Good day everyone, and welcome to the Telecom Argentina First Quarter 2014 Earnings Conference Call. Today’s call is being recorded. Participating on today’s call, we have Mr. Stefano de Angelis, Chief Executive Officer; Mr. Adrian Calaza, Chief Financial Officer; and Mr. Pedro Insussarry, Head of Finance. And at this time, I’ll turn the call over to Mr. Pedro Insussarry, Please go ahead.

Good morning to everybody on behalf of Telecom Argentina. I would like to thank you for participating on this conference call. As mentioned by Margarita, our moderator, the purpose of this call is to share with you the consolidated results of the Telecom Argentina Group that corresponds to the fiscal quarter ended March 31. We would like to remind you that for all those that have not received our press release or presentation, you can call our Investor Relations office to request documents, or you can even download them from the Investor Relations section of our website located at www.telecom.com.ar/investors. Additionally, this conference call is being broadcasted through our webcast feature available in the Investor Relations section of the website and can also be replayed through this same channel. Before we continue with the conference call, I would like to go over our typical Safe Harbor information and other details of the call, as we usually do in our quarterly conference calls. We would like to clarify that during the conference call and Q&A session, we may produce certain forward-looking statements about Telecom’s future performance, plans, strategies and targets. Such statements are subject to uncertainties that could cause Telecom’s actual results and operations to differ materially. Such uncertainties include, but are not limited to the effects of the public emergency law and complementary regulations, the effects of ongoing industry and economic regulation, possible changes in demand for Telecom products and services, and effects of marginal factors such as changes in general markets or economic conditions in legislation or in regulations. Our press release dated May 7, 2014, a copy of which was included in the Form 6-K report furnished to the SEC, describes certain factors that may affect any forward-looking statements that we may produce during this session. Furthermore, we…

Thank you, Pedro. Good morning to everyone. Please refer to Slide 5, where we have a summary of the main achievements for the quarter. Our business continued to post an important phase of revenue expansion of 23% driven by the growth in mobile internet, data and fixed broadband. In this sense, in the fixed line business, it is also notable the increase of 29% in non-regulated revenues. Moreover, it is worth mentioning that the strong improvements in OIBDA before the capitalization of subscriber acquisition costs was achieved, with an increase of 22% that was mainly due to the revenue expansion mentioned before, plus the change to a positive margin in the mobile handset business. In terms of clients, with the improvements in smartphone sell-out, the mobile 3G customer base in Argentina continue to increase reaching 9.2 million, that represents 46% of the total base, where it was 32% one year ago. Our mobile subsidiary in Paraguay, Núcleo, achieved an 8% increase year-on-year in the postpaid segment with a steady improvement in the customer mix. In addition, FTTx deployment allowed us to offer higher broadband speeds thus being more competitive with compelling commercial offers. In that sense, it is remarkable that the fixed broadband ARPU rose by 20% year-on-year. When it comes to our financials, it is important to note that at the end of the first quarter, our net financial position increased to P$5.1 billion in cash. And after having paid P$1 billion in dividend last December, for this year we have proposed to our shareholders a dividend payment of P$1.2 billion, equivalent to a payout ratio of 37%. Our solid financial structure, together with a proactive hedging actions, such increasing our cash position in foreign currency and entering into NDF contract to hedge the volatility in the FX rate…

Thank you, Stefano. Please turn to Slide 14, where you can see the evolution of consolidated revenues and operating income before depreciation and amortization. In the first quarter of 2014, consolidated revenues reached P$7.5 billion with a 23% year-on-year growth, particularly fueled by mobile services in Argentina and fixed broadband that represented 69% and 10% of consolidated revenues respectively. It is important to underline that this revenue growth was achieved even having not only frozen tariffs in our fixed regulated services since 2002, but also with limited nominal price adjustments on mobile as we mentioned before. Operating income before depreciation and amortization totaled P$2.1 billion in the first quarter, representing 28% of revenues and growing at a pace of 17% year-on-year. If you can see on the small graph on top right of the slide, remark that operating income before depreciation and amortization, and before SAC and SRC capitalization similar to our previous local GAAP EBITDA increased by 22% year-on-year, while one year ago increased by 9% as a result of the revenue performance and the general reduction in SAC and SRC previously highlighted by Stefano. Let us now move to Slide 15, where we jump into the evolution of our operating income before depreciation and amortization with its most relevant components. With consolidated revenues growing by 23% year-on-year, we kept our continuous focus on cost controls, even though some cost increased above top line level mainly due to inflation. As we mentioned before, significant reduction in handset subsidies allowed us to achieve a positive margin in handsets business with sales growing by 66% versus first quarter of 2013, while handsets costs increased by 39%. Notwithstanding this, the revenue mix contributed to the margin dilution after participation of handset sales in total revenues increased from 9% in the first quarter…

Margarita?

