Form 20-F

X

Form 40-F

Yes

No

X

Yes

No

X

1.      Press Release — Telecom Argentina S.A. announces consolidated results for the fiscal year 2018 (‘FY18’)

*Unaudited non financial data

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IAS 29

Adjusted Proforma

(in million P$ adjusted by inflation, except where noted)**

As of December 31
2018

As of December, 31
2017

Δ $

Δ %

Consolidated Revenues

168,046

172,354

(4,308)

-2.5%

Operating Income before D&A

56,368

54,598

1,770

3.2%

Operating Income

21,257

17,715

3,542

20.0%

Net Income attributable to Controlling Company

5,294

14,544

(9,250)

-63.6%

Shareholders’ equity attributable to Controlling Company

225,686

n.a.

-

-

Net Financial Position - (Debt) / Cash***

(65,628)

(9,580)

(56,048)

-

CAPEX *

42,480

39,938

2,542

6.4%

Fixed lines in service (in thousand lines)

3,544

3,795

(251)

-6.6%

Mobile customers (in thousand)

21,009

22,146

(1,137)

-5.1%

Personal (Argentina)

18,316

18,980

(664)

-3.5%

Nextel (Argentina)

314

717

(403)

-56.2%

Núcleo (Paraguay) -including Wimax customers-

2,379

2,450

(71)

-2.9%

Broadband accesses in Argentina (in thousand)

4,110

4,062

48

1.2%

Cable TV Suscribers (in thousand)

3,454

3,503

(49)

-1.4%

Argentina

3,310

3,360

(50)

-1.5%

Uruguay

144

143

1

0.7%

Average Billing per user (ARBU) Fixed Telephony / voice (in P$)

219.3

152.3

67.0

44.0%

Average Revenue per user (ARPU) Mobile Services - Personal (in P$)

174.0

142.3

31.7

22.3%

Average Revenue per user (ARPU) Broadband (in P$) ***

623.4

463.3

160.1

34.6%

Average Revenue per user (ARPU) Cable TV (in P$)

696.2

510.3

185.9

36.4%

IAS 29

Adjusted Proforma

FY18

FY17

Δ $

Δ %

Consolidated Revenues (MMP$)

168,046

172,354

(4,308)

(2.5%)

Net Income attributable to Controlling Company (MMP$)

5,294

14,544

(9,250)

(63.6%)

Earnings attributable to Controlling Company per Share (P$)

2.5

6.8

(4.3)

Earnings attributable to Controlling Company per ADR (P$)

12.3

33.8

(21.5)

Operating Income before D&A *

33.5%

31.7%

Operating Income *

12.6%

10.3%

Net Income*

3.3%

8.6%

*As a percentage of Consolidated Revenues

Note: The average of ordinary shares outstanding considered amounted to and 2,153,688,011 as of FY18 and FY17

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Consolidated Operating Revenues

Mobile Services

As of December 31, 2018, mobile clients amounted to 21.0 million.

In FY18, mobile services revenues represented P$57,776 million (-8.7% vs. FY17). This variation was mainly due to the higher effect of the restatement of revenues of FY17 vs. FY18, partially offset by the increase in the ARPU.  The commercial strategy was focused on promoting the consumption of mobile internet services through an update of the integrated offer of plans suitable for all market segments.

In turn, equipment revenues amounted to P$12,834 million (-P$2,274 million or -15.1% vs. FY17). This variation is mainly due to the greater effect of the restatement of the revenues of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018 and by a decrease in the quantities sold, partially offset by the increase in prices of handset sales.

Mobile Services in Argentina

As of December 31, 2018, Personal reached 18.3 million subscribers in Argentina, where postpaid clients represented 39% of the subscriber base.

In FY18, mobile service revenues in Argentina (excluding equipment sales) amounted to P$51,089 million (-6.2% vs. FY17). Considering mobile revenues in current terms, mobile internet revenues reached 62.1% of service revenues of Personal in Argentina (vs. 49.7% in FY17).

The average monthly revenue per user (‘ARPU’) of Personal in Argentina amounted to P$174.0 during FY18 (+22.3% vs. FY17).

