Telecom Argentina mulls capex increase to US$600mn

Telecom Argentina is mulling raising 2021 capex from the planned US$350mn-500mn to US$600mn.

CEO Roberto Nobile said during the Q1 results call that two additional investment stages are planned which will be approved based on cash flow.

“The best we can do with the pesos we earn is to reduce debt or make investments. The way to maintain the value of the currency is to convert it into capex,” Nobile said, referring to the inflation scenario.

The company invested 14.2bn pesos (US$154mn) during the first quarter, a 14% increase over the same period last year.

Half the amount went to network technologies, 36% to installation and customer home equipment and 14% to international operations.

PRICES

Telecom is confident about the judicial process to stop regulator Enacom from controlling tariffs. The government imposed several measures, including price controls, as part of an economic emergency plan to help deal with the pandemic.

Several affected operators, including Telecom Argentina, have already scored legal victories challenging the government decree.

“Likewise, we have to say that Enacom has authorized price increases of around 15%. We have communicated an increase of 20%, we are not that far away,” Nobile said.

He added the company plans to increase tariffs by 10% in June while competitors announced increases of 7%. Although tariff hikes in line with inflation would hurt business, the gap should be as narrow as possible, Nobile said.

“The competition is also struggling with this situation. It is a problem for the entire industry,” he said.

During the first quarter, Telecom Argentina could reduce costs by 10% and during the second it will focus on reducing the number of customers that are receiving discounts, according to Nobile.

Telecom is offering a 30% discount for new customers, compared to competitors’ offer of around 50%. "We believe that 30% is a reasonable number that allows us not to be so far from inflation," he added.

Nobile said customers have not complained about price increases and that the number of customers with debt has been low.

RESULTS

Telecom Argentina posted revenues of 82.5bn pesos in the first quarter, down 8% year-on-year in inflation-adjusted figures. Service revenues fell 9% to 77bn pesos.

Ebitda was 30bn pesos, a 4.4% decrease while operating profits totaled 5.38bn pesos, a 35% annual drop.

The company had 18.8mn mobile accesses and 3.5mn pay TV subscribers, almost flat compared to 4Q20. But 12,000 broadband access were added for a total of 3.5mn.