Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Entity Registrant Name | TELECOM ARGENTINA SA |
Entity Central Index Key | 932,470 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
Class "A" | |
Entity Common Stock, Shares Outstanding | 340,994,852 |
Class "B" | |
Entity Common Stock, Shares Outstanding | 627,930,005 |
Class "C" | |
Entity Common Stock, Shares Outstanding | 234,748 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION $ in Millions, $ in Millions | Dec. 31, 2017ARS ($) | Dec. 31, 2016ARS ($) |
Current Assets | ||
Cash and cash equivalents | $ 2,831 | $ 3,945 |
Investments | 3,426 | 1,751 |
Trade receivables | 8,636 | 7,577 |
Other receivables | 1,491 | 1,011 |
Inventories | 1,854 | 1,278 |
Total current assets | 18,238 | 15,562 |
Non-Current Assets | ||
Trade receivables | 12 | 208 |
Other receivables | 419 | 360 |
Income tax assets | 626 | 680 |
Investments | 2,657 | 347 |
Property, plant and equipment | 28,538 | 23,165 |
Intangible assets | 7,098 | 7,592 |
Total non-current assets | 39,350 | 32,352 |
TOTAL ASSETS | 57,588 | 47,914 |
Current Liabilities | ||
Trade payables | 11,483 | 8,979 |
Deferred revenues | 515 | 443 |
Financial debt | 3,194 | 3,266 |
Salaries and social security payables | 2,051 | 1,610 |
Income tax payables | 2,748 | 724 |
Other taxes payables | 1,505 | 1,149 |
Other liabilities | 85 | 69 |
Provisions | 406 | 271 |
Total current liabilities | 21,987 | 16,511 |
Non-Current Liabilities | ||
Trade payables | 101 | 152 |
Deferred revenues | 425 | 445 |
Financial debt | 9,041 | 8,646 |
Salaries and social security payables | 259 | 184 |
Deferred income tax liabilities | 48 | 569 |
Income tax payables | 2 | 7 |
Other liabilities | 220 | 170 |
Provisions | 1,626 | 1,352 |
Total non-current liabilities | 11,722 | 11,525 |
TOTAL LIABILITIES | 33,709 | 28,036 |
EQUITY | ||
Equity attributable to Telecom Argentina (Controlling Company) | 23,086 | 19,336 |
Equity attributable to non-controlling interest | 793 | 542 |
TOTAL EQUITY (See Consolidated Statements of Changes in Equity) | 23,879 | 19,878 |
TOTAL LIABILITIES AND EQUITY | $ 57,588 | $ 47,914 |
CONSOLIDATED INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENTS - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED INCOME STATEMENTS | |||
Revenues | $ 65,186 | $ 53,240 | $ 40,496 |
Other income | 133 | 83 | 44 |
Total revenues and other income | 65,319 | 53,323 | 40,540 |
Employee benefit expenses and severance payments | (12,718) | (9,800) | (7,253) |
Interconnection costs and other telecommunication charges | (3,148) | (2,553) | (2,170) |
Fees for services, maintenance, materials and supplies | (6,600) | (5,006) | (3,919) |
Taxes and fees with the Regulatory Authority | (6,107) | (5,125) | (3,943) |
Commissions | (3,631) | (3,849) | (3,193) |
Cost of equipments and handsets | (6,684) | (6,188) | (4,595) |
Advertising | (1,218) | (874) | (814) |
Cost of VAS | (874) | (1,499) | (1,256) |
Provisions | (590) | (187) | (113) |
Bad debt expenses | (1,113) | (1,228) | (564) |
Other operating expenses | (3,280) | (2,590) | (1,854) |
Depreciation and amortization | (6,928) | (6,198) | (4,438) |
Disposals and impairment of PP&E | (316) | (383) | (199) |
Operating income | 12,112 | 7,843 | 6,229 |
Finance income | 3,115 | 1,006 | 1,130 |
Finance expenses | (3,601) | (3,250) | (2,232) |
Income before income tax expense | 11,626 | 5,599 | 5,127 |
Income tax expense | (3,902) | (1,594) | (1,692) |
Net income for the year | 7,724 | 4,005 | 3,435 |
Attributable to: | |||
Telecom Argentina (Controlling Company) | 7,630 | 3,975 | 3,403 |
Non-controlling interest | $ 94 | $ 30 | $ 32 |
Earnings per share attributable to Telecom Argentina | |||
Basic and diluted | $ 7.87 | $ 4.10 | $ 3.51 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 7,724 | $ 4,005 | $ 3,435 |
Items will be reclassified subsequently to profit or loss | |||
Currency translation adjustments (no effect on Income Tax) | 392 | 288 | 245 |
Subsidiaries' NDF effects classified as hedges (Note 20) | 7 | (9) | 8 |
Items will not be reclassified subsequently to profit or loss | |||
Actuarial results (Notes 3. m and 16) | 6 | (24) | 7 |
Tax effect | (2) | 8 | (3) |
Other components of the comprehensive income, net of tax | 403 | 263 | 257 |
Total comprehensive income for the year | 8,127 | 4,268 | 3,692 |
Attributable to: | |||
Telecom Argentina (Controlling Company) | 7,904 | 4,142 | 3,580 |
Non-controlling interest | $ 223 | $ 126 | $ 112 |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Currency translation adjustments, tax effect | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - ARS ($) $ in Millions | Equity attributable to Telecom Argentina (Controlling Company) | Outstanding shares, Capital nominal value | Outstanding shares, Inflation adjustment | Treasury shares, Capital nominal value | [2] | Treasury shares, Inflation adjustment | [2] | Treasury shares acquisition cost | [2] | Legal reserve | Special reserve for IFRS implementation | Voluntary reserve for capital investments | [2] | Voluntary reserve for future investments | Voluntary reserve for future dividends payments | Other comprehensive results | Cost of the increase of the share in controlled companies | Retained earnings | Equity attributable to non-controlling interest | Total | ||
Balance at the beginning of the year at Dec. 31, 2014 | $ 14,418 | $ 969 | [1] | $ 2,646 | $ 15 | [1] | $ 42 | $ (461) | $ 734 | $ 351 | $ 3,191 | $ 2,904 | $ 354 | $ 3,673 | $ 351 | $ 14,769 | ||||||
Dividends from Nucleo | [3] | (47) | (47) | |||||||||||||||||||
Voluntary reserve for future dividends payments | [4] | $ 2,869 | (2,869) | |||||||||||||||||||
Dividends | [4] | (804) | (804) | (804) | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income for the year | 3,403 | 3,403 | 32 | 3,435 | ||||||||||||||||||
Other comprehensive income | 177 | 177 | 80 | 257 | ||||||||||||||||||
Total comprehensive income for the year | 3,580 | 177 | 3,403 | 112 | 3,692 | |||||||||||||||||
Balance at the end of the year at Dec. 31, 2015 | 17,194 | 969 | [1] | 2,646 | 15 | [1] | 42 | (461) | 734 | 351 | 3,191 | 2,904 | 2,869 | 531 | 3,403 | 416 | 17,610 | |||||
Voluntary reserve for future dividends payments | [5] | 3,403 | (3,403) | |||||||||||||||||||
Dividends | [6] | (2,000) | (2,000) | (2,000) | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income for the year | 3,975 | 3,975 | 30 | 4,005 | ||||||||||||||||||
Other comprehensive income | 167 | 167 | 96 | 263 | ||||||||||||||||||
Total comprehensive income for the year | 4,142 | 167 | 3,975 | 126 | 4,268 | |||||||||||||||||
Balance at the end of the year at Dec. 31, 2016 | 19,336 | 969 | [1],[7] | 2,646 | 15 | [1],[7] | 42 | (461) | 734 | 351 | 3,191 | 2,904 | 4,272 | 698 | 3,975 | 542 | 19,878 | |||||
Dividends from Nucleo | [8] | (35) | (35) | |||||||||||||||||||
Voluntary reserve for future dividends payments | [9] | (2,730) | $ (2,904) | 9,609 | (3,975) | |||||||||||||||||
Increase of the share in Personal | [10] | (3) | $ (3) | (3) | ||||||||||||||||||
Tuve's Paraguay acquisition | [11] | 63 | 63 | |||||||||||||||||||
Dividends | [12] | (4,151) | (4,151) | (4,151) | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income for the year | 7,630 | 7,630 | 94 | 7,724 | ||||||||||||||||||
Other comprehensive income | 274 | 274 | 129 | 403 | ||||||||||||||||||
Total comprehensive income for the year | 7,904 | 274 | 7,630 | 223 | 8,127 | |||||||||||||||||
Balance at the end of the year at Dec. 31, 2017 | $ 23,086 | $ 969 | [7] | $ 2,646 | $ 15 | [7] | $ 42 | $ (461) | $ 734 | $ 351 | $ 461 | $ 9,730 | $ 972 | $ (3) | $ 7,630 | $ 793 | $ 23,879 | |||||
[1] | As of December 31, 2016, 2015 and 2014, total shares ( 984,380,978 ), of $1 argentine peso of nominal value each, were issued and fully paid. As of the same dates; 15,221,373 were treasury shares. | |||||||||||||||||||||
[2] | Corresponds to 15,221,373 shares of $1 argentine peso of nominal value each, equivalent to 1.55% of total capital. The treasury shares acquisition costs amounted to 461. See Note 19 - Equity to these consolidated financial statements. | |||||||||||||||||||||
[3] | As approved by the Ordinary Shareholders’ Meeting of Núcleo held on March 26, 2015 and the Board of Directors’ meeting of Núcleo held on December 17, 2015. | |||||||||||||||||||||
[4] | As approved by the Company’s Ordinary Shareholders’ Meeting held on April 29, 2015. | |||||||||||||||||||||
[5] | As approved by the Company's Ordinary Shareholders' Meeting held on April 29, 2016. | |||||||||||||||||||||
[6] | As approved by the Company's Board of Directors' Meeting held on April 29, 2016. | |||||||||||||||||||||
[7] | As of December 31, 2017 and 2016, total shares (984,380,978), of $1 argentine peso of nominal value each, were issued and fully paid. As of the same dates; 15,221,373 were treasury shares. | |||||||||||||||||||||
[8] | As approved by the Ordinary Shareholders' Meeting of Núcleo held on March 28, 2017. | |||||||||||||||||||||
[9] | As approved by the Company’s Ordinary and Extraordinary Shareholders’ Meeting held on April 27, 2017. | |||||||||||||||||||||
[10] | See Note 3.u. | |||||||||||||||||||||
[11] | See Note 3.e. | |||||||||||||||||||||
[12] | As approved by the Company’s Board of Directors’ Meeting held on December 18, 2017. The amount in pesos is $ 4,150,312,272, which was rounded in this Consolidated Statement of changes in equity to be presented in millions of pesos to 4,151. |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - ARS ($) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Shares issued and fully paid | 984,380,978 | 984,380,978 | 984,380,978 | |||
Nominal value (in pesos per share) | $ 1 | $ 1 | $ 1 | |||
Treasury shares (in shares) | 15,221,373 | 15,221,373 | 15,221,373 | |||
Treasury shares | $ 461,000,000 | $ 461,000,000 | $ 461,000,000 | |||
Dividends | $ 4,151,000,000 | [1] | $ 2,000,000,000 | [2] | $ 804,000,000 | [3] |
Treasury shares, Capital nominal value | ||||||
Nominal value (in pesos per share) | $ 1 | $ 1 | $ 1 | |||
Treasury shares (in shares) | 15,221,373 | |||||
Percentage of treasury shares to total capital | 1.55% | 1.55% | 1.55% | |||
Pesos | ||||||
Dividends | $ 4,150,312,272 | |||||
[1] | As approved by the Company’s Board of Directors’ Meeting held on December 18, 2017. The amount in pesos is $ 4,150,312,272, which was rounded in this Consolidated Statement of changes in equity to be presented in millions of pesos to 4,151. | |||||
[2] | As approved by the Company's Board of Directors' Meeting held on April 29, 2016. | |||||
[3] | As approved by the Company’s Ordinary Shareholders’ Meeting held on April 29, 2015. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income for the year | $ 7,724 | $ 4,005 | $ 3,435 |
Adjustments to reconcile net income to net cash flows provided by operating activities | |||
Bad debt expenses | 1,113 | 1,228 | 564 |
Allowance for obsolescence of inventories, materials and other | 103 | 77 | 72 |
Depreciation of property, plant and equipment | 5,039 | 4,358 | 3,046 |
Amortization of intangible assets | 1,889 | 1,840 | 1,392 |
Consumption of materials | 1,125 | 507 | 294 |
Disposals and impairment of property, plant and equipment | 276 | 366 | 199 |
Net book value of property, plant and equipment | 77 | 21 | 35 |
Adjustments for provisions | 590 | 187 | 113 |
Other financial results | 1,165 | 1,721 | 351 |
Income tax expense | 3,902 | 1,594 | 1,692 |
Income tax paid | (2,400) | (1,700) | (1,631) |
Net increase in assets | (3,592) | (1,660) | (4,640) |
Net increase (decrease) in liabilities | 2,321 | (1,179) | 1,890 |
Total cash flows provided by operating activities | 19,332 | 11,365 | 6,812 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Property, plant and equipment acquisitions | (10,727) | (9,541) | (5,148) |
3G/4G licenses acquisitions | (2,256) | ||
