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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

 

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

 

For the month of March 2019

 

Commission File Number: 001-13464

 

 

Telecom Argentina S.A.

(Translation of registrant’s name into English)

 

Alicia Moreau de Justo, No. 50, 1107

Buenos Aires, Argentina

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

 

Form 40-F

 

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes

 

 

No

X

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes

 

 

No

X

 


Table of Contents

 

Telecom Argentina S.A.

 

 

TABLE OF CONTENTS

 

Item

 

1.      Press Release — Telecom Argentina S.A. announces consolidated results for the fiscal year 2018 (‘FY18’)

 


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FOR IMMEDIATE RELEASE

 

Market Cap P$271.1 billion

March 7th, 2019

Contacts:

Solange Barthe Dennin

(54 11) 4968-3752

 

Telecom Argentina S.A.

announces consolidated results for fiscal year 2018 (‘FY18’)*

 

Note: The merger between Telecom and Cablevisión was considered an inverse acquisition under IFRS 3 (Business Combinations), with Cablevisión being the surviving entity for accounting purposes. Thus, for the purposes of preparing the consolidated financial statements of Telecom Argentina as of December 31, 2018: i) the comparative figures as of December 31, 2017 correspond to those that arise from the consolidated financial statements of Cablevisión (restated by inflation in terms of a constant measuring unit as of December 31, 2018); and ii) the corresponding information for the annual period ended December 31, 2018, incorporates on the basis of figures corresponding to Cablevisión, the effect of the application of Telecom Argentina’s method of acquisition at its fair value in accordance with the IFRS 3 guidelines (see Financial Table No. 3) and the operations of Telecom Argentina as of January 1, 2018. Moreover, the Company has accounted for the effects of inflation adjustment adopted by Resolution 777/18 of the Comisión Nacional de Valores (“CNV”), which establishes that the restatement will be applied to the annual financial statements, for intermediate and special periods ended as of December 31, 2018 inclusive. Accordingly, the reported figures corresponding to FY18 include the effects of the adoption of inflationary accounting in accordance with IAS 29. On the other hand, in order to ease the understanding and analysis of the earnings evolution by its users, additional tables of the income statements are included, containing figures non-adjusted by inflation and which were used as the base for the information presented in constant pesos, exposing on pro forma basis the comparative figures for FY17 as if the merger between Telecom and Cablevisión had been effective as of January 1, 2016 (see Financial Tables No. 5, No. 7 and No. 9). Finally, comments related to variations of results of FY18 and vs. FY17 mentioned in this press release correspond to “figures restated by inflation” or “constant”. For further details, please refer to the titles of the financial tables beginning from page 14.

 

§     Consolidated Revenues amounted to P$168,046 million in FY18, of which Service Revenues reached P$155,212 million. Considering the breakdown of Service Revenues, Mobile Services amounted P$57,776 million; Internet Services totaled P$37,742 million, while Cable TV Services and Fixed Telephony and Data Services amounted to P$36,067 million and P$23,149 million, respectively.

 

§     Mobile Internet revenues of Personal in Argentina reached a 62.1% participation in Service Revenues, in current terms.

 

§     Mobile subscribers in Argentina: 18.6 million in FY18, while Cable TV subscribers and Broadband accesses totaled 3.5 million and 4.1 million, respectively.

 

§     Mobile ARPU of Personal in Argentina in FY18 increased to P$174.0 per month in FY18 (+22.3% vs. FY17).

 

§     Broadband ARPU reached P$623.4 per month in FY18 (+34.6% vs. FY17). Monthly churn was 1.9% in FY18.

 

§     Cable TV ARPU increased to P$696.2 per month in FY18 (+36.4% vs. FY17).

 

§     Consolidated Operating costs -including D&A and impairment of PP&E and intangible assets- totaled P$146,789 million in FY18 (-5.1% vs. FY17).

 

§     Operating Income before Depreciation and Amortization reached P$56,368 million in FY18 (+3.2% vs. FY17), 33.5% of Consolidated Revenues.

 

§     Net Income amounted to P$5,536 million in FY18. Net Income attributable to the Controlling Company amounted to P$5,294 million during the same fiscal year. The variation of the mentioned Net Income vs. FY17 mainly reflects the impact of FX losses over financial results, partially offset by the growth in Operating Income.

 

§     Capex reached P$42,480 million in FY18, equivalent to 25.3% of Consolidated Revenues.

 

§     Net Financial Debt Position: P$65,628 million in FY18.

 

 

*Unaudited non financial data

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IAS 29

Adjusted Proforma

 

 

(in million P$ adjusted by inflation, except where noted)**

As of December 31
2018

As of December, 31
2017

Δ $

Δ %

Consolidated Revenues

168,046

172,354

(4,308)

-2.5%

Operating Income before D&A

56,368

54,598

1,770

3.2%

Operating Income

21,257

17,715

3,542

20.0%

Net Income attributable to Controlling Company

5,294

14,544

(9,250)

-63.6%

Shareholders’ equity attributable to Controlling Company

225,686

n.a.

-

-

Net Financial Position - (Debt) / Cash***

(65,628)

(9,580)

(56,048)

-

CAPEX *

42,480

39,938

2,542

6.4%

 

 

 

 

 

Fixed lines in service (in thousand lines)

3,544

3,795

(251)

-6.6%

Mobile customers (in thousand)

21,009

22,146

(1,137)

-5.1%

Personal (Argentina)

18,316

18,980

(664)

-3.5%

Nextel (Argentina)

314

717

(403)

-56.2%

Núcleo (Paraguay) -including Wimax customers-

2,379

2,450

(71)

-2.9%

Broadband accesses in Argentina (in thousand)

4,110

4,062

48

1.2%

Cable TV Suscribers (in thousand)

3,454

3,503

(49)

-1.4%

Argentina

3,310

3,360

(50)

-1.5%

Uruguay

144

143

1

0.7%

 

 

 

 

 

Average Billing per user (ARBU) Fixed Telephony / voice (in P$)

219.3

152.3

67.0

44.0%

Average Revenue per user (ARPU) Mobile Services - Personal (in P$)

174.0

142.3

31.7

22.3%

Average Revenue per user (ARPU) Broadband (in P$) ***

623.4

463.3

160.1

34.6%

Average Revenue per user (ARPU) Cable TV (in P$)

696.2

510.3

185.9

36.4%

 

*(CAPEX in constant measuring unit - Figures as of FY17 calculated as the sum of the parts of Telecom Argentina’s and Cablevisión’s CAPEX, adjusting them to similar criteria.)

**(Figures may not sum up due to rounding)

***(Figures as of FY17 calculated as the sum of the parts of Telecom Argentina’s and Cablevisión’s consolidated net financial positions)

 

Buenos Aires, March 7, 2019 - Telecom Argentina S.A. (‘Telecom Argentina’) - (NYSE: TEO; BASE: TECO2), one of Argentina’s leading telecommunications companies, announced today a Net Income of P$5,536 million for the annual period ended December 31, 2018, a decrease of P$9,208 million or 62.5% when compared to FY17. Net loss attributable to the Controlling Company amounted to P$5,294 million.