As of December 31, 2018, Nextel IDEN subscriber base reached approximately 0.3 million subscribers, where postpaid clients represented 80% of the subscriber base and prepaid clients represented the remaining 20%.

Commercial Initiatives

During the fourth quarter of 2018, the integration mobile service brands began with the launch of a campaign to transport Nextel’s customers to Personal.  This communication was accompanied by the presentation of Personal’s new Smart Radio service, which includes the benefits of the most modern 3G/4G network in the market. Smart Radio enables customers to communicate with all users who share the radio network, including other providers besides Personal, through the use of robust equipment or smartphones which are compatible with the application of the service.

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In addition, the promotion of the update of our clients’ devices with discounts and special financing continued, and focusing on the convergence of products. In terms of new releases, the entire portfolio of iPhone devices was incorporated.

Regarding infrastructure, Personal continued to enhance the mobile internet experience of its customers through the deployment of its 4G and 4G+ network throughout Argentina, which currently covers more than 1,500 locations from La Quiaca to Ushuaia, and reaching more than 12.2 million customers with 4G devices throughout the country. Accompanying these improvements through a massive communication campaign, the 4G Personal Network was promoted as the fastest in the country -based on the results of international benchmarks that measure network standards through the worldwide experience of customers-.

Likewise, Club Personal Convergente was also presented to Fibertel and Cablevisión customers, which includes benefits with discounts on trips, supermarkets, cinemas, shopping, and others to the entire client portfolio of the different services.

Personal in Paraguay (‘Núcleo’)

As of December 31, 2018, Núcleo’s subscriber base reached around 2.4 million clients. Prepaid and postpaid customers represented 83% and 17%, respectively.

Núcleo generated service revenues equivalent to P$6,687 million during FY18 (+41.6% vs. FY17). Internet revenues represented 45.3% of FY18 service revenues (vs. 44.5% in FY17).

Cable TV Services

Cable TV service revenues reached P$36,067 million in FY18 (-9.6% vs. FY17). This decrease was mainly explained by the greater effect of the restatement of FY17 revenues vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, which was partially offset by the upselling of value added services combined with price adjustments. Cable TV subscribers totaled almost 3.5 million, while the Cable TV ARPU reached P$696.2 during FY18, rising +36.4% vs. FY17. Moreover, average monthly churn during FY18 was 1.4%.

In the fourth quarter of 2018, Cablevisión continued to add featured titles to its on-demand content grid, being the most relevant the co-production Un Gallo para Esculapio (season II), and Morir de Amor.

In addition, the Company continued offering the possibility to customers to enjoy different Cablevisión Flow exceptional content without consuming mobile data of their Personal plans, as were the cases of the friendly matches of the Argentine National Soccer Team played after the World Cup, and the Copa Libertadores final between Boca and River and the Club World Cup 2018.

In the fourth quarter of 2018, Cablevisión continued to migrate its clients in Uruguay in the cities of Montevideo, Canelones and San José to satellite technology, adding more high definition channels to its programming to its offer and, in the near future, new value added services.

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Fixed Telephony and Data Services

During FY18, revenues generated by fixed telephony and data reached P$23,149 million in FY18, +14.2% vs. FY17. The increase in fixed telephony services was mainly explained by monthly fee price increases that came into effect for both corporate and residential fixed line customers, and additionally due to the bundled offer of packs that include voice and internet services (‘Arnet + Voz’), that aim to achieve higher levels of customer loyalty.

As a result, the average monthly revenue billed per user (‘ARBU’) of fixed telephony reached P$219.3 in FY18, +44.0% vs. FY17.

Meanwhile, Data revenues increase (services mainly offered to Corporate customers, SMEs, Government and to other operators) was mainly driven by FX rate variations that affected those contracts that were adjusted by the $/US$ exchange rate, in a context that evidences the growing position of Telecom as an integrated ICT provider.