Other intangible asset acquisitions | (971) | (1,798) | (1,310) |
Personal shares acquisitions | (4) | ||
Proceeds from the sale of property, plant and equipment | 27 | 19 | 39 |
Acquisition of Tuves Paraguay | 2 | ||
Incorporated by Merge with Nortel | 6 | ||
Investments not considered as cash and cash equivalents | (2,627) | (20) | (976) |
Total cash flows used in investing activities | (14,294) | (11,340) | (9,651) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from financial debt | 1,730 | 9,337 | 4,301 |
Payment of financial debt | (2,986) | (2,936) | (31) |
Payment of interests and related expenses | (848) | (1,573) | (471) |
Payment of cash dividends and related withholding tax | (4,192) | (2,000) | (849) |
Total cash flows provided by (used in) financing activities | (6,296) | 2,828 | 2,950 |
NET FOREIGN EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | 144 | 222 | 75 |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,114) | 3,075 | 186 |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 3,945 | 870 | 684 |
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | $ 2,831 | $ 3,945 | $ 870 |
Description of business and bas
Description of business and basis of preparation of the consolidated financial statements | 12 Months Ended |
Dec. 31, 2017 | |
Description of business and basis of preparation of the consolidated financial statements | |
Description of business and basis of preparation of the consolidated financial statements | Note 1 – Description of business and basis of preparation of the consolidated financial statements a) The Company and its operations Telecom Argentina was created through the privatization of ENTel, the state-owned company that provided telecommunication services in Argentina. Telecom Argentina’s license, as originally granted, was exclusive to provide telephone services in the northern region of Argentina since November 8, 1990 through October 10, 1999. As from such date, the Company also began providing telephone services in the southern region of Argentina and competing in the previously exclusive northern region. The Company provides mainly fixed-line public and mobile telecommunication services, international long-distance service, data transmission and Internet services in Argentina and through its subsidiaries, mobile telecommunications services Paraguay and international wholesale services in the United States of America. Information on the Telecom Group’s licenses and the regulatory framework is described in Note 2. The Ordinary and Extraordinary Shareholders Meeting held on June 22, 2015 approved the Telecom Argentina’s corporate purpose change, adapting it to the new definition of ICT services of the LAD and, thus, including the possibility of providing Audiovisual Communication Services. The Company obtained authorization from the AFTIC and later of the CNV and IGJ, which registered the amendment of the Company’s bylaws on September 26, 2015. As a consequence of the merger between the Company and Cablevisión S.A. (Note 32), Telecom Argentina as surviving entity will develop starting on fiscal year 2018 the operations that Cablevisión S.A. had as of December 31, 2017. For the year 2017, entities included in the consolidation process and the respective equity interest owned by Telecom Argentina is presented as follows: Subsidiaries Percentage of capital Indirect Date of acquisition Segment that consolidates Telecom USA 100.00% 09.12.00 Fixed Services Micro Sistemas (ii) 100.00% 12.23.97 Fixed Services Personal (iii) - 07.06.94 Personal Mobile Services Núcleo (iv) 67.50% 02.03.98 Núcleo Mobile Services Personal Envíos (iv) 67.50% Núcleo 07.24.14 Núcleo Mobile Services Tuves Paraguay (v) 47.25% Núcleo 06.30.17 Núcleo Mobile Services (i) Percentage of equity interest owned has been rounded. (ii) Dormant entity as of and for the fiscal years ended December 31, 2017, 2016 and 2015. (iii) Until November 30, 2017, Telecom Argentina owned 100% of Personal. Since December 1, 2017 the reorganization described in Note 31 was effective and from that date, mobile services provided by Personal are continued by Telecom. (iv) Non-controlling interest of 32.50% is owned by the Paraguayan company ABC Telecomunicaciones S.A. (v) Non-controlling interest of 22.75% is owned by the Paraguayan company ABC Telecomunicaciones S.A and 30% is owned by TU VES S.A. (Chile). On June 30, 2017, the transaction by which Núcleo acquired the 70% of shares and votes of Tuves Paraguay was performed. b) Segment reporting An operating segment is defined as a component of an entity that engages in business activities from which it may earn revenues and incur expenses, and whose financial information is available, held separately, and evaluated regularly by the Telecom Group’s Chief Executive Officer (“CEO”). Operating segments are reported in a consistent manner with the internal reporting provided to the CEO, who is responsible for allocating resources and assessing performance of the operating segments under the accounting principles effective (IFRS as issued by the IASB). The accounting policies applied for segment information are the same for all operating segments. Information regarding segment reporting is included in Note 28. c) Basis of preparation These consolidated financial statements are a free translation from the original consolidated financial statements issued in Spanish and filed to the CNV in Argentina and contain the same information to the original version. As required by CNV, these consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB, and in accordance with RT 26 (as amended by RT 29 and RT 43) of FACPCE as adopted by the CPCECABA. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the Telecom Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these consolidated financial statements are disclosed in Note 3.w). These consolidated financial statements (except for cash flow information) are prepared on an accrual basis of accounting. Under this basis, the effects of transactions and other events are recognized when they occur. Therefore income and expenses are recognized at fair value on an accrual basis regardless of when they are received or paid. When significant, the difference between the fair value and the nominal amount of income and expenses is recognized as finance income or expense using the effective interest method over the relevant period. The accompanying consolidated financial statements have also been prepared on a going concern basis (further details are provided in Note 3.a) and the figures are expressed in millions of pesos, otherwise indicated. These consolidated financial statements for the year ended December 31, 2017 were approved by resolution of the Board of Directors’ meeting held on March 7, 2018. d) Financial statement formats The financial statement formats adopted are consistent with IAS 1. In particular: · the consolidated statements of financial position have been prepared by classifying assets and liabilities according to “current and non-current” criterion. Current assets and liabilities are those that are expected to be realized/settled within twelve months after the year-end; · the consolidated income statements have been prepared by classifying operating expenses by nature of expense as this form of presentation is considered more appropriate and represents the way that the business of the Group is monitored by the Management, and, additionally, are in line with the usual presentation of expenses in the telecommunication industry; · the consolidated statements of comprehensive income include the profit or loss for the year as shown in the consolidated income statement and all components of other comprehensive income; · the consolidated statements of changes in equity have been prepared showing separately (i) profit (loss) for the year, (ii) other comprehensive income (loss) for the year, and (iii) transactions with shareholders (owners and non-controlling interest); · the consolidated statements of cash flows have been prepared by presenting cash flows from operating activities according to the “indirect method”, as permitted by IAS 7. These consolidated financial statements contain all material disclosures required under IFRS. Some additional disclosures required by the LGS and/or by the CNV have been also included, among them, complementary information required in the last paragraph of Article 1 Chapter III Title IV of the CNV General Resolution No. 622/13. Such information is disclosed in Notes 7, 8, 9, 17, 20, 22 and 26 to these consolidated financial statements, as admitted by IFRS. e) Application of IAS 29 (Financial reporting in hyperinflationary economies) IAS 29 establishes the conditions under which an entity shall restate its financial statements if it is located in an economic environment considered “hyperinflationary”. It should be mentioned that if the qualitative and / or quantitative characteristics to consider an economy as a “hyperinflationary” economy set out in paragraph 3 of IAS 29 occur, the restatement of financial statements must be made retroactively from the date of the revaluation used as deemed cost (in the case of Group companies located in Argentina, since February 2003) or from the acquisition date for assets acquired after that date. The Company’s Management periodically verifies the evolution of official statistics as well as the general factors of the economic environment in the countries in which the Telecom Group operates. The Company’s Management also considers the opinion of other organizations interested in this matter: the national and international accounting profession, domestic and foreign audit firms, national and the United States’ capital market regulators, and, in particular, the International Practices Task Force (“IPTF”), aware that the conclusions to which a financial statement issuer arrives must be consistent with the vision of those organizations for an uniform application of IAS 29. Although the standard does not establish an absolute rate at which hyperinflation is deemed to arise, usually - in compliance with the provisions of IAS 29- a cumulative inflation rate over three years approaching or exceeding 100% is used as reference in conjunction with other qualitative factors related to the macroeconomic environment. The Company analyzes the economic environment as required by the provisions of IAS 29, based on the inflation rates published by the National Institute of Statistics and Census (INDEC), following the same criteria adopted by the accounting profession in the Argentine Republic. The tables below show the evolution of these indexes in the last three years according to official statistics (INDEC), except for November and December 2015, and Consumer Price and Internal Wholesale Price for the period November 2015-April 2016, when the INDEC was unable to publish Internal Wholesale Price Index and suggested to use Price Index published by the Province of San Luis and the City of Buenos Aires. 