Telecom ArgentinaTelecom Argentina
3Q14 3Q14 EarningsEarnings ReleaseRelease3Q14 3Q14 EarningsEarnings ReleaseRelease
Conference Call Presentation
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 providers, including Telecom. Due to extensive and rapid changes in laws and economic and business
DisclaimerDisclaimer
1
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.
AgendaAgenda
Market Overview
Business Highlights
Financials
2
Financials
Conclusions
Relevant Matters
Q&A
Retail & Wholesale commerce
Manufacturer Industry
Transport & Communications
Financial interm.
Construction
Real Estate
Minery
Public Admin & Defense
Agriculture
Social services & Healthcare
Electricity, gas & water
8.6%
0.9%2.9%
0.3% 0.0% 0,2%
∆ YoY - constant prices
10.012.2
8.06.6 6.5 7.5
Trade Balance (Billion US$) Last 12 months
51.944.1 45.7
27.426.0
31.2
Consumer Confidence Index of Durable Goods
46.4 43.330.6 27.0 29.3 27.9
29.4% 24.5% 25.9% 29.5% 33.5% 35.5%
Central Bank Reserves (Billion US$)National Wages - ∆ % YoY
Economic activity per sector Wages Central Bank Reserves
3Q14:3Q14: unsustainable trilemma (Economic Activity + Imports restriction + Reserves)unsustainable trilemma (Economic Activity + Imports restriction + Reserves)
Real GDP* CCI Trade Balance
Total
2011 2012 2013 1Q14 2Q14 3Q14e 2011 2012 2013 1Q14 2Q14 3Q14e2011 2012 2013 1Q14 2Q14 3Q14e
� Industrial activity remained depressed, after
suffering January devaluation, a tax hike on the
automobile sector, and a lower demand from
Brazil
� Agricultural exports were affected by a
reduction in international prices
� Government continues to implement measures
to foster economic activity but no recovery
signals are still shown in the quarter
� Car Sales fell by 42% vs. September 2013
� Real Estate activity fell by 2.8% vs. September
2013 and 52% vs. 2011
3Source: MECON, INDEC and Company Estimates
*Official GDP YoY variation, constant prices
� After a strong decline in February, the consumer
confidence index showed a stable performance
in 3Q14 but showed a slowdown in September
� Strong decline in consumer indicators:
- Retail sales decreased 6% YoY
- Consumer loans contracted together
with a reduction in real wages
- VAT collection deteriorated in 9M14
� The new CPI Index published by the government
reached 19.8% YTD, stabilizing in a level of aprox.
1.4% per month during the quarter
� The supply of foreign currency was affected not
only by the decline in oilseed and grain export
liquidation but also by devaluation expectations
and holdouts situation
� As of September 2014, Central Bank Reserves
showed a decrease of 20% YoY
� Government is actively monitoring the FX market
aimed at dampering expectations of devaluation
of the peso
� Trade balance showed some improvements in
3Q14. Nevertheless, this result was obtained
thru higher reduction in imports instead of
increases in exports
AgendaAgenda
Market Overview
Business Highlights
Financials
4
Financials
Conclusions
Relevant Matters
Q&A
� Internet Mobile users and revenues keep growing (1.1 million new users
YoY)
� Broadband wireline continues to gain strength (81k new subs YoY)
� Accelerated roll out of 3G and preparation for 4G
� VDSL cabinet deployment (enabling up to 50 Mb connections)
� Spectrum auction held on October 31st: the equivalent of US$658 million
committed in the auction (including the highest offer for lot 8: 30 Mhz in
AWS and 20 Mhz in 700 Mhz)
Business HighlightsBusiness Highlights
Business
5
Financials
� Revenues up +22% driven by:
- Mobile internet (+56%) due to increase in unique users,
ARPU and Data penetration
- Data (+54%) and Broadband (28%) in the Fixed Business
� Constant efforts in costs efficiencies to mitigate the effects of the
inflationary context
19,827 241 374 518 -5 329 359 8221,406 312
24,183
IFRS, Million of AR$, Percentage
Consolidated revenue growth propped up by Data, Internet & HandsetsConsolidated revenue growth propped up by Data, Internet & HandsetsEvolution of revenues 9M13 – 9M14
YoY
Variation +9% +54% +7% +7% +56% +67%
+4,356; +22%
+28% -10% +37%
MOBILE IN ARGENTINAFIXED NUCLEO
SMS-AR144 MM; -4%
Impact of billing per second
9M13
Revenues
Voice Data Internet Equipments Voice Data Internet Handsets Nucleo 9M14
Revenues
6
Note:
*Paraguayan (Nucleo S.A.) revenues expressed in AR$ and includes handsets.