 

It is worth mentioning that the comparative figures for the previous reporting periods have been restated so that the resulting comparative information is presented in terms of the current unit of measurement as of December 31, 2018.

 

 

IAS 29

Adjusted Proforma

 

 

 

FY18

FY17

Δ $

Δ %

Consolidated Revenues (MMP$)

168,046

172,354

(4,308)

(2.5%)

Net Income attributable to Controlling Company (MMP$)

5,294

14,544

(9,250)

(63.6%)

Earnings attributable to Controlling Company per Share (P$)

2.5

6.8

(4.3)

 

Earnings attributable to Controlling Company per ADR (P$)

12.3

33.8

(21.5)

 

Operating Income before D&A *

33.5%

31.7%

 

 

Operating Income *

12.6%

10.3%

 

 

Net Income*

3.3%

8.6%

 

 

*As a percentage of Consolidated Revenues

 

 

 

 

Note: The average of ordinary shares outstanding considered amounted to and 2,153,688,011 as of FY18 and FY17

 

During FY18, Consolidated Revenues decreased by 2.5% to P$ 168,046 million (-P$ 4,308 million vs. FY17). This decrease is mainly due to the increase in Revenues in FY17, as a result of its restatement to the FY18 currency (whose variation as a consequence of the restatement amounts to approximately 38.5%), partially offset by the restatement of Revenues for FY18 (whose variation as a consequence of the restatement amounts to approximately 18.4%) and by the increase in Revenues of Internet Services and Fixed Telephony and Data Services.

 

Operating Income totaled P$21,257 million in FY18 (+P$3,542 million or +20.0% vs FY17).

 

 

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Consolidated Operating Revenues

 

Mobile Services

 

As of December 31, 2018, mobile clients amounted to 21.0 million.

 

In FY18, mobile services revenues represented P$57,776 million (-8.7% vs. FY17). This variation was mainly due to the higher effect of the restatement of revenues of FY17 vs. FY18, partially offset by the increase in the ARPU.  The commercial strategy was focused on promoting the consumption of mobile internet services through an update of the integrated offer of plans suitable for all market segments.

 

In turn, equipment revenues amounted to P$12,834 million (-P$2,274 million or -15.1% vs. FY17). This variation is mainly due to the greater effect of the restatement of the revenues of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018 and by a decrease in the quantities sold, partially offset by the increase in prices of handset sales.

 

 

Mobile Services in Argentina

 

As of December 31, 2018, Personal reached 18.3 million subscribers in Argentina, where postpaid clients represented 39% of the subscriber base.

 

In FY18, mobile service revenues in Argentina (excluding equipment sales) amounted to P$51,089 million (-6.2% vs. FY17). Considering mobile revenues in current terms, mobile internet revenues reached 62.1% of service revenues of Personal in Argentina (vs. 49.7% in FY17).

 

The average monthly revenue per user (‘ARPU’) of Personal in Argentina amounted to P$174.0 during FY18 (+22.3% vs. FY17).

 

As of December 31, 2018, Nextel IDEN subscriber base reached approximately 0.3 million subscribers, where postpaid clients represented 80% of the subscriber base and prepaid clients represented the remaining 20%.

 

Commercial Initiatives

 

During the fourth quarter of 2018, the integration mobile service brands began with the launch of a campaign to transport Nextel’s customers to Personal.  This communication was accompanied by the presentation of Personal’s new Smart Radio service, which includes the benefits of the most modern 3G/4G network in the market. Smart Radio enables customers to communicate with all users who share the radio network, including other providers besides Personal, through the use of robust equipment or smartphones which are compatible with the application of the service.

 

 

 

 

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In addition, the promotion of the update of our clients’ devices with discounts and special financing continued, and focusing on the convergence of products. In terms of new releases, the entire portfolio of iPhone devices was incorporated.

 

Regarding infrastructure, Personal continued to enhance the mobile internet experience of its customers through the deployment of its 4G and 4G+ network throughout Argentina, which currently covers more than 1,500 locations from La Quiaca to Ushuaia, and reaching more than 12.2 million customers with 4G devices throughout the country. Accompanying these improvements through a massive communication campaign, the 4G Personal Network was promoted as the fastest in the country -based on the results of international benchmarks that measure network standards through the worldwide experience of customers-.

 

Likewise, Club Personal Convergente was also presented to Fibertel and Cablevisión customers, which includes benefits with discounts on trips, supermarkets, cinemas, shopping, and others to the entire client portfolio of the different services.

 

Personal in Paraguay (‘Núcleo’)

 

As of December 31, 2018, Núcleo’s subscriber base reached around 2.4 million clients. Prepaid and postpaid customers represented 83% and 17%, respectively.

 

Núcleo generated service revenues equivalent to P$6,687 million during FY18 (+41.6% vs. FY17). Internet revenues represented 45.3% of FY18 service revenues (vs. 44.5% in FY17).

 

 

 

Cable TV Services

 

Cable TV service revenues reached P$36,067 million in FY18 (-9.6% vs. FY17). This decrease was mainly explained by the greater effect of the restatement of FY17 revenues vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, which was partially offset by the upselling of value added services combined with price adjustments. Cable TV subscribers totaled almost 3.5 million, while the Cable TV ARPU reached P$696.2 during FY18, rising +36.4% vs. FY17. Moreover, average monthly churn during FY18 was 1.4%.

 

In the fourth quarter of 2018, Cablevisión continued to add featured titles to its on-demand content grid, being the most relevant the co-production Un Gallo para Esculapio (season II), and Morir de Amor.

 

In addition, the Company continued offering the possibility to customers to enjoy different Cablevisión Flow exceptional content without consuming mobile data of their Personal plans, as were the cases of the friendly matches of the Argentine National Soccer Team played after the World Cup, and the Copa Libertadores final between Boca and River and the Club World Cup 2018.

 

In the fourth quarter of 2018, Cablevisión continued to migrate its clients in Uruguay in the cities of Montevideo, Canelones and San José to satellite technology, adding more high definition channels to its programming to its offer and, in the near future, new value added services.

 

 

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Fixed Telephony and Data Services

 

During FY18, revenues generated by fixed telephony and data reached P$23,149 million in FY18, +14.2% vs. FY17. The increase in fixed telephony services was mainly explained by monthly fee price increases that came into effect for both corporate and residential fixed line customers, and additionally due to the bundled offer of packs that include voice and internet services (‘Arnet + Voz’), that aim to achieve higher levels of customer loyalty.

 

As a result, the average monthly revenue billed per user (‘ARBU’) of fixed telephony reached P$219.3 in FY18, +44.0% vs. FY17.

 

Meanwhile, Data revenues increase (services mainly offered to Corporate customers, SMEs, Government and to other operators) was mainly driven by FX rate variations that affected those contracts that were adjusted by the $/US$ exchange rate, in a context that evidences the growing position of Telecom as an integrated ICT provider.

