BUENOS AIRES, Argentina, May 9 /PRNewswire-FirstCall/ -- -- Telecom
Argentina Group continues to improve its business, confirming the
growth trend evidenced in previous periods. During 1Q08 Net
Revenues grew 21% when compared to same period of the previous year
(1Q07), amounting to P$2,480 million. Major revenue increase came
from the Cellular business with an expansion of 27% and from
Internet businesses with a growth of 33%, both with respect to
1Q07. -- The cellular subscribers increased by 18%, reaching 12.6
million, while broadband subscribers grew 60% totaling 841,000,
meanwhile fixed lines in service increased by 3% to 4.2 million. --
Operating Profit before Depreciation and Amortization ("OPBDA")
reached P$879 million (+28% vs. 1Q07), equivalent to 35% of Net
Revenues, mainly fueled by the cellular telephony growth. On the
contrary, fixed telephony profitability continues to weaken due to
frozen tariffs and the inflation effect on the general cost
structure. -- Net Income reached P$272 million (+101% vs. 1Q07). --
Investments totaled P$248 million during 1Q08 (+78% vs. 1Q07),
where P$144 million were allocated to fixed telephony (+121% vs.
1Q07). -- Net Financial Debt (before NPV effect) declined to
P$1,666 million (-P$1,556 million vs. March 2007). The Net
Financial Debt to OPBDA ratio declined from 1.2x as of the end of
March 2007, to 0.5x as of the end March 2008. * Non-Financial data
audited As of March-31 % 2008 2007 change change Consolidated Net
Revenues (in MM P$) 2480 2058 422 21% Voice, Data & Internet
863 786 77 10% Cellular 1617 1272 345 27% Operating Profit before
D&A (in MM P$) 879 688 191 28% Operating Profit (in MM P$) 534
358 176 49% Net Income (in MM P$) 272 135 137 101% Shareholder's
equity (in MM P$) 3328 2261 1,067 47% Net Financial Debt - Before
NPV effect (in MM P$) 1666 3222 -1,556 -48% Net Financial Debt -
Book value (in MM P$) 1619 3090 -1,471 -48% CAPEX (in MM P$) 248
139 109 78% Lines in service (Fixed lines-in thousands) 4224 4117
107 3% Cellular customers (in thousands) 12575 10639 1,936 18%
Personal (Argentina) 10882 9310 1,572 17% Nucleo (Paraguay) 1693
1329 364 27% ADSL customers (in thousands) 841 526 315 60% Fixed
line traffic (in MM minutes, Internet & Public Telephony not
incl.) 3894 3998 -104 -3% Incoming/Outgoing cellular voice traffic
in Arg.(in MM minutes) 2710 2224 486 22% Average Revenue per user
(ARPU) Fixed Telephony/voice (in P$) 38 38 - 0% Average Revenue per
user (ARPU) Cellular Telephony Arg. (in P$) 40 37 3 8% Telecom
Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading
telecommunications groups, announced today a Net Income of P$272
million for the three-month period ended March 31, 2008. During
1Q08, Consolidated Net Revenues increased 21% (+P$422 million vs.
1Q07) to P$2,480 million, mainly fueled by the cellular and
broadband businesses. Moreover, OPBDA increased by 28% (+P$191
million) to P$879 million (35% of Consolidated Net Revenues). This
level of operating profits before depreciation and amortization is
the consequence of the improvement in revenues, together with a
better efficiency in costs despite increasing inflationary
pressure. Company Activities Consolidated Net Revenues The
evolution in Consolidated Net Revenues by reportable segment was as
follows: Voice, Data Transmission & Internet Revenues generated
by these services amounted to P$863 million, +10% vs. 1Q07. Voice
Total Revenues for this service reached P$651 million (+4% vs.
1Q07). The results of this line of business are affected by frozen
tariffs of regulated services. During this three-month period,
Telecom continued with the implementation of the fixed line renewal
process, started last year with the launch of innovative terminals
and value-added services, which before were available only for
cellular telephony such as fixed SMS services and video call.
Moreover, during this period Telecom continued with the deployment
of the next generation technology (NGN) in its fixed telephony
network that will allow the offering of convergent state-of-the-art
services. Monthly Charges and Supplementary Services increased by
P$14 million or 8%, to P$196 million, as a consequence of a higher
number of lines in service (+3%), reaching 4.2 million of lines.
