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Telecom Argentina S.A. Announces Consolidated Results For The Six Month Period ("1H21") And Second Quarter Of Fiscal Year 2021 ("2Q21")**BUENOS AIRES, Argentina, Aug. 6, 2021 /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 1H21 include the effects of the adoption of inflationary accounting in accordance with IAS 29. Finally, comments related to variations of results of 1H21 and vs. 1H20 mentioned in this press release correspond to "figures restated by inflation" or "constant". Moreover, Table 3 contemplates information broken down by segment for periods ended as of June 30 of 2021 and 2020 as analyzed by the Executive Committee and the CEO, who receive periodically the financial information of Telecom and its subsidiaries (in historical values). For further details, please refer to the titles of the financial tables beginning from page 11.
**Unaudited non financial data
* (in constant measuring unit.) Telecom Argentina S.A. ('Telecom Argentina') - (NYSE: TEO; BASE: TECO2), announced today a net loss of P$1,672 million for the period ended June 30, 2021. The net loss attributable to the controlling company was P$2,005 million. It is worth mentioning that the comparative figures for the previous fiscal year have been restated so that the resulting comparative information is presented in terms of the current measurement unit as of June 30, 2021. The following table shows the evolution of the consumer price index (National CPI) for the last two fiscal years and as of June 30, 2020 and 2021 according to the official statistics (INDEC), which were used to restate the figures in constant currency:
During 1H21, Consolidated Revenues amounted to P$180,018 million, from which Service Revenues totaled P$167,085 million. Consolidated Operating Revenues Mobile Services As of June 30, 2021, mobile clients amounted to 21.4 million in Argentina and Paraguay. In 1H21, mobile services revenues represented P$67,633 million (-P$6,615 million vs. 1H20). Mobile Services in Argentina As of June 30, 2021, Personal subscribers reached more than 19.3 million in Argentina (+460 thousand vs. 1Q21). Postpaid clients represented 42% of our subscriber base. In 1H21, mobile service revenues in Argentina amounted to P$67,633 million (-8.9% vs 1H20). Mobile internet revenues reached 73% of mobile service revenues. The average monthly revenue per user ('ARPU' – restated in constant currency as of June 30, 2021) amounted to P$525.2 during 1H21 (-6.9% vs. 1H20). The effect generated by the inflation adjustment as of June 30, 2021 (included in the ARPU) amounted to P$43.9 and P$207.3, for the 1H21 and 1H20, respectively. Mobile churn was 0.7% (vs. 2.1% in 1H20). Commercial Initiatives During the second quarter 2021, the Company launched a new WiFi Pass service through our Personal and Fibertel brands, a connectivity proposal which allows Personal customers who also have our Fibertel service to share internet gigas free of charge through their phones to any other device without consuming data from their original plan. Personal in Paraguay ('Núcleo') As of June 30, 2021, Núcleo's subscriber base reached almost 2.2 million clients. Prepaid and postpaid customers represented 83% and 17%, respectively. Núcleo generated mobile service revenues equivalent to P$7,788 million during 1H21 (-17.9% vs. 1H20), mainly due to a decrease in the number of clients as well as a slight decrease in ARPU, which was partially offset by the appreciation of the Guaraní against the Argentine peso. Cable TV Services Cable TV service revenues reached P$35,665 million in 1H21 (-P$3,923 million vs. 1H20). Cable TV subscribers totaled more than 3.5 million (+20.2 thousand vs.1Q21). Moreover, the monthly Cable TV ARPU (restated in constant currency as of June 30, 2021) reached P$1,586.9 during 1H21 (vs P$1,885.5 in 1H20). The effect generated by the restatement in terms of the measuring unit as of June 30, 2021 included in the ARPU amounts to P$93.1 and P$690.5, for the 1H21 and 1H20, respectively. Additionally, the average monthly churn during 1H21 and 1H20 was 1.0%. During the second quarter, the Company continued its plan to consolidate its entertainment platform, developing new content and providing customers a top tier cross-platform experience. The Company continued to consolidate Esports as a trend to develop the local consumption of entertainment. In April, the Torneo Apertura of the Liga Master and the Unity League Flow was broadcasted live. Fixed Telephony and Data Services Revenues generated by fixed telephony and data reached P$25,884 million in 1H21 (-P$4,296 million vs. 1H20). As a result, the average monthly revenue billed per user ('ARBU' - restated in constant currency as of June 30, 2021) of fixed telephony reached P$656.6 (vs. P$780.1 in 1H20). The effect generated by the restatement in terms of the measuring unit as of June 30, 2021, included in the ARBU amounted to P$57.4 and P$286.5 for the 1HQ21 and 1H20, respectively. Regarding the corporate segment, Telecom FiberCorp, continued to develop different initiatives to support companies in their productivity and growth. In June, a new edition of "Telecom SummIT 2021" was launched to tap the corporate market helping companies to evaluate new ways of working. Internet Services Internet services revenues totaled P$37,535 million during 1H21 (-P$5,110 million vs. 1H20). As of June 30, 2021, total broadband accesses reached approximately 4.2 million (+2 thousand vs. 1Q21). Additionally, broadband ARPU (restated in constant currency as of June 30, 2021) amounted to P$1,442.3 per month in 1H21 (vs. P$1,743.7 in 1H20). The effect generated by the restatement in terms of the measuring unit as of June 30, 2021, included in the ARPU amounted to approximately P$123.9 and P$638.4, for the 1H21 and 1H20, respectively. The average monthly churn rate for the 2Q21 was 1.5% (vs. 1.3% in 1H20). It is worth noting that as of 1H21 76.0% of our total customer base had a broadband service of 20Mb or higher (increasing from 67.5% as of 1H20). Revenues from equipment sales Equipment revenues amounted to P$12,933 million (+P$3,170 million vs. 1H20). Said increase was mainly due to an increase in the number of units sold (+42%), and by the increase in the average prices of handsets. Consolidated Operating Costs Consolidated Operating Costs (including D&A and impairment of fixed assets) totaled P$174,713 million in 1H21 (-P$521 million or -0.3% vs. 1H20). Excluding D&A and impairment of fixed assets, operating costs showed a reduction of 5.1%. The cost breakdown was as follows:
Other operating costs (including charges for lawsuits and other contingencies, energy and other public services, insurance, rents and internet capacity) totaled P$7,541 million (+3.2% vs. 1H20).
