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Telecom Argentina S.A. announces consolidated first quarter results for fiscal year 2018 ('1Q18')*

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Telecom Argentina S.A. announces consolidated first quarter results for fiscal year 2018 ('1Q18')*

PR Newswire



BUENOS AIRES, Argentina, May 11, 2018 /PRNewswire/ -- 

Note: The merger between Telecom and Cablevisión was considered an inverse acquisition under IFRS 3 (Business Combinations), with Cablevisión being the surviving entity for accounting purposes. Therefore, for purposes of preparing the consolidated financial statements of Telecom Argentina as of March 31, 2018: i) the comparative figures as of December 31, 2017 and March 31, 2017 correspond to those that arise from the consolidated financial statements of Cablevisión at their respective dates; and ii) the corresponding information for the three-month period ended March 31, 2018, incorporates figures corresponding to Cablevisión, the effect of the application of Telecom Argentina's method of acquisition at its fair value in accordance with IFRS 3 guidelines (see Financial Table No. 3) and the operations of Telecom Argentina as of January 1, 2018. On the other hand, in order to facilitate the understanding and analysis of the earnings evolution by its users, additional tables of the income statements are included, exposing on a pro forma basis, the comparative figures for 1Q17 as if the merger between Telecom and Cablevisión had been effective during that period. The variations of results vs. 1Q17 identified in this press release originate from the comparison with the aforementioned "pro forma" information (see Financial Tables No 6, No 7 and No 9).

  • Consolidated Revenues amounted to P$30,698 million (+27.3% vs. 1Q17); of which Service Revenues amounted to P$28,503 million (+26.6% vs. 1Q17). Considering the breakdown of Service Revenues, Mobile Services amounted to P$10,945 million (+17.0% vs. 1Q17); Internet Services totaled P$7,153 million (+41.8% vs. 1Q17); while Cable TV Services, Fixed Telephony and Data Services amounted to P$6,666 million (+34.3% vs. 1Q17) and P$3,625 million (+26.2% vs. 1Q17), respectively.
  • Mobile subscribers in Argentina totaled 19.5 million in 1Q18, while Cable TV subscribers and Broadband accesses totaled 3.5 million and 4.1 million, respectively.
  • Mobile Internet revenues of Personal in Argentina increased 51.4% vs. 1Q17; reaching 58.5% participation in Service Revenues.
  • Mobile ARPU of Personal in Argentina increased to P$160.8 per month in 1Q18 (+20.5% vs. 1Q17).
  • Broadband ARPU amounted to P$577.6 per month in 1Q18 (+51.6% vs. 1Q17). Monthly churn of each product was approximately 1.5% in 1Q18.
  • Cable TV ARPU increased to P$636.5 per month in 1Q18 (+37.4% vs. 1Q17).
  • Consolidated Operating costs -including Depreciation and Amortization ("D&A") and impairment of PP&E- totaled P$23,572 million (+20.1% vs. 1Q17).
  • Operating Income before D&A amounted to P$11,793 million (+39.1% vs. 1Q17), 38.4% of consolidated revenues.
  • Net Income amounted to P$3,481 million (+17.5% vs. 1Q17). Net Income attributable to the Controlling Company amounted to P$3,460 million (+17.4% vs. 1Q17), influenced by the growth in Operating Income before D&A and partially offset mostly by the impact of FX losses over financial results.
  • Capex amounted to P$6,050 million in 1Q18, equivalent to 19.7% of Consolidated Revenues.
  • Net Financial Debt Position amounted to P$32,181 million in 1Q18.

 







1Q18

1Q17

Δ $

Δ %

Consolidated Revenues (MMP$)

30,698

24,124

6,574

27.3%

Net Income attributable to Controlling Shareholder (MMP$)

3,460

2,946

514

17.4%

Earnings attributable to Controlling Shareholder per Share (P$)

1.6

1.4

0.2


Earnings attributable to Controlling Shareholder per ADR (P$)

8.0

-

1.2


Operating Income before D&A *

38.4%

35.2%



Operating Income *

23.2%

18.6%



Net Income*

11.3%

12.3%



*As a percentage of Consolidated Revenues





 Note: The average of ordinary shares outstanding considered amounted to and 2,153,688,011 as of 1Q18 and 1Q17
*Unaudited non financial data




Telecom Argentina S.A. ('Telecom Argentina') - (NYSE:TEO, BASE: TECO2)), one of Argentina's leading telecommunications companies, announced today a Net Income of P$3,481 million for the three month period ended March 31, 2018, or +17.5% when compared to 1Q17. Net income attributable to the Controlling Company amounted to P$3,460 million (+P$514 million or +17.4% vs. 1Q17).

During 1Q18, Consolidated Revenues increased by 27.3% to P$30,698 million (+P$6,574 million vs. 1Q17), mainly driven by Internet Services, Mobile Services and Cable TV Services. Moreover, Operating Income amounted to P$7,126 million (+P$2,631 million or +58.5% vs. 1Q17).

Consolidated Operating Revenues

Mobile Services

As of March 31, 2018, mobile clients amounted to 21.9 million.

In 1Q18, service revenues represented P$10,945 million (+17.0% vs. 1Q17). The commercial strategy was focused on promoting the consumption of mobile internet services through an updated offer of plans suitable for all market segments. 

Mobile Services in Argentina

As of March 31, 2018, Personal's subscribers in Argentina amounted to 18.9 million, where postpaid clients represented 36% of the subscriber base.

In 1Q18, service revenues of Personal in Argentina (excluding equipment sales) amounted to P$9,515 million (+17.3% vs. 1Q17), with 58.5% corresponding to mobile internet revenues (vs. 45.4% as in 1Q17), as mobile internet revenues amounted to P$5,567 million (+51.4% vs. 1Q17). In addition, equipment sales increased by 45.6% vs. 1Q17, reaching P$2,151 million, equivalent to 18.4% of total revenues of Personal in Argentina.

