-- Consolidated Net Revenues amounted to P$5,754 million (+14% vs.
1H08); Internet +43% vs. 1H08; Mobile business in Argentina +16%
vs. 1H08. -- Mobile subscribers: 15.4 million (+17% vs. 1H08);
Broadband subscribers: 1.1 million (+24% vs. 1H08); Fixed lines in
service: 4.3 million (+2% vs. 1H08). -- Operating Profit Before
Depreciation and Amortization ("OPBDA") reached P$1,841 million
(+9% vs. 1H08), 32% of Net Revenues. Growth was mainly fueled by
mobile services and broadband in Argentina. -- Operating Profit
amounted to P$1,311 million (+25% vs. 1H08), 23% of Net Revenues.
-- Net Income reached P$703 million (+15% vs. 1H08). -- Investments
(excluding materials) totaled P$529 million. -- Net Financial Debt
(before NPV effect) reached P$573 million (-P$757 million vs.
1H08). Net Financial Debt to OPBDA ratio declined from 0.4x as of
the end of June 2008 to 0.2x as of the end of June 2009. BUENOS
AIRES, Argentina, Aug. 7 /PRNewswire-FirstCall/ -- Telecom
Argentina (NYSE: TEO; BASE: TECO2), one of Argentina's leading
telecommunications groups, announced today Net Income of P$703
million for the six-month period ended June 30, 2009 or +15% when
compared to the same period last year. During 1H09, Consolidated
Net Revenues increased by 14% (+P$703 million vs. 1H08) to P$5,754
million, mainly fueled by the Mobile and Broadband businesses.
Moreover, Operating Profit increased by 25% (+P$262 million vs.
1H08) to P$1,311 million. Consolidated Operating Revenues Fixed
Telephony (Voice, Data Transmission & Internet) During the
first half of 2009, revenues generated by these services amounted
to P$1,990 million, +13% vs. 1H08, where in relative terms Internet
revenues have grown the most (+43% vs. 1H08). Voice Total Revenues
for this service reached P$1,377 million in 1H09 (+4% vs. 1H08).
The results of this line of business are still affected by frozen
tariffs of regulated services. Monthly Charges and Supplementary
Services increased by P$24 million, or 6% vs. 1H08, to P$417
million, as a consequence of a higher number of lines in service
(+2%), which reached more than 4.3 million, and 16% increase in
supplementary services. Revenues generated by traffic (Local
Measured Service, Domestic Long Distance and International
Telephony) totaled P$625 million, an increase of 3% vs. 1H08,
despite a slight decrease in volume in local traffic (-6% vs. 1H08)
and in domestic long distance traffic (-5% vs. 1H08) affected by
the mobile substitution trend. Otherwise, international traffic
continued growing slightly (+1% vs. 1H08). Interconnection revenues
amounted to P$213 million (+12% vs. 1H08), mainly as a consequence
of traffic originated in cellular lines from other operators but
transported by and terminated in the Company's fixed-line network.
Other revenues reached P$122 million (-9% vs. 1H08). This reduction
is mainly as a consequence of a decrease in Public Telephony
revenues (-P$10 million or -22% vs. 1H08). Data Transmission and
Internet Data transmission revenues amounted to P$127 million (+23%
vs. 1H08), generated by the offer of modern solutions to the
corporate market geared toward addressing internal infrastructure
needs. This has enhanced its position as an integrated provider of
innovative ICT solutions (connectivity, housing and hosting, among
others). Revenues related to Internet reached P$486 million (+147
million or 43% vs. 1H08), mainly due to the substantial expansion
of the broadband service, driven by an increase in subscribers,
better network coverage, commercial promotions and innovation of
the service portfolio. In addition, ARPU improved 16% when compared
to 1H08 due to the clients that maintained the service paying full
tariff, without promotions after the first six months of
subscription. As of June 30, 2009, Telecom reached 1.120 thousands
ADSL customers (+24% vs. 1H08). These connections represent
approximately 26% of Telecom's fixed lines in service. Data
Transmission and Internet both have significantly increased their
contribution to net consolidated revenues reaching a 11%
participation (vs. 9% in 1H08) and representing 31% of fixed
telephony segment revenues (vs. 25% in 1H08). Commercial
Initiatives During 1H09 one of the main offerings to residential
customers was a bundled commercial package combining
fixed-telephony broadband and satellite TV. This product is the
result of a commercial agreement between Telecom and Direct TV. It
is available in several cities in the country and will soon be
extended throughout Telecom's entire area of operation. As for the
specific services to the SME market, Telecom developed a new
platform that will offer all services of the Arnet BIZ family. This
platform allows SME customers access to several value-added
services. The new platform is hosted in Telecom's Datacenter, with
high capacity and availability that ensures connectivity to the
Internet for SMEs directly through Telecom's IP Backbone. In this
way Telecom intensifies its strategy of offering small and medium-
sized innovative services comparable to those rendered to large
corporations, without the need for important investments. Mobile
Services In this quarter, clients have significantly increased
reaching 15.4 million subscribers as of the end of June 2009
representing an increase of 0.4 million since March 2009 and 2.2
million since June 2008. During 1H09, net revenues reached P$3,764
million (+15% vs. 1H08). Telecom Personal in Argentina As of the
end of June 2009, Personal reached 13.6 million subscribers in
Argentina (+2.2 million, or +19% vs. 1H08) which allowed the
Company to enhance its market position and strengthens its
potential for future revenue growth. During 1H09 the strong
increase in net additions continued with the incorporation of about
1 million subscribers (vs. +0.7 million net additions in 1H08).
