Telecom(TEO) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The EBITDA margin for the first half of 2024 was 29.7%, showing improvement year-over-year despite a challenging macroeconomic environment [6] - Revenues totaled almost $1.83 billion, with a year-over-year decrease of 13% in constant pesos, but a quarter-over-quarter growth of 5.6% in real terms [9] - The net income profit was ARS 859 billion, primarily due to real exchange differences gains [6][20] Business Line Data and Key Metrics Changes - Mobile subscribers increased by over 3% year-over-year, with mobile data usage growing by 18% [7] - Broadband ARPU grew above inflation year-over-year, with FTTH accesses rapidly increasing [7][12] - Pay TV unique customers reached almost 1.5 million, an increase of 11% year-over-year [7][12] Market Data and Key Metrics Changes - The company holds a 35% market share in the broadband business in Paraguay, contributing to margin improvements [37] - In Paraguay, mobile customers grew by 5% year-over-year, with broadband and pay TV subscribers increasing by 17% and 10% respectively [14][15] Company Strategy and Development Direction - The current CapEx focus is on expanding fixed and mobile access networks, particularly FTTH and 5G [6][21] - The company aims to improve operational profitability through effective pricing and cost management strategies [18][30] - The Fintech business, Personal Pay, has grown significantly, with almost 3 million onboarded clients, positioning it as a key player in the market [16][29] Management's Comments on Operating Environment and Future Outlook - Management expects a reduction in inflation rates, which may stabilize around 2-3% [39][41] - Delinquency rates are among the lowest in the company's history, indicating improved collection practices [41] - The company is cautiously optimistic about the second half of the year, with positive trends in customer behavior and revenue expectations [39][42] Other Important Information - The company successfully returned to international debt capital markets with a$ 500 million issuance due in 2031, indicating strong investor support [8][27] - The net debt-to-EBITDA ratio as of June 2024 was 2.2x, reflecting a recovery in operational profitability [25] Q&A Session Summary Question: Consolidated margins and quarter-over-quarter decline - Management explained that seasonal factors and inflation fluctuations impacted margins, with a typical pattern of higher margins at the beginning of the year [32][33] Question: Margin improvement in Paraguay - The improvement is driven by the broadband business growth and cost management in the mobile segment [37] Question: Outlook for the second half and customer resistance to price increases - Management noted that July and August showed strong performance, with expectations for stable customer behavior regarding pricing [38][39] Question: Expectations for pricing increases and profitability - Management clarified that previous legal restrictions on price increases did not significantly impact their pricing strategy, which remains focused on portfolio evolution [44][45] Question: Clarification on cash flow and liability management - Management discussed the resolution of previous foreign exchange restrictions and ongoing liability management efforts to improve debt structure [47][52]