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: Fiscal Year 2025 (ended December 31, 2025) and Fourth Quarter 2025.
Key Context: Results include the consolidation of Telefónica Móviles Argentina ("TMA") for ten months (March–December 2025). Financial figures are restated for inflation in accordance with IAS 29, reflecting an annual inflation rate of 31.5% in Argentina for FY25.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Consolidated revenue surged 54.7% year-over-year, primarily driven by the inclusion of TMA revenues. Excluding TMA, Telecom's service revenues grew 4.2% (vs. -6.4% real growth in FY24).
• Profitability Shift: The company reported a net loss of P$145.3 billion, a reversal from a P$1.36 billion profit in FY24. This was caused by significant foreign exchange losses (P$2.79 billion) due to the Argentine peso depreciating 41.0% against the USD while inflation was 31.5%.
• Margin Expansion: Operating Income before D, A & I margin improved to 30.3%. Telecom (excluding TMA) margin reached 33.7%, up 5.5 percentage points from FY24.
• Customer Base:
  • Mobile: Telecom (excl. TMA) mobile accesses decreased 7.8% to 19.9 million due to prepaid line disconnections with no traffic. TMA mobile accesses grew 1.6% to 19.1 million.
  • Fixed Broadband: Telecom (excl. TMA) accesses grew 3.2% to 4.2 million; TMA grew 5.8% to 1.6 million.
  • TV: Telecom (excl. TMA) TV accesses grew 1.4% to 3.3 million; TMA declined 7.9% to 0.4 million.
• Investment: CAPEX nearly doubled (+98.3%) to P$1.49 billion, focused on 5G expansion, FTTH deployment, and network modernization.

Guidance, Outlook, and Risks

• Management Commentary: Management highlighted improved service quality, with Personal recognized by Ookla for the fastest 5G and best fixed network in Argentina. The company consolidated commercial brands under "Personal" (Personal Fibra, Personal Móvil, Personal Flow, Personal Pay).
• Recent Corporate Actions:
  • Issued US$600 million in International Notes Class 27 (8.50% fixed, due 2036) in January 2026.
  • Used proceeds to fully prepay TMA acquisition loans (US$182 million) and redeem Notes Class 1 (US$164 million).
  • Entered a strategic alliance with Banco Macro for Personal Pay, with Banco Macro subscribing to 50% of Micro Sistemas for US$75 million.
  • Completed merger by absorption of TSMA effective January 1, 2026.
• Risks and Contingencies:
  • Macroeconomic Volatility: High inflation and currency devaluation risks remain significant, impacting financial results and debt servicing.
  • Regulatory Environment: Risks related to new government policies in Argentina, potential nationalization, and regulatory changes.
  • Liquidity: Restrictions on currency exchange and fund transfers abroad.
  • Leadership Change: CFO Gabriel Blasi stepped down in December 2025; Federico Pra is serving as interim CFO.

Investor Verification Checklist

• FX Impact: Verify the sensitivity of future earnings to the gap between inflation rates and peso depreciation against the USD.
• TMA Integration: Assess the realization of synergies from the TMA acquisition and the sustainability of TMA's revenue contribution.
• Debt Structure: Review the impact of recent debt refinancing (Notes Class 27) on future interest obligations and liquidity.
• Prepaid Churn: Monitor the trend of prepaid mobile disconnections and its potential long-term effect on the revenue base.
• Regulatory Changes: Track new Argentine government policies affecting telecommunications pricing and operations.