BUENOS AIRES, Argentina, March 6 /PRNewswire-FirstCall/ -- Telecom
Argentina (BASE: TECO2; NYSE: TEO), one of Argentina's leading
telecommunications groups, announced today a Net Income of P$961
million for the fiscal year ended December 31, 2008 or +9% when
compared to same period of the previous year. If Publicom sales
effects were not contemplated, Net Income would have grown by 23%
vs. FY07. Highlights -- Telecom Argentina Group continued with the
expansion of its business during fiscal year 2008. Consolidated Net
Revenues amounted to P$10,608 million (+17%) when compared to same
period of the previous fiscal year ("FY07"). Revenues generated by
the Cellular business grew by 20% and the Internet business
increased by 39%. -- Cellular subscribers totaled 14.4 million
(+17%), while broadband subscribers reached 1,042,000 (+33%). Fixed
lines in service also increased by 2% to 4.3 million. -- Operating
Profit Before Depreciation and Amortization ("OPBDA") reached
P$3,330 million (+9% vs. FY07), equivalent to 31% of Net Revenues,
mainly fueled by growth in cellular telephony in Argentina. On the
contrary, fixed line telephony profitability continued to weaken
due to frozen tariffs of regulated services and the inflation
effect on the cost structure. -- Operating Profit amounted to
P$2,041 million (+25% vs. FY07), equivalent to 19% of Net Revenues
(+121 bps. vs. FY07). -- Net Income reached P$961 million (+9% vs.
FY07). If Publicom sales effects were not contemplated, Net Income
would have grown by 23% vs. FY07. -- Investments (excluding
materials) totaled P$1,597 million during FY08 (+23% vs. FY07),
where P$834 million were allocated to fixed telephony (+21% vs.
FY07). -- Net Financial Debt (before NPV effect) declined to P$912
million (-P$1,143 million vs. December 2007). The Net Financial
Debt to OPBDA ratio declined from 0.7x as of the end of December
2007 to 0.3x as of the end of December 2008. As of December 31 2008
2007 Var $ Var % Consolidated Net Revenues (in MM P$) 10,608 9,074
1,534 17% Voice, Data & Internet 3,653 3,302 351 11% Cellular
6,955 5,772 1,183 20% Operating Profit before D&A (in MM P$)
3,330 3,052 278 9% Operating Profit (in MM P$) 2,041 1,636 405 25%
Net Income (in MM P$) 961 884 77 9% Shareholder's equity (in MM P$)
4,020 3,030 990 33% Net Financial Debt - Before NPV effect (in MM
P$) 912 2,055 (1,143) (56%) Net Financial Debt - Book value (in MM
P$) 903 1,993 (1,090) (55%) CAPEX (in MM P$) 1,597 1,302 295 23%
Lines in service (Fixed lines - in thousands) 4,299 4,208 91 2%
Cellular customers (in thousands) 14,390 12,292 2,098 17% Personal
(Argentina) 12,564 10,666 1,898 18% Nucleo (Paraguay) 1,826 1,626
200 12% ADSL customers (in thousands) 1,042 783 259 33% Fixed line
traffic (in MM minutes, Internet & Public Telephony not incl.)
16,306 16,878 (572) (3%) Incoming/Outgoing cellular voice traffic
in Arg.(in MM minutes) 11,579 9,946 1,633 16% Average Revenue per
user (ARPU) Fixed Telephony/voice (in P$) 39 39 - 0% Average
Revenue per user (ARPU) Cellular Telephony Arg. (in P$) 41 39 2 5%
During FY08, Consolidated Net Revenues increased by 17% (+P$1,534
million vs. FY07) to P$10,608 million, mainly fueled by the
cellular and broadband businesses. Moreover, OPBDA increased by 9%
(+P$278 million) to P$3,330 million (31% 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 fiscal year
2008, revenues generated by these services amounted to P$3,653
million, +11% vs. FY07, where Internet revenues have grown the most
(+39% vs. FY07). Voice Total Revenues for this service reached
P$2,701 million (+4% vs. FY07). The results of this line of
business are still affected by frozen tariffs of regulated
services. Monthly Charges and Supplementary Services increased by
P$53 million, or 7% vs. FY07, to P$799 million, as a consequence of
a higher number of lines in service (+2%), which reached 4.3
million lines, and the 19% increase in supplementary services.
