-- The Telecom Argentina Group maintained an important expansion of
its business in the six-month period ended June 30, 2007.
Consolidated revenues grew 26% vs. 1H06, totaling P$4,202 million.
Revenues generated by the Cellular and Internet & Data
Transmission increased 40% and 18%, respectively. -- In terms of
subscribers, the Cellular customer base reached 11.3 million
(+47%), broadband subscribers totaled 602,000 (+100%), while fixed
lines in service increased 4% to 4.1 million. -- Operating Profit
before Depreciation and Amortization ("OPBDA") reached P$1,414
million (+26% vs. 1H06), equivalent to 34% of net revenues.
Operating Profit increased by 73%, totaling P$727 million. -- Net
Income totaled P$387 million, considering the results for
discontinued operations (P$ 102 million) generated by the sale of
Publicom. -- Net financial Debt (before NPV effect) declined to P$
2,785 million (-P$1.224 million vs. 1H06), primarily as a result of
the cash flow generated by operations. The ratio of Net Financial
Debt to OPBDA declined from 1.8x as of June 2006, to 1.0x. BUENOS
AIRES, Argentina, Aug. 9 /PRNewswire-FirstCall/ -- Telecom
Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading
telecommunications groups, announced today a Net Income of P$387
million for the six- month period ended June 30, 2007. During 1H07,
Consolidated Net Revenues increased 26% (+P$854 million vs. 1H06)
to P$4,202 million, mainly fueled by the cellular and broadband
businesses. Moreover, OPBDA increased by 26% (+P$293 million) to
P$1,414 million, equal to 34% of Consolidated Net Revenues. 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$1,589 million, +7% vs. 1H06. Voice Total Revenues for this
segment reached P$1,258 million (+4%). Monthly Charges and
Supplementary Services increased by P$12 million or 3%, to P$366
million. Lines in service increased 4%, similar to the results
reported in recent quarters. Revenues generated by traffic (Local
Measured Service, Domestic Long Distance and International
Telephony) totaled P$598 million, with increases of 1%, 4% and 8%,
respectively. Interconnection revenues amounted to P$174 million
(+19%), due to the expansion of both fixed-line and wireless
traffic. Other Other revenues reached P$120 million. Internet and
Data Transmission The increase in broadband continues to have an
outstanding performance. Internet continues to be the main driver
of growth, with revenues of P$250 million (+22% vs. 1H06).
Moreover, Telecom's ADSL subscribers reached 602,000 (+300,000 or
+100% vs. 1H06). Therefore, lines with ADSL connection accounted
for approximately 14% of Telecom's lines in service. This
development confirms Telecom's fixed-line customer's preference for
the Company's broadband services. This growth is the result of the
strategy of the Company to make available to its clients of all the
country products that combine the best quality of navigation at
accessible prices, according with different segments. In this
sense, to products already available (from 640 K to 5 MG), the
Company added an option of broadband connection with no fixed
monthly fee during the last quarter. Revenues generated by Data
transmission amounted to P$81 million, (+8% or P$6 million vs.
1H06). The Company continues to work actively in the corporative
segment, in particular with clients of the public sector making
available the best technology to accompany government initiatives
in matters related to security, emergencies and management.
Cellular Telephony The Cellular Telephony business generated
revenues of P$2,613 million in 1H07. Telecom Personal in Argentina
As of June 30, 2007, Personal's subscribers reached 9.9 million
(+3.0 million or +44% vs. 1H06). Approximately 68% of the overall
subscriber base was prepaid and 32% was postpaid. Subscribers with
GSM technology represented 92% of the total subscriber base at the
semester. Total voice traffic increased by 34% vs. 1H06 while
outgoing SMS traffic increased from an average of 460 million
messages per month to an average of 784 million (+70%). Moreover,
the average monthly Revenue per User ("ARPU") reached P$ 37, stable
when compared to 1H06. Revenues totaled P$2,436 million (+P$720
million or +42% vs. 1H06). Service revenues increased by 46%, while
handset sales grew 17% in the period. During 1H07, Personal
continued to work on further consolidating in leadership in
Argentine market, in terms of technology and innovation. It is
important to highlight the launch of Third Generation services by
Personal, such video-call, mobile broadband and numerous exclusive
multimedia content features, Personal interactive web portal,
photoblog, gaming, MP3 Full Track Download, Personal Mobile Video,
etc. Therefore, Personal becomes the first 3G operator in Argentina
and the first cellular provider in Latin America to offer 3G
connections both for notebooks and voice , plus videocall and
multimedia through 3G handsets. Nucleo Personal's controlled
subsidiary that operates in Paraguay, generated revenues equivalent
to P$177 million (+20% vs. 1H06). By the end of the quarter, the
subscriber base reached approximately 1.4 million, +78% vs. 1H06.
