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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of November, 2006

Commission File Number: 001-13464

Telecom Argentina S.A.

(Translation of registrant’s name into English)

Alicia Moreau de Justo, No. 50, 1107

Buenos Aires, Argentina

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x    Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ¨    No  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ¨    No  x

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  ¨    No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

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Telecom Argentina S.A.

TABLE OF CONTENTS

 

Item
1.		Press release entitled “Telecom Argentina S.A. Announces Consolidated Nine-Month Period (“9M06”) and Third Quarter Results for Fiscal Year 2006 (“3Q06”)

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FOR IMMEDIATE RELEASE				Market Cap: P$9.6 billion
				(November 9, 2006	)

Contacts:

Pedro Insussarry

Pablo Caride

Telecom Argentina

(54-11) 4968-3743/3602

TELECOM ARGENTINA S.A. ANNOUNCES CONSOLIDATED NINE-MONTH

PERIOD (“9M06”) AND THIRD QUARTER RESULTS

FOR FISCAL YEAR 2006 (“3Q06”)*

 

•

During 9M06 Telecom’s operations continued its positive evolution. Cellular and broadband subscribers grew 46% and 99%, respectively when compared to September 2005, while fixed lines in service grew 4% over the same period.

 

•

Net Revenues reached P$5,262 million (+30% vs. 9M05) mainly fueled by the expansion of the cellular business, which increased by 56% and data & Internet revenues, which increased by 20%.

 

•

Operating Profit before Depreciation and Amortization (OPBDA) increased by P$250 million (+17% vs. 9M05) reaching P$1,731 million. Operating Profit reached P$676 million (+95% vs. 9M05).

 

•

Net Income reached P$164 million for 9M06 and P$65 million for 3Q06, as a result of the general improvement of the business, partially offset by financial expenses (interest and holding results). Net Income for 9M05 was P$1,623 million, including a P$1,424 million non-recurrent gain generated as a result of the closing of the debt restructuring process. Shareholders’ Equity as of September 30, 2006, amounted to P$2,043 million.

 

•

Net financial Debt declined to P$ 3,777 million (-P$795 million vs. 9M05), primarily as a result of the cash flow generated by operations. The ratio of Net Financial Debt to OPBDA decreased from 2.3x as of September 30, 2005, to 1.6x.

 

 

 

 

 

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*	Non-financial data unaudited

www.telecom.com.ar

 

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		As of September-30
		2006		2005		D			D%
Consolidated Net Revenues (in MM P$)		5,262		4,057		1,205			30	%
Fixed Telephony (includes directories edition)		1,858		1,797		61			3	%
Cellular		2,993		1,918		1,075			56	%
Data & Internet		411		342		69			20	%
Operating Profit before D&A (in MM P$)		1,731		1,481		250			17	%
Operating Profit (in MM P$)		676		347		329			95	%
Net Income (in MM P$)		164		1,623		(1,459	)		-90	%
Shareholder’s equity (in MM P$)		2,043		2,154		(111	)		-5	%
Net Financial Debt - Before NPV effect (in MM P$)		3,777		4,572		(795	)		-17	%
Net Financial Debt - Book value (in MM P$)		3,579		4,209		(630	)		-15	%
CAPEX (in MM P$)		755		408		347			85	%
Lines in service (Fixed lines -in thousands)		4,056		3,906		150			4	%
Cellular customers (in thousands)		8,624		5,899		2,725			46	%
Personal (Argentina)		7,675		5,308		2,367			45	%
Núcleo (Paraguay)		949		591		358			61	%
ADSL customers (in thousands)		375		188		187			99	%
Fixed line traffic (in MM minutes, Internet Traffic not included)		12,517		12,527		(10	)		0	%
Incoming/Outgoing cellular voice traffic in Arg. (in MM minutes)		5,380		3,928		1,452			37	%
Average Revenue per user (ARPU ) Fixed Telephony/voice (in P$)		39		39		(1	)		-2	%
Average Revenue per user (ARPU ) Cellular Telephony Arg. (in P$)		39		35		4			11	%

 

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Buenos Aires, November 9, 2006 – Telecom Argentina (BASE: TECO2, NYSE: TEO), one of Argentina’s leading telecommunications groups, announced today Net Income of P$164 million for the nine-month period ended September 30, 2006 (“9M06”).

