BUENOS AIRES, Argentina, March 7 /PRNewswire-FirstCall/ -- --
During 2007, the Telecom Argentina Group continued with an
important expansion of its business. Consolidated Net Revenues grew
23% vs. the previous year ("FY06"), amounting to P$9,074 million.
Major revenue increase came from the Cellular business with an
expansion of 34% and from Internet businesses with a growth of 23%,
both with respect to FY06. -- The cellular customer base reached
12.3 million (+28%), Broadband subscribers totaled 783,000 (+71%),
while fixed lines in service increased by 3% to 4.2 million. --
Operating Profit before Depreciation and Amortization ("OPBDA")
reached P$3,052 million (+34% vs. FY06), equivalent to 34% of Net
Revenues, mainly fueled by cellular telephony growth. On the
contrary, fixed telephony profitability continues weakening due to
frozen tariffs and the inflation effect on the general cost
structure. -- Net Income reached P$884 million (2.6x more than
FY06). This result includes P$102 million from the sale of the
subsidiary Publicom, occurred during the first months of FY07. --
The Telecom Group continued developing its strong investment plan,
allocating P$1,441 million during FY07 (+18% vs. FY06), where P$799
million were allocated to fixed telephony (+35% vs. FY06). -- Net
Financial Debt (before NPV effect) declined to P$2,055 million
(-P$1,443 million vs. December 2006), primarily as a result of the
cash flow generated by operations. The Net Financial Debt to OPBDA
ratio declined from 1.5x as of the end of FY06, to 0.7x as of the
end of FY07. -- On February 19, 2008 Fitch Ratings upgraded the
long-term debt rating of Telecom Argentina and Telecom Personal to
B+ on the International Scale and to AA- on the Local Scale. (*)
Non-financial data unaudited As of December-31 2007 2006 Change
Change % Consolidated Net Revenues (in MM P$) 9,074 7,372 1,702 23%
Voice, Data & Internet 3,302 3,053 249 8% Cellular 5,772 4,319
1,453 34% Operating Profit before D&A (in MM P$) 3,052 2,285
767 34% Operating Profit (in MM P$) 1,636 894 742 83% Net Income
(in MM P$) 884 244 640 262% Shareholder's equity (in MM P$) 3,030
2,129 901 42% Net Financial Debt - Before NPV effect (in MM P$)
2,055 3,498 (1,443) -41% Net Financial Debt - Book value (in MM P$)
1,993 3,352 (1,359) -41% CAPEX (in MM P$) 1,441 1,225 216 18% Lines
in service (Fixed lines -in thousands) 4,208 4,095 113 3% Cellular
customers (in thousands) 12,292 9,589 2,703 28% Personal
(Argentina) 10,666 8,425 2,241 27% Nucleo (Paraguay) 1,626 1,164
462 40% ADSL customers (in thousands) 783 457 326 71% Fixed line
traffic (in MM minutes, Internet & Public Telephony not incl.)
16,877 16,914 (37) 0% Incoming/Outgoing cellular voice traffic in
Arg.(in MM minutes) 9,946 7,610 2,336 31% Average Revenue per user
(ARPU ) Fixed Telephony/voice (in P$) 39 39 -- 0% Average Revenue
per user (ARPU ) Cellular Telephony Arg. (in P$) 39 39 -- 0%
Telecom Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's
leading telecommunications groups, announced today Net Income of
P$884 million for the fiscal year ended December 31, 2007. During
FY07, Consolidated Net Revenues increased 23% (+P$1,702 million vs.
FY06) to P$9,074 million, mainly fueled by the cellular and
Broadband businesses. Moreover, OPBDA increased by 34% (+P$767
million) to P$3,052 million (34% of Consolidated Net Revenues).