Net Financial Results Net Financial Results (including Financial Expenses on Debt and Other Financial Results, net) generated a gain of P$18,590 million in 1H21 (vs. a loss of P$14,201 million in 1H20). This variation was mainly due to:
Consolidated Net Financial Debt As of June 30, 2021, our net financial debt position (cash, cash equivalents plus financial investments and financial NDF minus loans) totaled P$189,342 million, decreasing P$29,981 million or -13.7% when compared to the consolidated net financial debt position as of December 31, 2020, which totaled P$219,323 million (restated in terms of the measuring unit as of June 30, 2021). Investments in PP&E, intangible assets and rights of use assets During 1H21, the Company invested P$41,705 million (+22.0% vs. 1H20). These investments represented 23.2% of consolidated revenues in 1H21, and were focused on:
Other Initiatives Telecom continues to encourage a more digital life in order to promote access and development of digital skills and competencies. The Company also continued with its developing programs such as "digit@lers" and "digit@lers girls", offering free programming and digital workshops. During the second quarter, Telecom´s 2020 Integrated Report was finished and included in our investors web. Relevant Matters Finnvera: On May 14, 2021, the company closed a credit facility guaranteed by Finnvera plc (the official export credit agency of Finland) for up to US$30mm, being: (i) JPMorgan Chase Bank, N.A. the initial lender, mandated lead arranger and residual risk guarantor, (ii) JPMorgan Chase Bank, N.A., London Branch, the facility agent, and (iii) JPMorgan Chase Bank, N.A., Sucursal Buenos Aires, the onshore custody agent. Proceeds of the loan will be used to finance up to 85% of imports of certain goods and services, certain goods and services originated in Argentina and the payment of the applicable premium to Finnvera. On July 27, 2021 Telecom received a disbursement of US$5.1 million (US$0.7 million was discounted corresponding to the premium) Issuance of Class 9 local bond Issuance Date: June 7, 2021. Amount Issued: US$91.8 million to be paid in Argentine pesos at the applicable exchange rate. Maturity Date: June 7, 2024. Amortization: Bullet. Interest Rate: 2.75% p.a. Interest Payments: Quarterly. Repayment of 2021 Class A notes On June 15, 2021, the Company repaid the outstanding amount of its 2021 Class A Notes. Total consideration was US$106.6mm (US$103.0 million in principal and US$3.4 million in interests). Resolution of the Chamber II of the Federal Court of Appeals on Administrative Litigation Matters On April 30, 2021 the Federal Court of Appeals on Administrative Litigation Matters resolved to grant the appeal filed by the Company, revoked the decision of the original instance, and, consequently, admitted the requested precautionary measure, ordering the suspension of the effects of sections 1, 2, 3, 4, 5 and 6 of Decree 690/20 and its resolutions. Consequently, the non-applicability to the Company for a period of six months. In order to reach said decision, the Court considered, among other reasons, that the "configuration of circumstances prima facie lead to serious and founded questioning of Decree 690/2020's reasonability standard and legitimacy and of ENACOM's resolutions adopted as a consequence thereof, due to the direct adverse effects they have on Telecom Argentina's property rights, which derive from ICT services provision under a free competition system as ruled, authorized and granted (depending on the case), by the National State itself." The National State and ENACOM presented an extraordinary appeal against the resolution of the Federal Court of Appeals on Administrative Litigation Matters, which on June 18, 2021 was rejected by the Court. On June 29, 2021, the National State and the ENACOM filed a complaint before the Supreme Court of Justice, which as of the date of this Press Release has not yet been treated. Other Relevant Matters Call for an Extraordinary General Shareholders' Meeting for August 11, 2021 On July 13, 2021, the Board of Directors called for an Extraordinary General Shareholders' Meeting to be held on August 11, 2021 in order to consider the "Total or partial withdrawal of the "Facultative Reserve to maintain the capital investments level and the current level of solvency of the Company". Distribution of cash dividends or dividends in kind or in any combination of both options according to the Company´s current situation. Delegation of powers to the Board of Directors." Repayment of 2021 Class A notes On July 31, 2021, the Company repaid the outstanding amount of its Class 4 Notes. Total consideration was P$1,200 million. 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, 2021, Telecom Argentina had 2,153,688,011 shares issued and outstanding. For more information, please contact Investor Relations:
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