(Operator Instructions) And we’ll take our first question from Michel Morin with Morgan Stanley. Michel Morin – Morgan Stanley: Yes. Good morning everyone. I was wondering if you can talk a little bit about the subscriber trends in your mobile business. You had some negative net adds this quarter and it appears that it’s entirely because of lower gross adds. So I was just wondering if you can elaborate a little bit more on what you’re seeing, how the economy is impacting, because I guess I would have expected churn to go up rather than to see a decline in gross adds? And also a similar question, you are still generating very strong handset sales. And again that seems to be a bit of a disconnect given the state of the economy in the quarter. So I was wondering if you could elaborate on what’s driving that. Thank you.

Thank you, Michel. In terms of mobile business, your question was related to the trends of the customer base. So first of all, we have to analyze the customer base, divide it into prepaid and postpaid. As you can see, in postpaid, we are posting a positive year-on-year trend. That is the result of our strategy of upselling and moving customer base from the prepaid to the [indiscernible]. And this explains part of the slowdown in the prepaid segment. Another important situation is the seasonality of the first quarter. Just to remember you that we have a 13-month rule internally in order to disconnect the lines. So after the Christmas campaign, the 13 months pass by along the first quarter that here in Argentina is summer time. So there is a reduced commercial activities. Last but not least, we have in the prepaid a slowdown in the gross additions. So if we sum up these three components, I think that we have a future of the situation. In terms of handset sales, in this moment we are confirming the growth that we are experimenting in this quarter. This is mostly driven by price and by volumes. We are seeing some reduction in volumes, where compared to our expectation that was to increase substantially the volumes of handset compared to 2013. And in this moment, we are compensating this volume impact compared to our expectation with a substantial price increase that is driven by the favorable mix in terms of smartphone and by the impact of the dollar – of the peso’s devaluation when compared to the dollar. Michel Morin – Morgan Stanley: Okay, great. Thank you very much.

You’re welcome.

(Operator Instructions) We’ll take our next question from Alejandra Aranda with Itau. Alejandra Aranda – Itau: Hi, good morning. Great results. I wanted to ask you a question about what we’ve seen this week, the law that is going to be debated in the Senate regarding whether or not cell phones are going to be public service which would give the government to the ability to control your tariffs. I wanted to see you what’s your perspective about that, and what we should expect? Thank you.

Thank you. This discussion about the declaration of public service of the mobile business is something that here in Argentina is on air by several years. I think that the most important things is not – because if we look at the wireline business that now is still public service, the problem honestly, I have managed for several years, the concept of public service for fixed telephony in Europe without any negative impact in the financials of the company. The problem here in Argentina is not 100% on the public service. It’s how the public service is managed by the authorities because the problem of the wireline business is that we have a tariff that is freeze by 13 years. So I think that the question is not what would be impact of declaration of public service in the mobile telephony or what we can expect that – how we can expect that is managed mobile business after declaration of public services. On the other hand, let me say my opinion of what may happen if, then if you ask me what we can expect in the next quarter, in the next month. We were expecting a new regulation of mobile business driven by the regulatory watchdog that was announced in the September, and that is been discussing with the companies and with the public through public audience. So my expectation today is that we are not going in the public service – working through the public service, but we are going to have a new set of groups for the mobile telephony in line with the project that is not a low project from a specific party but is the new rules coming from the watchdog here in Argentina. In this set of rules, there is a strict control of price but not the declaration of public services. And the mandatory price increase that has to be approved by the government. There they have stricter control when compared to what happened in the last 10 years. And I think that we will advance – we will shape advances in this set of rules that are public and that have been discussed by several months with the authorities. Alejandra Aranda – Itau: Thank you. If I may, one more question. It seems like all of the debates with this new law and the regulation aims at tackling low quality service. And from where I stand, it looks – what we’re missing is spectrum option at the end of the line. So, do you see that this may come up again? Do you see there is a possibility to discuss with the government is to rethink its stance on the spectrum option, is that suspended or spectrum option for 4G that would give you the possibility to continue to grow?

Yes, let me explain again. The project – because we are discussing about five or six, I don’t remember, I think five different low projects. And these are coming from all, let me say the political parties here in Argentina. Why? Because obviously the penetration of mobile service in the electoral base of Argentina is 100%. So everybody wants to stay into this issue that is very popular. This is only referred to this declaration of public service and do not enter into any impact regarding the spectrum. If we move to what we expect, the logical – in other words, relation that we have with the telecommunication authority, we are discussing this issue of the spectrum by several quarters, by several months. And what we may expect is that along 2014 something is going to happen. What is most probable is that an auction of the frequencies for the 4G. What we are interested mostly is to add the frequencies for the 3G, because this frequency may help us to improve immediately, let me say the capacity and consequently the quality of our services tomorrow. The 4G will help us to grow the future in 12 to 18 months after the spectrum availability. We are most interested in having the 3G spectrum. The 3G spectrum let me say is not a political issue, because as you probably remember, the spectrum was stopped the auction because of the concentration between Telecom Italia and Telefónica that the spectrum was assigned for the launch of a new mobile operator from the government – from the state owned. And now we are three years far from this declaration and nothing has happened until today. Why? Because again this is I think a political issue. On the other hand… Alejandra Aranda – Itau: I completely agree with you.

