Slide 1: 3Q14 Earnings Release Conference Call Presentation
Telecom Argentina 3Q14 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 Conclusions Relevant Matters Q&A 2
Slide 4: 3Q14: unsustainable trilemma (Economic Activity + Imports restriction + Reserves)
3Q14: unsustainable trilemma (Economic Activity + Imports restriction + Reserves) Economic activity per sector Wages Central Bank Reserves Total National Wages - ∆ % YoY Central Bank Reserves (Billion US$) Electricity, gas & water Social services & Healthcare Agriculture Public Admin & Defense 29.4%
Slide 5: Agenda
Agenda Market Overview Business Highlights Financials Conclusions Relevant Matters Q&A 4
Slide 6: Business Highlights
Business Highlights Internet Mobile users and revenues keep growing (1.1 million new users YoY) Broadband wireline continues to gain strength (81k new subs YoY) Business Accelerated roll out of 3G and preparation for 4G VDSL cabinet deployment (enabling up to 50 Mb connections) Spectrum auction held
Slide 7: Consolidated revenue growth propped up by Data, Internet & Handsets
Consolidated revenue growth propped up by Data, Internet & Handsets Evolution of revenues 9M13 – 9M14 IFRS, Million of AR$, Percentage +4,356; +22% Impact of SMS billing per second -AR144 MM; -4% 24,183 1,406 312 518 -5 329 359 822 19,827 241 374 FIXED MOBILE IN ARGENTINA NUCLEO YoY Variation +9% +5
Slide 8: Mobile Business in Argentina – Focusing on High value customers and services
Mobile Business in Argentina – Focusing on High value customers and services FOCUS ON +7% DATA Smartphone 1.8 1.7 ARPU 70.4 75.2 Penetration AR$/Month Gross Adds (in MM) -3% 26.5 Voice 27.2 30% 23% +13% 48.7 2.7% 3.0% Non Voice 43.2 Monthly Churn 3Q13 3Q14 3Q13 3Q14 Smartphone Sellout Browsing ARPU
Slide 9: Mobile Business in Argentina - Prepaid offering to revert challenging environment and stimulate usage
Mobile Business in Argentina - Prepaid offering to revert challenging environment and stimulate usage Customers Prepaid MOU recharges <30 days 295 TOU 265 220 182 158 56 55 45 54 64 3Q13 4Q13 1Q14 2Q14 3Q14 PREPAID AR$/Month Results of “Super Chip” +50% 24.7 Customer Base Stabilizing CB and expandin
Slide 10: Mobile Business in Argentina - Postpaid segment – Innovative Offers
Mobile Business in Argentina -Postpaid segment – Innovative Offers that result in encouraging trends Billing per Total Postpaid Subscribers (in MM) second MOU 241 240 effect TOU 202 197 195 6.4 6.3 239 219 180 161 143 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 POSTPAID AR$/Month BLACK ILIMITA
Slide 11: Fixed: Leadership in flow share in BB accesses thru improved service provisioning
Fixed: Leadership in flow share in BB accesses thru improved service provisioning and competitive bundling offer Thousand of broadband accesses, thousand of net adds AR$/Month +81k; +5% +26% 134.0 138.0 147.9 157.8 Monthly Churn 125.5 1,750 1,707 1,714 1,726 ARPU (AR$) 1,669 1.4% 1.3% 1.3% 1.4% 1.3%
Slide 12: Capex: Focus in Capacity and Coverage to ensure continuous service quality improvement
Capex: Focus in Capacity and Coverage to ensure continuous service quality improvement Capex Evolution FTTx Rollout Others Mobile IT +3x Access 2% 12% 33% 31% 22% Core & Fixed Infraest. 1 Access 4,851 Million of AR$ +49% 887 3Q13 4Q13 1Q14 2Q14 3Q13 +32% 3,819 3G Cells 3,257 +5% 784 2,896 +21% Intan
Slide 13: Agenda
Agenda Market Overview Business Highlights Financials Conclusions Relevant Matters Q&A 12
Slide 14: TEO Group: Consolidated Results
TEO Group: Consolidated Results Revenues IFRS, Million of AR$, Percentage OIBDA* IFRS, Million of AR$, Percentage Handsets Revenues – Costs 463 % of Revenues (in million of AR$) Personal – Mobile 69% Fixed Business 16% -55 -148 Broadband 10% Nucleo – Mobile 5% -491 FY12 FY13 9M13 9M14 +23% Before ca
Slide 15: TEO Group: Consolidated costs and OIBDA evolution
TEO Group: Consolidated costs and OIBDA evolution Operating Income Before Depreciation and Amortization 9M13 – 9M14 IFRS, Million of AR$ YoY +632; +11% Variation 452 950 1,402 150 1,006 445 240 605 2,968 176 166 63% 44% 34% 32% 35% 23% 12% 12% 6,186 5,554 17% 11% OIBDA 9M13 Ss. Revenues & Handsets H
Slide 16: TEO Group: Consolidated Results
TEO Group: Consolidated Results Operating Net Income Income IFRS, Million of AR$, Percentage attributable to Telecom IFRS, Million of AR$, Percentage in million of AR$ 9M13 9M14 Net Interests $ 428 $ 231 +14% Gains on Mutual Funds FX results $ 46 $ 113 -$ 131 -$ 205 3,843 Results on NDF $ 14 -$ 20 +
Slide 17: TEO Group: FCF, Net Financial Position & Hedging Strategy
TEO Group: FCF, Net Financial Position & Hedging Strategy IFRS, Million of AR$ - Last 12 months Free Cash Flow Operating free Cash Flow 2,165 8,196 5,774 1,132 1,290 728 375 2,234 152 OIBDA Capex Δ WK & others 5,684 3,526 Net Financial Position Net Financial Net Financial Telecom Argentina 1,235(1)
Slide 18: 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 19: Agenda
Agenda Market Overview Business Highlights Financials Conclusions Relevant Matters Q&A 18
Slide 20: Events on OIBDA
Events on OIBDA Actions Items: YoY OIBDA growth Price increase in mobile will have full impact in 4Q14 (~14%) Recent launch of appealing commercial offers (“Super September Chip” & “Full Day” packs) to enrich value proposition 11% YoY Positive KPI trends: Rising mobile Data penetration Increase in p
Slide 21: Agenda
Agenda Market Overview Business Highlights Financials Conclusions Relevant Matters Q&A 20
Slide 22: Capital Ownership and Corporate Structure
Capital Ownership and Corporate Structure Shareholder Structure as of October 29th , 2014 Telecom Italia Fintech Group Werthein Group Group 51% 32% 17% On October 29th, 2014 TI sold to Fintech 17% of its Sofora shareholding shares. (Ordinary shares) Preferred B Sofora (Listed in NYSE) Telecomunicaci
Slide 23: Geographical Footprint
Geographical Footprint Presence by Region Northern Region Population 17.2 MM Technological and Market Leadership Mkt Share Sites Spectrum Buenos Aires Metro Area Population 15.2 MM Competitive Gap Mkt Share Sites Spectrum Southern Region Population 9.8 MM Low market share Mkt Share Sites Spectrum Te
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Slide 25: Agenda
Agenda Market Overview Business Highlights Financials Conclusions Relevant Matters Q&A 24