Telecom Argentina SA

Good morning. On behalf of Telecom Argentina, I would like to thank everybody for participating of this conference call. The participants of today's conference call are Roberto Nóbile, Chief Executive Officer, Gabriel Blasi, Chief Financial Officer, Fernando Balmaceda, Director of Investor Relations, and myself, Solange Bartedeni, Manager of Investor Relations. The purpose of this call is to share with you the results of our fiscal year 2020 and fourth quarter ended December 31st of 2020. If you have not received our press release or presentation, you can call our investor relations office to request the documents or download them from the investor relations section of our website located at www.telecom.com.ar. This conference call and presentation is being broadcasted and can also be replaced through our investor website at institutional.telecom.com.ar investors. If you'd like to go over some, I would like to go over some, say, hardware information and other details of the call. We would like to clarify that during the conference call and Q&A session, we could mention certain forward-looking statements about telecom's future performance, plans, strategies, and objectives. 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 effect of ongoing industry and economic regulation, possible changes in the demand for telecoms products and services, the effects of potential changes in general market and or economic conditions in legislation and the impact of the outbreak of COVID-19 of the global economy and specifically on the economies of the country in which we operate, as well as on our operations and financial performance. Our press release dated March 9th, 2021, a copy of which was included in Form 6K and sent to the SEC, describes certain factors that may affect any forward-looking statements that could be mentioned during this call. The company has reflected the effects of the inflation adjustment adopted by Resolution 777 of 2018 of the Comisión Nacional de Valores , which established that the expression will be applied to the annual financial statements for Intermediate and Special Periods ended as of and included December 31st, 2018. Accordingly, the reported figures correspond to fiscal year 2020 included the effects of the adoption of the inflationary accounting in accordance with IAS 29. In this presentation, we will also include figures in historical values, which are easier to understand. Our press release is complemented by our earning presentation. The audience should read the disclaimer containing slide One and two of the presentation. The agenda of today's conference call is described in slide three and includes our business and financial highlights. We will end the call with a Q&A session. Now let me pass the call to Gabriel, our CFO, who will start with the presentation.

Thank you, Solange. Good morning and welcome to everyone. Moving to slide 4, it shows the summary of the company figures as of December 2020. During the fiscal year 2020, Telecom's revenues totaled $3.6 billion. Revenues measured in constant pesos increased 6.5% year to year. EBITDA totaled $1.2 billion, implying 34.1% EBITDA margin, which has been on the high side despite the challenging 2020 Our mobile subscribers in Argentina amounted to 18.7 million, decreasing in approximately 228,000 when comparing with the previous quarter, due to a decline of around 540,000 in the prepaid segment, which were partially offset by an increase of more than 315,000 clients in the postpaid segment. Broadband and Pay TV clients have maintained the number of clients during 2020, totaling around 4.2 million and 3.5 million respectively. Fixed voice subscribers without considering IP telephone lines amounted to 2.9 million. Thanks to our successful commercial strategy focused on the bundling and upselling of our products, We currently have 2.7 million convergent unique customers and 45% of our broadband customers have a mobile platform. Slide 5 summarizes our main achievements during 2020. Our network has performed very well during last year and will continue to do so in response to the higher demand of mobile and fixed connectivity. Thanks to the investments in infrastructure done in recent years, Telecom has the equipment and systems that allow its network to perform efficiently, supporting important increases in home internet data traffic, mobile voice and data services, combined with a very strong growth in upstream traffic. Our business has proven to be very resilient during a challenging scenario. We have been able not only to refinance our financial debt, but also to maintain our GAPEX to sales ratio according to industry standards, resulting on our historical EBITDA margin of plus 30%. The company's objective is to be 100% digital. We are not only reconverting our systems In order to integrate all our operations, but also create an ecosystem of platforms, leverage our connectivity, which allowed us to manage an upscale products and services focusing on the digital and convergent customer experience, and on the B2B business. In addition, we are working on a series of business initiatives, such IoT, our own FinTech, and Mi Negocio Personal, all of which will allow us to increase revenues. OPEX before DNA have been strongly reduced substantially by almost 9% in real terms, thus allowing us to achieve a strong VDA margin. Our collections and VAT