2015 2016 2017 Consumer Price Index (*) (*) (**) Consumer Price Index (annual) 20.6% 36.3% 24.8% Consumer Price Index (3 years accumulated) 65.8% 103.7% 104.9% Internal Wholesale Price Index Internal Wholesale Price Index (annual) 19.2% 34.6% 18.8% Internal Wholesale Price Index (3 years accumulated) 75.4% 105.8% 90.7% (*) Consumer Price Index and Internal Wholesale Price Index published by INDEC until October were 11.9% and 10.6% respectively. These rates (which contain ten months accumulated), were updated with November and December 2015 Consumer Price Index average rates for this two months (7.8%) published by the Province of San Luis and the City of Buenos Aires. (**) Due to the unavailability of Consumer Price Index published by the INDEC, the Company estimated 16.6% for the period January-April 2016; this estimation is an average of the indexes published by the Province of San Luis and the City of Buenos Aires for that period. The Consumer Price Index at national level published by the INDEC for the period May-December 2016 was 16.9%. The Annual Price Index for the year 2017 (Consumer Price Index: 24.8%, Internal Wholesale Price: 18.8%) show a decrease in the level of inflation rates as compare to 2016. According to the high inflation levels in Argentina registered in late years, the Company’s Management has further assessed the characteristics set out in paragraph 3 of IAS 29, including (i) the quantitative condition provided in section (e) “ the cumulative inflation rate over three years is approaching, or exceeds, 100% ”, as well as (ii) the qualitative characteristics contained in paragraphs a) to d) of that paragraph. From the analysis assessed as of December 31, 2017, the Company’s Management considers that the quantitative condition provided in section e) of IAS 29 hasn’t been met considering Internal Wholesale Price Index, while the qualitative conditions of the Argentine economy are mixed (some of them would recommend the existence of a high inflation environment and others have not substantially changed respect to previous years, when it was concluded that financial statements should not be restated). Under these circumstances, and in order to objectify the analysis, the Company’s Management gave priority to the conclusions reached by some international auditing firms to which the Company’s Management had access, which considered that, to date, there was insufficient evidence to consider the Argentine economy as “hyperinflationary” under IAS 29 terms. Similar conclusions for US GAAP were reached by the IPTF, according to its memo issued on May 16, 2017. An extract of the mentioned memo stated that: “Considering the guidance in ASC 830, it does not appear that Argentina would be required to be considered highly-inflationary for the reporting periods from January 1, 2017 to June 30, 2017 for calendar year-end registrants. Registrants would be expected to have appropriate controls in place to monitor Argentina’s reported inflation data throughout 2017 and consider other pertinent economic indicators to determine if and when Argentina should be considered highly-inflationary “ . While there are differences in the definition of a “hyperinflationary” and “highly inflationary” environments between IFRS and US GAAP, respectively, the Company believes that the assessment of the macroeconomic situation of a country should be substantially similar under both accounting frameworks and, on this condition, considered consistent the conclusions arrived by the IPTF with those provided in the analysis assessed by international audit firms according to IFRS and US GAAP. The Company’s Management will continue monitoring the characteristics and the evolution of the inflation rates in Argentina in order to comply properly with IAS 29 provisions, with special consideration of the pronouncements of argentine regulators – which as of the date of issuance of these consolidated financial statements are forbidden to accept the filing of financial statements restated for inflation according to Decree No.664/03 and its supplementary standards. The Company’s Management will also monitor the pronouncements of foreign regulators, as well as the evaluation that the domestic and international accounting profession will perform with regards to the uniform application of IAS 29 together with other issuers that apply IFRS in the Argentine Republic. f) Merger of Cubecorp Argentina S.A. (“Cubecorp”) In July 2008, Telecom Argentina acquired 100% of the shares of Cubecorp. With this acquisition, Telecom Argentina strengthens its Data Center services, as the Data Center acquired is equipped with world class infrastructure, which permits to offer clients with high reliability, availability and scalability customized to their needs. In March 2009, the Board of Directors of Cubecorp and Telecom Argentina approved the Merger Agreement, by which both companies would merge (subject to the approval of the CNV and to the approval of the Shareholders’ Meetings of Cubecorp and Telecom Argentina), being Telecom Argentina the surviving company and Cubecorp the dissolved without liquidation company. The CNV determined no legal or accounting observations for the merger and ordered the publication of the Merger Agreement in the Buenos Aires Stock Exchange’s (“the BCBA”) Daily Bulletin and in the CNV’s website (www.cnv.gov.ar, section “Autopista de Información Financiera”). The Extraordinary Shareholders’ Meeting of Cubecorp held on March 19, 2009, and the Annual General Ordinary and Extraordinary Shareholders’ Meeting of Telecom Argentina held on April 28, 2010 approved the merger, the corresponding financial statements and, in the case of the Meeting of Cubecorp, the dissolution without liquidation of Cubecorp as provided by Law No. 19,550 section 94 art. 7. Additionally, the Final Merger Agreement with Cubecorp was authorized, effective January 1st, 2009. The period specified in the Law No. 19,550 section 83 was completed and the Final Merger Agreement was granted on June 2, 2010. On June 7, 2010, the process of registration of the merger with the CNV began, whose Board of Directors, on June 24, 2010, decided to hold the proceeding until the CNDC authorizes the acquisition of shares of Cubecorp by Telecom Argentina. On September 5, 2017, Telecom Argentina was notified of the Secretary of Commerce Resolution No. 2017-656-APN-SECC # MP that authorized the operation of economic concentration consisting of the purchase of 100% of Cubecorp’s shares. On September 6, 2017, Telecom Argentina requested the CNV to provide administrative compliance to the Merger of Telecom Argentina with Cubecorp in accordance with the provisions of Chapter X Title II of the CNV Rules (NT 2013) and send the proceedings to the IGJ for registration. On October 12, 2017, the Board of Directors of the CNV ordered the merger by absorption of Telecom Argentina, as an acquiring company, and Cubecorp, as an absorbed company, and sent the proceedings to the IGJ for registration. On February 27, 2018, the dissolution without liquidation of Cubecorp since the effect of the merger with the Company was registered in IGJ. g) Corporate reorganization of the Telecom Group On December 1, 2017, the corporate reorganization of the Telecom Group was effective as described in Note 31. Since as of the date of the Telecom Group’s Reorganization date (i) Nortel and Sofora, that were holding companies with no operations or assets other than direct and indirect interests, respectively, in Telecom Argentina and (ii) Personal was a wholly-owned subsidiary of Telecom Argentina, Telecom’s equity didn’t change after the merger, showing only minor changes (incorporation of net assets from the investment of $ 14 and liabilities of the same amount, both from Nortel and Sofora as of November 30, 2017). The Reorganization was accounted for under the absorbed Companies basis of accounting, as permitted by IFRS as issued by the IASB. Under this method, assets and liabilities of the absorbed Companies were incorporated by Telecom Argentina at their respective book values. |
REGULATORY FRAMEWORK
REGULATORY FRAMEWORK | 12 Months Ended |
Dec. 31, 2017 | |
REGULATORY FRAMEWORK | |
REGULATORY FRAMEWORK | Note 2 - REGULATORY FRAMEWORK a) Regulatory Authority Telecom Argentina is regulated by a set of rules and regulations that comprise the regulatory framework of the telecommunication sector in Argentina. Until the issuance of Law No. 27,078, the LAD, which was published in the Official Gazette on December 19, 2014 and has been in force since its publication, the telecommunication services provided by Telecom Argentina and its domestic subsidiaries were regulated by the CNC, a decentralized agency within the scope of the SC, which was also under the scope of the Ministry of Federal Planning, Public Investment and Services. (See “—Law No. 27,078—Argentine Digital Law” below). The LAD created the Federal Authority of Information and Communication Technologies (“AFTIC”), as a decentralized and autonomous agency within the scope of the National Executive Power (PEN), which would act as the Regulatory Authority of the LAD and would replace, for all purposes, of the SC and the CNC. The LAD conferred the AFTIC the regulation, control, supervision and verification functions concerning Information and Communication Technologies (“ICT”) in general, and in particular of the telecommunications, postal service and all those matters integrated to its field in accordance with the provisions of the LAD. By the end of December 2015, the PEN issued the Decree of Need and Urgency (“ Decreto de Necesidad y Urgencia” or hereinafter the “DNU”) No. 267/15 published in the Official Gazette on January 4, 2016. The DNU substantially amends Law No. 26,522 (Audiovisual Communication Services – “SCA”) and Law No. 27,078 (LAD) and also creates the National Communications Agency (“ENACOM”) as a new Regulatory Authority of those laws. The ENACOM replaces the AFTIC and AFSCA (“Federal Authority of Audiovisual Communication Services”). This new Authority acts as an autonomous agency within the scope of the Ministry of Communications. See “— Decree No. 267/15 - Amendments to the “LAD” below. The ENACOM has started its operations on January 5, 2016 with the 4 directors appointed by the PEN through Decree No. 7/16, thus resulting in the constitution of the ENACOM as established by Article 23 of Decree No. 267/15. The Board of ENACOM is composed of a Chairman and three directors appointed by the PEN, as well as three directors appointed by the Bicameral Commission of Audiovisual Communication and ICT services. The quorum is met with the attendance of four members. No special eligibility conditions are established to be a member of the Board; the only limitation is the non-existence of incompatibilities, under the terms of Law No. 25,188 (“Public Ethic”). The ENACOM members can be removed directly and without cause by the PEN. On August 11, 2017, the National Government issued Decree No. 632, whereby it approved the organizational structure of the Ministry of Modernization, according to the organization chart established in said Decree. Pursuant to this Decree, the ENACOM is now placed within the sphere of the Ministry of Modernization. b) Regulatory framework of the services provided by Telecom Argentina and its subsidiaries Among the principal features of the regulatory framework governing the services provided by the Company and its domestic subsidiaries is worth mentioning: - The LAD, as amended by Decree of Need and Urgency No. 267/15 and Decree No. 1,340/16; - Law No. 19,798 remains in force only to the extent that it does not conflict with the provisions set out under the LAD; - The Privatization Regulations; - The Transfer Agreement; - The Licenses for providing telecommunication services granted to Telecom Argentina and Telecom Personal through several regulations (transferred to the Company after the reorganization – Note 31), and the List of Conditions and their respective regulations; In addition, Law No. 27,078 states that Decree No. 764/00 and its amendments shall remain in force to the extent that it does not conflict with the provisions set out under the LAD, for the time required by the Regulatory Authority to draw up the regulations concerning the Licensing Framework for ICT Services, the Interconnection Regulation, the Universal Service Regulation and the Administration, Management and Control of the Spectrum Regulation. Also, the LAD states that Law No. 19,798 (“Ley Nacional de Telecomunicaciones” passed in 1972) and its amendments shall remain in force in respect of those regulations not opposing its provisions. Núcleo and Tuves Paraguay are supervised by the Comisión