TEO

Business Context and Reporting Period

Company: Telecom Argentina S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Unaudited condensed consolidated financial statements for the three and six-month periods ended June 30, 2026.
Filing Date: August 10, 2026
Accounting Basis: IFRS, restated for hyperinflation (IAS 29) in current Argentine pesos as of June 30, 2026.

Key Financial Metrics (Six Months Ended June 30, 2026)

Note: Comparisons are impacted by the full consolidation of TMA in 1H26 versus partial consolidation in 1H25, and significant inflation restatement effects.

Material Changes vs. Prior Period

• Profitability Surge: The Company reported a net income of ARS 869 billion in 1H26, reversing a net loss of ARS 101 billion in 1H25. This was driven by a ARS 439 billion increase in operating income and a ARS 902 billion swing in net financial results (from loss to gain).
• Financial Results: Net financial results improved significantly due to favorable foreign exchange differences (ARS 732 billion gain vs. ARS 123 billion loss in prior period) and higher RECPAM (inflation adjustment) gains.
• Segment Performance:
  • Personal Network: Revenues increased 2.7% to ARS 3.1 trillion; Adjusted EBITDA rose 17.5%.
  • TMA Network: Revenues increased 45.4% to ARS 1.87 trillion (full period consolidation effect); Adjusted EBITDA rose 86.2%.
  • Other Segments: Adjusted EBITDA increased 115.5% primarily due to the loss of control of Micro Sistemas (now a joint venture), removing associated costs.
• Debt Reduction: Total borrowings decreased by ARS 749 billion, aided by the issuance of new Notes (Series 27, 28, 29, 30) used to prepay higher-cost loans and redeem maturing notes.

Guidance, Outlook, Risks, and Unusual Items

• Regulatory Risks (TMA Acquisition): The acquisition of TMA is subject to a conditional antitrust resolution by the ANC. The Company must divest a minimum of 6 million mobile customers and 211,400 residential internet portfolios within 18-24 months. No impairment was recognized as of June 30, 2026, but the ultimate financial effect remains uncertain.
• Strategic Shifts:
  • Micro Sistemas: Lost control in January 2026; now accounted for as a joint venture following a strategic alliance with Banco Macro. This resulted in a one-time gain of ARS 48.7 billion.
  • Brand Unification: Completed unification under the "Personal" brand to streamline the digital ecosystem.
• Capital Expenditures: Total CAPEX (PP&E, Intangibles, and Right of Use) for 1H26 was ARS 1.085 trillion, focused on 5G expansion, fiber deployment, and network modernization.
• Liquidity: The Company maintains a negative working capital position typical of capital-intensive industries, relying on spontaneous financing from suppliers and access to capital markets. It remains in compliance with all loan covenants.

Key Facts for Investor Verification

• Divestiture Timeline: Verify the progress of the ANC-mandated divestiture of TMA assets (6M mobile customers) and the identification of potential purchasers.
• Inflation Restatement Impact: Confirm the sensitivity of financial results to the Argentine CPI and exchange rate fluctuations, which significantly influenced the reported gains.
• Micro Sistemas Transition: Review the ongoing performance of Micro Sistemas as a joint venture and the impact of the Banco Macro alliance on future fintech revenues.
• Debt Maturity Profile: Assess the refinancing strategy for upcoming maturities, given the high level of foreign currency-denominated debt.
• Customer Churn: Monitor mobile and internet churn rates, particularly in the Personal Network segment where customer base declined slightly in 1H26.