Revenues generated by traffic (Local Measured Service, Domestic
Long Distance and International Telephony) totaled P$1,237 million,
an increase of 1% vs. FY07, as a consequence of a slight decrease
of 3% in minutes affected by the mobile substitution, reflecting a
small decrease in local and national long distance traffic.
Otherwise, international traffic continued growing by 10% vs. FY07.
Interconnection revenues amounted to P$400 million (+7% vs. FY07),
mainly as a consequence of traffic originated in cellular lines but
transported by and terminated in the Company's fixed-line network.
Other revenues reached P$265 million (+5% vs. FY07). This evolution
is the consequence of an increase in billing and collection fees as
well as in voice, data and internet equipment sales despite a
decrease in Public Telephony revenues (-P$31 million), which was
affected by the development of the mobile service. Data
Transmission and Internet Data transmission revenues amounted to
P$217 million (+25% vs. FY07), generated by the offering of new
solutions to the corporate market geared towards addressing
internal necessities related to infrastructure. This has enhanced
its position as an integrated provider of innovative ICT solutions
(connectivity, housing and hosting). In this line, in July 2008,
Telecom acquired the shares of Cubecorp Argentina S.A., a world
class infrastructure datacenter located in Buenos Aires, in order
to maximize its datacenter services. Revenues related to Internet
reached P$735 million (+207 million or 39% vs. FY07), mainly due to
the substantial expansion of broadband service, driven by better
network coverage, commercial promotions and innovation of the
service portfolio. During the fourth quarter, and in line with the
increase of the market, in November, Telecom reached one million
ADSL clients. As part of this milestone, the company carried out
several extensive promotions through TV, visual advertisements,
radio and Internet media. During this quarter, Telecom continued
promoting Arnet Go, the first broadband service that combines ADSL
technology for home internet access using a Wi-Fi modem, and the
mobile internet access through Telecom Personal's 3G networks. As
of December 31, 2008, Telecom reached 1,042,000 ADSL customers
(+33% vs. FY07). Lines with these types of connections represent
approximately 24% of Telecom's fixed-lines in service. Cellular
Telephony Cellular Telephony continues expanding, increasing its
participation in the Group's total revenues (66% vs. 64% in FY07).
During FY08, this business generated revenues of P$6,955 million
(+20% vs. FY07). As of the end of December 2008, total subscribers
reached 14.4 million, representing an increase of 0.6 million
subscribers when compared to September 30, 2008 and 2.1 million vs.
FY07. Telecom Personal in Argentina As of the end of December 2008,
Personal reached 12.6 million subscribers in Argentina (+1.9
million, or +18% vs. FY07). 4Q08 experienced the highest increase
of 2008, adding 0.6 million subscribers. Approximately 66% of the
overall subscriber base is prepaid and 34% is postpaid (including
"cuentas claras" plans). Total voice traffic increased by 16% vs.
FY07 while outgoing SMS traffic increased from a monthly average of
883 million messages in FY07 to 1,454 million (+65%) in FY08.
Because of this raise in traffic and the increasing use of
value-added services, the Average Monthly Revenue per User ("ARPU")
increased to P$41 in FY08, compared to P$39 in FY07. Meanwhile, the
ARPU in 4Q08 amounted to P$42, stable when compared to 4Q07.
Revenues totaled P$6,565 million (+P$1,226 million or +23% vs.
FY07). Service revenues increased by P$1,097 million or 23% vs.
