Telecom Argentina S.A. announces consolidated nine month period (´9M12´) and third quarter results for fiscal year 2012

 Telecom Argentina S.A. announces consolidated nine month period (´9M12´) and
             third quarter results for fiscal year 2012 (´3Q12´)

PR Newswire

BUENOS AIRES, Oct. 31, 2012

BUENOS AIRES, Oct. 31, 2012  /PRNewswire/ --

  oConsolidated Revenues amounted to P$16,025 million (+20% vs. 9M11); Fixed
    Internet +28% vs. 9M11; Fixed Data +27% vs. 9M11; and Mobile business in
    Argentina +21% vs. 9M11.
  oMobile subscribers in Argentina: 18.9 million; +1.1 million (+6% vs.
  oMobile Value Added Services in Argentina (Internet and Data): +35% vs.
    9M11; 52% of Service Revenues.
  oMobile ARPU reached P$55.8 per month in 9M12 (+12% vs. 9M11).
  oADSL ARPU increased to P$99.2 per month in 9M12 (+16% vs. 9M11); monthly
    churn remained at 1.3% in 9M12.
  oOperating Profit Before Depreciation and Amortization ("OPBDA") reached
    P$4,726 million (+7% vs. 9M11), 29.5% of Net Revenues.
  oOperating Profit amounted to P$2,803 million.
  oNet Income amounted to P$1,923 million (+2% vs. 9M11). Net Income
    attributable to Telecom Argentina amounted P$1,891 million (+1% vs. 9M11).
  oNet Cash Position: P$2,697 million, an increase of P$672 million vs. 9M11
    due to the cash generation and after Telecom Argentina's cash dividend
    payment of P$807 million.
  oCapex reached P$2,187 million in 9M12 (+23% vs. 9M11), 14% of Consolidated

                                              As of September, 30
(in million P$, except where noted)           2012        2011     Δ $    Δ %
Revenues                                      16,025      13,359   2,666  20%
     Fixed Services                     4,417       3,909    508    13%
     Mobile Services                    11,608      9,450    2,158  23%
Operating Profit before D&A                  4,726       4,401    325    7%
Operating Profit                             2,803       2,863    (60)   -2%
Net Income attributable to Telecom Argentina  1,891       1,870    21     1%
Shareholders' equity attributable to Telecom
Argentina                                    9,137       7,391    1,746  24%
Net Financial Position - Cash                 2,697       2,025    672    33%
CAPEX                                         2,187       1,775    412    23%
Fixed lines in service (in thousand lines)    4,140       4,132    8      0%
Mobile customers (in thousand)                21,179      19,864   1,315  7%
     Personal (Argentina)               18,909      17,786   1,123  6%
     Nucleo (Paraguay) -including
Wimax customers-                              2,270       2,078    192    9%
Broadband acceses (in thousand)               1,612       1,505    107    7%
Fixed line traffic (in MM minutes, Internet
& Public Telephony not incl.)                 10,440      11,143   (703)  -6%
Incoming / Outgoing mobile voice traffic in
Arg.(in MM minutes)                           16,401      15,180   1,221  8%
Average Billing per user (ARBU) Fixed
Telephony / voice (in P$)                    47.7        45.4     2.3    5%
Average Revenue per user (ARPU) Mobile
Services in Arg. (in P$)                      55.8        49.8     6.0    12%
Average Revenue per user (ARPU) ADSL (in P$)  99.2        85.5     13.7   16%

Telecom Argentina ("Telecom") - (NYSE: TEO; BASE: TECO2), one of Argentina's
leading telecommunications companies, announced today a Net Income of P$1,923
million for the nine months period ended September 30, 2012, or +2% when
compared to the same period last year. Net income attributable to Telecom
Argentina amounted to P$1,891 million (+1% vs. 9M11).

