Financial data prepared under IFRS

Transcription

1 First Quarter of Fiscal Year 2012 Earnings Results Conference Call Presentation Financial data prepared under IFRS

2 Disclaimer This presentation is based on audited financial statements and may include 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 impact of the 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, uncertainties concerning the impact of the emergency laws enacted by the Argentine government which have resulted in the repeal of Argentina s convertibility law, the devaluation of the peso, restrictions on the ability to exchange pesos into foreign currencies, the adoption of a restrictive currency transfer policy, 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 and rapid 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 reduction 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 presentation, including, without limitation, changes in the Company s business or to reflect the occurrence of unanticipated events. Information included in this presentation is unaudited and may not coincide with that included in the financial statements of the Company, due to rounding, reclassification matters, and other reasons. Readers are encouraged to consult the Company s Annual Report and 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 and the Argentine Comisión Nacional de Valores. 1

3 Agenda Market Overview Business Highlights Financials Q&A Session 2

4 Market Overview: Consumption maintains its impetus Billions USD, at current prices Last 12 months YoY - constant prices 0,9% 307 Real GDP* 9,2% 8,9% 368 4,3% Consumption Billions USD, at current prices Last 12 months YoY - constant prices 0,5% 9,0% ,7% 4,9% ,9 Trade & Fiscal Balance Trade Balance (Billions USD) Last 12 months Fiscal Balance as % of GDP Last 12 months* 1,5% 1,7% 0,3% 0,1% 11,6 10,0 11, Q12e International context has shown improvements as recovery in the United States gains traction and dangers from Europe recede, although risks remain high. After a turbulent 4Q11, the measures taken by the authorities seems to take effect, interest rates slumped and capital outflow eased, although industrial production decelerated. Improved climate increased agricultural production with higher commodities prices, giving support to macro stabilization. Source: MECON, INDEC and Company Estimates Official GDP YoY variation, constant prices. Fiscal Balance represents primarily fiscal surplus Measures in the FX market taken in the 4Q11 and an accommodative monetary policy, end maintaining real interest rates low, fostering private consumption. Inflation remains high while wages negotiation started in different sectors at lower levels from previous year. Construction sector has decelerated significantly from last year, although it still showing positive growth. Fiscal front continued to deteriorate, expenses rose 39% YoY in 1Q12, while revenues increased 35%. Higher social expenses, were partially offsets by decelerating transfers to the private sector. Imports experimented its first decrease in almost 2 years, while exports were sustained due to high commodities prices. Capital outflows reduced significantly and the exchange rate remained stable. 3

5 Agenda Market Overview Business Highlights Financials Q&A Session 4

6 Business Highlights MOBILE Strong top of mind strengthens market position VAS +44% YoY; 52% of services revenues FIXED Internet revenues up 31% YoY in 1Q12 Bundling voice with fixed/wireless broadband NGN & FTTC deployments in key locations position TEO as first mover in these technologies FINANCIALS As from FY12 Financial Statements are prepared under IFRS Strong commercial activities & energy costs affected margins P$ 0,82 per share dividend will be made starting on May 10,

7 Mobile: Leadership in net adds with a view to MNP TEO vs. market growth Million of lines #1 in Revenue Share #1 Postpaid net adds 50,9 +7% 54,5 51,4 +7% 55,2 MNP Promotions: Focus on customer life extension Others 34,6 +5% 36,3 34,5 +6% 36,7 Focus on packages to enhance customer satisfaction ARPU up +16% YoY in 1Q12 Sustained Smartphone leadership TEO 16,3 18,2 +10% +11% 16,9 18,5 Mobile KPI National Market share e 32,1% 33,4% +1,6 M subs. 32,9% 33,6% ARPU (ARS/Month) TOU (SMS/Month) 44,4 +16% +8% 51,4 47,4 +16% -7% 54,9 Note: Argentinean operation only does not include trunking subscribers Source: Market estimates of the main providers in the industry for total subscribers. +70 pts MOU (Mins/Month) % 288-3%

8 Mobile: Value Added Service Retail & Wholesale Voice Data (SMS) Internet Services VAS as % of Service Revenues Service Revenue Breakdown Million ARS Argentine Market % +12% % % +50% Agent Commission +38% % % % 48% 46% 52% SAC & SRC as % of Service Revenues Before capitalization of SAC & SRC Advertising Handset subsidies Mobile Internet Services revenues +80% YoY 15,3% 3,5% 4,2% 7,6% 1Q11 Change In Agent commissions with focus in quality acquisitions and customer retention Handset upgrades increases to yield base, stimulate usage and facilitate upselling 16,4% 3,6% 3,8% 9,0% 1Q12 Note: Argentinean operation only 7

9 Paraguay Mobile Market: 3G services driving expansion Mobile lines Thousand of lines (includes 3G modems) Successful adoption of Personal Brand restyling % % Increasing EBITDA margins thanks to high VAS revenue growth Outstanding postpaid growth; backed on Mobile internet services Elimination of unlimited SMS & Voice promotions reduced MOU and TOU REVENUES OPBDA IFRS Million of ARS % +67% 714 Financials % % Margin 34% 37% 32% 37% Churn levels at 1,8% down from 2,9% at 1Q11 ARPU (GUA/Month) In thousands TOU (SMS/Month) MOU (Mins/Month) 23, % +15% +13% 27,1 KPI 25,4 +8% -10% % ,5 8