Figures might not sum up due to rounding
0%10% 23%4% 9%% of total
Revenues15%
Variation +9% +54% +7% +7% +56% +67%+28% -10% +37%
12% 22% 5%
1.8 1.7
19.9 20.1 19.9 19.8 19.8
Customer Base
(in MM)
2.7% 3.0%
Mobile Business in Argentina Mobile Business in Argentina –– Focusing on High value customers and servicesFocusing on High value customers and services
AR$/Month
43.2 48.7
27.2 26.5
3Q13 3Q14
Voice
Non Voice
75.2
+7%
70.4
+13%
-3%
� Browsing ARPU (+41% in 3Q14 YoY)
� Voice/SMS ARPU (-8% in 3Q14 YoY)
FOCUS ON DATAFOCUS ON DATA
Monthly Churn
Gross Adds(in MM)
23%30%
3Q13 3Q14
ARPU Smartphone
Penetration
88%65%
Smartphone Sellout
Prepaid Arpu Pospaid Arpu
6.3 6.7 6.9 6.9 7.4
3Q13 4Q13 1Q14 2Q14 3Q14
(in MM)
Monthly Unique
Internet Users (in
MM)
7
Note: Argentinean operation only. Figures might not sum up due to rounding1 Includes “Cuentas Claras” subscribers2Market estimates of the top 3 providers in the industry – Exclude trunking services
Monthly Unique Internet Users: Number of subs. that use internet at least once a month
13.4 13.5
6.4 6.3
3Q13 3Q14
Postpaid 1
Prepaid
19.9 19.8
Market
share2 33.0%32.6%
FOCUS ON POSTPAIDFOCUS ON POSTPAID
� Lower Churn (50% vs. Prepaid)
Mobile Business in Argentina Mobile Business in Argentina -- Prepaid offering to revert challenging Prepaid offering to revert challenging environment and stimulate usageenvironment and stimulate usage
56 55 45 54 64
295265
220182 158
3Q13 4Q13 1Q14 2Q14 3Q14
MOU
TOU
PREPAIDPREPAID
Customers Prepaid recharges <30 days Customers Prepaid recharges <30 days
Results of “Super Chip”
� Stabilizing CB and expanding “frequent
users” (recovering 30-day rechargers)
� Stimulate voice usage (MoU rose 14%
in two quarters)
� Increase Data Usage (Browsing ARPU
rose 50% in 3Q14 YoY)
16.5
24.7
3Q13 4Q13 1Q14 2Q14 3Q14
8
+50%
Customer Base
Traditional
Usage
Data Usage
PREPAIDPREPAID
AR$/Month
241 240 202 197 195
239219
180 161 143
3Q13 4Q13 1Q14 2Q14 3Q14
MOU
TOU
Mobile Business in Argentina Mobile Business in Argentina --Postpaid segment Postpaid segment –– Innovative Offers that result Innovative Offers that result in encouraging trendsin encouraging trends
POSTPAIDPOSTPAIDAR$/Month
BLACK ILIMITADOBLACK ILIMITADO
6.4 6.3
3Q13 4Q13 1Q14 2Q14 3Q14
Total Postpaid Subscribers (in MM)
Billing per
second
effect
9
38.0
53.2
3Q13 3Q14
+40%
AR$/MonthBLACK ILIMITADOBLACK ILIMITADO
Goals:
Retain High End Customers
Proposal:
Unlimited calls and SMS, and Data included in the plan
