Table of Contents

 

 

FORM 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of March, 2009

Commission File Number: 001-13464

 

 

Telecom Argentina S.A.

(Translation of registrant’s name into English)

 

 

Alicia Moreau de Justo, No. 50, 1107

Buenos Aires, Argentina

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F      X            Form 40-F              

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes                      No      X    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes                      No      X    

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes                      No      X    

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

---

Table of Contents

Telecom Argentina S.A.

TABLE OF CONTENTS

 

Item
1.		Press release, dated March  6, 2009, entitled “Telecom Argentina S.A. announces consolidated annual period (“FY08”) and fourth quarter results for fiscal year 2008 (“4Q08”)”

---

Table of Contents

        

 

FOR IMMEDIATE RELEASE

Market Cap: P$5.3 billion

March, 6 2009

Contacts:

Pedro Insussarry

Solange Barthe Dennin

(54-11) 4968-3743/3752

TELECOM ARGENTINA S.A. ANNOUNCES CONSOLIDATED ANNUAL PERIOD

(‘FY08’) and FOURTH QUARTER RESULTS FOR FISCAL YEAR 2008 (‘4Q08’)*

 

†

Telecom Argentina Group continued with the expansion of its business during fiscal year 2008. Consolidated Net Revenues amounted to P$10,608 million (+17%) when compared to same period of the previous fiscal year (“FY07”). Revenues generated by the Cellular business grew by 20% and the Internet business increased by 39%.

 

†

Cellular subscribers totaled 14.4 million (+17%), while broadband subscribers reached 1,042,000 (+33%). Fixed lines in service also increased by 2% to 4.3 million.

 

†

Operating Profit Before Depreciation and Amortization (“OPBDA”) reached P$3,330 million (+9% vs. FY07), equivalent to 31% of Net Revenues, mainly fueled by growth in cellular telephony in Argentina. On the contrary, fixed line telephony profitability continued to weaken due to frozen tariffs of regulated services and the inflation effect on the cost structure.

 

†

Operating Profit amounted to P$2,041 million (+25% vs. FY07), equivalent to 19% of Net Revenues (+121 bps. vs. FY07).

 

†

Net Income reached P$961 million (+9% vs. FY07). If Publicom sales effects were not contemplated, Net Income would have grown by 23% vs. FY07.

 

†

Investments (excluding materials) totaled P$1,597 million during FY08 (+23% vs. FY07), where P$834 million were allocated to fixed telephony (+21% vs. FY07).

 

†

Net Financial Debt (before NPV effect) declined to P$912 million (-P$1,143 million vs. December 2007). The Net Financial Debt to OPBDA ratio declined from 0.7x as of the end of December 2007 to 0.3x as of the end of December 2008.

 

		As of December-31							D%
		2008		2007		D
Consolidated Net Revenues (in MM P$)		10.608		9.074		1.534			17	%
Voice, Data & Internet		3.653		3.302		351			11	%
Cellular		6.955		5.772		1.183			20	%
Operating Profit before D&A (in MM P$)		3.330		3.052		278			9	%
Operating Profit (in MM P$)		2.041		1.636		405			25	%
Net Income (in MM P$)		961		884		77			9	%
Shareholder’s equity (in MM P$)		4.020		3.030		990			33	%
Net Financial Debt - Before NPV effect (in MM P$)		912		2.055		(1.143	)		-56	%
Net Financial Debt - Book value (in MM P$)		903		1.993		(1.090	)		-55	%
CAPEX (in MM P$)		1.597		1.302		295			23	%
Lines in service (Fixed lines -in thousands)		4.299		4.208		91			2	%
Cellular customers (in thousands)		14.390		12.292		2.098			17	%
Personal (Argentina)		12.564		10.666		1.898			18	%
Núcleo (Paraguay)		1.826		1.626		200			12	%
ADSL customers (in thousands)		1.042		783		259			33	%
Fixed line traffic (in MM minutes, Internet & Public Telephony not incl.)		16.306		16.878		(572	)		-3	%
Incoming/Outgoing cellular voice traffic in Arg. (in MM minutes)		11.579		9.946		1.633			16	%
Average Revenue per user (ARPU ) Fixed Telephony/voice (in P$)		39		39		—			0	%
Average Revenue per user (ARPU ) Cellular Telephony Arg. (in P$)		41		39		2			5	%

*

Non-audited Financial data

 

		1		www.telecom.com.ar

---

Table of Contents

        

 

Buenos Aires, March 6, 2009 – Telecom Argentina (BASE: TECO2; NYSE: TEO), one of Argentina’s leading telecommunications groups, announced today a Net Income of P$961 million for the fiscal year ended December 31, 2008 or +9% when compared to same period of the previous year. If Publicom sales effects were not contemplated, Net Income would have grown by 23% vs. FY07.

 

		FY08			FY07			D		D%
Net Revenues (MMP$)		10.608			9.074			1.534		17	%
Net Income (MMP$)		961			884			77		9	%
Earnings per Share (P$)		0,98			0,90			0,08
Earnings per ADR (P$)		4,88			4,49			0,39
OPBDA *		31	%		34	%
Operating Profit *		19	%		18	%
Net Income *		9	%		10	%

 

*	As a percentage of Net Revenues

During FY08, Consolidated Net Revenues increased by 17% (+P$1,534 million vs. FY07) to P$10,608 million, mainly fueled by the cellular and broadband businesses.