10 Mobile Revenues: Data & Internet, key drivers of growth Evolution of revenues 1Q11 1Q12 IFRS, Million of ARS, Percentage +822 (+29%) YoY Variation +80% +18% +3% +38% +34% +34% 1Q11 Revenues Retail Voice Wholesale* Voice Data Internet Equipment Nucleo* (Paraguay) 1Q12 Revenues % of total Mobile Revenues 29% 11% 36% 7% 11% 6% Note: Wholesale voice shows Interconnection revenues (CPP, TRLD, Roaming and others ) Núcleo revenues expressed in Argentine pesos, includes equipment. 9

11 Broadband: Sustained revenue and customer expansion Evolution of Accesses Thousand of broadband accesses Bundling and new products contributes to control churn Others % +14% % +14% Arnet Play video streaming supports customer retention Arnet Turbo increases bandwidth and improves customer experience 10Mb residential targeted offer ARPU up +16% YoY TEO +12% +11% e ARPU (2) & Churn Evolution +16% National Market share 1 35% 35% 35% 35% 82,2 86,0 88,2 91,1 95,6 Monthly Churn 1,2% 1,2% 1,2% 1,1% 1,3% ARPU (ARS) 1 Source: Market estimates of the main providers in the industry. 2 It must be noted that the calculation method of ARPUs of 2011 was adjusted in order to exclude from the subscriber base the dongles of customers that already had fixed broadband access. 1Q11 2Q11 2Q11 4Q11 1Q12 10

12 Fixed voice: Commercial offers based on simplicity Evolution of Lines in Service Thousand of lines in service +0,8% +0,7% Simple offer proposition: Pricing & bundling: Unlimited local minutes calls per month - no time limits ADSL + Video Streaming + 3G services ARBU up 7% YoY in 1Q12 thanks to flat pricing and value added services Sustained low churn levels (0,5%) ARBU evolution (excluding broadband and data) ARS +7% National Market share 1 47% 47% 47% 47%* 43,7 45,7 46,6 46,9 46,9 1 Source: Company reports of the main providers in the industry. * FY 11 refers to 4Q11 market share. ARBU: Includes only concepts billed to clients 1Q11 2Q11 3Q11 4Q11 1Q12 11

13 Fixed Services: BB + ICT continue to accelerate growth Evolution of revenues 1Q11 1Q12 IFRS, Million of ARS, Percentage +170 (+14%) % Regulated Regulated 42% YoY Variation +8% -1% +21% +31% -36% Non Regulated 58% 61% Non Regulated Revenues 1Q11 % of total Fixed Line Revenues Retail Voice Wholesale Voice 43% 12% Data Internet Equipment Revenues 1Q12 12% 32% 1% Note: Does not include intercompany revenues. Graph not in scale 12

14 Evolution of CAPEX Million of ARS % Capex Evolution PP&E Capex Breakdown IT Others 15% 7% 24% Mobile access PP&E +25% % % % Intangible Assets +53% 36% Core & Infraestructure 1 18% Fixed access % Revenues 17% 17% 11% 13% Intangible assets mainly SAC & SRC Increase in Commercial Assets due to MNP implementation FTTC rollout to improve fixed BB bandwidth NGN & FTTC deployments in key locations position TEO as first mover in these technologies Mobile access network upgrade for capacity increase Note: 1 Core & infrastructure refers to network related capex, including quality and innovation capex. 13

15 Agenda Market Overview Business Highlights Financials Q&A Session 14

16 TEO Group: Consolidated Results Revenues IFRS, Million of ARS, Percentage IFRS, Million of ARS, OPBDA* +26% % % % Regulated Revenues 14% 12% 13% 11% OPBDA Margin 33% 33% 35% 32% *OPBDA = Operating Profit Before Depreciation & Amortization. 15

17 TEO Group: Consolidated Costs Consolidated Costs 1 as % of Revenues Operating Costs 1 1Q12 65,5% 68,0% 8,8% ITX Costs 8,0% 20,1% Marketing & Sales 20,5% 8,7% Taxes 9,0% 12,7% Labor costs 13,2% Others 2 19% 26% Marketing & Sales 30% 12% 13% Taxes ITX costs Labor Costs 15,2% Others 2 17,3% 1Q11 1Q12 Strong momentum in postpaid adds and upgrades increases SAC/SRC Higher energy and labor related costs affects margins. 1. Excluding Depreciation & Amortizations. 2. Others includes: Fees for services, fees for Call Center outsourcing, maintenance, materials and supplies, bad debt expenses.. 16

18 TEO Group: Consolidated Results IFRS, Million of ARS, Percentage Operating Profit Net Income % Non Controlling Interest % 29 +8% Attributable to Telecom (Owners of the parent) % % % O. Profit Margin 22% 21% 23% 20% 13% 14% 15% 14% 17

19 TEO Group: FCF and Net Financial Position IFRS, Million of ARS - Last 12 months Operating Free Cash Flow OPBDA Capex WK & others Net Financial Position Telecom Argentina 716 (1) Telecom Personal (2) Nucleo (Paraguay) (104) Net Financial Position 1Q11 (Cash) Operating Free Cash Flow 3 Taxes Free Cash Flow = Net Interest FX Variations Dividend Payment Net Financial Position 1Q12 (Cash) Note: (1) Includes Telecom USA (2) Includes Springville (3) OFCF: Operating Free Cash Flow before Taxes. 18

20 Agenda Market Overview Business Highlights Financials Q&A Session 19