In this sense, FiberCorp, Personal and Telecom presented their unified portfolio of products and services for companies in the province of Tucumán, Argentina, promoting to current clients and prospects the benefits of the integration of the corporate brands of Telecom Argentina, as well as the latest trends in the world of technology.

In addition, and complementary to its innovation strategy in Internet of Things, the Company launched a third device designed for pets: Personal Bipy Mascotas, who joins family IoT solutions already launched as Bipy Adultos and Bipy Niños. Bipy Mascotas is an intelligent pet locator device connected to the Personal 4G network. The device favors remote monitoring, provides useful information of its profile and allows the connection via voice at a distance, through a mobile application.

Internet Services

Internet services revenues totaled P$37,742 million during FY18, +14.6% vs. FY17. As of December 31, 2018, total broadband accesses increased to more than 4.1 million (+1.2% vs. FY17). Additionally, broadband ARPU amounted to P$623.4 per month in FY18 (+34.6% vs. FY17). Moreover, the average monthly churn rate for the period was 1.9%. On the other hand, clients with service of 20Mb or higher currently represent 40% of the total customer base as of FY18.

Consolidated Operating Costs

Consolidated Operating Costs (including D&A and impairment of PP&E and intangible assets) totaled P$146,789 million in FY18, a decrease of P$7,850 million, or -5.1% vs. FY17. These lower operating costs vs. FY17 are mainly associated with the higher effect of the restatement of FY17 vs. FY18 operating costs, in order to be expressed in constant

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currency as of December 31, 2018, which allowed an increase in Operating Income before D&A and a margin expansion. Moreover, this decrease in costs was partially offset by greater costs of services contracted with suppliers, including higher programming and content costs due the incorporation of broadcasting signals of football matches, and an increase in the charge for bad debt expenses.

The cost breakdown is as follows:

- Employee benefit expenses and severance payments totaled P$30,048 million (-7.2% vs. FY17). The decrease was mainly caused by a higher effect of restatement of employee benefit expenses and severance payments for FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, partially offset by increases in salaries to unionized and non-unionized employees together with the associated social security contributions. Finally, total employees at the end of FY18 amounted to 25,343 (vs. 26,958 in FY17).

- Interconnection and transmission costs (including TLRD, Roaming, international settlement charges and lease of circuits) totaled P$5,525 million, -6.8% vs. FY17, decreasing mainly due to the greater effect of the restatement of interconnection and transmission costs for FY17 vs. FY18, in order to be expressed in current currency as of December 31, 2018, partially offset by higher TLRD costs and carriers’ charges.

- Fees for services, maintenance, materials and supplies amounted to P$16,261 million (-10.4% vs. FY17). These lower costs are mainly due to the greater effect of the restatement of the fees for services, maintenance, materials and supplies of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, which was partially offset by increases in fees for services, mostly related to call centers and higher professional fees generated by a greater level of activity driven mainly by new Company projects and by services linked to operational management in general. There were also higher technical maintenance costs and higher hardware and software maintenance costs due to price increases, the US$ FX fluctuations and the higher level of activity.

- Taxes and fees with regulatory authorities reached P$13,609 million (-8.0% vs. FY17). This decrease corresponds mainly to the greater effect of the restatement of taxes and fees with the regulatory authority of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018, partially offset by the increase in revenues, at nominal value.

- Commissions and advertising (Commissions paid to agents, prepaid card distribution commissions and others) totaled P$11,210 million (-3.4% vs. FY17). This decline is due to the higher effect of the restatement of Commissions and advertising of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, partially offset by higher fees paid in favor of commercial channels and collection fees.

- Cost of handsets sold amounted to P$9,667 million (-18.0% vs. FY17). The majority of this amount can be associated to handset sales in Argentina, which decreased vs. FY17 due to the greater effect of restating the cost of equipment and handsets sold in FY17 vs. FY18 and due to the decrease in the quantities sold, partially offset by higher average costs per unit in FY18.

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- Programming and content costs totaled P$12,156 million (+15.0% vs. FY17), increasing largely due to the incorporation of the cost of signals to broadcast live football matches of the first division of the Argentine Football Association, price increases and fluctuation of the P$/US$ exchange rate.

