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FORM 6-K

 

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of May, 2007

Commission File Number: 001-13464

 

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Telecom Argentina S.A.

(Translation of registrant’s name into English)

 

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Alicia Moreau de Justo, No. 50, 1107

Buenos Aires, Argentina

(Address of principal executive offices)

 

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F      X                Form 40-F              

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes                          No      X    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes                          No      X    

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes                          No      X    

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

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Telecom Argentina S.A.

TABLE OF CONTENTS

 

Item
1.		Press Release, regarding Telecom Argentina’s S.A., Consolidated First Quarter Results for Fiscal Year 2007 (“1Q07”)

 

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FOR IMMEDIATE RELEASE
		Market Cap: P$13,83 billion
		(May 10, 2007)

Contacts:

Pedro Insussarry

Pablo Caride

Telecom Argentina

(54-11) 4968-3743/3602

TELECOM ARGENTINA S.A. ANNOUNCES CONSOLIDATED FIRST QUARTER

RESULTS FOR FISCAL YEAR 2007 (“1Q07”)*

 

Ø

Continuing with the positive trend observed in recent years, the Telecom Group confirms the strong expansion of its business. 1Q07showed a 28% growth in net revenues when compared to the same period of the previous year (“1Q06”), totaling P$2.055 million. The most dynamic segments continued to be cellular, Internet and data, which expanded 45%, 23% and 17% respectively.

 

Ø

Cellular subscribers increased by 51% while broadband subscribers grew 111%. In addition, fixed lines in service increased 4%, when compared to March 2006.

 

Ø

As a consequence of the general improvement of the business, Operating Profit before Depreciation and Amortization (“OPBDA”) reached P$688 million (+26% vs. 1Q06), equivalent to 33.5% of net revenues. Operating Profit totaled P$358 million (+82% vs. 1Q06).

 

Ø

Finally, Net Income totaled P$135 million. Shareholders equity as of March 31, 2007 amounted to P$2,261 million.

 

Ø

Net financial Debt (before NPV effect) declined to P$ 3,222 million (-P$1.052 million vs. 1Q06), primarily as a result of the cash flow generated by operations. The ratio of Net Financial Debt to OPBDA declined from 2.0x as of March, 2006, to 1.2x.

 

		As of March-31
		2007		2006		D			D%
Consolidated Net Revenues (in MM P$)		2,055		1,611		444			28	%
Voice, data & Internet		783		732		51			7	%
Cellular		1,272		879		393			45	%
Operating Profit before D&A (in MM P $)		688		546		142			26	%
Operating Profit (in MM P$)		358		197		161			82	%
Net Income (in MM P$)		135		3		132
Shareholder’s equity (in MM P$)		2,261		1,871		390			21	%
Net Financial Debt - Before NPV effect (in MM P$)		3,222		4,274		(1,052	)		-25	%
Net Financial Debt - Book value (in MM P $)		3,090		4,026		(936	)		-23	%
CAPEX (in MM P$)		198		185		13			7	%
Lines in service (Fixed lines -in thousands)		4,117		3,966		151			4	%
Cellular customers (in thousands)		10,639		7,041		3,598			51	%
Personal (Argentina)		9,310		6,351		2,959			47	%
Núcleo (Paraguay)		1,329		690		639			93	%
ADSL customers (in thousands)		526		250		276			111	%
Fixed line traffic (in MM minutes, Internet Traffic not included)		3,983		3,947		36			1	%
Incoming/Outgoing cellular voice traffic in Arg. (in MM minutes)		2,224		1,641		582			35	%
Average Revenue per user (ARPU) Fixed Telephony/voice (in P$)		39		38		0			1	%
Average Revenue per user (ARPU) Cellular Telephony Arg. (in P$)		37		36		1			4	%

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*	Non-financial data unaudited

 

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Buenos Aires, May 10, 2007 – Telecom Argentina (BASE: TECO2, NYSE: TEO), one of Argentina’s leading telecommunications groups, announced today a Net Income of P$135 million for the three month period ended March 31, 2007.

