BUENOS AIRES, Argentina, Aug. 5 /PRNewswire-FirstCall/ -- Telecom
Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading
telecommunications groups, announced today a Net Income of P$613
million for the six-month period ended June 30, 2008, or +58% when
compared to same period of the previous year, which included P$102
million that resulted from discontinued operations. -- Telecom
Argentina Group continued the expansion of its business in the
six-month period ended June 30, 2008. Net Revenues grew 20% when
compared to same period of the previous year ("1H07"), amounting to
P$5,051 million. Revenues generated by the Cellular business grew
26% and by the Internet business 36%. -- The cellular subscribers
totaled 13.1 million (+16%), while broadband subscribers reached
902,000 (+50%). Fixed lines in service also increased by 3% to 4.3
million. -- Operating Profit before Depreciation and Amortization
("OPBDA") reached P$1,687 million (+19% vs. 1H07), equivalent to
33% of Net Revenues, mainly fueled by the cellular telephony
growth. On the contrary, fixed telephony profitability continues to
weaken due to frozen tariffs of regulated services and the
inflation effect on the cost structure. -- Operating Profit
amounted P$1,049 million (+44%), equivalent to 21% of Net Revenues
(+400 bps. vs. 1H07). -- Net Income reached P$613 million (+58% vs.
1H07). -- Investments (excluding materials) totaled P$716 million
during 1H08 (+67% vs. 1H07), where P$337 million were allocated to
fixed telephony (+48% vs. 1H07). -- Net Financial Debt (before NPV
effect) declined to P$1,330 million (-P$1,455 million vs. June
2007). The Net Financial Debt to OPBDA ratio declined from 1.0x as
of the end of June 2007, to 0.4x as of the end of June 2008. -- On
May 15, 2008 Standard & Poor's International Ratings LLC
upgraded the long-term debt rating of Telecom Argentina and Telecom
Personal to AA- from A+ on the local scale. * Non-Financial data
audited As of June 30 2008 2007 change % change Consolidated Net
Revenues (in MM P$) 5,051 4,202 849 20% Voice, Data & Internet
1,764 1,589 175 11% Cellular 3,287 2,613 674 26% Operating Profit
before D&A (in MM P$) 1,687 1,414 273 19% Operating Profit (in
MM P$) 1,049 727 322 44% Net Income (in MM P$) 613 387 226 58%
Shareholder's equity (in MM P$) 3,677 2,511 1,166 46% Net Financial
Debt - Before NPV effect (in MM P$) 1,330 2,785 (1,455) -52% Net
Financial Debt - Book value (in MM P$) 1,299 2,671 (1,372) -51%
CAPEX (in MM P$) 716 429 287 67% Lines in service (Fixed lines - in
thousands) 4,253 4,138 115 3% Cellular customers (in thousands)
13,125 11,286 1,839 16% Personal (Argentina) 11,379 9,881 1,498 15%
Nucleo (Paraguay) 1,746 1,405 341 24% ADSL customers (in thousands)
902 602 301 50% Fixed line traffic (in MM minutes, Internet &
Public Telephony not incl.) 8,036 8,220 (183) -2% Incoming/Outgoing
cellular voice traffic in Arg.(in MM minutes) 5,536 4,589 947 21%
Average Revenue per user (ARPU) Fixed Telephony/voice (in P$) 39 38
- 0% Average Revenue per user (ARPU) Cellular Telephony Arg. (in
P$) 40 37 3 8% During 1H08, Consolidated Net Revenues increased by
20% (+P$849 million vs. 1H07) to P$5,051 million, mainly fueled by
the cellular and broadband businesses. Moreover, OPBDA increased by
19% (+P$273 million) to P$1,687 million (33% of Consolidated Net
Revenues). Company Activities Consolidated Net Revenues The
evolution in Consolidated Net Revenues by reportable segment was as
follows: Voice, Data Transmission & Internet During the first
six-month period of 2008, revenues generated by these services
amounted to P$1,764 million, +11% vs. 1H07. Voice Total Revenues
for this service reached P$1,322 million (+5% vs. 1H07). The
results of this line of business are still affected by frozen
tariffs of regulated services. During this three-month period,
Telecom continued with the marketing of innovative handsets and
equipment and value-added services, which before were available
only for cellular telephony such as fixed SMS services and video
calls. An example is the fixed-line handset that integrates photo
frame, video and MP3. Bundling promotions of equipments plus SMS
packages were also successfully marketed. Other offered products
combine voice minutes packages and broadband internet access.
Moreover, during this period, Telecom continued with the deployment
of the next generation network (NGN) in its fixed telephony network
that will allow the offering of convergent state-of-the-art
services. Simultaneously, Telecom set up a project oriented to
improve the quality of voice and data transmission services.
Monthly Charges and Supplementary Services increased by P$27
million, or 7%, to P$393 million, as a consequence of a higher
number of lines in service (+3%), reaching 4.3 million of lines.
