Telecom ArgentinaTelecom Argentina

1Q16 1Q16 EarningsEarnings ReleaseRelease

Conference Call PresentationConference Call Presentation

DDisclaimerisclaimer

This presentation is based on audited financial statements and may include statements that could constitute forward‐looking statements,including, but not limited to, the Company’s expectations for its future performance, revenues, income, earnings per share, capitalg, , p y p p , , , g p , pexpenditures, dividends, liquidity and capital structure; the impact of the emergency laws enacted by the Argentine government; and theimpact of rate changes and competition on the Company’s future financial performance. Forward‐looking statements may be identified bywords such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or other similar expressions.Forward‐looking statements involve risks and uncertainties that could significantly affect the Company’s expected results. The risks anduncertainties include, but are not limited to, uncertainties concerning the impact of the emergency laws enacted by the Argentine governmentwhich have resulted in the repeal of Argentina’s convertibility law, the devaluation of the peso, restrictions on the ability to exchange pesosinto foreign currencies, the adoption of a restrictive currency transfer policy, the “pesification” of tariffs charged for public services, theelimination of indexes to adjust rates charged for public services and the executive branch announcement to renegotiate the terms of the

i t d t bli i id i l di T l D t t i d id h i l d i d b iconcessions granted to public service providers, including Telecom. Due to extensive and rapid changes in laws and economic and businessconditions in Argentina, it is difficult to predict the impact of these changes on the Company’s financial condition. Other factors may include,but are not limited to, the evolution of the economy in Argentina, growing inflationary pressure and reduction in consumer spending and theoutcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward‐looking statements, which speak only asthe date of this document The Company undertakes no obligation to release publicly the results of any revisions to forward‐looking statementsthe date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward looking statementswhich may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in theCompany’s business or to reflect the occurrence of unanticipated events. Information included in this presentation is unaudited and may notcoincide with that included in the financial statements of the Company, due to rounding, reclassification matters, and other reasons. Readersare encouraged to consult the Company’s Annual Report and Form 20‐F as well as periodic filings made on Form 6‐K, which are filed with org p y p p gfurnished to the United States Securities and Exchange Commission and the Argentine Comisión Nacional de Valores.

1

AgendaAgenda

Market Overview

Business Highlights

Financials

Q&A

2

Macro: Taking first steps on normalization agenda, context remains challenging.Macro: Taking first steps on normalization agenda, context remains challenging.

30.6 31.4 29.6

Central Bank Reserves (Billion U$S)

Central Bank Reserves FX Rate

13.01

14.58

an‐16

an‐16

an‐16

an‐16

eb‐16

eb‐16

eb‐16

eb‐16

eb‐16

ar‐16

ar‐16

ar‐16

ar‐16

Mean ‐ 1Q16 = 14.48

OfficialFX 

(BCRA)13.01 14.58

Official FX Rate Blue FX Rate Closing of the gapDevaluation of AR$/U$S (2014)

Closing of the gapDevaluation of AR$/U$S (2014)

25.69 6

2013 2014 2015 1Q16

1Q16: Repo with Investment Banks (U$S 5Bn) on Jan 16

Tightening of monetary policy & increase in interest rates. Low level of intervention of CB in exchange market. Confidence effect :Holdouts settlement in Apr‐16, issuancein international markets of U$S 15 Bn.

Tightening of monetary policy & increase in interest rates. Low level of intervention of CB in exchange market. Confidence effect :Holdouts settlement in Apr‐16, issuancein international markets of U$S 15 Bn.

Ja Ja Ja Ja Fe Fe Fe Fe Fe M M M M

8.029.83

n‐14

b‐14

ar‐14

pr‐14

y‐14

n‐14

ul‐14

g‐14

p‐14

ct‐14

ov‐14

ec‐14

n‐15

b‐15

ar‐15

pr‐15

y‐15

n‐15

ul‐15

g‐15

p‐15

ct‐15

ov‐15

ec‐15

n‐16

b‐16

ar‐16

Pre ‐ electionary period

Unification of Exchange Rates Managed Floating Exchange Rate Regime during 1Q16:Managed Floating Exchange Rate Regime during 1Q16:

4.3%

Household consumption

40.6%32.8%

Consumer Price Index (FIEL)

CPI (YoY)

5Bn) on Jan‐16

lElectricity, gas & water

Retail & Wholesale commerceManufacturer Industry

Economic activity per sectorTotal

Ja Fe Ma

Ap

Ma Ju J u Au Se Oc

No

De Ja Fe Ma

Ap

Ma Ju J u Au Se Oc

No

De Ja Fe Ma

Strong influence of tariffsincreases & relative price

adjustments afterdevaluation

‐0.5%

1.9%

‐2.2%

2013 2014 2015e 1Q16e

26.5% 27.2%

2013 2014 2015 1Q16

16.5%

AgricultureConstruction

Public Admin & DefenseSocial services & Healthcare

Transport & CommunicationsReal Estate

MineryFinancial interm.