Prepaid and Postpaid customers represented 89% and 11%,
respectively, while GSM subscribers represented 82% of the overall
subscriber base. Consolidated Operating Costs The Cost of Services
Provided, Administrative Expenses and Selling Expenses totaled
P$3,475 million in 1H07, which represents an increase of P$548
million or +19% vs. 1H06 with the following breakdown: - Salaries
and Social Security Contributions: P$463 million (+17%), affected
by wage adjustments and headcount increases related to the
expansion of the business. - Taxes: P$321 million (+36%), mainly
generated by direct taxes on sales. - Agents and Prepaid Card
Commissions: $340 million, (+42%), related to the expansion in
terms of subscribers and traffic. - Advertising: P$128 million
(+47%), related to brand positioning campaigns and the launch of
new services. - Cost of cellular handsets: increased to P$404
million (+4%) as a consequence increase in handset sales related to
the subscriber growth and handset upgrades. - TLRD and Roaming by
P$347 million (+42%) due to increased traffic among cellular
operators. - Depreciation of Fixed and Intangible Assets: P$687
million (-2% vs. 1H06). Telecom Argentina totaled P$418 millones
and Telecom Personal $268 millones (-13% y +22%) respectively.
Consolidated Financial and Holding Results Financial and Holding
Results resulted in a loss of P$218 million, as compared to the
P$297 million loss registered in 1H06. The difference is mainly due
to lower net interest expenses by P$72 million ( mainly due to the
reduction in net financial debt) and also lower net foreign
currency exchange losses by P$33 million. Net Financial Debt As of
June 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$2,785 million, a
reduction of P$1.224 million as compared to June 2006. Interest
accrued on financial debt totaled P$157 million. During April and
May Telecom Argentina performed prepayments on its outstanding
Series A & B Notes equivalent to the remaining 25% of the
mandatory amortization scheduled for October 15, 2009 and 74% of
the mandatory amortization scheduled for April 15, 2010. The
prepayments totaled approximately the equivalent of US$ 140
million. In addition, Telecom Personal canceled bank loans and
notes for approximately the equivalent of US$ 60 million in the
second quarter. Consolidated Capital Expenditures A total amount of
P$553 million invested in fixed and intangibles assets was
allocated to the cellular business (P$253 million) and the Voice,
Data and Internet business (P$300 million). The Telecom Group
continues to implement its Capex plan including the expansion of
its ADSL services (accesses and transmission), reconverting its
network in order to fully develop a new generation of services,
enhancing its cellular network (capacity, coverage and 3G
services), and integrating platforms. Recent Developments During
2Q07, Telecom registered a result for discontinued operations of P$
102 million related to the sale of Publicom SA, the company engaged
in the directories business. During July, Telecom reached an
agreement with the different unions representing workers under
Collective Bargaining Agreements. The agreement includes a wage
increase of approximately 16% and a half-hour reduction in the work
day, applicable starting September, 2007. The agreement covers the
period from April 2007 through and including July 2008. 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 June 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 54-11-4968-3743 Mariano Martire 54-11-4968-3718 Gaston
Urbina 54-11-4968-6236 Astrid Burger 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. DATASOURCE: Telecom Argentina
S.A. CONTACT: Pedro Insussarry, +011-54-11-4968-3743, or Pablo
Caride, +011-54-11-4968-3602, both of Telecom Argentina
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