BUENOS AIRES, Argentina, Nov. 9 /PRNewswire-FirstCall/ -- -- The
Telecom Argentina Group maintained an important expansion of its
business in the nine-month period ended September 30, 2007.
Consolidated revenues grew 24% vs. 9M06, totaling P$6,515 million.
Revenues generated by the Cellular and Internet & Data
Transmission businesses increased 37% and 19%, respectively. -- The
Cellular customer base reached 11.7 million (+35%), broadband
subscribers totaled 677,000 (+81%), while fixed lines in service
increased 3% to 4.2 million. -- Operating Profit before
Depreciation and Amortization ("OPBDA") reached P$2,252 million
(+30% vs. 9M06), equivalent to 35% of net revenues. Operating
Profit increased by 78%, totaling P$1,201 million. -- Net Income
reached P$614 million, which includes results for discontinued
operations by P$102 million (related to the sale of Publicom in
1Q07). -- Net Debt (before NPV effect) declined to P$ 2,516 million
(-P$1.261 million vs. September, 2006), primarily as a result of
the cash flow generated by operations. The ratio of Net Debt to
OPBDA declined from 1.6x as of the end of 9M06, to 0.8x. As of
September-30 2007 2006 ^ ^% Consolidated Net Revenues (in MM P$)
6,515 5,242 1,273 24% Voice, Data & Internet 2,420 2,249 171 8%
Cellular 4,095 2,993 1,102 37% Operating Profit before D&A (in
MM P$) 2,252 1,730 522 30% Operating Profit (in MM P$) 1,201 675
526 78% Net Income (in MM P$) 614 164 450 274% Shareholder's equity
(in MM P$) 2,748 2,043 705 35% Net Financial Debt - Before NPV
effect (in MM P$) 2,516 3,777 (1,261) -33% Net Financial Debt -
Book value (in MM P$) 2,382 3,579 (1,197) -33% CAPEX (in MM P$) 981
755 226 30% Lines in service (Fixed lines -in thousands) 4,170
4,056 114 3% Cellular customers (in thousands) 11,665 8,624 3,041
35% Personal (Argentina) 10,161 7,675 2,486 32% Nucleo (Paraguay)
1,504 949 555 58% ADSL customers (in thousands) 677 375 302 81%
Fixed line traffic (in MM minutes, Internet Traffic not included)
12,528 12,516 12 0% Incoming/Outgoing cellular voice traffic in
Arg.(in MM minutes) 7,147 5,380 1,767 33% Average Revenue per user
(ARPU) Fixed Telephony/voice (in P$) 39 39 0 0% Average Revenue per
user (ARPU) Cellular Telephony Arg. (in P$) 38 38 0 0% Telecom
Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading
telecommunications groups, announced today a Net Income of P$614
million for the nine-month period ended September 30, 2007. During
9M07, Consolidated Net Revenues increased 24% (+P$1,273 million vs.
9M06) to P$6,515 million, mainly fueled by the cellular and
broadband businesses. Moreover, OPBDA increased by 30% (+P$522
million) to P$2,252 million (35% of Consolidated Net Revenues, +200
bps). Company Activities 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$2,420 million, +8% vs. 9M06. Voice Total Revenues for
this service reached P$1,910 million (+5%). Monthly Charges and
Supplementary Services increased by P$22 million or 4%, to P$555
million, as lines in service grew by 2%. Revenues generated by
traffic (Local Measured Service, Domestic Long Distance and
International Telephony) totaled P$905 million, with an increase of
4% vs. 9M06. Interconnection revenues amounted to P$273 million
(+20%), mainly fueled by higher cellular traffic. Other &
Public Telephony Other revenues reached P$177 million, decreasing
by 7% mainly due to the decline in traffic. Internet and Data
Transmission Mainly due to the increase in broadband connections,
Internet continues to deliver revenue growth to the wireline
business. During 9M07, revenues from this business grew 22% vs.
9M06 to P$384 million. Moreover, Telecom's ADSL subscribers reached
677,000 (+302,000 or +81% vs. 9M06). Therefore, lines with ADSL
connection accounted for approximately 16% of Telecom's lines in
service. Telecom confirms its market approach, based on delivering
higher velocity solutions, allowing its customers to access
increasingly complex multimedia content as well as new value-added
services. Telecom Argentina recently announced a significant
improvement of its Broadband portfolio, by automatically upgrading
its Arnet 640 K customers to Arnet 1 Mb product with no additional
charge. 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$126 million, (+12% vs.
9M06). The Company continues to work actively in the corporate
accounts, public sector and the SME segment, positioning itself as
an integrated provider of communications and connectivity
solutions. Cellular Telephony The Cellular Telephony business
generated revenues of P$4,095 million in 9M07. Telecom Personal in
Argentina As of September 30, 2007, Personal's subscribers reached
10.2 million (+2.5 million or +32% vs. 9M06). Approximately 67% of
the overall subscriber base was prepaid and 33% was postpaid. By
the end of 9M07, subscribers with GSM technology represented 96% of
the total subscriber base. Total voice traffic increased by 33% vs.