 

		3M 07			3M 06			D		D%
Net Revenues (MM P$)		2,055			1,611			444		28	%
Net Income (MM P$)		135			3			132
Earnings per Share ($)		0.14			0.00			0.13
Earnings per ADR ($)		0.69			0.02			0.67
OPBDA *		33.5	%		34	%
Operating Profit *		17	%		12	%
Net Income *		7	%		0	%

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*	As a percentage of Net Revenues

During 1Q07, Consolidated Net Revenues increased 28% (+P$444 million vs. 1Q06) to P$2,055 million, mainly fueled by the cellular and broadband businesses.

Moreover, OPBDA increased by 26% (+P$142 million) to P$688 million, equal to 33.5% of Consolidated Net Revenues.

Company Activities

Net Revenues

The evolution in Consolidated Net Revenues by reportable segment was as follows:

Voice, data transmission & Internet

Revenues generated by the Fixed-line Business (including voice, data transmission and Internet services) amounted to P$783 million, a 7% increase over 1Q06.

Voice

Total Revenues for this segment reached P$619 million (+4%).

Monthly Charges increased by P$6 million or 3%, reaching P$182 million, even though no increase has been applied to regulated tariffs. Lines in service increased 4% as a consequence of promotions and campaigns developed by Telecom.

Revenues generated by traffic totaled P$296 million, as a consequence of the 8% decrease in Local Measured Service and increases of 13% and 8% in Domestic Long Distance and International Telephony, respectively.

Interconnection revenues amounted to P$84 million (+22%), mainly driven by a higher level of mobile traffic transported by and terminated in Telecom’s fixed line network.

Internet and Data Transmission

As a consequence of the extraordinary evolution of broadband subscribers, Internet continues to be the main driver of growth in the fixed-line business, with revenues of P$123 million (+23% vs. 1Q06).

 

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As of the end of 1Q07, Telecom’s ADSL subscribers reached 526,000 (+276,000 or +111% vs. 1Q06). Lines with ADSL connection accounted for approximately 13% of Telecom’s lines in service. Regarding ISP services, Arnet subscribers totaled 534,000 (+80% or +237,000 subscribers), due to the increase of 262,000 broadband subscribers (+141%) and the decrease of 25,000 dial-up subscribers (-26%).

This positive evolution is a consequence of Telecom’s offering of high quality products at accessible prices (for example, the product Arnet 640Kb , which showed an excellent performance), leveraging on broadband-specific content, improving ADSL coverage, as well as investing in promotional and branding activities for the portfolio of Arnet products.

Revenues generated by Data transmission amounted to P$41 million, (+17% or P$6 million, vs. 1Q06).

Cellular Telephony

The Cellular Telephony business generated revenues of P$ 1,272 million in 1Q07.

Telecom Personal in Argentina

As of March 31, 2007, the total subscriber base totaled 9.3 million, 3 million customers more than those registered in 1Q06 (+47%). Approximately 68% of the overall subscriber base was prepaid and 32% was postpaid. Subscribers with GSM technology represented 91% of the total subscriber base at the end of 1Q07.

Total voice traffic, in minutes, increased by 35% vs. 1Q06 while outgoing SMS traffic increased from an average of 440 million messages per month to an average of 762 million (+73%). Moreover, the proportion of value-added services in the average monthly Revenue per User (“ARPU”) reached 27% in 1Q07.

In this context, revenues totaled P$1,180 million, increasing P$369 million (+45%). Service revenues increased by 48%, while handset sales increased by 25%. ARPU amounted to P$37 in 1Q07 (+4% vs 1Q06)

 

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During the quarter, Personal continued with its strategy of strengthening technological innovation by launching the latest generation of value-added services, such as “Personal Cam” (life images through the web portal); and “SMS to fixed” (text messages that can be sent to a fixed line telephone). Personal has also been the first operator offering Blackberry Pearl, with more features and a latest generation design.

In addition, Personal continued its customer loyalty program Club Personal with specific activities designed for the summer season. Meanwhile, the development of the network and commercial channels continued, mainly in the Southern Region, in order to improve service quality and customer attention to Personal’s subscribers.

Núcleo

Personal’s controlled subsidiary that operates in Paraguay, generated revenues equivalent to P$92 million (+35% when compared to 1Q06).

The subscriber base as of March 31, 2007 reached approximately 1.3 million, +93% vs. 1Q06. Prepaid and Postpaid customers represented 88% and 12%, respectively, while GSM subscribers represented 80% of the overall subscriber base.

