BUENOS AIRES, Argentina,
Aug. 9, 2019 /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 1H19 include the effects of the adoption of
inflationary accounting in accordance with IAS
29. Finally, comments related to variations of results
of 1H19 and vs. 1H18 mentioned in this press release correspond to
"figures restated by inflation" or "constant".
- The results restated for inflation corresponding to
June 2018 contain the effect of year
over year inflation as of June 2019,
which reaches 55.8%. It is important to highlight this impact when
performing an analysis of the Company's operational
performance.
- Consolidated Revenues of Telecom Argentina amounted to
P$94,756 million in 1H19, of which Service Revenues totaled
P$88,581 million. At the end of June, the Company was able to
increase billing at a faster rate than the level of inflation (net
of the effect of public services inflation), thanks to a greater
demand for higher value services. This has been achieved in a
challenging context, where it can be observed that despite
significant increases in the wallet share assigned to energy and
transportation services by users due to the increase in tariffs,
the consumption allocation to telecommunications services remains
stable during the last years.
- Mobile clients in Argentina
reached 18.6 million in 1H19, while cable television subscribers
and broadband accesses totaled 3.4 million and 4.1 million,
respectively. It is important to remark that in all cases the total
number of subscribers increased when compared to the previous
quarter, through actions such as change of products, bundling and
upselling, allowing to increase the weight of value customers and
reiterating the leadership of the Company in mobile portability, in
broadband and video platforms.
- Operating Income before Depreciation and Amortization
amounted P$31,839 million in 1H19, 33.6% of Consolidated Sales.
During 2Q19 the margin was 34.6%, and above the 32.7% obtained in
1Q19.
- Net Income amounted to P$6,729 million in 1H19, increasing
+99.6% vs. 1H18. Net Income attributable to the Controlling Company
amounted to P$6,600 million during the same period, increasing
+99.7% vs. 1H18. The variation of the mentioned Net Income vs. 1H18
mainly reflects greater net financial results due to the effect of
positive FX results measured in real terms.
- A second payment of dividends of P$7,045 million has been
approved, in accordance to the resolutions of the Shareholders'
Meeting of April 2019, which will be
made available through the use of cash resources as a consequence
of the Company's solid operative generation.
- Investments in PP&E, intangible assets and adds of
rights of use reached P$24,120 million in 1H19, equivalent to 25.5%
of Consolidated Revenues, due to better financing conditions
obtained by the Company and with the objective of improving the
services demanded by its customers. In this way, the Company
carries on with its investment plan as it was formulated.
- Net Financial Debt Position: P$75,268 million in 1H19, down
6.3% in real terms when compared with December 2018.
|
|
|
IAS
29
|
|
IAS
29
|
|
|
|
|
|
(in million P$ adjusted by
inflation)
|
|
As of June,
30
|
|
As of June,
30
|
|
Δ
$
|
|
Δ
%
|
|
|
2019
|
|
2018
|
|
|
|
Consolidated
Revenues
|
|
94,756
|
|
107,078
|
|
(12,322)
|
|
-11.5%
|
|
Operating Income
before D&A
|
|
31,839
|
|
38,361
|
|
(6,522)
|
|
-17.0%
|
|
Operating
Income
|
|
9,359
|
|
19,142
|
|
(9,783)
|
|
-51.1%
|
|
Net Income
attributable to Controlling Company
|
|
6,600
|
|
3,305
|
|
3,295
|
|
99.7%
|
|
Shareholders' equity
attributable to Controlling Company
|
|
274,275
|
|
n.a
