Telecom Argentina S.A. announces consolidated results for the first quarter of fiscal year 2023 ("1Q23") **
BUENOS AIRES, Argentina, May 9, 2023 /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 1Q23 include the effects of the adoption of inflationary accounting in accordance with IAS 29. Finally, comments related to variations of results of 1Q23 and vs. 1Q22 mentioned in this press release correspond to "figures restated by inflation" or "constant".
**Unaudited non-financial information
* (in constant currency - includes right-of-use assets as of March 31, 2022 for P$4,591 million and as of March 31, 2023 for P$9,154 million)
Telecom Argentina S.A. ('Telecom Argentina') - (NYSE: TEO; BYMA: TECO2), announced today a net income of P$28,483 million for the period ended March 31, 2023. The net income attributable to the controlling company was P$27,759 million.
Comparative figures for the previous fiscal year have been restated so that the resulting information is presented in terms of the current measurement unit as of March 31, 2023.
The following table shows the evolution of the national consumer price index (National CPI - according to INDEC's official statistics) as of March 31, 2023 and as of December 31, 2022 and 2021, used for the restatement of figures in constant currency.
During the 1Q23, Consolidated Revenues amounted to P$214,818 million, from which Service Revenues totaled P$200,782 million.
As of March 31, 2023, total mobile subscribers in Argentina and Paraguay amounted to 22.8 million. In 1Q23, mobile services revenues represented P$87,610 million (- P$5,094 million or -5.5% vs. 1Q22).
Mobile Services in Argentina
As of March 31, 2023, total mobile subscribers amounted to approximately 20.5 million (+321 thousand vs. 1Q22). Postpaid clients represented 42% of our subscriber base (vs. 41% in 1Q22).
In 1Q23, mobile service revenues in Argentina amounted to P$81,109 million (-$3,734 million or -4.4% vs 1Q22). Mobile internet revenues in 1Q23 were equivalent to 92% of total sales for these services, while in 1Q22 they were equivalent to 86% of total sales for these services. The average monthly revenue per user ("ARPU") amounted to P$1,307.4 during 1Q23 (vs. $1,394,3 in 1Q22), which represents a variation of -6,2%. The effect generated by the restatement in terms of the current measurement unit as of March 31, 2023 included in the ARPU amounted to P$80.7 and P$749.5 for 1Q23 and 1Q22, respectively. The average monthly churn rate was 1.7% in 1Q23 (compared to an average of 2.3% in 1Q22).
During 1Q23, the Company continued to enhance its customers' mobile internet experience with the deployment of 4G and 4G+ networks throughout the country, reaching more than 14.8 million customers with 4G devices. Additionally, Personal was awarded by Ookla, the global leader in data testing and network usage analysis, as the Fastest Mobile Network in Argentina.
The Company continued preparing for the introduction of 5G technology by expanding the coverage, availability, and capacity of the network. As of the end of 1Q23, 194 5G DSS sites were enabled in Buenos Aires, Rosario, the Atlantic Coast, Cordoba, Santa Fe, Corrientes, Posadas, and Paraná.
Personal in Paraguay ('Núcleo')
As of March 2023, Núcleo's subscriber base reached 2.3 million clients. Of the total number of clients, 79% correspond to the prepaid modality and 21% to the postpaid modality, whereas as of March 31, 2022, prepaid clients represented 81% and postpaid clients 19%.
Núcleo's mobile service revenues during 1Q23, amounted to P$6,501 million (-17.3% vs. 1Q22), mainly due to a decrease in ARPU measured in constant pesos, which was partially offset by the appreciation of the Guaraní against the Argentine peso.
Cable TV Services
Cable TV service revenues reached P$39,909 million in 1Q23 (-P$7,038 million or -15% vs. 1Q22). Cable TV subscribers totaled approximately 3.4 million (-140 thousand vs. 1Q22). The monthly Cable TV ARPU (restated in constant currency as of March 31, 2023) reached P$3,728.3 during 1Q23 (vs. P$4,311.1 in 1Q22). The effect generated by the restatement in terms of the measuring unit as of March 31, 2023, included in the ARPU amounts to P$250.6 and P$2,323.9, for 1Q23 and 1Q22, respectively. The average monthly churn rate as of March 31, 2023, and as of March 31, 2022, was 1.8% and 1.3%, respectively.
