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Telecom ArgentinaPlan 2011-13FRANCO BERTONE
Safe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning ofthe Pri...
Agenda         Telecom Argentina Group 2010 Results (IFRS)         Telecom Argentina Plan            FRANCO BERTONE       ...
2010 Main ResultsEuros, in million                         Reported Revenues                                  Key Highligh...
Mobile Business                       Mobile Customers(1)                                                               20...
Fixed Business                       Fixed & BB Access                                                                    ...
Agenda         Telecom Argentina Group 2010 Results (IFRS)         Telecom Argentina Plan            FRANCO BERTONE       ...
Latam Market                                                                   Argentinas Telecoms Market in a Regional Co...
Argentina: TLC Competitive Landscape Snapshot                                              Mobile (1)                     ...
Regulatory Environment                Fixed Business                                 Mobile Business Current Regulatory Fr...
Mobile Business: Main Goals and Action Plan         Obiettivi Strategici                        Goals                     ...
Fixed Business: Main Goals and Action Plan         Obiettivi Strategici                         Goals                     ...
Revenues & Ebitda Outlook                                                     Revenues per Product & per Business         ...
CAPEX Plan                          Capex (ARS, in billions)                      Key Drivers        2,5                  ...
Telecom Argentina – Main Takeaways    Market                        Competitive                                           ...
Back Up          FRANCO BERTONE   15
Telecom Italia Conference Call2010 Results & Plan UpdateTelecom Argentina Footprint                                       ...
Telecom Italia Conference Call2010 Results & Plan UpdateTelecom Argentina – Shareholders Structure                     Sha...
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FY 2010 Results & Plan - F. Bertone

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Transcript of "FY 2010 Results & Plan - F. Bertone"

  1. 1. Telecom ArgentinaPlan 2011-13FRANCO BERTONE
  2. 2. Safe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. These statements appear in a number of places inthis presentation and include statements regarding the intent, belief or current expectations of thecustomer base, estimates regarding future growth in the different business lines and the global business,market share, financial results and other aspects of the activities and situation relating to the Companyand the Group.Such forward looking statements are not guarantees of future performance and involve risks anduncertainties, and actual results may differ materially from those projected or implied in the forwardlooking statements as a result of various factors.Forward-looking information is based on certain key assumptions which we believe to be reasonable as ofthe date hereof, but forward looking information by its nature involves risks and uncertainties, which areoutside our control, and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak onlyas of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly theresults of any revisions to these forward looking statements which may be made to reflect events andcircumstances after the date of this presentation, including, without limitation, changes in Telecom ItaliaS.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence ofunanticipated events. Analysts and investors are encouraged to consult the Companys Annual Report onForm 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securitiesand Exchange Commission.Furthermore, the data and information contained in this presentation only refer to Telecom Argentinagroup and do not include data from its controlling companies Sofora Telecomunicaciones and NortelInversora; such companies are part of the business unit Argentina that is consolidated in the Telecom ItaliaGroup. FRANCO BERTONE 1
  3. 3. Agenda Telecom Argentina Group 2010 Results (IFRS) Telecom Argentina Plan FRANCO BERTONE 2
