Telecom Argentina SA (TEO) Q2 2024 Earnings Call Highlights: Navigating Inflation and Expanding 5G

GuruFocus News
4 min read

In This Article:

  • EBITDA Margin: 29.7% for the first six months of 2024.

  • CapEx: Approximately $246 million, equivalent to 13% of revenues.

  • Net Income: ARS859 billion due to real exchange differences gains.

  • Revenue: Almost $1.83 billion, decreased 13% year over year in constant pesos.

  • Mobile Subscribers: 21.2 million in Argentina, increased by over 578,000 year over year.

  • Broadband Subscribers: 4.1 million.

  • Pay TV Subscribers: 3.3 million.

  • Inflation: Accumulated inflation in Argentina for the first half of 2024 was 79.7%.

  • Service Revenues: Over ARS1.3 trillion, decreased 12% in real terms year over year.

  • Net Debt-to-EBITDA Ratio: 2.2 times as of June 2024.

  • Gross Debt: $2.8 billion as of June 30, 2024.

  • Cash and Equivalents: $411 million as of June 2024.

  • EBITDA (Last 12 Months): Equivalent to more than $1 billion, increased by 52% versus December 2023.

  • 5G Deployment: Over 100 5G sites operational, with plans to reach 200 by the end of 2024.

  • Personal Pay Clients: Almost 3 million onboarded clients as of June 2024.

Release Date: August 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Telecom Argentina SA (NYSE:TEO) achieved an EBITDA margin of 29.7% for the first six months of 2024, indicating effective cost management and pricing strategy.

  • The company reported a net income profit of ARS859 billion, largely due to real exchange differences gains.

  • Mobile subscriber base grew by over 3% year over year, with data usage per user increasing by 18%.

  • Telecom Argentina SA (NYSE:TEO) successfully returned to international debt capital markets with a $500 million notes issuance due 2031, receiving strong investor support.

  • The fintech business, Personal Pay, has grown significantly, reaching almost 3 million onboarded clients and becoming the second most important player in terms of clients' account balances.

Negative Points

  • Revenues measured in constant pesos decreased by 13% year over year, despite a nominal increase of 229%.

  • The company faced a challenging macroeconomic environment with high inflation rates, impacting financial performance.

  • Fixed voice segment continued to see a reduction in accesses, particularly in the traditional fixed copper network.

  • Telecom Argentina SA (NYSE:TEO) had to perform retention actions such as discounts and promotions to maintain its subscriber base amidst price adjustments.

  • The company's net debt-to-EBITDA ratio increased temporarily due to the December 2023 devaluation, although it has since stabilized.

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