 

 

In this sense, FiberCorp, Personal and Telecom presented their unified portfolio of products and services for companies in the province of Tucumán, Argentina, promoting to current clients and prospects the benefits of the integration of the corporate brands of Telecom Argentina, as well as the latest trends in the world of technology.

 

In addition, and complementary to its innovation strategy in Internet of Things, the Company launched a third device designed for pets: Personal Bipy Mascotas, who joins family IoT solutions already launched as Bipy Adultos and Bipy Niños. Bipy Mascotas is an intelligent pet locator device connected to the Personal 4G network. The device favors remote monitoring, provides useful information of its profile and allows the connection via voice at a distance, through a mobile application.

 

 

 

Internet Services

 

Internet services revenues totaled P$37,742 million during FY18, +14.6% vs. FY17. As of December 31, 2018, total broadband accesses increased to more than 4.1 million (+1.2% vs. FY17). Additionally, broadband ARPU amounted to P$623.4 per month in FY18 (+34.6% vs. FY17). Moreover, the average monthly churn rate for the period was 1.9%. On the other hand, clients with service of 20Mb or higher currently represent 40% of the total customer base as of FY18.

 

Consolidated Operating Costs

 

Consolidated Operating Costs (including D&A and impairment of PP&E and intangible assets) totaled P$146,789 million in FY18, a decrease of P$7,850 million, or -5.1% vs. FY17. These lower operating costs vs. FY17 are mainly associated with the higher effect of the restatement of FY17 vs. FY18 operating costs, in order to be expressed in constant

 

 

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currency as of December 31, 2018, which allowed an increase in Operating Income before D&A and a margin expansion. Moreover, this decrease in costs was partially offset by greater costs of services contracted with suppliers, including higher programming and content costs due the incorporation of broadcasting signals of football matches, and an increase in the charge for bad debt expenses.

 

 

 

The cost breakdown is as follows:

 

 

 

- Employee benefit expenses and severance payments totaled P$30,048 million (-7.2% vs. FY17). The decrease was mainly caused by a higher effect of restatement of employee benefit expenses and severance payments for FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, partially offset by increases in salaries to unionized and non-unionized employees together with the associated social security contributions. Finally, total employees at the end of FY18 amounted to 25,343 (vs. 26,958 in FY17).

 

- Interconnection and transmission costs (including TLRD, Roaming, international settlement charges and lease of circuits) totaled P$5,525 million, -6.8% vs. FY17, decreasing mainly due to the greater effect of the restatement of interconnection and transmission costs for FY17 vs. FY18, in order to be expressed in current currency as of December 31, 2018, partially offset by higher TLRD costs and carriers’ charges.

 

- Fees for services, maintenance, materials and supplies amounted to P$16,261 million (-10.4% vs. FY17). These lower costs are mainly due to the greater effect of the restatement of the fees for services, maintenance, materials and supplies of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, which was partially offset by increases in fees for services, mostly related to call centers and higher professional fees generated by a greater level of activity driven mainly by new Company projects and by services linked to operational management in general. There were also higher technical maintenance costs and higher hardware and software maintenance costs due to price increases, the US$ FX fluctuations and the higher level of activity.

 

- Taxes and fees with regulatory authorities reached P$13,609 million (-8.0% vs. FY17). This decrease corresponds mainly to the greater effect of the restatement of taxes and fees with the regulatory authority of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, partially offset by the increase in revenues, at nominal value.

 

- Commissions and advertising (Commissions paid to agents, prepaid card distribution commissions and others) totaled P$11,210 million (-3.4% vs. FY17). This decline is due to the higher effect of the restatement of Commissions and advertising of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, partially offset by higher fees paid in favor of commercial channels and collection fees.

 

- Cost of handsets sold amounted to P$9,667 million (-18.0% vs. FY17). The majority of this amount can be associated to handset sales in Argentina, which decreased vs. FY17 due to the greater effect of restating the cost of equipment and handsets sold in FY17 vs. FY18 and due to the decrease in the quantities sold, partially offset by higher average costs per unit in FY18.

 

 

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- Programming and content costs totaled P$12,156 million (+15.0% vs. FY17), increasing largely due to the incorporation of the cost of signals to broadcast live football matches of the first division of the Argentine Football Association, price increases and fluctuation of the P$/US$ exchange rate.

 

- Depreciation, amortization and impairment of PP&E and intangible assets amounted P$35,111 million (-4.8% vs. FY17). This reduction is explained mainly by a greater effect of the restatement of the depreciation, amortization and impairment of PP&E and intangible assets of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018. It is important to highlight the recognition of the impairment allowance of the Arnet trademark for P$ 1,623 million, because this trademark will no longer be used.

 

- Other Costs totaled P$13,202 million (+5.1% vs. FY17), of which bad debt expenses reached P$3,527 million (+28.6% vs. FY17), and whose increase is mainly due to the impact generated by the application as of the FY18 of IFRS 9, partially offset by as lower other operating costs that totaled P$9,675 million (-1.5% vs. FY17).

 

 

 

Net Financial Results

 

The Net Financial Results (including Financial Expenses on Debt and Other Financial Results, net) showed a loss of P$18,795 million in FY18, compared with a gain of P$3,886 million in FY17. The result was mainly due to an increase in financial expenses on debt of P$30,780 million, mostly due to the strong depreciation of the peso during the FY18 and greater interest expenses generated by an increase of the net financial debt, followed by a decrease in other financial results, net (excluding RECPAM) of P$3,382 million vs. FY17 (reaching P$1,774 million in FY18). The aforementioned lower results were partially offset by a greater RECPAM (inflation adjustment gain / loss) which amounted to P$13,403 million (generating greater earnings of P$11,481 million vs. FY17).

 

Consolidated Net Financial Debt

 

As of December 31, 2018, net financial debt position (cash, cash equivalents plus financial investments and financial NDF minus loans) totaled P$65,628 million, increasing when compared to the consolidated net financial debt position as of December 31, 2017 (calculated as the sum of consolidated net financial debt positions of Telecom Argentina and Cablevisión, which was P$9,580 million).

 

 

in million of P$

 

FY17

 

FY18

 

$ Var

 

Financial expenses on debt

 

-$ 3,192

 

-$ 33,972

 

-$ 30,780

 

Other financial results, net (excluding RECPAM)

 

$ 5,156

 

$ 1,774

 

-$ 3,382

 

RECPAM (Inflation Adj. Gain / Loss)

 

$ 1,922

 

$ 13,403

 

$ 11,481

 

Total

 

$ 3,886

 

-$ 18,795

 

-$ 22,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

During FY18, the Company invested P$42,480 million, increasing approximately 6.4% from the sum of the parts of Telecom Argentina’s and Cablevisión’s CAPEX as of FY17. The aforementioned investments amounted to P$35,674 million in current terms during FY18, increasing by 56.3% vs. FY17. The investments were focused on projects that maximize the network capacity and on the development of products and services that contribute to address the customer’s needs that today demand for connectivity and data availability. Moreover, transmision and transport networks has been extended to unify the differents

 

 

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access technologies, reconverting the copper fixed networks into fiber or coaxial-fiber hybrid networks, in order to face the the increaseing services demand from mobile and fixed clients.  Likewise, significant investments have been made in the charging, billing and relationship systems with customers. The Company aims to improve the capacity and coverage of its networks, which is key factor for the transformation towards convergent services with international quality standards, but also to leverage the content business, with Flow as an integral content platform and entertainment center, whose competitive advantages and differential features place it above other platforms. In relative terms, CAPEX reached 25.3% of consolidated revenues in FY18 (vs. 23.2% in FY17), while in current terms they reached 25.8% of revenues.