Nacional de Telecomunicaciones de Paraguay , the National Communications Commission of Paraguay (“CONATEL”) and its subsidiary Personal Envíos S.A. is supervised by the Banco Central de la República del Paraguay . Additionally, Telecom USA, Telecom Argentina’s subsidiary in the United States, is supervised by the Federal Communications Commission (the “FCC”). c) Licenses granted as of December 31, 2017 To Telecom Argentina As of December 31, 2017, Telecom Argentina has been granted the following non-expiring licenses to provide the following services in Argentina: · Local fixed telephony; · Public telephony; · Domestic and international long-distance telephony; · Domestic and international point-to-point link services; · Domestic and international telex services; · VAS, data transmission, videoconferencing and transportation of audio and video signals; and · Internet access. Additionally, the Company holds licenses originally granted to Personal which were transferred to Telecom since the Reorganization (Note 31). Such non-expiring licenses have been granted to provide mobile telecommunication services (STM) in the Northern Region of Argentina and data transmission and Value Added Services throughout the country, mobile radio communication services (SRMC) in the AMBA area, as well as a non-expiring license to provide PCS services throughout the country, and it is registered to provide national and international long-distance telephone services. Additionally, from November 2014 Personal has been granted a license to provide Mobile Advanced Communications Services (SCMA) for 15 years as disclosed in Note 2.i). To Telecom Argentina’s subsidiaries Núcleo has been granted a license to provide mobile telecommunication services (STM and PCS) throughout Paraguay. In addition, Núcleo has been granted a license for the installation and provision of Internet and Data throughout Paraguay. All these licenses have been granted for renewable five-year periods. See Note 2.i), regarding the auction process for 700 MHz band spectrum in Paraguay. Personal Envíos, a company controlled by Núcleo, was authorized by the Central Bank of Paraguay to operate as an Electronic Payment Company (EMPE) through Resolution No. 6 issued on March 30, 2015, and its corporate purpose is restricted to such service. Tuves Paraguay, a company controlled by Núcleo, has a license for the provision of telecommunications services and also the distribution of digital audio and television signals to homes, for the term of five years. The license was granted in March 2010 and renewed in March 2015 for a term of five years. d) Events of revocation of the Licenses Telecom Argentina’s license is revocable in the case of non-compliance with certain obligations, including but not limited to: · repeated interruption of all or a substantial portion of service; · a modification of corporate purpose without prior approval of the Regulatory Bodies or change of domicile to a jurisdiction outside Argentina; · the transfer of the license to third parties without prior approval of the Regulatory Bodies; · the sale, encumbrance or transfer of assets which has the effect of reducing services supplied without the prior approval of the Regulatory Bodies; · any transfer of shares resulting in a direct or indirect loss of control in Telecom Argentina which has not been executed ad referendum of the approval of the ENACOM and informed within 30 days following its completion (according to the provisions of article 8 of Decree No. 267/15); and · the bankruptcy of Telecom Argentina. STM / SRMC / PCS / SCMA Personal’s licenses (transferred to the Company), are revocable in case of non-compliance with certain obligations, including but not limited to: · repeated interruptions of Personal’s services as set forth in the List of Conditions; · any transfer of the license and/or the related rights and obligations, without the approval of the Regulatory Authority (according to the provision of article 8 of Decree No. 267/15); · any encumbrance of the license; · any voluntary insolvency proceedings or bankruptcy of Telecom; and · a liquidation or dissolution of Telecom, without the prior approval of the Regulatory Authority. According to the Auction Terms and Conditions for the awarding of frequency bands for SCMA (and some bands for SRMC and PCS), approved by SC Resolution No. 38/14, the authorization to use radio electric spectrum (as defined in the Auction) will be revocable under the following circumstances: · repeated or persistent breaches of obligations related to quality indicators of services provided under the terms of the Regulation for the Quality of Telecommunications Services approved by SC Resolution No. 5/13 (further information on filings of the Company and Personal against the sanction processes initiated by the Regulatory Authority related to quality matters is disclosed in k) below); · repeated or persistent failure of infrastructure sharing obligations and the conditions set for automatic roaming agreements established in the Terms and Conditions; · repeated or persistent failure of the coverage obligations set in Annex III of the Terms and Conditions; · assignment, transfer, encumbrance, lease or sale to third parties of the authorization for the use of the awarded bands, without authorization of the Regulatory Authority (according to the provision of article 8 of Decree No. 267/15). Núcleo and Tuves Paraguay’s licenses are revocable mainly in the case of: · repeated interruptions of the services; · any voluntary insolvency proceedings or bankruptcy of Núcleo and Tuves Paraguay; and · non-compliance with certain service obligations. According to the Resolution No. 6/14 of the Central Bank of Paraguay, Personal Envíos’ license to provide Electronic Payment services may be revoked by: · insolvency proceedings or bankruptcy, · sanctions imposed by the Central Bank of Paraguay, with prior administrative proceedings regarding the performance of operations that are forbidden by the legislation in force. e) Law No. 27,078 – Argentine Digital Law Among the most relevant contents in the LAD, which amended the regulatory framework in force as of December 19, 2014, as regards telecommunications are: a) the rule on prices and rates establishing that the licensees of ICT services shall set their prices which shall have to be fair and reasonable, cover the exploitation costs and tend to the efficient supply and reasonable operation margin; b) the exemptions of taxes, establishing that tax exemptions or reductions, prices and encumbrances of ICT in general and in telecommunications in particular may be set on a precarious basis when the nature of certain activities so warrant; c) the amendments as regards Universal Service (See “—Universal Service Regulation ” below); d) the asymmetric regulation as universalization tools towards the development of an effective competition; and e) a maximum period for granting each authorization or use of frequencies of the radioelectric spectrum must be established (section 28 in fine ). The LAD declared of public interest the development of ICT and its associated resources in order to establish and ensure complete neutrality of networks and to guarantee every user the right to access, use, send, receive or offer any content, application, service or protocol through Internet without any restrictions, discrimination, distinction, blocking, interference, obstruction or degradation. The LAD set forth that the licensees of the ICT services may supply audiovisual communication services with the exception of those provided through satellite link, in which case, the corresponding license must be requested from the proper authority. Also, the LAD allowed ICT service licensees included in the restrictions of the Audiovisual Services Communications Law (among them, Telecom Argentina) to provide audiovisual communications services. Nevertheless, that regulation was partially amended by Decree No. 267/15 (see “—Decree No. 267/15—Amendments to the LAD” below). According to the LAD provisions, Telecom Argentina amended its corporate purpose during 2015, which was approved by AFTIC Resolution No. 19/15. Further information is disclosed in “—Introduction—The Company” and in Note 1.a) to these consolidated financial statements. Also, the LAD established the framework for suppliers and licensees entering the audiovisual communication services market (among them, Telecom Argentina and its Argentine subsidiaries) setting forth that the Federal Authority of Audiovisual Communication Services (replaced by the ENACOM since Decree No. 267/15 enforcement) would determine the go-to-market conditions of audiovisual communication services for ICT suppliers and licensees. The LAD also stated a gradual implementation plan through the setting up of promotion areas for limited periods of time determined according to public interest, within which the ICT licensees with significant market power would not be able to provide audiovisual communication services. It also set forth that the ICT service should be provided throughout the national territory, considered for that end as a unique area of exploitation and supply, and the modification of the interconnection schedule, imposing higher obligations to the operators and more rights to the Argentine government for the regulation in this sense of the wholesale market. According to the LAD provisions, the SBT holds its status of public service (section 54), but with a different scope than the previous regulations provisions. It was defined as the national and international telephone voice service, through the local networks, notwithstanding the technology used for its transportation, provided that it complies with the objective of allowing its users to communicate with each other (section 6 paragraph c)). In addition, in section 90 of Title XI, it established that said definition, comprises the senses of the definition established in the Auction Terms and Conditions for the International Public Auction process for the Privatization of the Supply of the Telecommunications Service timely approved by Decree No. 62/90. The LAD introduced substantial changes to the SU regulation established by Decree No. 558/08. Among its provisions the LAD creates a new SU Fund and provides that the investment contributions for the SU programs shall be managed through this fund, which assets, belong to the Federal Government (See “—Universal Service Regulation” below) . Law No. 19,798 Telecommunications Act (passed in 1972), as amended, continues in effect only with respect to those provisions that do not contradict the provisions of the new LAD (including, for example, Article 39 of Law No. 19,798 referred to exemption from all taxes on the use of soil, subsoil and airspace for telecommunications services). The LAD also revoked Decree No. 764/00, as amended, but provisions of the decree that do not contradict the LAD will remain in effect during the time it takes to the Regulatory Authority to issue new licensing, interconnection services, universal service and spectrum regulations. f) Decree No. 267/15 – Amendments to the LAD On January 4, 2016, Decree No. 267/15 was issued, amending Law No. 26,522 (Audiovisual Communication Services) and Law No. 27,078 (LAD). As mentioned above, “ENACOM” was created as the Regulatory Authority applicable of these laws. However, some of its provisions were subsequently amended by Decree No. 1,340/16. The main amendments to the LAD consist of: The incorporation of Broadcasting Services provided by subscription (physical or radio electric link, such as Cable TV) as an ICT service within the scope of the LAD, and excluding it from Law No. 26,522. Satellite Television Services will remain within the scope of Law No. 26,522. Furthermore, Decree No. 267/15 states that the ownership of a satellite