Telecom Argentina (TEO) Investor Day 2024 summary

Macroeconomic and regulatory context

• Argentina is undergoing significant economic reforms, including fiscal adjustment, currency control dismantling, and structural reforms in labor, tax, and pensions, aiming for macroeconomic stabilization and renewed growth by 2025–2026.

• The government is maintaining a 2% crawling peg on the official exchange rate, prioritizing inflation moderation over immediate currency liberalization, with market consensus expecting a shift in early 2025.

• New investment incentives (RIGI) offer 30-year stability and tax benefits for large projects in sectors like energy, mining, and technology, aiming to attract foreign capital.

• Regulatory authorities are focused on aligning Argentina’s capital markets with international standards, easing FX restrictions, and supporting privatizations and financial innovation.

• The capital market is seeing gradual relaxation of FX controls, with further liberalization expected as macro stability improves.

Strategic vision and business transformation

• The company is shifting from a traditional telco to a technology-driven ecosystem, expanding into digital, fintech, IoT, and B2B services, and leveraging GenAI and data-driven platforms.

• Core business leadership is maintained in mobile, broadband, and video, with targeted 5G and FTTH deployments and a focus on customer experience and operational efficiency.

• Digital businesses, including a fast-growing fintech platform and entertainment services, are integrated to drive ARPU and ecosystem stickiness.

• B2B growth is targeted through cloud, cybersecurity, IoT, and managed services, with strong market share in connectivity and new verticals like agriculture and public safety.

• The company is a regional leader in API economy initiatives, enabling new revenue streams and supporting digital transformation for clients.

Financial performance and capital allocation

• Despite macro volatility, the company has delivered positive total shareholder returns over the past three years, with a strong cash flow yield and stable dividend payments.

• ARPU and service revenues are recovering as inflation moderates and pricing power returns, supported by technology-driven customer segmentation and reduced discounting.

• The balance sheet is robust, with significant dollar-denominated assets and infrastructure providing a natural hedge against FX risk; 80% of towers are owned, with no current plans to sell.

• CapEx to revenue is expected to remain in the 15–17% range, focused on FTTH expansion and selective 5G rollout, with flexibility to adjust based on macro conditions.

• Debt is diversified across international and local sources, with recent successful bond issuances and plans for a green bond as market conditions allow.