Slide 1: Telecom Argentina 3Q17 Earnings Release Conference Call Presentation
TELECOM ARGENTINA 3Q17 Earnings Release Conference Call Presentation
Slide 2: Disclaimer
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 a
Slide 3: Agenda
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 2
Slide 4: Macro & Industry Overview
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 3
Slide 5: Macro: Reserves show resiliency despite trade deficit and volatility
MACRO: RESERVES SHOW RESILIENCY DESPITE TRADE DEFICIT AND V O L AT I L I T Y I N E X C H A N G E M A R K E T S EXTERNAL FRONT CENTRAL BANK RESERVES (Billion U$S) International Reserves experienced an increase of U$S 2.2Bn 50,5 48,0 50,2 during 3Q17. This was mainly associated with sovereign debt 38,
Slide 6: Macro: Activity recovery accelerates, with uneven decline in inflation
M A C R O : A C T I V I T Y R E C O V E R Y A C C E L E R AT E S , W I T H A N U N E V E N D E C L I N E I N I N F L AT I O N D O M E S T I C A C T I V I T Y & I N F L AT I O N HOUSEHOLD CONSUMPTION Revised official figures as of 2Q17 Overall household consumption continued its recovery, but at a
Slide 7: Vision & Strategy
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 6
Slide 8: 2017 – Actions taken in the transformation process
2 0 1 7 – A C T I O N S TA K E N I N T H E T R A N S F O R M AT I O N P R O C E S S CUSTOMER CENTRIC VISION Evolution of systems and processes CONTENT MANAGEMENT Customer Insight Concrete alliances of value with Successful migration of virtualized OTT according to the preference core system of the
Slide 9: Digital era transformation
D I G I TA L E R A T R A N S F O R M AT I O N D I G I TA L CONVERGENCE I N N O VAT I O N T R A N S F O R M AT I O N DEVELOPMENTOFSOLUTIONS,OTT CONVERGENTBUSINESS AND IOT CONTENT TOGETHER WITH MULTIPLATFORMS7X24 Link people with things INDUSTRYVERTICALS CONVERGENTHOME Transforming Data into Infor
Slide 10: Business Highlights
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 9
Slide 11: 3Q17 Business Highlights
3Q17 BUSINESS HIGHLIGHTS MOBILE FINANCIALS Internet Services: +65% vs. 9M16 Service Revenues: +27% reaching P$41,646 million Data Usage: MBOU +80% vs. 9M16 EBITDA: +40% in 9M17 vs. 9M16 Data Penetration: 9.4 M vs. 8.2 M vs. 9M16 Net income: (attributable to Telecom Argentina) Browsing ARPU : +46% vs
Slide 12: Group Revenues
GROUP REVENUES In P$ Million MOBILE SERVICES IN ARGENTINA GROUP REVENUE MIX +24% INTERNET +65% +22% 12% 25.264 12.353 Handsets 15% 7.497 20.297 9M16 9M17 9M16 9M17 52% Service 53% Mobile FIXED SERVICES Revenues +27% +33% FIXED VOICE + INTERNET +35% 5% 5% Data Fixed Voice 22% 25% + Internet Paraguay
Slide 13: Fixed – Home convergence strategy pushes ultrabroadband offer
F I X E D – H O M E C O N V E R G E N C E S T R AT E G Y P U S H E S U B B O F F E R U LT R A B R O A D B A N D S U B S E V O LU T I O N ARNET + VOICE ‐ evolution Number of subs Number of subs +67% +213% HOME CONVERGENCE STRATEGY 3Q16 4Q16 1Q17 2Q17 3Q17 Launch (Dec‐16) 3Q17 FIXED DATA In P$ Million
Slide 14: Fixed – Price adjustments continue while lines in service remain stable