The average monthly revenue per user ("ARPU") amounted to $160.8 during 1Q18 (+20.5% vs. 1Q17).

As of March 31, 2018, Nextel's subscribers amounted to approximately 0.5 million, where postpaid clients represented 83% of the subscriber base and prepaid clients represented the remaining 17%.

Commercial Initiatives

During 1Q18, the Company continued with its differential offer for its mobile customers, which includes the use of the instant messaging application WhatsApp for free for 30 days even without credit, which enhances the value that this service has for customers' communication.

Likewise, the Company's offering of devices continues evolving with Personal Bipy Adults, and together with the Internet of Things ("IOT"). This release integrates a smart watch with GPS and the ability to make calls and send voice messages to predefined contacts, along with a smartphone application that allows to any responsible guardian to be permanently connected and assist the adult in case it is required. Personal Bipy Adults is part of a series of IOT launches, which began last year with the launch of Personal Bipy for children.

Mobile Services in Paraguay ('Núcleo')  

As of March 31, 2018, Núcleo's subscriber base amounted to approximately 2.4 million clients. Prepaid and postpaid customers represented 83% and 17%, respectively.

Núcleo generated service revenues that amounted to P$937 million during 1Q18 (+49.0% vs. 1Q17). Internet revenues amounted to P$406 million (+42.5% vs. 1Q17) representing 43.3% of 1Q18 service revenues (vs. 45.3% in 1Q17).

Cable TV Services

Cable TV service revenues amounted to P$6,666 million in 1Q18 (+34.3% vs. 1Q17). This increase was mainly explained by an up selling of value added services combined with price modifications. Total Cable TV subscribers totaled almost 3.5 million, while the Cable TV ARPU amounted to P$636.5 during 1Q18, rising +37.4% vs. 1Q17. Moreover, average monthly churn during 1Q18 remained at 1.3%.

During the first months of the year, Cablevisión continued to add exclusive content to its on-demand content grid. Among the most outstanding are: series and documentaries by BBC Worldwide; the 'Parecido' web series, through an agreement with UN3TV; and 'The Handmaid's Tale' entire series at the premiere of the first episode. On the other hand, the Cosquín Rock festival was broadcasted exclusively during the two days.

In addition, Cablevisión Flow, the innovative product that evolved the way of watching television and updated our offer in pay TV business, made the first platform upgrade in March, for both versions of the product (Box and App). The upgrade was focused optimizing the user experience in navigation and simplification, clarity, and accessibility to content. Furthermore, a YouTube widget was added to access from the interface. The second update of the platform will be made in the preview of the Russia 2018 World Cup. Cablevisión Flow subscribers in its Box version amounted to almost 0.8 million as of 1Q18, while Flow App subscribers totaled almost 0.3 million.

Fixed Telephony and Data Services

During 1Q18, revenues generated by fixed telephony and data services amounted to P$3.625 million in 1Q18, +26.2% vs. 1Q17. The increase in fixed telephony services was mainly explained by monthly fee price increases that came into effect for both corporate and residential fixed line customers, and additionally due to the bundled offer of packs that include voice and internet services ('Arnet + Voz'), that aim to achieve higher levels of customer loyalty and churn reduction.

As a result, the average monthly revenue billed per user ("ARBU") amounted to P$198.4 in 1Q18, +47.9% vs. 1Q17.

Meanwhile, Data revenues increase (services mainly offered to Corporate customers, SMEs, Government and to other operators) was mainly driven by FX rate variations that affected those contracts that were adjusted by the $/U$S exchange rate and due to the increase in the number of clients, generated in a context that evidence the growing position of Telecom as an integrated ICT provider.

Additionally, as part of the actions of the corporate business, the Company was present at the 12th edition of Expoagro, presenting innovative solutions for the agricultural sector and offering fixed and mobile connectivity for exhibitors and visitors. Telecom designed a portfolio of products dedicated to provide the agribusiness with telemetry, management and monitoring and meteorology solutions.

Internet Services

Internet services revenues totaled P$7.153 million during 1Q18, +41.8% vs. 1Q17. As of March 31, 2018, total broadband accesses increased to almost 4.1 million (+4.0% vs. 1Q17). Additionally, broadband ARPU amounted to P$577.6 per month in 1Q18 (+51.6% vs. 1Q17). Moreover, the average monthly churn rate for the period was around 1.5% for each product. On the other hand, clients with service of 20Mb or higher currently represent 25% of the total customer base as of 1Q18.

For fixed connectivity and content services, a suitable commercial offer was presented in March 2018, accompanied by a comprehensive campaign that included a 35% discount for 12 months in Cablevisión Flow + Fibertel with 100 megabytes of speed.

Consolidated Operating Costs

Consolidated Operating Costs totaled P$23,572 million in 1Q18, an increase of P$3,943 million, or +20.1% vs. 1Q17 (including D&A and impairment of PP&E). Continuing with the trend observed during the lasts quarters, this overall increase is below inflation levels and moreover Revenue growth, which allowed a significant increase in the Company's Operating Income before D&A and to improve its margin. This was a result of a higher level of efficiency in the cost structure. Higher costs are mainly associated to the effect of higher revenues, a highly competitive environment in the mobile and Internet businesses, the impact of higher direct and indirect labor costs generated by the operations in Argentina, the increase in costs of services contracted with our suppliers, higher programming and content costs due to cost from the incorporation of broadcasting signals of football matches.

The cost breakdown is as follows:

- Employee benefit expenses and severance payments totaled P$5,217 m

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