Revenues generated by traffic (Local Measured Service, Domestic
Long Distance and International Telephony) totaled P$605 million,
an increase of 1% vs. 1H07, partially affected by a slight decrease
in local traffic volume. Interconnection revenues amounted to P$190
million (+9%), mainly as a consequence of traffic originated in
cellular lines but transported by and terminated in the Company's
fixed-line network. Other revenues, including public telephony
reached P$134 million (+12% vs. 1H07). This amount is the
consequence of an increase in billing and collection fees as well
as voice, data and internet handset sales despite a decrease in
Public Telephony revenues (-P$15 million). Data Transmission and
Internet Revenues generated by Data transmission amounted to P$103
million, (+27% vs. 1H07). Related to the corporate market, during
2Q08, Telecom continued enhancing its position as integrated
provider of innovative ICT solutions or Information and
Communication Technology, conceived to satisfy specific needs from
each business segments, medium and large companies and oriented to
contribute in the improvement of governmental administration at the
different national, provincial and municipal levels. In addition,
Telecom Argentina was selected by the provincial government of
Corrientes to implement the 911 Urban Emergencies Integral
Management System and the Control & Tracing Urban System in the
city of Corrientes. Both systems are turnkey integral solutions
that include the reception and administration of police emergencies
as well as the control and video- surveillance tracking. The
solution also includes the subsequent capitalization of statistic
information and capture of images in order to optimize the human
and material resources and delinquency preventive actions. Revenues
related to Internet reached P$339 million (+36% vs. 1H07), mainly
due to the substantial expansion of broadband service, driven by
better network coverage, commercial promotions and innovation of
the service portfolio. Telecom recently renewed the offer of
broadband products with two innovative options: one is Arnet
Recargable (Arnet Rechargeable), the first internet service in the
market that is prepaid and without monthly charge. The other
product is Arnet Go, which makes possible both in-house broadband
access and mobile internet. This is the first broadband service
that combines ADSL technology with the benefit coming from the
domestic internet access by Wi-Fi modem and the mobile internet
access through Telecom Personal's 3G network. Moreover, as part of
the CSR (Corporate Social Responsibility) program, Telecom
participates in the initiative Internet en Familia (Family
Internet), developed by the National Ministry of Education,
oriented to making parents aware of the importance of monitoring
their children when they use internet. Telecom, as a company that
supports the development of internet in Argentina, promotes the
responsible use of this tool, which not only changes adult
communication habits, but also that of today's youth, who were born
into the modern technological world. Telecom's broadband
subscribers reached 902,000 as of June 30, 2008 (+50% vs. 1H07).
Therefore, lines with this type of connection represent
approximately 21% of Telecom's fixed-lines in service. Cellular
Telephony Cellular Telephony continues with its expansion,
increasing its participation in the Group's total revenues (65% vs.
62% in 1H07 and 0.5 million or 5% vs. 1Q08). During 1H08, this
business generated revenues of P$3,287 million (+26% vs. 1H07). As
of the end of June 2008 total subscribers reached 13.1 million.
Telecom Personal in Argentina As of the end of June 2008,
Personal's subscribers reached 11.4 million in Argentina (+1.5
million or +15% vs. 1H07). Approximately 66% of the overall
subscriber base is prepaid and 34% is postpaid. Total voice traffic
increased by 21% vs. 1H07 while outgoing SMS traffic increased from
a monthly average of 784 million messages in 1H07 to 1,062 million
(+35%) in 1H08. Because of this enhancement in traffic and the use
of value-added services, the Average Monthly Revenue per User
("ARPU") increased to P$40 in 1H08, compared to P$37 in 1H07.
Revenues totaled P$3,072 million (+P$636 million or +26% vs. 1H07).
Service revenues increased by P$580 million or 27% vs. 1H07,
reaching P$2,749 million; furthermore, value-added services totaled
P$790 million (+P$249 million or 46%, vs. 1H07), 29% of service
revenues. In addition, handset sales grew by P$56 million (+21%)
compared to 1H07, reaching P$323 million. During 2Q08, Personal
continued focusing its commercial efforts in customer caring
outreach as well as in offers to stimulate consumption by existing
clients. Moreover, an upgrade handset campaign was implemented,
helping clients to use the wide variety of value-added services
offered by the company. For the retail segment, Personal launched a
line of packages for calls, SMS messages and internet, all within
an innovative and flexible offer oriented to satisfy the client's
communication needs yet without changing the subscriber's current
plan. The launch, also furthered by the national communication
campaign under the idea "Personal te conviene" (Personal suits
you), was accepted positively by the market. Regarding the
corporate segment, "Personal Soluciones Express" (Personal Express
Solutions) was introduced, an application oriented to SME's and
large company sales forces. This tool covers connectivity and
on-line information exchange needs among the company and its
in-field personnel. Personal also implemented a campaign oriented
to expanding BlackBerry use permitting the increase of smartphone
sales in customer offices. In addition, Personal continued the
expansion of its commercial network by opening two new customer
offices (one in Posadas and the other in Bahia Blanca), together
with extension of 3G network coverage. Also, the remaining client
migration from TDMA to GSM technology ended in June 2008. Nucleo
Personal's controlled subsidiary that operates in Paraguay
generated revenues equivalent to P$215 million during 1H08 (+21%
vs. 1H07). By the end of June 2008, the subscriber base reached
approximately 1.7 million, +24% vs. 1H07. Prepaid and Postpaid
customers represented 90% and 10%, respectively. Consolidated
Operating Costs The Cost of Services Provided, Administrative
Expenses and Selling Expenses totaled P$4,002 million in 1H08,
which represents an increase of P$527 million, or +15%, vs. 1H07.