DIA FULL (for Hybrid accounts)DIA FULL (for Hybrid accounts)
Goals:
Increase Postpaid Cb while fostering ARPU
Proposal:
Unlimited on-net calls and SMS at AR$4.9 per day
1,669 1,707 1,714 1,726
1,750
3Q13 4Q13 1Q14 2Q14 3Q14
1.4% 1.3% 1.3% 1.4% 1.3%
125.5134.0 138.0 147.9 157.8
3Q13 4Q13 1Q14 2Q14 3Q14
Monthly
Churn
ARPU
(AR$)
Fixed: Leadership in flow share in BB accesses thru improved service Fixed: Leadership in flow share in BB accesses thru improved service
provisioning and competitive bundling offerprovisioning and competitive bundling offer
Thousand of broadband accesses, thousand of net adds
+26%+81k; +5%
AR$/Month
FIXEDFIXED
33%
48%
39%
27%
41%
3Q13 4Q13 1Q14 2Q14 3Q14e
735
963
213 319
228
364 248
380
FY12 FY13 9M13 9M14
10
IFRS Million of AR$
+50%
+31%
1Q
2Q
+60%
+54%1,063
689+53%
3Q
FIXEDFIXED
3Q14e: Market estimates of the top 3 providers in the industry
887
784
33%
22%
31%
12%2%
Fixed
AccessCore &
Infraest. 1
ITOthers Mobile
Access
Capex: Focus in Capacity and Coverage to ensure continuous service quality Capex: Focus in Capacity and Coverage to ensure continuous service quality improvementimprovement
Million of AR$
+32%
+49%
Capex Evolution FTTx Rollout
2,896
3,819
+21%
+3x
3,257
4,851
+5%
3Q13 4Q13 1Q14 2Q14 3Q13
3G Cells
PP&E
Intangible Assets
2,415
3,964
2,249 3,035
842 647
FY12 FY13 9M13 9M14
Note: 1Core & infrastructure refers to network related capex, including quality and innovation capex.
% Revenues 18% 15% 16%
� Strong increase in PP&E Capex (+35% vs. 9M13)
15%
2,896+21%
+35%
11
+64%
3Q13 4Q13 1Q14 2Q14 3Q13
+62%
� Continuous broadband fixed and mobile access
deployment despite delays in permits
AgendaAgenda
Market Overview
Business Highlights
Financials
12
Financials
Conclusions
Relevant Matters
Q&A
1,930 2,067
27,287
7,114
8,598
TEO Group: Consolidated Results TEO Group: Consolidated Results
IFRS, Million of AR$, Percentage IFRS, Million of AR$, Percentage
+22%
+11%
Revenues OIBDA*
+23%
+15%
Fixed Business 16%
Broadband 10%
Personal – Mobile 69%
% of Revenues
Nucleo – Mobile 5%
19,827
24,183
5,554
6,1863Q
+21% 3Q+7%
Handsets Revenues – Costs(in million of AR$)
-491
-55-148
463
FY12 FY13 9M13 9M14
Before capitalization of SAC & SRC
6,570 7,564
1,799 2,112
1,825 2,007
1,930
FY12 FY13 9M13 9M14
22,117
27,287
6,064 7,466
6,649
8,119
FY12 FY13 9M13 9M14
13
OIBDA
Margin30% 28% 28% 26%
Regulated
Revenues 10% 8% 9% 7%
*Operating Income Before Depreciation & Amortization.