  4. 4. 2010 Main ResultsEuros, in million Reported Revenues Key Highlights +483M€ Increasing revenues and customer base in all 3.000 +21% 2,820 businesses 2.500 2,337 4Q10 revenues growth acceleration 798 2.000 4Q 640 +25% VAS+Data+BB accounting for 35% of revenues 1.500 and growing at a 2x the rate 1.000 9M 1,697 +19% 2,022 2010 mobile market leadership with est. 46% 500 of net adds 0 Bundled BB fixed and mobile offer FY09 FY10 Strong financial position EBITDA Net Financial Position Evolution (+Cash/-Debt) 231 +126M€ 926 86 1.000 +16% 800 800 246 4Q 211 +17% 600 -185 400 9M +15% 680 -430 589 200 0 -831 FY09 FY10 FY06 FY07 FY08 FY09 FY10 FRANCO BERTONE 3
  5. 5. Mobile Business Mobile Customers(1) 2010 HighlightsMln, % 16.0 16.3 46% of estimated 2010 market net adds ; 1.2% 14.9 15.3Market 14.5 market share increase YoYShare(2) 12.6 Over 50% market share of smartphones sales 10.7 30.9% 31.6% 31.8% 9% ARPU growth YoY 30.6% 30.8% 29.4% 3G devices approaching 10% of base 28.3% VAS reaching 40% of service revenues (46% increase YoY) 2007 2008 2009 1Q10 2Q10 3Q10 4Q10 High 30/70 postpaid-prepaid mix KPI’s Service Revenues & VAS(1)(3) Pesos, in billion 8.5 $ 44 +24% +17% 6.8 $ 41 $ 41 +23% 5.8 $ 39 5.1 4.8 4.5 +13% 4.1 +10% 299 3.5 +18% 222 +46% 3.4 91 103 125 101 102 +34% 2.3 85 1.3 +36% 1.7 2007 2008 2009 2010 2007 2008 2009 2010 MOU SMS ARPU (pesos) VAS revenues Non-VAS revenues VAS includes: SMS, MMS, SMS revenue sharing, Contents, Mobile internet & others Figures are in Argentinean GAAP, with no material difference in terms of growth under IFRS for 2009 and 2010. (1) Argentinean Operation only (2) Estimated, data not available for 4Q10 FRANCO BERTONE (3) Net of Intercompany 4
  6. 6. Fixed Business Fixed & BB Access 2010 HighlightsTotal Lines in market Lines in services and market share maintain(In millions) 46.6% 46.8% 46.8% 46.9% 46.9% 46.9% marginal growthMarket 45.6%Share(1) Regulated revenues participation down 7 p.p. to 3.92 4.01 4.06 4.06 4.07 4.09 4.11 44%FixedVoice Fixed ARBU up 5% despite frozen tariffs BB revenues reached 30% of fixed business passingFixed 1.21 1.23 1.27 1.33 1.38 voice revenues (net of monthly fee) 1.03BB 0.77 BB ARPU up 14% BB churn down to 1.4% from 1.8% in FY09 2007 2008 2009 1Q10 2Q10 3Q10 4Q10e 30% of BB net adds in voice bundled offers BB ARPU & Churn Fixed Revenues Breakdown 2.0% 1.8% 1.8% 1.4% 76 67 56 57 2007 2008 2009 2010 ARPU (in Pesos) CHURN (monthly) Figures are in Argentinean GAAP, with no material difference in terms of growth under IFRS for 2009 and 2010. (1) Estimated, data not available for 4Q10 FRANCO BERTONE 5
  7. 7. Agenda Telecom Argentina Group 2010 Results (IFRS) Telecom Argentina Plan FRANCO BERTONE 6
  8. 8. Latam Market Argentinas Telecoms Market in a Regional Context Service Revenues (Cagr ‘10-’13) USD GDP per capita (2010) Fixed BB Penetration Mobile Penetration Pay TV Penetration Venezuela Venezuela Venezuela Source: Pyramid Research. Residential population only FRANCO BERTONE 7
  9. 9. Argentina: TLC Competitive Landscape Snapshot Mobile (1) Broadband Fixed 2010 M/S 2010 M/S 2010 M/S 31.8% 35.3% 46.9%TLC Operators 2010 Penetration(2) 2010 Penetration(2) 2010 Penetration(2) Argentina 129% Argentina 37% Argentina 67% Latam 97% Latam 23% Latam 55%TLC Access (mln lines) 51.4 47.4 42.8 8.6 8.6 8.7 8.7 37.8 3.9 3.0 3.4 2.3 2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010 (1) Does not include trunking subscribers Source: Telecom Argentina (2) Source: Pyramid Research. Fixed line penetration residential only The Market Share for 4Q is a Company estimate FRANCO BERTONE 8
  10. 10. Regulatory Environment Fixed Business Mobile Business Current Regulatory Framework Current Regulatory Framework Fixed voice tariffs frozen since Jan 2002 Number Portability by YE 2011 BB unregulated prices Unregulated prices Universal Service implemented as 50 MHz frequency cap incumbent: no cash contribution required Limited MVNO participation Triple play currently not allowed to Telcos Universal Service partly contributed with shared mobile access infrastructure Expectations over the next three years Number Portability Expectations over the next three years Video incorporated into VAS licences 850–1.900MHz spectrum auction with Growing interest of federal and local current frequency cap Government in the telecommunications AWS (Advanced Wireless Service) 1.700 - infrastructure 2.100Mhz spectrum auction with separate frequency cap Shift from CPP F2M to mobile termination rates FRANCO BERTONE 9