 

		9M 06			9M 05			D			D%
N et Revenues (MMP$)		5,262			4,057			1,205			30	%
N et Income/Loss (MMP$)		164			1,623			(1,459	)		(90	%)
Earnings/Loss per Share ($)		0.2			1.6			(1.5	)		(90	%)
Earnings/Loss per ADR ($)		0.8			8.2			(7.4	)		(90	%)
OPBDA *		33	%		37	%
Operating Profit/Loss *		13	%		9	%
N et Income/Loss *		3	%		40	%

 

*	As a percentage of Net Revenues

During 9M06, Consolidated Net Revenues increased 30% to P$5,262 million (+P$1,205 million vs. 9M05), fueled by the expansion of the cellular and broadband businesses, together with moderate growth in the fixed telephony business.

Moreover, OPBDA increased by 17% to P$1,731 million (+P$250 million), equal to 33% of Consolidated Net Revenues.

Net Income reached P$164 million during 9M05 and P$65 million in 3Q06. Year-to-year comparison is affected by the P$1,424 million non-recurrent gain generated in 2005 as a result of the closing of the debt restructuring process.

Company Activities

Consolidated Net Revenues

The growth in Consolidated Net Revenues (+30% vs. 9M05) is as follows:

Fixed Telephony (Voice, Data Transmission & Internet)

Fueled mainly by the increase in broadband penetration and an increase in the number of lines in service, revenues generated by the Fixed Telephony Business (including voice, data transmission and Internet services) amounted to P$2,249 million, a 6% increase over 9M05.

Voice

Following an increase of 4% in the number of lines in service, Monthly Charges increased by P$32 million or 6% in 9M06 as compared to 9M05, reaching P$533 million. This growth occurred even though no increase has been applied to regulated tariffs.

Local Measured Service and Domestic Long Distance revenues marginally decreased when compared to 9M05 to

 

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P$379 million (-2%) and P$336 million (+1%) respectively, while overall traffic volume, measured in minutes, remained basically stable.

In addition, revenues generated by International Telephony reached P$173 million (P$6 million or 4% higher than 9M05) due to an increase in traffic partially offset by marginally lower prices.

Interconnection revenues increased by P$44 million (+24%), reaching P$225 million, driven by mobile traffic transported by and/or terminated in Telecom’s fixed line network.

Internet and Data Transmission

Revenues generated by Data transmission and Internet amounted to P$411 million, an increase of P$69 million, or 20% vs. 9M05. The strong growth in broadband connections has been the most dynamic component of this item.

As of the end of 9M06, Telecom’s ADSL subscribers numbered 375,000 (+187,000 or +99% vs. 9M05). Lines with ADSL connections accounted for more than 9% of Telecom’s lines in service. Regarding ISP services, Arnet subscribers totaled 400,000 (+54% or +141,000 subscribers vs. 9M05), as a consequence of the increase of 175,000 broadband subscribers (+136% vs. 9M05) and the decrease of 34,000 dial-up subscribers (-26% vs. 9M05).

This expansion is a consequence of Telecom’s strategy of launching quality products at accessible prices. Also contributing is the new portfolio of data transmission services that permits small and mid-size businesses to access services that previously were only available for large companies.

Directories

Publicom sales amounted to P$20 million in 9M06 (+P$3 million or 18% vs. 9M05), due to the positive evolution of the sales campaigns for advertising space in directories.

Cellular Telephony

 

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As of September 30, 2006, the total subscriber base of Personal in Argentina totaled approximately 7.7 million; 2.4 million customers more than those registered as of September 30, 2005 (+45%). It is important to highlight that the postpaid customer base increased by 54%, while the prepaid customer base increased by 40% vs. 9M05.

As of September 30, 2006, approximately 65% of the overall subscriber base was prepaid and 35% was postpaid. Subscribers with GSM technology represented 85% of the overall subscriber base.