Consolidated Operating Costs

The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$1,697 million in 1Q07, which represents an increase of P$283 million or +20% vs. 1Q06 with the following breakdown:

Salaries and Social Security Contributions: totaled P$214 million (+13%), affected by wage adjustments and headcount increases generated by the growth in the business.

Taxes: amounted to P$161 million (+40%), mainly due to direct taxes on sales.

Agents and Prepaid Card Commissions totaled $177 million, (+53%), as a consequence of the growth in the subscriber base in the cellular business and increased prepaid traffic sales.

 

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Advertising: expenditures reached P$61 million (+69%), related to brand positioning campaigns and the acquisition of new cellular and Internet customers.

Cost of cellular handsets: increased to P$197 million (+10%) due to the increase in handset sales related to the subscriber growth and handset upgrades.

TLRD (termination charges in third party cellular networks) and Roaming: increased to P$176 million (+36%) due to increased traffic among cellular operators, in line with the significant expansion of the market.

Allowance for Doubtful Accounts: amounted to P$19 million (+6%), but remained below 1% of net revenues.

Depreciation of Fixed and Intangible Assets decreased to P$330 million (+P$13million in the cellular business, -P$32 million in Voice, data & Internet business).

Consolidated Financial and Holding Results

Financial and Holding Results resulted in a loss of P$132 million, as compared to the P$183 million loss registered in 1Q06. The difference is mainly due to lower net financial interest expenses P$38 million (due to lower net financial debt) and foreign currency exchange losses P$19 million.

Net Financial Debt

As of March 31, 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$3,222 million, a reduction of P$1.052 million as compared to March 31, 2006. Interest accrued on financial debt totaled P$82 million.

It is worth mentioning that on April 16, 2007, Telecom Argentina cancelled the remaining 25% of the principal amortization originally scheduled for October 15, 2009 and 31.8% of the principal amortization originally scheduled for April 15, 2010 of its Series A and B Notes, in an amount approximately equivalent to US$81 million.

Consolidated Capital Expenditures

A total amount of P$198 million invested in fixed and intangibles assets was allocated to the cellular business (P$94 million) and the Voice, data and Internet business (P$104 million).

In the Fixed-line business, the Company focused its efforts on the deployment of a new generation network (NGN) based on IP technology Additionally, investments were allocated to the development of important IT projects, such as the new ERP system.

 

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In the Cellular business expenditures continued to be focused in the GSM/GPRS/EDGE network deployment in the South Region and the extension of its capacity in AMBA and North Regions. In addition, the Group continues with the development of value-added services.

Recent Developments

Sale of Publicom

As of April 12, 2007, Telecom sold Publicom, the company specialized in Directories, for approximately US$60 million.

The operation of Publicom has been consolidated in the Financial Statements in a special item as discontinued operations. This operation will generate an estimated positive result before taxes of approximately $167 million that will be registered in the second quarter of FY2007.

New Organizational Structure

The Telecom Group has implemented a new organization model in order to facilitate the synergy among fixed communications, mobile, broadband and contents.

The new scheme implies the elimination of the General Executive Direction and establishes direct reporting from the two General Directors to the Board.

Therefore, the business management gets a unified vision, under the responsibility of a Director of Operations, with four areas: Mobile Telephony, Network, Fixed Telephony-Residential and SMEs- and Fixed Telephony-Large Accounts and Wholesale-.

The corporative functions were grouped under the responsibility of the Director of Corporate Affairs in charge of assuring the optimization of process focusing on efficiency and service quality.

This announcement does not imply mergers nor corporate changes nor any modification in the current structure of business segments (Voice, Data and Internet, and Cellular)

New Chairman

As of April 27, 2007, the Board of Directors of Telecom Argentina appointed Lic. Carlos A. Felices as Chairman of the Group replacing Dr. Amadeo R. Vazquez.

***********

 

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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, 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 54-11-4968-3743		Mariano Martire 54-11-4968-3718		Gastón Urbina 54-11-4968-6236		Astrid Burger 54-11-4968-4448

Voice Mail: 54-11-4968-3628

Fax: 54-11-4313-5842

E-mail: relinver@ta.telecom.com.ar

For information about Telecom Group services, visit:

www.personal.com.ar

www.personal.com.py

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.