 

These commercial initiatives and improvements in infrastructure through sustained investment impacted on the quality of service standards and were reflected in the rise of the Net Promoter Score (NPS) indicators of recommendation of Personal as a favorite mobile services brand. In addition, they resulted in more users from other service companies choosing Personal, leading the industry-level mobile number portability during the last quarter.

 

In the last quarter of 2018, the Company announced investments in the Buenos Aires Atlantic Coast to expand the access network, and improve the speed and capacity of mobile connections. The investment plan foresees the construction of 30 new sites; in addition to the fiber optic deployment that increases the capacity of the 4G data network. This agreement was added to other similar celebrated during the year with the Municipalities of the cities of Rosario (province of Santa Fe), the province of Jujuy, and the municipalities of the cities of Ezeiza and Lomas de Zamora (in the Buenos Aires Metropolitan Area).

 

 

 

Breakdown of the comparative figures restated by inflation

 

 

 

 

FY18

 

FY17

 

 

 

 

 

IAS 29

Adjustment

Proforma
(ex IAS 29)

Proforma
Adjusted

r $

r %

 

Revenues

168,046

30,886

137,160

172,354

(4,308)

-2.5%

 

Consolidated Operating Costs

(146,789)

(33,834)

(112,955)

(154,639)

7,850

-5.1%

 

Operating income

21,257

(2,948)

24,205

17,715

3,542

20.0%

 

Net Financial results and results of equity in earnings from associates

(18,559)

22,198

(40,757)

4,239

(22,798)

-

 

Net (loss) income before income tax expense

2,698

19,250

(16,552)

21,954

(19,256)

-87.7%

 

Income tax expense

2,838

(3,132)

5,970

(7,210)

10,048

-139.4%

 

Net (loss) income

5,536

16,118

(10,582)

14,744

(9,208)

-62.5%

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Controlling Company

5,294

15,978

(10,684)

14,544

(9,250)

-63.6%

 

Non-controlling interest

242

140

102

200

42

21.0%

 

 

 

 

 

 

 

 

 

Operating income before D&A

56,368

9,994

46,374

54,598

1,770

3.2%

 

As % of Revenues

33.5%

 

33.8%

31.7%

 

 

 

 

 

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During FY18 consolidated total revenues decreased 2.5% (-P$4,308 million vs. FY17) amounting to P$168,046 million. The inflationary effect contained in revenues amounts approximately to P$30,886 million.

 

Operating income before depreciation and amortization reached P$56,368 million in FY18 (+ P$1,770 million or +3.2% vs. FY17), representing 33.5% of consolidated revenues (vs. 31.7% in FY17). The inflationary effect contained in operating income before D&A amounts approximately to P$9,994 million.

 

Operating income amounted to P$21,257 million in FY18 (+P$3,542 million or +20.0% vs. FY17). The inflationary effect contained in operating income amounts approximately to -P$2,948 million, mainly due to a greater restatement of D&A and impairment of PP&E and intangible assets.

 

Net Financial results and results of equity in earnings from associates resulted in a net loss of P$18,559 million in FY18, representing a higher loss of P$22,798 million vs. FY17. The inflationary effect contained in net financial results and results of equity in earnings from associates amounts approximately to P$22,198 million, mainly due to a positive effect from the exposure to inflation.

 

Telecom Argentina recorded a net income of P$5,536 million in FY18, which means a decrease of P$9,250 million in relation to the net income of P$14,744 million in FY17. The inflationary effect over net income generated a positive impact of approximately P$16,118 million.

 

 

 

Relevant Matters

 

Loan with Deustche Bank AG, London Branch

 

On November 8, 2018, Telecom Argentina took due notice of the acceptance of a loan offer by Deutsche Bank AG, London Branch, as organizer of syndicate of entities, for an amount up to US$ 200 million (which could be increased to US$ 300 million). The loan has a term of 42 months from the date of the initial disbursement and will accrue compensatory interest at an initial rate per annum equivalent to LIBOR + 4.5% that will be payable quarterly in arrears. The capital will be payable in 6 consecutive semi-annual equal installments equivalent to 12.5% of the amount of paid-up capital with a final payment on the due date equivalent to 25% of the initial disbursement. The proceeds from the loan were used by the Company only to cancel partially the Syndicated Loan agreement celebrated on February 2, 2018 for US$ 1,000 million.

 

Incorporation of a new lender for US$ 100 million to the Deutsche Bank loan

 

On November 14, 2018, in accordance with the provisions of the loan agreement signed on November 8 between Telecom Argentina and Deutsche Bank AG, London Branch, as organizer of a syndicate of entities, (“the Loan”), today a new lender was incorporated to the Loan for an amount up to US$ 100 million, subject to the same terms and conditions of the Loan that were duly informed.

 

 

 

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Other Relevant Matters

 

Cancellation of the syndicated loan agreement celebrated in February 2018 for US$ 1,000 million

 

In October 2018, the Company had prepaid US$ 500 million outstanding under the syndicated loan agreement entered into on February 2, 2018 for US$ 1,000 million (the “Original Loan”), through funds obtained under the of the syndicated loan agreement signed on October 8, 2018, and US$ 100 million with own funds, as a mandatory pre-cancellation condition agreed upon in the terms of the Original Loan. Moreover, in November 2018, the funds obtained from the loan with Deutsche Bank for US$ 300 million were used to prepay the Original Loan. Finally, on February 11, 2019 Telecom Argentina canceled the final amount outstanding under the Original Loan for US$ 100 million with its own funds.

 

Loan agreement with the International Finance Corporation (IFC)

 

On  March 4, 2019, Telecom Argentina entered into a loan agreement with the International Finance Corporation (“IFC”), for a total amount of up to US$ 450 million, as requested by the Company in one or more disbursements (the “Loan”). The proceeds from the loan will be used by the Company to finance capital investments for 2019.

 

The Loan will consist of a tranche “A” (“Tranche A”), tranche “B-1” (“Tranche B-1”), tranche “B-2” (“Tranche B-2”), tranche “B-3” (“Tranche B-3”) and tranche “B-4” (“Tranche B-4”). In addition, the amounts disbursed under the Loan will mature in August 2023, in the case of Tranche B-1 and Tranche B-3, or in August 2024, in the case of Tranche A, Tranche B-2 and Tranche B-4.