FIXED – PRICE ADJUSTMENTS CONTINUE WHILE LINES IN SERVICE R E M A I N S TA B L E ARBU DRIVERS OF ARBU INCREASE P$/Month PRICE INCREASES – AUG 17 +48% BUSINESS RESIDENTIAL 155,2 147,7 SEGMENT SEGMENT 134,1 +20% 112,3 $ 168 105,1 +20% $ 140 $ 90 $ 75 3Q16 4Q16 1Q17 2Q17 3Q17 LINES IN SERVICE Previous
Slide 15: Mobile in Argentina: Focus on value
M O B I L E I N A R G E N T I N A : F O C U S O N VA LU E SERVICE REVENUE MIX D ATA U S A G E MBOU/ MONTH DATA USAGE (4G subs) Browsing Voice + Data 2x +80% 51% 55% 63% 1.712 27% 949 49% 37% 9M16 9M17 9M16 9M17 D ATA P E N E T R AT I O N 9M16 9M17 Monthly unique users in million BROWSING ARPU 4 G U
Slide 16: Mobile – 4G evolution
MOBILE – 4G EVOLUTION 4G COVERAGE 4G CLIENTS +89% M O B I L E D ATA T R A F F I C E V O L U T I O N 4 G I N T H E S U B WAY 8.3x +90% sites +200% data traffic increase 2015 2016 2017 2018 2019 2020 Cisco Visual Networking Index 2015‐2020 15
Slide 17: Capex: Network deployment to improve capacity and quality
C A P E X : N E T W O R K D E P L O Y M E N T T O I M P R O V E C A PA C I T Y A N D Q U A L I T Y CAPEX EVOLUTION Million of P$ +13% Lower capex requirements as new ‐11% regulatory goals and conditions were set. 11.386 10,100 7,699 6,638 Spectrum 2.256 1.296 ‐31% Redefinition of sites search and
Slide 18: Financials
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 17
Slide 19: Consolidated Results: Revenues and EBITDA
C O N S O L I D AT E D R E S U LT S REVENUES EBITDA IFRS, Million of P$, Percentage Δ OF REVENUES IFRS, Million of P$, Percentage IN ARGENTINA: +23% IN PARAGUAY: +7% +31% +40% +22% +33% 14,246 47,263 38,818 10,210 42% 4.902 3Q 25% 16.719 3Q 13.412 3.446 53.240 14.424 40% 4.706 2Q 40.496 15.818 2Q
Slide 20: EBITDA and consolidated cost evolution
E B I T D A A N D C O N S O L I D AT E D C O S T E V O L U T I O N EBITDA Margin 26.3% +2.1% ‐0.8% +0.4% +1.3% ‐0.8% +0.2% +1.4% 30.1% AS % OF 9% 19% 10% 9% 9% 5% 11% REVENUES *Others include bad debt expenses, provisions, VAS costs and others Figures may not sum up due to rounding 19
Slide 21: Consolidated Results: Operating income and net income
C O N S O L I D AT E D R E S U LT S O P E R AT I N G I N C O M E NET INCOME IFRS, Million of P$, Percentage (Attributable to Telecom) IFRS, Million of P$, Percentage in million of P$ 9M16 9M17 Δ 3G/4G Spectrum Disposal and Operating Income $ 5.523 $ 9.018 $ 3.495 Period D&A Total Amortization impair
Slide 22: Net income evolution
NET INCOME EVOLUTION in million of P$ 9M16 9M17 $ Var Net Interests ‐$ 1,139 ‐$ 388 $ 751 Gains on Mutual Funds & $ 254 $ 708 $ 454 other inv. IFRS, Million of P$ FX results net of NDF ‐$ 748 ‐$ 555 $ 193 instruments Others ‐$ 49 ‐$ 41 $8 Total ‐$ 1,682 ‐$ 276 $ 1,406 M A I N D R I V E R S ‐ F I N A
Slide 23: Free cash flow, net financial position
F R E E C A S H F L O W, N E T F I N A N C I A L P O S I T I O N IFRS, Million of P$. Last 12 months FREE CASH FLOW OPERATING FREE CASH FLOW 18.460 10.325 2.517 EBITDA Capex Δ WK & others FCF GENERATION ‐ LTM Net Debt Operating Taxes Net Interest FX Dividend Net Cash 9M16 Free Cash & Others Variatio
Slide 24: Q&A
AGENDA • M AC RO & I N D U S T RY OV E RV I E W • V I S I O N & S T R AT EGY • B U S I N ES S H I G H L I G H T S • FINANCIALS • Q&A 23