Telecom Argentina S.A. Announces Consolidated Nine-Month Period ("9M07") and Third Quarter Results for Fiscal Year 2007 ("3Q07")

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

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	-0.20	-2.37%	8.25	8.10	8.40				0.00	22:50:19

Telecom Argentina (TG:TEO)
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BUENOS AIRES, Argentina, Nov. 9 /PRNewswire-FirstCall/ -- -- The Telecom Argentina Group maintained an important expansion of its business in the nine-month period ended September 30, 2007. Consolidated revenues grew 24% vs. 9M06, totaling P$6,515 million. Revenues generated by the Cellular and Internet & Data Transmission businesses increased 37% and 19%, respectively. -- The Cellular customer base reached 11.7 million (+35%), broadband subscribers totaled 677,000 (+81%), while fixed lines in service increased 3% to 4.2 million. -- Operating Profit before Depreciation and Amortization ("OPBDA") reached P$2,252 million (+30% vs. 9M06), equivalent to 35% of net revenues. Operating Profit increased by 78%, totaling P$1,201 million. -- Net Income reached P$614 million, which includes results for discontinued operations by P$102 million (related to the sale of Publicom in 1Q07). -- Net Debt (before NPV effect) declined to P$ 2,516 million (-P$1.261 million vs. September, 2006), primarily as a result of the cash flow generated by operations. The ratio of Net Debt to OPBDA declined from 1.6x as of the end of 9M06, to 0.8x. As of September-30 2007 2006 ^ ^% Consolidated Net Revenues (in MM P$) 6,515 5,242 1,273 24% Voice, Data & Internet 2,420 2,249 171 8% Cellular 4,095 2,993 1,102 37% Operating Profit before D&A (in MM P$) 2,252 1,730 522 30% Operating Profit (in MM P$) 1,201 675 526 78% Net Income (in MM P$) 614 164 450 274% Shareholder's equity (in MM P$) 2,748 2,043 705 35% Net Financial Debt - Before NPV effect (in MM P$) 2,516 3,777 (1,261) -33% Net Financial Debt - Book value (in MM P$) 2,382 3,579 (1,197) -33% CAPEX (in MM P$) 981 755 226 30% Lines in service (Fixed lines -in thousands) 4,170 4,056 114 3% Cellular customers (in thousands) 11,665 8,624 3,041 35% Personal (Argentina) 10,161 7,675 2,486 32% Nucleo (Paraguay) 1,504 949 555 58% ADSL customers (in thousands) 677 375 302 81% Fixed line traffic (in MM minutes, Internet Traffic not included) 12,528 12,516 12 0% Incoming/Outgoing cellular voice traffic in Arg.(in MM minutes) 7,147 5,380 1,767 33% Average Revenue per user (ARPU) Fixed Telephony/voice (in P$) 39 39 0 0% Average Revenue per user (ARPU) Cellular Telephony Arg. (in P$) 38 38 0 0% Telecom Argentina (BASE: TECO2, NYSE: TEO), one of Argentina's leading telecommunications groups, announced today a Net Income of P$614 million for the nine-month period ended September 30, 2007. During 9M07, Consolidated Net Revenues increased 24% (+P$1,273 million vs. 9M06) to P$6,515 million, mainly fueled by the cellular and broadband businesses. Moreover, OPBDA increased by 30% (+P$522 million) to P$2,252 million (35% of Consolidated Net Revenues, +200 bps). Company Activities 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$2,420 million, +8% vs. 9M06. Voice Total Revenues for this service reached P$1,910 million (+5%). Monthly Charges and Supplementary Services increased by P$22 million or 4%, to P$555 million, as lines in service grew by 2%. Revenues generated by traffic (Local Measured Service, Domestic Long Distance and International Telephony) totaled P$905 million, with an increase of 4% vs. 9M06. Interconnection revenues amounted to P$273 million (+20%), mainly fueled by higher cellular traffic. Other & Public Telephony Other revenues reached P$177 million, decreasing by 7% mainly due to the decline in traffic. Internet and Data Transmission Mainly due to the increase in broadband connections, Internet continues to deliver revenue growth to the wireline business. During 9M07, revenues from this business grew 22% vs. 9M06 to P$384 million. Moreover, Telecom's ADSL subscribers reached 677,000 (+302,000 or +81% vs. 9M06). Therefore, lines with ADSL connection accounted for approximately 16% of Telecom's lines in service. Telecom confirms its market approach, based on delivering higher velocity solutions, allowing its customers to access increasingly complex multimedia content as well as new value-added services. Telecom Argentina recently announced a significant improvement of its Broadband portfolio, by automatically upgrading its Arnet 640 K customers to Arnet 1 Mb product with no additional charge. In addition, Telecom launched the Arnet 20 Mb product, the fastest connection available in the Argentine market. Revenues generated by Data transmission amounted to P$126 million, (+12% vs. 9M06). The Company continues to work actively in the corporate accounts, public sector and the SME segment, positioning itself as an integrated provider of communications and connectivity solutions. Cellular Telephony The Cellular Telephony business generated revenues of P$4,095 million in 9M07. Telecom Personal in Argentina As of September 30, 2007, Personal's subscribers reached 10.2 million (+2.5 million or +32% vs. 9M06). Approximately 67% of the overall subscriber base was prepaid and 33% was postpaid. By the end of 9M07, subscribers