FY07, reaching P$5,853 million; furthermore, value-added services
totaled P$1,735 million (+P$471 million or 37%, vs. FY07), 30% of
service revenues. Additionally, handset sales grew by P$129 million
(+22%) compared to FY07, reaching P$712 million. Commercial
Activities During 4Q08, Personal continued developing its
commercial efforts focusing on different segments. That is why it
launched original packs, with the purpose of providing Personal's
customers with more flexibility and convenient offers. Furthermore,
Personal continued to expand 3G network coverage, as well as the
offer of new Smartphones, Mobile Broadband USB Modems and Netbooks.
Additionally, the Company expanded its commercial offices, opening
new customer centers in Viedma (Rio Negro), San Rafael (Mendoza),
Comodoro Rivadavia (Chubut), Villa Maria (Cordoba) and Rio Cuarto
(Cordoba). Moreover, Personal continued providing innovative value
added services, such as the download of CNN en Espanol contents. In
line with its focus strategy in music, Personal put into practice
several promotional actions such as handsets with music related
content. Finally, Personal closed FY08 having strengthened its
leadership position in brand recognition, with particular focus on
the youth segment. Nucleo Personal's controlled subsidiary that
operates in Paraguay generated revenues equivalent to P$390 million
during FY08 (-10% vs. FY07). The global crisis affected Paraguayan
economy, where the depreciation of its currency and a lower level
of activity were the last evident effects. The devaluation of the
Guarani in 4Q08 originated a reduction in revenues due to the
consequent conversion of the full year revenues to the end of
period exchange rate. The Guarani appreciated 18% against the
dollar in the first half, but with the deepening of the financial
crisis in October, it suffered a strong depreciation of 23%. This
conversion effect had a negative impact of P$46 million on revenues
of 4Q08 and FY08. By the end of December 2008, the subscriber base
reached approximately 1.8 million customers (+12% vs. FY07).
Prepaid and Postpaid customers represented 90% and 10%,
respectively. Consolidated Operating Costs The Cost of Services
Provided, Administrative Expenses and Selling Expenses totaled
P$8,567 million in FY08, which represents an increase of P$1,129
million, or +15%, vs. FY07. This increase in costs is a consequence
of the increase in revenues, inflationary effects on the costs
structure, and higher expenses related to the competition in the
cellular business and internet. The cost breakdown is as follows:
-- Salaries and Social Security Contributions: totaled P$1,217
million (+27% vs. FY07), affected by increases in salaries and
social security imposed by law, the increase in mobile headcount
that accompanied the evolution of the cellular business, and the
absorption of 46 employees from Cubecorp S.A. -- Taxes: reached
P$825 million (+25% vs. FY07), influenced mainly by a higher rates
in turnover taxes and additional charges related to Universal
Service. -- Maintenance, materials and supplies reached P$541
million (+21% vs. FY07), mostly due to an increase in costs that
followed inflation. -- Network access costs (includes TLRD,
Roaming, Interconnection, international settlement charges and
lease of circuits): amounted to P$1,366 million (+19% vs. FY07)
generated by higher traffic between cellular operators that
accompany the increase in revenues. -- Fees for services: reached
P$389 million (+30% vs. FY07), mainly caused by the evolution of
prices that followed inflation. -- Agents, prepaid card commissions
and other commissions: were P$928 million (+11% vs. FY07), mainly
due to the increase in commissions paid to commercial agents and
card distribution costs, as a higher volume of revenues was
registered. -- Advertising: amounted to P$388 million (+27% vs.
FY07) oriented towards supporting the commercial activity in
cellular telephony and Internet, and to strengthen the brand
position of the Telecom Group. -- Cost of handsets sold: totaled
P$1,026 million (+15% vs. FY07) mainly due to an increase in the
number of terminals sold. Despite this, handset subsidies were less
than in FY07 and represented P$268 million (-P$17 million vs.
FY07). -- Other Costs (includes bad debt expense, cost of
directories publishing, transportation and freight, insurance,
energy, water and others, rental expense and international and
satellite connectivity: totaled P$598 million (+27% vs. FY07). This
increase was due to the inflationary effects on related services.
-- Depreciation of Fixed and Intangible Assets: reached P$ 1,289
million (-9% vs. FY07). Fixed-line telephony totaled P$822 million
(-1% vs. FY07) and Cellular telephony P$467 million (-21% vs.