|
|
n.a
|
|
n.a
|
|
Net Financial
Position - (Debt) / Cash
|
|
(75,268)
|
|
n.a
|
|
n.a
|
|
n.a
|
|
CAPEX
|
|
24,120
|
|
23,572
|
|
548
|
|
2.3%
|
|
|
|
|
|
|
|
|
|
|
|
Fixed lines in
service (in thousand lines)
|
|
3,371
|
|
3,679
|
|
(308)
|
|
-8.4%
|
|
Mobile customers (in
thousand)
|
|
20,943
|
|
21,459
|
|
(516)
|
|
-2.4%
|
|
Personal (Argentina)
|
|
18,408
|
|
18,631
|
|
(223)
|
|
-1.2%
|
|
Nextel
(Argentina)
|
|
182
|
|
447
|
|
(265)
|
|
-59.3%
|
|
Núcleo (Paraguay) -including Wimax customers-
|
|
2,352
|
|
2,381
|
|
(29)
|
|
-1.2%
|
|
Broadband accesses in
Argentina (in thousand)
|
|
4,132
|
|
4,083
|
|
49
|
|
1.2%
|
|
Cable TV Suscribers
(in thousand)
|
|
3,417
|
|
3,484
|
|
(67)
|
|
-1.9%
|
|
Argentina
|
|
3,276
|
|
3,341
|
|
(65)
|
|
-1.9%
|
|
Uruguay
|
|
141
|
|
143
|
|
(2)
|
|
-1.4%
|
|
|
|
|
|
|
|
|
|
|
|
Average Billing per
user (ARBU) Fixed Telephony / voice (in P$ - Restated by
inflation)
|
341.2
|
|
342.8
|
|
(2)
|
|
-0.5%
|
|
Average Revenue per
user (ARPU) Mobile Services - Personal (in P$ - Restated by
inflation)
|
246.5
|
|
275.8
|
|
(29)
|
|
-10.6%
|
|
Average Revenue per
user (ARPU) Broadband (in P$ - Restated by inflation)
|
867.4
|
|
978.5
|
|
(111)
|
|
-11.4%
|
|
Average Revenue per
user (ARPU) Cable TV (in P$ - Restated by inflation)
|
914.8
|
|
1,091.8
|
|
(177)
|
|
-16.2%
|
* (constant measuring unit)
**(Figures may not sum up due to rounding)
Telecom Argentina S.A. ('Telecom Argentina') - (NYSE: TEO; BASE:
TECO2), one of Argentina's leading
telecommunications companies, announced today a Net Income of
P$6,729 million for the period ended June
30, 2019. Net Income attributable to the Controlling Company
amounted to P$6,600 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
measurement unit as of June 30,
2019.
The following table shows the evolution of the consumer price
index (National CPI) for the last three fiscal years and as of
June 30, 2018 and 2019 according to
the official statistics (INDEC), which were used to restate the
figures in constant currency:
|
As of
December
31, 2016
|
As of
December
31, 2017
|
As of
December
31, 2018
|
As of June
30, 2018
|
As of June
30, 2019
|
Price Index
Variation
|
|
|
|
|
|
Annual
|
34.6%
|
24.7%
|
47.6%
|
29.3%
|
55.8%
|
3 year
cumulative
|
102.2%
|
96.6%
|
147.8%
|
117.0%
|
139.2%
|
3 month
cumulative
from
Mar-19
|
n/a
|
n/a
|
n/a
|
8.7%
|
9.5%
|
6 month
average
|
n/a
|
n/a
|
n/a
|
16.0%
|
22.4%
|
During 1H19, Consolidated Revenues amounted to P$94,756 million
(-P$12,322 million vs. 1H18). This decrease is reflected mainly in
Mobile, Internet and Cable TV Service Revenues, partially offset by
greater Fixed Telephony and data revenues. Total Revenues contain
approximately P$7,307 million and P$42,899 million, for the 1H19
and 1H18, respectively, related to the restatement in terms of the
measuring unit as of June 30,
2019.
Consolidated Operating Revenues
Mobile Services
As of June 30, 2018, mobile
clients amounted to 20.9 million.
In 1H19, mobile services revenues represented P$32,023 million
(-5,491 million vs. 1H18). The effect generated by the restatement
in terms of the measuring unit as of June
30, 2019, included in mobile services revenues amounts to,
approximately, P$2,444 million and P$15,116 million, for the 1H19
and 1H18, respectively. This effect was partially offset by the
increase in the mobile plan prices. The commercial strategy
was focused on promoting the consumption of mobile internet
services through Personal´s 4G network, the fastest network in the
country according to the results of international benchmarks who
measure the network standards through the experience of the
clients.