During 9M12, Consolidated Revenues increased by 20% to P$16,025 million
(+P$2,666 million vs. 9M11), mainly fueled by the Mobile Services, Broadband
business and Fixed Data. Moreover, Operating Profit amounted to P$2,803
million (-P$60 million vs. 9M11).

Consolidated Operating Revenues

Mobile Services

Clients continued to increase in 9M12, reaching 21.2 million as of the end of
September 2012, representing an increase of 1.3 million (+7%) since September
30, 2011.

The actions developed to increase the usage of value added services ("VAS"),
such as innovative offers to clients and equipments sales, allowed Personal to
increase consolidated revenues to third parties to P$11,608 million (+23% vs.

Telecom Personal in Argentina

As of September 30, 2012, Personal reached 18.9 million subscribers in
Argentina (+6% or 1.1 million vs. 9M11), improving its market position. It is
worth noting that the overall subscriber base mix continued to improve with
33% in the postpaid segment (+12% vs. 9M11). 

In 9M12, Revenues to third parties reached P$10,981 million (+P$2,047 million
or 23% vs. 9M11) while Service Revenues (excluding equipment) amounted to
P$9,573 million (+21% vs. 9M11), with 52% corresponding to value-added
services ('VAS') revenues (vs. 47% in 9M11). VAS revenues strongly increased
by 35% vs. 9M11.

During the quarter, VAS usage continued to be promoted, where Personal's
clients tended to acquire more sophisticated equipments with more services,
thus improving its usage experience.

During 9M12, the overall traffic of voice minutes increased by 8% vs. 9M11.
SMS traffic (incoming and outgoing charged messages) continued to increase,
although at a slower pace of growth, due to other Internet alternatives
provided by Personal. The traffic climbed to a monthly average of 5,662
million in 9M12 from 5,484 million messages in 9M11 (+3% vs. 9M11). Due to
this increase in traffic and VAS usage, Average Monthly Revenue per User
("ARPU") increased to P$55.8 during 9M12 (+12% vs. 9M11).


During 3Q12, Personal continued with its strategy in terms of service
convenience, through special promotions in prepaid credit recharges and new
packages customized to Club Personal's members. In addition, a new platform
was implemented with the objective of reaching each segment with customized
benefits and improving the customer experience.

Personal extended its digital platform for customer service by using the
application "Mi Cuenta Personal," available for Android's handsets, so that
each client can manage its services from its handset. Moreover, Personal
consolidated its position in the mobile Internet market with its proposal of
daily unlimited Internet that massifies mobile Internet access.

Furthermore, Personal continued expanding its commercial network in the
country by opening new commercial offices focusing in a clients´ experience
model. In line with this concept, Personal launched a Black Tour, the
itinerant experience centre of Personal, which visits more than 50 cities of
the country with the last technology and smartphones so that clients can have
their own experience. 

Personal continued with its brand positioning strategy by sponsoring, for the
ninth time, the Winter Ski Season and also included its name in the rugby
international championship: "Personal Rugby Championship" and supported the
national team Los Pumas in those games played in Argentina.

Telecom Personal in Paraguay ("Nucleo") 

Nucleo's subscriber base reached 2.3 million clients (+9% vs. 9M11). Prepaid
and postpaid customers represented 82% and 18%, respectively.

Personal's subsidiary in Paraguay continued growing supported by a commercial
offer strategy and the leadership in the mobile Internet market despite the
economic environment. The Company generated revenues equivalent to P$627
million during 9M12 (+22% vs. 9M11). Moreover, the level of ARPU reached
approximately Gs.27,100 in 9M12, vs. Gs.26,500 one year ago. VAS represented
48% of 9M12 service revenues.

Fixed Services (Voice, Data Transmission & Internet)

During 9M12 revenues generated by fixed services amounted to P$4,417 million,
+13% vs. 9M11; with Internet (+28% vs. 9M11) and Data revenues (+27% vs. 9M11)
growing the most in relative terms in this segment.


Total Revenues for this service reached P$2,386 million in 9M12 (+4% vs.
9M11). The results of this line of business continued to be affected by frozen
tariffs of regulated services enforced by the Argentine Government in 2002.