Moreover, OPBDA increased by 9% (+P$278 million) to P$3,330 million (31% of Consolidated Net Revenues).

Company Activities

Consolidated Net Revenues

The evolution in Consolidated Net Revenues by reportable segment was as follows:

Voice, Data Transmission & Internet

During fiscal year 2008, revenues generated by these services amounted to P$3,653 million, +11% vs. FY07, where Internet revenues have grown the most (+39% vs. FY07).

Voice

Total Revenues for this service reached P$2,701 million (+4% vs. FY07). The results of this line of business are still affected by frozen tariffs of regulated services.

Monthly Charges and Supplementary Services increased by P$53 million, or 7% vs. FY07, to P$799 million, as a consequence of a higher number of lines in service (+2%), which reached 4.3 million lines, and the 19% increase in supplementary services.

Revenues generated by traffic (Local Measured Service, Domestic Long Distance and International Telephony) totaled P$1,237 million, an increase of 1% vs. FY07, as a consequence of a slight decrease of 3% in minutes affected by the mobile substitution, reflecting a small decrease in local and national long distance traffic. Otherwise, international traffic continued growing by 10% vs. FY07.

Interconnection revenues amounted to P$400 million (+7% vs. FY07), mainly as a consequence of traffic originated in cellular lines but transported by and terminated in the Company’s fixed-line network.

Other revenues reached P$265 million (+5% vs. FY07). This evolution is the consequence of an increase in billing and collection fees as well as in voice, data and internet equipment sales despite a decrease in Public Telephony revenues (-P$31 million), which was affected by the development of the mobile service.

Data Transmission and Internet

Data transmission revenues amounted to P$217 million (+25% vs. FY07), generated by the offering of new solutions to the corporate market geared towards addressing internal necessities related to infrastructure. This has enhanced its position as an integrated provider of innovative ICT solutions (connectivity, housing and hosting). In this line, in July 2008, Telecom acquired the shares of Cubecorp Argentina S.A., a world class infrastructure datacenter located in Buenos Aires, in order to maximize its datacenter services.

 

		2		www.telecom.com.ar

---

Table of Contents

        

 

Revenues related to Internet reached P$735 million (+207 million or 39% vs. FY07), mainly due to the substantial expansion of broadband service, driven by better network coverage, commercial promotions and innovation of the service portfolio.

During the fourth quarter, and in line with the increase of the market, in November, Telecom reached one million ADSL clients. As part of this milestone, the company carried out several extensive promotions through TV, visual advertisements, radio and Internet media.

During this quarter, Telecom continued promoting Arnet Go, the first broadband service that combines ADSL technology for home internet access using a Wi-Fi modem, and the mobile internet access through Telecom Personal’s 3G networks.

As of December 31, 2008, Telecom reached 1.042.000 ADSL customers (+33% vs. FY07). Lines with these types of connections represent approximately 24% of Telecom’s fixed-lines in service.

Cellular Telephony

Cellular Telephony continues expanding, increasing its participation in the Group’s total revenues (66% vs. 64% in FY07). During FY08, this business generated revenues of P$6,955 million (+20% vs. FY07). As of the end of December 2008 total subscribers reached 14.4 million representing an increase of 0.6 million subscribers when compared to September 30, 2008 and 2.1 million vs. FY07.

Telecom Personal in Argentina

As of the end of December 2008, Personal reached 12.6 million subscribers in Argentina (+1.9 million, or +18% vs. FY07). 4Q08 experienced the highest increase of 2008, adding 0.6 million subscribers.

Approximately 66% of the overall subscriber base is prepaid and 34% is postpaid (including “cuentas claras” plans).

Total voice traffic increased by 16% vs. FY07 while outgoing SMS traffic increased from a monthly average of 883 million messages in FY07 to 1,454 million (+65%) in FY08. Because of this raise in traffic and the increasing use of value-added services, the Average Monthly Revenue per User (“ARPU”) increased to P$41 in FY08, compared to P$39 in FY07. Meanwhile, the ARPU in 4Q08 amounted to P$42, stable when compared to 4Q07.

Revenues totaled P$6,565 million (+P$1,226 million or +23% vs. FY07). Service revenues increased by P$1,097 million or 23% vs. FY07, reaching P$5,853 million; furthermore, value-added services totaled P$1,735 million (+P$471 million or 37%, vs. FY07), 30% of service revenues. Additionally, handset sales grew by P$129 million (+22%) compared to FY07, reaching P$712 million.

 

		3		www.telecom.com.ar

---

Table of Contents

        

 

Commercial Activities

During 4Q08, Personal continued developing its commercial efforts focusing on different segments. That is why it launched original packs, with the purpose of providing Personal’s customers with more flexibility and convenient offers.

Furthermore, Personal continued to expand 3G network coverage, as well as the offer of new Smartphones, Mobile Broadband USB Modems and Netbooks. Additionally, the Company expanded its commercial offices, opening new customer centers in Viedma (Rio Negro), San Rafael (Mendoza), Comodoro Rivadavia (Chubut), Villa María (Córdoba) and Rio Cuarto (Córdoba).

Moreover, Personal continued providing innovative value added services, as the download of CNN en Español contents.

In line with its focus strategy in music, Personal put into practice several promotional actions such as handsets with music related contents.

Finally, Personal closed FY08 having strengthened its leadership position in brand recognition, with particular focus in youth segment.

Núcleo

Personal’s controlled subsidiary that operates in Paraguay generated revenues equivalent to P$390 million during FY08 (-10% vs. FY07).