In turn, equipment revenues amounted to P$6,175 million
(-P$2,236 million vs. 1H18). This variation was mainly due to a
decrease in the quantities sold, partially offset by the increase
in prices of handset sales.
Mobile Services in Argentina
As of June 30, 2019, Personal
reached 18.4 million subscribers in Argentina, increasing in more than 250
thousand clients when comparing with the previous quarter, where
postpaid clients represented 40% of the subscriber base.
In 1H19, mobile service revenues in Argentina (excluding equipment sales) amounted
to P$27,910 million. Mobile internet revenues reached 78% of
service revenues of Personal in Argentina (vs. 55% in 1H18). The average
monthly revenue per user ('ARPU' – restated in constant currency as
of June 30, 2019) of Personal in
Argentina amounted to P$246.5
during 1H19. The effect generated by the restatement in terms of
the measuring unit as of June 30,
2019, included in the ARPU amounts to, approximately,
P$110.8 and P$19.5, for the 1H19 and 1H18,
respectively.
As of June 30, 2019, Nextel IDEN
subscriber base reached approximately 0.2 million subscribers,
where postpaid clients represented 76% of the subscriber base and
prepaid clients represented the remaining 24%.
Commercial Initiatives
In May Telecom presented in Buenos
Aires the first public 5G Demo, on Personal's mobile
network. The test was conducted with a virtual reality tennis game
that allows to experience the high response speed of fifth
generation technology, 100 times higher than 4G browsing. To this
first demo are added others of similar characteristics in other
country locations of strategic importance for the Company.
Telecom already invests in the 4.5G network, which is active in
100% of Personal's 4G network, and is the prelude to the
possibilities that 5G will offer: smart cities, internet of things,
connected houses and cars, home automation and artificial
intelligence, among other innovations.
On June 30, 2019, all the services
that were identified under the brand Nextel (including the radio
service over the IDEN network) ceased to be active. For this
reason, Telecom through its corporate services brand Fibercorp |
Telecom, presented "Smart Radio", a new option for customers and
their businesses so they may continue communicating. Smart Radio is
a new service for direct and immediate voice connections with
multimedia messaging for companies and governments, which offers
the best benefits of the Personal 3G/4G network and also for WiFi
connection. In addition, series of robust equipment with dedicated
buttons specially designed for factory and building work contexts,
such as the CAT S31 and Cyrus CM17, were added.
Personal in Paraguay
('Núcleo')
As of June 30, 2019, 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$4,113 million
during 1H19 (+17.7% vs. 1H18). Internet revenues represented 49.2%
of 1H19 service revenues (vs. 43.3% in 1H18).
Cable TV Services
Cable TV service revenues reached P$20,016 million in 1H19
(-P$3,050 million vs. 1H18). The effect generated by the
restatement in terms of the measuring unit as of June 30, 2019, included in Cable TV service
revenues amounts to, approximately, P$1,571 million and P$9,194
million, for the 1H19 and 1H18, respectively. Cable TV subscribers
totaled almost 3.4 million, increasing in approximately 9 thousand
subscribers when compared with the previous quarter. Moreover, the
monthly Cable TV ARPU (restated in constant currency as of
June 30, 2019) reached P$914.8 during
1H19. The effect generated by the restatement in terms of the
measuring unit as of June 30, 2019,
included in the ARPU amounts to, approximately, P$438.6 and P$72.4,
for the 1H19 and 1H18, respectively. Additionally, the average
monthly churn during 1H19 was 1.4%.
With the aim to continue offering to its customers the best
entertainment experience when enjoying content on multiple screens,
Flow incorporated Netflix into its decoder so that users may have
access to the exclusive series and movies of this platform. Thus,
customers who own a Flow decoder and have a Netflix account can
access the service directly, through a dedicated application. In
addition, the new Flow remote control will feature a direct access
button to Netflix that will allow users to access the content they
want, in a simple and convenient way.
Telecom launched a new live show platform called "Flow Music
Experience", which offers an annual show proposal in Argentina, with leading international artists.
The platform will present more than 20 shows in the next 12 months,
in Buenos Aires, Córdoba and
Rosario; and in addition to Lollapalooza Argentina and the
Asunciónico festival in Paraguay,
the most important festivals in each country. As part of the
comprehensive proposal, each of the shows can be watched
exclusively by live streaming through Cablevision Flow and from any
device.