 

Finally, the aforementioned financing was approved by the Company’s Board of Directors during its meeting held on March 1, 2019.

 

Destination of Retained Earnings

 

Regarding the destination of the Retained Earnings, according to Section 27, Chapter II of Title II of the CNV Rules, (N.T 2013), Shareholders’ Meetings of Companies that exhibit cumulative positive results in their annual financial statements not subject to restrictions for its distribution, should adopt an express resolution regarding its allocation to either one or a combination of the following: cash dividend distribution, share capitalization or creation of reserves, where it should be specifically foreseen in the Agenda of the Shareholders’ Meeting that deals with the treatment of the distributable earnings.

 

In relation of the aforementioned, the Board of Directors proposes:

 

 

 

In Pesos

Retained Earnings as of December 31, 2018

26,918,365,656

 

 

To Legal Reserve

(265,906,251)

To Cash Dividends

(6,300,000,000)

To Facultative reserve for future cash dividends

(6,300,000,000)

To Facultative reserve to maintain the level of investments in capital assets and the current level of solvency of the Company

(14,052,459,405)

To New Fiscal Year

---------

 

 

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Regarding this proposal, it should be taken into account that since the enactment of General Resolution CNV No. 777/2018 (published in the Official Gazette on December 28, 2018), the re-expression method for the financial statements in homogenous currency is applicable for issuer companies, as established by the International Accounting Standard No. 29 (IAS 29).

 

Regarding the distribution of earnings, the aforementioned CNV General Resolution No. 777/2018, established that “The distribution of earnings must be treated in the currency of the date of the Shareholders’ Meeting by means of the price index corresponding to the month prior to their meeting.” (section 3, item 1, subsection e), Chapter III, Title IV of the CNV RULES (NT 2013),”Expression in constant currency of the earnings distributions”).

 

Therefore, it should be noted that this proposal of distribution of earnings corresponds to figures in constant currency as of December 31, 2018, leaving to the resolution of the Shareholders’ Meeting the determination of the amount that can be distributed.

 

In addition, the Board of Directors proposes i) that the cash dividends be made available to shareholders in three (3) equal installments, being payable the first installment within thirty (30) calendar days of their approval by the Shareholders’ Meeting, and the second and third installments within ninety (90) and one hundred and eighty (180) consecutive days of their approval by the Shareholders’ Meeting, respectively, or on the previous date determined by the Board of Directors; ii) that powers be delegated into the Board of Directors of the Company so that, depending on the evolution of the business, it may order the withdrawal, totally or partially, in one or more times, of an amount of up to P$ 6,300,000,000 from the “Facultative reserve for future cash dividends” and its distribution to shareholders as cash dividends, being these delegated powers able to be exercised until December 31, 2019.

 

*******

 

 

 

 

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Telecom Argentina is the parent company of a leading telecommunications group in Argentina, where it offers, either itself or through its controlled subsidiaries local and long distance fixed-line telephony, cellular, data transmission, and pay TV and Internet services, among other services. Additionally, Telecom Argentina offers cellular services in Paraguay and pay TV services in Uruguay. The Company commenced operations on November 8, 1990, upon the Argentine government’s transfer of the telecommunications system in the northern region of Argentina.

 

As of March 7, 2019, Telecom Argentina has 2,168,909,384 shares issued and 2,153,688,011 shares outstanding.

 

 

Cablevisión Holding S.A. owns 18.75% of total capital stock directly and owns 20.06% of total capital stock indirectly through VLG Argentina S.A.U.

 

 

For more information, please contact Investor Relations:

 

Solange Barthe Dennin

Luis F. Rial Ubago

Nahuel Monsalvo

 

(5411) 4968 3752

(5411) 4968 3718

(5411) 4698 4448

 

 

Voice Mail: (5411) 4968 3628

Fax: (5411) 4968 3616

E-mail: relinver@teco.com.ar

 

For information about Telecom Argentina’s services, visit:

 

www.telecom.com.ar

www.personal.com.ar

www.personal.com.py

www.arnet.com.ar

www.cablevisionfibertel.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

 

 

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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.

 

 

(Financial tables follow)

 

 

*******

 

 

 

 

 

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TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

1-              Consolidated Balance Sheet (as reported in the FFSS)

(Restated by inflation, comparative with Cablevisión’s consolidated financial statements)

 

 

 

12/31/18

 

12/31/17

 

Cash and cash equivalents

 

6,891

 

6,517

 

Financial Investments

 

2,121

 

162

 

Trade receivables

 

17,415

 

2,588

 

Other Receivables

 

4,323

 

1,223

 

Inventories

 

2,737

 

136

 

Total current assets

 

33,487

 

10,626

 

Financial Investments

 

4,672

 

-

 

Trade receivables

 

61

 

-

 

Goodwill

 

120,449

 

31,954

 

Property, plant and equipment (‘PP&E’)

 

150,476

 

45,701

 

Intangible assets

 

59,870

 

4,635

 

Other Receivables

 

2,723

 

1,154

 

Total non-current assets

 

338,251

 

83,444

 

TOTAL ASSETS

 

371,738

 

94,070

 

Trade payables

 

22,854

 

5,737

 

Financial debt

 

20,044

 

1,383

 

Salaries  and social  security payables

 

5,947

 

2,585

 

Taxes  payables

 

2,319

 

2,743

 

Dividend Payable

 

-

 

6,021

 

Other liabilities

 

1,537

 

152

 

Provisions

 

744

 

-

 

Total current liabilities

 

53,445

 

18,621

 

Trade payables

 

570

 

-

 

Financial debt

 

59,268

 

14,626

 

Salaries  and social  security payables

 

347

 

-

 

Deferred income tax liabilities

 

24,542

 

3,982

 

Taxes  payables

 

26

 

4

 

Other liabilities

 

1,159

 

198

 

Provisions

 

3,468

 

1,611

 

Total non-current liabilities

 

89,380

 

20,421

 

TOTAL LIABILITIES

 

142,825

 

39,042

 

 

 

 

 

 

 

Equity attributable to Controlling Company

 

225,686

 

54,182

 

Non-controlling interest

 

3,227

 

846

 

TOTAL EQUITY

 

228,913

 

55,028

 

TOTAL LIABILITIES AND EQUITY

 

371,738

 

94,070

 

 

2-              Consolidated Loans (as reported in the FFSS)

(Monetary items, comparative with the consolidated financial statements of Cablevisión)

 

 

 

12/31/18

 

12/31/17

 

Bank overdrafts - principal

 

2,276

 

-

 

Bank and other financial  institutions loans - principal

 

12,945

 

77

 

NDF

 

100

 

-

 

Accrued interest and related expenses

 

3,675

 

43

 

For purchase of equipment

 

1,048

 

1,257

 

Companies under Section 33 - Law 19,550 and related parties

 

-

 

6

 

Total Current Loans

 

20,044

 

1,383

 

For purchase of equipment

 