This level of operating profits before depreciation and
amortization is consequence of the substantial improvement in
revenues, together with a better efficiency in costs. Company
Activities Consolidated Net Revenues The evolution in Consolidated
Net Revenues by reportable segment was as follows: Voice, Data
Transmission & Internet Revenues generated by these services
amounted to P$3,302 million, +8% vs. FY06. Voice Total Revenues for
this service reached P$2,601 million (+5% vs. FY06), despite there
was no increase in regulated tariffs during the period. Monthly
Charges and Supplementary Services increased by P$30 million or 4%,
to P$746 million, as a consequence of higher number of lines in
service (+3%), reaching 4.2 million of lines. Revenues generated by
traffic (Local Measured Service, Domestic Long Distance and
International Telephony) totaled P$1,230 million, with an increase
of 4% vs. FY06. Interconnection revenues amounted to P$373 million
(+17%), mainly fueled by traffic originating in cellular lines but
transported by and terminated in fixed-line network. Public
Telephony & Other Other revenues reached P$252 million, barely
exceeding P$250 million in FY06. This amount was affected by an
increase in billing & collecting commission and handset sales
but partially compensated by a decrease in Public Telephony
revenues. Internet and Data Transmission Total revenues coming from
Internet services reached P$528 million (+23% vs. FY06), due to the
increase in the Broadband business, driven by commercial
promotions, innovation of service portfolio and better network
coverage. Moreover, Telecom's Broadband subscribers reached 783,000
as of December 2007(+71% vs. Dec-06). Therefore, lines with this
type of connections represent approximately 19% of Telecom's
fixed-lines in service. Telecom confirms its market oriented
approach, based on delivering higher velocity solutions, allowing
its customers to access increasingly complex multimedia content as
well as new value- added services. Since October, Telecom Argentina
has improved its Broadband portfolio by automatically upgrading its
Arnet 640 K customers to Arnet 1 Mb product. In addition, Telecom
launched the Arnet 20 Mb product, the fastest connection available
in the Argentine market. Revenues generated by Data transmission
amounted to P$173 million, (+11% vs. FY06). The Company continues
actively working with the corporate market, as well as with the
Government sector, providing know-how and experience in
telecommunication skills, supplying tailor-made and converging
systems that integrate voice & data services -for both fixed
and cellular services- together with multimedia solutions, all with
the latest generation technology, leading the development of VPN-IP
(Virtual Private Net on Internet Protocol) and MPLS (Multi Protocol
Label Switching) networks. In connection with the Government
sector, Telecom assists on e-government enterprises, such as
solution for administrative management, 911, emergency services and
cameras for security and medical treatment. Furthermore, regarding
ICT, the Company has endorsed the development of data networks.
Therefore, Telecom Datacenter experienced an important growth,
assuring high availability of Broadband connectivity, outsourcing
and contingency solutions to its clients. Cellular Telephony The
Cellular Telephony business achieved consolidated growth and
increased its participation in the Group's total revenues (64% vs.
59% in FY06). During FY07 this business generated revenues of
P$5,772 million (+34% vs. FY06). Total subscribers reached 12.3
million. Telecom Personal in Argentina As of December 31, 2007,
Personal's subscribers reached 10.7 million in Argentina (+2.2
million or +27% vs. FY06). Approximately 66% of the overall
subscriber base was prepaid and 34% was postpaid. Total voice
traffic increased by 31% vs. FY06 while outgoing SMS traffic
confirming its higher usage increased from an average of 741
million messages in 4Q06 to an average of 1,016 million (+37%) in
4Q07. Because of this enhancement in traffic and the use of value
added services, the Average Monthly Revenue per User ("ARPU")
increased by P$42 in 4Q07, compared to P$40 in 4Q06, positioning
the Company as one of the highest ARPUs in the market.