1Q
2Q
1Q
2Q
+23%
+22%
+17%
+10%
5,554
2,968
1,402950
150 1,006445
240 605 176 166
6,18617%
63%
44%
11%
34%23%
12%
32% 35%
12%
YoY
Variation
TEO Group: Consolidated TEO Group: Consolidated costs costs and OIBDA evolutionand OIBDA evolution
IFRS, Million of AR$
Operating Income Before Depreciation and Amortization 9M13 – 9M14
+632; +11%
452
5,554
OIBDA 9M13 Ss. Revenues &
other incomes
Handsets
Sales
Handsets Costs ITX Costs Labor Costs Taxes Other
Marketing &
Sales
Fees for
services,
maint. and
materials
VAS Costs Others* OIBDA 9M14
14* Others includes bad debt expenses, provisions, recovery (costs) restructuring and others
OIBDA Margin
-1.4%+0.6% -0.1% +0.9% -0.7% -0.2% 25.6%+0.5%28.0%
� Fourth quarter in a row with positive margin in handsets business, improving the mix revenues
� After strong increases in FY13, turnover taxes rate continued to increase in 9M14 but at a slower pace
� Continuous review of structural costs, optimization in ITX costs
-2.0%
-0.5%+1.0% -0.7% +1.3% -0.2% -1.1% 27.7%+0.4%29.7% -2.2%
9M14
FY13
9M13
FY12
2,685 3,202
652 916
870
839
3,966 4,518
945
1,241
1,203
1,225
TEO Group: Consolidated ResultsTEO Group: Consolidated Results
IFRS, Million of AR$, Percentage
+14%
+18%
IFRS, Million of AR$, Percentage
Net Income attributable to Telecom
+19%+14%
2Q
Operating Income
+31%
3,263
3,843
+40%
2,324
2,644
2Q
+2%3Q
3Q
-4%
in million of AR$ 9M13 9M14
Net Interests $ 428 $ 231
Gains on Mutual Funds $ 46 $ 113
FX results -$ 131 -$ 205
Results on NDF $ 14 -$ 20
Others $ 20 $ 111
Total $ 377 $ 230
2,685
802 889
652 916
FY12 FY13 9M13 9M14
1,115 1,377
FY12 FY13 9M13 9M14
15
O. Income
Margin18% 17% 12% 12%16% 16% 12% 11%
+11%
Net Income
Margin
1Q+23%
+40%
1Q
� FX results in 9M14 affected by a non-cash pre-tax loss of AR$228 MM related to purchases of US$ Dollar Bonds, following accounting valuation
standards of fixed income securities (Valuation method: amortization cost)
� Net Income in 9M13 includes AR$172 Million charge related to disposal of PP&E. Excluding this effect, Net Income in 9M14 vs. 9M13 would have
increased +6% YoY
IFRS, Million of AR$ - Last 12 months
TEO Group: TEO Group: FCF, Net FCF, Net Financial Financial Position & Hedging StrategyPosition & Hedging Strategy
Free Cash Flow
5,684
1,2902,165
728 375 2,234
152
3,526
Telecom Argentina 1,235(1)
Telecom Personal 2,507
Operating free Cash Flow
Net Financial Position
8,196 5,774 1,132
OIBDA Capex Δ WK & others
Net Financial
Position
9M13
(Net Cash)
Net Financial
Position
9M14
(Net Cash)
Net Interest
& Others
FX
Variations
Operating
Free Cash
Flow2Taxes
Dividend
Payments3
Share
buy back
16
Note:
(1) Includes Telecom USA
(2) OFCF: Operating Free Cash Flow before Taxes
(3) Includes $44 Million related to Nucleo dividends payments to third parties, net of income tax
-6%
48%
38%15% 5%
100%
FX Cash in Argentina Dollar LinkedFX Cash
Abroad
AR$Núcleo
NFP
NFP Breakdown
NFP
Nucleo (Paraguay) (216) Free Cash Flow = -875
(Net Cash) (Net Cash)
150% Coverage
in 9M14
Dividends: Paying dividends 5 years in a rowDividends: Paying dividends 5 years in a row
3.6% 3.8%
42% 37%
Dividend
Dividend Yield
TELECOM ARGENTINA
LATAM TELCOS
Dividend Comparison
Evolution of DeclaredDividend
2012 2013 2014
8071,000
1,202
In million of AR$
Pay out Ratio
17
� Total Dividend AR$ 1.24 per outstanding share in circulation or AR$ 6.2 per ADR
� Payable in two equal installments:
� 50% on June 10th, 2014
� 50% on September 22nd, 2014
� Equivalent to 37% pay-out ratio
� Dividend Yield 3.8% in US$*
Dividend Payment
* Assuming Closing Price of March 14th , 2014 in Buenos Aires Stock Exchange and total Dividend
AgendaAgenda
Market Overview
Business Highlights
Financials
18
Financials
Conclusions
Relevant Matters
Q&A
Events on OIBDAEvents on OIBDA
YoY OIBDAgrowth
Actions Items:
� Price increase in mobile will have full impact in 4Q14
(~14%)
� Recent launch of appealing commercial offers (“Super
Chip” & “Full Day” packs) to enrich value proposition
� Positive KPI trends:
� Rising mobile Data penetration
September11% YoY
19
1Q14 2Q14 3Q14
� Rising mobile Data penetration
� Increase in prepaid recharges and MOU
� Browsing ARPU grows at high level
� Constant efforts in costs efficiencies to
mitigate the effects of the inflationary
context
19
10.0%17.4%YoY
Growth7.1%
AgendaAgenda
Market Overview
Business Highlights
Financials
20
Financials
Conclusions
Relevant Matters
Q&A
Capital Ownership and Corporate StructureCapital Ownership and Corporate Structure
Preferred B(Listed in NYSE)
21.62% Capital Own.
