Fourth Quarter & Fiscal Year 2012 Earnings Results Conference - PowerPoint PPT Presentation

Fourth Quarter & Fiscal Year 2012 Earnings Results Conference Call Presentation

Disclaimer This presentation is based on audited financial statements and may include 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 impact of the 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, uncertainties concerning the impact of the emergency laws enacted by the Argentine government which have resulted in the repeal of Argentina’s convertibility law, the devaluation of the peso, restrictions on the ability to exchange pesos into foreign currencies, the adoption of a restrictive currency transfer policy, 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 public services and the executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive and rapid 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 reduction 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 presentation, including, without limitation, changes in the Company’s business or to reflect the occurrence of unanticipated events. Information included in this presentation is unaudited and may not coincide with that included in the financial statements of the Company, due to rounding, reclassification matters, and other reasons. Readers are encouraged to consult the Company’s Annual Report and 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 and the Argentine Comisión Nacional de Valores . 1

Agenda Market Overview • Business Highlights • Financials Financials • • Guidance for 2013 • Q&A Session • 2

Market Overview: Rebound expected after 2012 slowdown Real GDP* Consumption & Wages Trade & Fiscal Balance Billion USD, at current prices – Last 12 months Billion USD, at current prices – Last 12 months Trade Balance (Billion USD) Last 12 months ∆ YoY - constant prices National Wages - ∆ % YoY Fiscal Balance as % of GDP Last 12 months* 29,4% 9,2% 8,9% 26,3% 24,5% 1,7% 1,5% 0,3% 1,9% 16,7% -0,2% 0,9% 465 442 16,9 266 368 249 12,7 11,4 211 307 10,0 179 179 2009 2010 2011 2012e 2009 2010 2011 2012e 2009 2010 2011 2012e • After a hard landing in 2012, an improved • Private consumption was the main driver of • International commerce declined in 2012, due economic scenario for 2013 is expected. The growth in 2012, as deteriorated investment to a reduction in exports and imports of 3% agricultural production will probably recover levels suffered from tighter FX and imports and 7% respectively, reaching a trade surplus strength and the Brazilian economy may help conditions. of 12,7 billion dollars. industrial exports. • The continued increases in nominal wages • Weak performance in the fiscal accounts • Weak economic conditions reduced growth to and the low real interest rates encouraged increased flows from the Central Bank and 1,9% in 2012 down from 8,9%. consumption over savings. National Pension Funds. • Sectors like agriculture and construction • Inflation remained at high levels, although • Improved agricultural production and Brazilian suffered the most, while banking and some in general, wages negotiation concluded at economy picking-up, could help to ease other services outperformed the rest of the lower levels from last year. external constraints and to sustain a more economy. favorable context for 2013. Source: MECON, INDEC and Company Estimates •Official GDP YoY variation, constant prices. 3 •Fiscal Balance represents primarily fiscal surplus

Agenda Market Overview • Business Highlights • Financials Financials • • Guidance for 2013 • Q&A Session • 4

Business Highlights #1 in Revenue Share; Service Revenues up +21% YoY in 4Q12 MOBILE Postpaid leadership confirmed by high quality of port-ins & net adds Investing in mobile access to sustain VAS growth Wireline BB and Data services sustain revenue expansion Wireline BB and Data services sustain revenue expansion FIXED Wireline Broadband ARPU rose +22% YoY in 4Q12 Increasing ICT orders backlog Strong cash flow generation in 4Q12 – ARS1.406 MM in 2012 FINANCIALS Margins expanded QoQ; controlled SAC/SRC and cost efficiency Revenues and OIBDA double digit growth Target Reached 5

TEO Group: 2012 Targets IFRS, Billion of ARS Guidance FY12 2012 Results +Positive Double Digit YoY trend +20% vs 2011 Revenues +20% vs. FY11 2011 2012 +Positive Double Digit YoY trend Digit YoY trend +10% vs. FY11 OIBDA +11% vs. FY11* *Excluding non-recurring cost 2011 2012 Capex as % of Revenues 18% 17% +2% vs. FY11 4,0 ARS 3,3 Billion Capex 3,2 � Delays in logistics for equipment imports affected target 2011 2012 6

