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BUENOS AIRES, Argentina, Nov. 9, 2022 /PRNewswire/ -- Note: For the figures included in their FFSS, 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 9M22 include the effects of the adoption of inflationary accounting in accordance with IAS 29. Finally, comments related to variations of results of 9M22 and vs. 9M21 mentioned in this press release correspond to "figures restated by inflation" or "constant".
**Unaudited non financial data
(in million P$ adjusted by inflation, except where noted)** | IAS 29 | IAS 29 | Δ $ | Δ % | |||||
As of Sep-30, | As of Sep-30, | ||||||||
2022 | 2021 | ||||||||
Consolidated Revenues | 470,960 | 536,247 | (65,287) | -12.2 % | |||||
Operating Income before D&A | 135,138 | 174,607 | (39,469) | -22.6 % | |||||
Operating Income (loss) | (234,668) | 2,169 | (236,837) | - | |||||
Net Income (loss) before income tax expense | (159,200) | 58,542 | (217,742) | - | |||||
Net income (loss) attributable to Controlling Company | (164,873) | 655 | (165,528) | - | |||||
Shareholders' equity attributable to Controlling Company | 690,897 | 887,412 | (196,515) | -22.1 % | |||||
Net Financial Debt | (360,531) | (408,918) | 48,387 | -11.8 % | |||||
Investments in PP&E, intangible assets & rights of use assets * | 85,664 | 121,750 | (36,086) | -29.6 % | |||||
Fixed lines in service (in thousand lines) *** | 2,030 | 2,524 | (494) | -19.6 % | |||||
Mobile customers (in thousand) | 22,339 | 21,722 | 617 | 2.8 % | |||||
Personal (Argentina) | 19,997 | 19,522 | 475 | 2.4 % | |||||
Núcleo (Paraguay) -including Wimax customers- | 2,342 | 2,200 | 141 | 6.4 % | |||||
Broadband accesses in Argentina (in thousand) | 4,218 | 4,248 | (30) | -0.7 % | |||||
Pay TV Subscribers (in thousand) | 3,500 | 3,561 | (61) | -1.7 % | |||||
Average Billing per user (ARPU) Fixed Telephony / voice (in P$ - Restated by inflation) | 1,206.6 | 1,296.2 | (89.6) | -6.9 % | |||||
Average Revenue per user (ARPU) Mobile Services - Personal (in P$ - Restated by inflation) | 936.5 | 1,039.6 | (103.1) | -9.9 % | |||||
Average Revenue per user (ARPU) Broadband (in P$ - Restated by inflation) | 2,642.0 | 2,892.8 | (250.8) | -8.7 % | |||||
Average Revenue per user (ARPU) Cable TV (in P$ - Restated by inflation) | 2,620.9 | 3,201.6 | (580.7) | -18.1 % |
*(in constant measuring unit – includes $10.779 million corresponding to additions of rights of use assets as of September 30, 2022)
**(Figures may not add up due to rounding)
*** (does not include IP telephony lines, which as of September 30, 2022 amounted to approximately 1,020 thousand)
Telecom Argentina S.A. ('Telecom Argentina') - (NYSE: TEO; BYMA: TECO2), announced today a net loss of P$163,498 million for the period ended September 30, 2022 (-P$165,374 million vs. 9M21). The net income attributable to the controlling company was P$164,873 million (-P165,528 million vs. 9M21).
Comparative figures for the previous fiscal year have been restated so that the resulting information is presented in terms of the current measurement unit as of September 30, 2022.
The following table shows the evolution of the consumer price index (National CPI - according to INDEC's official statistics) for the last two fiscal years and as of September 30, 2021 and 2022, , which were used to restate the figures in constant currency:
As of December 31. | As of December 31. | As of September 30. 2021 | As of September 30. 2022 | |
Price Index Variation Annual | 36.1 % | 50.9 % | 52.5 % | 83.0 % |
3-month cumulative (since June) | n/a | n/a | 9.3 % | 22.0 % |
9 month cumulative | n/a | n/a | 37.0 % | 66.1 % |
During the 9M22, Consolidated Revenues amounted to P$264,577 million, from which Service Revenues totaled P$247,527 million.
Consolidated Operating Revenues
Mobile Services
As of September 30, 2022, total mobile subscribers in Argentina and Paraguay amounted to 22.3 million. In 9M22, total mobile services revenues represented P$187,113 million (-P$13,590 million or -6.8% vs. 9M21).
Mobile Services in Argentina
As of September 30, 2022, total mobile subscribers amounted to approximately 20.0 million (+0.5 million vs. 9M21). Postpaid clients represented 43% of our subscriber base.