2013 2014 2015e 1Q16e

As of March 2016, International Reserves showedan increase, mainly explained by a Repo agreementwith international investment banks Netting this

During 1Q16 the Peso continued to register certainlevel of depreciation. Important levels of volatilitywere registered on nominal FX rates, but CB

t d d fl ti h th t f d

Trade balance began to revert its decreasing trendin 1Q16, as exports began to grow YoY. However,overall figures continue to register deficitE i i i h l h f

Q Agriculture

with international investment banks. Netting thiseffect, reserves would have shown almost novariation. This agreement has maturity during 2016

Overall household consumption is expected to dropduring the first three months of the year, as certain“ t ki ” i d bl d i t d

executed a managed floating scheme that focusedon avoiding overshooting CPI measured by private consultants rose to 32.8%YoY, as inflation accelerated because of strongdepreciation of the peso, important increases in

Economic activity shows almost no growth as ofMar‐16, as construction and agriculture (the twomost dynamic sectors of 2015) are registeringimportant decreases in activity Industrial production Index (IPI) reflects a general

3

“overstocking” in durable goods was registeredduring the last months of 2015 and someworsening of household’s income was observed

electricity tariffs and general relative priceadjustments, that impacted particularly in foodprices. A second round of tariff adjustments intransport, gas and water continued during Apr‐16

p ( ) gslowdown in industrial activity in 1Q16, with mixedresults by sector

AgendaAgenda

Market Overview

Business Highlights

Financials

Q&A

4

5

B U S I N E S S

HighlightsHighlightsB U S I N E S S

MobileMobile –– SustainedSustained growthgrowth drivendriven byby DataData && InternetInternet

Solid position in value segments: postpaid gross adds +416k subs in 1Q16, 7% YoY Important delivery of handsets during 1Q16: quantities increase by 37% vs 1Q15, still with a positive margin. LTEdevice sell‐out 75% in order to enable data penetration Quick adoption of Data Centric offers (clients with new plans represent 33% of postpaid subs in 1Q16) Successful 4G rollout continues:

‐2.5 million customers are able to use our 4G platform2.5 million customers are able to use our 4G platform‐ Data consumption boost (160% higher than non‐4G clients average consumption)

Browsing ARPU grew at 65% pace enhanced by increased data usage (+13% users, +55% usage) In 1Q16 Núcleo was the only operator with 4G in Paraguay

FixedFixed –– ExpandingExpanding positionposition inin keykey segmentssegments

Broadband: ≥ 10Mb subs = 28% of CB vs. 19% in 1Q15 ‐ ARPU +39% vs. 1Q15. Total BB Accesses +2% vs. 1Q15

Voice: Price adjustment in monthly fee in certain segments

Revenue growth in line with inflation rate, outperformed the market Service Revenues growth of 31% mainly driven by

F I N A N C I A L S

Service Revenues growth of 31%, mainly driven by:‐Mobile Internet in Argentina (+85%)‐ Fixed Broadband (+43%)

EBITDA increased by +29%, reaching a 27% profitability in a challenging scenario Relevant improvement in dividend payment with a payout ratio of 59% and a P$2.06 DPS. A cash dividend distribution willtake place as from May 13, 2016 for an amount of P$700 million

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Group Revenues: Strong revenue outperformance in 1Q16 with a solid growth platform for the futureGroup Revenues: Strong revenue outperformance in 1Q16 with a solid growth platform for the future

AR$ MillionAR$, Million

Retail Fixed Voice

GROUP REVENUE MIX Retail Mobile

+26%

Retail Fixed Voice

BB and Fixed Data 16% 17%

8% 8%4,735  5,986 

+31%

Retail Mobile53% 48%

745  975 

1Q15 1Q16

1Q15 1Q16

7%

53% 48%

Broadband & Fixed Data Mobile Internet in Argentina

HandsetsParaguay

Wholesale

4% 4%10% 16%8%

Mobile Internet in Argentina+51%

+85%

Traditional fixed services% on Total Rev 7.0% 6.7%

1Q161Q1514%

1,380 2,079 

1Q15 1Q16

1,188 

2,202 

% on Total Rev 

6

1Q15 1Q16 1Q15 1Q16

Figures may not sum up due to rounding

Fixed Fixed –– UBB accesses continued increasing steadily in 1Q16UBB accesses continued increasing steadily in 1Q16

≥10Mb b

Thousand of broadband accesses, thousand of net adds

BB Accesses≥10Mb subs.