Revenues generated by Measured Services totaled P$968 million, an increase of
P$47 million or +5% vs. 9M11 mainly due to the incorporation of flat rate
packs with local calls.

Monthly Charges and Supplementary Services reached P$768 million, an increase
of P$58 million or +8% vs. 9M11 with more than 4.1 million of lines in service
and an increasing in penetration of Value Added Services.

The average monthly bill per user (ARBU) reached P$47.7 in 9M12 vs. P$45.4 in

Interconnection revenues reached P$385 million (-1% vs. 9M11). Meanwhile,
other revenues totaled P$265 million (-6% vs. 9M11).

During September, a mass campaign to impulse Aladino handset sales was

Data Transmission and Internet

Revenues related to Internet totaled P$1,442 million (+ P$315 million or +28%
vs. 9M11), mainly due to the continued expansion of broadband services.

Data transmission revenues amounted to P$528 million (+27% vs. 9M11), where
the focus was to strengthen Telecom's position as an integrated ICT provider.

As of September 30, 2012, Telecom surpassed 1.6 million ADSL accesses (+7% vs.
9M11). These connections represented 39% of Telecom's fixed lines in service.
In addition, ADSL ARPU reached approximately P$99.2 in 9M12, +16% when
compared to 9M11 and the monthly churn rate remained at 1.3% in 9M12,
continuing at low levels.

During 3Q12, Telecom Argentina continued with the campaign ¨Reputacion¨
through a new Facebook application. This promotion offers Arnet 6Mb WIFI with
Arnet Movil (mobile internet) during six months with the possibility to extend
the promotion to twelve months if the application was contracted through the
online feature.

Furthermore, during the quarter, a new campaign "Arnet Play" was launched with
an offer that remarks the main services and the different content that is
included. The promotion offers Arnet 6Mb WIFI with Arnet Play (Video streaming
service) during six months with the possibility to extend the promotion to
twelve months if the application was hired online.

Moreover, during the quarter Telecom Argentina continued promoting the cloud
computing services for corporate ICT. 

Consolidated Operating Costs

The Cost of Services Provided, General & Administrative Expenses and Selling
Expenses, excluding Gains on disposal of PP&E, totaled P$13,242 million in
9M12, an increase of P$2,709 million, or +26% vs. 9M11. The increase is a
consequence of higher commercial costs due to a higher volume of revenues, the
inflationary effects in the general cost structure, and greater expenses
related to the intense competition.

The cost breakdown is as follows:

- Employee benefit expenses and severance payments totaled P$2,368 million
(+27% vs. 9M11), mainly affected by increases in salaries due to the new labor
agreement reached at the beginning of 3Q12, the increase in the number of
employees and the increase in salaries for non unionized employees. Total
headcount at the end of the period totaled 16,778 employees (+3% vs. 9M11)
(including temporary and eventual employees), 443 employees were incorporated
in the mobile business and 90 employees in the fixed services, compared to

- Taxes and fees with the regulatory authority reached P$1,454 million (+26%
vs. 9M11), impacted mainly by a higher volume of revenues, an increase in
turnover taxes, by higher bank debit and credit taxes and higher taxes with
the regulatory authority.

- Interconnection costs and other telecommunication charges (includes TLRD,
Roaming, Interconnection, international settlement charges and lease of
circuits) amounted to P$1,214 million, +P$124 million vs. 9M11. This increase
resulted from higher roaming charges partially compensated by savings from
stimulating on-net traffic among mobile clients and consequently decrease
third parties network usage costs.

- Commissions (Commissions paid to Agents, prepaid card commissions and
others) totaled P$1,422 million (+31% vs. 9M11), net of capitalization of SAC
of P$218 million (+33% vs. 9M11), mainly due to the increase in commissions
paid to commercial agents associated with higher revenues from the sale of
more sophisticated handsets with the aim of gaining fidelity from clients.