The global crisis affected Paraguayan economy, where the depreciation of its currency and a lower level of activity were the last evident effects.

The devaluation of the Guaraní in the 4Q08 originated a reduction in revenues due to the consequent conversion of the full year revenues to the end of period exchange rate. The Guaraní appreciated 18% against the dollar in the first half, but with the deepening of the financial crisis in October, it suffered a strong depreciation of 23%. This conversion effect had a negative impact of P$46 million in revenues of 4Q08 and FY08.

By the end of December 2008, the subscriber base reached approximately 1.8 million customers (+12% vs. FY07). Prepaid and Postpaid customers represented 90% and 10%, respectively.

Consolidated Operating Costs

The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$8,567 million in FY08, which represents an increase of P$1,129 million, or +15%, vs. FY07. This increase in costs is a consequence of the increase in revenues, inflationary effects on the costs structure, and higher expenses related to the competition in the cellular business and internet.

The cost breakdown is as follows:

- Salaries and Social Security Contributions: totaled P$1,217 million (+27% vs. FY07), affected by increases in salaries and social security imposed by law, the increase in mobile headcount that accompanied the evolution of the cellular business, and the absorption of 46 employees from Cubecorp S.A.

 

		4		www.telecom.com.ar

---

Table of Contents

        

 

- Taxes: reached P$825 million (+25% vs. FY07), influenced mainly by a higher rates in turnover taxes and additional charges related to Universal Service.

- Maintenance, materials and supplies reached P$541 million (+21% vs. FY07), mostly due to an increase in costs that followed inflation.

- Network access costs (includes TLRD, Roaming, Interconnection, international settlement charges and lease of circuits): amounted to P$1,366 million (+19% vs. FY07) generated by higher traffic between cellular operators that accompany the increase in revenues.

- Fees for services: reached P$389 million (+30% vs. FY07), mainly caused by the evolution of prices that followed inflation.

- Agents, prepaid card commissions and other commissions: were P$928 million (+11% vs. FY07), mainly due to the increase in commissions paid to commercial agents and card distribution costs, as a higher volume of revenues was registered.

- Advertising: amounted to P$388 million (+27% vs. FY07) oriented towards supporting the commercial activity in cellular telephony and Internet, and to strengthen the brand position of the Telecom Group.

- Cost of handsets sold: totaled P$1,026 million (+15% vs. FY07) mainly due to an increase in the number of terminals sold. Despite this, handset subsidies were less than in FY07 and represented P$268 million (-P$17 million vs. FY07).

- Others Costs (includes bad debt expense, cost of directories publishing, transportation and freight, insurance, energy, water and others, rental expense and international and satellite connectivity: totaled P$598 million (+27% vs. FY07). This increase was due to the inflationary effects on related services.

- Depreciation of Fixed and Intangible Assets: reached P$1,289 million (-9% vs. FY07). Fixed-line telephony totaled P$822 million (-1% vs. FY07) and Cellular telephony P$467 million (-21% vs. FY07), as TDMA technology depreciation charges ended in March 2008.

Consolidated Financial and Holding Results

Financial and Holding Results resulted in a loss of P$265 million, an improvement of P$176 million vs. FY07. This was due to P$110 million less net interest, the positive effect of P$61 million of holding results generated by inventories and the gain on purchase of notes of P$34 million. This positive impact compensated the loss of P$32 million registered in foreign currency exchange losses.

Consolidated Net Financial Debt

As of December 31, 2008, Net Financial Debt (Loans before the effect of NPV valuation, minus Cash, Cash Equivalents and Other credits from derivative Investments for Notes) amounted to P$912 million, a reduction of P$1,143 million as compared to December 2007.

From October 16, 2008 to December 31, 2008, Telecom Argentina and Telecom Personal purchased Notes pursuant to market purchase transactions. In the case of Telecom Argentina, it has acquired an aggregate principal nominal amount of euros 79 million of Telecom’s Series A Regulation S Euro Notes Due 2014 (equivalent to an outstanding amount of euros 32 million). In the case of Telecom Personal, it has acquired an aggregate principal amount of US$40 million of Personal´s Series 3 Medium Term Notes due 2010. These notes were acquired in market transactions, with both companies’ cash.

During January 2009, Personal purchased a nominal amount of US$4 million Series 3 Notes due 2010.

The Notes acquired were cancelled according to the terms and conditions of the Indenture.

Consolidated Capital Expenditures

During FY08, the Company invested P$1,597 million (excluding materials), in fixed and intangible assets. This amount was allocated to Voice, Data and Internet businesses (P$834 million) and cellular business (P$763 million).

 

		5		www.telecom.com.ar

---

Table of Contents

        

 

Main capex projects are related to the expansion of broadband services and to the upgrade of the network for next generation services (NGN), the improvement of the network (capacity, coverage and 3G), and the launch of new and innovative value-added services.

In relative terms, capex reached 15% of the revenues, within industry standards.

Furthermore, due to a careful management of capex, Telecom reached a ratio of operating profit to net investment capital of 36% for FY08.

Other Initiatives

Related to the corporate market, during 4Q08 Telecom continued enhancing its position as an integrated provider of innovative ICT solutions, conceived to satisfy specific needs of each business segment and contribute to the improvement of government administration.

During this quarter, Telecom Argentina was distinguished with a certification that endorses the fulfillment of Communication “A 4609” from the Central Bank of Argentina to its datacenters in Cordoba and Bosque Alegre’s housing service, adding to those received for the Buenos Aires datacenter. This certification is a requirement to provide services to financial entities, one of the segments that have grown the most during the year.