  11. 11. Mobile Business: Main Goals and Action Plan Obiettivi Strategici Goals Outlook (1) Mobile Lines Consolidate VAS leadership through strong Cagr ‘10-’13 +5% (Millions) 17.6 growth in data revenues 16.3 Increase customer base smartphones & 2010 2011 2013 tablet penetration Cagr ‘10-’13 ARPU 50 +12% (ARS per month) 44 Further development of youth segment and social networking 2010 2011 2013 Action Plan Business ModelUpgrade 3G network, capacity, quality and coverage + ARPU VAS 2011-13 Handset upgrade plan with 3G devices 2009-10 Bundled data + social network plans Mobile internet massification through convenient <2009 prepaid packaging offersLoyalty targeted customer care programs ahead of mobile number portability +Capture + Customer Development (1) Argentinean Operation only FRANCO BERTONE 10
  12. 12. Fixed Business: Main Goals and Action Plan Obiettivi Strategici Goals Outlook (1) Fixed BB Lines Cagr ‘10-’13 Increase BB penetration of existing (Millions) 1.5 +7% customer base 1.4 2010 2011 2013 Develop ICT market Cagr ‘10-’13 ARPU 87 +14% (ARS per month) 76 Introduce video services 2010 2011 2013 Action Plan Internet & Data over Fixed Revenues(1) Upgrade local loop capacity to increase bandwidth 42% Introduce VoD, content delivery and Connected 37% Home applications Migrate from per minute charging to flat pricing Develop supplementary service offers on top of basic telephony 2010 2011 2013 (1) Net of Intercompany FRANCO BERTONE 11
  13. 13. Revenues & Ebitda Outlook Revenues per Product & per Business ARS, Bln VAS+data+ 35% 38% ADSL as % of Revenues >+21% >17.7 >+21% >17.7 14.6 14.6 >+32% >+24% >+12% Consolidated EBITDA Cost Structure ARS, Bln ITX Costs Focus on efficiency: 14% >5.5 Marketing 25% and sales Leaner cost structure 4.8 Taxes through unified operation 28% Labor Costs 20% Lower incidence of ITX costs Others 13% % Growth in labor related costs 2010 2011 2010 FRANCO BERTONE 12
  14. 14. CAPEX Plan Capex (ARS, in billions) Key Drivers 2,5 Expand backhaul IP deployment to improve mobile broadband footprint ∼3.2 2.6 and user experience Improve mobile coverage to reduce domestic roaming cost Expand, secure and integrate backbone networks and IT platforms. Upgrade fixed access network to increase bandwith Capex as Deploy content delivery capabilities % of 17% 18% Update IT solutions to improve Revenues customer care, provisioning and business operations*Include SAC Mobile & Internet FRANCO BERTONE 13
  15. 15. Telecom Argentina – Main Takeaways Market Competitive Business Growth Edge Convergence Model Mobile business Focus on innovation and CAPEX & OPEX efficiency gains from Proven track record of customer care integrated operations sustainable growth in Fixed BB Convergence revenues, margins and market State -of -the -art Convergent view on product Mobile BB share infrastructure development ICT and Data Strong cash flow generation Top-brand recognition OTT and Video Reduced FX exposure Fully integrated operation Ebitda-Capex EvolutionARS, Bln >5.5 Cum’11-13 OFCF: Ebitda >7 Bln ARS ∼3.2 Capex FRANCO BERTONE 14
  16. 16. Back Up FRANCO BERTONE 15
  17. 17. Telecom Italia Conference Call2010 Results & Plan UpdateTelecom Argentina Footprint Telecom Argentina Presence Population: 18 mln Fixed: 4.1 mln lines Strong presence in this region GDP per capita: 6k $ BB: 1.4 mln lines Higher penetration of BB in LIS Cities with >20k inh.: Mobile: 11 mln lines Higher penetration of mobile Nord 96 High density region AMBA Population: 9 mln Most wealthiest region Metropolitan Area of Buenos Aires GDP per capita: 13k $ Business segment is mostly in AMBA Strong competitive region Sud Population: 14 mln Fixed: 0.1 mln lines Increasing coverage GDP per capita: BB: 0.1 mln lines Expanding network 9k $ Cities with >20k inh.: Mobile: 6 mln lines Increasing presence in the region 69 FRANCO BERTONE 16
  18. 18. Telecom Italia Conference Call2010 Results & Plan UpdateTelecom Argentina – Shareholders Structure Shareholders Structure – ex ante Shareholders Structure – ex post 2,5 Werthein de Werthein de Telecom Italia Telecom Italia Telecom Italia Telecom Italia Argentina Inversiones Argentina Inversiones International Spa International Spa S.L S.L 25.5 % 32.5% 42.0% 25.5 % 32.5% 42.0% 58.0% 58.0% Sofora Telecomunicaciones Sofora Telecomunicaciones S.A. S.A. 100% 100% 67.79% (1) 67.79% (1) Nortel Common Stock Nortel Common Stock TII 8% of 51.04% (2) 51.04% (2) Nortel Nortel Nortel Preferred B Inversora 32.21% (1) Inversora 32.21% (1) Preferred A & B Shares Preferred A & B Shares 48.96% (2) 48.96% (2) 54.74% 54.74% ~41% ~41% Public Public Telecom Telecom Argentina ~4% Argentina ~4% Employees Employees 99.99% 99.99% Telecom Telecom Personal Personal 67.50% TI Economic Interest 67.50% TI Economic Interest Nucleo Nucleo (Paraguay) in TA: ∼16.2% (Paraguay) in TA: ∼18.3%(1) % of capital ownership; (2) % economic interest; as of 24 January 2011 FRANCO BERTONE 17
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