1,031

 

686

 

Notes - principal

 

18,831

 

13,767

 

Bank and other financial institutions loans - principal

 

34,260

 

210

 

Accrued interest and related expenses

 

5,146

 

(37)

 

Total Non Current Loans

 

59,268

 

14,626

 

Total Loans

 

79,312

 

16,009

 

 

 

 

 

 

 

Cash and cash equivalents, and Financial Investments

 

13,684

 

6,679

 

Net Financial Position - Cash (Debt)

 

(65,628)

 

(9,330)

 

 

 

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TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

 

3-

Effect of Business Combination - over Assets, Liabilities, Equity and Income

 

 

 

 

 

 

 

(This table aims to explain the Merger registration and the allocation of a greater asigned value)

 

 

 

 

 

 

Telecom
(Accounting
acquiree)

 

Retained
earnings
adjustments

 

Business
Combination
effect IFRS 3

 

Total
indentifiable
consolidated
net assets,

 

Total
consolidated
indentifiable
net assets,

 

 

 

 

(1)

 

(2)

 

(3)

 

inc. as of
01.01.2018

 

constant
currency

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

2,831

 

-

 

-

 

2,831

 

4,180

 

 

Trade receivables

 

8,636

 

157

 

(656)

 

(4)   8,137

 

12,013

 

 

Other current assets

 

6,771

 

-

 

32

 

(4)   6,803

 

10,044

 

 

Total current assets

 

18,238

 

157

 

(624)

 

17,771

 

26,237

 

 

NON CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income tax assets

 

626

 

-

 

(624)

 

2

 

3

 

 

Investments

 

2,657

 

-

 

3

 

2,660

 

3,927

 

 

Goodwill

 

2

 

-

 

59,653

 

59,655

 

88,072

 

 

Property, plant and equipment (‘PP&E’)

 

28,538

 

-

 

34,209

 

(4) 62,747

 

92,637

 

 

Intangible assets

 

7,096

 

(85)

 

33,175

 

40,186

 

59,329

 

 

Other non current assets

 

431

 

125

 

(125)

 

(4) 431

 

636

 

 

Total non currents assets

 

39,350

 

40

 

126,291

 

165,681

 

244,604

 

 

Total assets

 

57,588

 

197

 

125,667

 

183,452

 

270,841

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

21,987

 

-

 

7

 

21,994

 

32,470

 

 

NON CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income tax liabilities

 

48

 

83

 

16,610

 

16,741

 

24,716

 

 

Other non current liabilities

 

11,674

 

-

 

18

 

11,692

 

17,262

 

 

Total non current liabilities

 

11,722

 

83

 

16,628

 

28,433

 

41,978

 

 

Total Liabilities

 

33,709

 

83

 

16,635

 

50,427

 

74,448

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Capital Stock - Outstanding Shares

 

969

 

-

 

(15)

 

954

 

954

 

 

Inflation Adjustment – Outstanding Shares

 

2,646

 

-

 

-

 

2,646

 

39,559

 

 

Capital Stock - Treasury Shares

 

15

 

-

 

-

 

15

 

15

 

 

Inflation Adjustment – Treasury Shares

 

42

 

-

 

-

 

42

 

152

 

 

Treasury shares acquisition cost

 

(461)

 

-

 

-

 

(461)

 

(1,795)

 

 

Merger Premium

 

-

 

-

 

109,469

 

109,469

 

127,343

 

 

Legal reserve

 

734

 

-

 

-

 

734

 

1,819

 

 

Special reserve for IFRS implementation

 

351

 

-

 

-

 

351

 

869

 

 

Voluntary reserve for investments in capital stock

 

461

 

-

 

-

 

461

 

3,300

 

 

Reserve for future cash dividend payments

 

9,730

 

-

 

-

 

9,730

 

22,414

 

 

Other comprehensive income

 

972

 

-

 

(972)

 

-

 

-

 

 

Cost of equity interest increase in controlled companies

 

(3)

 

-

 

3

 

-

 

-

 

 

Retained earnings

 

7,630

 

128

 

-

 

7,758

 

(195)

 

 

Equity attributable to Telecom Argentina

 

23,086

 

128

 

108,485

 

131,699

 

194,435

 

 

Equity attributable to non-controlling interest

 

793

 

(14)

 

547

 

1,326

 

1,958

 

 

TOTAL EQUITY

 

23,879

 

114

 

109,032

 

133,025

 

196,393

 

 

TOTAL LIABILITIES AND EQUITY

 

57,588

 

197

 

125,667

 

183,452

 

270,841

 

 

(1) According to the consolidated financial statements of Telecom as of December 31, 2017, approved by the Board of Directors of the Company on March 7, 2018. P$2MM of Tuves Paraguay’s goodwill was reclassified from intangible assets to goodwill.

(2) Adjustment to results of previous fiscal years corresponding to initial balances of Telecom Argentina prior to the merger in application of IFRS 9 and IFRS 15 as of fiscal year 2018.

(3) Adjustments to the book value of the net assets of Telecom to fair value in accordance with IFRS 3.

(4) Fair value estimations are net of provisions for P$1,677 million, which are deducted from assets.

 

Impact of greater asigned value over consolidated income statements

 

FY ended as of

 

 

Dec 31, 2018

 

 

 

Revenues

 

(30)

Operating costs before D&A

 

(187)

Operating income before D&A

 

(217)

Depreciation, amortization (‘D&A’) and impairment of PP&E and intangible assets

 

(11,414)

Operating income

 

(11,631)

Net financial results

 

35

Net (loss) income before income tax expense

 

(11,596)

Income tax expense

 

3,479

Net (loss) Income

 

(8,117)

Attributable to Telecom Argentina (Controlling Company)

 

(8,044)

Attributable to non-controlling shareholders

 

(73)

 

 

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TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

 

4-

Consolidated Income Statements - Pro Forma restated by inflation (constant figures)

 

 

 

 

 

 

 

(Allows the understanding of the variations of the Income Statement in real terms)

 

 

 

 

 

 

12/31/18

 

12/31/17

 

∆ $

 

∆ %

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

168,046

 

172,354

 

(4,308)

 

-2.5%

 

 

Consolidated Operating Costs

 

(146,789)

 

(154,639)

 

7,850

 

-5.1%

 

 

Operating income

 

21,257

 

17,715

 

3,542

 

20.0%

 

 

Net Financial results and results of equity in earnings from associates

 

(18,559)

 

4,239

 

(22,798)

 

-

 

 

Net (loss) income before income tax expense

 

2,698

 

21,954

 

(19,256)

 

-87.7%

 

 

Income tax expense

 

2,838

 

(7,210)

 

10,048

 

-139.4%

 

 

Net (loss) income

 

5,536

 

14,744

 

(9,208)

 

-62.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

Controlling Company

 

5,294

 

14,544

 

(9,250)

 

-63.6%

 

 

Non-controlling interest

 

242

 

200

 

42

 

21.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before D&A

 

56,368

 

54,598

 

