-- Consolidated Net Revenues amounted to P$8,861 million (+14% vs.
9M08); Internet +47% vs. 9M08; Mobile business in Argentina +15%
vs. 9M08. -- Mobile subscribers: 15.8 million (+15% vs. 9M08);
Broadband subscribers: 1.2 million (+21% vs. 9M08); Fixed lines in
service: 4.3 million (+1% vs. 9M08). -- Operating Profit Before
Depreciation and Amortization ("OPBDA") reached P$2,855 million
(+14% vs. 9M08), 32% of Net Revenues. Growth was mainly fueled by
mobile services and broadband in Argentina. -- Operating Profit
amounted to P$2,035 million (+32% vs. 9M08), 23% of Net Revenues.
-- Net Income reached P$1,006 million (+21% vs. 9M08). --
Investments (excluding materials) totaled P$1,022 million. -- Net
Financial Debt (before NPV effect) reached P$143 million (-P$1,048
million vs. 9M08). Net Financial Debt to OPBDA ratio declined from
0.4x as of the end of September 2008 to 0.04x as of the end of
September 2009. -- As of October 15, 2009 Telecom Argentina S.A.
has paid off all its outstanding financial debt. BUENOS AIRES,
Argentina, Nov. 10 /PRNewswire-FirstCall/ -- Telecom Argentina
(NYSE: TEO; BASE: TECO2), one of Argentina's leading
telecommunications groups, announced today Net Income of P$1,006
million for the nine-month period ended September 30, 2009 or +21%
when compared to the same period last year. During 9M09,
Consolidated Net Revenues increased by 14% (+P$1,072 million vs.
9M08) to P$8,861 million, mainly fueled by the Mobile and Broadband
businesses. Moreover, Operating Profit increased by 32% (+P$495
million vs. 9M08) to P$2,035 million. Consolidated Operating
Revenues Fixed Telephony (Voice, Data Transmission & Internet)
During 9M09, revenues generated by these services amounted to
P$3,043 million, +13% vs. 9M08, where in relative terms Internet
revenues have grown the most (+47% vs. 9M08). Voice Total Revenues
for this service reached P$2,078 million in 9M09 (+4% vs. 9M08).
The results of this line of business are still affected by frozen
tariffs of regulated services. Monthly Charges and Supplementary
Services increased by P$33 million, or 6% vs. 9M08, to P$628
million, as a consequence of a higher number of lines in service
(+1%), which reached more than 4.3 million, and a 15% increase in
supplementary services. Revenues generated by traffic (Local
Measured Service, Domestic Long Distance and International
Telephony) totaled P$945 million, an increase of 3% vs. 9M08.
Revenues from International traffic increased 12% vs. 9M08 while
local traffic revenues increased +3% vs. 9M08. Otherwise, revenues
from domestic long distance traffic slightly decreased 2% vs. 9M08.
Interconnection revenues amounted to P$319 million (+11% vs. 9M08),
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$186 million
(-7% vs. 9M08). This reduction was mainly a consequence of a
decrease in Public Telephony revenues (-P$13 million or -20% vs.
9M08). Data Transmission and Internet Data transmission revenues
amounted to P$197 million (+24% vs. 9M08), generated by the offer
of innovative solutions for the corporate market focused on both
satisfying the enterprises' internal infrastructure needs and
enhancing the offer of ICT services (connectivity, housing and
hosting, among others). Revenues related to Internet reached P$768
million (+P$246 million or 47% vs. 9M08), mainly due to the
substantial expansion of the broadband service, driven by an
increase in the subscriber base, better network coverage,
commercial promotions and innovations in the service portfolio. In
addition, ARPU reached P$68 in 3Q09, +21% when compared to 3Q08,
due to the implementation of an efficient pricing strategy and the
expiration of promotions together with reduction of churn. As of
September 30, 2009, Telecom reached 1.2 million ADSL customers
(+21% vs. 9M08). These connections represent approximately 27% of
Telecom's fixed lines in service. Data Transmission and Internet
both have significantly increased their contribution to net
consolidated revenues, reaching 11% participation (vs. 9% in 9M08)
and representing 32% of fixed telephony segment revenues (vs. 25%
in 9M08). Commercial Initiatives During the quarter Telecom
extended throughout its entire area of operation the promotion
denominated "Superpack", a bundle of services that includes
broadband access, flat rates for local calls and satellite TV
through a commercial agreement with DirectTV, the leading company
in digital TV. This offer presents clients the opportunity to have
a complete home package for communications and entertainment at an
attractive price. Telecom has continued developing complementary
services. Consequently it is marketing a promotion of Pack Arnet
together with a new line including flat rates for local calls. For
the corporate market, Telecom launched its virtualization service
for wholesale and government segments, enhancing its offer of ICT
services. These comprise Hosting Virtual y Virtual Desktop on Next
Generation Data Center, offering clients more efficiency in the
cost-benefit relationship with IT infrastructure. Telecom relies on
a competitive advantage to offer these types of services: its Data
Center in Pacheco Tier IV, one of the most complete and modern
information centers in the country, which allows the integration of
all of the virtual solution components: data center, connectivity,
hardware and software. Also remarkable are its data network and its
background oriented toward the corporate and government segments.