- Depreciation, amortization and impairment of PP&E and intangible assets amounted P$35,111 million (-4.8% vs. FY17). This reduction is explained mainly by a greater effect of the restatement of the depreciation, amortization and impairment of PP&E and intangible assets of FY17 vs. FY18, in order to be expressed in homogeneous currency as of December 31, 2018. It is important to highlight the recognition of the impairment allowance of the Arnet trademark for P$ 1,623 million, because this trademark will no longer be used.

- Other Costs totaled P$13,202 million (+5.1% vs. FY17), of which bad debt expenses reached P$3,527 million (+28.6% vs. FY17), and whose increase is mainly due to the impact generated by the application as of the FY18 of IFRS 9, partially offset by as lower other operating costs that totaled P$9,675 million (-1.5% vs. FY17).

Net Financial Results

The Net Financial Results (including Financial Expenses on Debt and Other Financial Results, net) showed a loss of P$18,795 million in FY18, compared with a gain of P$3,886 million in FY17. The result was mainly due to an increase in financial expenses on debt of P$30,780 million, mostly due to the strong depreciation of the peso during the FY18 and greater interest expenses generated by an increase of the net financial debt, followed by a decrease in other financial results, net (excluding RECPAM) of P$3,382 million vs. FY17 (reaching P$1,774 million in FY18). The aforementioned lower results were partially offset by a greater RECPAM (inflation adjustment gain / loss) which amounted to P$13,403 million (generating greater earnings of P$11,481 million vs. FY17).

Consolidated Net Financial Debt

As of December 31, 2018, net financial debt position (cash, cash equivalents plus financial investments and financial NDF minus loans) totaled P$65,628 million, increasing when compared to the consolidated net financial debt position as of December 31, 2017 (calculated as the sum of consolidated net financial debt positions of Telecom Argentina and Cablevisión, which was P$9,580 million).

in million of P$

FY17

FY18

$ Var

Financial expenses on debt

-$ 3,192

-$ 33,972

-$ 30,780

Other financial results, net (excluding RECPAM)

$ 5,156

$ 1,774

-$ 3,382

RECPAM (Inflation Adj. Gain / Loss)

$ 1,922

$ 13,403

$ 11,481

Total

$ 3,886

-$ 18,795

-$ 22,681

Capital Expenditures

During FY18, the Company invested P$42,480 million, increasing approximately 6.4% from the sum of the parts of Telecom Argentina’s and Cablevisión’s CAPEX as of FY17. The aforementioned investments amounted to P$35,674 million in current terms during FY18, increasing by 56.3% vs. FY17. The investments were focused on projects that maximize the network capacity and on the development of products and services that contribute to address the customer’s needs that today demand for connectivity and data availability. Moreover, transmision and transport networks has been extended to unify the differents

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access technologies, reconverting the copper fixed networks into fiber or coaxial-fiber hybrid networks, in order to face the the increaseing services demand from mobile and fixed clients.  Likewise, significant investments have been made in the charging, billing and relationship systems with customers. The Company aims to improve the capacity and coverage of its networks, which is key factor for the transformation towards convergent services with international quality standards, but also to leverage the content business, with Flow as an integral content platform and entertainment center, whose competitive advantages and differential features place it above other platforms. In relative terms, CAPEX reached 25.3% of consolidated revenues in FY18 (vs. 23.2% in FY17), while in current terms they reached 25.8% of revenues.

These commercial initiatives and improvements in infrastructure through sustained investment impacted on the quality of service standards and were reflected in the rise of the Net Promoter Score (NPS) indicators of recommendation of Personal as a favorite mobile services brand. In addition, they resulted in more users from other service companies choosing Personal, leading the industry-level mobile number portability during the last quarter.

In the last quarter of 2018, the Company announced investments in the Buenos Aires Atlantic Coast to expand the access network, and improve the speed and capacity of mobile connections. The investment plan foresees the construction of 30 new sites; in addition to the fiber optic deployment that increases the capacity of the 4G data network. This agreement was added to other similar celebrated during the year with the Municipalities of the cities of Rosario (province of Santa Fe), the province of Jujuy, and the municipalities of the cities of Ezeiza and Lomas de Zamora (in the Buenos Aires Metropolitan Area).

