Telecom Argentina's FY24 and 4Q24 Results: Navigating Inflation and Growth

Telecom Argentina S.A. has announced its consolidated annual results for the fiscal year 2024 (FY24) and the fourth quarter of 2024 (4Q24), showcasing the company's resilience in the face of high inflation and currency devaluation in Argentina. Despite the challenging economic environment, Telecom Argentina managed to maintain service revenues and improve operating margins through strategic initiatives and effective management.



The company's strategic acquisition of a 100MHz block of 5G spectrum in the 3.5GHz band in 2023 has had both positive and negative impacts on its financial performance and market position. On the positive side, the acquisition has allowed Telecom Argentina to enhance its service offerings, potentially leading to increased market share. This is evident in the company's award by Ookla for the fastest mobile network in Argentina for the fifth consecutive time, which can be a differentiator in retaining and attracting customers. Additionally, the company has maintained a stable customer base in the fixed segment and has even seen a growth in mobile subscribers by 760 thousand compared to FY22, indicating that its strategic investments are helping it maintain its competitive position in the market.

However, the acquisition of 5G spectrum has also contributed to the increase in net financial debt, which rose by 41.1% in constant currency compared to FY22. This increase in debt may limit the company's future investment capacity and increase its vulnerability to further currency fluctuations. Furthermore, despite the strategic acquisition, Telecom Argentina's consolidated revenues decreased by 10.4% in constant currency compared to 1Q22, underscoring the volatile macroeconomic conditions that the company is facing.

In FY24 and 4Q24, Telecom Argentina managed to maintain service revenues and improve operating margins despite the high inflation rate and currency devaluation in Argentina through several strategic initiatives. The company successfully reduced operating costs by 10.1% in real terms compared to FY22, optimizing expenses and improving operational efficiency. This effective management of operating costs led to an increase in the company's margin over revenues to 28.1% in FY23, up from 27.5% in FY22.

The expansion of Telecom Argentina's virtual wallet service, Personal Pay, has significantly contributed to the company's revenue growth and customer engagement. The service, which allows customers to manage their finances digitally, has seen a substantial increase in the number of users, with over 2 million customers joining the platform. This growth demonstrates the potential for cross-selling and increased customer engagement through digital financial services. The expansion of Personal Pay has also helped Telecom Argentina to enhance its service offerings and potentially lead to increased market share.

In conclusion, Telecom Argentina's FY24 and 4Q24 results demonstrate the company's ability to navigate the challenging economic environment in Argentina. Through strategic acquisitions, effective management of operating costs, and the expansion of digital financial services, Telecom Argentina has managed to maintain service revenues and improve operating margins. However, investors should remain cautious about the potential risks associated with high inflation, currency devaluation, and regulatory changes, as these factors may impact the company's long-term financial health and stock performance.