Approximately 68% of the overall subscriber base is prepaid and 32%
is postpaid (including "Cuentas claras" plans). Personal continued
with the consistent growth in Total Revenues (including handset
sales) reaching P$3,574 million (+16% vs. 1H08), supported by the
increase in overall voice traffic minutes by 17% vs. 1H08 and in
value-added services (VAS) revenues by 33% vs. 1H08. Service
revenues reached P$3,235 million (+18% vs. 1H08) where 32% of them
correspond to VAS revenues. Noteworthy is SMS traffic performance,
which climbed from a monthly average of 1,062 million messages in
1H08 to 2,624 million in 1H09 (+147% vs. 1H08), with similar
service quality levels. As a consequence of the traffic increase
and higher usage of value-added services, Average Monthly Revenue
per User ("ARPU") remained stable at approximately P$40 in 1H09
despite a significant level of penetration. Personal's contribution
to consolidated margins has improved since 1H08 despite its intense
commercial activity focused on the expansion of its subscriber base
and high-value segment retention efforts continued. Initiatives
During this quarter, in connection with Father's Day and in the
framework of the campaign 'Personal te conviene' ('Personal is
convenient'), a new value offer integrating important benefits was
launched to the market. New plans were designed incorporating,
among other benefits, like numbers to make communications free of
charge between our clients and extra credit. Mobile broadband has
been enhanced by data plans and the 2.0 version of the Pack
offering, that targets social networks. International roaming
service was extended also for prepaid clients to more than 200
different destinations all over the world. Furthermore, continuing
with the strategic links between Personal and the entertainment
industry, Pack Music was introduced, the first market offer that
integrates the acquisition of digital music in the package of
services for current client plans. Personal continued with the
expansion of third generation infrastructure in both, capacity and
coverage; under the HSDPA/UPA standard that, allows content under
optimal conditions peaks of up to 7.2 MB of theoretical download
velocity in certain cities. All of these actions are consistent
with the strategy of enabling content and services to enhance the
expansion of value- added services. Telecom Personal in Paraguay By
the end of June 2009, Nucleo' s subscriber base reached
approximately 1.8 million customers (+1% vs. 1H08). Prepaid and
Postpaid customers represented 89% and 11%, respectively.
Personal's controlled subsidiary in Paraguay generated revenues
equivalent to P$190 million during 1H09 (-12% vs. 1H08). Both the
global crisis that affected the Paraguayan economy, impacting in
the lower level of activity and local currency depreciation as well
as intensive operator competition levels, had its effect on Nucleo'
s income. Consolidated Operating Costs The Cost of Services
Provided, Administrative Expenses and Selling Expenses totaled
P$4,443 million in 1H09, which represents an increase of P$441
million, or +11%, vs. 1H08. The increase in costs is a consequence
of a higher volume of revenues, inflationary effects on the cost
structure, and greater expenses related to competition in mobile
and internet businesses. The cost breakdown is as follows: --
Salaries and Social Security Contributions totaled P$688 million
(+22% vs. 1H08), affected by increases in salaries agreed upon in
2008 and higher social security charges imposed by law. Regarding
personnel, the decrease in headcount in fixed segment (-368
employees vs. 1H08) was partially compensated by the incorporation
of 161 employees in the same period in the mobile business. The
total headcount at the end of 1H09 was 15.322 employees. -- Taxes
reached P$472 million (+17% vs. 1H08), influenced mainly by higher
rates in turnover taxes, municipal taxes and a higher volume of
revenues. -- Network access costs (includes TLRD, Roaming,
Interconnection, international settlement charges and lease of
circuits) amounted to P$682 million (+5% vs. 1H08) generated by
higher traffic among mobile operators that accompanies the increase
in revenues. -- Agents, prepaid card commissions and other
commissions were P$502 million (+19% vs. 1H08), mainly due to the
increase in commissions paid to commercial agents and card
distribution costs, as higher subscriber volume and sales of cards
was registered. -- Advertising amounted to P$158 million (-17% vs.