Breakdown of the comparative figures restated by inflation

FY18

FY17

IAS 29

Adjustment

Proforma
(ex IAS 29)

Proforma
Adjusted

r $

r %

Revenues

168,046

30,886

137,160

172,354

(4,308)

-2.5%

Consolidated Operating Costs

(146,789)

(33,834)

(112,955)

(154,639)

7,850

-5.1%

Operating income

21,257

(2,948)

24,205

17,715

3,542

20.0%

Net Financial results and results of equity in earnings from associates

(18,559)

22,198

(40,757)

4,239

(22,798)

-

Net (loss) income before income tax expense

2,698

19,250

(16,552)

21,954

(19,256)

-87.7%

Income tax expense

2,838

(3,132)

5,970

(7,210)

10,048

-139.4%

Net (loss) income

5,536

16,118

(10,582)

14,744

(9,208)

-62.5%

Attributable to:

Controlling Company

5,294

15,978

(10,684)

14,544

(9,250)

-63.6%

Non-controlling interest

242

140

102

200

42

21.0%

Operating income before D&A

56,368

9,994

46,374

54,598

1,770

3.2%

As % of Revenues

33.5%

33.8%

31.7%

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During FY18 consolidated total revenues decreased 2.5% (-P$4,308 million vs. FY17) amounting to P$168,046 million. The inflationary effect contained in revenues amounts approximately to P$30,886 million.

Operating income before depreciation and amortization reached P$56,368 million in FY18 (+ P$1,770 million or +3.2% vs. FY17), representing 33.5% of consolidated revenues (vs. 31.7% in FY17). The inflationary effect contained in operating income before D&A amounts approximately to P$9,994 million.

Operating income amounted to P$21,257 million in FY18 (+P$3,542 million or +20.0% vs. FY17). The inflationary effect contained in operating income amounts approximately to -P$2,948 million, mainly due to a greater restatement of D&A and impairment of PP&E and intangible assets.

Net Financial results and results of equity in earnings from associates resulted in a net loss of P$18,559 million in FY18, representing a higher loss of P$22,798 million vs. FY17. The inflationary effect contained in net financial results and results of equity in earnings from associates amounts approximately to P$22,198 million, mainly due to a positive effect from the exposure to inflation.

Telecom Argentina recorded a net income of P$5,536 million in FY18, which means a decrease of P$9,250 million in relation to the net income of P$14,744 million in FY17. The inflationary effect over net income generated a positive impact of approximately P$16,118 million.

Relevant Matters

Loan with Deustche Bank AG, London Branch

On November 8, 2018, Telecom Argentina took due notice of the acceptance of a loan offer by Deutsche Bank AG, London Branch, as organizer of syndicate of entities, for an amount up to US$ 200 million (which could be increased to US$ 300 million). The loan has a term of 42 months from the date of the initial disbursement and will accrue compensatory interest at an initial rate per annum equivalent to LIBOR + 4.5% that will be payable quarterly in arrears. The capital will be payable in 6 consecutive semi-annual equal installments equivalent to 12.5% of the amount of paid-up capital with a final payment on the due date equivalent to 25% of the initial disbursement. The proceeds from the loan were used by the Company only to cancel partially the Syndicated Loan agreement celebrated on February 2, 2018 for US$ 1,000 million.

Incorporation of a new lender for US$ 100 million to the Deutsche Bank loan

On November 14, 2018, in accordance with the provisions of the loan agreement signed on November 8 between Telecom Argentina and Deutsche Bank AG, London Branch, as organizer of a syndicate of entities, (“the Loan”), today a new lender was incorporated to the Loan for an amount up to US$ 100 million, subject to the same terms and conditions of the Loan that were duly informed.