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(Financial tables follow)

*******

 

Carlos Felices

Chairman

*******

 

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TELECOM ARGENTINA S.A.

Consolidated information

FIRST QUARTER - FISCAL YEAR 2007

(In millions of Argentine pesos, except statistical data)

 

1-	Consolidated Balance Sheet

 

		Mar-31		Dec-31		D$			D%
		2007		2006
Cash, equivalents and investments		1,033		661		372			56	%
Trade receivables		724		743		(19	)		-3	%
Other current assets		311		363		(52	)		-14	%
TOTAL CURRENT ASSETS		2,068		1,767		301			17	%
Fixed & Intangible assets		6,363		6,520		(157	)		-2	%
Other non-current assets		459		428		31			7	%
TOTAL NON-CURRENT ASSETS		6,822		6,948		(126	)		-2	%
TOTAL ASSETS		8,890		8,715		175			2	%
Accounts payable		1,299		1,481		(182	)		-12	%
Loans		1,489		1,395		94			7	%
Reserves		81		85		(4	)		-5	%
Other current liabilities		429		412		17			4	%
TOTAL CURRENT LIABILITIES		3,298		3,373		(75	)		-2	%
Loans		2,730		2,703		27			1	%
Reserves		247		234		13			6	%
Other non-current liabilities		278		204		74			36	%
TOTAL NON-CURRENT LIABILITIES		3,255		3,141		114			4	%
TOTAL LIABILITIES		6,553		6,514		39			1	%
Minority Interest		76		72		4			6	%
Shareholders’ equity		2,261		2,129		132			6	%
TOTAL LIABILITIES AND EQUITY		8,890		8,715		175			2	%

2- Consolidated Loans

 

		Mar-31			Dec-31			D$			D%
		2007			2006
Corporate Bonds		1,032			1,014			18			2	%
Banks and others		347			334			13			4	%
Accrued interest		109			42			67			160	%
Derivaties		1			5			(4	)		-80	%
TOTAL CURRENT LOANS		1,489			1,395			94			7	%
Corporate Bonds		2,852			2,798			54			2	%
Banks and others		10			51			(41	)		-80	%
Net Present Value		(132	)		(146	)		14			-10	%
TOTAL NON-CURRENT LOANS		2,730			2,703			27			1	%
TOTAL LOANS		4,219			4,098			121			3	%
Derivatives valuation effect (Other Credits)		96			85			11			13	%
Cash, equivalents and investments		1,033			661			372			56	%
Net Financial Debt (without NPV effect)		3,222			3,498			(276	)		-8	%

 

 

		Mar-31						D$			D%
		2007			2006
Financial and Holding results
Financial results generated by assets
Interest on short term investments		23			19			4			21	%
Foreign currency exchange gains		8			9			(1	)		-11	%
Other financial results		—			7			-7
Total Financial results generated by assets		31			35			(4	)		-11	%
Financial results generated by liabilities
Interest on debt		(93	)		(127	)		34			-27	%
Foreign currency exchange losses		(70	)		(91	)		21			-23	%
Total Financial results generated by liabilities		(163	)		(218	)		55			-25	%
Total Financial and Holding results		(132	)		(183	)		51			-28	%

 

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3-	Consolidated Income Statement

Three-Months Comparison

 

		Mar-31						D $			D %
		2007			2006
Net revenues		2,055			1,611			444			28	%
Cost of services provided		(1,137	)		(986	)		(151	)		15	%
GROSS PROFIT		918			625			293			47	%
Administrative expenses		(77	)		(63	)		(14	)		22	%
Selling expenses		(483	)		(365	)		(118	)		32	%
OPERATING PROFIT		358			197			161			82	%
Equity income from related companies		—			6			(6	)		-100	%
Financial and holding results		(132	)		(183	)		51			-28	%
Other expenses, net		(32	)		(42	)		10			-24	%
RESULTS FROM ORDINARY OPERATIONS		194			(22	)		216			-982	%
Taxes on income		(52	)		31			(83	)		-268	%
Minority interest		(5	)		(5	)		—			0	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		137			4			133
RESULTS FROM DISCONTINUED OPERATIONS		(2	)		(1	)		(1	)		100	%
NET INCOME		135			3			132
Operating (Loss)/ Profit before D & A		688			546			142			26	%
As a % of Net Revenues		33	%		34	%