debt has been normalized at historical levels. During 2020, we refinanced $777 million of debt and canceled $200 million of debt with different financial institutions. Our bond matured in June 2021, was exchanged with the 2025 bond and our oil debt with multilaterals was refinanced. We have been on the few Argentine companies achieving such a financial performance in terms of both improving our capital structure and extending debt maturities. All of our cash of about $500 million was used to cancel debt with external creditors and intercompany loans. On slide 6 we summarize the competitive advantages of our products, services and platforms that allow us to successfully respond to the higher demand of our services during 2020. Telecoms leadership in Argentina telecommunications market is leveraged on three main strategic assets broadband flow as our IPTV service and mobile. Our broadband network is the fastest and has the best coverage around the country. achieving average speeds of more than 60 megabytes per second in the case of our brand fiber-tel, and 11 megabytes for our XDSL products, reaching 65% of homes, passed over total homes in Argentina SA. Most of our network technology is HFC, which works with Dorsys 3.1, 1 gigabyte per second, and is available in all our HFC networks. We have also been deploying FTTH to upgrade our copper network. Flow is our IEP video platform that has evolved into a super content aggregator, allowing clients access to video, music, gaming, and other famous streaming services. We have incorporated a fully digital subscription to Flow for our 5RTL clients called FlowNow, allowing clients to enjoy Flow features without the need of a deco at home. Our brand for mobile personnel is the fastest 4G mobile network in the country with the best 4G quality terms of consistent quality, availability, video experience, and download upload speed. In addition, we have initiated the deployment of the first series of 5G mobile sites in the cities of Buenos Aires and Rosario with Huawei and Nokia technologies. This has allowed us to achieve an increase in the net mobile portability and post-pay market share. In slide 7, we highlight our digital transformation projects and new business initiatives. Regarding our main BSS transformation project fund, we have continued with our migration process. All of our prepaid customers have been migrated and more than 10 million clients are active in the CRM system. We have also completed the migration of 550,000 prospect clients in February 2021. Switch is our new digital channel front-end and includes e-commerce and self-service solutions which gives our B2C customers a convergent experience. During 2020, we have launched the first releases for the app and web versions of the platform. Our cloud foundation project aims to integrate the different public cloud platforms with telecom processes in order to achieve additional efficiency, process automation and business flexibility. We have also implemented the payments microsite hosted in the AWS cloud and uploaded the electronic wallet for our fintech initiative. During 2020, Telecom was the first company in the world to successfully implement S4HANA central finance with central payments and great management. On July 1st, we have concluded the digital core implementation and post-go-live support has been done. Mi Negocio Personal is our e-commerce platform that allows microentrepreneurs to digitalize the commercial experience of their businesses and to perform sales in a personalized way through the social networks of their choice and with integrated forms of payment. We also began to develop a fintech business which consists of providing mobile financial services to clients in Argentina through our subsidiary Microsistemas. In December 2020, we obtained the first version of the platform that would allow us to provide the same service. Finally, we have also created a new company called Personal Smart Home, which provides IoT services such as monitoring, security, digital interconnection and home automation in the design of houses, buildings, cities and public or private companies. Slide 8 summarizes the regulatory events related to the telecommunications industry during 2020. During March 2020, the executive power issued a decree which determined the temporary suspension or interruption of fixed and mobile telephony, internet and cable TV services in the case of non-payment until the end of September 2020. This decree was then extended until December 2020. In May, due to COVID-19, our industry has agreed jointly with ENACOM to freeze the tariff of our products until the end of August 2020. On the other hand, all companies in the industry were not required to increase salaries until August 2020. In August, decree 690-2020 extended the price freeze until the end of 2020. The decree also declared ICT services as an essential public service. In December of 2020, ENACOM issued two resolutions. Resolution number 1466, authorized price increased by 5% on all ICT services is effective as of January 1st, 2021. It also established that any further price increase must be informed and submitted to ENACOM for approval 60 days in advance. Resolution 1467 determined a series of basic universal services that should be provided by the operators for mobile broadband pay TV and fixed voice services. These services target low income individuals, beneficiaries