Telecom Argentina S.A. announces consolidated first quarter results for fiscal year 2013 ('1Q13')*

Telecom Argentina S.A. announces consolidated first quarter results for fiscal
                             year 2013 ('1Q13')*

PR Newswire

BUENOS AIRES, Argentina, April 30, 2013

BUENOS AIRES, Argentina, April 30, 2013 /PRNewswire/ --

  oConsolidated Revenues amounted to P$6,064 million (+18% vs. 1Q12); Fixed
    Data +31% vs. 1Q12; Fixed Internet +26% vs. 1Q12; and Mobile business in
    Argentina +19% vs. 1Q12.
  oMobile subscribers in Argentina: 19.1, million; +0.6 million (+3% vs.
  oMobile Value Added Services in Argentina (Internet and Data): +25% vs.
    1Q12; 55% of mobile Service Revenues.
  oMobile ARPU reached P$62.1 per month in 1Q13 (+13% vs. 1Q12).
  oADSL ARPU increased to P$114.9 per month in 1Q13 (+20% vs. 1Q12); monthly
    churn reached 1.6% in 1Q13.
  oOperating Income Before Depreciation and Amortization reached P$1,799
    million (+9% vs. 1Q12), 30% of Net Revenues, influenced by the evolution
    of operating costs.
  oOperating Income amounted to P$1,115 million (+8% vs. 1Q12), 18% of Net
  oNet Income amounted to P$813 million (+15% vs. 1Q12). Net Income
    attributable to Telecom Argentina amounted P$802 million (+15% vs. 1Q12).
  oNet Cash Position: P$4,020 million, an increase of P$1,038 million vs.
    1Q12 due to the cash generation of the Group.
  oCapex reached P$741 million in 1Q13 (+7% vs. 1Q12), 12% of Consolidated

                                                 As of March, 31
(in million P$, except where noted)             2013    2012    $      %
                                                                 Change Change
Revenues                                         6,064   5,126   938    18%
 Mobile Services                      4,448   3,705   743    20%
 Fixed Services                       1,616   1,421   195    14%
Operating Income before D&A                     1,799   1,647   152    9%
Operating Income                                 1,115   1,033   82     8%
Net Income attributable to Telecom Argentina     802     698     104    15%
Shareholders' equity attributable to Telecom     10,801  8,736   2,065  24%
Net Financial Position - Cash                    4,020   2,982   1,038  35%
CAPEX                                            741     690     51     7%
Fixed lines in service (in thousand lines)       4,109   4,138   (29)   -1%
Mobile customers (in thousand)                   21,449  20,750  699    3%
 Personal (Argentina)                 19,114  18,547  567    3%
 Nucleo (Paraguay) -including Wimax   2,335   2,203   132    6%
Broadband acceses (in thousand)                  1,626   1,566   60     4%
Average Billing per user (ARBU) Fixed Telephony  49.5    46.9    2.6    6%
/ voice (in P$)
Average Revenue per user (ARPU) Mobile Services  62.1    54.9    7.2    13%
in Arg. (in P$)
Average Revenue per user (ARPU) ADSL (in P$)     114.9   95.6    19.3   20%

*Unaudited non financial data

Telecom Argentina ("Telecom") - (NYSE: TEO; BASE: TECO2), one of Argentina's
leading telecommunications companies, announced today a Net Income of P$813
million for the three month period ended March 31, 2013, or +15% when compared
to the same period last year. Net income attributable to Telecom Argentina
amounted to P$802 million (+15% vs. 1Q12).

During 1Q13, Consolidated Revenues increased by 18% to P$6,064 million (+P$938
million vs. 1Q12), mainly fueled by the Mobile Services, Fixed Data and
Broadband business. Moreover, Operating Income amounted to P$1,115 million
(+P$82 million vs. 1Q12).