Revenues generated by traffic (Local Measured Service, Domestic
Long Distance and International Telephony) totaled P$293 million,
(-2% vs. 1Q07) mainly because a slight decrease in traffic volume
and higher discounts granted to the customers. Interconnection
revenues amounted to P$94 million (+8%), mainly as a consequence of
traffic originated in cellular lines but transported by and
terminated in the Company's fixed-line network. Public Telephony
& Other Other revenues, including public telephony reached P$68
million (+19% vs. 1Q07). This amount was affected by an increase in
billing and collection fees and voice, data and internet handset
sales despite a decrease in Public Telephony revenues (-$6
million). Internet and Data Transmission Total revenues coming from
Internet services reached P$158 million (+33% vs. 1Q07), mainly due
to the substantial expansion of broadband service, driven by a
better network coverage, commercial promotions, and innovation of
the service portfolio. Telecom's broadband subscribers reached
841,000 as of March 2008(+60% vs. March07). Therefore, lines with
this type of connections represent approximately 20% of Telecom's
fixed-lines in service. Revenues generated by Data transmission
amounted to P$54 million, (+32% vs. 1Q07). Related to the corporate
market, during this period Telecom continued enhancing its
positioning as integrated provider of communication solutions,
focused on technology innovation in order to offer the most
innovative services to both government sector and corporate
clients. Telecom provides tailor-made and converging systems that
integrate voice & data services -for both fixed and cellular
services- together with internet services, web, multimedia, and
specially ICT solutions (Information and communication technology)
and datacenter services. Cellular Telephony The Cellular Telephony
continues with its expansion, increasing its participation in the
Group's total revenues (65% vs. 62% in 1Q07). During the first
three-months of 2008 this business generated revenues of P$1,617
million (+27% vs. 1Q07). Total subscribers reached 12.6 million.
Telecom Personal in Argentina As of the three-month period ended
March 31, 2008, Personal's subscribers reached 10.9 million in
Argentina (+1.6 million or +17% vs. 1Q07). Approximately 66% of the
overall subscriber base is prepaid and 34% is postpaid. Total voice
traffic increased by 22% vs. 1Q07 while outgoing SMS traffic
increased from an average of 762 million messages in 1Q07 to an
average of 990 million (+30%) in 1Q08. Because of this enhancement
in traffic and the use of value-added services, the Average Monthly
Revenue per User ("ARPU") increased by P$40 in 1Q08, compared to
P$37 in 1Q07. Revenues totaled P$1,510 million (+P$330 million or
+28% vs. 1Q07). Service revenues increased by P$305 million or 29%
vs. 1Q07, reaching P$1,361 million; furthermore, value added
services totaled P$392 million (+P$128 million or 48% vs. 1Q07),
which means 26% of Revenues. In addition handset sales grew by P$25
million (+20%) compared to 1Q07, reaching P$149 million. During
1Q08, Personal enhanced its commercial offer, launching the "Tu
Familia Personal" plan (Your Personal Family plan). It allows to
make free, unlimited communications, both calls or SMS to a group
of three telephone numbers of the Company, previously selected by
the client. Due to the summer season, Personal developed a plan for
the expansion of the 3G/3.5G network in main Argentine tourist
cities. Personal also continued reinforcing its strategy related to
music downloads, as a platform for increasing the use of innovative
value-added services, such as full MP3. Moreover, the Company is
successfully reaching the conclusion of the migration process of
the network technology from TDMA to GSM technology. Nucleo
Personal's controlled subsidiary that operates in Paraguay,
generated revenues equivalent to P$107 million during 1Q08 (+16%
vs. 1Q07). By the end of March 2008, the subscriber base reached
approximately 1.7 million, +27% vs. 1Q07. Prepaid and Postpaid
customers represented 90% and 10%, respectively. During first
quarter of 2008, Nucleo launched third generation services (3G) in
Paraguay. Consolidated Operating Costs The Cost of Services
Provided, Administrative Expenses and Selling Expenses totaled
P$1,946 million in 1Q08, which represents an increase of P$246
million or +14% vs. 1Q07. Notwithstanding, in relative terms such
increase is less than revenue growth due to an improvement in
efficiency and a better distribution of costs. The cost breakdown
is as follows: -- Salaries and Social Security Contributions: P$270
million (+26%), affected by increases in salaries and personnel
(+258 employees vs. 1Q07). -- Taxes: P$199 million (+24%), in line
with the general evolution of revenues. -- Agents and Prepaid Card
Commissions: P$173 million (-2%), mainly due to reduction in
commissions paid to commercial agents. -- Advertising: P$73 million
(+20%) to support the commercial activity in the cellular telephony
and internet. -- Cost of handsets sold: totaled P$201 million
similar levels as that registered in 1Q07. -- TLRD and Roaming:
P$219 million (+24%) due to increased traffic among cellular
operators. -- Depreciation of Fixed and Intangible Assets: P$345
million (+5% vs. 1Q07). Fixed-line telephony totaled P$192 million
(-9%) and Cellular telephony $153 million (+28%). Consolidated
Financial and Holding Results Financial and Holding Results
resulted in a loss of P$60 million, (-P$72 million vs. 1Q07). Such
improvement was due to a reduction in net interests and a lower
impact of foreign currency exchange looser generated by
liabilities. Consolidated Net Financial Debt As of March 31, 2008,
Net Financial Debt (Loans before the effect of NPV valuation, minus
Cash, Cash Equivalents and Other credits from derivative
Investments) amounted to P$1,666 million, a reduction of P$1,556
million as compared to March 2007. A substantial generation of
operating cash flow allowed for the decrease in indebtedness.