Total traffic measured in minutes increased by 37% vs. 9M05. Furthermore, SMS traffic (outgoing messages) increased from an average of 207 million per month during 9M05 to an average of 508 million per month during 9M06 (+145%). Moreover, value-added services continued to gain participation in the overall average monthly revenue per user in Argentina (“ARPU”),.

In this context, Telecom Personal’s revenues in Argentina reached P$2,748 million, increasing P$985 million (+56%) when compared to the same period last year. This positive evolution is the result of both a larger subscriber base and a higher ARPU, the latter increasing to P$39 or by +11% vs. 9M05. In addition, higher handset sales positively contributed to the overall revenue growth.

In a highly competitive and dynamic market environment, Personal continued to develop a commercial approach focused on growth in economic value, by implementing activities to strengthen its brand positioning, with a strategic focus on service quality, and to strengthen its distribution channels throughout the country.

With regards to its product portfolio, Personal upgraded its Blackberry platform, introduced new content offerings (realtones, ringtones, speechtones) and launched a set of tailor-made plans designed for the younger market (such as “Personal Manía”). Finally, Personal launched Mobile Banking services.

Núcleo, Personal’s controlled subsidiary that operates in Paraguay, generated revenues equivalent to P$245 million in 9M06 (+58% when compared to 9M05).

Subscriber base as of September 30, 2006 reached approximately 949.000 (+61% vs. 9M05), with an ARPU increase of 7% over the same period, reaching the equivalent of US$10.

 

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Prepaid and Postpaid customers represented 84% and 16%, respectively. GSM subscribers represented 67% of the overall subscriber base.

 

Consolidated Operating Costs

The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$4,586 million in 9M06, which represents an increase of P$876 million or 24% over 9M05.

Salaries and Social Security Contributions increased by P$107 million, or 21%, to P$611 million, reflecting wage increases and a headcount increase in line with the general growth of the business.

Taxes amounted to P$380 million, representing an increase of 36%, mainly due to increases in taxes directly calculated as a percentage of the revenues.

Agents and Prepaid Card Commissions increased by P$110 million, or 43% over 9M05, to P$365 million. Advertising costs totaled P$149 million (+54% vs. 9M05). It is important to highlight that this increase in costs is related to the efforts implemented by the Telecom Group to acquire new cellular and internet customers, as well as the increase in the volume of cellular pre paid credit.

The cost of cellular handsets increased by P$264 million over 9M05 to P$655 million in 9M06 mainly due to the increase in handset sales related subscriber growth and TDMA to GSM migration.

TLRD (termination charges in third party cellular networks) and Roaming costs increased by P$107 million from 9M05 (+39%), reaching P$379 million in 9M06, due to the increase in traffic among cellular operators, in line with the significant expansion of the market.

During 9M06, the Allowance for Doubtful Accounts was P$51 million, equal to 1% of net revenues.

Depreciation of Fixed and Intangible Assets decreased by P$79 million to P$1,055 million (+P$33 million in the cellular operation, -P$111 million in the Fixed Telephony business and -P$1 million in the Directories business).

Consolidated Financial and Holding Results

Financial and Holding Results resulted in a loss of P$412 million, as compared to the P$91 million profit registered in 9M05. The

 

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difference is mainly due to foreign exchange fluctuations (-P$753 million), while net financial interest expense decreased by P$177 million.

Interest accrued on financial debt totaled P$278 million (P$180 million of which corresponds to Telecom Argentina).

Net Financial Debt

As of September 30, 2006, Net Debt (Loans before the effect of NPV valuation, minus Cash, Banks, Current Investments and Other credits derived from derivative Investments) amounted to P$3,777 million, a reduction of P$759 million as compared to December 31, 2005. In October 2006, Telecom Argentina prepaid an amount equivalent to 75% of the amortization originally scheduled for October 2009, an amount equal to U$S 104 million.

On October 9, 2006, Standard & Poor’s upgraded the long-term debt rating of Telecom Argentina and Telecom Personal to B+ from B in the international scale and to raA+ from raBBB+ in the local scale, based on the improvement of the financial situation of the Company after the closing of its debt restructuring process, its strong competitive positioning and its operative efficiency indicators.