48.96% Econ. Int.
(Ordinary shares)
SoforaTelecomunicaciones S.A.
78.38% Capital Own.
51.04% Econ. Int.
32%51%
Telecom Italia Group
Werthein Group
17%
Fintech Group
Shareholder Structure as of October 29th , 2014
� On October 29th, 2014 TI sold to Fintech 17% of its Sofora
shareholding shares.
� The sale of the 51% controlling interest of TI in Sofora is
conditional upon obtaining regulatory approval by the
“Secretaría de Comunicaciones” and will not occur until after
such approval is obtained. This sale is expected to occur within
the next two and one-half years
21
99.99% 67.5%
Floating shares(Class B Shares & ADRs)
Nortel Inversora
(Class A: 51% - Class B 3.74%)Class C shares
Telecom Argentina
TelecomPersonal
Núcleo(Paraguay)
the next two and one-half years
� The majority of Sofora’s Board of Directors will continue to
be appointed by Telecom Italia Group until receipt of
Argentine regulatory approval and closing of the sale of
Telecom Italia’s 51% controlling interest in Sofora. No material
change in the corporate governance of Sofora and its
subsidiaries is foreseen
45.23% Capital Own.
44.37% Econ. Int.
54.74% Capital Own.
55.60% Econ. Int.
0.03% Capital Own.
0.03% Econ. Int.
Note: TI economic interest reaches 14.5%
GeographicalGeographical FootprintFootprint
Northern Region
Population
17.2 MM
Buenos Aires Metro Area
Population
15.2 MM
Presence by Region
Technological and
Market Leadership
Competitive Gap
Sites SpectrumMkt Share
Spectrum
15.2 MM
Southern Region
Population
9.8 MM
Source: INDEC. Projections based on Censo Nacional de Población, Hogares y Viviendas 2010.
22
Competitive Gap
Low market share
Sites
Sites
Spectrum
Telecom Argentina
Competitors
Mkt Share
Mkt Share
NORTHNORTH
AMBA**AMBA**
3G/4G Spectrum auction3G/4G Spectrum auctionTotal
Spectrum4G
20
20
AWS*
700 Mhz
30
20
AWS*
700 Mhz
20
30
AWS*
700 Mhz
Lot 1
Lot 8
Lot 9
Maintain
Leadership
Fill the Gap
4G
25 2520 25
2030
Pre Auction Post Auction
850 Mhz 1,900 Mhz 700 Mhz 1,700 Mhz
13 2030 30
2030
Pre Auction Post Auction
3G
SOUTHSOUTH
* Corresponds to bands of 1,700/2,100 Mhz
** Buenos Aires Metropolitan Area 23
30700 Mhz
20
20
AWS*
700 Mhz
Lot 10
Spectrum auction schedule
SPECTRUM AUCTIONOctober 31, 2014
FREQUENCIES ALLOCATIONBY GOVT.
In the period of 20 days after Spectrum Auction
PAYMENT
10 days after frequencies allocation
Room for
Growth40 50
2030
Pre Auction Post Auction
AgendaAgenda
Market Overview
Business Highlights
Financials
24
Financials
Conclusions
Relevant Matters
Q&A