It is important to point out that the privileged position as
integral supplier of ICT solutions was achieved thanks to the
acquisition of Cubecorp, a data center that provides world-class IT
services, which occurred in July 2008. Mobile Services In the
quarter, clients have significantly increased, reaching 15.8
million as of the end of September 2009, representing an increase
of 0.4 million since June 2009 and 2.0 million since September
2008. During 9M09, net revenues reached P$5,818 million (+14% vs.
9M08). Telecom Personal in Argentina As of the end of September
2009, Personal reached 14 million subscribers in Argentina (+2.1
million, or +17% vs. 9M08), which allowed the Company to enhance
its market position and strengthen its potential for future revenue
growth. During 9M09 the strong increase in net additions continued
with the incorporation of about 1.4 million subscribers (vs. +1.3
million net additions in 9M08). Approximately 31% of the overall
subscriber base is postpaid (including "Cuentas claras" plans) and
69% is prepaid. Personal continued with consistent growth in Total
Revenues (including handset sales) reaching P$5,516 million (+15%
vs. 9M08), supported by the increase in overall voice traffic
minutes by 15% vs. 9M08 and in value-added services (VAS) revenues
by 35% vs. 9M08. Service revenues reached P$4,968 million (+17% vs.
9M08) where 34% corresponds to VAS revenues. Also noteworthy is SMS
traffic performance, which climbed from a monthly average of 1,239
million messages in 9M08 to 2,923 million in 9M09 (+136% vs. 9M08),
with similar service quality levels. As a consequence of the
traffic increase and higher usage of value-added services (mainly
due to a significant increase in SMS per client), Average Monthly
Revenue per User ("ARPU") remained stable at approximately P$40
during 9M09, even though the level of penetration is significant.
Meanwhile, ARPU in 3Q09 reached P$41. Personal's contribution to
consolidated margins has improved since 9M08 thanks to the
activities focused on expanding its subscriber base and retaining
the high-value segment. Initiatives During the quarter, Personal
continued its strategy in terms of value and convenience to clients
through the offer of "All inclusive" packs and promotions combining
minutes, SMS and Internet in the same monthly fee. Furthermore, it
continued expanding the offer of Packs -- flat or limited -- of
Internet, calls, SMS, roaming and access to social networks. It
also provided more benefits for prepaid clients, such as unlimited
SMS with each recharge of credits. Also noteworthy, revenues from
3G devices had a remarkable performance in the quarter, increasing
75% when compared to last quarter. One of the most remarkable
launches of this quarter -- in a strategic partnership with
Microsoft -- is SMS Messenger. This product allows access to
Windows Live Messenger through the use of text messages, regardless
of the handset used. Personal is the first operator in the world
providing this service. The digital music store, Personal Musica,
incorporated innovations such as an integral platform that allows
the acquisition of digital music simultaneously with chat through
Microsoft Messenger. The success of this strategy was reflected in
the continuous increase of VAS in total service revenues. In
addition, Personal increased its area of influence in the youth
segment, becoming the market share leader of this attractive
target. Telecom Personal in Paraguay By the end of September 2009,
Nucleo's subscriber base reached approximately 1.8 million
customers. During the year, Nucleo adopted the same client
disconnection policy as in the Argentine market. Prepaid and
Postpaid customers represented 89% and 11%, respectively.
Personal's controlled subsidiary in Paraguay generated revenues
equivalent to P$302 million during 9M09 (-7% vs. 9M08), affected by
the reduction of interconnection revenues -- which intensified the
competition between operators -- and the change in measured service
charges criteria, from a base of minutes to seconds. Consolidated
Operating Costs The Cost of Services Provided, Administrative
Expenses and Selling Expenses totaled P$6,826 million in 9M09,
which represents an increase of P$577 million, or +9%, vs. 9M08.
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$1,075 million (+23% vs. 9M08), affected by
increases in salaries and higher social security charges imposed by
law. Regarding personnel, the decrease in headcount in the fixed
segment (-244 employees vs. 9M08) was partially compensated by the
incorporation of 82 employees in the same period in the mobile
business. The total headcount at the end of 9M09 was 15,368
employees. -- Taxes reached P$720 million (+17% vs. 9M08),
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$1,015 million,
maintaining similar levels as 9M08. These costs are associated with
traffic generated among mobile operators. -- Agents, prepaid card
commissions and other commissions were P$778 million (+16% vs.