Consolidated Capital Expenditures

A total amount of P$755 million invested in fixed assets and intangibles during 9M06 was allocated to the cellular business (P$390 million) and the Voice data and Internet business (P$365 million).

The Telecom Group continues to implement an important investment plan with the goal of developing a new generation of services based on the transformation of its networks.

This technological evolution will have a significant effect on the services available for each type of client. Residential subscribers will enjoy a broad portfolio of value-added services, permanent connectivity, entertainment and mobility to meet their communications demands. Business clients will have more flexible tools that will help to improve efficiency and productivity.

Some of the new facilities that the Telecom Group will soon offer to its corporate and residential clients are: Fiber Optic closer to the home; super broadband (20 MB) for internet; data, images & sound in a single access; IP telephony; Satellite & Wi Max internet for remote locations; e-government solutions (such as “digital signature” and remote administrative proceedings) and public security solutions (911).

Conversion of Class “C” to Class “B” shares

 

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In accordance with the approvals received at the Shareholders’ Meeting in April 2006, and the authorizations given by the Bolsa de Comercio de Buenos Aires and Comisión Nacional de Valores, a new conversion of Class “C” shares into Class “B” shares was implemented. As a result of this conversion, the capital stock is composed as follows:

 

Class “A” Shares		502,034,299
Class “B” Shares		440,631,683
Class “C” Shares		41,714,996
Total		984,380,978

***********

 

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Telecom is the parent company of a leading telecommunications group in Argentina, where it offers directly or through its controlled subsidiaries local and long distance fixed-line telephony, cellular, data transmission and Internet services, among other services. Additionally, through a controlled subsidiary, the Telecom Group offers cellular services in Paraguay. The Company commenced operations on November 8, 1990, upon the Argentine Government’s transfer of the telecommunications system in the northern region of Argentina. Nortel Inversora S.A. (“Nortel”), which acquired the majority of the Company from the Argentine government, holds 54.74% of Telecom’s common stock. Nortel is a holding company where the common stock (approximately 68% of capital stock) is owned by Sofora Telecomunicaciones S.A. Additionally, Nortel capital stock is comprised of preferred shares that are held by minority shareholders.

As of September 30, 2006, Telecom had 984,380,978 shares outstanding.

(*) Employee Stock Ownership Program

For more information, please contact the Financial Planning & Investor Relations Department:

 

Pedro Insussarry 54-11-4968-3743		Mariano Martire 54-11-4968-3718		Gastón Urbina 54-11-4968-6236		Astrid Burger 54-11-4968-4448

Voice Mail: 54-11-4968-3628

Fax: 54-11-4313-5842

E-mail: relinver@ta.telecom.com.ar

For information about Telecom Group services, visit:

www.personal.com.ar

www.personal.com.py

www.arnet.com.ar

www.paginasamarillas.com.ar

Disclaimer

This document may contain 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, capital expenditures, dividends, liquidity and capital structure; the effects of its debt restructuring process; the impact of emergency laws enacted by the Argentine Government; and the impact of rate changes and competition on the Company’s future financial performance. Forward-looking statements may be identified by words 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 and uncertainties include, but are not limited to, the impact of emergency laws enacted by the Argentine government that have resulted in the repeal of Argentina’s Convertibility law, devaluation of the peso, various changes in restrictions on the ability to exchange pesos into foreign currencies, and currency transfer policy generally, the “pesification” of tariffs charged for public services, the elimination of indexes to adjust rates charged for public services and the Executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive changes in laws and economic and business conditions 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 evolution in consumer spending and the outcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward-looking statements which may be made to reflect events and circumstances after the date of this press release, including, without limitation, changes in the Company’s business or to reflect the occurrence of unanticipated events. Readers are encouraged to consult the Company’s Annual Report on Form 20-F, as well as periodic filings made on Form 6-K, which are filed with or furnished to the United States Securities and Exchange Commission for further information concerning risks and uncertainties faced by Telecom.

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(Financial tables follow)

*******

Amadeo R. Vázquez

President

*******

 

		9		www.telecom.com.ar

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TELECOM ARGENTINA S.A.