Likewise, during December, Telecom validated ISO 9001:2000 certifications for the third time, originally obtained in 2001, related to wholesale client procedures in order to improve quality administration and enhance standard solutions offered to that segment.

Recent relevant Matters

Standard & Poor’s Ratings Services announced on February 12, 2009, that it had downgraded to ‘B-’ from ‘B’ the foreign currency ratings on Telecom Argentina and Telecom Personal in line with the increase in Convertibility and Transferability risk assigned to Argentina. Additionally, Standard & Poor’s, has also rated the local currency ´B´ for both companies in Credit Watch as it reviews the impact of other country risks factors.

On January 1, 2009, Telecom incorporated by merger Cubecorp Argentina S.A a “world class infrastructure” datacenter with the objective of simplifying administration and taking advantage of professional and qualified staff from both companies. As part of this agreement, a migration plan was initiated to transfer Telecom Argentina and Telecom Personal data centers to Pacheco, Buenos Aires Province premises.

 

		***********

 

		6		www.telecom.com.ar

---

Table of Contents

        

 

Telecom is the parent company of a leading telecommunications group in Argentina, where it offers directly or through its controlled subsidiaries local and long distance fixed-line telephony, cellular, data transmission and Internet services, among other services. Additionally, through a controlled subsidiary, the Telecom Group offers cellular services in Paraguay. The Company commenced operations on November 8, 1990, upon the Argentine government’s transfer of the telecommunications system in the northern region of Argentina.

Nortel Inversora S.A. (“Nortel”), which acquired the majority of the Company from the Argentine government, holds 54.74% of Telecom’s common stock. Nortel is a holding company where the common stock (approximately 68% of capital stock) is owned by Sofora Telecomunicaciones S.A. Additionally, Nortel capital stock is comprised of preferred shares that are held by minority shareholders.

As of December 31, 2008, Telecom had 984,380,978 shares outstanding.

(*) Employee Stock Ownership Program

For more information, please contact the Investor Relations Department:

 

Pedro Insussarry 54-11-4968-3743		Solange Barthe Dennin 54-11-4968-3752		Evangelina Sánchez 54-11-4968-3718		Ruth Fuhrmann 54-11-4968-4448		Horacio Nicolás del Campo 54-11-4968-6236

Voice Mail: 54-11-4968-3628

Fax: 54-11-4313-5842

E-mail: relinver@ta.telecom.com.ar

For information about Telecom Group services, visit:

www.telecom.com.ar

www.personal.com.ar

www.personal.com.py

www.arnet.com.ar

Disclaimer

This document may contain statements that could constitute forward-looking statements, including, but not limited to, the Company’s expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; the effects of its debt restructuring process; the impact of emergency laws enacted by the Argentine Government; and the impact of rate changes and competition on the Company’s future financial performance. Forward-looking statements may be identified by words such as “believes,” “expects,” “anticipates,” “projects,” “intends,” “should,” “seeks,” “estimates,” “future” or other similar expressions. Forward-looking statements involve risks and uncertainties that could significantly affect the Company’s expected results. The risks and uncertainties include, but are not limited to, the impact of emergency laws enacted by the Argentine government that have resulted in the repeal of Argentina’s Convertibility law, devaluation of the peso, various changes in restrictions on the ability to exchange pesos into foreign currencies, and currency transfer policy generally, the “pesification” of tariffs charged for public services, the elimination of indexes to adjust rates charged for public services and the Executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive changes in laws and economic and business conditions in Argentina, it is difficult to predict the impact of these changes on the Company’s financial condition. Other factors may include, but are not limited to, the evolution of the economy in Argentina, growing inflationary pressure and evolution in consumer spending and the outcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward-looking statements which may be made to reflect events and circumstances after the date of this press release, including, without limitation, changes in the Company’s business or to reflect the occurrence of unanticipated events. Readers are encouraged to consult the Company’s Annual Report on Form 20-F, as well as periodic filings made on Form 6-K, which are filed with or furnished to the United States Securities and Exchange Commission for further information concerning risks and uncertainties faced by Telecom.

 

		(Financial tables follow)   *******   Enrique Garrido Chairman   *******

 

		7		www.telecom.com.ar

---

Table of Contents

        

 

Consolidated information

ANNUAL PERIOD AND FOURTH QUARTER - FISCAL YEAR 2008

(In millions of Argentine pesos, except statistical data)

 

1-      Consolidated Balance Sheet

		Dec-31		Dec-31
		2008		2007		D$			D%
Cash, equivalents and investments		1.125		992		133			13	%
Trade receivables		1.009		898		111			12	%
Other current assets		458		494		(36	)		-7	%
TOTAL CURRENT ASSETS		2.592		2.384		208			9	%
Fixed & Intangible assets		6.960		6.498		462			7	%
Other non-current assets		97		289		(192	)		-66	%
TOTAL NON-CURRENT ASSETS		7.057		6.787		270			4	%
TOTAL ASSETS		9.649		9.171		478			5	%
Accounts payable		1.769		1.640		129			8	%
Loans		1.355		1.474		(119	)		-8	%
Reserves		36		49		(13	)		-27	%
Other current liabilities		901		480		421			88	%
TOTAL CURRENT LIABILITIES		4.061		3.643		418			11	%
Accounts payable		27		—		27			—
Loans		688		1.724		(1.036	)		-60	%
Reserves		319		243		76			31	%
Other non-current liabilities		453		452		1			0	%
TOTAL NON-CURRENT LIABILITIES		1.487		2.419		(932	)		-39	%
TOTAL LIABILITIES		5.548		6.062		(514	)		-8	%
Minority Interest		81		79		2			3	%
Shareholders’ equity		4.020		3.030		990			33	%
TOTAL LIABILITIES AND EQUITY		9.649		9.171		478			5	%