television license provided by subscription is incompatible with having any other kind of ICT services license. Provision amended by Decree No. 1,340/16. Broadcasting supplied by subscription licenses (such as Cable TV) issued before the application of Decree No. 267/15 will be considered for all purposes as in compliance with LAD upon the respective registration for such service provision. Furthermore, the Decree states a 10 years extension from January 1, 2016, for the use of frequency spectrum to radio electric link provided by subscription license holders. Among the amendments that replaces Section 6 of the LAD is the incorporation of “video on demand service,” defined as a service offered by an ICT services supplier to provide access to software under demand on a catalogue basis. On January 7, 2016, the Company and Personal presented to ENACOM an application for the registration of “Video On Demand or On Demand Video Service”, describing the service characteristics which registration was requested. As of the date of issuance of these consolidated financial statements, the ENACOM resolution is still pending. Decree No.267/15 replaced the LAD’s article No. 94, and states that SBT suppliers, fixed telephony license holders within the scope of Decree No.264/98, and mobile telecommunication license holders within the scope of Decree No.1,461/93 are prohibited from providing Broadcasting under subscription services (defined as any form of communication, primarily one-way, for the transmission of signals to be received by a determinable public, either by physical or by radio connection, for example, video cable and IP TV services) until January 1, 2018 (this term can be extended by 1 additional year). Also, the Decree replaces article 95 of the LAD and provides several obligations for fixed telephony licensees granted by Decree No.264/98 and mobile services providers with licenses granted by Decree No.1,461/93, which choose to provide broadcasting under subscription services. This provision was subsequently amended by Decree No. 1,340/16. In addition, shareholders of a 10% or more interest in companies that provide public services may not be holders of a Subscription Radio Record. However, this will not apply in the following cases: (i) non-profit companies to whom the national, provincial or municipal State has granted the license, concession or permission to provide a public service (such as telecommunications cooperatives); (ii) those mentioned in section 94 (including the Company and Personal) who will be only able to provide the service after the expiration of the period specified therein. Section 28 of Decree No. 267/15 created, in the field of the Ministry of Communications, the “Commission for the Elaboration of the Draft Law for the Reform, Updating and Unification of Laws No. 26,522 and 27,078” (Comisión para la Elaboración del Proyecto de Ley de Reforma, Actualización y Unificación de las Leyes N° 26,522 y 27,078”). The Commission is responsible for the study of the reform of both laws under the principles set out herein. On April 15, 2016, the Ministry of Communications through Resolution No. 9/16 provided that the Commission shall be composed by 6 members and 1 Secretary, who will perform their duties “ad honorem.” The Resolution also appointed its members. The Commission should submit a draft Law for the reform, updating and adaptation of a unified system of the Regulatory Framework Law for the Telecommunications and Audiovisual Communication Services in Argentina, within the following 180 calendar days from the date of its constitution. Through Resolution No. 1,098-E/16 published on October 31, 2016, the Ministry of Communications extended for 180 days the deadline for the preparation of the draft reform of Laws No. 26,522 and 27,078. As of the date of issuance of these consolidated financial statements, the elaboration of the draft reform of Laws No. 26,522 and 27,078 is still pending. Furthermore, the Decree provides that licenses transfers and interest transfers involving the loss of company control must be approved by ENACOM, stating a new procedure provided by section 8 of Decree No. 267/15. That licenses transfers and interest in licensees’ transfers will be considered ad referendum of ENACOM approval. Decree No. 267/15 repealed Section 15 and Section 48 (second paragraph) of the LAD. Therefore, the following provisions have no longer effect: (i) the condition of essential and strategic public services of ICT regarding the access to the telecommunications network for the “ICT services” license holders; and (ii) the Regulatory Authority power to regulate tariffs due to public interest reasons. On April 8, 2016, the Chamber of Representatives voted in favor of the validity of DNU No. 267/15. According to this, such Decree acquired the status of Law . The Decree establishes several amendments to the Audiovisual Communications Services Law (SCA). Among the main amendments established by this Emergency Decree to both laws, it should be noted that the licenses for the exploitation of physical link and radio-electric link subscription television services that had been granted under Laws No. 22,285 and No. 26,522 are now called “Registrations” for the exploitation of physical link and radio-electric link subscription television services of a Licencia Única Argentina Digital . However, it should be noted that pursuant to Section 21 of Decree No. 267/15 and until the enactment of a law that will unify the fee regime provided under Laws Nos. 26,522 and 27,078, the physical link and radio-electric link subscription television services will continue to be subject only to the fee regime provided under Law No. 26,522. Therefore, they shall not be subject to the investment contribution or the payment of the Control, Oversight and Verification Fee provided under Sections 22 and 49 of Law No. 27,078. g) Decree No. 1,340/16 - Amendments to DNU No. 267/15 Decree No. 1,340/16 issued by PEN and published in the Official Gazette on January 2, 2017 provides the rules for achieving a greater convergence of networks and services under competitive conditions , promoting the deployment of next generation networks and the penetration of Broadband Internet access throughout the national territory, in accordance with the provisions of Laws No. 26,522 and 27,078. This Decree introduces some amendments to DNU No. 267/15, which has the status of Law . Among the most relevant provisions, it establishes: - Fix the 15-year-term, as from the publication of the Decree, as differential condition in the terms provided by section 45 of Law No. 27,078, for the protection of last-mile fixed NGN networks for Broadband deployed by ICT licensees for Broadband regarding the regulations of open access to Broadband and infrastructure to be stated, notwithstanding the provisions of section 56 of said Law. - That the Ministry of Communications or ENACOM, as appropriate, shall establish the rules for the administration, management, and control of the radio spectrum, according to guidelines for the promotion of competition as follows: a) the ENACOM, in a period not exceeding 6 months since the publication of the Decree, shall call for National and International Public Auction Process for the allocation of new frequency bands for the provision of mobile communications services, according to the service attributions following the recommendations of the International Telecommunication Union (ITU), to maximize and increase the radio resources assigned thereto; b) for the purposes of the provisions of section 28 of Annex IV of Decree No. 764/00 and section 29 of Law No. 27,078, rules and procedures shall be adopted ensuring the reattribution of radio spectrum frequencies with economic compensation and shared use to frequencies previously allocated to other service and assigned to ICT or SCA providers who request to re-use them for the provision of mobile or fixed wireless services with LTE or higher technologies. To this effect, the Regulatory Authority shall impose coverage obligations and specific goals; c) for the purposes of the provisions of sections 27 and 28 of Law No. 27,078 and section 2 subparagraphs c) and d) of Decree No. 798/16, the ENACOM shall have the power to assign radio spectrum frequencies on demand, establishing compensation, deployment and coverage obligations, within the corresponding deadlines, to: 1) current local or regional providers of ICT services in their service areas; and 2) current providers of MCS, on the terms provided in section 3 of Decree No. 798/16; d) the term of authorizations for the use of frequencies of the SCMA, as well as the corresponding deployment obligations, shall be computed since the effective migration of services currently operating in these bands in the scope of Area II, defined according to the provisions of Decree No. 1,461/93 and its amendments (additional information on the impact on the Company is provided in Note 3.j) and Note 18.e) to these consolidated financial statements). - That Operators included in section 94 of the LAD (among them, Telecom Argentina), may register the Broadcasting Service by subscription, by physical or radio connection as of the enforcement of this Decree, setting January 1, 2018 as initial date for the provision of such service in the AMBA (and extended AMBA), and in the cities of Rosario (Santa Fe Province) and Córdoba (Córdoba Province). The Decree also provides that, for the rest of the country, the initial date for the provision of the services of these operators shall be determined by the ENACOM (See Resolution E 5641 E/ 2017). - That ICT’s licensees and Satellite Link Subscription Broadcasting licensees, who as of December 29, 2016 simultaneously provided both services, may retain ownership of both types of licenses. - That ICT’s services providers carrying out joint service offerings, shall detail the price of each of them, including the breakdown of these values, and the discounts or benefits applied to each service or product of the aforementioned offer, not being able to subsume, under any condition, the hiring of any service to the hiring of another, so as to prevent the consumer from obtaining the service individually or separately. - That within 180 days of the Decree enforcement, the Ministry of Communications will establish the necessary guidelines for the creation of the “Public Protection, Defense and Security Operations Network” ( Red de Protección Pública y Operaciones de Socorro, Defensa y Seguridad) under the terms of section 12 of Law No. 27,208 to secure suitable communications for public safety agencies . - That for the purposes of the provisions of section 92 of Law No. 27,078 and section 2, paragraph g) of Decree No. 798 issued on June 21, 2016, MINCOM shall ensure the following principles on interconnection matters: a) Until the interconnection prices determination systems provided by the National Interconnection Regulation are implemented, averages of regional Latin America prices shall be considered for similar functions and facilities, corrected by parameters which comply with the conditions of the sector, as determined by the Authority of Application; b) In accordance with section 46 of Law No. 27,078, the National Interconnection Regulation shall provide asymmetric interconnection rates for mobile services for a 3 years period from the effective service implementation, extendable for a maximum of 18 months. c) The National Interconnection Regulation shall provide rules concerning the automatic national roaming service , forcing mobile services providers, for a maximum period of 3 years, to make such service available to other providers in areas where they do not have their own network coverage. The temporary limitation provided in the previous paragraph shall not be enforceable in those cases