The cost breakdown is as follows: -- Salaries and Social Security
Contributions: totaled P$563 million (+22%), affected by increases
in salaries and, marginally, in personnel (+364 employees vs.
1H07). -- Taxes: reached P$402 million (+25%), in line with the
general evolution of revenues. -- Agents and Prepaid Card
Commissions: were P$350 million (+3%), mainly due to the increase
in prepaid card commissions, partially compensated by reduction in
total commission paid to commercial agents. -- Advertising:
amounted P$190 million (+48%) oriented to strengthen institutional
brand and to support the commercial activity in the cellular
telephony and internet. -- Cost of handsets sold: totaled P$448
million (+9%) mainly due to increased handset unit cost. Despite
this, handset subsidy represented P$102 million (-P$32 million vs.
1H07). -- TLRD and Roaming: P$449 million (+29%) due to increased
traffic among cellular operators. -- Depreciation of Fixed and
Intangible Assets: reached P$ 638 million (-7% vs. 1H07).
Fixed-line telephony totaled P$391 million (-7%) and Cellular
telephony P$247 million (-8%), due to TDMA technology depreciation
charges ended in 1H08. Consolidated Financial and Holding Results
Financial and Holding Results resulted in a loss of P$8 million,
(-P$210 million vs. 1H07). Such improvement was due to positive
effect of foreign currency exchange generated by liabilities and a
reduction in net interests. Consolidated Net Financial Debt As of
June 30, 2008, Net Financial Debt (Loans before the effect of NPV
valuation, minus Cash, Cash Equivalents and Other credits from
derivative Investments) amounted to P$1,330 million, a reduction of
P$1,455 million as compared to June 2007. In April 2008, Telecom
Argentina made a principal payment of Notes in the amount
equivalent to $822 million. Consequently, it has cancelled up to
45% of the principal amortization payment scheduled for October 15,
2011. In addition, on May 15, 2008, Standard & Poor's
International Ratings LLC upgraded the long-term debt rating of
Telecom Argentina and Telecom Personal to AA- from A+ on the Local
Scale. Consolidated Capital Expenditures During 1H08, the Company
invested P$716 million (excluding materials), in fixed and
intangibles assets. This amount was allocated to the Voice, Data
and Internet businesses (P$337 million) and the cellular business
(P$379 million). Main capex projects are related to the expansion
of broadband services and to the upgrade of the network for next
generation services (NGN), the improvement of the network
(capacity, coverage and 3G), and the launch of new and innovative
value-added services. Other Commercial Initiatives Telecom, as
Official Sponsor of Argentine Olympic Committee Beijing 2008, will
provide communication and networking technology that will accompany
the Argentina Olympic Mission. Such technology will not only assist
in logistic issues related with the games (check in, medical
schedule requirement, meeting schedule, among others) but will also
permit athletes to be closer to their relative and friends,
receiving their support which is the key to their physical
preparation. Recent Relevant Matters Cubecorp Argentina S.A.
("Cubecorp) Acquisition: On July 15, 2008 Telecom acquired the
shares of Cubecorp for a maximum amount of US$ 35 million (subject
to a price adjustment process). As of the date of the Financial
Statements, Telecom has transferred 5% of such shares to Telecom
Personal S.A. Within the brand positioning of the Company as an
integrated ICT solutions provider for the corporate wholesale
segment and for Government segment Telecom acquires with Cubecorp a
Data Center that provides IT world class outsourcing services which
include: equipment, connectivity, information security, monitoring,
storage, backboard and data recovery, support, operation and
administration. Consequently, with this acquisition Telecom
strengthens its market position, while it can count with world
class infrastructure in Data Center services, which permits it to
offer its clients high reliability, availability and scalability
customized to their needs. 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 June 30, 2008,
Telecom had 984,380,978 shares outstanding. For more information,
please contact the Investor Relations Department: Pedro Insussarry
54-11-4968-3743 Solange Barthe Dennin 54-11-4968-3752 Evangelina
Sanchez 54-11-4968-3718 Ruth Fuhrmann 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, +011-54-11-4968-3743, Solange
Barthe Dennin, +011-54-11-4968-3752, Evangelina Sanchez,
+011-54-11-4968-3718, or Ruth Fuhrmann, +011-54-11-4968-4448, all
of Telecom Argentina, or Voice Mail, +011-54-11-4968-3628, Fax,
+011-54-11-4313-5842, 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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