of social programs and non-profit entities, all of which must fill and submit an application form to the ENACOM. During February 2021, a preliminary injunction requested by a representative of the cable TV subscription-based broadcasting industry of the province of Córdoba was accepted by a federal judge who ordered the suspension of the Decree 690-20 and Decree 311-20. The judge also ordered the executive power and the NACOM to abstain from pursuing any measure based on said degrees until the National Supreme Court decided how to proceed. Moving to slide nine, present the price adjustment performed as of January 2021. As of January 2021, we have made a following adjustment to the prices of our services. In mobile, prices of the plants with 1 GB of data have been increased by 5%, while those with more than 1 GB of mobile data have been increased by 20%. In broadband, the prices of services with speed up to or equal to 25 MB per second, mainly fiber and light services, have been raised by 10%. Prices of services with a speed higher than 25 megabytes per second increased by 20%. All prices of pay-to-be services, including premium services such as HAVO and FOX, have increased by 20%. The price of the football pack subscription has increased by 25%. Prices of fixed-voice basic services were increased by 5%, and Argentina digital services by 20%. Slide 10 shows our products' evolution in Argentina. Postpaid subscribers have increased 4.1% while prepaid subs have decreased 4.8%, increasing our postpaid market share. Fivertel, our customer base, increased 1.7% year-over-year, mainly growing in the HFC and FTTH segments. PayTV ARPU, PayTV accesses have grown 0.9% year-over-year, mostly leveraged on our Flow platform. The reduction of accesses has continued, mainly in traditional fixed copper lines, with fiber-collaptive accesses having increased by more than 220,000. Slide 11 shows the evolution of our service revenues. Service revenues total almost 284 billion pesos, increasing 6.3% in real terms versus fiscal year 2019, in a period when inflation was reaching 36.3%. Our revenue breakdown as of December 2020 shows an increasing mobile revenue share and a lower share of broadband and pay TV revenues. The breakdown results are as follows. Mobile revenues 38%, broadband revenues 21%, pay TV revenues 20%, fixed telephone and data revenues 15%, equipment sales revenues 6%. Our main drivers of growth in mobile and broadband are explained on the following slide 12. We have been able to keep almost constant our customer base but growing in the usage of our products. Postpaid mobile and broadband are the two main pillars of our performance. As of December of 2020, postpaid subscribers amounted to 46% of our total customer base. The chart in the upper left shows the competitive landscape wireless and mass during 2020. Personal is in blue color. Positive numbers show incoming clients and negative numbers show clients lost again to competition. As mentioned, we have obtained a positive net inflow which has been mainly supported by our convergent offers to cable TV and internet subscribers that were not mobile clients of the company before. Mobile internet usage has also increased, reaching an average of more than 4.3 GB per user per month in 2020. We have continued increasing the speed and capacity of our broadband customer page, leveraging our strong LHC network and responding to the higher usage of our fixed networks. Our clients have been migrating to the more efficient ones. In addition, there has been an important increase in broadband speed. 59% of our total subs have speeds between 50 and 1000 MB per second, compared with 41% during 2019. In slide 13 we show the evolution of our Flow product and how we have been able to increase its penetration. Flow is our IP video platform which has reached 70 million views during the fourth quarter of 2020. 5 million devices have been connected and clients have used Flow for an average of almost 7.7 hours. We have more than 1.2 million Flow boxes inside Home and almost 1.4 million Flow apps that show our improvement in the network digitalization. Site 14 is a summary of our operation in Paraguay. We consider our presence in Paraguay Núcleo as a driver of growth given to our strong market share. Paraguay is improving economic situation too, Núcleo's ability to finance itself in the local market and implicit hedge in dollars that we have since there are no restrictions to convert guarantees local currency into US dollars. Núcleos generating $193 million in revenues and EBITDA respectively during fiscal year 2020. Revenues breakdown was as follows. Browsing services 43%, voice almost 20%, data almost 10%, broadband 9%, TV services 7%, and other services with approximately 11%. As of December 31, 2020, mobile customer total 2.2 million, clients of Billetera Personal, the mobile financial service that our subsidiary provides, reaching more than 310,000. Fixed internet services subscribers amounting to 135,000. In the pay TV segment, flow customers totaled 23,000 and in personnel HD 60,000. The fixed network deployment in the main cities of Paraguay has been increasing rapidly, reaching 455,000 on past. Additionally, Nucleus Internet subscribers total 135,000, increasing almost three times versus the last quarter of 2019. I will now pass the call to Fernando Balmaceda, who will go over our financial performance.

