Telecom Argentina S.A. Announces Consolidated First Quarter Results for Fiscal Year 2008 ("1Q08")*

Share Name	Share Symbol	Market	Type
Telecom Argentina SA	TG:TEO	Tradegate	Ordinary Share

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Telecom Argentina (TG:TEO)
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BUENOS AIRES, Argentina, May 9 /PRNewswire-FirstCall/ -- -- Telecom Argentina Group continues to improve its business, confirming the growth trend evidenced in previous periods. During 1Q08 Net Revenues grew 21% when compared to same period of the previous year (1Q07), amounting to P$2,480 million. Major revenue increase came from the Cellular business with an expansion of 27% and from Internet businesses with a growth of 33%, both with respect to 1Q07. -- The cellular subscribers increased by 18%, reaching 12.6 million, while broadband subscribers grew 60% totaling 841,000, meanwhile fixed lines in service increased by 3% to 4.2 million. -- Operating Profit before Depreciation and Amortization ("OPBDA") reached P$879 million (+28% vs. 1Q07), equivalent to 35% of Net Revenues, mainly fueled by the cellular telephony growth. On the contrary, fixed telephony profitability continues to weaken due to frozen tariffs and the inflation effect on the general cost structure. -- Net Income reached P$272 million (+101% vs. 1Q07). -- Investments totaled P$248 million during 1Q08 (+78% vs. 1Q07), where P$144 million were allocated to fixed telephony (+121% vs. 1Q07). -- Net Financial Debt (before NPV effect) declined to P$1,666 million (-P$1,556 million vs. March 2007). The Net Financial Debt to OPBDA ratio declined from 1.2x as of the end of March 2007, to 0.5x as of the end March 2008. * Non-Financial data audited As of March-31 % 2008 2007 change change Consolidated Net Revenues (in MM P$) 2480 2058 422 21% Voice, Data & Internet 863 786 77 10% Cellular 1617 1272 345 27% Operating Profit before D&A (in MM P$) 879 688 191 28% Operating Profit (in MM P$) 534 358 176 49% Net Income (in MM P$) 272 135 137 101% Shareholder's equity (in MM P$) 3328 2261 1,067 47% Net Financial Debt - Before NPV effect (in MM P$) 1666 3222 -1,556 -48% Net Financial Debt - Book value (in MM P$) 1619 3090 -1,471 -48% CAPEX (in MM P$) 248 139 109 78% Lines in service (Fixed lines-in thousands) 4224 4117 107 3% Cellular customers (in thousands) 12575 10639 1,936 18% Personal (Argentina) 10882 9310 1,572 17% Nucleo (Paraguay) 1693 1329 364 27% ADSL customers (in thousands) 841 526 315 60% Fixed line traffic (in MM minutes, Internet & Public Telephony not incl.) 3894 3998 -104 -3% Incoming/Outgoing cellular voice traffic in Arg.(in MM minutes) 2710 2224 486 22% Average Revenue per user (ARPU) Fixed Telephony/voice (in P$) 38 38 - 0% Average Revenue per user (ARPU) Cellular Telephony Arg. (in P$) 40 37 3 8% Telecom Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading telecommunications groups, announced today a Net Income of P$272 million for the three-month period ended March 31, 2008. During 1Q08, Consolidated Net Revenues increased 21% (+P$422 million vs. 1Q07) to P$2,480 million, mainly fueled by the cellular and broadband businesses. Moreover, OPBDA increased by 28% (+P$191 million) to P$879 million (35% of Consolidated Net Revenues). This level of operating profits before depreciation and amortization is the consequence of the improvement in revenues, together with a better efficiency in costs despite increasing inflationary pressure. Company Activities Consolidated Net Revenues The evolution in Consolidated Net Revenues by reportable segment was as follows: Voice, Data Transmission & Internet Revenues generated by these services amounted to P$863 million, +10% vs. 1Q07. Voice Total Revenues for this service reached P$651 million (+4% vs. 1Q07). The results of this line of business are affected by frozen tariffs of regulated services. During this three-month period, Telecom continued with the implementation of the fixed line renewal process, started last year with the launch of innovative terminals and value-added services, which before were available only for cellular telephony such as fixed SMS services and video call. Moreover, during this period Telecom continued with the deployment of the next generation