with GSM technology represented 96% of the total subscriber base. Total voice traffic increased by 33% vs. 9M06 while outgoing SMS traffic increased from an average of 508 million messages per month to an average of 839 million (+65%). Moreover, the Average Monthly Revenue per User ("ARPU") remained stable at P$38, when compared to 9M06. Value-Added Services accounted for 27% of ARPU. Revenues totaled P$3,799 million (+P$1,051 million or +38% vs. 9M06). Service revenues increased by 43%, while handset sales grew 9% in the period, totaling P$401 million. Reconfirming its strong focus on technological innovation, Personal continued the expansion of its 3G services to Cordoba and Rosario cities, therefore becoming the first 3G operation outside Buenos Aires. In terms of products and services, should be mentioned the launch of "Servicio de Localizacion Movil", a business application developed for sales forces, and "Navegador Personal", incorporating satellite navigation facilities into existing BlackBerry services. In addition, Personal is the first Latin American operator to provide international roaming in 3G. Finally, Personal continued to expand its commercial network, by inaugurating the country's largest customer care center in Cordoba. Nucleo Personal's controlled subsidiary that operates in Paraguay, generated revenues equivalent to P$296 million (+21% vs. 9M06). By the end of the quarter, the subscriber base reached approximately 1.5 million, +58% vs. 9M06. Prepaid and Postpaid customers represented 89% and 11%, respectively, while GSM subscribers represented 85% of the overall subscriber base. Consolidated Operating Costs The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$5,314 million in 9M07, which represents an increase of P$747 million or +16% vs. 9M06 with the following breakdown: -- Salaries and Social Security Contributions: P$712 million (+18%), affected by wage adjustments and a minor headcount increase in the cellular business. -- Taxes: P$467 million (+23%), in line with the general evolution of the business. -- Agents and Prepaid Card Commissions: $508 million, (+39%), due to the expansion in terms of subscribers and traffic. -- Advertising: P$199 million (+38%), to support commercial activity in cellular and internet. -- Cost of cellular handsets: increased to P$597 million (-9%) as a consequence of fewer handset sales, in the context of an increasingly penetrated market and decreased in the migration process of TDMA to GSM handsets. -- TLRD and Roaming: P$544 million (+44%) due to increased traffic among cellular operators. -- Depreciation of Fixed and Intangible Assets: P$1,051 million, stable when compared to 9M06. Telecom Argentina totaled P$626 million and Telecom Personal $425 million (-13% y +26%) respectively. Consolidated Financial and Holding Results Financial and Holding Results resulted in a loss of P$323 million, as compared to the P$413 million loss registered in 9M06. This improvement is mainly due to lower net interest expenses by P$138 million (mainly due to the reduction in net debt). Net Debt As of September 30, 2007, Net Debt (Loans before the effect of NPV valuation, minus Cash, Banks, Current Investments and Other credits derived from derivative Investments) amounted to P$2,516 million, a reduction of P$1.261 million as compared to September 2006. Interest accrued on the Company's debt totaled P$227 million. During October 2007 Telecom Argentina performed a prepayment on its outstanding Notes equivalent to the remaining 26% of the mandatory amortization scheduled for April, 2010 and 73.6% of the mandatory amortization scheduled for October, 2010. Consolidated Capital Expenditures A total amount of P$981 million invested in fixed and intangibles assets was allocated to the cellular business (P$426 million) and the Voice, Data and Internet businesses (P$555 million). Main Capex projects in the Voice, Data and Internet Businesses relates to the expansion of ADSL services and the upgrade of the network for services of a new generation, while in the cellular business improvement of the network (capacity, coverage and 3G), and the launch of new and innovative value added services were areas of focus. Commercial Initiatives In concern with the massive market, the Company lounged for the first time in the country, the SMS (Short Message Service) for fixed lines, performance that showed the beginning of some innovations that Telecom would offer to its residential clients and which would change the way of communicating at home. 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 others 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 September 30, 2007, Telecom had 984,380,978 shares outstanding. (*) Employee Stock Ownership Program For more information, please contact the Financial Planning & Investor Relations Department: Pedro Insussarry Mariano Martire Gaston Urbina Ruth Fuhrmann 54-11-4968-3743 54-11-4968-3718 54-11-4968-6236 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.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. *Non-financial data unaudited DATASOURCE: Telecom Argentina S.A. CONTACT: Pedro Insussarry, +54-11-4968-3743, or Pablo Caride, +54-11-4968-3602, 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