1,770

 

3.2%

 

 

As % of Revenues

 

33.5%

 

31.7%

 

 

 

 

 

 

5-

Consolidated Income Statements - Pro Forma (current figures)

 

 

 

 

 

 

 

(Allows the understanding of the variations of the Income Statement accounting for historical values)

 

       Consolidated Income Statements - Pro Forma (current figures)

 

(Allows the understanding of the variations of the Income Statement accounting for historical values)

 

 

 

 

12/31/18

 

12/31/17

 

∆ $

 

∆ %

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

137,160

 

105,915

 

31,245

 

29.5%

 

 

Consolidated Operating Costs

 

(112,955)

 

(86,357)

 

(26,598)

 

30.8%

 

 

Operating income

 

24,205

 

19,558

 

4,647

 

23.8%

 

 

Net Financial results and results of equity in earnings from associates

 

(40,757)

 

(3,528)

 

(37,229)

 

-

 

 

Net (loss) income before income tax expense

 

(16,552)

 

16,030

 

(32,582)

 

-

 

 

Income tax expense

 

5,970

 

(5,238)

 

11,208

 

-

 

 

Net (loss) income

 

(10,582)

 

10,792

 

(21,374)

 

-198.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

Controlling Company

 

(10,684)

 

10,666

 

(21,350)

 

-

 

 

Non-controlling interest

 

102

 

126

 

(24)

 

-19.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before D&A

 

46,374

 

35,131

 

11,243

 

32.0%

 

 

As % of Revenues

 

33.8%

 

33.2%

 

 

 

 

 

 

 

 

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TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

6-             Breakdown of the Income Statements - Pro Forma restated by inflation (constant figures)

 

(Revenues as of 2017 restated to 2018 values include a variation coming from the restatement of approximately 38.5% vs. a restatement variation of 18.4% for revenues as of 2018)

 

 

 

12/31/18

 

12/31/17

 

Δ $

 

Δ %

 

 

 

 

 

 

 

 

 

REVENUES FROM SERVICES

 

155,212

 

157,246

 

(2,034)

 

-1.3%

 

 

 

 

 

 

 

 

 

Mobile Services

 

57,776

 

63,276

 

(5,500)

 

-8.7%

 

 

 

 

 

 

 

 

 

Internet Services

 

37,742

 

32,945

 

4,797

 

14.6%

 

 

 

 

 

 

 

 

 

Cable TV Services

 

36,067

 

39,914

 

(3,847)

 

-9.6%

 

 

 

 

 

 

 

 

 

Fixed Telephony and Data Services

 

23,149

 

20,277

 

2,872

 

14.2%

 

 

 

 

 

 

 

 

 

Other revenues from services

 

478

 

834

 

(356)

 

-42.7%

 

 

 

 

 

 

 

 

 

REVENUES FROM EQUIPMENT SALES

 

12,834

 

15,108

 

(2,274)

 

-15.1%

 

 

 

 

 

 

 

 

 

REVENUES

 

168,046

 

172,354

 

(4,308)

 

-2.5%

 

7-             Breakdown of the Income Statements - Pro Forma (current figures)

 

(Allows the understanding of the variations of the Revenues accounting for historical values)

 

 

 

12/31/18

 

12/31/17

 

Δ $

 

Δ %

 

 

 

 

 

 

 

 

 

REVENUES FROM SERVICES

 

126,698

 

97,584

 

29,114

 

29.8%

 

 

 

 

 

 

 

 

 

Mobile Services

 

46,910

 

36,988

 

9,922

 

26.8%

 

 

 

 

 

 

 

 

 

Internet Services

 

30,870

 

23,383

 

7,487

 

32.0%

 

 

 

 

 

 

 

 

 

Cable TV Services

 

29,390

 

20,717

 

8,673

 

41.9%

 

 

 

 

 

 

 

 

 

Fixed Telephony and Data Services

 

19,099

 

14,168

 

4,931

 

34.8%

 

 

 

 

 

 

 

 

 

Other revenues from services

 

429

 

2,328

 

(1,899)

 

-81.6%

 

 

 

 

 

 

 

 

 

REVENUES FROM EQUIPMENT SALES

 

10,462

 

8,331

 

2,131

 

25.6%

 

 

 

 

 

 

 

 

 

REVENUES

 

137,160

 

105,915

 

31,245

 

29.5%

 

 

17

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Table of Contents

 

 

TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

8-             Consolidated Income Statements - Pro Forma restated by inflation (constant figures)

(Allows the understanding of the variations of the Income Statement in real terms)

 

 

 

12/31/18

 

12/31/17

 

Δ $

 

Δ %

Revenues

 

168,046

 

172,354

 

(4,308)

 

-2.5%

Employee benefit expenses and severance payments

 

(30,048)

 

(32,381)

 

2,333

 

-7.2%

Interconnection and transmission costs

 

(5,525)

 

(5,926)

 

401

 

-6.8%

Fees for services, maintenance, materials and supplies

 

(16,261)

 

(18,144)

 

1,883

 

-10.4%

Taxes and fees with the regulatory authority

 

(13,609)

 

(14,788)

 

1,179

 

-8.0%

Commissions and advertising

 

(11,210)

 

(11,600)

 

390

 

-3.4%

Cost of equipments and handsets

 

(9,667)

 

(11,787)

 

2,120

 

-18.0%

Programming and content costs

 

(12,156)

 

(10,569)

 

(1,587)

 

15.0%

Bad debt expenses

 

(3,527)

 

(2,743)

 

(784)

 

28.6%

Other operating income and expenses

 

(9,675)

 

(9,818)

 

143

 

-1.5%

Subtotal Operating costs before D&A

 

(111,678)

 

(117,756)

 

6,078

 

-5.2%

Operating income before D&A

 

56,368

 

54,598

 

1,770

 

3.2%

Depreciation, amortization (‘D&A’) and impairment of PP&E and intangible assets

 

(35,111)

 

(36,883)

 

1,772

 

-4.8%

Operating income

 

21,257

 

17,715

 

3,542

 

20.0%

Equity in earnings from associates

 

236

 

353

 

(117)

 

-33.1%

Financial results, net

 

(18,795)

 

3,886

 

(22,681)

 

-

Net (loss) income before income tax expense

 

2,698

 

21,954

 

(19,256)

 

-87.7%

Income tax expense

 

2,838

 

(7,210)

 

10,048

 

-139.4%

Net (loss) Income

 

5,536

 

14,744

 

(9,208)

 

-62.5%

Attributable to:

 

 

 

 

 

 

 

 

Controlling Company

 

5,294

 

14,544

 

(9,250)

 

-63.6%

Non-controlling interest

 

242

 

200

 

42

 

21.0%

 

 

18

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Table of Contents

 

 

TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

 

9-             Consolidated Income Statements - Pro Forma (current figures)

(Allows the understanding of the variations of the Income Statement accounting for historical values)

 

 

 

12/31/18

 

12/31/17

 

Δ $

 

Δ %

Revenues

 