9M06 while outgoing SMS traffic increased from an average of 508
million messages per month to an average of 839 million (+65%).
Moreover, the Average Monthly Revenue per User ("ARPU") remained
stable at P$38, when compared to 9M06. Value-Added Services
accounted for 27% of ARPU. Revenues totaled P$3,799 million
(+P$1,051 million or +38% vs. 9M06). Service revenues increased by
43%, while handset sales grew 9% in the period, totaling P$401
million. Reconfirming its strong focus on technological innovation,
Personal continued the expansion of its 3G services to Cordoba and
Rosario cities, therefore becoming the first 3G operation outside
Buenos Aires. In terms of products and services, should be
mentioned the launch of "Servicio de Localizacion Movil", a
business application developed for sales forces, and "Navegador
Personal", incorporating satellite navigation facilities into
existing BlackBerry services. In addition, Personal is the first
Latin American operator to provide international roaming in 3G.
Finally, Personal continued to expand its commercial network, by
inaugurating the country's largest customer care center in Cordoba.
Nucleo Personal's controlled subsidiary that operates in Paraguay,
generated revenues equivalent to P$296 million (+21% vs. 9M06). By
the end of the quarter, the subscriber base reached approximately
1.5 million, +58% vs. 9M06. Prepaid and Postpaid customers
represented 89% and 11%, respectively, while GSM subscribers
represented 85% of the overall subscriber base. Consolidated
Operating Costs The Cost of Services Provided, Administrative
Expenses and Selling Expenses totaled P$5,314 million in 9M07,
which represents an increase of P$747 million or +16% vs. 9M06 with
the following breakdown: -- Salaries and Social Security
Contributions: P$712 million (+18%), affected by wage adjustments
and a minor headcount increase in the cellular business. -- Taxes:
P$467 million (+23%), in line with the general evolution of the
business. -- Agents and Prepaid Card Commissions: $508 million,
(+39%), due to the expansion in terms of subscribers and traffic.
-- Advertising: P$199 million (+38%), to support commercial
activity in cellular and internet. -- Cost of cellular handsets:
increased to P$597 million (-9%) as a consequence of fewer handset
sales, in the context of an increasingly penetrated market and
decreased in the migration process of TDMA to GSM handsets. -- TLRD
and Roaming: P$544 million (+44%) due to increased traffic among
cellular operators. -- Depreciation of Fixed and Intangible Assets:
P$1,051 million, stable when compared to 9M06. Telecom Argentina
totaled P$626 million and Telecom Personal $425 million (-13% y
+26%) respectively. Consolidated Financial and Holding Results
Financial and Holding Results resulted in a loss of P$323 million,
as compared to the P$413 million loss registered in 9M06. This
improvement is mainly due to lower net interest expenses by P$138
million (mainly due to the reduction in net debt). Net Debt As of
September 30, 2007, Net Debt (Loans before the effect of NPV
valuation, minus Cash, Banks, Current Investments and Other credits
derived from derivative Investments) amounted to P$2,516 million, a
reduction of P$1.261 million as compared to September 2006.
Interest accrued on the Company's debt totaled P$227 million.
During October 2007 Telecom Argentina performed a prepayment on its
outstanding Notes equivalent to the remaining 26% of the mandatory
amortization scheduled for April, 2010 and 73.6% of the mandatory
amortization scheduled for October, 2010. Consolidated Capital
Expenditures A total amount of P$981 million invested in fixed and
intangibles assets was allocated to the cellular business (P$426
million) and the Voice, Data and Internet businesses (P$555
million). Main Capex projects in the Voice, Data and Internet
Businesses relates to the expansion of ADSL services and the
upgrade of the network for services of a new generation, 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 In concern
with the massive market, the Company lounged for the first time in
the country, the SMS (Short Message Service) for fixed lines,
performance that showed the beginning of some innovations that
Telecom would offer to its residential clients and which would
change the way of communicating at home. 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 others 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 September 30, 2007,
Telecom had 984,380,978 shares outstanding. (*) Employee Stock
Ownership Program For more information, please contact the
Financial Planning & Investor Relations Department: Pedro
Insussarry Mariano Martire Gaston Urbina Ruth Fuhrmann
54-11-4968-3743 54-11-4968-3718 54-11-4968-6236 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.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. *Non-financial data unaudited
DATASOURCE: Telecom Argentina S.A. CONTACT: Pedro Insussarry,
+54-11-4968-3743, or Pablo Caride, +54-11-4968-3602, both of
Telecom Argentina 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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