Consequently, ARPU determined on an annual basis remained stable at
P$39 in FY07 compared to FY06. Revenues totaled P$5,339 million
(+P$1,375 million or +35% vs. FY06). Service revenues increased by
P$1,328 million or 39% vs. FY06, while handset sales grew by 9% in
the period. Reconfirming its strong focus on technological
innovation, Personal continued the expansion of its Third
Generation Network (3G/3.5G). In anticipation to the summer season,
during 4Q07, the Company introduced the latest services for 3G in
main Argentine tourist cities and also in Uruguay, adding them to
those existing coverage available in Buenos Aires, Cordoba and
Rosario. In terms of products and services, further agreements to
introduce exclusive mobile content to the Multimedia Portal WAP
were executed. The development of innovative value-added services
was also such enhanced, with Full Track Download (Full MP3) and
instant messages, together with MSN. In addition, Personal
continued with the expansion of its commercial network by opening
new customer offices. As of December 2007, Personal counted with 45
commercial offices, gaining commercial capillarity and confirming
its institutional presence throughout Argentina. Accordingly,
customer satisfaction was enhanced, mainly by improving waiting
time and increasing dedicated attention. Nucleo Personal's
controlled subsidiary that operates in Paraguay, generated revenues
equivalent to P$433 million (+22% vs. FY06). By the end of the year
2007, the subscriber base reached approximately 1.6 million, +40%
vs. FY06. Prepaid and Postpaid customers represented 90% and 10%,
respectively. Consolidated Operating Costs The Cost of Services
Provided, Administrative Expenses and Selling Expenses totaled
P$7,438 million in FY07, which represents an increase of P$960
million or +15% vs. FY06. Notwithstanding, as a percentage of Net
Revenues, this evolution represents a decrease of 600 basis points
(88% in FY06 vs. 82% in FY07) which means an improvement in
efficiency and better use of costs. The breakdown of costs is as
follow: -- Salaries and Social Security Contributions: P$960
million (+16%), affected by raising salaries and an increase of
cellular business personnel (+283 in FY07 vs. FY06). -- Taxes:
P$660 million (+22%), in line with the general evolution of revenue
volume. -- Agents and Prepaid Card Commissions: $704 million
(+28%), due to the expansion of subscribers and the volume of the
prepaid cards sold. -- Advertising: P$306 million (+36%) to support
commercial activity in cellular telephony and internet. -- Cost of
Voice, Data & Cellular handsets: decreased to P$893 million
(-11%) as a consequence of fewer handset sales, taking into account
the level of market penetration reached and due to a lower number
of handsets upgrade from TDMA to GSM. -- TLRD and Roaming: P$760
million (+31%) due to increased traffic among cellular operators.
-- Depreciation of Fixed and Intangible Assets: P$1,416 million,
stable when compared to FY06. Fixed-line telephony totaled P$828
million and Cellular telephony $588 million. Consolidated Financial
and Holding Results Financial and Holding Results resulted in a
loss of P$441 million, as compared to the P$484 million loss
registered in FY06. Although net interest decreased by P$145
million such reduction was compensated by the effect of foreign
currency exchange (-P$42 million) and holding losses on handsets
inventories (P$54 million). Net Financial Debt As of December 31,
2007, Net Financial Debt (Loans before the effect of NPV valuation,
minus Cash, Cash Equivalents and Other credits from derivative
Investments) amounted to P$2,055 million, a reduction of P$1,443
million as compared to December 2006. This decrease is due to the
generation of operating cash flow and the result of Publicom sale
that permitted debt cancellation for P$1,290 million (P$889 million
in Telecom Argentina and P$401 million in Telecom Personal).
Consolidated Capital Expenditures A total amount of P$1,441 million
(including material by P$139 million) was invested in fixed and
intangibles assets. Such amount was allocated between the Voice,
Data and Internet businesses (P$799 million) and the cellular
business (P$642 million). Main Capex projects the Voice, Data and
Internet Businesses related to the expansion of Broadband services
and the upgrade of the network for services of a new generation
(NGN), while in the cellular business, improvement of the network
(capacity, coverage and 3G), and the launch of new and innovative
value-added services, were areas of focus. Commercial Initiatives
Within the technological upgrade initiated by Telecom in the
fixed-line business, three outstanding announcements were made: In
connection with SMEs target, Telecom renewed its portfolio of
services, with integrated solutions that combine fixed and mobile
telephony, data transmission and internet, thus strengthening its
position as integrated provider of telecommunication solutions.
Regarding the mass market, the Company launched for the first time
in the country, the SMS (Short Message Service) for fixed lines, as
a first step of several innovations that Telecom will offer its
residential clients, and which will change home communications. In
addition, in December 2007 Telecom Argentina launched video-call
product, becoming then the first operator in South America to
provide a service that integrates voice and video for mass market.