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Other Relevant Matters

Cancellation of the syndicated loan agreement celebrated in February 2018 for US$ 1,000 million

In October 2018, the Company had prepaid US$ 500 million outstanding under the syndicated loan agreement entered into on February 2, 2018 for US$ 1,000 million (the “Original Loan”), through funds obtained under the of the syndicated loan agreement signed on October 8, 2018, and US$ 100 million with own funds, as a mandatory pre-cancellation condition agreed upon in the terms of the Original Loan. Moreover, in November 2018, the funds obtained from the loan with Deutsche Bank for US$ 300 million were used to prepay the Original Loan. Finally, on February 11, 2019 Telecom Argentina canceled the final amount outstanding under the Original Loan for US$ 100 million with its own funds.

Loan agreement with the International Finance Corporation (IFC)

On  March 4, 2019, Telecom Argentina entered into a loan agreement with the International Finance Corporation (“IFC”), for a total amount of up to US$ 450 million, as requested by the Company in one or more disbursements (the “Loan”). The proceeds from the loan will be used by the Company to finance capital investments for 2019.

The Loan will consist of a tranche “A” (“Tranche A”), tranche “B-1” (“Tranche B-1”), tranche “B-2” (“Tranche B-2”), tranche “B-3” (“Tranche B-3”) and tranche “B-4” (“Tranche B-4”). In addition, the amounts disbursed under the Loan will mature in August 2023, in the case of Tranche B-1 and Tranche B-3, or in August 2024, in the case of Tranche A, Tranche B-2 and Tranche B-4.

Finally, the aforementioned financing was approved by the Company’s Board of Directors during its meeting held on March 1, 2019.

Destination of Retained Earnings

Regarding the destination of the Retained Earnings, according to Section 27, Chapter II of Title II of the CNV Rules, (N.T 2013), Shareholders’ Meetings of Companies that exhibit cumulative positive results in their annual financial statements not subject to restrictions for its distribution, should adopt an express resolution regarding its allocation to either one or a combination of the following: cash dividend distribution, share capitalization or creation of reserves, where it should be specifically foreseen in the Agenda of the Shareholders’ Meeting that deals with the treatment of the distributable earnings.

In relation of the aforementioned, the Board of Directors proposes:

In Pesos

Retained Earnings as of December 31, 2018

26,918,365,656

To Legal Reserve

(265,906,251)

To Cash Dividends

(6,300,000,000)

To Facultative reserve for future cash dividends

(6,300,000,000)

To Facultative reserve to maintain the level of investments in capital assets and the current level of solvency of the Company

(14,052,459,405)

To New Fiscal Year

---------

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Regarding this proposal, it should be taken into account that since the enactment of General Resolution CNV No. 777/2018 (published in the Official Gazette on December 28, 2018), the re-expression method for the financial statements in homogenous currency is applicable for issuer companies, as established by the International Accounting Standard No. 29 (IAS 29).

Regarding the distribution of earnings, the aforementioned CNV General Resolution No. 777/2018, established that “The distribution of earnings must be treated in the currency of the date of the Shareholders’ Meeting by means of the price index corresponding to the month prior to their meeting.” (section 3, item 1, subsection e), Chapter III, Title IV of the CNV RULES (NT 2013),”Expression in constant currency of the earnings distributions”).

Therefore, it should be noted that this proposal of distribution of earnings corresponds to figures in constant currency as of December 31, 2018, leaving to the resolution of the Shareholders’ Meeting the determination of the amount that can be distributed.

In addition, the Board of Directors proposes i) that the cash dividends be made available to shareholders in three (3) equal installments, being payable the first installment within thirty (30) calendar days of their approval by the Shareholders’ Meeting, and the second and third installments within ninety (90) and one hundred and eighty (180) consecutive days of their approval by the Shareholders’ Meeting, respectively, or on the previous date determined by the Board of Directors; ii) that powers be delegated into the Board of Directors of the Company so that, depending on the evolution of the business, it may order the withdrawal, totally or partially, in one or more times, of an amount of up to P$ 6,300,000,000 from the “Facultative reserve for future cash dividends” and its distribution to shareholders as cash dividends, being these delegated powers able to be exercised until December 31, 2019.

