Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telecom Argentina SA (TEO, Financial) achieved an EBITDA margin of 29.7% for the first six months of 2024, indicating effective cost management and pricing strategy.
- The company reported a net income profit of ARS859 billion, largely due to real exchange differences gains.
- Mobile subscriber base grew by over 3% year over year, with data usage per user increasing by 18%.
- Telecom Argentina SA (TEO) successfully returned to international debt capital markets with a $500 million notes issuance due 2031, receiving strong investor support.
- The fintech business, Personal Pay, has grown significantly, reaching almost 3 million onboarded clients and becoming the second most important player in terms of clients' account balances.
Negative Points
- Revenues measured in constant pesos decreased by 13% year over year, despite a nominal increase of 229%.
- The company faced a challenging macroeconomic environment with high inflation rates, impacting financial performance.
- Fixed voice segment continued to see a reduction in accesses, particularly in the traditional fixed copper network.
- Telecom Argentina SA (TEO) had to perform retention actions such as discounts and promotions to maintain its subscriber base amidst price adjustments.
- The company's net debt-to-EBITDA ratio increased temporarily due to the December 2023 devaluation, although it has since stabilized.
Q & A Highlights
Q: Can you elaborate on the impact of inflation and currency fluctuations on your financial results?
A: Gabriel Blasi, Chief Financial Officer, explained that the high inflation and stable FX during the first half of 2024 led to a net income of ARS859 million. The real appreciation of the peso resulted in positive exchange differences, mainly due to financial debt denominated in foreign currency. This helped improve the company's financial results despite the challenging economic environment.
Q: How has Telecom Argentina managed to maintain its EBITDA margin in such a volatile economic climate?
A: Gabriel Blasi highlighted that effective cost management and a strategic pricing approach were key to maintaining an EBITDA margin of 29.7% for the first half of 2024. The company focused on controlling labor costs, reducing commissions and advertising expenses, and managing handset costs, which contributed to the margin expansion.
Q: What are the company's plans for 5G deployment and network expansion?
A: The company is advancing in its 5G rollout, with over 100 5G sites operational in the 3.5 GHz band and plans to reach 200 sites by the end of 2024. The focus is on adding 5G equipment to existing sites and targeting major cities in Argentina for the initial deployment phase.
Q: Could you provide more details on the recent debt issuance and its implications for Telecom Argentina's financial strategy?
A: Gabriel Blasi discussed the successful issuance of $500 million in notes due 2031, which was well-received by investors, with offers totaling over $1.3 billion. The proceeds will be used to repay certain loans and manage existing debt, improving the maturity profile and maintaining a stable financial position.
Q: How is the fintech segment, particularly Personal Pay, performing in the current market?
A: Luis F Rial Ubago noted that Personal Pay has grown significantly, with nearly 3 million onboarded clients and a strong market position. The digital wallet's total payment volume and number of transactions have multiplied substantially compared to the previous year, positioning it as a key player in the fintech space.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