technology (NGN) in its fixed telephony network that will allow the offering of convergent state-of-the-art services. Monthly Charges and Supplementary Services increased by P$14 million or 8%, to P$196 million, as a consequence of a higher number of lines in service (+3%), reaching 4.2 million of lines. Revenues generated by traffic (Local Measured Service, Domestic Long Distance and International Telephony) totaled P$293 million, (-2% vs. 1Q07) mainly because a slight decrease in traffic volume and higher discounts granted to the customers. Interconnection revenues amounted to P$94 million (+8%), mainly as a consequence of traffic originated in cellular lines but transported by and terminated in the Company's fixed-line network. Public Telephony & Other Other revenues, including public telephony reached P$68 million (+19% vs. 1Q07). This amount was affected by an increase in billing and collection fees and voice, data and internet handset sales despite a decrease in Public Telephony revenues (-$6 million). Internet and Data Transmission Total revenues coming from Internet services reached P$158 million (+33% vs. 1Q07), mainly due to the substantial expansion of broadband service, driven by a better network coverage, commercial promotions, and innovation of the service portfolio. Telecom's broadband subscribers reached 841,000 as of March 2008(+60% vs. March07). Therefore, lines with this type of connections represent approximately 20% of Telecom's fixed-lines in service. Revenues generated by Data transmission amounted to P$54 million, (+32% vs. 1Q07). Related to the corporate market, during this period Telecom continued enhancing its positioning as integrated provider of communication solutions, focused on technology innovation in order to offer the most innovative services to both government sector and corporate clients. Telecom provides tailor-made and converging systems that integrate voice & data services -for both fixed and cellular services- together with internet services, web, multimedia, and specially ICT solutions (Information and communication technology) and datacenter services. Cellular Telephony The Cellular Telephony continues with its expansion, increasing its participation in the Group's total revenues (65% vs. 62% in 1Q07). During the first three-months of 2008 this business generated revenues of P$1,617 million (+27% vs. 1Q07). Total subscribers reached 12.6 million. Telecom Personal in Argentina As of the three-month period ended March 31, 2008, Personal's subscribers reached 10.9 million in Argentina (+1.6 million or +17% vs. 1Q07). Approximately 66% of the overall subscriber base is prepaid and 34% is postpaid. Total voice traffic increased by 22% vs. 1Q07 while outgoing SMS traffic increased from an average of 762 million messages in 1Q07 to an average of 990 million (+30%) in 1Q08. Because of this enhancement in traffic and the use of value-added services, the Average Monthly Revenue per User ("ARPU") increased by P$40 in 1Q08, compared to P$37 in 1Q07. Revenues totaled P$1,510 million (+P$330 million or +28% vs. 1Q07). Service revenues increased by P$305 million or 29% vs. 1Q07, reaching P$1,361 million; furthermore, value added services totaled P$392 million (+P$128 million or 48% vs. 1Q07), which means 26% of Revenues. In addition handset sales grew by P$25 million (+20%) compared to 1Q07, reaching P$149 million. During 1Q08, Personal enhanced its commercial offer, launching the "Tu Familia Personal" plan (Your Personal Family plan). It allows to make free, unlimited communications, both calls or SMS to a group of three telephone numbers of the Company, previously selected by the client. Due to the summer season, Personal developed a plan for the expansion of the 3G/3.5G network in main Argentine tourist cities. Personal also continued reinforcing its strategy related to music downloads, as a platform for increasing the use of innovative value-added services, such as full MP3. Moreover, the Company is successfully reaching the conclusion of the migration process of the network technology from TDMA to GSM technology. Nucleo Personal's controlled subsidiary that operates in Paraguay, generated revenues equivalent to P$107 million during 1Q08 (+16% vs. 1Q07). By