Telecom Argentina S.A. announces consolidated results for the first half ("1H22") and second quarter of fiscal year 2022 ("2Q22") **
BUENOS AIRES, Aug. 9, 2022 /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 June 30, 2018 inclusive. Accordingly, the reported figures corresponding to 1H22 include the effects of the adoption of inflationary accounting in accordance with IAS 29. Finally, comments related to variations of results of 1H22 and vs. 1H21 mentioned in this press release correspond to "figures restated by inflation" or "constant".
* (in constant measuring unit – includes $6.526 million corresponding to additions of rights of use assets as of June 30, 2022)
Telecom Argentina S.A. ('Telecom Argentina') - (NYSE: TEO; BYMA: TECO2), announced today a net income of P$31,879 million for the period ended June 30, 2022 (+P$34,621 million vs. 1H21). The net income attributable to the controlling company was P$31,260 million (+P$34,548 million vs. 1H21).
Comparative figures for the previous fiscal year have been restated so that the resulting information is presented in the current measurement unit as of June 30, 2022.
The following table shows the evolution of the consumer price index (National CPI - according to INDEC's official statistics) as of June 30, 2022 and as of December 31, 2021 and 2020, which were used to restate the figures in constant currency:
During the 1H22, Consolidated Revenues amounted to P$264,577 million, from which Service Revenues totaled P$247,527 million.
Consolidated Operating Revenues
As of June 30, 2022, total mobile customers in Argentina and Paraguay amounted to 22.3 million. In 1H22, total mobile services revenues represented P$103,718 million (-P$5,944 million vs. 1H21).
Mobile Services in Argentina
As of June 30, 2022, total mobile subscribers amounted to more than 20.1 million (+0.8 million vs. 1H21). Postpaid clients represented 42% of our subscriber base.
In 1H22, mobile service revenues in Argentina amounted to P$94,957 million (-2.7% vs 1H21). Mobile internet revenues were 87% of mobile service revenues. The average monthly revenue per user ('ARPU' – restated in constant currency as of June 30, 2022) amounted to P$779.2 during 1H22 (-9.5% vs. 1H21). The effect generated by the inflation adjustment as of June 30, 2022 (included in the ARPU) amounted to P$95.6 and P$379.9, for 1H22 and 1H21, respectively. Mobile churn was 2.4% (vs. 1.5% in 1H21).
The Company continued to enhance its customers' mobile Internet experience through the deployment of the 4G and 4G+ network throughout the country, reaching more than 14.6 million customers with 4G devices. During 1H22, the traffic carried by 4G technologies represented 95% of total traffic.
Personal in Paraguay ('Núcleo')
As of June 30, 2022, Núcleo's subscriber base reached 2.3 million clients. Prepaid and postpaid customers represented 81% and 19%, respectively.
Núcleo´s mobile service revenues during 1H22, amounted to P$8,761 million (-27.1% vs. 1H21), 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 were P$48,849 million in 1H22 (-P$9,635 million vs. 1H21). Cable TV subscribers totaled approximately 3.5 million (-27 thousand vs. 1H21). The monthly Cable TV ARPU (restated in constant currency as of June 30, 2022) reached P$2,240.0 during 1H22 (vs P$2,365.1 in 1H21). The effect generated by the restatement in terms of the measuring unit as of June 30, 2022 included in ARPU amounts to P$281.7 and P$1,046.6, for the 1H22 and 1H21, respectively. The average monthly churn during 1H22 and 1H21 was 1.3% and 1.0%, respectively.
Flow continued to strengthen its content offering by incorporating new products in music, national and international films, and gaming.
Additionally, we launched our new ISDB-T solution for analog pay TV customers, which allows the upgrade of their classic cable connection to digital without the need for a decoder box.
Fixed Telephony and Data Services
Revenues generated by fixed telephony and data services reached P$33,404 million in 1H22 (-P$9,041 million vs. 1H21).