Thank you so much, Gabriel. Turning to slide 15, we show the evolution of local inflation. As of December 2020, the year-over-year increase in inflation has been 36.1%. During the fourth quarter of the year, inflation has accelerated to 11.3%. The breakdown that we are including shows that the share of communication services in the CPI amounts to approximately 2.8%. Communication services during 2020 have increased by 7.6% according to the official national CPI data published by the INDEC. Slide 16. shows that during fiscal year 2020 consolidated revenues on nominal terms grew by 33%, reaching almost 257.3 billion pesos. When analyzing that figure adjusted by inflation, revenues amounted to almost 301.6 billion pesos, showing an increase of 6.5% in real terms. Service revenues showed a 33% nominal increase in a context where prices have been frozen for the most part of 2020, being mainly driven by mobile revenues, which grew more than 1% in real terms when comparing fiscal year 2020 with fiscal year 2019. EBITDA increased by 36% year on year in nominal terms, thus generating an EBITDA margin of The company performed well in terms of cost controls, operating costs before the NA decreased by 9% in real terms versus fiscal year 2019. The company has achieved an aggressive cost reduction. Slide 17 shows the company's EBITDA evolution and the impact of the reduction in operating expenses. There was a positive contribution to the EBITDA margin due to the reduction in enhancement costs, which decreased 24% in real terms, mainly to a lower sell-out. Operating efficiencies have been obtained both in programming and content costs, and also due to the elimination of sickness, mainly related to sports. General fees, maintenance, and material expenses have been reduced due to an optimization in the consumption of materials associated with our daily activity. Commissions and advertising expenses have also been reduced. Interconnectional costs increased in real terms mainly due to the lower influence, while bad debt expenses also increased above inflation. The final result was a 160 BIPs increase in every time real terms when compared with fiscal year 2019. Slide 18 shows the evolution of our collections and non-performing debt. Collections through digital channels have increased to a 67% of our total collections and are at normal levels in terms of our collection periods. Please recall that our delays in collections was almost 30% at the beginning of the lockdown period back in March 2020. The general level of our non-performing debt has experienced a decrease during the last quarter of 2020, 1.3% as of December 2020. Slide 18 shows that the company's operating income totaled almost 20.3 billion pesos, EBIT has decreased 6% in real terms. Operating margin in real terms was 7% of consolidated revenues, very stable when compared to last years. When concerning historical figures, the same margin has increased by 20% from 18% in fiscal year 2019. Our net loss for fiscal year 2020 was 5.2%. and Luis Fernando Rial Ubago. This is a summary of the company's capex. During fiscal year 2020, capex amounted to more than 55 billion pesos, or an equivalent of and a total of $662 million at the official FX rate. This amount is 37% lower when compared to last year's CAPEX. We have almost finalized most of our system adjustments and improved our infrastructure during the first two years after the merger. Our CAPEX program will continue evolving according to Argentina's economic condition, network performance and customer requirements. Technical CapEx were mainly composed of installation and customer premise equipment or CPA. The balance was allocated to network and technology and to our international operations in Paraguay and Euroweb. During the fourth quarter of 2020, 89 new mobile sites were deployed and the capacity and security of more than 2,000 existing sites was upgraded. Moreover, we continued with We continue to increase the capacity of our HFC access network, mainly