Fixed Telephony and Data Services
During 1H19, revenues generated by fixed telephony and data
reached P$14,756 million in 1H19, +7.3% vs. 1H18. The increase in
fixed telephony services was mainly explained by higher revenues
from data services in a context that evidences the growing position
of the Company as an integrated ICT provider (Datacenter, VPN,
among other services) in the segment of Corporate and Government
customers. Regarding the increase in fixed telephony service
revenues, monthly fee price increases came into effect for both
corporate and residential fixed line customers, and in the bundled
offer of packs that include voice and internet services, that
aim to achieve higher levels of customer loyalty. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in Fixed
telephony and data service revenues amounts to, approximately,
P$1,126 million and P$5,505 million, for the 1H19 and 1H18,
respectively.
As a result, the average monthly revenue billed per user ('ARBU'
- restated in constant currency as of June
30, 2019) of fixed telephony has remained stable in 1H19
compared with 1H18, reaching P$341.2.
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.
Through Fibercorp | Telecom, its corporate services brand, the
company presented IoT solutions for smart cities at the exhibition
"Cities of the Future", that took place in Buenos Aires in April. With the aim of paving
the way for an Argentina with more
efficient and sustainable cities, the company carried out
demonstrations of IoT solutions such as establishment automation
and renewable energy, environmental monitoring and urban
development, intelligent parking, waste collection management, and
video analytics in real time.
Internet Services
Internet services revenues totaled P$21,451 million during 1H19,
-P$2,502 million vs. 1H18. The effect generated by the restatement
in terms of the measuring unit as of June
30, 2019, included in Internet services revenues amounts to,
approximately, P$1,673 million and P$9,518 million, for the 1H19
and 1H18, respectively. As of June 30,
2019, total broadband accesses increased to more than 4.1
million (+1.2% vs. 1H18). Additionally, broadband ARPU (restated in
constant currency as of June 30,
2019) amounted to P$867.4 per month in 1H19. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in the ARPU
amounts to, approximately, P$393.1 and P$68.7, for the 1H19 and
1H18, respectively. Moreover, the average monthly churn rate
for the period was 2.0%. On the other hand, clients
with service of 20Mb or higher currently represent 49% of the
total customer base as of 1H19, increasing from the participation
registered in 1H19 (29%).
For the first time, Fibertel and Flow arrived to Catamarca,
Santiago del Estero, Tucumán, La
Rioja, Jujuy and Reconquista (Santa
Fe). With these new services from Telecom, customers can
access the maximum fiber optic internet speed. In addition, they
can add the Flow experience for TV, which allows viewing of live
and on demand content, at anytime and anywhere they want, and from
multiple devices; thus changing the traditional way of watching
television, thanks to its differential features.
Consolidated Operating Costs
Consolidated Operating Costs (including D&A and impairment
of PP&E, intangible assets and rights of use) totaled P$85,397
million in 1H19, a decrease of P$2,539 million, or 2.9% vs. 1H18.
These lower operating costs vs. 1H18 are mainly associated with
lower operating costs excluding D&A and impairment of PP&E,
intangible assets and rights of use, which decreased 8.4%, mainly
due to lower cost of taxes and fees with the regulatory authority,
commissions and advertising, cost of handsets sold, interconnection
and transmission costs, programming costs and labor costs,
partially offset by higher depreciation, amortization and
impairment of PP&E, intangibles and rights-of-use. On the other
hand, it worth to highlight that the dynamic of cost adjustments is
different over time than that of the increase in revenues,
notwithstanding the fact that costs are being positively influenced
by synergies.
The cost breakdown is as follows:
- Employee benefit expenses and severance payments totaled
P$18,083 million (-2.0% vs. 1H18). The decrease was mainly due to a
decrease in recurring labor costs (decrease in the number of total
employees partially offset by increases in salaries to unionized
and non‐unionized employees together with the associated social
security contributions) which was partially offset by non-recurring
labor costs (severance payments and extraordinary gratifications
due to salary recomposition). Total employees totaled 24,583 in
1H19 vs. 26,335 in 1H18. The effect generated by the restatement in
terms of the measuring unit as of June 30,
2019, included in labor costs and severance payments amounts
to, approximately, P$1,425 million and P$7,400 million, for the
1H19 and 1H18, respectively.