Flow continued to evolve with new features, innovative and quality content through partnerships with producers, becoming the most important integrated platform in Argentina. Among them, Flow broadcasted live and nationwide the Cosquín Rock festival in February and the Lollapalooza in March. At the end of 1Q23, Flow's unique customers amounted to 1.3 million (+116,000 compared to 1Q22).
During 1Q23, as part of the technological evolution of the Flow platform, ISDB-T was offered in a staggered manner to the analog pay-TV customer base for digitalization of the service. This new solution allow customers to have a digital service through their traditional cable connection without the need for a decoder.
Fixed Telephony and Data Services
Revenues generated by fixed telephony and data services reached P$24,501 million in 1Q23 (-19.1% vs. 1Q22).
The monthly fixed voice ARPU (restated in constant currency as of March 31, 2023) reached P$1,618.3 (vs. P$1,983.5 as of 1Q22). The effect generated by the restatement in terms of the measuring unit as of March 31, 2023, included in the ARPU amounted to P$112.9 and P$1,147 for 1Q23 and 1Q22, respectively.
The corporate segment continues to develop new solutions to support businesses in enhancing their operations. During 1Q23, the Company continued to assist businesses in their digital transformation journey, supporting the evolution and growth of their e-commerce platforms, logistics, and stock movements, among other services. Additionally, in the first quarter of the year, the Company announced its partnership with Ituran, a leading innovation and technology Company, to provide the vulnerability analysis/test solution and support corporate security processes in its subsidiaries in Argentina, Mexico, Ecuador, Colombia, and Brazil.
Internet services revenues totaled P$47,017 million during 1Q23 (-P$4,554 million or -8.8% vs. 1Q22). As of December 31, 2022, total broadband accesses reached approximately 4.1 million (-156 thousand vs. 1Q22). The monthly churn rate of Internet services was positioned at 1.7% and 1.5% as of March 31, 2023 and 2022, respectively.
Additionally, broadband ARPU (restated in constant currency as of March 31, 2023) amounted to P$3,641.0 in 1Q23 (vs. P$3,894.9 in 1Q22). The effect generated by the restatement in terms of the measuring unit as of March 31, 2023, included in the ARPU amounted to approximately P$230.2 and P$2,097.8 for the 1Q23 and 1Q22, respectively.
As of March 31, 2023, customers with a service of 100 Mb or higher represented 81% of the total customer base (compared to 37% as of 1Q22). At the end of the first quarter of 2023, customers with this speed or higher amounted to 3.3 million (+112.8% in total compared to 1Q22).
Revenues from equipment sales
Equipment revenues amounted to P$14,036 million (-P$2,295 million or -14.1% vs. 1Q22). Said decrease was mainly due to a lower volume of handsets sold, offset by an increase in their average price compared to 1Q22.
Our virtual wallet service, Personal Pay, ended the year with over 955,000 customers. During the first quarter, Personal Pay continued to expand the differentials of its product, incorporating the new functionality of remunerated balances for all its users, which allows them to generate profits by simply having their money available in the wallet.
Consolidated Operating Costs
Consolidated Operating Costs (including D&A and impairment of fixed assets) totaled P$217,908 million in 1Q23 (-P$19,311 million or -8.1% vs. 1Q22). Excluding D&A and impairment of fixed assets, operating costs experienced a reduction of 4.4%.
The cost breakdown was as follows:
Net Financial Results
Net Financial Results (including Financial Expenses on Debt and Other Financial Results) were P$19,375 million in 1Q23 (vs. a utility of P$45,640 million in 1Q22), mainly due to:
Telecom's income tax includes the following effects:
i) the current income tax, determined based on the current tax legislation applicable to Telecom,
Income tax gain amounted to P$11,773 million in 1Q23 (vs. a gain of P$57 million in 1Q22). The loss according to item (i) above amounted to P$80 million in 1Q23 (vs. a loss of P$22,405 million in 1Q22) and the income tax effect related to the application of the deferred tax method described in item (ii) above was a gain of P$11,853 million in 1Q23 (vs. a gain of P$22,462 million in 1Q22).