- Advertising amounted to P$475 million (+25% vs. 9M11), oriented towards
supporting the commercial activity in mobile and Internet services and to
strengthening the brands of the Telecom Group. A significant portion of this
increase was also due to the Mobile Number of Portability campaign and
Personal's brand positioning efforts. 

- Cost of handsets sold totaled P$1,521 million (+31% vs. 9M11), net of
capitalization of SAC of P$374 million (+20% vs. 9M11), due to an increase in
high-end handsets sales and a higher number of handset upgrades (+25% vs.
9M11), performed to stimulate VAS usage. These effects resulted in the
increase of the average cost of handsets.

- Fees for services, maintenance and materials amounted to $1,563 million
(+26% vs. 9M11), principally due to increased efforts to improve customer
services through focusing on call centers and the increase of labor related
costs that are involved in these services.

- Depreciations and Amortizations reached P$1,927 million (+24% vs. 9M11).
PP&E depreciation amounted to P$1,325 million (+19% vs. 9M11); SAC and
services connection cost amortization totaled P$586 million (+37% vs. 9M11);
and other intangible assets amortization reached P$16 million.

- Others Costs totaled P$1,298 million (+30% vs. 9M11). This increase was
mainly due to general increases in public services such as electricity and
water reaching P$224 million in 9M12 (+91% vs. 9M11), affected by the
elimination of Government subsidies. Bad debt expenses reached P$70 million
representing 1,6% of consolidated costs, while provisions expenses decreased
by -40% vs. 9M11.

Consolidated Financial Results

Financial Results resulted in a gain of P$159 million, an increase of P$121
million vs. 9M11. This was mainly due to a gain in net financial interest of
P$194 million in 9M12 (+P$155 million vs. 9M11) derived from a healthy
financial position and to losses for FX results of P$29 million in 9M12 (vs.
losses of P$3 million in 9M11) as a result of a higher depreciation of the

Consolidated Net Financial Position

As of September 30, 2012, Net Financial Position (Cash, Cash Equivalents and
financial Investments minus Loans) totaled P$2,697 million in cash, an
improvement of P$672 million vs. Net Financial Position as of September 2011,
after the cash dividend payment of P$807 million done by Telecom Argentina in
May 2012.

Capital Expenditures

Throughout 9M12, the Company invested P$2,187 million. This amount was
allocated to Fixed Services (P$924 million) and Mobile services (P$1,263
million). In relative terms, capex reached 14% of consolidated revenues.

In the mobile business, Telecom continued its 3G network deployment with the
intention of extending coverage and simultaneously increasing its capacity,
through non conventional solutions that facilitate a faster deployment. Main
capital expenditures in the fixed business are focused on replacing copper
with fiber using FTTC technology, improving residential fixed broadband
bandwidth and making new services available. Moreover, efforts to satisfy
increasing data traffic and secure our backbone network are being approached
in a convergent way, concerning both mobile and fixed networks.

Other Relevant Matters

On September 5th, 2012 the Secretariat of Communications (´SC´) notified
Personal of the cancellation of the Public Auction to reassign the 850 and
1900 MHz frequency bands.

Moreover, the Minister of Federal Planning, Public Investment and Services has
instructed the SC to propose the mechanisms and technical legal instruments to
reassign the mentioned frequencies to ARSAT (a state owned telecommunications
company), as well as to present a business plan for the exploitation of the
frequencies , by itself or through third parties.

Personal will continue investing in the network to optimize its usage.

Telecom 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 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 whose common stock (approximately 78% 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, 2012, Telecom continued to have 984,380,978 shares

For more information, please contact the Investor Relations Department:

Pedro Insussarry Solange Barthe Dennin
(5411) 4968 3743 (5411) 4968 3752

Voice Mail: (5411) 4968 3628
Fax: (5411) 4968 3616

For information about Telecom Group services, visit:

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

SOURCE Telecom Argentina S.A.

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