 

4-	Consolidated Revenues Breakdown

Three-Months Comparison

 

		Mar-31				D$			D%
		2007		2006
Fixed Telephony		554		537		17			3	%
Measured service
Local		110		119		(9	)		-8	%
DLD		121		107		14			13	%
Monthly charges		182		176		6			3	%
Public telephones		31		36		(5	)		-14	%
Interconnection		84		69		15			22	%
Others		26		30		(4	)		-13	%
International Telephony		65		60		5			8	%
Data transmission & Internet		164		135		29			21	%
Cellular Telephony		1,272		879		393			45	%
Telecom Personal		1,180		811		369			45	%
Monthly fee and measured service		265		193		72			37	%
Pre-paid card		418		230		188			82	%
Calling Party Pays		128		114		14			12	%
TLRD *		127		90		37			41	%
Handset sales		124		99		25			25	%
Others		118		85		33			39	%
Núcleo		92		68		24			35	%
Monthly fee and measured service		15		13		2			15	%
Pre-paid card		49		32		17			53	%
Calling Party Pays		10		10		—			0	%
TLRD *		12		7		5			71	%
Handset sales		2		1		1			100	%
Others		4		5		(1	)		-20	%
TOTAL NET REVENUES		2,055		1,611		444			28	%

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*	Charges for the termination of calls of the cellular operators.

 

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5-	Consolidated Income Statement by segments

Three Months Period - Fiscal Year 2007

(In million of Argentine pesos)

 

		Segments									Variation vs 1Q 06
		Voice, Data and Internet			Cellular Telephony			Consolidated			D$			D%
NET REVENUES		783			1,272			2,055			444			28	%
Salaries and social security contributions		(167	)		(47	)		(214	)		(25	)		13	%
Taxes		(48	)		(113	)		(161	)		(46	)		40	%
Materials and supplies		(71	)		(29	)		(100	)		(30	)		43	%
Doubtful accounts		(5	)		(14	)		(19	)		(1	)		6	%
Interconnection cost		(37	)		—			(37	)		(10	)		37	%
Settlement charges		(31	)		—			(31	)		6			-16	%
Lease of lines and circuits		(9	)		(12	)		(21	)		(7	)		50	%
Service fees		(26	)		(32	)		(58	)		(10	)		21	%
Advertising		(11	)		(50	)		(61	)		(25	)		69	%
Agent and Prepaid card commissions		(6	)		(171	)		(177	)		(61	)		53	%
Cost of cellular handsets		—			(197	)		(197	)		(18	)		10	%
Roaming and TLRD		—			(176	)		(176	)		(47	)		36	%
Others		(52	)		(63	)		(115	)		(28	)		32	%
Operating Profit before D&A		320			368			688			142			26	%
Operating Profit before D&A Margin		41	%		29	%		33	%		—			0	%
Depreciation of fixed assets		(207	)		(111	)		(318	)		20			-6	%
Amortization of intangible assets		(3	)		(9	)		(12	)		(1	)		9	%
OPERATING RESULTS		110			248			358			161			82	%
EQUITY INCOME FROM RELATED COMPANIES		—			—			—			(6	)		-100	%
FINANCIAL AND HOLDING INCOME		(88	)		(44	)		(132	)		51			-28	%
OTHER EXPENSES, NET		(23	)		(8	)		(31	)		11			-26	%
INCOME FROM ORDINARY OPERATIONS		(1	)		196			195			217			-986	%
Taxes on income		(23	)		(29	)		(52	)		(83	)		-268	%
Minority interest		—			(5	)		(5	)		(9	)		180	%
NET INCOME BEFORE DISCONTINUED OPERATIONS		(24	)		162			138			139			0	%
RESULTS FROM DISCONTINUED OPERATIONS		(3	)		—			(3	)		(6	)		0	%
NET INCOME		(27	)		162			135			135			—

Consolidated Income Statement by segments

Three Month Period - Fiscal Year 2006

(In million of Argentine pesos)

 