Consolidated Net Financial Debt
As of March 31, 2023, our net financial debt (cash, cash equivalents plus financial investments and financial NDF* & interest rate swaps minus loans) amounted to P$477,923 million, decreasing P$33,896 when compared to the net financial debt as of March 31, 2022, adjusted by inflation.
Investments in PP&E, intangible assets and rights of use assets
During the 1Q23, the Company invested (including rights of use assets) P$34,528 million (-10% vs. 1Q22). Said investments represented 16.1% of consolidated revenues in 1Q23. Investments without including additions for right of use totaled $25,374 million (-24.9% vs. 1Q22).
The investments were focused on:
Relevant events after March 31, 2023
Acquisition of stake in Open Pass Holding Corp.
On April 25, 2023, the Company subscribed for 1,000 ordinary shares, with one vote each of Open Pass Holding Corp, representing 50% of its capital.
Open Pass Holding Corp is a company incorporated in the state of Delaware, United States of America, which owns an equity interest in Open Pass S.A.U. ("OpenPass"). Open Pass is a company that provides IT services related to software development and maintenance, which also has an agreement for the use and development of the Personal Pay electronic wallet platform with the subsidiary of Telecom Argentina, Micro Sistemas S.A.U. ("Micro Sistemas").
Through this acquisition, the strategic objective is to ensure the continuity of the services provided by Open Pass, as well as the scalability and future regional evolution of the Personal Pay platform.
Ordinary and Extraordinary General Shareholders' Meeting
The Ordinary and Extraordinary General Shareholders' Meeting held on April 27, 2023 approved, among other matters, the following:
– To approve the proposal of the Board of Directors, expressed in purchasing power currency as of March 31, 2023, using the National CPI in accordance with Resolution CNV No. 777/18, regarding the negative Unassigned Results as of December 31, 2022, amounting to P$207,832,672,505 (P$253 billion in constant currency as of March 31, 2023), consisting of: (i) regarding the amount of P$273,927,247,113 (P$333,458 million in constant currency as of March 31, 2023) resulting from the adjustment for the loss of the higher value assigned to the assets and liabilities identified and incorporated up to the merger date, which gave rise to the creation of the Merger Premium, to be reclassified to the "Merger Premium" account, (ii) regarding the difference of the Unassigned Results amounting to P$66,094,574,608 (P$80,458 million in constant currency as of March 31, 2023), it shall be fully appropriated to the "Discretionary reserve to maintain the level of capital investments and the current solvency level of the Company".
– Delegate powers to the Board of Directors to release, by December 31, 2023, the "discretionary reserve to maintain the level of investments in capital goods and the current solvency level of the Company" in an amount sufficient to distribute Global Bonds 2030 as dividends in kind, up to a nominal value of US$473,623,896.
Dividend Distribution and Reserve Withdrawal
On May 3, 2023, in exercise of the authority delegated by the General Ordinary and Extraordinary Shareholders' Meeting held on April 27, 2023, the Board of Directors of Telecom Argentina resolved:
Export credit line guaranteed by Export Development Canada (EDC).
On May 5, 2023, we submitted a proposal for an export credit facility for an aggregate principal amount of up to U.S.$50,000,000 (the "Credit Facility") to Export Development Canada, as lender, and Citibank N.A., Sucursal Argentina, as onshore custody agent, which was accepted on the same date.
The proceeds of the loans made under the Credit Facility will be used to finance up to 100% of the payments to be made by the Company to the suppliers under the Supply Agreement for eligible goods and services generated outside Argentina.
Telecom Argentina is a leading telecommunications company 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 mobile, broadband and satellite TV 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 March 31, 2023, Telecom Argentina owns 2,153,688,011 issued and outstanding shares.
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SOURCE Telecom Argentina S.A.