYSE

  9. Slide 9: Strategy fundamentals for the future

    Strategy fundamentals for the future Continuing with Strategic Plan • Capex: P$40 Bn for the next 3 years Cloud Services • 100% Company orientation to the local For SMEs and Large Customers market • Strategy designed for the local market 06 01 01 Customer Centric Content Management Vision • Value Al

  10. Slide 10: Group Revenues: Accelerated pace as a result of incremental usage and price adjustments

    Group Revenues: Accelerated pace as a result of incremental usage and price adjustments AR$, Million GROUP REVENUE MIX Retail Fixed Voice Broadband & Fixed Data +37% +36% +46% Revenues YoY +19% Retail Fixed Voice 8% 8% BB and Fixed Data 16% 17% 2,092 4,240 1,533 2,914 1H15 1H16 1H15 1H16 Retail Mobi

  11. Slide 11: Fixed – Continuous growth in UBB connections

    Fixed – Continuous growth in UBB connections ≥10Mb subs. BB Accesses 40% Thousand of broadband accesses, thousand of net adds +36k; +7% +12k, +1% 492 515 551 394 448 1,786 1,798 2Q15 3Q15 4Q15 1Q16 2Q16 ≥10Mb % of CB 1H15 1H16 22% 25% 27% 28% 31% BB ARPU & Churn Data / ICT Revenues +29% IFRS Million

  12. Slide 12: Fixed – ARBU growth thanks to price increases

    Fixed – ARBU growth thanks to price increases Lines in Service ARBU Thousand of lines AR$/Month +45% 93.7 4.1 4.1 4.0 4.0 4.0 80.9 76.2 69.6 64.4 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 Market Share remained stable ~47% Latam Benchmark USD w/o VAT(*) Business Segment Price adjustments Aug

  13. Slide 13: Mobile: Improved customer profile through growth in value customers and data centric plans

    Mobile: Improved customer profile through growth in value customers and data centric plans Customer Base (Mill) Data penetration Monthly unique users in million 20.0 Postpaid Subs 19.4 13% 6.2 6.5 Data Postpaid 1 Centric 7.7 8.7 33% Subs Prepaid 13.2 13.5 67% Non Data Centric Subs 1H15 1H16 Market S

  14. Slide 14: Mobile – Data acceleration driven by 4G

    Mobile – Data acceleration driven by 4G COVERAGE CONSUMPTION Average Gb per user CITIES WITH COVERAGE OF COVERAGE POPULATION IN PROVINCIAL CAPITAL CITIES CAPITALS + AMBA(*) Type of clients Top Sites CUSTOMERS Location DOWNLOAD SPEED 1 MILLION 2 3 Source: Open Signal (*) AMBA: Metropolitan Area of Bu

  15. Slide 15: Capex: Network deployment to optimize data consumption

    Capex: Network deployment to optimize data consumption Capex Evolution Technical Capex breakdown Million of AR$ +13% 10,100 *Core & infrastructure refers to network related capex, including quality 8,957 and innovation capex. 2,256(*) 3,530(*) +85% 4,495 7,844 2,256(*) 5,427 2,434 47% FY14 FY15 1H15

  16. Slide 16: Agenda

    Agenda Macro Overview Business Highlights, Strategy & Performance Financials Q&A 15

  17. Slide 17: TEO Group: Consolidated Results

    TEO Group: Consolidated Results Service Rev growth in Argentina (Yoy) EBITDA IFRS, Million of AR$, Percentage 30% 31% 21% 24% 24% +25% 2Q15 3Q15 4Q15 1Q16 2Q16 +32% Revenues IFRS, Million of AR$, Percentage 6,755 5,135 +21% 10,866 3,361 2Q16 8,702 34% +37% 2,501 25,406 29% 3,394 1Q16 2,634 40,496 18

  18. Slide 18: TEO Group: Consolidated costs and EBITDA evolution

    TEO Group: Consolidated costs and EBITDA evolution EBITDA 1H15 – 1H16 YoY IFRS, Million of AR$ Variation +1.620;+32% 27.8% -2.8% +0.2% +0.1% +0.2% +0.8% +0.9% -0.7% 26.6% As % of Revenues 12% 5% 17% 10% 9% 9% 11% Others include bad debt expenses, provisions, VAS costs and others Figures may not sum

  19. Slide 19: TEO Group: Consolidated Results

    18 TEO Group: Consolidated Results Operating Net Income Income IFRS, Million of AR$, Percentage attributable to Telecom IFRS, Million of AR$, Percentage 3G/4G Period D&A Spectrum Total Amortization +14% 1H15 1,859 131 1,990 -7% 1H16 2,701 193 2,894 +18% -12% 3,721 3,148 1,956 1,725 6,229 3,673 3,403

  20. Slide 20: TEO Group: Net Income Evolution

    TEO Group: Net Income Evolution IFRS, Million of AR$ in million of AR$ 1H15 1H16 Net Interests -$ 87 -$ 681 Gains on Mutual Funds & $ 130 $ 232 other inv. FX results net of NDF -$ 142 -$ 558 instruments Others -$ 20 -$ 39 Total -$ 119 -$ 1,046 ‘Price effect’ on Financial Results NET DEBT ‘Quantity E

  21. Slide 21: TEO Group: FCF, Net Financial Position

    TEO Group: FCF, Net Financial Position IFRS, Million of AR$ - Last 12 months DIVIDENDS Considering a total dividend payment of P$ 2,000 million, the payout ratio will be equivalent to 59% and P$2.06 per share or P$10.3 per ADR.  Steady retribution to shareholders throughout the years. 6-Year Avg*

  22. Slide 22: Financial strength: Robust cash flow generation, strong balance sheet and solid coverage ratios

    Financial strength: Robust cash flow generation, strong balance sheet and solid coverage ratios Leverage Net Debt / EBITDA Interest Coverage 12,486 2013 2014 2015 2013 2014 2015 10,866 Net Debt/ EBITDA Regional Averages 7,564 8,702 USA 1.4x 2.2x 2.3x 14.3x 10.0x 10.4x 0.4 x 0.2 x 2.8x 3.5x 4.2x 5.9x

  23. Slide 23: Agenda

    Agenda Macro Overview Business Highlights, Strategy & Performance Financials Q&A 22

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