- Interconnection and transmission costs (including TLRD,
Roaming, international settlement charges and lease of circuits)
totaled P$2,987 million, down 10.6% vs. 1H18, decreasing mainly due
to operative efficiencies (synergies) as of June 30, 2019, compared with the same period last
year, partially offset by higher traffic and the FX increase
related with services fixed in US$. The effect generated by the
restatement in terms of the measuring unit as of June 30, 2019, included in interconnection and
transmission costs amounts to, approximately, P$244 million and
P$1,367 million, for the 1H19 and 1H18, respectively.
- Fees for services, maintenance, materials and supplies
amounted to P$9,781 million (-0.3% vs. 1H18). This decrease in
costs is mainly due by synergies resulting from the merger process
between Telecom and Cablevisión in January
2018, partially offset by a greater level of activity driven
mainly by new Company projects, services linked to operational
management in general, and also by higher technical maintenance
costs and higher hardware and software maintenance costs due to
price increases and Peso/US$ exchange fluctuations. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in fees for
services, maintenance, materials and supplies amounts to,
approximately, P$892 million and P$3,575 million, for the 1H19 and
1H18, respectively.
- Taxes and fees with regulatory authorities reached P$7,515
million (-13.9% vs. 1H18). This decrease corresponds mainly to
lower sales in 1H19 vs 1H18, partially offset by impact of the
application of resolution ENACOM 840/18 that introduced changes in
the determination of the radioelectric spectrum fee. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in taxes and
fees with regulatory authorities amounts to, approximately, P$575
million and P$3,489 million, for the 1H19 and 1H18,
respectively.
- Commissions and advertising (Commissions paid to agents,
collection fees and other commissions) totaled P$5,579 million
(-17.0% vs. 1H18). This decline is due to lower charges for agent
commissions as a consequence of the sales channel reorganization
and due to a slightly decrease in advertising related to the
synergies achieved after the merger that allowed to reduce cost
even with greater presence in the various media, partially offset
by higher collection fees. The effect generated by the restatement
in terms of the measuring unit as of June
30, 2019, included in commissions and advertising amounts
to, approximately, P$425 million and P$2,907 million, for the 1H19
and 1H18, respectively.
- Cost of handsets sold amounted to P$4,638 million
(-26.5% vs. 1H18). Of this amount, the majority corresponds to cost
of handsets in Argentina, which
decreased compared with 1H18, mainly due to lower quantities sold
which were down approximately by 30%, mainly affected by the
decrease in consumption of durable goods registered at an
aggregated level in the economy. These lower quantities sold were
partially offset by an increase in purchase price of the handsets
compared with 1H18. Moreover, it's worth to remark that results of
handset sales have a positive margin contribution. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in cost of
handsets sold amounts to, approximately, P$798 million and P$2,713
million, for the 1H19 and 1H18, respectively.
- Programming and content costs totaled P$7,143 million (-5.5%
vs. 1H18). This decrease is explained mainly by operative
efficiencies obtained in 1H19 vs. 1H18, which were partially offset
by price increases in almost all broadcasting signals, including
football signals corresponding to the broadcast of live matches of
the first division of the Argentine Soccer Association. The effect
generated by the restatement in terms of the measuring unit as of
June 30, 2019, included in
programming and content costs amounts to, approximately, P$568
million and P$3,028 million, for the 1H19 and 1H18,
respectively
- Depreciation, amortization and impairment of PP&E,
intangible assets and rights-of-use amounted P$22,480 million
(+17.0% vs. 1H18). The increase was due to the impact of the
amortization the incorporations after June
30, 2018, as a consequence of the Capex Plan that the
Company is developing and the effect of the application since
January 1, 2019, of IFRS 16 being the
charge P$1,268 million, partially offset by assets that have
stopped amortizing in 2019. The effect generated by the restatement
in terms of the measuring unit as of June
30, 2019, included in depreciation, amortization and
impairment of PP&E, intangible assets and right-of-use amounts
to, approximately, P$9,601 million and P$9,577 million, for the
1H19 and 1H18, respectively.
