Telecom Argentina SA Q4 FY2023 earnings call

• EBITDA margin in fiscal year 2023 was 28.1% due to effective cost management and inflation pass-through. - CapEx was approximately $598 million (23% of revenues), focused on FTTH expansion, mobile network expansion, and 5G development. - Mobile subscriber base grew almost 4% year-over-year, with mobile data usage up 11%. - Broadband FTTH accesses growing, stabilizing the subscriber base. - FinTech Personal Pay had over 2 million onboarded clients. - Successfully refinanced all debt maturities in 2023 and improved debt composition.

In the mobile segment, there was a total increase of more than 760,000 subscribers, a 3.8% year-over-year growth, with mobile representing 40% of revenues. The broadband segment saw growth in FTTH accesses, and broadband and pay TV together adapt to almost 40% of revenues. Pay TV's Flow unique customers reached 1.4 million, a 10% year-over-year increase. Fixed telephony had a reduction in accesses, replaced with IP telephony, and equipment sales made up 7.4% of revenues.

• CapEx budget for 2024 is around $500 million, but only $350 million launched so far, monitoring cash, inflation, and FX stability. - Expecting prospective inflation for March and April to go below 20%, which will help in passing through inflation to prices. - Budget for basic maintenance CapEx is $500 million, but being cautious with spending.

• Uncertainties from ongoing economic regulations. - Possible changes in demand for telecom products and services. - Effects of general market and economic conditions. - FX risk due to peso devaluation and its impact on financial figures. - Labor cost negotiations and their impact on margins.

Q: What trends are you seeing so far in the first quarter? And how are your clients taking price increases amid inflation levels? And could you please provide some color on CapEx for 2024?

A: Roberto Nobile mentioned keeping customer base stable, new customers in FTTH, increased promotional prices, expecting inflation to go below 20% in March/April, and CapEx budget around $500 million with $350 million launched so far.

Q: Regarding margin improvements, is there more room to improve margins that way or further improvements will probably come as inflation goes down and you're able to have a recomposition of prices? And clarification on CapEx.

A: Gabriel Blasi said cost cutting has helped, labor cost is a challenge but manageable, and CapEx budget is $500 million with $350 million launched, monitoring cash and FX stability.

Q: How long do you think it will take you to catch up with FX depreciation from an EBITDA standpoint?

A: Gabriel Blasi said it will take at least one to one and a half years to fully outpace inflation and translate into prices, with Roberto Nobile adding on the equation of pricing in dollars considering inflation and devaluation.