in which mobile services are provided by cooperatives and small and medium-sized companies with exclusively regional coverage. Mobile service providers shall freely enter into agreements to secure, among other issues, technical, economic, operational and legal conditions. Such agreements may not be discriminatory or may not establish technical conditions that prevent, delay or obstruct interconnection services. The National Interconnection Regulation will enable ENACOM to define reference prices for a maximum period of 3 years, taking into consideration the costs of the assets involved (subject to exploitation) and a reasonable return rate to ensure speed, neutrality, non-discrimination and competition between mobile service providers. Likewise, they shall not contain technical, interconnection, operational or other conditions that delay, obstruct or create barriers for the remaining mobile services providers to access the market . h) Universal Service Regulation Decree No. 764/00 Law No. 27,078 states that Decree No. 764/00 and its amendments shall remain in full force to the extent that the provisions of such Decree do not conflict with the law until the Regulatory Bodies have drawn up the regulations concerning the Licensing Framework for ICT Services. With respect to Universal Service Regulation, Annex III of Decree No. 764/00 required entities that receive revenues from telecommunications services to contribute 1% of these revenues (net of taxes) to the Universal Service Fiduciary Fund (the “SU Fund”). The regulation adopted a “pay or play” mechanism for compliance with the mandatory contribution to the SU Fund. The regulation also established the exemption to contribute to the FSU in the following events: (i) for local services provided in areas with teledensity lower than 15%, and ii) when certain conditions exists in connection with a formula which combines the foregone revenues and the market share of other operators than Telecom Argentina and Telefónica who provide local telephony. Additionally, the regulation created a committee responsible for the administration of the SU Fund and the development of specific SU programs. On June 8, 2007, the SC issued Resolution No. 80/07 which stipulated that until the SU Fund was effectively implemented, telecommunication service providers, such as Telecom Argentina and Personal, were required to deposit any contributions accrued since the issuance of such Resolution into a special individual account held in their name at Banco de la Nación Argentina. CNC Resolution No. 2,713/07, issued in August 2007, established how these contributions are to be calculated. SU Regulation established by Decree No. 558/08 Decree No. 558/08, published on April 4, 2008, introduced certain changes to the SU Fund regime, replacing the Annex III of the Decree No. 764/00. Decree No. 558/08 established that the SC would assess the value of service providers’ direct program contributions in compliance with obligations promulgated by Decree No. 764/00. It would also determine the level of funding required in the SU Fund for programs pending implementation. In the same manner, in order to guarantee the continuity of certain projects, the SC was given the choice to consider as SU contributions certain other undertakings made by telecommunication services providers and compensate providers for these undertakings. In defining “Universal Service,” the new regulation established two categories: (a) geographical areas with uncovered or unsatisfied needs and (b) customer groups with unsatisfied needs. It also determined that the SC would have exclusive responsibility for the issuance of general and specific resolutions regarding the new regulation, as well as for its interpretation and application. It also established that the SC would review SU programs which were established under the previous regulation, guaranteeing the continuity of those already being administered and implementing those that had been under review. The financing of SU ongoing programs which were recognized as such were determined by the SC, whereas telecommunications providers appointed to participate in future SU Programs were selected by competitive auction. The Decree required Telecom Argentina and Telefónica to extend the coverage of their fixed line networks, within their respective original region of activity, within 60 months from the ef |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 31, 2017 | |
Significant accounting policies | |
Significant accounting policies | Note 3 – Significant accounting policies a) Going concern The consolidated financial statements for the years ended December 31, 2017, 2016 and 2015 have been prepared on a going concern basis as there is a reasonable expectation that Telecom Argentina and its subsidiaries will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve months). b) Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Argentine pesos ($), which is the functional currency of all Telecom Group’s companies located in Argentina. The functional currency for the foreign subsidiaries of the Telecom Group is the respective legal currency of each country. The financial statements of the Company’s foreign subsidiaries (Núcleo, Personal Envíos, Telecom USA and Tuves Paraguay since June 30, 2017) are translated using the exchange rates in effect at the reporting date; for assets and liabilities while income and expenses are translated at the average exchange rates for the year. Exchange differences resulting from the application of this method are recognized in Other Comprehensive Income. The cash flows of foreign consolidated subsidiaries expressed in foreign currencies included in the consolidated statement of cash flows are translated at the average exchange rates for each year. c) Foreign currency transactions Transactions in foreign currencies are translated into the functional currency using the foreign exchange rate prevailing at the date of the transaction or valuation where items are re-measured. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate prevailing at the reporting date. Exchange differences are recognized in the consolidated income statement and are included in Financial income/expenses as Foreign currency exchange gains or losses. d) Consolidation These consolidated financial statements include the accounts of Telecom Argentina and its subsidiaries over which it has effective control (Núcleo, Micro Sistemas, Telecom USA, Personal Envíos, Tuves Paraguay – only as of December 31, 2017- and the second semester of 2017 and Telecom Personal until November 30, 2017) as of December 31, 2017, 2016 and 2015. Control exists when the investor (Telecom Argentina) has power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to use its power to affect the amount of the returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They should be deconsolidated from the date that control ceases. In the preparation of these consolidated financial statements, assets, liabilities, revenues and expenses of the consolidated companies are consolidated on a line-by-line basis and non-controlling interests in the equity and in the profit (loss) for the year are disclosed separately under appropriate captions, respectively, in the consolidated statement of financial position, in the consolidated income statement and in the consolidated statement of comprehensive income. All intercompany accounts and transactions have been eliminated in the preparation of these consolidated financial statements. Financial year-end of all the subsidiaries’ financial statements coincides with that of the Parent and are prepared as of the same closing date and in accordance with the same accounting policies. e) Acquisition of the controlling interest in Tuves Paraguay On October 6, 2016 Tuves Paraguay’s controlling shareholder (TU VES S.A – Chile) accepted Núcleo’s proposal for executing the Tuves Paraguay’s shares purchase option, which was subject to the approval of the Comisión Nacional de Telecomunicaciones (“CONATEL”). On April 11, 2017, the CONATEL’s Board of Directors through Resolution No. 460/17authorized TU VES S.A. (Chile) to transfer Núcleo 350 shares of Tuves Paraguay, that represent 70% Tuves Paraguay’ total capital stock. Accordingly, and pursuant to the provisions of the shares’ purchase agreement, on June 30, 2017, the transaction was performed and Núcleo acquired the 70% capital stock and votes of Tuves Paraguay through the payment of approximately $0.1 (35 million of Guaraníes) and the partial capitalization of receivables that Núcleo had at such date for approximately $147 (49,396 million of Guaraníes). Tuves Paraguay is a Paraguayan company whose main purpose is the provision of telecommunications services and also the distribution of digital audio and television signals to homes, in accordance with the license granted by CONATEL. The acquisition of control of Tuves Paraguay was recognized in the consolidated financial statements as of June 30, 2017, in accordance with the provisions of IFRS 3 “Business Combinations”. For this purpose, the total purchase price provided by IFRS 3 of approximately $149 (50,056 million of Guaraníes) was determined including the book value of the call option as of the date of the transaction, the assets and liabilities of Tuves Paraguay were measured at fair value, recognizing a higher value of PP&E and identifying a customer relationship and a goodwill of approximately $2 within Intangible Assets (662 million of Guaraníes), which will be annually reviewed through its impairment test. f) Revenues Revenues are recognized to the extent that it is considered probable that economic benefits will flow to the Company and their amount can be measured reliably. Final outcome may differ from those estimates. Revenues are stated net of discounts and returns. The Company discloses its revenues into two groups: services and equipment. Service revenues are the main source of income for the Company and are disclosed by nature: Voice services, Internet services and Data transmission services. This classification of revenues is given by different commercial offers and products, type of contracts and kind of customers. Equipment sales represent a precursor of the mentioned service revenues; therefore, the Group only sells equipment to customers and, from time to time, the Management of the Company and Núcleo decide to sell mobile handsets at prices lower than their respective costs in order to acquire new contracts with a minimum non-cancelable period of permanence. Other income mainly includes penalties collected from suppliers and gains on disposal of PP&E, which are realized in the ordinary course of business but are not the main business objective. The Company’s principal sources of revenues are: Fixed telecommunication services and products Domestic services revenues consist of monthly basic fees, measured service, long-distance calls and monthly fees for additional services, including call forwarding, call waiting, three-way calling, itemized billing and voicemail. Revenues are recognized when services are rendered. Unbilled revenues from the billing cycle dating to the end of each month are calculated based on traffic and are accrued at the end of the year. Basic fees are generally billed monthly in advance and are recognized when services are provided. Billed basic fees for which the related service has not yet been provided are deducted from corresponding accounts receivable. Revenues derived from other telecommunications services, principally network access, long distance and airtime usage, are recognized on a monthly basis as services are provided. Revenues from the sale of prepaid calling cards are recognized on the basis of the minutes used, at the contract price per minute, or when the card expires, whichever happens first. Remaining