The monthly fixed voice ARPU (restated in constant currency as of June 30, 2022) reached P$1,015.1 (vs. P$1,076.7 in 1H21). The effect generated by the restatement in terms of the measuring unit as of June 30, 2022, included in the ARPU amounted to P$131.7 and P$477.5 for the 1H22 and 1H21, respectively.
Regarding the B2B business, the corporate segment launched a new comprehensive communication campaign for its vertical Cloud during the quarter, focusing on the evolution and growth of the customers' e-commerce, logistics and stock platforms, among others.
Internet services revenues totaled P$59,308 million during 1H22 (-P$2,243 million vs. 1H21). As of June 30, 2022, total broadband accesses reached approximately 4.2 million (-6 thousand vs. 1H21).
Additionally, broadband ARPU (restated in constant currency as of June 30, 2022) amounted to P$2,240.0 per month in 1H22 (vs. P$2,365.1 in 1H21). The effect generated by the restatement in terms of the measuring unit as of June 30, 2022, included in the ARPU amounted to approximately P$281.7 and P$1,046.6, for the 1H22 and 1H21, respectively.
The average monthly churn rate for the 1H22 was 1.5% (unchanged compared to 1H21). As of 1H22, 77% of our total customer base had a broadband service of 50Mb or higher (this percentage was 63% as of 1H21).
Revenues from equipment sales
Equipment revenues amounted to P$17,050 million (-P$4,458 million vs. 1H21). Said decrease was mainly due to a lower volume of handsets sold (-17%), which have increased their average price.
Consolidated Operating Costs
Consolidated Operating Costs (including D&A and impairment of fixed assets) totaled P$273,112 million in 1H22 (-P$13,388 million or -4.7% vs. 1H21). Excluding D&A and impairment of fixed assets, operating costs experienced a reduction of 5.7%.
Our costs breakdown was as follows:
- Employees benefits and severance payments: P$60,519 million (+4.8% vs. 1H21). Total employees amounted to 22,385 as of 1H22.
- Interconnection and transmission costs (including roaming, international settlement charges and lease of circuits) were P$8,118 million (-25.5% vs. 1H21). This saving was mainly due to a new business dynamic that optimizes our links and sites which has offset the increase in prices of those services which are denominated in US dollars.
- Fees for services, maintenance, materials and supplies: P$30,711 million (-8.7% vs. 1H21). This decrease is mainly explained by lower maintenance and material costs of $2,717 million vs. 1H21.
- Taxes and fees paid to regulatory authorities: P$20,370 million (-10.9% vs. 1H21). This decrease was mainly due to lower sales during 1H22 vs 1H21. These costs represent 7.7% of total revenues as of 1H22 and 1H21.
- Commissions and advertising (commissions paid to agents, collection fees and other commissions): P$14,765 million (-10.4% vs. 1H21). Said decrease was mainly explained by a reduction in advertising costs.
- Cost of handsets sold: P$12,456 million (-17.6% vs. 1H21). These costs decreased mainly due to lower volume of handsets sold (-17% vs. 1H21), notwithstanding the increase in purchase prices.
- Programming and content costs: P$12,456 million (-18.7% vs. 1H21). Said reduction was mainly generated by commercial efficiencies, which were partially offset by price increases in almost all of our broadcasting signals.
- Other Costs totaled P$20,073 million (+14.9% vs. 1H21). Bad debt expenses reached P$13,619 million (+10.1% vs. 1H21).
Our bad debt ratio was 2.4% as of June 30, 2022 (vs. 1.7% in 1H21). The increase was mainly explained by the harder economic situation in Argentina, which has a direct impact on our clients´ incomes. During 2Q22, the bad debt ratio has improved, decreasing to 2.1%.
Other operating costs (including charges for lawsuits and other contingencies, energy and other public services, insurance, rents and internet capacity) totaled P$13,619 million (+10.1% vs. 1H21). This increase was mainly related to higher lawsuits and other contingency charges, partially offset by lower energy costs, rental charges, and internet capacity.