- Other Costs totaled P$7,191 million (-7.7% vs. 1H18), of which
bad debt expenses reached P$2,662 million (+25.4% vs. 1H18),
increasing mainly due to the higher delinquency levels in
comparison with those registered in of 2018. Despite the fact that
the bad debt ratio reaches 2.81% as of 1H19, the same ratio in 2Q19
reduced to 2.33%, signaling an improvement in the trend of bad
debt. Bad debt expenses increase was more than offset by the
decrease in other operating costs (which includes charges for
trials and other contingencies, energy and other public services,
insurances, rents, internet capacity, among others), which totaled
P$4,529 million (-20.1% vs. 1H18). The effect generated by
restatement in terms of the measuring unit as of June 30, 2019, included in other costs amounts
to, approximately, P$577 million and P$3,355 million, for the 1H19
and 1H18, respectively.
Finally, as can be highlighted from the favorable evolution of
costs in real terms, it is noticeable that most of the components
evolved positively despite a challenging economic context,
indicating in most of the cases improvements or synergies.
Net Financial Results
The Net Financial Results (including Financial Expenses on Debt
and Other Financial Results, net) showed a gain of P$4,826 million
in 1H19, compared with a loss of P$19,618 million in 1H18. This
variation was mostly due to positive FX results (including results
of NDF) measured in real terms in 1H19 for P$6,551 million (due to
a depreciation of the Argentine peso against the US dollar of 13%
vs. an inflation of 22% during the same period), while negative FX
results measured in real terms were registered in 1H18 for P$22,071
million (due to a depreciation of the Argentine peso against the US
dollar of 55% vs. an inflation of 16% during the same period).
These results were partially offset by a lower RECPAM (inflation
adjustment gain/loss), which totaled P$2,076 million (down P$2,524
million compared with 1H18); and also by higher net interest losses
which totaled P$2.325 million (a decrease of P$1,221 million vs
1H18). Finally, lower gains on investments for P$174 million were
registered in 1H19 (a decrease of P$275 million vs 1H18).
Consolidated Net Financial Debt
As of June 30, 2019, net financial
debt position (cash, cash equivalents plus financial investments
and financial NDF minus loans) totaled P$75,268 million,
decreasing P$5,067 million or 6.3% when compared to the
consolidated net financial debt position as of December 31, 2018, which totaled P$80,335 million
(restated in terms of the measuring unit as of June 30, 2019)
Investments in PP&E, intangible assets and adds of rights of
use
During 1H19, the Company invested P$24,120 million, increasing
approximately 2.3% as of 1H18. 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 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, investments reached 25.5% of consolidated revenues in 1H19
(vs. 22.0% in 1H18).
During May, the first mobile site with a Personal satellite link
was inaugurated in the town of Presidente Roca (province of
Santa Fe). In this sense, Telecom
now offers the inhabitants of this town the opportunity to access
the internet with mobile technology. The infrastructure deployment
in Presidente Roca is part of a plan to expand the mobile network
in low population density locations, thus confirming the Company's
commitment to connect Argentina,
from Ushuaia to La Quiaca, through the 4G Personal network, which
continues to grow and now reaches more than 1,630 locations and
13.1 million clients in all the country,
Relevant Matters
Export credit facility with Finnvera
On May 7, 2019 Telecom Argentina
submitted a proposal for an export credit facility for an amount up
to US$96,000,000 (the "Facility") to
the following entities: (i) Banco Santander, S.A. and JPMorgan
Chase Bank, N.A., London Branch,
as initial lenders, mandated lead arrangers and residual risk
guarantors, (ii) JPMorgan Chase Bank, N.A., London Branch, as facility agent and as the
ECA bank (iii) Banco Santander, S.A. as documentation bank and (iv)
Banco Santander Río S.A. as onshore custody agent, which was
accepted on the same date.
The Facility will be guaranteed by the official export credit
agency of Finland, Finnvera plc
("Finnvera"), which will grant a guarantee in favor of the lenders
regarding the Facility and subject to the terms and conditions
established by Finnvera.