137,160

 

105,915

 

31,245

 

29.5%

Employee benefit expenses and severance payments

 

(24,647)

 

(19,905)

 

(4,742)

 

23.8%

Interconnection and transmission costs

 

(4,550)

 

(3,774)

 

(776)

 

20.6%

Fees for services, maintenance, materials and supplies

 

(13,114)

 

(10,666)

 

(2,448)

 

23.0%

Taxes and fees with the regulatory authority

 

(11,127)

 

(8,447)

 

(2,680)

 

31.7%

Commissions and advertising

 

(9,223)

 

(7,112)

 

(2,111)

 

29.7%

Cost of equipments and handsets

 

(7,258)

 

(6,980)

 

(278)

 

4.0%

Programming and content costs

 

(9,945)

 

(6,489)

 

(3,456)

 

53.3%

Bad debt expenses

 

(2,907)

 

(1,670)

 

(1,237)

 

74.1%

Other operating income and expenses

 

(8,016)

 

(5,741)

 

(2,275)

 

39.6%

Subtotal Operating costs before D&A

 

(90,787)

 

(70,784)

 

(20,003)

 

28.3%

Operating income before D&A

 

46,374

 

35,131

 

11,243

 

32.0%

Depreciation, amortization (‘D&A’) and impairment of PP&E and intangible assets

 

(22,169)

 

(15,573)

 

(6,596)

 

42.4%

Operating income

 

24,205

 

19,558

 

4,647

 

23.8%

Equity in earnings from associates

 

188

 

167

 

21

 

12.6%

Financial results, net

 

(40,945)

 

(3,695)

 

(37,250)

 

-

Net (loss) income before income tax expense

 

(16,552)

 

16,030

 

(32,582)

 

-

Income tax expense

 

5,970

 

(5,238)

 

11,208

 

-

Net (loss) Income

 

(10,582)

 

10,792

 

(21,374)

 

-198.1%

Attributable to:

 

 

 

 

 

 

 

 

Controlling Company

 

(10,684)

 

10,666

 

(21,350)

 

-

Non-controlling interest

 

102

 

126

 

(24)

 

-19.0%

 

 

19

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Table of Contents

 

 

TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

ANNEX - FINANCIAL TABLES AS REPORTED IN FFSS

 

10-      Consolidated Income Statements - as reported in FFSS

 

(Restated by inflation, comparative with Cablevisión’s consolidated financial statements)

 

 

 

12/31/18

 

12/31/17

 

 

 

 

 

Revenues

 

168,046

 

66,649

Consolidated Operating Costs

 

(146,789)

 

(52,340)

Operating income

 

21,257

 

14,309

Net Financial results and results of equity in earnings from associates

 

(18,559)

 

1 ,066

Net (loss) income before income tax expense

 

2,698

 

15,375

Income tax expense

 

2,838

 

(5,516)

Net (loss) income

 

5,536

 

9,859

 

 

 

 

 

Attributable to:

 

 

 

 

Controlling Company

 

5,294

 

9,731

Non-controlling interest

 

242

 

128

 

 

 

 

 

Operating income before D&A

 

56,368

 

24,113

As % of Revenues

 

33.5%

 

36.2%

 

 

 

 

 

 

 

 

 

 

Net Financial results

 

12/31/18

 

12/31/17

Financial expenses on debt

 

 

 

 

Interest on debt

 

(4,542)

 

(1,138)

Exchange differences on debt

 

(29,620)

 

780

Other financial expenses

 

190

 

141

Total financial expenses on debt

 

(33,972)

 

(217)

Other financial results, net

 

 

 

 

Interest and gains on investments

 

1,898

 

353

Taxes and bank expenses

 

(1,646)

 

(745)

Other Exchanges differences

 

1,402

 

(476)

Financial discounts on assets, debts and diverse

 

7

 

16

Results for operations with notes and bonds

 

780

 

(43)

Interest on provisions

 

(604)

 

(78)

Quinquennial financial costs

 

(72)

 

-

RECPAM *

 

13,403

 

1,907

Others

 

9

 

(4)

Total other financial results, net

 

15,177

 

930

Total net financial results

 

(18,795)

 

713

 

* Inflation adjustment gain /loss

 

 

20

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Table of Contents

 

 

TELECOM ARGENTINA S.A.

Consolidated information

Annual period - Fiscal Year 2018

(In million of Argentine pesos)

ANNEX - FINANCIAL TABLES AS REPORTED IN FFSS

 

11-      Breakdown of the Income Statements - as reported in FFSS

(Restated by inflation, comparative with Cablevisión’s consolidated financial statements)

 

 

 

12/31/18

 

12/31/17

REVENUES FROM SERVICES

 

155,212

 

66,274

Mobile Services

 

57,776

 

4,274

Internet Services

 

37,742

 

19,354

Cable TV Services

 

36,067

 

39,914

Fixed Telephony and Data Services

 

23,149

 

1,897

Other revenues from services

 

478

 

835

 

 

 

 

 

REVENUES FROM EQUIPMENT SALES

 

12,834

 

375

 

 

 

 

 

REVENUES

 

168,046

 

66,649

 

12-      Consolidated Income Statements - as reported in FFSS

 

(Restated by inflation, comparative with Cablevisión’s consolidated financial statements)

 

 

 

12/31/18

 

12/31/17

Revenues

 

168,046

 

66,649

Employee benefit expenses and severance payments

 

(30,048)

 

(11,665)

Interconnection and transmission costs

 

(5,525)

 

(1,311)

Fees for services, maintenance, materials and supplies

 

(16,261)

 

(7,254)

Taxes and fees with the regulatory authority

 

(13,609)

 

(4,859)

Commissions and advertising

 

(11,210)

 

(3,691)

Cost of equipments and handsets

 

(9,667)

 

(493)

Programming and content costs

 

(12,156)

 

(9,116)

Bad debt expenses

 

(3,527)

 

(901)

Other operating income and expenses

 

(9,675)

 

(3,246)

Subtotal Operating costs before D&A

 

(111,678)

 

(42,536)

Operating income before D&A

 

56,368

 

24,113

Depreciation, amortization (‘D&A’) and impairment of PP&E and intangible assets

 

(35,111)

 

(9,804)

Operating income

 

21,257

 

14,309

Equity in earnings from associates

 

236

 

353

Financial expenses on debt

 

(33,972)

 

(217)

Other financial results, net

 

15,177

 

930

Net (loss) income before income tax expense

 

2,698

 

15,375

Income tax expense

 

2,838

 

(5,516)

Net (loss) Income

 

5,536

 

9,859

Attributable to:

 

 

 

 

Controlling Company

 

5,294

 

9,731

Non-controlling interest

 

242

 

128

 

 

21

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Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

Telecom Argentina S.A.

 

 

 

 

 

 

 

 

Date:      March 8, 2019

By:

/s/ Gabriel P. Blasi

 

 

Name:       Gabriel P. Blasi

 

 

Title:         Responsible for Market Relations