Losses widen for Telecom Argentina despite rising demand for services

12 Nov 2004

Telecom Argentina has reported net losses of ARS491 million (USD165.49 million) for the first nine months of 2004, compared with a net profit of ARS779 million for the corresponding period of 2003, despite a rise in demand for its internet access and mobile services. The telco attributed the losses in part to ongoing financial effects such as interest and exchange rate fluctuations, but went on to say that in Q3 the situation improved slightly: net losses in the three-month period amounted to ARS261 million, from a ARS509 million loss a year ago, on the back of a 19% year-on-year rise in turnover to ARS1.14 billion. Sales from fixed line activities in the three months to 30 September rose by 6% to ARS160 million thanks to an increase in the number of main lines in service. By the start of October Telecom reported more than 3.7 million active subscriber lines, up from 3.62 million a year ago. In 2004 the telco invested ARS250 million in its infrastructure – 29% of which was spent on the fixed line network.

Telecom’s data transmission division also performed strongly, returning revenues of ARS89 million (+10%) in Q3 thanks to increased internet traffic volumes and a rise in wholesale fees to ISPs reselling its ADSL and dial-up access services. In the twelve months to the end of September Telecom boosted the number of ADSL lines by 79% to 111,000, while its ISP unit, Arnet, boosted its ADSL base by 75% to 70,000 users and reported a stable dial-up base of 156,000 customers. Sales for the ISP amounted to ARS21 million, up 31% on a year ago.

Meanwhile, Telecom’s mobile arm Telecom Personal boosted its year-on-year third quarterly revenues by 48% to ARS452 million, after adding more than 950,000 new subscribers in the twelve-month period to lift its total to 3.38 million users. The wireless unit also reported some success in improving its pre-paid/post-paid mix: at the end of September the mix was 76% pre-paid and 24% contract customers, compared to 82% and 18% respectively a year ago. Elsewhere, Telecom Personal’s Paraguayan mobile business Nucleo ended the period with 458,000 subscribers, down 12% year-on-year after it disconnected inactive pre-paid users. Nucleo’s Q32004 turnover was down 7% at ARS38 million.