I think it’s more easier to have it advanced in the next quarter for the 4G. Alejandra Aranda – Itau BBA: Okay. Thank you so much.

You’re welcome.

We’ll take our next question from Michel Morin with Morgan Stanley. Michel Morin – Morgan Stanley: Thank you for the follow-up. I was wondering if you can update us on the rates negotiations. Maybe they haven’t started yet, but what’s the latest on that? And then secondly, with respect to the offer – the transaction with FinTech. Could you update us on where that stands, as well as remind us on what is required of the buyer in terms of offering the same terms to the public? Thank you.

Regarding the so-called partenariat, that is the negotiation with. I have to remember to you that, in the 16,000 employees of Telecom Argentina we have let me say two big components. One that is part of this discussion that are the ex ENTel contracts, let’s say. And the other that are in different with different unions and that follow the commerce agreement, for example that are not discussed privately with Telecom Argentina. If with respect to the ex ENTel contracts, we have started in this day the discussion. The due date is the end of June. And as always, let me say we’re going to expect the discussion that ended with something that is in line with expected inflection rate. At this moment, the expected inflation rate is in the range of 30%. So this is our expectation for the renewal of the price adjournment of the ENTel contracts. Regarding FinTech, just remember you that the contract between FinTech and Telecom Italia is August 13 as the due date of the contract, the last date of the contract. The closing of the operation is subject to the approval of the SeCom of the telecommunication was stopped, none antitrust won. And as you probably may see in the newspaper the discussion, it seems a little larger than expected due to the FinTech participation in Cablevision, that is a broadband and TV content distributor in the Grupo Clarin, that is part of a restructuring process based on a mandatory media load that applies to Grupo Clarin to be restructured. So in the third quarter for sure we will have some news, because in August there is a due date of the Telecom Italia FinTech FTA. Michel Morin – Morgan Stanley: And if somehow they find a way to get around those antitrust issues and there is a transaction, can you remind us of what the obligation is to extend an offer to the public?

From FinTech? Michel Morin – Morgan Stanley: Yes.

The [indiscernible] rules that applies in case of change of control to know about, the base price of the offerer of the mandatory public offer is based on the transaction price and the average of the last six months.

Valuation multiple.

Yes, than valuation multiples. I think that is the general law as worldwide – than in the worldwide benchmark. Just to remind that – sorry? Michel Morin – Morgan Stanley: Just to clarify you said it’s based on the last six month trading price?

One of the – so let me say that the mandatory variable that you have to consider, then I pass to Pedro, who is the expert of the local regulation. One of the mandatory variable is the price of the last six months. And Pedro may add.

Michel, this is Pedro. Good morning. Michel Morin – Morgan Stanley: Yes, good morning.

I’m far from being an expert in the new capital markets law but anyway, I’ll try to describe the criteria. Basically when you have a change in control here in Argentina, the acquirer, basically in this case would be FinTech has the obligation to do an offer, basically mandatory offer to shareholders for the entire stake. Obviously this is mandatory for the acquirer. Obviously shareholders have the chance to go with the offer or not they can basically. It doesn’t mean the withdrawal of the public offering, basically an offer to purchase. Okay? Within the criteria that the acquirer has to follow in terms of what’s the price, it’s basically what is the price of the transaction in the last six months, the average price of the last six months, and also the valuation multiples comparable basically to the company, basically industry comparable. Okay? But again this is an issue that obviously the acquirer, in this case, FinTech has to undertake. Michel Morin – Morgan Stanley: Okay. And regarding the price of the transaction. Given that there’s shares held in different buckets, I don’t know if there is different prices, but can you help us – I mean it’s – and also, the currency has moved. So I was wondering was the price set in dollars, and do you have already a reference price per share for payout?

Yes, just to be very clear. This is something that is in regards to the shareholders, but I can tell you that the FTA [ph], that all this information is a public, FTA [ph] that is [indiscernible] that you can download from the SEC. Just to answer the question, because it’s public the price is in dollars. And in the document you have all the components of the price, because as you probably know, and was referred as different component, different type of shares that were part of the agreements because as you probably know, part of the sale happened in December, that the stake of Telecom Italia in Tierra Argentea indirectly hold by Telecom Italia was just sold to FinTech. But all this information is public and you may download from the SEC website. Michel Morin – Morgan Stanley: Perfect. Okay, thank you. And given that there weren’t any other questions in the queue, can I ask also what you’re seeing in Paraguay? You had very strong results there it seems. So just wondering – I haven’t checked to see if it was currency related or what are you seeing there?

