Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net income increased significantly to ARS856 billion from ARS150.5 billion in the first half of 2023.
- EBITDA margin improved to 29.6% compared to 28.3% in the first half of 2023.
- Broadband ARPU increased in real terms for the second quarter in a row.
- Telecom's CapEx deployment has been recognized with the award for the fastest 4G network in Argentina for the fifth year in a row.
- Net debt to adjusted EBITDA coverage ratio improved to 2.2 times, indicating better financial resilience.
Negative Points
- Revenues for the first half of 2024 dropped by 13.3% due to lower service revenues.
- Mobile service participation decreased slightly, driven by lower ARPU in real terms.
- Cable TV ARPU in real terms decreased by 33.2% due to high inflation and commercial discounts.
- Operating costs, excluding cost of equipment and handsets, decreased by 10.9% in real terms, indicating cost management challenges.
- Investment as a percentage of revenues decreased year-over-year, reflecting potential constraints in future growth.
Q & A Highlights
Q: Can you provide more details on the impact of inflation on your financial results?
A: Samantha Olivieri, Head of IR: The high inflation rate has significantly impacted our revenues and costs. Despite price increases, the inflation rate of 271.5% has outpaced our ability to fully pass through these costs to our service prices. This has resulted in lower revenues in constant currency terms, although nominal revenues increased by 247%.
Q: How has the competitive environment affected your mobile service revenues?
A: Samantha Olivieri, Head of IR: The competitive environment has led to a decrease in ARPU in real terms, despite an increase in mobile subscribers. The shift from postpaid to prepaid plans, which have lower ARPU, has also contributed to this decline.
Q: What measures are you taking to manage costs in this inflationary environment?
A: Samantha Olivieri, Head of IR: We have implemented several cost management initiatives, resulting in a 10.9% decrease in operating costs in real terms. This includes efficiencies in salaries, fees for services, and maintenance costs. Our EBITDA margin has improved to 29.1% from 28.3% in the first half of 2023.
Q: Can you elaborate on the performance of your fixed services segment?
A: Samantha Olivieri, Head of IR: Revenues from fixed services, including broadband, cable TV, and fixed telephony, decreased by 5.2% in real terms. However, broadband ARPU increased due to higher internet speeds and effective pricing policies. The customer base for cable TV slightly decreased, but Flow unique customers increased by 10.6%.
Q: What are your plans for CapEx and network expansion?
A: Samantha Olivieri, Head of IR: Our CapEx plan remains flexible, focusing on network performance and coverage. We have been investing in the deployment and upgrading of 5G sites and expanding our fiber-to-the-home network. CapEx as a percentage of revenues was 16.7% in the second quarter of 2024.
Q: How are you managing your debt in the current economic conditions?
A: Samantha Olivieri, Head of IR: We have been accessing the local market for financing needs and reducing cross-border risk. Our net debt to adjusted EBITDA coverage ratio improved to 2.2 times as of June 2024. We have also conducted liability management transactions to extend debt maturities and improve our maturity profile.
Q: What is the outlook for the economic recovery and its impact on your business?
A: Samantha Olivieri, Head of IR: The economic recovery is progressing slower than expected, particularly in wages and private consumption. We are closely monitoring the inflation rate, central bank reserves, and exchange rate dynamics. Our priority is to maintain the balance of public accounts and strengthen the deceleration of inflation.
Q: How has the performance of the agricultural sector influenced your results?
A: Samantha Olivieri, Head of IR: The agricultural sector has shown significant year-on-year increases, which helped cushion the setbacks in other critical sectors like industry and commerce. This sector's performance contributed to a 2.3% increase in the monthly estimator of economic activity in May 2024.
Q: What are the key challenges you foresee in the near term?
A: Samantha Olivieri, Head of IR: The key challenges include managing the high inflation rate, competitive pressures in the mobile segment, and maintaining customer retention amidst price increases. We are focused on cost management and strategic investments to navigate these challenges.
Q: Can you provide an update on your international operations?
A: Samantha Olivieri, Head of IR: Our international operations in Paraguay and Uruguay continue to perform well. Investments have been allocated to network and technology upgrades in these regions, contributing to overall growth and stability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