In 9M22, mobile service revenues in Argentina amounted to P$171,114 million (-4.6% vs 9M21). Mobile internet revenues accounted for 88% of mobile service revenues. The average monthly revenue per user ("ARPU" – restated in constant currency as of September 30, 2022) amounted to P$936.5 during 9M22 (-9.9% vs. 9M21). The effect generated by the restatement in terms of the September 30, 2022 current measurement unit (included in the ARPU) amounted to P$194.8 and P$537.4, for 9M22 and 9M21, respectively. Mobile churn was 2.5% (vs. 1.6% in 9M21).
Personal in Paraguay ('Núcleo')
As of September 30, 2022, Núcleo's subscriber base reached 2.3 million clients. Prepaid and postpaid customers represented 80% and 20%, respectively.
Núcleo´s mobile service revenues during 9M22, amounted to P$15,999 million (-24.9% vs. 9M21), mainly due to a decrease in ARPU measured in constant pesos, which was partially offset by the appreciation of the Guaraní against the Argentine peso.
Cable TV Services
Cable TV service revenues were P$85,700 million in 9M22 (-P$19,420 million or -18.5% vs. 9M21). Cable TV subscribers totaled approximately 3.5 million (-61 thousand vs. 9M21). The monthly Cable TV ARPU (restated in constant currency as of September 30, 2022) reached P$2,620.9 during 9M22 (vs P$3,201.6 in 9M21). The effect generated by the restatement in terms of the measuring unit as of September 30, 2022 included in ARPU amounts to P$567.4 and P$1,663.9, for the 9M22 and 9M21, respectively. The average monthly churn during 9M22 and 9M21 was 1.3% and 1.1%, respectively.
Flow continued to strengthen its content offer by incorporating new products in music, national and international films, and gaming. During the 9M22, Flow's subscribers reached 1.3 million (+200 thousand or +18.3% vs. 9M21)
Additionally, we continued to deploy the ISDB-T technology for analogic Flow subscribers in new cities, reaching more than 1.5 million subscribers in the Autonomous City of Buenos Aires and the province of Buenos Aires. We have also presented a new Flow Flex service, which consists of a flexible paid TV proposal that allows customers to contract Flow's services for a fixed period of time, with packages of 3, 7, 15 and 30 days.
Fixed Telephony and Data Services
Revenues generated by fixed telephony and data services reached P$58,534 million in 9M22 (-P$16,658 million or -22.2% vs. 9M21).
The monthly fixed voice ARPU (restated in constant currency as of September 30, 2022) reached P$1,206.6 (vs. P$1,296.2 in 9M21). The effect generated by the restatement in terms of the measuring unit as of September 30, 2022, included in the ARPU amounted to P$271.0 and P$676.3 for the 9M22 and 9M21, respectively.
We continue to offer valuable proposals with the objective of supporting companies in their digital transformation, including cybersecurity as a key element in this transformation process. In this regard, the Company included Oracle Cloud solutions in its offer, which includes application servers, databases and more.
Internet Services
Internet services revenues totaled P$105,070 million during 9M22 (-P$8,850 million or -7.5% vs. 9M21). As of September 30, 2022, total broadband accesses reached approximately 4.2 million (-30 thousand vs. 9M21).
Additionally, broadband ARPU (restated in constant currency as of September 30, 2022) amounted to P$2,642.0 per month in 9M22 (vs. P$2,892.8 in 9M21). The effect generated by the restatement in terms of the measuring unit as of September 30, 2022, included in the ARPU amounted to approximately P$563.9 and P$1,499.8, for the 9M22 and 9M21, respectively.
The average monthly churn rate for the 9M22 was 1.5% (unchanged when compared to 9M21). As of 9M22, 79% of our total customer base had a broadband service of 50Mb or higher (this percentage was 68% as of 9M21).
The Company continued to enhance the home connectivity experience of its customers, increasing the deployment of Fiber Optic to the Home (FTTH) in different locations throughout the country. These connections reach up to 300 megabytes, with low latency, multi-device connection and including the option of contracting Flow as an additional service, among other advantages.
Revenues from equipment sales
Equipment revenues amounted to P$30,591 million (-P$7,498 million or -19.7% vs. 9M21). Said decrease was mainly due to a lower volume of handsets sold (-18%), which have increased their average price.
Consolidated Operating Costs
Consolidated Operating Costs (including D&A and impairment of fixed assets) totaled P$705,628 million in 9M22 (+P$171,550 million or -32.1% vs. 9M21). Excluding D&A and impairment of fixed assets, operating costs experienced a reduction of 7.1%.