Consolidated information

NINE MONTH PERIOD AND THIRD QUARTER - FISCAL YEAR 2006

(In millions of Argentine pesos, except statistical data )

1- Consolidated Balance Sheet

 

		Sep-30 2006		Dec-31 2005		D$			D%
Cash, equivalents and investments		887		642		245			38	%
Trade receivables		715		705		10			1	%
Other current assets		298		195		103			53	%
TOTAL CURRENT ASSETS		1,900		1,542		358			23	%
Fixed & Intangible assets		6,403		6,723		(320	)		-5	%
Other non-current assets		376		292		84			29	%
TOTAL NON-CURRENT ASSETS		6,779		7,015		(236	)		-3	%
TOTAL ASSETS		8,679		8,557		122			1	%
Accounts payable		1,187		834		353			42	%
Loans		1,143		905		238			26	%
Reserves		128		110		18			16	%
Other current liabilities		359		357		2			1	%
TOTAL CURRENT LIABILITIES		2,817		2,206		611			28	%
Loans		3,367		3,996		(629	)		-16	%
Reserves		232		247		(15	)		-6	%
Other non-current liabilities		158		200		(42	)		-21	%
TOTAL NON-CURRENT LIABILITIES		3,757		4,443		(686	)		-15	%
TOTAL LIABILITIES		6,574		6,649		(75	)		-1	%
Minority Interest		62		41		21			51	%
Shareholders’ equity		2,043		1,867		176			9	%
TOTAL LIABILITIES AND EQUITY		8,679		8,557		122			1	%

2- Consolidated Loans

 

		Sep-30 2006			Dec-31 2005			D$			D%
Corporate Bonds		820			761			59			8	%
Banks and others		174			39			135			346	%
Accrued interest		123			59			64			108	%
Derivatives		26			46			(20	)		-43	%
TOTAL CURRENT LOANS		1,143			905			238			26	%
Corporate Bonds		3,351			3,856			(505	)		-13	%
Banks and others		214			386			(172	)		-45	%
Net Present Value		(198	)		(277	)		79			-29	%
Derivatives valuation effect		—			31			(31	)		-100	%
TOTAL NON-CURRENT LOANS		3,367			3,996			(629	)		-16	%
TOTAL LOANS		4,510			4,901			(391	)		-8	%
Derivatives valuation effect (Other Credits)		80			—			80
Cash, equivalents and investments		556			642			(86	)		-13	%
Net financial debt (without NPV effect)		4,072			4,536			(464	)		-10	%

3- Consolidated Income Statement

Nine - Month Comparison

 

		Sep-30
		2006			2005			D$			D%
Net revenues		5,262			4,057			1,205			30	%
Cost of services provided		(3,177	)		(2,667	)		(510	)		19	%
GROSS PROFIT		2,085			1,390			695			50	%
Administrative expenses		(206	)		(171	)		(35	)		20	%
Selling expenses		(1,203	)		(872	)		(331	)		38	%
OPERATING (LOSS)/PROFIT		676			347			329			95	%
Equity income from related companies		6			7			(1	)		-14	%
Financial and holding results		(412	)		91			(503	)		-553	%
Other expenses, net		(129	)		(108	)		(21	)		19	%
Debt Restructuring Results		—			1,424			(1,424	)		-100	%
RESULTS FROM ORDINARY OPERATIONS		141			1,761			(1,620	)		-92	%
Taxes on income		38			(134	)		172			-128	%
Minority interest		(15	)		(4	)		(11	)		275	%
NET (LOSS)/INCOME		164			1,623			(1,459	)		-90	%
Operating (Loss)/Profit before D&A		1,731			1,481			250			17	%
As a % of Net Revenues		33	%		37	%

 

		10		www.telecom.com.ar

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4- Consolidated Income Statement

Three -Month Comparison

 

