TEO

Business Context and Reporting Period

Company: Telecom Argentina S.A. (NYSE: TEO)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Nine months ended September 30, 2025 (9M25) and Third Quarter 2025 (3Q25).
Key Context: Results include the consolidation of Telefónica Móviles Argentina ("TMA") for seven months (March 1 to September 30, 2025). Financial figures are restated for inflation in accordance with IAS 29. Argentina's inflation for the period was 31.8%, while the Argentine peso depreciated 33.7% against the US dollar.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Consolidated revenue surged 50.7% year-over-year, primarily driven by the inclusion of TMA revenues. Excluding TMA, Telecom's service revenues grew 4.1% (nominal) but declined 9.1% in real terms compared to the prior year.
• Profitability Shift: The company reported a consolidated net loss of P$272.5 billion, a reversal from a net income of P$1.25 billion in 9M24. This was caused by a significant loss from foreign exchange differences (P$2.6 billion) due to the peso depreciating faster than inflation (33.7% vs. 22.0%).
• Margin Expansion: Despite the net loss, operating efficiency improved. The EBITDA margin expanded to 30.5% (up 1.7 percentage points). Excluding TMA, Telecom's margin reached 33.0% (up 4.2 percentage points).
• Debt Increase: Net financial debt rose 44.3% in constant currency terms, largely attributed to financing obtained for the TMA acquisition.
• Customer Base:
  • Mobile: Telecom (excl. TMA) mobile accesses fell 5.0% to 20.3 million due to disconnections of inactive lines. TMA mobile accesses grew 1.6% to 19.1 million.
  • Fixed Broadband: Telecom (excl. TMA) grew 2.5% to 4.1 million; TMA grew 6.0% to 1.6 million.
  • Pay TV: Telecom (excl. TMA) grew 1.4% to 3.2 million; TMA declined 6.9% to 0.4 million.

Guidance, Outlook, and Risks

• Management Commentary: Management highlighted that mobile services now account for 51.4% of service revenues. ARPU for Telecom (excl. TMA) increased 13.6% in real terms, while TMA's ARPU grew 5.4% in real terms.
• Investment Focus: CAPEX is focused on 4G/5G expansion, fiber optic connectivity, and network modernization. 4G coverage reached 98% of the population.
• Corporate Actions:
  • Secured a loan agreement with Bank of China (RMB 1.03 billion total disbursements noted).
  • Board changes: Resignation of Director Julián Ackerman; appointment of Diego Miguel Bianchi.
• Risks and Contingencies:
  • Macroeconomic Volatility: High inflation and currency devaluation in Argentina create significant exchange rate risks and impact financial results.
  • Regulatory Environment: Risks related to government policies, potential nationalization, and regulatory changes in Argentina, Paraguay, and Uruguay.
  • Competition: Intense competition in telecommunications and cable markets.
  • Forward-Looking Statements: The filing includes standard disclaimers regarding uncertainties in achieving synergies from the TMA acquisition and the Cablevisión merger.

Investor Verification Checklist

• FX Impact: Verify the sensitivity of future earnings to the Argentine peso's exchange rate against the US dollar, given the P$2.6 billion FX loss in 9M25.
• TMA Integration: Assess the timeline and cost of fully integrating TMA operations and realizing projected synergies.
• Debt Servicing: Review the terms of the new Bank of China loan and the company's ability to service increased debt levels in a high-interest environment.
• Real Revenue Growth: Distinguish between nominal revenue growth (driven by inflation and consolidation) and real organic growth, noting the 9.1% real decline in Telecom's core business excluding TMA.
• Regulatory Changes: Monitor new government policies in Argentina that could affect pricing, content costs, or operational restrictions.