Business Context and Reporting Period
Company: Telecom Argentina S.A. (NYSE: TEO)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First half (1H25) and second quarter (2Q25) ended June 30, 2025.
Key Context: Results include the consolidation of Telefónica Móviles Argentina ("TMA") for the four-month period from March 1 to June 30, 2025. Financial figures are restated for inflation in accordance with IAS 29, reflecting a cumulative inflation rate of 39.4% through June 2025.
Key Financial Metrics
| Metric | 1H25 Value (P$ Millions) | Change vs. 1H24 |
|---|---|---|
| Consolidated Revenues | 3,357,004 | +44.2% |
| Service Revenues | 3,160,986 | Driven by TMA consolidation |
| Operating Income (EBITDA) | 1,007,153 | +45.9% |
| EBITDA Margin | 30.0% | +0.3 p.p. |
| Net Income (Loss) | (75,554) | Loss vs. Profit of 1,197,930 in 1H24 |
| Net Financial Debt | 4,029,971 | +38.2% (constant currency) |
| CAPEX (excl. rights of use) | 481,189 | +53.7% |
Segment Performance (Excluding TMA):
- Telecom (excl. TMA) Service Revenues: +3.8% vs. 1H24.
- Telecom (excl. TMA) EBITDA Margin: 32.5% (+2.8 p.p. vs. 1H24).
- Mobile Subscribers (excl. TMA): 20.9 million (-1.3%); Postpaid grew +1.1%.
- Fixed Broadband (excl. TMA): 4.1 million (+1.5%).
- Pay TV (excl. TMA): 3.2 million (+2.3%).
Material Changes vs. Prior Period
- Net Loss vs. Profit: The company reported a net loss of P$75,554 million in 1H25 compared to a profit of P$1,197,930 million in 1H24. This reversal is primarily due to a significant loss in net financial results (P$215,364 million loss vs. P$1,792,664 million gain in 1H24), driven by foreign exchange differences and higher interest expenses, partially offset by stronger operating results.
- TMA Consolidation: The inclusion of TMA for four months significantly boosted consolidated revenues (+44.2%) and EBITDA (+45.9%). TMA contributed P$572,126 million to mobile revenues and P$131,955 million to internet revenues.
- Debt Increase: Net financial debt increased by 38.2% in constant currency terms, mainly driven by financing obtained for the TMA acquisition.
- Customer Base: While total mobile accesses for Telecom (excl. TMA) declined 1.3% due to prepaid disconnection policy changes, the postpaid base grew 1.1%. TMA mobile accesses grew 2.5%.
Outlook, Risks, and Unusual Items
- Regulatory Matters (TMA Acquisition): On June 19, 2025, the Secretary of Industry and Commerce issued a preliminary objection report regarding the TMA acquisition. The company disagrees with the preliminary conclusions, submitted a response on August 5, 2025, and expressed willingness to propose remedies. The company estimates proposed remedies would not significantly adversely affect its business.
- Financial Events:
- Notes Issuance: Successfully issued US$800 million in Class 24 Notes in May 2025 (9.25% coupon). In July 2025, tapped the issuance for an additional US$200 million at a lower yield of 8.80%.
- Debt Repayment: Proceeds from the Class 24 Notes were used to prepay US$784 million in principal under syndicated and bilateral loans.
- Tax Payment: TMA paid P$83.07 billion in taxes and interest related to the acquisition on May 15, 2025.
- Investment Focus: CAPEX focused on 4G/5G expansion, fiber optic connectivity, and network modernization. 4G coverage reached 98% of the population.
- Risks: Significant exposure to inflation, exchange rate volatility (USD/Peso), and regulatory changes in Argentina. The company notes that forward-looking statements are subject to uncertainties regarding political conditions and economic policies.
Investor Verification Checklist
- Net Loss Drivers: Verify the sustainability of the net loss given the one-time nature of the TMA acquisition financing costs and FX impacts versus the underlying operating margin improvement.
- Regulatory Approval: Monitor the status of the CNDC preliminary objection regarding the TMA merger and any potential divestiture requirements.
- Debt Servicing: Assess the impact of the increased net financial debt (P$4.03 trillion) and the ability to service US$1 billion in new international notes amidst local currency volatility.
- Prepaid Churn: Evaluate the long-term impact of the July 2024 disconnection policy on the prepaid subscriber base, which drove a 2.8% decline in that segment.
- Inflation Accounting: Confirm understanding of IAS 29 restatement effects, as nominal growth figures (e.g., +44.2% revenue) are heavily influenced by inflation and consolidation rather than pure volume growth.