		Sep-30
		2006			2005			D$			D%
Net revenues		1,905			1,472			433			29	%
Cost of services provided		(1,144	)		(962	)		(182	)		19	%
GROSS PROFIT		761			510			251			49	%
Administrative expenses		(76	)		(52	)		(24	)		46	%
Selling expenses		(428	)		(334	)		(94	)		28	%
OPERATING (LOSS)/PROFIT		257			124			133			107	%
Equity income from related companies		—			—			—			—
Financial and holding results		(116	)		(208	)		92			-44	%
Other expenses, net		(43	)		(58	)		15			-26	%
Debt Restructuring Results		—			1,439			(1,439	)		-100	%
RESULTS FROM ORDINARY OPERATIONS		98			1,297			(1,199	)		-92	%
Taxes on income		(28	)		(131	)		103			-79	%
Minority interest		(5	)		(1	)		(4	)		400	%
NET (LOSS)/INCOME		65			1,165			(1,100	)		-94	%
Operating (Loss)/Profit before D&A		612			509			103			20	%
As a % of Net Revenues		32	%		35	%

5- Consolidated Revenues Breakdown

Nine - Month Comparison

 

		Sep-30
		2006		2005		D$			D%
Fixed Telephony		1,665		1,613		52			3	%
Measured service
Local		379		386		(7	)		-2	%
DLD		336		334		2			1	%
Monthly charges		533		501		32			6	%
Public telephones		100		118		(18	)		-15	%
Interconnection		225		181		44			24	%
Others		92		93		(1	)		-1	%
International Telephony		173		167		6			4	%
Data transmission & Internet		411		342		69			20	%
Cellular Telephony		2,993		1,918		1,075			56	%
Telecom Personal		2,748		1,763		985			56	%
Monthly fee and measured service		633		403		230			57	%
Pre-paid card		872		426		446			105	%
Calling Party Pays		355		295		60			20	%
TLRD *		298		177		121			68	%
Handset sales		369		211		158			75	%
Others		221		251		(30	)		-12	%
Núcleo		245		155		90			58	%
Monthly fee and measured service		46		34		12			35	%
Pre-paid card		120		61		59			97	%
Calling Party Pays		29		25		4			16	%
TLRD *		30		17		13			76	%
Handset sales		5		8		(3	)		-38	%
Others		15		10		5			50	%
Telephone Directories (Publicom)		20		17		3			18	%
TOTAL NET REVENUES		5,262		4,057		1,205			30	%

 

*	Charges for the termination of calls of the cellular operators.

6- Consolidated Revenues Breakdown

Three -Month Comparison

 

		Sep-30
		2006		2005		D$			D%
Fixed Telephony		568		556		12			2	%
Measured service
Local		128		139		(11	)		-8	%
DLD		119		114		5			4	%
Monthly charges		179		170		9			5	%
Public telephones		31		38		(7	)		-18	%
Interconnection		81		63		18			29	%
Others		30		32		(2	)		-6	%
International Telephony		54		57		(3	)		-5	%
Data transmission & Internet		142		118		24			20	%
Cellular Telephony		1,130		731		399			55	%
Telecom Personal		1,032		673		359			53	%
Monthly fee and measured service		229		152		77			51	%
Pre-paid card		356		177		179			101	%
Calling Party Pays		125		108		17			16	%
TLRD *		110		68		42			62	%
Handset sales		141		84		57			68	%
Others		71		84		(13	)		-15	%
Núcleo		98		58		40			69	%
Monthly fee and measured service		17		13		4			31	%
Pre-paid card		50		24		26			108	%
Calling Party Pays		11		9		2			22	%
TLRD *		12		6		6			100	%
Handset sales		1		3		(2	)		-67	%
Others		7		3		4			133	%
Telephone Directories (Publicom)		11		10		1			10	%
TOTAL NET REVENUES		1,905		1,472		433			29	%

 

*	Charges for the termination of calls of the cellular operators.