The financing consists of an "A" tranche and a "B" tranche,
under which the outstanding principal disbursed will accrue
interest at an annual rate equivalent to LIBO plus an applicable
nominal margin of 1.04%, that will be payable semi-annually in 14
equal and consecutive installments. This cost, which has been
obtained at competitive levels according to actual market
conditions, reflects a recognition to the Company's
creditworthiness.
The proceeds of the loans under the Facility will be used to
finance up to 85% of certain imported goods and services, the value
of certain national goods and services and the total payment of the
applicable premium payable to Finnvera equivalent to 7.82% of the
total amount committed by the lenders under the Facility.
Finally, on May 23, 2019 the
Company received a disbursement for US$36
million. This facility accrues interest at a LIBO rate plus
a 1.04% margin payable semi-annually in 13 equal and consecutive
installments starting from November
2019 and with a final maturity in November 2025.
Treasury Shares acquired by the Company
Within the framework of the resolution of the Board of Directors
Meeting held on May 22, 2013, Telecom
Argentina purchased treasury shares in the market between
May 28, 2013 and November 5, 2013, having acquired a total of
15,221,373 Class "B" shares issued by Telecom Argentina, of P$1
nominal value and 1 voting right per share (the "treasury shares").
As of May 27, 2019, these treasury
shares represented 0.70% of the total capital of Telecom
Argentina.
Likewise, in accordance with the provisions of section 67 of the
Ley de Mercado de Capitales No. 26,831 (Capital Markets Law
No. 26,831), and after three (3) years (term which was extended for
three (3) additional years as decided by the Ordinary and
Extraordinary Shareholders' Meeting of the Company held on
April 29, 2016) since the first
acquisition of treasury shares and not having been sold, nor having
passed a Shareholders' Meeting resolution over this matter, from
May 28, 2019 and until November 5, 2019 the capital stock of Telecom
Argentina will be reduced as a matter of law in an amount equal to
the nominal value of the corresponding shares, which will be
cancelled.
On July 1, 2019, the Company
submitted to the Comisión Nacional de Valores the capital
reduction request for a nominal value of P$3,672,960 for its
subsequent registration in the Public Registry in charge of the
Inspección General de Justicia. As of June 30, 2019, 11,548,413 Class "B" common shares
remained as treasury shares.
Loan agreement with IDB Invest
On May 29, 2019, the Company
submitted a financing proposal for a total amount of up to
US$300,000,000 (U.S. dollars three hundred million) in one or
more tranches, to the Inter-American Investment Corporation, on its
own behalf and acting as agent of the Inter-American Development
Bank ("IDB Invest"), as organizer of a syndicated loan, which was
accepted on the same date (the "Financing"). The Financing's
proceeds will be used by the Company to finance its capital
investments for 2019, including the deployment of the 4G network
and the expansion of the Company's broadband services.
The Financing consists of (i) one or more tranches to be granted
by IDB Invest (the "IDB Group Tranche") and (ii) one or more
related tranches to be extended by one or more co-lenders that
eventually would sign the corresponding loan agreements. The
maturity date of the disbursed capital, in the case of the IDB
Group Tranche, will be May 15, 2026,
payable in equal and consecutive semi-annual installments as of
November 15, 2021.
In accordance with the Financing offer, today the Company
notified to IDB Invest its intention to request a disbursement of
the IDB Group Tranche, for an amount of US$75.000.000, which occurred on June 7, 2019. On the other hand, an additional
disbursement was received on July 11,
2019 for US$25,000,000.
Finally, it is informed that the Board of Directors approved the
financing at its meeting held on May 27,
2019.
Other Relevant Matters
International issuance of Class 1 Notes for an amount of
US$ 400 million
On July 10, 2019, Telecom
Argentina notified the Comisión Nacional de Valores about
the resumption of the subscription period of Notes for an amount
US$300 million of nominal value,
expandable up to US$500 million,
whose proceeds must be allocated to the refinancing of liabilities,
including the use of up to US$250
million to refinance the Class "A" Notes due 2021. The
amount of Notes finally issued and their main characteristics are
detailed below:
Date of issuance: July 18,
2019.
