Slide 1: 2Q17 Earnings Release Conference Call Presentation
7] ARGENTINA 2Q17 Earnings Release Conference Call Presentation amet Povseme{ TELECOM
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 Macro & Industry Overview Vision & Strategy Business Highlights Financials Q&A 2
Slide 4: Macro: Exchange rate rises, but reserves remain solid
Macro: Exchange rate rises, but reserves remain solid EXTERNAL FRONT Central Bank Reserves (Billion U$S) International Reserves reached record levels during April, despite 50.5 48.0 having experienced a decrease of U$S 2,5 Bn during 2Q17. This 38.8 latter was mainly associated with sovereign debt pa
Slide 5: Macro: While slowdown in inflation consolidates, activity enters into a rebound phase
Macro: While slowdown in inflation consolidates, activity enters into a rebound phase DOMESTIC ACTIVITY & INFLATION Household consumption Revised official figures as of 1Q17 Overall household consumption shows a slight recovery, but 3.5% 1.2% consumer confidence levels remain volatile, not registeri
Slide 6: Agenda
Agenda Macro & Industry Overview Vision & Strategy Business Highlights Financials Q&A 5
Slide 7: 2017 – Actions taken in the transformation process
2017 – Actions taken in the transformation process Succesfull implementation of virtualized core system and convergent charging system Convergent and integrated CRM, Billing, Collection and Order Manager Relaunch of Personal Store New generation content/ selection of value added content Connect
Slide 8: Agenda
Agenda Macro & Industry Overview Vision & Strategy Business Highlights Financials Q&A 7
Slide 9: 2Q17 Highlights
2Q17 Highlights BUSINESS FINANCIALS Mobile Sustained growth driven by Internet Service Revenues growth of 28% in Argentina, mainly driven by: -Mobile Internet (+67%) Continuous 4G rollout: -Fixed Voice + Internet (+37%) - 7.4 Million customers are enjoying 4G EBITDA increased by 38% (730 bps o
Slide 10: Group Revenues: Continuous revenue growth boosted by Internet consumption
Group Revenues: Continuous revenue growth boosted by Internet consumption In P$ Million GROUP REVENUE MIX FIXED SERVICES +20% Fixed Voice + Internet +33% +37% Handsets 11% 16% 9,331 6,991 7,645 Mobile 54% 5,589 52% Service 1H16 1H17 1H16 1H17 Revenues +27% 6% Data 6% MOBILE - in Argentina - Internet
Slide 11: Fixed – Upselling strategy pushes UBB connections
Fixed – Upselling strategy pushes UBB connections ULTRABROADBAND SPEEDS SUBS EVOLUTION ≥15Mb subs % of Customer Base +46% 15% 255 11% 12% 13% 10% 175 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16 2Q17 Fixed Data BB ARPU & CHURN In P$ Million +37% +64% 302.9 331.3 356.6 259.8 272.8 +20% 2,919 1.7% 1.4% 2.2% 1.3% 1.6
Slide 12: Fixed – Arnet + Voice bundle packs are gaining traction. Price adjustments continue
Fixed – Arnet + Voice bundle packs are gaining traction. Price adjustments continue ARNET + VOICE LINES IN SERVICE Revenues in million pesos Million of lines +69% 1,832 -August 2017- 4.0 3.9 3.9 Residencial Segment: From $75 to $90 (+20%) 1,087 Business Segment: From $140 to $168 (+20%) 2Q16 4Q16 2Q
Slide 13: Mobile in Argentina: Capturing revenue growth via stimulation of data usage
Mobile in Argentina: Capturing revenue growth via stimulation of data usage Customer Base (Mill) SERVICE REVENUE MIX DATA USAGE 19.3 19.5 MBOU/ month Browsing Voice + Data +88% 6.5 6.5 53% 12.8 13.0 65% 1,420 1,727 1,122 1,287 918 1Q17 2Q17 47% Pospaid Prepaid 2Q16 3Q16 4Q16 1Q17 2Q17 35% Churn 1H16
Slide 14: Mobile – 4G evolution
Mobile – 4G evolution 4G Users Evolution +147% 6.5 7.4 4.6 5.5 3.0 2Q16 3Q16 4Q16 1Q17 2Q17 13
Slide 15: Capex: Network deployment to improve capacity and quality
Capex: Network deployment to improve capacity and quality CAPEX EVOLUTION LTM Capex Comparison Million of P$ +10% +13% 10,100 11,386 -11% Spectrum 2,256 9,905 10,914 4,495 4,023 -28% 854 611 Intangible Assets 7,844 3,641 -6% 3,412 PP&E LTM 1H2016 LTM 1H2017 FY15 FY16 1H16 1H17 On July 6th, 2017, Tel
Slide 16: Agenda
Agenda Macro & Industry Overview Vision & Strategy Business Highlights Financials Q&A 15
Slide 17: Consolidated Results
Consolidated Results REVENUES EBITDA IFRS, Million of P$, Percentage Δ of Revenues IFRS, Million of P$, Percentage In Argentina: +21% +33% In Paraguay: +5% +31% +38% +20% 9,344 30,544 25,406 6,764 53,240 14,424 4,706 2Q 15,818 40% 40,496 22% 2Q 10,866 12,951 3,362 12,455 18% 14,726 1Q 3,402 36% 4,
Slide 18: EBITDA and Consolidated Costs evolution
EBITDA and Consolidated Costs evolution EBITDA 1H17 – 1H16 YoY IFRS, Million of P$ Variation +2,580;+38% 675 314 202 1,443 376 61 624 176 9,344 5,823 6,764 27% 33% 27% 15% 15% 6% 3% -16% -10% EBITDA Ss. Handsets Handsets ITX Costs Labor Costs Taxes Other Fees for Others* EBITDA 1H16 Revenues & Sales
Slide 19: Consolidated Results
Consolidated Results NET INCOME OPERATING INCOME IFRS, Million of P$, Percentage (Attributable to Telecom) IFRS, Million of P$, Percentage in million of P$ 1H17 1H16 Δ 3G/4G Spectrum Disposal and Operating Income $ 5.851 $ 3.721 $ 2.130 Period D&A Amortization impairment of PP&E Total Financial Resu
Slide 20: Net Income Evolution
Net Income Evolution Price Effect on Financial Results NET DEBT FX Rate Avg. Interest Rate (BADLAR) Lower interest rates on debt ‘Quantity Effect’ on Financial Results ~-1,000bps +15% +5% Lower FX Depreciation as of June 17 since December 16 Reduction in Net Debt levels 5,422 due to growth in C
Slide 21: Free Cash Flow, Net Financial Position
Free Cash Flow, Net Financial Position IFRS, Million of P$. Last 12 months FREE CASH FLOW OPERATING FREE CASH FLOW 17,004 10,914 3,255 EBITDA Capex Δ WK & 5,422 others 9,345 938 287 1,317 775 2,156 FCF GENERATION - QoQ Net Debt Operating Taxes Net Interest FX Dividend Net Debt 1H16 Free Cash & Other
Slide 22: Agenda
Agenda Macro & Industry Overview Vision & Strategy Business Highlights Financials Q&A 21
Slide 23: Investor Relations Contact
Investor Relations Contact Telephone: (5411) 4968 3628 E-mail: relinver@ta.telecom.com.ar