2-      Consolidated Loans

		Dec-31			Dec-31
		2008			2007			D$			D%
Corporate Bonds		1.255			1.372			(117	)		-9	%
Banks and others		89			69			20			29	%
Accrued interest		20			30			(10	)		-33	%
Derivatives		—			3			(3	)		-100	%
TOTAL CURRENT LOANS		1.364			1.474			(110	)		-7	%
Corporate Bonds		688			1.781			(1.093	)		-61	%
Banks and others		—			5			(5	)		-100	%
TOTAL NON-CURRENT LOANS		688			1.786			(1.098	)		-61	%
TOTAL LOANS (without NPV effect)		2.052			3.260			(1.208	)		-37	%
Derivatives valuation effect for notes (Other Current Credits)		9			212			(203	)		-96	%
Cash and cash equivalents		1.131			993			138			14	%
NET FINANCIAL DEBT (without NPV effect)		912			2.055			(1.143	)		-56	%
		Dec-31			Dec-31
		2008			2007			D$			D%
Financial and Holding results
Financial results generated by assets
Interest on short term investments		86			95			(9	)		-9	%
Foreign currency exchange gains		104			26			78			300	%
Holding results generated by inventories		2			(59	)		61			-103	%
Other financial results		7			—			7			—
Total Financial results generated by assets		199			62			137			221	%
Financial results generated by liabilities
Interest		(236	)		(355	)		119			-34	%
Foreign currency exchange losses		(262	)		(152	)		(110	)		72	%
Others		34			4			30
Total Financial results generated by liabilities		(464	)		(503	)		39			-8	%
TOTAL FINANCIAL AND HOLDING RESULTS		(265	)		(441	)		176			-40	%

 

		8		www.telecom.com.ar

---

Table of Contents

        

 

 

3-      Consolidated Income Statement Annual Comparison

		Dec-31			Dec-31
		2008			2007			D$			D%
Net revenues		10.608			9.074			1.534			17	%
Cost of services provided		(5.648	)		(4.973	)		(675	)		14	%
GROSS PROFIT		4.960			4.101			859			21	%
Administrative expenses		(368	)		(313	)		(55	)		18	%
Selling expenses		(2.551	)		(2.152	)		(399	)		19	%
OPERATING PROFIT		2.041			1.636			405			25	%
Financial and holding results		(265	)		(441	)		176			-40	%
Other expenses, net		(268	)		(98	)		(170	)		173	%
RESULTS FROM ORDINARY OPERATIONS		1.508			1.097			411			37	%
Taxes on income		(535	)		(292	)		(243	)		83	%
Minority interest		(12	)		(23	)		11			-48	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		961			782			179			23	%
RESULTS FROM DISCONTINUED OPERATIONS		—			102			(102	)		-100	%
NET INCOME		961			884			77			9	%
OPERATING (LOSS)/PROFIT BEFORE D & A		3.330			3.052			278			9	%
As a % of Net Revenues		31,4	%		33,6	%

4-      Consolidated Income Statement Three-Months Comparison

		Dec-31			Dec-31
		2008			2007			D$			D%
Net revenues		2.819			2.559			260			10	%
Cost of services provided		(1.544	)		(1.419	)		(125	)		9	%
GROSS PROFIT		1.275			1.140			135			12	%
Administrative expenses		(86	)		(84	)		(2	)		2	%
Selling expenses		(688	)		(621	)		(67	)		11	%
OPERATING PROFIT		501			435			66			15	%
Financial and holding results		(153	)		(118	)		(35	)		30	%
Other expenses, net		(127	)		(22	)		(105	)		477	%
RESULTS FROM ORDINARY OPERATIONS		221			295			(74	)		-25	%
Taxes on income		(89	)		(17	)		(72	)		424	%
Minority interest		(2	)		(8	)		6			-75	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		130			270			(140	)		-52	%
RESULTS FROM DISCONTINUED OPERATIONS		—			—			—			—
NET INCOME		130			270			(140	)		-52	%
OPERATING (LOSS)/PROFIT BEFORE D & A		828			800			28			3	%
As a % of Net Revenues		29,4	%		31,3	%

 

		9		www.telecom.com.ar

---

Table of Contents

        

 