Consolidated Operating Revenues

Mobile Services

Clients continued to increase in 1Q13, reaching 21.4 million as of the end of
March 2013, representing an increase of 0.7 million (+3%) since March 31,

The actions developed to increase the usage of value added services ('VAS'),
such as innovative offers to clients and revenues from equipments sales,
allowed Personal to increase consolidated revenues to third parties to P$4,448
million (+20% vs. 1Q12).

Telecom Personal in Argentina

As of March 31, 2013, Personal reached 19.1 million subscribers in Argentina
(+3% or +0.6 million vs. 1Q12), maintaining its market position. It is
highlighted that the overall subscriber base mix continued to improve,
reaching a 33% participation of the postpaid segment (+7% vs. 1Q12). 

In 1Q13, Revenuesfrom third parties reached P$4,186 million (+P$680 million
or 19% vs. 1Q12) while Service Revenues (excluding equipment sales) amounted
to P$3,668 million (+18% vs. 1Q12), with 55% corresponding to value-added
services ('VAS') revenues (vs. 52% in 1Q12). VAS revenues increased by 25% vs.
1Q12. Moreover, equipment sales increased by 28% vs. 1Q12, reaching P$518

During 1Q13, the overall traffic of voice minutes increased by 5% vs. 1Q12.
SMS traffic (incoming and outgoing charged messages) continued to increase,
although at a slower pace comparing with other periods, due to other Internet
alternatives provided by Personal. The traffic climbed to a monthly average of
5,829 million in 1Q13 from 5,289 million messages in 1Q12 (+10% vs. 1Q12). Due
to the VAS usage and certain price adjustments during 1Q13, the Average
Monthly Revenue per User ('ARPU') increased to P$62.1 during 1Q13 (+13% vs.


During 1Q13, Personal continued with its strategy in terms of convenience,
through the launch of 'Saving Packs' (for voice, data and SMS), which clients
can activate them whenever they want, according to their needs at a more
convenient price than that in the market. Related to handsets, Personal
extended its Smartphones offer to its Personal Black clients' incorporating
new state-of-the-art.

Furthermore, Personal continued with its technological reconversion plan
around the country to enhance mobile service quality and optimize traffic
capacity to give more efficiency to its network.

Additionally, Personal is the first operator in Latin America in launching the
GSMA Spam Reporting Service (SRS) system, a proactive tool, where clients can
complain about spam SMS and protect the network from abusive traffic.

During the summer season, Personal enlarged its international roaming packs
offer, and has enabled a mobile consumption calculator so that clients can
hire the international service that best suits to their connection needs

Moreover, Personal continued its brand positioning associated with music by
organizing events such as 'Personal Fest Verano'. In the four editions held in
the interior of the country, national and international artists were presented
with more than 200,000 people attending. In addition, the events were
broadcasted via You Tube's Argentina webpage allowing more than 200,000 fans
to enjoy the event online.

Telecom Personal in Paraguay ("Nucleo") 

As of March 31, 2013, Nucleo's subscriber base reached 2.3 million clients
(+6% vs. 1Q12). Prepaid and postpaid customers represented 81% and 19% (vs.
17% in 1Q12), respectively.

Personal's subsidiary in Paraguay continued growing at a slower pace supported
by the increase in the postpaid customer base that leveraged its leadership in
the mobile Internet market. The Company generated revenues from third parties
equivalent to P$262 million during 1Q13 (+32% vs. 1Q12), influenced by the
evolution of the peso against the Guarani. Moreover, the level of ARPU reached
Gs.26.3 thousand (equivalent to P$32) vs. 1Q12. VAS represented 56% of 1Q13
service revenues (vs. 46% in 1Q12).

In 1Q13, Personal launched 4G technology (LTE, Long Term Evolution) in
Paraguay, being the first and only in the country offering that service
through 1,900 Mhz band.

Fixed Services (Voice, Data & Internet)

During 1Q13 revenues generated by fixed services amounted to P$1,616 million,
+14% vs. 1Q12; with Data revenues (+31% vs. 1Q12) and Internet (+26% vs. 1Q12)
growing the most in relative terms in this segment.