 

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7- Consolidated Income Statement by Activities

Nine month period - FY 2006

(In million of Argentine pesos )

 

		Activities												Variation vs 9M05
		Voice, Data and Internet			Cellular Telephony			Publishing Directories			Consolidated Activities			D$			D%
NET REVENUES		2,249			2,993			20			5,262			1,205			30	%
Salaries and social security contributions		(488	)		(116	)		(7	)		(611	)		(107	)		21	%
Taxes		(128	)		(251	)		(1	)		(380	)		(100	)		36	%
Materials and supplies		(178	)		(63	)		(6	)		(247	)		(32	)		15	%
Doubtful accounts		(12	)		(39	)		—			(51	)		(33	)		183	%
Interconnection cost		(119	)		—			—			(119	)		(12	)		11	%
Settlement charges		(77	)		—			—			(77	)		(5	)		7	%
Lease of lines and circuits		(22	)		(18	)		—			(40	)		(6	)		18	%
Service fees		(76	)		(95	)		—			(171	)		(64	)		60	%
Advertising		(37	)		(109	)		(3	)		(149	)		(52	)		54	%
Agent and Prepaid card commissions		(16	)		(349	)		—			(365	)		(110	)		43	%
Cost of cellular handsets		—			(655	)		—			(655	)		(264	)		68	%
Roaming and TLRD		—			(379	)		—			(379	)		(107	)		39	%
Others		(131	)		(154	)		(2	)		(287	)		(63	)		28	%
Operating (Loss)/Profit before D&A		965			765			1			1,731			250			17	%
Operating (Loss)/Profit before D&A Margin		43	%		26	%		5	%		33	%
Depreciation of fixed assets		(709	)		(309	)		—			(1,018	)		82			-7	%
Amortization of intangible assets		(8	)		(29	)		—			(37	)		(3	)		9	%
OPERATING RESULTS		248			427			1			676			329			95	%
EQUITY INCOME FROM RELATED COMPANIES		—			6			—			6			(1	)		-14	%
FINANCIAL AND HOLDING INCOME		(317	)		(96	)		1			(412	)		(503	)		-553	%
OTHER EXPENSES, NET		(80	)		(47	)		(2	)		(129	)		(21	)		19	%
DEBT RESTRUCTURING INCOME		—			—			—			—			(1,424	)		-100	%
INCOME FROM ORDINARY OPERATIONS		(149	)		290			—			141			(1,620	)		-92	%
Taxes on income		44			(7	)		1			38			172			-128	%
Minority interest		—			(15	)		—			(15	)		(11	)		275	%
NET (LOSS)/INCOME		(105	)		268			1			164			(1,459	)		-90	%

Consolidated Income Statement by Activities

Nine month period - FY 2005

(In million of Argentine pesos )

 

		Activities
		Voice, Data and Internet			Cellular Telephony			Publishing Directories			Consolidated Activities
NET REVENUES		2,122			1,918			17			4,057
Salaries and social security contributions		(412	)		(83	)		(9	)		(504	)
Taxes		(122	)		(157	)		(1	)		(280	)
Materials and supplies		(153	)		(58	)		(4	)		(215	)
Doubtful accounts		(4	)		(15	)		1			(18	)
Interconnection cost		(107	)		—			—			(107	)
Settlement charges		(72	)		—			—			(72	)
Lease of lines and circuits		(22	)		(12	)		—			(34	)
Service fees		(57	)		(50	)		—			(107	)
Advertising		(29	)		(66	)		(2	)		(97	)
Agent and Prepaid card commissions		(13	)		(242	)		—			(255	)
Cost of cellular handsets		—			(391	)		—			(391	)
Roaming and TLRD		—			(272	)		—			(272	)
Others		(117	)		(103	)		(4	)		(224	)
Operating (Loss)/Profit before D&A		1,014			469			(2	)		1,481
Operating (Loss)/Profit before D&A Margin		48	%		24	%		-12	%		37	%
Depreciation of fixed assets		(821	)		(278	)		(1	)		(1,100	)
Amortization of intangible assets		(7	)		(27	)		—			(34	)
OPERATING RESULTS		186			164			(3	)		347
EQUITY INCOME FROM RELATED COMPANIES		7			—			—			7
FINANCIAL AND HOLDING INCOME		172			(82	)		1			91
OTHER EXPENSES, NET		(82	)		(24	)		(2	)		(108	)
DEBT RESTRUCTURING INCOME		1,424			—			—			1,424
INCOME FROM ORDINARY OPERATIONS		1,707			58			(4	)		1,761
Taxes on income		(172	)		37			1			(134	)
Minority interest		—			(4	)		—			(4	)
NET (LOSS)/INCOME		1,535			91			(3	)		1,623

 

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TELECOM ARGENTINA S.A.