5-      Consolidated Revenues Breakdown Annual Comparison

		Dec-31		Dec-31
		2008		2007		D$			D%
Fixed Telephony		2.432		2.331		101			4	%
Measured service Local		463		462		1			0	%
Measured service DLD		505		498		7			1	%
Monthly charges		799		746		53			7	%
Public telephones		86		117		(31	)		-26	%
Interconnection		400		373		27			7	%
Others		179		135		44			33	%
International Telephony		269		270		(1	)		0	%
Data transmission & Internet		952		701		251			36	%
Data		217		173		44			25	%
Internet		735		528		207			39	%
Measured service		53		60		(7	)		-12	%
Monthly charges		678		464		214			46	%
Modems		4		4		—			0	%
Cellular Telephony		6.955		5.772		1.183			20	%
Telecom Personal		6.565		5.339		1.226			23	%
Monthly fee and measured service		1.410		1.181		229			19	%
Pre-paid card		952		807		145			18	%
Calling Party Pays		560		558		2			0	%
TLRD *		787		592		195			33	%
VAS		1.735		1.264		471			37	%
Handset sales		712		583		129			22	%
Others		409		354		55			16	%
Núcleo		390		433		(43	)		-10	%
Monthly fee and measured service		45		63		(18	)		-29	%
Pre-paid card		224		238		(14	)		-6	%
Calling Party Pays		22		41		(19	)		-46	%
TLRD *		49		53		(4	)		-8	%
VAS		7		5		2			40	%
Handset sales		8		7		1			14	%
Others		35		26		9			35	%
TOTAL NET REVENUES		10.608		9.074		1.534			17	%
*  Charges for the temination of calls of the cellular operators.

6-      Consolidated Revenues Breakdown Three-Months Comparison

		Dec-31		Dec-31
		2008		2007		D$			D%
Fixed Telephony		627		615		12			2	%
Measured service		246		249		(3	)		-1	%
Local		117		116		1			1	%
DLD		129		133		(4	)		-3	%
Monthly charges		204		191		13			7	%
Public telephones		20		28		(8	)		-29	%
Interconnection		113		100		13			13	%
Others		44		47		(3	)		-6	%
International Telephony		72		76		(4	)		-5	%
Data transmission & Internet		271		191		80			42	%
Data		58		47		11			23	%
Internet		213		144		69			48	%
Measured service		13		13		—			0	%
Monthly charges		199		130		69			53	%
Modems		1		1		—			0	%
Cellular Telephony		1.849		1.677		172			10	%
Telecom Personal		1.785		1.540		245			16	%
Monthly fee and measured service		363		313		50			16	%
Pre-paid card		263		227		36			16	%
Calling Party Pays		147		151		(4	)		-3	%
TLRD *		210		166		44			27	%
VAS		478		391		87			22	%
Handset sales		189		182		7			4	%
Others		135		110		25			23	%
Núcleo		64		137		(73	)		-53	%
Monthly fee and measured service		2		16		(14	)		-88	%
Pre-paid card		38		77		(39	)		-51	%
Calling Party Pays		2		11		(9	)		-82	%
TLRD *		8		15		(7	)		-47	%
VAS		1		2		(1	)		-50	%
Handset sales		2		2		—			0	%
Others		11		14		(3	)
TOTAL NET REVENUES		2.819		2.559		260			10	%
*  Charges for the temination of calls of the cellular operators.

 

		10		www.telecom.com.ar

---

Table of Contents

        

 

7-      Consolidated Income Statement by segments Fiscal Year 2008
(In million of Argentine pesos)

		Segments									Variation vs FY07
		Voice, Data and Internet			Cellular Telephony			Consolidated			D$			D%
NET REVENUES		3.653			6.955			10.608			1.534			17	%
Salaries and social security contributions		(931	)		(286	)		(1.217	)		(257	)		27	%
Taxes		(223	)		(602	)		(825	)		(165	)		25	%
Materials and supplies		(373	)		(168	)		(541	)		(94	)		21	%
Doubtful accounts		(10	)		(57	)		(67	)		4			-6	%
Interconnection cost		(156	)		—			(156	)		(5	)		3	%
Settlement charges		(145	)		—			(145	)		(7	)		5	%
Lease of lines and circuits		(67	)		(57	)		(124	)		(23	)		23	%
Service fees		(181	)		(208	)		(389	)		(89	)		30	%
Advertising		(137	)		(251	)		(388	)		(82	)		27	%
Agent, Prepaid card commissions and other commissions		(94	)		(834	)		(928	)		(94	)		11	%
Cost of voice, data and cellular handsets		(38	)		(988	)		(1.026	)		(133	)		15	%
Roaming and TLRD		—			(941	)		(941	)		(181	)		24	%
Others		(264	)		(267	)		(531	)		(130	)		32	%
Operating Profit before D&A		1.034			2.296			3.330			278			9	%
Operating Profit before D&A Margin		28	%		33	%		31	%		-2	%		-7	%
Depreciation of fixed assets		(806	)		(461	)		(1.267	)		110			-8	%
Amortization of intangible assets		(16	)		(6	)		(22	)		17			-44	%
OPERATING RESULTS		212			1.829			2.041			405			25	%
FINANCIAL AND HOLDING INCOME		(166	)		(99	)		(265	)		176			-40	%
OTHER EXPENSES, NET		(212	)		(56	)		(268	)		(170	)		173	%
INCOME FROM ORDINARY OPERATIONS		(166	)		1.674			1.508			411			37	%
Taxes on income		(143	)		(392	)		(535	)		(243	)		83	%
Minority interest		—			(12	)		(12	)		11			-48	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		(309	)		1.270			961			179			23	%
RESULTS FROM DISCONTINUED OPERATIONS		—			—			—			(102	)		-100	%
NET INCOME		(309	)		1.270			961			77			9	%

8-      Consolidated Income Statement by segments Fiscal Year 2007
(In million of Argentine pesos)