Total Revenues for this service reached P$814 million in 1Q13 (+4% vs. 1Q12).
A portion 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$329 million, an increase of
P$13 million or +4% vs. 1Q12 mainly due to the incorporation of flat rate
packs of local calls.

Monthly Charges and Supplementary Services reached P$269 million, an increase
of P$17 million or +7% vs. 1Q12 due to higher revenues in non regulated
supplementary services and more than 4.1 million lines in service.

The average monthly bill per user (ARBU) reached P$49.5 in 1Q13, +6% vs. 1Q12.

Fixed and mobile Interconnection revenues reached P$128 million (+3% vs.
1Q12). Meanwhile, other revenues totaled P$88 million (-2% vs. 1Q12).

During the first quarter of 2013, Telecom continued promoting Aladino's
handset sales.

Data and Internet

Data revenues amounted to P$213 million (+31% vs. 1Q12), where the focus was
to strengthen Telecom's position as an integrated ICT provider, with a wide
variety of services.

During 1Q13, Telecom extended the solutions offer: 'La Nube Argentina
Telecom', highlighting the inclusion to the Virtual Central product (Hosted
PBX), a function that enables you to carry the internal number of the fixed
number of the office, in the mobile device. Also, the Secure Access (Hosted
Firewall) product was launched, that protects clients from spam accesses to
its network, integrating the firewall function in the 'Internet Nube'.

Revenues related to Internet totaled P$575 million (+ P$117 million or +26%
vs. 1Q12), thanks to the increase in the customer base, to the upselling
strategy and to price adjustments during 4Q12.

As of March 31, 2013, Telecom surpassed 1.6 million ADSL accesses (+4% vs.
1Q12). These connections represented 40% of Telecom's fixed lines in service.
In addition, ADSL ARPU reached P$114.9 in 1Q13, +20% when compared to 1Q12 and
the monthly churn rate was 1.6% in 1Q13, slightly above 1.3% registered in

During 1Q13, Arnet presented the campaign 'Barco de Papel' which emphasized
the possibilities of the Internet as a tool to reach what users want. The
promotion offers Arnet 6Mb WIFI at P$100 per month during the first six months
of service with the possibility of extending the promotion to twelve months if
the service was contracted online.

Furthermore, during the quarter, Arnet continued its brand positioning
associated to entertainment by launching in the summer season 'Arnet Summer
Park' in the city of Mar del Plata and Villa Carlos Paz where different shows
and entertainment activities for the family were developed. Additionally, in
the main touristic cities, Club Arnet (Arnet's fidelity program) clients were
benefited from discounts and special offers.

Consolidated Operating Costs

The Cost of Services Provided, General & Administrative Expenses and Selling
Expenses, excluding Gains on disposal of PP&E, totaled P$4,965 million in
1Q13, an increase of P$867 million, or +21% vs. 1Q12. The increase is a
consequence of higher commercial costs, higher taxes related to the increase
in sales, 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$868 million (+28%
vs. 1Q12), mainly affected by increases in salaries granted to the unionized
employees, increases to non-unionized workforce, to an increase in the number
of unionized headcount and to the increase in the number of employees in the
mobile business. Total headcount at the end of the period totaled 16,752
employees (+1% vs. 1Q12) (including temporary employees), where 287 employees
were incorporated in the mobile business while 123 employees were dismissed in
the fixed services, when compared to 1Q12.

- Taxes and fees with regulatory authorities reached P$602 million (+30% vs.
1Q12), impacted mainly by a higher volume of revenues, a higher incidence in
turnover taxes derived from increases in municipal jurisdictions, 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$484 million, +P$76 million or +19% vs. 1Q12. This
increase resulted from higher roaming charges due to a higher volume of
traffic of minutes, partially compensated by savings arising on-net traffic
stimulation, as well as higher Data and SMS roaming costs.

