Telecom Argentina (TEO) Q2 2024 earnings summary

Executive summary

• EBITDA margin for the first half of 2024 reached 29.7%, reflecting effective cost management and pricing strategies amid a challenging macroeconomic environment.

• Net income for H1 2024 was ARS 859 billion, mainly due to real exchange gains from peso appreciation impacting USD-denominated debt.

• Mobile subscribers in Argentina grew to 21.2 million, up 2.8% year-over-year, with data usage per user up 18%.

• Fintech business Personal Pay reached nearly 3 million clients, establishing a strong market position and ranking #2 in Argentina by remunerated account balances.

• Pay TV (Flow) unique customers reached 1.5 million, up 11% year-over-year.

Financial highlights

• Revenues for H1 2024 totaled almost $1.83 billion; in constant pesos, revenues decreased 13% year-over-year but grew 5.6% quarter-over-quarter.

• EBITDA for H1 2024 was $543 million, with margin up 1.3 percentage points year-over-year.

• CapEx for H1 2024 was $246 million, or 13–13.5% of revenues, focused on network expansion and technology.

• Gross debt as of June 30, 2024, was $2.8 billion; net debt was $2.4 billion, with a net debt/EBITDA ratio of 2.2x.

• Free cash flow for H1 2024 was $151 million, down from $308 million in H1 2023.

Outlook and guidance

• July and August 2024 continued the positive trend, with company sizing initiatives underway to prepare for 2025.

• Targeting deployment of 200 new 5G sites in the 3.5 GHz band by year-end and expanding FTTH and mobile networks.

• Continued emphasis on cost control and pricing strategies to offset inflationary pressures.

• Slowing inflation is expected to stabilize customer expectations and support ARPU growth.

• No significant customer resistance to price increases anticipated; promotional requests are slowing.