Amount Issued: US$ 400 million.
Maturity Date: July 18, 2026.
Amortization: the principal will be canceled by a single (1)
payment for an amount equal to 100% of the total principal, payable
on the Maturity Date.
Interest Rate: semi-annual interest accrues from the Date of
Issuance until maturity at a fixed annual rate of 8.00%.
Interest Payment Date: Interest will be paid semiannually from the
Date of Issuance. The last Interest Payment Date will take place on
the corresponding Maturity Date.
Finally, the Company received offers for this issuance for more
than US$2 billion (nearly seven times
the original issuance amount foreseen) with a remarkable
participation of first class investors (including 50% from
USA, 30% from Europe and 7% from Asia). This allowed the upsize of the original
issuance for US$100 million,
indicating an acknowledgement to Telecom Argentina as an
international issuer.
Tender offer for Class "A" Notes due 2021
On July 10, 2019, Telecom
Argentina S.A. announced the commencement of a tender offer for its
outstanding Class "A" Notes due 2021 (the "Class A Notes") for a
Tender Cap of up to US$200 million,
which was increased to up to US$250
million on July 12, 2019.
Additionally, the Company has announced on July 29, 2019 that it has decided to extend the
Expiration Time to 11:59 p.m.,
New York City time, on
August 9, 2019 (the "Expiration
Time"), and that the total consideration for each US$1,000 principal amount of the outstanding
Class A Notes validly tendered at or before the Expiration Time has
been increased from US$967.50 per
US$1,000 principal amount of Class A
Notes, to US$997.50 per US$1,000 principal amount of Class A Notes.
Partial prepayment of the syndicated loan agreement entered into
in October 2018 for up to
US$500 million.
On July 25, 2019, within the
framework of the use of proceeds from the issuance of the Class 1
Notes, which were intended for the refinancing of liabilities, the
Company complied with the partial prepayment under the loan
agreement entered into on October 8,
2018 for a principal amount of US$100,000,000 plus the corresponding accrued and
unpaid interests, additional amounts and related expenses.
Withdrawal and distribution of the Voluntary reserve for future
cash dividends
The Board of Directors of the Company, at its meeting on
August 8, 2019, decided, in
accordance with the powers delegated by the Ordinary and
Extraordinary Shareholders´ Meeting of the Company held on
April 24, 2019, the withdrawal and
distribution of the "Voluntary reserve for future cash dividends"
in the amount of P$7,045,307,602 (equivalent to P$3.271275861 for
each share of $ 1.- nominal value
outstanding) and that they be made available to shareholders on
August 16, 2019.
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 June 30, 2019, Telecom
Argentina has 2,165,236,424 shares issued and 2,153,688,011 shares
outstanding.
For more information, please contact Investor Relations:
Solange Barthe
Dennin
(5411) 4968
3752
|
Luis F. Rial
Ubago
(5411) 4968
3718
|
Nahuel
Monsalvo
(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.cablevisionfibertel.com.ar
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 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 and Uruguay; (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 reflect the current views
of the management of the Company with respect to future events.
They 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 such
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 and Uruguay; (iv) inflation, the devaluation of
the peso, the Guaraní and the Uruguayan peso and exchange rate
risks in Argentina, Paraguay and Uruguay; (v) restrictions on the ability to
exchange Argentine or Uruguayan pesos or Paraguayan guaraníes into
foreign currencies and transfer funds abroad; (vi) the manner in
which the Argentine government regulates Law No. 27,078, the
Argentina Digital Law or, as amended by Decree No. 267/15; (vii)
the creditworthiness of our actual or potential customers; (viii)
the nationalization, expropriation and/or increased government
intervention in companies; (ix) technological changes; (x) 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; (xi) the effects of increased competition; (xii) reliance
on content produced by third parties; (xiii) increasing cost of the
Company's supplies; (xiv) inability to finance on reasonable terms
capital expenditures required to remain competitive; (xv)
fluctuations, whether seasonal or in response to adverse
macro-economic developments, in the demand for advertising; and
(xvi) the Company's ability to compete and develop our business in
the future. 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.