the end of March 2008, the subscriber base reached approximately 1.7 million, +27% vs. 1Q07. Prepaid and Postpaid customers represented 90% and 10%, respectively. During first quarter of 2008, Nucleo launched third generation services (3G) in Paraguay. Consolidated Operating Costs The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$1,946 million in 1Q08, which represents an increase of P$246 million or +14% vs. 1Q07. Notwithstanding, in relative terms such increase is less than revenue growth due to an improvement in efficiency and a better distribution of costs. The cost breakdown is as follows: -- Salaries and Social Security Contributions: P$270 million (+26%), affected by increases in salaries and personnel (+258 employees vs. 1Q07). -- Taxes: P$199 million (+24%), in line with the general evolution of revenues. -- Agents and Prepaid Card Commissions: P$173 million (-2%), mainly due to reduction in commissions paid to commercial agents. -- Advertising: P$73 million (+20%) to support the commercial activity in the cellular telephony and internet. -- Cost of handsets sold: totaled P$201 million similar levels as that registered in 1Q07. -- TLRD and Roaming: P$219 million (+24%) due to increased traffic among cellular operators. -- Depreciation of Fixed and Intangible Assets: P$345 million (+5% vs. 1Q07). Fixed-line telephony totaled P$192 million (-9%) and Cellular telephony $153 million (+28%). Consolidated Financial and Holding Results Financial and Holding Results resulted in a loss of P$60 million, (-P$72 million vs. 1Q07). Such improvement was due to a reduction in net interests and a lower impact of foreign currency exchange looser generated by liabilities. Consolidated Net Financial Debt As of March 31, 2008, Net Financial Debt (Loans before the effect of NPV valuation, minus Cash, Cash Equivalents and Other credits from derivative Investments) amounted to P$1,666 million, a reduction of P$1,556 million as compared to March 2007. A substantial generation of operating cash flow allowed for the decrease in indebtedness. Dividends of Telecom Personal As of the end of March 2008, Personal paid a cash dividend distribution of P$220 million. Consolidated Capital Expenditures During 1Q08, the Company invested P$248 million (excluding material), in fixed and intangibles assets. Such amount was allocated to the Voice, Data and Internet businesses (P$144 million) and to the cellular business (P$104 million). Main Capex projects are related to the expansion of broadband services and to the upgrade of the network for next generation services (NGN), the improvement of the network (capacity, coverage and 3G), and the launch of new and innovative value-added services. Recent Relevant Matters On April 15, 2008 Telecom Argentina made, along with the interest payments of its financial debt, a principal prepayment of Notes, in the amount of US$ 260 million; such funds came from excess cash determined as of December 31, 2007 and a voluntary prepayment, that includes the amount of dividends received from Telecom Personal. -- At the Shareholders' Meeting held on April 29, 2008 and the Board of Directors Meeting on the same date, the members of the Board of Directors, independent auditors, and members of the Audit Committee were named for the 20th fiscal year. 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 March 31, 2008, Telecom had 984,380,978 shares outstanding. (*) Employee Stock Ownership Program For more information, please contact the Investor Relations Department: Pedro Insussarry Solange Barthe Dennin Evangelina Sanchez Ruth Fuhrmann 54-11-4968-3743 54-11-4968-3752 54-11-4968-3718 54-11-4968-4448 Voice Mail: 54-11-4968-3628 Fax: 54-11-4313-5842 E-mail: For information about Telecom Group services, visit: http://www.telecom.com.ar/http://www.personal.com.ar/http://www.personal.com.py/http://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. DATASOURCE: Telecom Argentina S.A. CONTACT: Pedro Insussarry, +54-11-4968-3743, or Solange Barthe Dennin, +54-11-4968-3752, both of Telecom Argentina Web site: http://www.telecom.com.ar/ http://www.personal.com.ar/ http://www.personal.com.py/ http://www.arnet.com.ar/

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TEO Telecom Argentina SA