		Segments
		Voice, Data and Internet			Cellular Telephony			Consolidated
NET REVENUES		3.302			5.772			9.074
Salaries and social security contributions		(744	)		(216	)		(960	)
Taxes		(196	)		(464	)		(660	)
Materials and supplies		(307	)		(140	)		(447	)
Doubtful accounts		(12	)		(59	)		(71	)
Interconnection cost		(151	)		—			(151	)
Settlement charges		(138	)		—			(138	)
Lease of lines and circuits		(58	)		(43	)		(101	)
Service fees		(140	)		(160	)		(300	)
Advertising		(89	)		(217	)		(306	)
Agent, Prepaid card commissions and other commissions		(75	)		(759	)		(834	)
Cost of voice, data and cellular handsets		(18	)		(875	)		(893	)
Roaming and TLRD		—			(760	)		(760	)
Others		(188	)		(213	)		(401	)
Operating Profit before D&A		1.186			1.866			3.052
Operating Profit before D&A Margin		36	%		32	%		34	%
Depreciation of fixed assets		(815	)		(562	)		(1.377	)
Amortization of intangible assets		(13	)		(26	)		(39	)
OPERATING RESULTS		358			1.278			1.636
FINANCIAL AND HOLDING INCOME		(262	)		(179	)		(441	)
Other expenses, Net		(61	)		(37	)		(98	)
INCOME FROM ORDINARY OPERATIONS		35			1.062			1.097
Taxes on income		(60	)		(232	)		(292	)
Minority interest		—			(23	)		(23	)
NET INCOME BEFORE DISCONTINUED OPERATIONS		(25	)		807			782
RESULTS FROM DISCONTINUED OPERATIONS		102			—			102
NET INCOME		77			807			884

This exposition of the financial statements is not coincident with the individual financial statements for each company due to the eliminations of intercompany operations.

 

		11		www.telecom.com.ar

---

Table of Contents

        

 

9-      Consolidated Income Statement by segments Fourth Quarter - FY 2008
(In million of Argentine pesos)

		Segments									Variation vs 4Q07
		Voice, Data and Internet			Cellular Telephony			Consolidated			D$			D%
NET REVENUES		970			1.849			2.819			260			10	%
Salaries and social security contributions		(267	)		(78	)		(345	)		(97	)		39	%
Taxes		(53	)		(159	)		(212	)		(19	)		10	%
Materials and supplies		(106	)		(48	)		(154	)		(14	)		10	%
Doubtful accounts		(3	)		(14	)		(17	)		(5	)		42	%
Interconnection cost		(37	)		—			(37	)		1			-3	%
Settlement charges		(37	)		—			(37	)		—			0	%
Lease of lines and circuits		(20	)		(22	)		(42	)		(7	)		20	%
Service fees		(55	)		(63	)		(118	)		(28	)		31	%
Advertising		(40	)		(58	)		(98	)		9			-8	%
Agent, Prepaid card commissions and other commissions		(27	)		(229	)		(256	)		(17	)		7	%
Cost of cellular handsets		(9	)		(286	)		(295	)		(9	)		3	%
Roaming and TLRD		—			(244	)		(244	)		(28	)		13	%
Others		(77	)		(59	)		(136	)		(18	)		15	%
Operating Profit before D&A		239			589			828			28			4	%
Operating Profit before D&A Margin		25	%		32	%		29	%		-2	%		-6	%
Depreciation of fixed assets		(212	)		(109	)		(321	)		37			-10	%
Amortization of intangible assets		(4	)		(2	)		(6	)		1			-14	%
OPERATING RESULTS		23			478			501			66			15	%
FINANCIAL AND HOLDING INCOME		(103	)		(50	)		(153	)		(35	)		30	%
Other expenses, net		(109	)		(18	)		(127	)		(105	)		477	%
INCOME FROM ORDINARY OPERATIONS		(189	)		410			221			(74	)		-25	%
Taxes on income		1			(90	)		(89	)		(72	)		424	%
Minority interest		—			(2	)		(2	)		6			-75	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		(188	)		318			130			(140	)		-52	%
RESULTS FROM DISCONTINUED OPERATIONS		—			—			—			—			0	%
NET INCOME		(188	)		318			130			(140	)		-52	%

10-   Consolidated Income Statement by Segments          Fourth Quarter - FY 2007
(In million of Argentine pesos)

		Segments
		Voice, Data and Internet			Cellular Telephony			Consolidated
NET REVENUES		882			1.677			2.559
Salaries and social security contributions		(187	)		(61	)		(248	)
Taxes		(53	)		(140	)		(193	)
Materials and supplies		(94	)		(46	)		(140	)
Doubtful accounts		—			(12	)		(12	)
Interconnection cost		(38	)		—			(38	)
Settlement charges		(37	)		—			(37	)
Lease of lines and circuits		(18	)		(17	)		(35	)
Service fees		(43	)		(47	)		(90	)
Advertising		(38	)		(69	)		(107	)
Agent, Prepaid card commissions and other commissions		(23	)		(216	)		(239	)
Cost of cellular handsets		(8	)		(278	)		(286	)
Roaming and TLRD		—			(216	)		(216	)
Others		(57	)		(61	)		(118	)
Operating Profit before D&A		286			514			800
Operating Profit before D&A Margin		32	%		31	%		31	%
Depreciation of fixed assets		(199	)		(159	)		(358	)
Amortization of intangible assets		(3	)		(4	)		(7	)
OPERATING RESULTS		84			351			435
FINANCIAL AND HOLDING INCOME		(90	)		(28	)		(118	)
Other expenses, Net		(1	)		(21	)		(22	)
INCOME FROM ORDINARY OPERATIONS		(7	)		302			295
Taxes on income		43			(60	)		(17	)
Minority interest		—			(8	)		(8	)
NET INCOME BEFORE DISCONTINUED OPERATIONS		36			234			270
RESULTS FROM DISCONTINUED OPERATIONS		—			—			—
NET INCOME		36			234			270

 

		12		www.telecom.com.ar

---

Table of Contents

        

 

TELECOM ARGENTINA S.A.