Dividends of Telecom Personal As of the end of March 2008, Personal
paid a cash dividend distribution of P$220 million. Consolidated
Capital Expenditures During 1Q08, the Company invested P$248
million (excluding material), in fixed and intangibles assets. Such
amount was allocated to the Voice, Data and Internet businesses
(P$144 million) and to the cellular business (P$104 million). Main
Capex projects are related to the expansion of broadband services
and to the upgrade of the network for next generation services
(NGN), the improvement of the network (capacity, coverage and 3G),
and the launch of new and innovative value-added services. Recent
Relevant Matters On April 15, 2008 Telecom Argentina made, along
with the interest payments of its financial debt, a principal
prepayment of Notes, in the amount of US$ 260 million; such funds
came from excess cash determined as of December 31, 2007 and a
voluntary prepayment, that includes the amount of dividends
received from Telecom Personal. -- At the Shareholders' Meeting
held on April 29, 2008 and the Board of Directors Meeting on the
same date, the members of the Board of Directors, independent
auditors, and members of the Audit Committee were named for the
20th fiscal year. Telecom is the parent company of a leading
telecommunications group in Argentina, where it offers directly or
through its controlled subsidiaries local and long distance
fixed-line telephony, cellular, data transmission and Internet
services, among other services. Additionally, through a controlled
subsidiary, the Telecom Group offers cellular services in Paraguay.
The Company commenced operations on November 8, 1990, upon the
Argentine government's transfer of the telecommunications system in
the northern region of Argentina. Nortel Inversora S.A. ("Nortel"),
which acquired the majority of the Company from the Argentine
government, holds 54.74% of Telecom's common stock. Nortel is a
holding company where the common stock (approximately 68% of
capital stock) is owned by Sofora Telecomunicaciones S.A.
Additionally, Nortel capital stock is comprised of preferred shares
that are held by minority shareholders. As of March 31, 2008,
Telecom had 984,380,978 shares outstanding. (*) Employee Stock
Ownership Program For more information, please contact the Investor
Relations Department: Pedro Insussarry Solange Barthe Dennin
Evangelina Sanchez Ruth Fuhrmann 54-11-4968-3743 54-11-4968-3752
54-11-4968-3718 54-11-4968-4448 Voice Mail: 54-11-4968-3628 Fax:
54-11-4313-5842 E-mail: For information about Telecom Group
services, visit:
http://www.telecom.com.ar/http://www.personal.com.ar/http://www.personal.com.py/http://www.arnet.com.ar/
Disclaimer This document may contain 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,
dividends, liquidity and capital structure; the effects of its debt
restructuring process; the impact of emergency laws enacted by the
Argentine Government; and the impact of rate changes and
competition on the Company's future financial performance.
Forward-looking statements may be identified by words such as
"believes," "expects," "anticipates," "projects," "intends,"
"should," "seeks," "estimates," "future" or other similar
expressions. Forward-looking statements involve risks and
uncertainties that could significantly affect the Company's
expected results. The risks and uncertainties include, but are not
limited to, the impact of emergency laws enacted by the Argentine
government that have resulted in the repeal of Argentina's
Convertibility law, devaluation of the peso, various changes in
restrictions on the ability to exchange pesos into foreign
currencies, and currency transfer policy generally, the
"pesification" of tariffs charged for public services, the
elimination of indexes to adjust rates charged for public services
and the Executive branch announcement to renegotiate the terms of
the concessions granted to public service providers, including
Telecom. Due to extensive changes in laws and economic and business
conditions in Argentina, it is difficult to predict the impact of
these changes on the Company's financial condition. Other factors
may include, but are not limited to, the evolution of the economy
in Argentina, growing inflationary pressure and evolution in
consumer spending and the outcome of certain legal proceedings.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as the date of this
document. The Company undertakes no obligation to release publicly
the results of any revisions to forward-looking statements which
may be made to reflect events and circumstances after the date of
this press release, including, without limitation, changes in the
Company's business or to reflect the occurrence of unanticipated
events. Readers are encouraged to consult the Company's Annual
Report on Form 20-F, as well as periodic filings made on Form 6-K,
which are filed with or furnished to the United States Securities
and Exchange Commission for further information concerning risks
and uncertainties faced by Telecom. DATASOURCE: Telecom Argentina
S.A. CONTACT: Pedro Insussarry, +54-11-4968-3743, or Solange Barthe
Dennin, +54-11-4968-3752, both of Telecom Argentina Web site:
http://www.telecom.com.ar/ http://www.personal.com.ar/
http://www.personal.com.py/ http://www.arnet.com.ar/
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