9M08), mainly due to the increase in commissions paid to commercial
agents and card distribution costs, as higher subscriber volumes
and sales of cards were registered. -- Advertising amounted to
P$247 million (-15% vs. 9M08) oriented towards supporting the
commercial activity in mobile services and Internet, and to
strengthening the brand position of the Telecom Group. It is
important to consider that last year costs related to the
Sponsorship of the Argentine Olympic Committee were incurred. --
Cost of handsets sold totaled P$804 million (+10% vs. 9M08) mainly
due to an increase in subscriber additions and in the number of
upgraded terminals. -- Depreciation of Fixed and Intangible Assets
reached P$820 million (-15% vs. 9M08). Fixed-line telephony totaled
P$490 million (-19% vs. 9M08) and mobile services P$330 million
(-7% vs. 9M08), mainly due to reestimation of the useful lives of
certain technical assets in 2Q09 and also since TDMA technology
depreciation charges ended in March 2008. -- Others Costs totaled
P$1,367 million (+25% vs. 9M08). The increase was mainly due to the
inflationary effects on related services. Consolidated Financial
and Holding Results Financial and Holding Results resulted in a
loss of P$317 million, an increase of P$205 million vs. 9M08. This
was mainly due to the loss registered in net foreign currency
exchange equivalent to P$293 million in 9M09 (vs. a gain of P$26
million in 9M08). The result was affected by losses from financial
debt denominated in Euros and in US dollars. It is important to
point out that since December 2008, the Argentine Peso devaluated
against the US Dollar and Euro currencies 10% and 15%,
respectively. Moreover, the result as of 9M09 includes losses of
P$73 million due to changes in market value of Financial Derivative
Instruments. Nevertheless, these results were partially compensated
by lower net interest (-P$90 million vs. 9M08) and lower losses
from holding results generated by inventories (-P$22 million vs.
9M08). Consolidated Net Financial Debt As of September 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$143 million, a reduction of
P$1,048 million as compared to September 2008 and P$769 million
when compared to December 2008. During 9M09, Personal purchased a
nominal amount of US$8.77 million Series 3 Notes due 2010.
Furthermore, Telecom Argentina purchased Notes in a 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). These
operations were made through market purchases and with liquid funds
from each company. The Notes acquired were cancelled according to
the terms and conditions of the respective Indentures. Consolidated
Capital Expenditures During 9M09, the Company invested P$1,022
million (excluding materials) in fixed and intangible assets. This
amount was allocated to Voice, Data and Internet businesses (P$520
million) and mobile services (P$502 million). In relative terms,
capex reached 12% 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 the
period Telecom continued with the development of solutions oriented
toward satisfying private neighborhood and real state development
needs. The Company announced the provision of technological
infrastructure and telecommunications services in the first
intelligent urban center of Argentina: "Area 60," located 64 km
from Buenos Aires city. It will rely on the first GPON network
(Gigabit Passive Optical Network) in the country. This is an optic
fiber network reaching each client's house. With this kind of next
generation technology, clients will be able to access the most
advanced services in voice, high velocity Internet and VAS, such as
video calls and videoconferences, security services and domotic,
among others. Other Relevant Matters The Court of Appeals in
Commercial Matters N. 2 resolved to suspend the Ordinary and
Extraordinary Telecom Argentina Shareholders meeting to be held on
September 9, 2009. Recent Relevant Matters As of October 15, 2009
Telecom Argentina has paid off the remaining portion of the debt
issued on August 31, 2005 for an amount equivalent to US$1.9
billion in accordance with the terms and conditions of the Acuerdo
Preventivo Extrajudicial (APE). The debt was prepaid 5 years in
advance of the repayment schedule originally agreed upon with the
financial creditors. Outstanding principal amount together with
accrued interest equivalent to US$352 million was paid. Since
October 16, 2009 until today, Telecom Personal purchased a nominal
amount of US$6.33 million Series 3 Notes due 2010. These operations
were made through market purchases and with liquid funds of the
company. The Notes acquired were cancelled according to the terms
and conditions of the Indenture. On October 22, 2009 Standard &
Poor's Ratings Services revised the local rating on Telecom
Personal Notes and upgraded it to AA from AA-. 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 September 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. Contacts: Pedro Insussarry
Solange Barthe Dennin (54-11) 4968-3743/3752 DATASOURCE: Telecom
Argentina CONTACT: Pedro Insussarry, +011-54-11-4968-3743, or
Solange Barthe Dennin, +011-54-11-4968-3752, both of Telecom
Argentina Web site: http://www.telecom.com.ar/
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