+23k; +5%+41k, +2%

54%

335  394  448  492  515 

809

thousand of net adds

1Q15 2Q15 3Q15 4Q15 1Q161,768 1,809 

1Q15 1Q16 ≥10Mb% of CB

19% 22% 25% 27% 28%

AR$/MonthIFRS Million of AR$

% of CB 

BB ARPU & Churn Data / ICT Revenues+39%

178.5 201.6  217.4  231.5  248.8  +21%

+69%

The increase in Data / ICT Revenues is mainlydue to the exchanget i ti i

1.3% 1.4% 1.4% 1.4% 1.4%

1,470 1,780 

407 689 

+69% rate variation in contracts that are set in USD dollars

7

1Q15 2Q15 3Q15 4Q15 1Q16Monthly Churn ARPU (AR$)

FY14 FY15 1Q15 1Q16

Fixed Fixed –– ARBU sustained thru flat pricing + price adjustment in the business monthly feeARBU sustained thru flat pricing + price adjustment in the business monthly fee

AR$/Month

ARBU

80.9+34%Due to the Monthly Fee Tariff increases for BusinessClients in the months of:

60.564.4

69.676.2 August 2015

February 2016

Residential tariff will be increased during the monthf M 2016 b ill b l i l

1Q15 2Q15 3Q15 4Q15 1Q16

of May 2016 but still below regional peers

Thousand of lines

Lines in Service Latam Benchmark

USD w/o VAT(*)

4,077  4,064  4,054  4,043  4,010 12.4

18.5 18.9 19.7 20.122.1

USD w/o VAT( )

~3x

1Q15 2Q15 3Q15 4Q15 1Q162.5

7.2 8.2

AR UY CO MX BR (Min) BO CL BR (Max) PE

8(*) Information after adjustments on residential tariffs. 

Market Share remained stable ~46.5%

Mobile: Mobile: FurtherFurther advancesadvances in data in data monetizationmonetization. LTE as a . LTE as a keykey leverlever onon mobilemobile datadata

Customer Base (Mill)

19.3 19.7

Transformation is accelerating 4G Customers

2.5In million

6.5 6.1 Postpaid 1 More than 2,0 M are DATA CENTRIC subs

36%

64%

0.4

13.2 13.2 

1Q161Q15

Prepaid36%

Migrations Adds

1Q15 1Q16

> 6x1Q161Q15

Data penetration, Monthly unique users  in million

Data UsageMBOU/month ARPU Browsing AR$/month Mobile services revenue mix

13%

8.67.6

+55% +65%

35%27%

42% 39%

457707

23% 34%

B i SMS C t t V i1Q15 1Q16

9

1Q15 1Q161Q161Q15 1Q15 1Q16 Browsing SMS + Content Voice

(1) Includes Dongles

Mobile Mobile –– Focus on 4G. Building the path. Fast transition from 3G to 4GFocus on 4G. Building the path. Fast transition from 3G to 4G

COVERAGE

We are modernizing 100% our networksPersonal’s 4G deployment keeps evolving

CUSTOMERS 4G Penetration

24%AMBA

402cities

15%

24%

10%

14%

B Ai

Cordoba

Santa Fe

AMBA

citiescovered MILLION

10%Buenos  Aires

PROVINCIAL CAPITALS WITH COVERAGE

CONSUMPTION TOP SITESCONSUMPTION TOP SITES

Gbytes per user

OF THE POPULATION CAN USE 4G SERVICES IN PROVINCIAL CAPITALS

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Type of clients

C E l ti

CapexCapex: : AcceleratingAccelerating Data Data CoverageCoverage. . DeliveringDelivering ourour commitmentscommitmentsCapex Evolution

Technical Capex breakdown

3 5302,256 

Million of AR$  10,1008,957

+13%

46%

17% 24%12%

5,427 7,844 

3,530 Spectrum>2x

12%

Mobile Access Fixed Access Core & Infrastructure*

IT864  1,902 

FY14 FY15 1Q15 1Q16*Core & infrastructure refers to network related capex, including quality and innovation capex.