The cost breakdown was as follows:
Net Financial Results
Net Financial Results (including Financial Expenses on Debt and Other Financial Results) were P$75,126 million in 9M22 (vs. P$55,989 million in 9M21), mainly due to:
In millions of $ | 9M22 | 9M21 | Var |
RECPAM | 50,853 | 20,972 | 29,881 |
Net interest | (3,224) | (22,107) | 18,883 |
Exchange differences | 46,987 | 68,362 | (21,375) |
Investment results | (12,162) | (901) | (11,261) |
Others | (7,328) | (10,337) | 3,009 |
Total | 75,126 | 55,989 | 19,137 |
Income Tax
Our income tax includes the following effects:
i) the tax to be paid according to applicable local tax legislation,
ii) the effect of applying the deferred tax method on temporary differences generated when comparing our asset and liability valuation according to tax and financial accounting criteria which includes the effect of the income tax inflation adjustment, and
iii) the effects mentioned in Note 13 to the consolidated financial statements as of September 30, 2022.
Income tax loss amounted to P$4,298 million in 9M22 (vs. a loss of P$56,666 million in 9M21). The tax paid according to item (i) above amounted to P$34,934 million in 9M22 (vs. P$23,263 million in 9M21) and the income tax effect related to the application of the deferred tax method described in item (ii) above is a gain of P$30,636 million in 9M22 (vs. a loss of P$33,403 million in 9M21).
Consolidated Net Financial Debt
As of September 30, 2022, our net financial debt (cash, cash equivalents plus financial investments and financial NDF* & interest rate swaps minus loans) amounted to P$360,531 million, decreasing P$48,387 million (-11.8%) when compared to the consolidated net financial debt as of September 30, 2021 adjusted by inflation.
* Contemplates rate swaps and NDF (non-delivery forwards) agreements.
Investments in PP&E, intangible assets and rights of use assets
During the 9M22, the Company invested (including rights of use assets) P$85,664 million (-29.6% vs. 9M21). Said investments represented 18.2% of consolidated revenues in 9M22.
The investments were focused on
Relevant financial events of the period
Impairment of goodwill
The most significant goodwill held by the Company was generated as a result of the merger between Telecom Argentina and Cablevisión (the effective date of this transaction was January 1, 2018).
The aforementioned merger was a business combination made through an exchange of equity interests. In order to determine the goodwill obtained in the merger between Telecom and Cablevisión, the consideration paid was determined based on the fair value of the shares of Telecom on the last business day before the effective date of the transaction (January 1, 2018). The NYSE market price of the ADR of Telecom on said date was US$ 36.63 per ADR (as of September 30, 2022, the price of the ADR of Telecom was US$ 4.01).
The impairment of this goodwill is identified by comparing the recoverable value of the business in Argentina, which includes goodwill balance, to its book value. Recoverable value is determined using the higher value between its fair value less costs of disposal and its value in use. Fair value less cost of disposal is calculated taking into account the Company's market capitalization value according to the average trading price of the stock in the local stock exchange (BYMA), and value in use is estimated using a discounted cash flow model.
Due to the deterioration of market conditions in Argentina and globally, the recoverable value of Argentinian business fell short vs. the book value by approximately P$208 billion pesos. This impairment is mainly due to the minor increase of Telecom's share price in pesos, which has underperformed inflation, while fixed assets increase their book values based on the inflation rate in accordance with the requirements under IAS 29. Consequently, an impairment for the aforementioned amount was registered as of September 30, 2022 in "D&A and impairment of fixed assets".
The aforementioned impairment does not affect assets other than goodwill, and has no impact over the Company's operations or its cash generation capacity.
For further information, refer to Note 26 of the Consolidated Financial Statements as of September 30, 2022.
Class 12 local notes - Reopening
Issuance Date: March 9, 2022.
Amount Issued: US$75 million to be paid in Argentine pesos at the applicable exchange rate. As the notes were issued at a premium to par value, the Company received proceeds for US$86.25 million.
Maturity Date: March 9, 2027.
Amortization: Bullet.
Interest Rate and payments: 1.00% p.a, quarterly interest payments.
ENACOM Resolution No. 798/2022 – On-demand spectrum allocation
Through ENACOM Resolution No. 798/2022, published in the Official Gazette of May 19, 2022, an on-demand process of spectrum allocation for the provision of the Advanced Mobile Communications Service was launched, involving blocks of the 2500-2570 MHz and 2620-2690 MHz frequencies.
On May 31, 2022, the Company submitted a presentation requesting the allocation of spectrum blocks in this process. Through ENACOM Resolution No.1729/2022 published in the Official Gazette on August 31, 2022, Telecom Argentina was awarded the spectrum blocks in the requested locations and ENACOM accepted the Company's proposal to return certain of its spectrum blocks.
