Telecom Argentina Stet - France Telecom Q3 Earnings Call Highlights

Key Points

• Q3 revenue and profitability increased: Revenue rose 18% year over year to $1.8 billion, while adjusted EBITDA climbed 37% to more than $640 million and the margin expanded to 36.1%. The company cautioned that peso appreciation boosted dollar growth; EBITDA grew more than 12% in inflation-adjusted pesos.
• Cash flow improved, but a one-off benefit was significant: Equity free cash flow nearly doubled to about $230 million, with an extraordinary working-capital benefit accounting for much of the increase. Net debt fell 9% to $2.9 billion, and net leverage improved to 1.2 times EBITDA.
• Network investment and strategic plans continue: Telecom spent about $350 million on capital expenditures, including fiber and 5G, and expanded its 5G footprint to nearly 1,900 sites. It also agreed to a multi-year, $400 million divestiture package with Metrotel, with potential integration and efficiency initiatives subject to regulatory approval.

Telecom Argentina Stet - France Telecom NYSE: TEO reported higher third-quarter revenue and profitability, as growth in adjusted earnings outpaced sales and an extraordinary working capital benefit helped lift cash flow.

Consolidated revenue reached $1.8 billion, up 18% from a year earlier in dollar terms, Chief Financial Officer Manuel García Díez said on the company’s earnings call. Adjusted EBITDA exceeded $640 million, up 37%, while the consolidated margin widened to 36.1% from 31.3%.

García Díez cautioned that the peso’s real appreciation amplified dollar growth rates: Inflation reached 33% over the preceding 12 months, while the exchange rate moved 10%. In inflation-adjusted pesos, EBITDA grew more than 12%, he said. Reported figures reflect inflation accounting under IAS 29.

Cash flow and investment

Equity free cash flow rose to about $230 million from nearly $120 million a year earlier, representing 36% of EBITDA compared with 25% a year earlier. García Díez said the improvement reflected stronger earnings and management of working capital, taxes and capital allocation.

He also noted that an extraordinary working capital benefit largely supported the quarter’s cash flow increase. Without that one-off effect, cash generation would have remained broadly consistent with recent quarters, he said.

Capital expenditures were approximately $350 million, or close to 20% of revenue, with spending focused on fiber-to-the-home and 5G. Head of Investor Relations Luis Rial Ubago said the company had expanded its 5G footprint from approximately 600 sites to nearly 1,900.

Net debt declined 9% year over year to $2.9 billion, and net leverage improved to 1.2 times EBITDA from 1.36 times in June. Rial Ubago said the company’s average debt life was approximately 4.5 years and its average cost of debt remained close to 8%.

Subscriber and margin trends

At Personal, postpaid mobile lines grew 1% year over year and accounted for 45% of the mobile base, up from 39%. García Díez attributed the prepaid decline mainly to a shorter inactivity period for disconnecting lines with no traffic, which he said had no significant revenue impact.

Broadband accesses increased 2.5% to 4.2 million, with fiber-to-the-home representing 40% of the broadband base, up from 28% a year earlier. Pay TV accesses in Argentina grew almost 5% to 3.4 million, supported by the World Cup and Pack Fútbol, whose subscriber count rose 12%. Flow unique customers increased 14% to nearly 2 million.

At TMA, mobile lines grew 5% to approximately 20 million, broadband increased close to 4% and pay TV grew more than 9%, García Díez said. TMA service revenue rose almost 1% in real terms despite approximately $26 million in promotional credits during the quarter.

García Díez said EBITDA margin at Telecom excluding TMA exceeded 42%, compared with roughly 35% a year earlier. TMA’s margin was around 25%. Both the current and prior-year periods included gains from copper sales associated with network decommissioning, with a larger gain in the third quarter of 2025.

Divestiture and integration plans

Rial Ubago said the company had reached a divestment agreement with Metrotel for an aggregate multi-year package of $400 million and was working through the operational steps needed to complete subscriber migration.

He described the agreement as a milestone toward a potential future integration, subject to regulatory approvals. If those approvals are obtained, the company could bring forward efficiency initiatives that may affect fourth-quarter EBITDA and cash generation, with the aim of accelerating synergies and improving performance in 2027.

About Telecom Argentina Stet - France Telecom (NYSE:TEO)

Telecom Argentina S.A. is a telecommunications and digital services provider based in Argentina. Its offerings include mobile and fixed-line phone service, broadband internet, pay television and digital entertainment, serving residential and business customers. The company markets mobile and internet services under the Personal brand and offers television and streaming services through Flow. It also provides connectivity and technology solutions to business and wholesale customers. Telecom Argentina was established in 1990 as part of the privatization of Argentina's state-owned telephone system.

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