The case for & against
Bull & Bear analysis
Telecom Argentina S.A. (Ticker: TEO) is a leading telecommunications provider in Argentina, specializing in mobile services, internet, and cable television. As an established player in the telecom sector, TEO operates within the ongoing digital transformation in Argentina, focusing heavily on enhancing mobile and broadband services through investments in infrastructure like 5G technology. TEO's recent expansion through the consolidation of Telefónica Móviles Argentina has further solidified its market position, catering to a growing customer base within a challenging regulatory landscape.
Bull says
- ↑Revenues rose 13.4% YoY to P$5.075T in 1H26, led by mobile services (55% of service revenues).
- ↑EBITDA margin improved to 35.8% from 30% YoY, signaling stronger operational efficiency.
- ↑CapEx jumped 60% to US$0.6B (18.6% of revenues), focused on 5G and FTTH expansion.
- ↑Analyst ABR of 2.50 with 40% ‘Strong Buy’ and $15.80 price target implies upside.
- ↑Consolidation of Telefónica Móviles Argentina drove higher ARPU and scale benefits.
- ↑Strong growth metrics and stable dividend yield reflect solid financial foundation.
Bear says
- ↓Elevated leverage raises debt servicing pressure and limits strategic options.
- ↓Total mobile subscribers declined despite postpaid gains, risking market share erosion.
- ↓Negative earnings yield points to low profitability and return challenges.
- ↓Poor liquidity metrics flag potential cash management and stability issues.
- ↓Analyst revisions are negative, suggesting downward earnings or rating adjustments.
- ↓Consolidation risks may amplify competitive and operational volatility.
Investment themes with TEO
Emerging economy driven by commodities, agriculture, and energy
Earnings Call · Q2 2023 · Mgmt. Guidance
Transcript signals
Bull points
- our EBITDA margin during the first half of '23 was 28.4%. Pressure coming from labor cost lowered its intensity during the quarter, while we successfully contained increases in other cost items.
- Cash flow generation remained strong despite the challenging context. In the first half of 2023, we were able to generate approximately $308 million in free cash flow before dividends and interest payments. This represents an improvement of approximately $52 million compared to the same period in 2022.
- Our fintech, Personal Pay, continue to grow, reaching almost 1.2 million onboarded clients for the first half of '23.
Bear points
- Revenues measured in constant pesos decreased 9% year-over-year as we have improved our pass-through of inflation to our revenues.
- Our broadband accesses have decreased by 144,000, minus 3.4% year-over-year, explained mostly by a reduction in xDSL accesses. In turn, we observed encouraging growth in FTTH during second quarter '23.
- Service revenues totaled ARS479 billion, decreasing 10% in real terms versus the first half of '22, showing an 87 nominal rise, reflecting the price increases we mentioned before.