- Commissions (Commissions paid to Agents, prepaid card commissions and
others) totaled P$502 million (+12% vs. 1Q12), mainly due to the increase in
commissions paid to commercial agents associated with higher costs and
collection volume. Agent commissions capitalized as SAC amounted to P$103
million (+36% vs. 1Q12)

- Advertising amounted to P$154 million (-6% vs. 1Q12), mainly explained by
minor commercial expenses and campaigns in comparison to 1Q12 when Mobile
Number Portability was introduced.

- Cost of handsets sold totaled P$558 million (+28% vs. 1Q12), due to an
increase in high-end handsets sales at higher unit prices but with more
functionalities, following the strategy of stimulating VAS usage, partially
compensated by a lower quantity of handset sales. Deferred costs from SAC
amounted to P$103 million (-3% vs. 1Q12).

- Fees for services, maintenance and materials amounted to $556 million (+17%
vs. 1Q12), principally due to increases in the maintenance of radiobases and
systems in the mobile business and higher costs associated to suppliers.

- Depreciations and Amortizations reached P$691 million (+12% vs. 1Q12). PP&E
depreciation amounted to P$467 million (+10% vs. 1Q12); SAC and services
connection costs amortization totaled P$219 million (+20% vs. 1Q12); and other
intangible assets amortization reached P$5 million (-17% vs. 1Q12).

- Other Costs totaled P$550 million (+34% vs. 1Q12). This increase was mainly
due to costs of VAS with an increase of 118% vs. 1Q12, related to those sales
especially in the mobile business. Bad debt expenses reached P$93 million
(+35% vs. 1Q12) representing 1.9% of consolidated costs, while provisions
expenses remained stable totalizing P$40 million in 1Q13.

Consolidated Financial Results

Financial Results resulted in a gain of P$135 million, an increase of P$74
million or +121% vs. 1Q12. This was mainly due to a gain in net financial
interest of P$116 million in 1Q13 (+P$47 million vs. 1Q12) based on a healthy
financial position and to gains for FX results of P$13 million in 1Q13 (vs.
losses of P$7 million in 1Q12).

Consolidated Net Financial Position

As of March 31, 2013, Net Financial Position (Cash, Cash Equivalents and
financial Investments minus Loans) totaled P$4,020 million in cash, an
improvement of P$1,038 million vs. Net Financial Position as of March 31,
2012, thanks to the cash generation of the Group.

Capital Expenditures

Throughout 1Q13, the Company invested P$741 million. This amount was allocated
to Fixed Services (P$284 million) and Mobile services (P$457 million). In
relative terms, capex reached 12% of consolidated revenues.

Main capital expenditures programs in the fixed business were the expansion
and upgrade of Broadband services to improve capacity and increase speed
offered to clients through the shortening of the local loop, together with the
development of infrastructure to support the growth of mobile internet. In the
mobile business, Telecom continued with its network deployment with the
intention of increasing access capacity and addressing the growth of mobile

Moreover Telecom continued investing in the transport network to support the
fixed and mobile data traffic growth.

Other Relevant Matters

The General Ordinary Shareholders' Meeting of Telecom Argentina approved on
April, 23^rd 2013 the designation of eleven Directors with a term in office of
three fiscal years. Related to the allocation of Retained Earnings of fiscal
year 2012, the Ordinary Shareholders' Meeting, resolved to adjourn to May
21^st, 2013, the consideration of that item.

The General Ordinary Shareholders' Meeting of Telecom Personal approved on
April 10^th, 2013 the allocation of P$1,950 million to Reserves for future
dividends, and P$233 million to a Voluntary Reserve to finance working capital
and Investments in the country.

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 March 31, 2013, Telecom continued to have 984,380,978 shares

For more information, please contact the Investor Relations Department:

Pedro           Solange       HoracioNicolas del    Gustavo      Ruth
Insussarry      Barthe Dennin Campo                  Tewel        Fuhrmann

(5411) 4968     (5411) 4968   (5411) 4968 6236       (5411) 4968  (5411) 4968
3743            3752                                 3718         4448

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

Enrique Garrido

SOURCE Telecom Argentina S.A.

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