Clearly we have a positive impact from the exchange rate, because the guarani does not have any significant change when compared to the dollar. This situation in Paraguay is quite good because the company has very good financials, very good profitability. You know that we received dividends in dollars from Paraguay. So we are very active with the performance from Paraguay. In this moment in Paraguay, we are discussing on how to improve our positioning moving to our business that I think is very important because our competitors, for example, Claro is active in the media business. You know that Tigo has a very huge market share and is active in the wireline business. So we are trying to reinforce our positioning in Paraguay, but again we are very active with the result and the results are quite positive from Paraguay. Michel Morin – Morgan Stanley: Great. Thank you very much.

You’re welcome.

You’re welcome.

And we’ll take our next question from Rodrigo Villanueva with Merrill Lynch. Rodrigo Villanueva – Bank of America Merrill Lynch: Thank you. Good morning. I was wondering if you have seen any change in trends from SMS revenues. And if you could share your thoughts regarding the launch of new communication application such as WhatsApp? Thank you.

Yes. As in this full year ‘13 presentation, we were showing some drivers of – not exactly the impact of WhatsApp, but what is happening in our customer base. Just to remember, use some figure, we have here in Argentina a 95% penetration of the SMS usage. And this is an historical trend that was boosted by personal and all the mobile operators and this on the other hand gives you a very low usage of the voice especially in the prepaid segment. This means that obviously with the push that we have in the smartphone penetration we are facing a negative impact in the SMS usage. If you look at the revenues from SMS, year-on-year, we are substantially flat that obviously considers the devaluation impact. The inflation impact is not so positive. On the other end, we are growing approximately 60% in browsing revenues. And if we look at the ARPU summing voice must, browsing must, SMS. When we have a customer adopting a smartphone on a global base, we have an increase of the ARPU that is from 1 to 1.5 of the ex-ante ARPU. So net-net now adopting WhatsApp we have – if we plan the negative impact in the SMS revenues and the positive impact in the browsing revenues, we have a net-net positive impact. Another important item is that the SMS is strongly used in the prepaid, while in our postpaid base that is 30% represents 60% of the revenues. The impact is quite negligible, because we have bundle of data and SMS. So if the customer uses data, it’s up to use SMS, we have no impact in the monthly fee because the monthly fee continues to be the same. If you look at the prepaid, in the prepaid if we look at the average penetration of smartphone that is above 30%. In the prepaid this penetration is still lower. So what that means, that the adoption of WhatsApp is higher in the postpaid segment that is more protected by the bundle offer that we have in this segment of the business. That’s why we are still facing, let me say, a net-net positive impact. Net-net in terms of commercial strategy, what we have to do. We have to continue to boost the browsing revenues and the browsing ARPU. And that is what we are doing. If we look at the price, the unit price that we are growing in the prepaid segment is the price of the internet. We move from P$1 two years ago to P$2.5 today. And I think it is the strategy that we have adopted and that give us a future proof commercial view into the future. Rodrigo Villanueva – Bank of America Merrill Lynch: Understood. Thank you very much.

You’re welcome.

And we’ll take our next question from Federico Rey with Raymond James. Federico Rey – Raymond James: Yes. Good morning. Thank you for the call. My question is regarding the – if you could comment on your policy regarding the allocation of your FX [ph] liquidity. Or in other words, if we do the – which type of instruments you usually [indiscernible] excess liquidity? Thank you.

Hi Federico, good morning. Basically I would say that, as we mentioned during the conference call, basically the strategy these days was basically a strategy focused more on the hedging of our liabilities denominated in foreign currency. Basically we have on one side diversified our cash investments towards basically dollar denominated bonds and dollar linked bonds. And on the other hand, we’ve entered into NDF contracts in order to hedge commercial contracts – portion of our commercial contracts. So basically our investment strategy is more focused towards mitigating future FX volatility that could impact our P&L on the long run. Obviously this as you may know in Argentina in terms of NDF, you don’t have long terms in order to hedge the volatility. So we have to go into some type of role on scheme in order to have this volatility covered on the commercial contract. But basically these days our method slightly has been focused on this. Federico Rey – Raymond James: Okay. Thank you.

You’re welcome.

(Operator Instructions) It appears we have no further questions at this time.

Okay. Thank you everybody for participating in this conference call. Please do not hesitate to call our Investor Relations department for any further enquiries you may have, and good morning to everybody. Have a nice day. And we expect to speak in the forthcoming days. Okay. Thank you very much.

That does conclude today’s conference. We appreciate your participation. You may now disconnect.