STRATEGIC GOALS

Competitive network

% Revenues 10%27% 15%25%

Improved customer experience

Focus on 4G~2x

Total New Sites New 4G Sites

~10x

Areas w/ UBB

~1.4x

2G / 3G evolution + migration

Ongoing implementation of firstcore network virtualization inL

11

Latam1Q15 1Q16 1Q15 1Q16 1Q15 1Q16

Figures may not sum up due to rounding

AgendaAgenda

Market Overview

Business Highlights

Financials

Q&A

12

TEO Group: Consolidated Results TEO Group: Consolidated Results 

d l bil i i

22% 21% 24% 24% 30%

Service Rev growth in Argentina (Yoy) 

9001,431

282 561

Handset Results ‐Mobile in ArgentinaBefore capitalization of SAC & SRC

Handsets Revenues – Costs (in million of AR$)

2x

Revenues

1Q15 2Q15 3Q15 4Q15 1Q16 FY14 FY15 1Q15 1Q1618% 25% 32% 29%Gross

Margin

IFRS, Million of AR$, PercentageRevenues

EBITDAIFRS, Million of AR$, Percentage

21%

+29%

+21%

+40%

+25%

8,702 10,866 

2,634  3,394 

+29%

33,341  40,496 

8,872  12,455 

FY14 FY15 1Q15 1Q16 FY14 FY15 1Q15 1Q16

EBITDA Mg

26% 27% 30% 27%

FY14 FY15 1Q15 1Q16

Revenue growth outperformed the market

13

Higher quantity of handsets sold (+37% YoY vs 1Q15)

TEO Group: Consolidated TEO Group: Consolidated costs costs and and EBITDA EBITDA evolutionevolution

YoY VariationIFRS, Million of AR$

EBITDA 1Q15 – 1Q16

+760;+29%

EBITDAMarginEBITDA Margin

+0.1% +0.5% +1.2% 27.3%+0.6%29.7% ‐0.1%+0.0%‐4.8%

As % of Revenues 10% 9%6% 17% 9% 10%12%

Others include bad debt expenses, provisions, VAS costs and others

14Figures may not sum up due to rounding

15TEO Group: Consolidated ResultsTEO Group: Consolidated Results

IFRS, Million of AR$, Percentage

Net Income attributable to Telecom

Operating Income IFRS, Million of AR$, Percentage

‐7%+14%

+19%3,673  3,403 5,443 

6,229 

1 997

+19%‐10%

1,028  925 

FY14 FY15 1Q15 1Q16

1,680  1,997 

FY14 FY15 1Q15 1Q16

O. Income Margin

16% 15% 11% 8%19% 16% 12% 7%

Net Income Margin

15

TEO TEO GroupGroup: Net : Net IncomeIncome EvolutionEvolution

NET FINANCIAL POSITION“Price effect” on Financial Results

NET FINANCIAL POSITION

“Quantity Effect” on Financial Results

521 Spectrum payments (700Mhz Bands, Jun‐15)

‐3,294 

1Q15 1Q16

( , )Dividend payments (May‐15)

16* Total Net Income includes the part attributable to Telecom and the non‐controlling interest

1Q15 1Q16

IFRS, Million of AR$ ‐ Last 12 months

TEO Group: FCF, Net TEO Group: FCF, Net FinancialFinancial PositionPositionS, o o $ as o s

RELEVANT MATTERSThe Company’s BoD on April 29, 2016, decided:To withdraw the amount of P$700 million of the ‘Reserve for Future Cash Dividends’ and to distribute thatamount as cash dividends, that will be made available to Shareholders’ as fromMay 13, 2016

In the month of August 2016, to withdraw and distribute as cash dividends the amount of P$1,300 million, thatwill be made available to Shareholders’ during the referred month, in the date that the Management of theCompany will determine.

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NoteS:(1) OFCF: Operating Free Cash Flow before Taxes(2) Includes $45 Million related to Nucleo dividend payments to third parties, net of income tax

Considering a total dividend payment of P$ 2,000 million, the payout ratio will be equivalent to 59% and P$2.06 per share or P$10.3 per ADR

AgendaAgenda

Market Overview

Business Highlights

Financials

Q&A

18