Telecom Argentina S.A. (TEO)
Q2 2012 Earnings Call
July 31, 2012 11:00 am ET
Pedro Insussarry – Finance Director
Franco Bertone – CEO
Adrián Calaza – CFO
Solange Barthe Dennin - Manager, IR
Alex Garcia - Citibank
Michel Morin - Morgan Stanley
Ricardo Cavanagh - Itau BBA
Stanley Martinez - Legal & General Investment Management
Rizwan Ali - Deutsche Bank
Federico Chapto - Raymond James
Sean Glickenhaus - HSBC
Felipe Pereira - Barclays
Arthur Burns - Deltech
Previous Statements by TEO
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» Telecom Argentina CEO Discusses Q2 2011 Results - Earnings Call Transcript
Good day, everyone, and welcome to the Telecom Argentina Second Quarter 2012 Earnings Conference Call. Today’s call is being recorded. Participating on today’s call, we have Mr. Franco Bertone, Chief Executive Officer of Telecom Argentina; Mr. Adrián Calaza, Chief Financial Officer; Mr. Pedro Insussarry, Finance Director; and Mrs. Solange Barthe Dennin, Manager of Investor Relations.
And at this time, I'd like to turn the conference over to Mr. Pedro Insussarry. Please go ahead, sir.
Good morning to everybody. On behalf of Telecom Argentina, I’d like to thank you for participating in this conference call. As mentioned by our host, the purpose of this call is to share with you the consolidated results of the Telecom Argentina Group that corresponds to the first half of fiscal year 2012 ended last June 30, 2012.
We would like to remind you that for all those that have not received our press release or presentation, you can call our Investors Relations office or download them from the Investor Relations section of our website located at www.telecom.com.ar/investors. Additionally, this conference call is being broadcasted through our webcast feature available in such section and can also be replayed through this same channel.
Before we continue with the conference call, I would like to go over some Safe Harbor information and other details of the call, as we usually do in our quarterly conference calls. We would like to clarify that during the conference call and Q&A session, we may produce certain forward-looking statements about Telecom’s future performance, plans, strategies and targets.
Such statements are subject to uncertainties that could cause Telecom’s actual results and operations to differ materially. Such uncertainties include, but are not limited to, the effects of the public emergency law and complementary regulation, the effects of ongoing industry and economic regulation, possible changes in the demand for Telecom products and services, and the effects of marginal factors such as changes in general market or economic condition, in legislation or in regulation.
Our press release dated July 30, 2012, a copy of which is being included in our Form 6-K report to be furnished to the SEC, describes certain factors that may affect any forward-looking statements that we may produce during this session. Furthermore, we urge the audience of this conference call to read the disclaimer clause contained in slide one of the presentation.
As usual in our quarterly conference calls, the agenda for today as seen in slide two, is to go over the general market overview, then we’ll go over some business highlights, and after that, we will go over some specifics of our financial figures. And finally, we will end the call with our traditional Q&A session.
Having gone through these procedural matters, I will now go over a brief macro overview as an introduction to the general operating environment. In slide three, we include some snapshots on the current Argentine macroeconomic scenario. This quarter was a case of a more challenging scenario whether European crisis increased investors risk aversion and the lower growth were the main international factors that influenced the international context.
According to official indicators, the local economy is showing certain deceleration in sectors like construction and industrial production, that’s a significant decline in the respective levels of affinity. Moreover, investment levels seemed to suffer from the import restrictions and the lower level of growth of the economy.
Moreover, a cautious consumer is slowing private consumption trends due to higher concerns about the economy and the restrictions to the access to the FX market. Inflation remained stable at high levels and in general wage negotiations have concluded at lower levels than last year.
Efforts to achieve a higher commercial balancing to take effect although with some deterioration in fiscal revenues in investments and in level of affinity. Increasing a gap between fiscal revenues and expenditures having covered by the incremental financial assistance from the central bank and the national pensions fund system allowing to preserve the fiscal balance neutral.
Despite this environment, higher commodity prices could help to sustain external balance and the growth in the economy in the near future.
Finally, we'd like to highlight the defensiveness of the communication sector but also remark that is not excluded from the economic cycle.
Having gone through this introduction of the macro context in which we operate, let me pass the call to Franco Bertone, who will go over the business highlights. Franco?
Thank you, Pedro and good morning to everyone. This quarter operating performance was good though a lower growth pace affected margin. Business environment was quite challenging and under these conditions the strength of our balance sheet and positive cash position is a very valuable asset to drive market growth.
As a matter of fact, we had a successful MNP start as we have reached first in customer choice, we also made further progress in mobile revenue share leadership and we stay leaders in post-paid net adds. We believe that smartphones are even strong sustained VAS revenue growth particularly mobile Internet that grew 82% year-on-year is a silent proof of a successful strategy.