through segmentation and division of areas. Additionally, 1.8 thousand blocks were enabled with FTTH, fixed access technology. In February 2021, we have begun with the deployment of 5G mobile sites in Argentina, which allows connection speeds up to 10 gigabytes per second having a response 100 times higher than the 4G networks. This new technology allows the client to connect multiple devices at the same time. Slide 21 describes our cash flow generation during 2020 when compared with the same period of 2019. As of December 2020, the operating free cash flow amounted to approximately $583 million. The reduction in capex mainly explained the additional $52 million in free cash flow when compared to the previous fiscal year. EBITDA in constant US dollars remained relatively stable. Slide 22 shows our figures for fiscal year 2020 in constant measuring units. Companies' revenues amounted to more than $101 billion, While EBITDA amounted to almost 103 billion pesos, EBITDA margin was 34.1%. A gross debt amounted to almost 200 billion pesos, decreasing 3.3% when compared with December 2019. The company's cash and short-term investments amounted to more than 25 billion pesos mainly composed of cash and equivalents and investments in local mutual funds and other short-term investments. Net debt amounted to approximately 174 billion pesos. Our net debt to EBITDA ratio was 1.7 times. During 2020, the company has canceled $200 million of debt and refinanced more than $770 and a total of $770 million of its financial debt. Slide 23 shows the liability management transactions that the company has done during 2020. On August 6, 2020, Telecom has concluded an exchange offer of its outstanding 6.5% coupon notes due in 2021. Holders validly tendered $362.2 million of notes due 2021. The acceptance rate was 77.74%, high enough to demonstrate our solid trade profile and attractive proposal to bondholders. An additional amount of $135.4 million of notes due 2025 new money was raised to repay our loan with Deutsche Bank AT London Brand and CPP IB Credit Investments Inc. The company finally issued $388.9 million of new amortizing notes due 2025 with an 8.5% semiannual coupon. On September, the company successfully refinanced its loans with IFC and IDB Invest. for an amount of $329.30 million. In the case of the IFC loans, 85% of the principal to be repaid in 2020 and 2021 was extended between 24 and 84 months. In the case of the IDB invest loans, 85% of principal to be repaid in 2020 and 2021 was extended between 24 and 66 months. The company repaid almost 40 million dollars of the loans mentioned above, optimizing its capital structure and extending its maturities. In slide 24, we describe our latest financing transactions. We have successfully completed two bonds issues in Argentina, in Argentina pesos, In December 2020, for an amount of almost $120 million equivalent in two tranches, and in January 2021, for an amount of approximately $100 million equivalent. Additionally, in December 2020, the company has closed an import financing for an amount of Remembe's $700 million equivalent to around $100 million, and expandable to up to Remembe's $1.4 The increase in the final amount of such financing will be subject to an insurance from the China Export and Trade Insurance, called SinoShare, in which we're currently working on. Slide 25 shows the breakdown of our financial debt. Total outstanding debt as of December 2020 amounted to more than $2.3 billion. Our debt profile and capital structure has improved significantly after the exchange of our 2021 notes and the refinancing of our IFC and IDB loans. Our dollar-denominated maturities for 2021 amount to approximately $150 million, while the rest is composed of peso-denominated debt. For 2022 and 2023, our debt maturities remain within the range of $500 million and will then be reduced considerably until the maturity date of our 2026 notes. I will now pass the presentation to Solange for the final remarks. Thank you very much.