Unconsolidated Information

NINE MONTH PERIOD AND THIRD QUARTER - FISCAL YEAR 2006

(In millions of Argentine pesos)

8- Balance Sheet

 

		Sep-30 2006		Dec-31 2005		D$			D%
Cash, equivalents and investments		656		558		98			18	%
Trade receivables		343		349		(6	)		-2	%
Other current assets		60		36		24			67	%
TOTAL CURRENT ASSETS		1,059		943		116			12	%
Other Trade receivables		237		169		68			40	%
Fixed & Intangible assets		4,206		4,601		(395	)		-9	%
Investments		858		829		29			3	%
Other non-current assets		19		21		(2	)		-10	%
TOTAL NON-CURRENT ASSETS		5,320		5,620		(300	)		-5	%
TOTAL ASSETS		6,379		6,563		(184	)		-3	%
Accounts payable		449		399		50			13	%
Loans		880		819		61			7	%
Reserves		69		54		15			28	%
Other current liabilities		193		193		—			0	%
TOTAL CURRENT LIABILITIES		1,591		1,465		126			9	%
Loans		2,349		2,802		(453	)		-16	%
Compensation and social benefits payable		30		30		—			0	%
Others liabilities		213		258		(45	)		-17	%
Reserves		153		141		12			9	%
TOTAL NON-CURRENT LIABILITIES		2,745		3,231		(486	)		-15	%
TOTAL LIABILITIES		4,336		4,696		(360	)		-8	%
Shareholders’ equity		2,043		1,867		176			9	%
TOTAL LIABILITIES AND EQUITY		6,379		6,563		(184	)		-3	%

9- Income Statement

Nine - Month Comparison

 

		30-Sep
		2006			2005			D$			D%
Net revenues		2,495			2,292			203			9	%
Cost of services provided		(1,439	)		(1,435	)		(4	)		0	%
GROSS PROFIT		1,056			857			199			23	%
Administrative expenses		(122	)		(105	)		(17	)		-16	%
Selling expenses		(449	)		(399	)		(50	)		-13	%
OPERATING (LOSS)/PROFIT		485			353			132			37	%
Equity income from related companies		21			(82	)		103			126	%
Financial & holding results		(318	)		177			(495	)		-280	%
Other incomes & expenses		(68	)		(77	)		9			12	%
Debt Restructuring Results		—			1,424			(1,424	)
RESULTS FROM ORDINARY OPERATIONS		120			1,795			(1,675	)		-93	%
Taxes on income		44			(172	)		216			-126	%
NET (LOSS)/INCOME		164			1,623			(1,459	)		-90	%
Operating (Loss)/Profit before D&A		1,201			1,181			20			2	%
As a % of Net Revenues		48	%		52	%

10- Income Statement

Three -Month Comparison

 

		30-Sep
		2006			2005			D$			D%
Net revenues		854			793			61			8	%
Cost of services provided		(484	)		(498	)		14			3	%
GROSS PROFIT		370			295			75			25	%
Administrative expenses		(43	)		(29	)		(14	)		-48	%
Selling expenses		(159	)		(136	)		(23	)		-17	%
OPERATING (LOSS)/PROFIT		168			130			38			29	%
Equity income from related companies		29			(40	)		69			173	%
Financial & holding results		(93	)		(159	)		66			42	%
Other incomes & expenses		(25	)		(43	)		18			42	%
Debt Restructuring Results		—			1,439			(1,439	)
RESULTS FROM ORDINARY OPERATIONS		79			1,327			(1,248	)		-94	%
Taxes on income		(14	)		(162	)		148
NET (LOSS)/INCOME		65			1,165			(1,100	)		-94	%
Operating (Loss)/Profit before D&A		404			410			(6	)		-1	%
As a % of Net Revenues		47	%		52	%

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

						Telecom Argentina S.A.
Date:		November 13, 2006				By:		/s/ Gerardo Werthein
								Name:		Gerardo Werthein
								Title:		Vice-President