Telecom(TEO) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's EBITDA margin for fiscal year 2023 was 28.1%, improved year-over-year due to effective cost management and better inflation pass-through to revenues [3][5] - Total revenues reached approximately $2.5 billion, with revenues in constant pesos decreasing by 9% year-over-year [5][40] - The company reported a net loss of ARS 249 billion in 2023, primarily due to the significant devaluation of the peso affecting financial debt [11][12] Business Line Data and Key Metrics Changes - The mobile subscriber base increased by over 760,000, representing a growth of 3.8% year-over-year, with mobile data usage growing by 11% [19][22] - Pay TV platform Flow saw unique customers reach 1.4 million, a 10% increase compared to the same period in 2022 [7][20] - Fixed voice segment continues to decline, particularly in traditional copper networks, while FTTH accesses are growing rapidly [4][22] Market Data and Key Metrics Changes - The accumulated inflation in Argentina for fiscal year 2023 was 211.4%, with a monthly inflation rate of 20.6% in January 2023 [6] - The company maintained a stable market share in pay TV despite a reduction in the total pay TV customer base [7] - In Paraguay, the company is the second-largest mobile player with 2.3 million customers and a strong EBITDA margin of almost 50% [9] Company Strategy and Development Direction - The focus is on expanding FTTH technology and mobile network development, including 5G deployment in high-density urban areas [3][8] - The company aims to improve service quality and customer satisfaction, with a strategy to enhance NPS since 2019 [8] - The digital business ecosystem is being built with B2B solutions, including cybersecurity and IoT services [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about inflation decreasing, which could enhance the ability to pass through costs to prices [35][50] - The company is cautious about CapEx, planning around$ 500 million but potentially reducing it to $350 million based on cash flow and market conditions [31][44] - The management highlighted the importance of maintaining customer base stability and improving pricing strategies amid competitive pressures [44] Other Important Information - The company successfully refinanced over$ 600 million of debt in 2023, focusing on local capital markets [28][42] - The company has a net debt of approximately $2.3 billion, with gross debt amounting to$ 2.6 billion as of December 31, 2023 [12][28] - The company has been granted waivers from creditors regarding compliance with financial ratios due to the economic situation in Argentina [52] Q&A Session Summary Question: What trends are you seeing so far in the first quarter? - Management noted that they are increasing prices monthly and have been able to pass through 75%-80% of inflation to ARPU, maintaining customer base levels [30][44] Question: Is there more room to improve margins through cost-cutting? - Management indicated that while cost-cutting has been effective, further margin improvements will likely come from sales and revenue growth as inflation stabilizes [31][32] Question: How long will it take to recover EBITDA levels post FX depreciation? - Management estimated it could take about one to one and a half years to fully outpace inflation and recover EBITDA levels, depending on government actions regarding inflation [35][50]