Foreign Exchange Losses Hits Telecom Profits

Telecom Argentina has reported that during 1H06, Consolidated Net Revenues increased by 30% to P$3.35 (US$1.1) billion, mainly fueled by the expansion of the cellular and broadband businesses. This was partially offset by higher interconnection expenses and direct taxes on revenues. In addition, Telecom undertook a set of important commercial and marketing strategies that permitted the impressive cellular subscriber growth in Argentina and Paraguay, as well as in ADSL connections in Argentina.

Net Income fell to P$99 (US$32.3) million, vs. P$458 (US$149.5) million during 1H05. The drop in profit was mainly driven by a loss in foreign exchange.

As of June 30, 2006, the subscriber base of Personal in Argentina reached approximately 6.9 million; 2.1 million customers more than those registered as of June 30, 2005 (+43%). It is important to highlight that the postpaid customer base increased by 67%, while the prepaid customer base increased by 32% vs. 1H05. As of June 30, 2006, approximately 64% of the overall subscriber base was prepaid and 36% was postpaid customers. Subscribers with GSM technology represented 80% of the overall subscriber base.

Total traffic measured in minutes increased by 36% vs. 1H05. SMS traffic increased from an average of 173 million per month during 1H05 to an average of 460 million per month during 1H06 (+166%). The cost of cellular handsets increased by P$156 (US$51) million to P$390 (US$127) million mainly due to the increase in handset sales related subscriber growth and TDMA to GSM migration.

TLRD (termination charges in third party cellular networks) and Roaming costs increased by P$74 (US$24) million, reaching P$245 (US$80) million, due to the increase in traffic delivered among cellular operators, in line with the significant expansion of the market."

Posted to the site on 14th August 2006