Mobile: Consolidated revenue share leadership Subscriber Share Evolution Mobile KPI Million of lines +13% 63,3 +12% +4% 56,6 +7% 57,7 54,5 +7% 56,0 ARPU 50,9 51,4 (ARS/Month) 47,4 TOU 37,6 -4% -2% +4% 36,3 (SMS/Month) 34,6 +5% +5% 32,9 Others* 309 322 329 322 MOU (Mins/Month) +1% +1% 0% +4% 19,0 18,2 +13% +11% 16,3 14,5 102 103 TEO 99 99 2009 2010 2011 2012 2011 2012 4Q11 4Q12 +0,8 MM • Sustained #1 in Revenue Share subs. Market • Outperformance in postpaid segment; 30,6% 32,1% 33,4% 33,5% share represents more than half of 2012 net adds Revenue • Leading the Smartphone segment 29,9% 31,1% 33,5% 34,3% Share • Despite single price adjustment in postpaid in 2012, 4Q12 ARPU rose +13% YoY Note: Argentinean operation only - Does not include trunking subscribers. 7 Source: Market estimates of the top 3 providers in the industry.

Mobile: SAC & SRC under control in MNP success Service Revenue Breakdown SAC & SRC as % of Argentine Service Revenues - Million ARS – Argentine Market 13.312 Before capitalization of SAC & SRC +21% 10.983 +29% 1.248 +61% 8.483 774 +24% 6.830 SAC & +98% 19,7% SRC 5.765 17,3% 391 16,4% +29% +126% Internet 16,2% 4.482 +50% 14,2% Services 173 Agent 8,6% 2.997 Commissions +39% Data 9,0% 2.150 9,0% 9,4% (SMS) 8,9% Handset +10% +12% 5,8% subsidies 6.299 Retail & 5.727 +13% 5.095 5,2% 3,8% 4.507 4.507 3,9% 3,9% Wholesale Wholesale 2,0% 2,0% Voice Advertising 5,3% 3,6% 3,1% 2,9% 3,3% 2009 2010 2011 2012 4Q11 1Q12 2Q12 3Q12 4Q12 VAS as % of 40% 48% 53% 34% Service Revenues • Continued rationalization of SAC & SRC • Consolidated leadership in high-end market after successful MNP implementation appealed by VAS & customer experience • Promoting handsets upgrade to 3G & • Successful mobile internet adoption in prepaid smartphones to encourage data usage segment thanks to innovative daily flat offer and improve spectrum efficiency (“internet por $1”) 8

Paraguayan Market: Sustained value generation Subscribers Financials Thousand of lines (includes 3G modems) IFRS Million of ARS 867 +21% +7% 714 +14% +53% REVENUES +4% +21% 466 385 +25% 331 2.301 2.149 +67% 264 1.878 1.806 +20% 158 132 OIBDA OIBDA 2009 2010 2011 2012 2009 2010 2011 2012 34% 34% 37% 38% Margin • LTE launch positioned our Brand as leader • Revenues in ARS rose +21% YoY in 4Q12 in innovation in the mobile internet business • Sustained value generation and contribution to • Great postpaid momentum; customers 1 rose the Telecom Argentina Group +21% YoY • Leadership in mobile internet boosted internet service revenues 1 Postpaid includes 3G modems but excludes WIMAX 9

Mobile Revenues: Sustained growth thanks to VAS Evolution of revenues 2011 – 2012 IFRS, Million of ARS, Percentage +2.925 (+22%) 443 16.094 153 474 1.283 460 112 13.169 +29% +61% +30% YoY +11% +6 % +21% Variation 2011 Retail Wholesale* Data Internet Equipment Nucleo* 2012 Revenues Voice Voice (Paraguay) Revenues % of total Mobile 28% 11% 36% 8% 12% 5% Revenues Note: Wholesale voice shows Interconnection revenues (CPP, TRLD, Roaming and others) Núcleo revenues expressed in ARS and includes equipment. 10