*******

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As of March 7, 2019, Telecom Argentina has 2,168,909,384 shares issued and 2,153,688,011 shares outstanding.

Cablevisión Holding S.A. owns 18.75% of total capital stock directly and owns 20.06% of total capital stock indirectly through VLG Argentina S.A.U.

Solange Barthe Dennin

Luis F. Rial Ubago

Nahuel Monsalvo

(5411) 4968 3752

(5411) 4968 3718

(5411) 4698 4448

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12/31/18

12/31/17

Cash and cash equivalents

6,891

6,517

Financial Investments

2,121

162

Trade receivables

17,415

2,588

Other Receivables

4,323

1,223

Inventories

2,737

136

Total current assets

33,487

10,626

Financial Investments

4,672

-

Trade receivables

61

-

Goodwill

120,449

31,954

Property, plant and equipment (‘PP&E’)

150,476

45,701

Intangible assets

59,870

4,635

Other Receivables

2,723

1,154

Total non-current assets

338,251

83,444

TOTAL ASSETS

371,738

94,070

Trade payables

22,854

5,737

Financial debt

20,044

1,383

Salaries  and social  security payables

5,947

2,585

Taxes  payables

2,319

2,743

Dividend Payable

-

6,021

Other liabilities

1,537

152

Provisions

744

-

Total current liabilities

53,445

18,621

Trade payables

570

-

Financial debt

59,268

14,626

Salaries  and social  security payables

347

-

Deferred income tax liabilities

24,542

3,982

Taxes  payables

26

4

Other liabilities

1,159

198

Provisions

3,468

1,611

Total non-current liabilities

89,380

20,421

TOTAL LIABILITIES

142,825

39,042

Equity attributable to Controlling Company

225,686

54,182

Non-controlling interest

3,227

846

TOTAL EQUITY

228,913

55,028

TOTAL LIABILITIES AND EQUITY

371,738

94,070

12/31/18

12/31/17

Bank overdrafts - principal

2,276

-

Bank and other financial  institutions loans - principal

12,945

77

NDF

100

-

Accrued interest and related expenses

3,675

43

For purchase of equipment

1,048

1,257

Companies under Section 33 - Law 19,550 and related parties

-

6

Total Current Loans

20,044

1,383

For purchase of equipment

1,031

686

Notes - principal

18,831

13,767

Bank and other financial institutions loans - principal

34,260

210

Accrued interest and related expenses

5,146

(37)

Total Non Current Loans

59,268

14,626

Total Loans

79,312

16,009

Cash and cash equivalents, and Financial Investments

13,684

6,679

Net Financial Position - Cash (Debt)

(65,628)

(9,330)

14

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3-

Effect of Business Combination - over Assets, Liabilities, Equity and Income

(This table aims to explain the Merger registration and the allocation of a greater asigned value)

Telecom
(Accounting
acquiree)

Retained
earnings
adjustments

Business
Combination
effect IFRS 3

Total
indentifiable
consolidated
net assets,

Total
consolidated
indentifiable
net assets,

(1)

(2)

(3)

inc. as of
01.01.2018

constant
currency

ASSETS

CURRENT ASSETS

Cash and cash equivalents

2,831

-

-

2,831

4,180

Trade receivables

8,636

157

(656)

(4)   8,137

12,013

Other current assets

6,771

-

32

(4)   6,803

10,044

Total current assets

18,238

157

(624)

17,771

26,237

NON CURRENT ASSETS

Deferred income tax assets

626

-

(624)

2

3

Investments

2,657

-

3

2,660

3,927

Goodwill

2

-

59,653

59,655

88,072

Property, plant and equipment (‘PP&E’)

28,538

-

34,209

(4) 62,747

92,637

Intangible assets

7,096

(85)

33,175

40,186

59,329

Other non current assets

431

125

(125)

