Telecom Argentina SA Q3 FY2020 earnings call

• Refinanced and reduced debt, improving capital structure with 2021 debt maturities reduced to P$150 million. • Reduced OpEx and improved collections, with 67% of clients paying digitally. • Undergoing digital transformation to become a 100% digital company, working on an ecosystem of platforms and implementing DevOps/agile methodologies. • Cut legacy systems, adapted systems for analytics/big data, and has a strong IoT portfolio with Nokia partnership. • IP transformation projects: FUN migration of 1.3 million lines, SWITCH digital channel launched, cloud foundation project for efficiency. • Service revenues totaled over P$197 billion, decreasing 3.6% in real terms; postpaid subscribers at 41% of total customer base. • Flow product had 94 million views, 5 million connected devices, average usage 9.7 hours in Q3 2020.

During the first nine months of 2020, Telecom's revenue totaled P$2.7 billion. Revenues in constant basis decreased 4.6% year-to-year. EBITDA was P$1 billion with a 35.8% EBITDA margin. Mobile subscribers in Argentina were 18.7 million, with postpaid increasing and prepaid decreasing. Broadband and paid TV clients were 4.2 million and 3.6 million respectively. Revenue breakdown as of September 2020: mobile 38%, broadband 21%, pay TV 20%, fixed telephony and data 15%, equipment sales 5%. International operations in Paraguay: subsidiary Núcleo had revenues of 142 million and EBITDA of 62 million in the first nine months of 2020, with browsing services accounting for ~43% of revenues.

• Target CapEx around 17% of revenues, reducing from previous higher levels. • Optimistic about increasing prices in 2021 through negotiations with government to catch up on inflation adjustments. • Expect to maintain a sound EBITDA margin despite challenges.

• Uncertainties from ongoing industry and economic regulations. • Potential changes in demand for products/services. • Impact of general market/economic conditions, legislation, and COVID-19 on operations/financial performance. • Bad debt increase due to COVID-19 lockdown, with non-performing debt levels moving to more normal levels but still a concern.

Q: Would you please share with us an update on potential conversation with the government to be able to raise price for telecom services in 2021?

A: We are in negotiations with the government, optimistic about increasing prices in 2021 but need to discuss rate scheduling.

Q: Assuming the government does not allow you to increase prices, just that the negative impact of your personal structure from inflationary pressure, which alternatives are you considering?

A: Can reduce promotional discounts, be less aggressive in promotions to offset lack of price increases.

Q: What was the impact of the 267 since December on the [indiscernible] business, it is possible to have a better sense of that?

A: Decree led to 30% increase in customers not being eliminated from base, bad debt increased from 2.7% to 3.8%.

Q: Can you please quantify the current magnitude of promotion and discounts and in what -- ARPU would be if 100% of that system promotions are eliminated?

A: Average discount around 30%, can reduce from 30 closer to 20s, but eliminating 100% discounts is unlikely due to competition.