		Segments
		Voice, Data and Internet			Cellular Telephony			Consolidated
NET REVENUES		732			879			1,611
Salaries and social security contributions		(156	)		(33	)		(189	)
Taxes		(42	)		(73	)		(115	)
Materials and supplies		(55	)		(15	)		(70	)
Doubtful accounts		(5	)		(13	)		(18	)
Interconnection cost		(27	)		—			(27	)
Settlement charges		(37	)		—			(37	)
Lease of lines and circuits		(8	)		(6	)		(14	)
Service fees		(20	)		(28	)		(48	)
Advertising		(8	)		(28	)		(36	)
Agent and Prepaid card commissions		(4	)		(112	)		(116	)
Cost of cellular handsets		—			(179	)		(179	)
Roaming and TLRD		—			(129	)		(129	)
Others		(43	)		(44	)		(87	)
Operating Profit before D & A		327			219			546
Operating Profit before D & A Margin		45	%		25	%		34	%
Depreciation of fixed assets		(240	)		(98	)		(338	)
Amortization of intangible assets		(2	)		(9	)		(11	)
OPERATING RESULTS		85			112			197
EQUITY INCOME FROM RELATED COMPANIES		—			6			6
FINANCIAL AND HOLDING INCOME		(141	)		(42	)		(183	)
OTHER EXPENSES, NET		(25	)		(17	)		(42	)
INCOME FROM ORDINARY OPERATIONS		(81	)		59			(22	)
Taxes on income		20			11			31
Minority interest		—			(5	)		(5	)
NET INCOME BEFORE DISCONTINUED OPERATIONS		(61	)		65			4
RESULTS FROM DISCONTINUED OPERATIONS		(1	)		—			(1	)
NET INCOME		-62			65			3

 

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TELECOM ARGENTINA S.A.

Unconsolidated Information

FIRST QUARTER - FISCAL YEAR 2007

(In millions of Argentine pesos)

 

6-	Balance Sheet

 

		Mar-31		Dec-31		D $			D %
		2007		2006
Cash, equivalents and investments		829		484		345			71	%
Trade receivables		377		379		(2	)		-1	%
Other current assets		78		56		22			39	%
TOTAL CURRENT ASSETS		1,284		919		365			40	%
Other Trade receivables		303		284		19			7	%
Fixed & Intangible assets		4,066		4,191		(125	)		-3	%
Investments		899		872		27			3	%
Other non-current assets		10		10		—			0	%
TOTAL NON -CURRENT ASSETS		5,278		5,357		(79	)		-1	%
TOTAL ASSETS		6,562		6,276		286			5	%
Accounts payable		520		543		(23	)		-4	%
Loans		1,078		1,015		63			6	%
Reserves		73		78		(5	)		-6	%
Other current liabilities		200		190		10			5	%
TOTAL CURRENT LIABILITIES		1,871		1,826		45			2	%
Loans		1,938		1,879		59			3	%
Compensation and social benefits payable		33		32		1			3	%
Others liabilities		184		161		23			14	%
Reserves		275		249		26			10	%
TOTAL NON -CURRENT LIABILITIES		2,430		2,321		109			5	%
TOTAL LIABILITIES		4,301		4,147		154			4	%
Shareholders’ equity		2,261		2,129		132			6	%
TOTAL LIABILITIES AND EQUITY		6,562		6,276		286			5	%

 

7-	Income Statement

Three-Months Comparison

 

		31-Mar						D $			D %
		2007			2006
Net revenues		890			809			81			10	%
Cost of services provided		(477	)		(469	)		(8	)		-2	%
GROSS PROFIT		413			340			73			21	%
Administrative expenses		(43	)		(40	)		(3	)		-8	%
Selling expenses		(155	)		(140	)		(15	)		-11	%
OPERATING PROFIT		215			160			55			34	%
Equity income from related companies		55			(13	)		68			523	%
Financial & holding results		(88	)		(141	)		53			38	%
Other incomes & expenses		(19	)		(21	)		2			10	%
RESULTS FROM ORDINARY OPERATIONS		163			(15	)		178			0	%
Taxes on income		(23	)		20			(43	)		-215	%
NET INCOME		135			3			135			0	%
Operating (Loss)/ Profit before D&A		425			402			23			6	%
As a % of Net Revenues		48	%		50	%

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		Telecom Argentina S.A.
Date: May 11, 2007		By:		/s/ Amadeo R. Vázquez
		Name:		Amadeo R. Vázquez
		Title:		President