(4) 431

636

Total non currents assets

39,350

40

126,291

165,681

244,604

Total assets

57,588

197

125,667

183,452

270,841

LIABILITIES

CURRENT LIABILITIES

Total current liabilities

21,987

-

7

21,994

32,470

NON CURRENT LIABILITIES

Deferred income tax liabilities

48

83

16,610

16,741

24,716

Other non current liabilities

11,674

-

18

11,692

17,262

Total non current liabilities

11,722

83

16,628

28,433

41,978

Total Liabilities

33,709

83

16,635

50,427

74,448

EQUITY

Capital Stock - Outstanding Shares

969

-

(15)

954

954

Inflation Adjustment – Outstanding Shares

2,646

-

-

2,646

39,559

Capital Stock - Treasury Shares

15

-

-

15

15

Inflation Adjustment – Treasury Shares

42

-

-

42

152

Treasury shares acquisition cost

(461)

-

-

(461)

(1,795)

Merger Premium

-

-

109,469

109,469

127,343

Legal reserve

734

-

-

734

1,819

Special reserve for IFRS implementation

351

-

-

351

869

Voluntary reserve for investments in capital stock

461

-

-

461

3,300

Reserve for future cash dividend payments

9,730

-

-

9,730

22,414

Other comprehensive income

972

-

(972)

-

-

Cost of equity interest increase in controlled companies

(3)

-

3

-

-

Retained earnings

7,630

128

-

7,758

(195)

Equity attributable to Telecom Argentina

23,086

128

108,485

131,699

194,435

Equity attributable to non-controlling interest

793

(14)

547

1,326

1,958

TOTAL EQUITY

23,879

114

109,032

133,025

196,393

TOTAL LIABILITIES AND EQUITY

57,588

197

125,667

183,452

270,841

Impact of greater asigned value over consolidated income statements

FY ended as of

Dec 31, 2018

Revenues

(30)

Operating costs before D&A

(187)

Operating income before D&A

(217)

Depreciation, amortization (‘D&A’) and impairment of PP&E and intangible assets

(11,414)

Operating income

(11,631)

Net financial results

35

Net (loss) income before income tax expense

(11,596)

Income tax expense

3,479

Net (loss) Income

(8,117)

Attributable to Telecom Argentina (Controlling Company)

(8,044)

Attributable to non-controlling shareholders

(73)

15

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4-

Consolidated Income Statements - Pro Forma restated by inflation (constant figures)

(Allows the understanding of the variations of the Income Statement in real terms)

12/31/18

12/31/17

∆ $

∆ %

Revenues

168,046

172,354

(4,308)

-2.5%

Consolidated Operating Costs

(146,789)

(154,639)

7,850

-5.1%

Operating income

21,257

17,715

3,542

20.0%

Net Financial results and results of equity in earnings from associates

(18,559)

4,239

(22,798)

-

Net (loss) income before income tax expense

2,698

21,954

(19,256)

-87.7%

Income tax expense

2,838

(7,210)

10,048

-139.4%

Net (loss) income

5,536

14,744

(9,208)

-62.5%

Attributable to:

Controlling Company

5,294

14,544

(9,250)

-63.6%

Non-controlling interest

242

200

42

21.0%

Operating income before D&A

56,368

54,598

1,770

3.2%

As % of Revenues

33.5%

31.7%

5-

Consolidated Income Statements - Pro Forma (current figures)

(Allows the understanding of the variations of the Income Statement accounting for historical values)

12/31/18

12/31/17

∆ $

∆ %

Revenues

137,160

105,915

31,245

29.5%

Consolidated Operating Costs

(112,955)

(86,357)

(26,598)

30.8%

Operating income

24,205

19,558

4,647

23.8%

Net Financial results and results of equity in earnings from associates

(40,757)

(3,528)

(37,229)

-

Net (loss) income before income tax expense

(16,552)

16,030

(32,582)

-

Income tax expense

5,970

(5,238)

11,208

-

Net (loss) income

(10,582)

10,792

(21,374)

-198.1%

Attributable to:

Controlling Company

(10,684)

10,666

(21,350)

-

Non-controlling interest

102

126

(24)

-19.0%

Operating income before D&A

46,374

35,131

11,243

32.0%

As % of Revenues

33.8%

33.2%

16

www.telecom.com.ar