Recent Relevant Matters The Board of Directors of Telecom Personal
has submitted for consideration of its Shareholder's Meeting a cash
distribution of dividends for an amount of P$220 million. On
February 19, 2008 Fitch Ratings upgraded the long-term debt rating
of Telecom Argentina and Telecom Personal to B+ from B on the
International Scale and to AA- from A on the Local Scale.
*********** Telecom is the parent company of a leading
telecommunications group in Argentina, where it offers directly or
through its controlled subsidiaries local and long distance
fixed-line telephony, cellular, data transmission and Internet
services, among other services. Additionally, through a controlled
subsidiary, the Telecom Group offers cellular services in Paraguay.
The Company commenced operations on November 8, 1990, upon the
Argentine government's transfer of the telecommunications system in
the northern region of Argentina. Nortel Inversora S.A. ("Nortel"),
which acquired the majority of the Company from the Argentine
government, holds 54.74% of Telecom's common stock. Nortel is a
holding company where the common stock (approximately 68% of
capital stock) is owned by Sofora Telecomunicaciones S.A.
Additionally, Nortel capital stock is comprised of preferred shares
that are held by minority shareholders. As of December 31, 2007,
Telecom had 984,380,978 shares outstanding. For more information,
please contact the Investor Relations Department: Pedro Insussarry
54-11-4968-3743 Solange Barthe Dennin 54-11-4968-3752 Evangelina
Sanchez 54-11-4968-3718 Ruth Fuhrmann 54-11-4968-4448 Voice Mail:
54-11-4968-3628 Fax: 54-11-4313-5842 E-mail: For information about
Telecom Group services, visit:
http://www.telecom.com.ar/http://www.personal.com.ar/http://www.personal.com.py/http://www.arnet.com.ar/
Disclaimer This document may contain statements that could
constitute forward-looking statements, including, but not limited
to, the Company's expectations for its future performance,
revenues, income, earnings per share, capital expenditures,
dividends, liquidity and capital structure; the effects of its debt
restructuring process; the impact of emergency laws enacted by the
Argentine Government; and the impact of rate changes and
competition on the Company's future financial performance.
Forward-looking statements may be identified by words such as
"believes," "expects," "anticipates," "projects," "intends,"
"should," "seeks," "estimates," "future" or other similar
expressions. Forward-looking statements involve risks and
uncertainties that could significantly affect the Company's
expected results. The risks and uncertainties include, but are not
limited to, the impact of emergency laws enacted by the Argentine
government that have resulted in the repeal of Argentina's
Convertibility law, devaluation of the peso, various changes in
restrictions on the ability to exchange pesos into foreign
currencies, and currency transfer policy generally, the
"pesification" of tariffs charged for public services, the
elimination of indexes to adjust rates charged for public services
and the Executive branch announcement to renegotiate the terms of
the concessions granted to public service providers, including
Telecom. Due to extensive changes in laws and economic and business
conditions in Argentina, it is difficult to predict the impact of
these changes on the Company's financial condition. Other factors
may include, but are not limited to, the evolution of the economy
in Argentina, growing inflationary pressure and evolution in
consumer spending and the outcome of certain legal proceedings.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as the date of this
document. The Company undertakes no obligation to release publicly
the results of any revisions to forward-looking statements which
may be made to reflect events and circumstances after the date of
this press release, including, without limitation, changes in the
Company's business or to reflect the occurrence of unanticipated
events. Readers are encouraged to consult the Company's Annual
Report on Form 20-F, as well as periodic filings made on Form 6-K,
which are filed with or furnished to the United States Securities
and Exchange Commission for further information concerning risks
and uncertainties faced by Telecom. DATASOURCE: Telecom Argentina
S.A. CONTACT: Pedro Insussarry, +011-54-11-4968-3743, Solange
Barthe Dennin, +011-54-11-4968-3752, Evangelina Sanchez,
+011-54-11-4968-3718, Ruth Fuhrmann, +011-54-11-4968-4448, all of
Telecom Argentina Investor Relations, +011-54-11-4968-3628, fax,
+011-54-11-4313-5842, Web site: http://www.telecom.com.ar/
http://www.personal.com.ar/ http://www.personal.com.py/
http://www.arnet.com.ar/
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