- Depreciation, amortization and impairment of fixed assets amounted to P$89,381 million (-2.6% vs. 1H21). This charge includes the impact of the amortization of assets incorporated after June 30, 2021, partially offset by the effect of the assets that were completely amortized after such date.
Net Financial Results
Net Financial Results (including Financial Expenses on Debt and Other Financial Results) were P$38,691 million in 1H22 (vs. P$30,485 million in 1H21), mainly due to:
Our income tax includes the following effects:
(i) the tax to be paid according to local tax legislation,
Our income tax amounted to a positive amount of P$1,579 million in 1H22 (vs. a loss of P$42,114 million in 1H21). The tax paid according to item (i) was P$18,772 million in 1H22 (vs. P$8,778 million in 1H21) and the income tax effect related to the application of the deferred tax method described in item (ii) was a gain of P$20,351 million in 1H22 (vs. a loss of P$33,326 million in 1H21).
Consolidated Net Financial Debt
As of June 30, 2022, our net financial debt (cash, cash equivalents plus financial investments and financial NDF & interest rate swaps minus loans) amounted to P$312,116 million, increasing P$1,628 million (+0.5%) when compared to the consolidated net financial debt as of June 30, 2021 adjusted by inflation.
Investments in PP&E, intangible assets and rights of use assets
During the 1H22, the Company invested (including rights of use assets) P$45,219 million (-33.9% vs. 1H21). Said investments represented 17.1% of consolidated revenues in 1H22, and were focused on:
Additionally, during the 2Q22 we announced new investments in the city of Mendoza, and in other locations in the Province of Buenos Aires such as Junín and General Villegas, which include the deployment of fiber optics and new mobile sites.
Relevant financial events of the period
Acquisition of Negocios y Servicios S.A.
On June 1, 2022, Telecom Argentina has acquired all of the shares representing the capital of the company Negocios y Servicios S.A. ("Negocios y Servicios"), a company incorporated in the Province of Mendoza, which provides internet services in the cities of San Martín, Junín, Rivadavia and Santa Rosa of said province.
Reserve withdrawal and Dividend Distribution
On June 2, 2022, in exercise of the authority delegated by the General Ordinary and Extraordinary Shareholders' Meeting held on April 27, 2022, the Board of Directors of Telecom Argentina resolved:
1. To partially withdraw the "Voluntary reserve to maintain the capital investments level and the Company's current level of solvency" in the amount of P$31,633,589,053.
2. To distribute dividends in kind as follows: (i) Global Bonds of the Argentine Republic amortizable in US Dollars maturing on 07/09/2030 (the "2030 Global Bonds"), for a nominal value of US$411,145,986, and (ii) Global Bonds of the Argentine Republic amortizable in US Dollars maturing on 07/09/2035 (the "2035 Global Bonds") for a nominal value of US$103,854,014, at a ratio of US$0.190903225 2030 Global Bonds and US$0.048221476 2035 Global Bonds per share of the Company.
Export credit facility with Export Development Canada (EDC)
On June 14, 2022, the Company received a disbursement of US$17 million, equivalent to P$2,090 million, which will mature in December 2026.
Relevant events after June 30, 2022
International Finance Corporation Loan
On July 15, 2022, under the loan agreement entered into between the Company and the International Finance Corporation ("IFC") on June 28, 2022, the Company received from IFC a disbursement amounting to US$184,500,000, which amortization schedule will end in August 2029.
Term Loan Cancellation
On July 18, 2022, in connection with the loan agreement entered into October 8, 2018 between the Company and a syndicate of foreign banks whose administrative agent is Citibank N.A. (the "Loan"), the Company has cancelled the total amount of the principal remaining under the Loan for US$140,000,000 plus accrued and unpaid interest.
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 June 30, 2022, Telecom Argentina owns 2,153,688,011 issued and outstanding shares.
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SOURCE Telecom Argentina S.A.