FY07), as TDMA technology depreciation charges ended in March 2008.
Consolidated Financial and Holding Results Financial and Holding
Results resulted in a loss of P$265 million, an improvement of
P$176 million vs. FY07. This was due to P$110 million less net
interest, the positive effect of P$61 million of holding results
generated by inventories and the gain on purchase of notes of P$34
million. This positive impact compensated the loss of P$32 million
registered in foreign currency exchange losses. Consolidated Net
Financial Debt As of December 31, 2008, Net Financial Debt (Loans
before the effect of NPV valuation, minus Cash, Cash Equivalents
and Other credits from derivative Investments for Notes) amounted
to P$912 million, a reduction of P$1,143 million as compared to
December 2007. From October 16, 2008 to December 31, 2008, Telecom
Argentina and Telecom Personal purchased Notes pursuant to market
purchase transactions. In the case of Telecom Argentina, it has
acquired an aggregate principal nominal amount of euros 79 million
of Telecom's Series A Regulation S Euro Notes Due 2014 (equivalent
to an outstanding amount of euros 32 million). In the case of
Telecom Personal, it has acquired an aggregate principal amount of
US$ 40 million of Personal's Series 3 Medium Term Notes due 2010.
These notes were acquired in market transactions, with both
companies' cash. During January 2009, Personal purchased a nominal
amount of US$4 million Series 3 Notes due 2010. The Notes acquired
were cancelled according to the terms and conditions of the
Indenture. Consolidated Capital Expenditures During FY08, the
Company invested P$1,597 million (excluding materials), in fixed
and intangible assets. This amount was allocated to Voice, Data and
Internet businesses (P$834 million) and cellular business (P$763
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. In relative terms, capex reached 15% of the
revenues, within industry standards. Furthermore, due to a careful
management of capex, Telecom reached a ratio of operating profit to
net investment capital of 36% for FY08. Other Initiatives Related
to the corporate market, during 4Q08 Telecom continued enhancing
its position as an integrated provider of innovative ICT solutions,
conceived to satisfy specific needs of each business segment and
contribute to the improvement of government administration. During
this quarter, Telecom Argentina was distinguished with a
certification that endorses the fulfillment of Communication "A
4609" from the Central Bank of Argentina to its datacenters in
Cordoba and Bosque Alegre's housing service, adding to those
received for the Buenos Aires datacenter. This certification is a
requirement to provide services to financial entities, one of the
segments that have grown the most during the year. Likewise, during
December, Telecom validated ISO 9001:2000 certifications for the
third time, originally obtained in 2001, related to wholesale
client procedures in order to improve quality administration and
enhance standard solutions offered to that segment. Recent Relevant
Matters Standard & Poor's Ratings Services announced on
February 12, 2009, that it had downgraded to 'B-' from 'B' the
foreign currency ratings on Telecom Argentina and Telecom Personal
in line with the increase in Convertibility and Transferability
risk assigned to Argentina. Additionally, Standard & Poor's,
has also rated the local currency 'B' for both companies in Credit
Watch as it reviews the impact of other country risk factors. On
January 1, 2009, Telecom incorporated by merger Cubecorp Argentina
S.A., a "world class infrastructure" datacenter, with the objective
of simplifying administration and taking advantage of professional
and qualified staff from both companies. As part of this agreement,
a migration plan was initiated to transfer Telecom Argentina and
Telecom Personal data centers to Pacheco, Buenos Aires Province
premises. 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 December 31, 2008,
Telecom had 984,380,978 shares outstanding. (*) Employee Stock
Ownership Program 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 Horacio Nicolas del Campo
54-11-4968-6236 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. * Non-audited Financial data
DATASOURCE: Telecom Argentina CONTACT: Pedro Insussarry,
+011-54-11-4968-3743, or Solange Barthe Dennin,
+011-54-11-4968-3752, both for Telecom Argentina Web site:
http://www.telecom.com.ar/
Copyright