1H08) and was oriented towards supporting the commercial activity
in mobile services and Internet, and to strengthening the brand
position of the Telecom Group. -- Cost of handsets sold totaled
P$520 million (+16% vs. 1H08) mainly due to an increase in
subscriber additions and in the number of upgraded terminals. --
Depreciation of Fixed and Intangible Assets reached P$530 million
(-17% vs. 1H08). Fixed-line telephony totaled P$324 million (-17%
vs. 1H08) and mobile services P$206 million (-17% vs. 1H08), mainly
due to reestimation of the useful lifes of certain technical assets
(-P$67 million in 1H09) and also since TDMA technology depreciation
charges ended in March 2008 (-64 million vs. 1H08). -- Others Costs
totaled P$891 million (+30% vs. 1H08). The increase was due to the
inflationary effects on related services. Consolidated Financial
and Holding Results Financial and Holding Results resulted in a
loss of P$151 million, an increase of P$143 million vs. 1H08. This
was due to the loss registered in foreign currency exchange (-P$242
million vs. 1H08), since the appreciation of the Argentine Peso
against the US dollar occurred in 1H08 by 4%; compensated by lower
net interest (+P$73 million vs. 1H08) and the positive effect of
holding results generated by inventories (+P$26 million vs. 1H08).
Consolidated Net Financial Debt As of June 30 2009, 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$573 million, a reduction of P$757 million as
compared to June 2008 and P$339 million when compared to December
2008. During 1H09, Personal purchased a nominal amount of US$8.77
million Series 3 Notes due 2010. Furthermore, during April 2009
Telecom Argentina purchased Notes in an aggregate principal nominal
amount of Euros 18.5 million of Telecom's Series A Euro Notes Due
2014 (equivalent to an outstanding amount of Euros 6.97 million).
The Notes acquired were cancelled according to the terms and
conditions of the respective Indentures. On April 15, 2009, Telecom
Argentina made, together with the corresponding interest payment, a
principal mandatory payment (according to the terms and conditions
of the restructured debt) of Notes in the amount of US$ 40 million
(US$ 29 million of principal and US$ 11 million in interest), with
the excess cash determined as of December 31, 2008. Consolidated
Capital Expenditures During 1H09, the Company invested P$529
million (excluding materials) in fixed and intangible assets. This
amount was allocated to Voice, Data and Internet businesses (P$298
million) and mobile services (P$231 million). In relative terms,
capex reached 9% of the revenues. Main capex projects are related
to the expansion of broadband services and to the upgrade of the
network for next generation services (NGN), improvement of the
network (capacity, coverage and 3G), and the launch of new and
innovative value-added services. Other Initiatives During 2Q09,
Telecom continued enhancing its position as an integrated provider
of ICT solutions for wholesale and government segments. It was
chosen by different clients to provide communication solutions for
the optimization of operations of businesses processes: Among these
are noted: -- Main Data Center Service for "Sistema Unico de Boleto
Electronico" (SUBE), the Unified System for paying public transport
in the metropolitan areas: Telecom will provide hosting service for
the servers of administrative, transactional and service
applications. It also includes the connectivity with AMBA (Buenos
Aires Metropolitan Area) and the city of Rosario. -- 9-1-1
Emergency System in Rosario: Telecom was selected by the government
of the Province of Santa Fe to perform the pilot test for the
Integrated Management Emergency System 9-1-1 in the city of
Rosario. -- Data Center for Arcos Dorados Latinoamerica S.A.
(McDonald's for Latin America): Telecom developed a tailor-made
solution that includes hosting service for servers, data storage in
the storage area network (SAN), centralized back-up and
professional assistance services to manage information,
applications and servers that are critical for sustaining its
operations in Latin America. Recent relevant Matters During 1H09
Telecom Personal made a dividend payment in cash of P$730 million.
The distribution was approved by the Ordinary Shareholder's Meeting
of Telecom Personal, March 31, 2009. Such dividend was paid to
Telecom Personal shareholders: Telecom Argentina and Nortel
Inversora. On August 4, 2009 the Board of Directors of Telecom
Argentina resolved to call for the Annual Ordinary and
Extraordinary Shareholders meeting for September 9, 2009. 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, 2009,
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 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. Enrique Garrido Chairman
Contacts: Pedro Insussarry Solange Barthe Dennin (54-11)
4968-3743/3752 DATASOURCE: Telecom Argentina CONTACT: Pedro
Insussarry, +011-54-11-4968-3743, Solange Barthe Dennin,
+011-54-11-4968-3752, Evangelina Sanchez, +011-54-11-4968-3718,
Ruth Fuhrmann, +011-54-11-4968-4448, Horacio Nicolas del Campo,
+011-54-11-4968-6236, all of Telecom Argentina; 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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