Unconsolidated Information

ANNUAL PERIOD AND FOURTH QUARTER - FISCAL YEAR 2008

(In millions of Argentine pesos)

 

11-   Balance Sheet

		Dec-31		Dec-31
		2008		2007		D$			D%
Cash, equivalents and investments		571		755		(184	)		-24	%
Trade receivables		487		438		49			11	%
Other current assets		83		283		(200	)		-71	%
TOTAL CURRENT ASSETS		1.141		1.476		(335	)		-23	%
Other Trade receivables		55		258		(203	)		-79	%
Fixed & Intangible assets		4.069		4.073		(4	)		0	%
Investments		1.825		1.192		633			53	%
Other non-current assets		3		5		(2	)		-40	%
TOTAL NON-CURRENT ASSETS		5.952		5.528		424			8	%
TOTAL ASSETS		7.093		7.004		89			1	%
Accounts payable		813		761		52			7	%
Loans		1.263		1.360		(97	)		-7	%
Reserves		25		39		(14	)		-36	%
Other current liabilities		290		226		64			28	%
TOTAL CURRENT LIABILITIES		2.391		2.386		5			0	%
Accounts payable		27		—		27			—
Loans		—		967		(967	)		-100	%
Compensation and social benefits payable		82		43		39			91	%
Taxes Payable		212		283		(71	)		-25	%
Others liabilities		116		99		17			17	%
Reserves		245		196		49			25	%
TOTAL NON-CURRENT LIABILITIES		682		1.588		(906	)		-57	%
TOTAL LIABILITIES		3.073		3.974		(901	)		-23	%
Shareholders’ equity		4.020		3.030		990			33	%
TOTAL LIABILITIES AND EQUITY		7.093		7.004		89			1	%

12-    Income Statement Annual Comparison

		Dec-31			Dec-31
		2008			2007			D$			D%
Net revenues		4.226			3.772			454			12	%
Cost of services provided		(2.318	)		(2.046	)		(272	)		-13	%
GROSS PROFIT		1.908			1.726			182			11	%
Administrative expenses		(233	)		(191	)		(42	)		-22	%
Selling expenses		(893	)		(709	)		(184	)		-26	%
OPERATING PROFIT		782			826			(44	)		-5	%
Equity income from related companies		694			328			366			112	%
Financial & holding results		(162	)		(260	)		98			38	%
Other incomes & expenses net		(210	)		(51	)		(159	)		-312	%
RESULTS FROM ORDINARY OPERATIONS		1.104			843			261			31	%
Taxes on income		(143	)		(59	)		(84	)		142	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		961			784			177			23	%
RESULTS FROM DISCONTINUED OPERATIONS		—			100			(100	)		-100	%
NET INCOME		961			884			77			9	%
Operating Profit before D&A		1.598			1.653			(55	)		-3	%
As a % of Net Revenues		37,8	%		43,8	%
		Dec-31			Dec-31
		2008			2007			D$			D%
Financial and Holding results
Financial results generated by assets
Interest on short term investments		61			75			(14	)		-19	%
Foreign currency exchange gains		67			21			46			219	%
Other financial results		1			—			1			—
Total Financial results generated by assets		129			96			33			34	%
Financial results generated by liabilities
Interest		(144	)		(240	)		96			-40	%
Others		(174	)		(116	)		(58	)		50	%
Other financial results		27			—			27			—
Total Financial results generated by liabilities		(291	)		(356	)		65			-18	%
TOTAL FINANCIAL AND HOLDING RESULTS		(162	)		(260	)		98			-38	%

 

		13		www.telecom.com.ar

---

Table of Contents

        

 

TELECOM ARGENTINA S.A.

Unconsolidated Information

ANNUAL PERIOD AND FOURTH QUARTER - FISCAL YEAR 2008

(In millions of Argentine pesos)

 

13-    Income Statement Three-Months Comparison
		Dec-31			Dec-31
		2008			2007			D$			D%
Net revenues		1.127			1.016			111			11	%
Cost of services provided		(641	)		(549	)		(92	)		17	%
GROSS PROFIT		486			467			19			4	%
Administrative expenses		(71	)		(47	)		(24	)		51	%
Selling expenses		(232	)		(203	)		(29	)		14	%
OPERATING PROFIT		183			217			(34	)		-16	%
Equity income from related companies		155			93			62			67	%
Financial & holding results		(101	)		(90	)		(11	)		12	%
Other incomes & expenses net		(108	)		6			(114	)		-1900	%
RESULTS FROM ORDINARY OPERATIONS		129			226			(97	)		-43	%
Taxes on income		1			44			(43	)		-98	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		130			270			(140	)		-52	%
RESULTS FROM DISCONTINUED OPERATIONS		—			—			—			—
NET INCOME		130			270			(140	)		-52	%
Operating Profit before D&A		396			419			(23	)		-5	%
As a % of Net Revenues		35,1	%		41,2	%

 

		14		www.telecom.com.ar

---

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		Telecom Argentina S.A.
Date: March 9, 2009		By:		/s/    Enrique Garrido
		Name:		Enrique Garrido
		Title:		Chairman of the Board of Directors