Sale of "Costanera" building
On March 21, 2022, the Company entered into an agreement for the sale of the "Costanera" building, located in the Autonomous City of Buenos Aires, Argentina, for a total of US$6 million. This transaction is subject to ENACOM's authorization, since the real estate is affected by the provision of ICT Services.
As of September 30, 2022, the Company has received an advance payment for US$ 2 million.
Relevant events after September 30, 2022
Preliminary Injunction
On October 5, 2022, we informed of the decision rendered by the Federal Administrative Litigation Matters Court No. 8 in the proceedings "Telecom Argentina S.A. a/EN-Enacom and other re. preliminary injunction (Autonomous)" (Docket No. 12,881/2020) whereby the Court decided to further extend for a period of 6 (six) months the preliminary injunction previously granted to us according to section 5 of Law No. 26,854
Telecom Argentina is a leading telecommunications company 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 mobile, broadband and satellite TV 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 September 30, 2022, Telecom Argentina owns 2,153,688,011 issued and outstanding shares.
For more information, please contact Investor Relations:
Luis Fernando Rial Ubago (5411) 5112 7218 | Tomás Pellicori (5411) 5524 7692 | Pablo Lorenzo (5411) 2482 6817 |
For information about Telecom Argentina's services, visit:
www.telecom.com.ar
www.personal.com.ar
www.personal.com.py
Disclaimer
This document may contain statements that could constitute forward-looking statements, including, but not limited to (i) the Company's expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; (ii) the continued synergies expected from the merger between the Company and Cablevisión S.A. (or the Merger); (iii) the implementation of the Company's business strategy; (iv) the changing dynamics and growth in the telecommunications and cable markets in Argentina, Paraguay, Uruguay and the United States; (v) the Company's outlook for new and enhanced technologies; (vi) the effects of operating in a competitive environment; (vii) the industry conditions; (viii) the outcome of certain legal proceedings; and (ix) regulatory and legal developments. Forward-looking statements may be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "will," "may" and "should" or other similar expressions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. In addition, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by forward-looking statements. These factors include, among others: (i) the Company's ability to successfully implement our business strategy and to achieve synergies resulting from the Merger; (ii) the Company's ability to introduce new products and services that enable business growth; (iii) uncertainties relating to political and economic conditions in Argentina, Paraguay, Uruguay and the United States, including the policies of the new government in Argentina; (iv) the impact of political developments, including the policies of the new government in Argentina, on the demand for securities of Argentine companies; (v) inflation, the devaluation of the peso, the Guaraní and the Uruguayan peso and exchange rate risks in Argentina, Paraguay and Uruguay; (vi) restrictions on the ability to exchange Argentine or Uruguayan pesos or Paraguayan guaraníes into foreign currencies and transfer funds abroad; (vii) the impact of currency and exchange measures or restrictions on our ability to access the international markets and our ability to repay our dollar-denominated indebtedness; (viii) the creditworthiness of our actual or potential customers; (ix) the nationalization, expropriation and/or increased government intervention in companies; (x) technological changes; (xi) the impact of legal or regulatory matters, changes in the interpretation of current or future regulations or reform and changes in the legal or regulatory environment in which the Company operates, including regulatory developments such as sanctions regimes in other jurisdictions (e.g., the United States) which impact on the Company's suppliers; (xii) the effects of increased competition; (xiii) reliance on content produced by third parties; (xiv) increasing cost of the Company's supplies; (xv) inability to finance on reasonable terms capital expenditures required to remain competitive; (xvi) fluctuations, whether seasonal or in response to adverse macro-economic developments, in the demand for advertising; (xvii) the Company's ability to compete and develop our business in the future; (xviii) the impact of increased national or international restrictions on the transfer or use of telecommunications technology; and (xix) the impact of the outbreak of COVID-19 on the global economy and specifically on the economies of the countries in which we operate, as well as on our operations and financial performance. Many of these factors are macroeconomic and regulatory in nature and therefore beyond the control of the Company's management. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. The Company does not intend and does not assume any obligation to update the forward-looking statements contained in this document. These forward-looking statements are based upon a number of assumptions and other important factors that could cause our actual results, performance or achievements to differ materially from our future results, performance or achievements expressed or implied by such forward-looking statements. Readers are encouraged to consult the Company's Annual Report on Form 20-F and the periodic filings made on Form 6-K, which are periodically filed with or furnished to the United States Securities and Exchange Commission, as well as the presentations periodically filed before the Argentine Securities and Exchange Commission (Comisión Nacional de Valores) and the Buenos Aires Stock Exchange (Bolsas y Mercados Argentinos), for further information concerning risks and uncertainties faced by the Company.
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SOURCE Telecom Argentina S.A.