unused traffic for unexpired calling cards is shown as “Deferred revenue on prepaid calling cards” under Deferred revenues line item in the statement of financial position. Interconnection charges represent amounts received by the Company from other local service providers and long-distance carriers for calls that are originated on their networks and transit and/or terminate on the Company’s network. Revenue is recognized as services when they are provided. Traffic revenues from interconnection and roaming are reported gross of the amounts due to other telecommunication operators. Non-refundable up-front connection fees for fixed telephony, data and Internet services are accounted for as a single transaction and deferred (as well as the related costs not in excess of the amount of revenues) over the term of the contract or, in the case of indefinite period contracts, over the average period of the customer relationship (approximately 8 years in the case of fixed telephony’s voice services). Reconnection fees charged to customers when resuming service after suspension are deferred and recognized ratably over the average life for those customers who are assessed a reconnection fee. Associated direct expenses are also deferred over the estimated customer relationship period up to an amount equal to or less than the amount of deferred revenues. Generally, reconnection revenues are higher than its associated direct expenses. Revenues from sales of goods, such as telephone and other equipment, are recognized when the significant risks and rewards of ownership are transferred to the buyer. Revenues on construction contracts are recognized based on the stage of completion (percentage of completion method). When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract are recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. Revenue on construction contracts recognized in the year ended December 31, 2017 amounted to $614. The 2017 agreement provides finance within 48 months from January 1, 2017, the date when the implementation of the project was effective. $83 and $17 are receivables as of December 31, 2017 and 2016, respectively. Cost on construction contracts recognized in the year ended December 31, 2017 amounted to $429. No revenue or costs on construction contracts were recorded for years 2016 and 2015. Revenue from international telecommunications services mainly includes voice and data services and international point-to-point leased circuits. Revenues from international long-distance service reflect payments under bilateral agreements between the Company and foreign telecommunications carriers, covering inbound international long-distance calls. Revenues are recognized as services when they are provided. Data and Internet revenues mainly consist of fixed monthly fees received from residential and corporate customers for data transmission (including private networks, dedicated lines, broadcasting signal transport and videoconferencing services) and Internet connectivity services (dial-up and broadband). These revenues are recognized as services when they are rendered. Mobile telecommunication services and products Telecom Group provides mobile services throughout Argentina via cellular and PCS networks. Cellular fees consist of monthly basic fees, airtime usage charges, roaming, charges for TLRD, CPP charges and additional charges for VAS, including call waiting, call forwarding, three-way calling, voicemail, SMS, GPRS, Mobile Internet and for other miscellaneous cellular services. These revenues are recognized as services when they are rendered. Basic fees are generally billed monthly in advance and are recognized when services are provided. Billed basic fees for which the related service has not yet been provided are deducted from the corresponding accounts receivable. Revenues from the sale of prepaid calling cards are recognized on the basis of the traffic used, at the contract price per minute, or when the card expires, whichever happens first. Remaining unused traffic for unexpired calling cards is shown as “Deferred revenue on prepaid calling cards” under Deferred revenues line item in the statement of financial position. Revenues from sales of goods, such as handsets, sim cards, tablets, smartphones and other equipment are recognized when the significant risks and rewards of ownership are transferred to the buyer. The Company and Núcleo offer to their subscribers a customer loyalty program. Under such program the Company and Núcleo grant award credits as part of the sales transactions which can be subsequently redeemed for goods or services provided by Personal and Núcleo or third parties. The fair value of the award credits is accounted for as deferred revenue, and recognized as revenue when the award credits are redeemed or expire, whichever occurs first. Those revenues are classified as service or goods revenues depending on the goods or services redeemed by the customers. Applicable to both fixed telephony and mobile telephony, for offerings including separately identifiable components (as equipment and service), the Company and its subsidiaries recognize revenues related to the sale of the equipment when it is delivered to the final customer whereas service revenues are recorded when rendered. The total revenue generated by this type of transactions is assigned to the separately identifiable units of accounting based on their fair values, provided that the total amount of revenue to be recognized does not exceed the contract revenue. IFRS does not prescribe a specific method for such assignation of revenue. However, telecommunications industry practice generally applies the method known as “residual method”, which was used in the preparation of these consolidated financial statements. The “residual method” requires identifying all the components that comprise a transaction and allocating its fair value on an individual basis to each of them. Under this method, the fair value of a delivered item (which could not be individually determined) is determined as the difference between the total arrangement consideration and the sum of the fair values of those elements for which fair value can be estimated on a stand-alone basis. g) Financial instruments Financial assets and liabilities, on initial recognition, are measured at transaction price as of the acquisition date. Financial assets are derecognized in the financial statement when the rights to receive cash flows from them have expired or have been transferred and the Company has transferred substantially all the risks and benefits of ownership. g.1) Financial assets Upon acquisition, in accordance with IFRS 9, financial assets are subsequently measured at either amortized cost , or fair value , on the basis of both: (a) the entity’s business model for managing the financial assets; and (b) the contractual cash flow characteristics of the financial asset. A financial asset shall be measured at amortized cost if both of the following conditions are met: (a) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Additionally, for assets that met the abovementioned conditions, IFRS provides for an option to designate, at inception, those assets as measured at fair value if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. A financial asset that is not measured at amortized cost according to the paragraphs above is measured at fair value . Financial assets include: Cash and cash equivalents Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not exceed three months. Cash and cash equivalents are recorded, according to their nature, at fair value or amortized cost. Time deposits are valued at their amortized cost. Investments in other short-term investments are carried at fair value. Gains and losses are included in financial results as other short-term investment gains. Investments in Lebacs are valued at fair value. Trade and other receivables Trade and other receivables classified as either current or non-current assets are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowances for doubtful accounts. Investments During 2016, Telecom Argentina received in payment certain Provincial Government bonds denominated in argentine pesos (Provincia de Mendoza and Provincia de Buenos Aires) that bear interests in argentine pesos. These Provincial Government bonds are valued at amortized cost and their results are included in Financial results as investment gains. Those National, Provincial and Municipal Governments bonds denominated in foreign currency whose initial intention is to keep them until their maturity, are measured at amortized cost and bear an interest in foreign currency. In this particular case, Management estimated the US Dollar denominated cash flows to be generated until maturity and compared that amount to the fair value of the instrument in US Dollars at the acquisition date. The acquisition cost in US Dollars has been adjusted by applying the IRR and the resulting value was converted to Argentine pesos using the exchange rate as of the date of measurement. The exchange differences generated by these bonds are included in Financial expenses as Foreign currency exchange gains or losses. Likewise, Telecom Argentina and Personal acquired Government bonds. Taking into account the business model chosen to manage these financial assets, and according to the provisions of IFRS 9, these bonds are recorded at their fair value and its results were included in Financial results – Other investments gains. Investments in other short-term investments are carried at fair value. Gains and losses are included in financial results as other short-term investment gains. Investments in Lebacs are valued at fair value. The 2003 Telecommunications Fund is recorded at fair value. Impairment of financial assets At every annual or interim closing date, assessments are made as to whether there is any objective evidence that a financial asset or a group of financial assets may be impaired. If any such evidence exists, an impairment loss is recognized in the consolidated income statement. Certain circumstances of impairment of financial assets that the Group assesses to determine whether there is objective evidence of an impairment loss could include: delay in the payments received from customers; customers that enter bankruptcy; the disappearance of an active market for that financial asset because of financial difficulties; observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets, significant financial difficulty of the obligor, among others. g.2) Financial liabilities Financial liabilities comprise trade payables (excluding Derivatives), financial debt, salaries and social security payables (see Note 3.o) below) and certain other liabilities. Financial liabilities other than derivatives are initially recognized at fair value and subsequently measured at amortized cost. Amortized cost represents the initial amount net of principal repayments made, adjusted by the amortization of any differences between the initial amount and the maturity amount using the effective interest method. g.3) Derivatives Derivatives are used by Telecom Group to manage its exposure to exchange rate and sometimes interest rate risks and to diversify the parameters of debt so that costs and volatility can be reduced to pre-established operational limits. All derivative financial instruments are measured at fair value in accordance with IFRS 9. Derivative financial instruments qualify for Hedge Accounting only when: a) The hedging relation consists only on hedging instruments and hedged items eligible; b) Since its inception the hedging relation and the purpose and risk management strategy, are formally designated and documented; c) the hedge is expected to fulfill the efficacy requirements described in Note 20 – Hedge Accounting. When a derivative financial instrument is designated as a cash flow hedge (the hedge of the exposure to variability in cash flows of an asset or liability, a firm commitment or a highly probable forecasted transaction) the effective portion of any gain or loss on the derivative financial instrument is recognized directly in OCI. The cumulative gain or loss is removed from OCI and recognized in the consolidated income statement at the same time as the hedged transaction affects the consolidated income statement. The gain or loss associated with the ineffective portion of a hedge is recognized in the consolidated income statement immediately. If the hedged transaction is no longer probable, the cumulative gains or losses included in OCI are immediately recognized in the consolidated income statement. If hedged item is a prospective transaction that results in the recognition of a non-financial asset or liability or a firm commitment, the cumulative gain or loss that was initially recognized in OCI is reclassified to the carrying amount of such asset or liability. If Hedge Accounting is not appropriate, gains or losses arising from the fair value measurement of derivative financial instruments are directly recognized in the consolidated income statement. For additional information about derivatives operations during 2017 and 2016, see Note 20. h) Inventories Inventories are measured at the lower of cost and estimated net realizable value. Cost is determined on a weighted average cost basis. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Allowances are made for obsolete and slow-moving inventories. From time to time, the Management of the Company and Núcleo decide to sell mobile handsets at prices lower than their respective costs. This strategy is aimed at achieving higher service revenues or at retention of high value customers by reducing customer access costs while maintaining the companies’ overall mobile business profitability since the customer subscribes a monthly service contract for indefinite period with a minimum period of permanence and, if the contract is abandoned in advance, the mobile company has the right to cancel, totally or partially, the bonus granted to the customer at the beginning of the contractual relationship. For the estimation of the net realizable value in these cases the Company considers the estimated selling price in normal course of business less applicable variable selling expenses plus the expected margin from the service contract signed during its minimum non-cancelable term. i) PP&E PP&E is stated at acquisition or construction cost. Subsequent expenditures are capitalized only when they represent an improvement, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other subsequent costs are recognized as expense in the period in which they are incurred, unless they are improvements. When a tangible fixed asset comprises major components having different useful lives, these components are accounted for as separate items if they are significant. PP&E cost also includes the expected costs of dismantling the asset and restoring the site if a legal or constructive obligation exists. The corresponding liability is recognized in the statement of financial position under Provisions line item at its present value. These capitalized costs are depreciated and charged to the consolidated income statement over the useful life of the related tangible assets in the Depreciation and amortization item line. The accounting estimates for dismantling costs, including discount rates, and the dates in which such costs are expected to be incurred are annually reviewed. Changes in the above liability are recognized as an increase or decrease of the cost of the relative asset and are depreciated prospectively. Depreciation of PP&E owned is calculated on a straight-line basis over the ranges of estimated useful lives of the assets; the ranges of the estimated useful lives of the main PP&E are the following: Asset Estimated useful Buildings received from ENTel 35 Buildings acquired subsequent to 11/8/90 50 Improvements in third parties buildings 2 – 5 Tower and pole 10 – 20 Transmission equipment 3 – 20 Wireless network access 3 – 7 Switching equipment 5 – 7 Power equipment 7 – 15 External wiring 3 – 20 Computer equipment and software 3 – 5 Telephony equipment and instruments 5 Installations 2 – 10 The depreciation rates are reviewed annually and revised if the current estimated useful life is different from that estimated previously taking into account, among others, technological obsolescence, maintenance and condition of the assets and different intended use from previous estimates. The effect of such changes is recognized prospectively in the consolidated income statement. j) Intangible assets Intangible assets are recognized when the following conditions are met: the asset is separately identifiable, it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably. Intangible assets with a finite useful life are stated at cost, less accumulated amortization and impairment losses, if any. Intangible assets with an indefinite useful life are stated at cost, less accumulated impairment losses, if any. Intangible assets comprise the following: - Subscriber acquisition costs (“SAC”) Direct and incremental costs incurred for the acquisition of new subscribers are capitalized when the conditions for the recognition of an intangible asset are met. The cost of acquiring broadband customers meets the conditions established by IFRS for its recognition as intangible asset. The amount of costs deferred is limited to the non-contingent part of the revenues generated by that subscriber. The costs above revenues are expensed when incurred. Capitalized SAC related to the acquisition of broadband customers are amortized on a straight-line basis over the average period of the customer relationship. The cost of acquiring postpaid and “cuentas claras” subscribers in mobile telephony meet the conditions established by IFRS for its recognition as intangible asset. In the event of early cancellation, grants the right to cancel bonuses granted at the beginning of the contractual relationship (i.e, equipment bonuses). SAC are mainly comprised of upfront commissions paid to third parties and, to a lower extent, of subsidies granted to customers on the sale of handsets. In all other cases, subscriber acquisition costs are expensed when incurred. Capitalized SAC related to the acquisition of post-paid and “cuentas claras” subscribers are amortized on a straight-line basis over the term in which the customer must pay a cancellation charge, in case of early termination of the relationship. - Service connection or habilitation costs Direct costs incurred for connecting customers to the network are accounted for as intangible assets and then amortized over the term of the contract with the customer if required conditions are met. For indefinite period contracts, the deferral of these costs is limited to the amount of non contingent revenue from the customer and expensed over the average period life of the customer relationship. Costs exceeding that amount are expensed as incurred. Connection costs are generated mainly for the installation of fixed lines and amortized over an average period of 8 years. - 3G/4G licenses As described in Note 2.i, it includes 3G and 4G frequencies awarded by the SC to Personal in November 2014 and June 2015. In accordance with Article 12 of the Auction Terms and Conditions they were granted for a period of 15 years as from the date of awarding notification. After this deadline, the Regulatory Authority may extend the term at Personal´s request. The extension of the term, the related cost and conditions shall be defined by the Regulatory Authority. Consequently, the Company’s management has concluded that the 3G and 4G licenses have a finite useful life and therefore are amortized under the straight-line method over 180 months. As a consequence of Section 4 (d) of PEN Decree No. 1,340/16, which is described in Note 2.i), the remaining useful life of the frequencies included in lot 8 of the auction was re-estimated in 4Q16. It was considered that 700 Mhz bands would be released since May 2017 and, in compliance with the mentioned Decree, the period of 15 years from such date was computed. After that, such date was re-estimated being the effective day of release on April 2018. - PCS license (Argentina) The Company, based on an analysis of all of the relevant factors, has considered the license having an indefinite useful life since there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. - PCS and Band B licenses (Paraguay) PCS license is amortized under the straight-line method over 60 months. These licenses were successively renewed for a period of 5 years, the amortization finalized during year 2017. On the other hand, Band B license finished its amortization during year 2012. On June 2017, Núcleo required the renewal of this license. Before the expiration date, CONATEL issued, according with the telecommunications law, resolutions of temporary extensions which are valid for 90 days, with the possibility of one only extension for the same term. Therefore, it is expected to have the definitive renewal en the next months. - Internet and data transmission license (Paraguay) Núcleo’s license 60 months amortization was finished in fiscal year 2016. However, on July 2017 CONATEL granted the Company with the renewal of such licenses. Therefore, the term of the license is extended until May 2021. - Rights of use The Company purchases network capacity under agreements which grant the exclusive right to use a specified amount of capacity for a specified period of time. Acquisition costs are capitalized as intangible assets and amortized over the terms of the respective capacity agreements, generally 180 months. - Exclusivity agreements Exclusivity agreements were entered into with certain retailers and third parties relating to the promotion of the Company’s services and products. Amounts capitalized are being amortized over the life of the agreements, with expiration up to financial year 2028. - Cubecorp ‘s Customer relationships Customer relationships identified as part of the purchase price allocation performed upon the acquisition of Cubecorp Argentina S.A. (a company engaged in data center business) in financial year 2008, are being amortized over the estimated duration of the relationship for customers in the data center business (180 months). - Tuves Paraguay’s Customer relationships It is related to the acquisition of Tuves Paraguay (see Note 3.e). It is amortized over the term of the relationship with the acquired customers, which is estimated in 78 months. - Goodwill It is related to the acquisition of Tuves Paraguay (see Note 3.e) measured as the difference between the fair value of the amount transferred less the fair value of the identified net assets. The goodwill has indefinite useful life and the impairment must be analyzed at least annually. k) Leases Finance leases Leases that transfer substantially all the risks and benefits incidental to ownership of the leased asset are classified as finance leases. The Company recognizes finance leases as assets and liabilities in its statements of financial position at amounts equ |
Cash and cash equivalents and I
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | 12 Months Ended |
Dec. 31, 2017 | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | Note 4 – Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows a) Cash and cash equivalents and Investments Cash and cash equivalents and investments consist of the following: As of December 31, Cash and cash equivalents 2017 2016 Cash Banks Time deposits Government bonds at amortized cost - Other short-term investments Lebacs at fair value - Total cash and cash equivalents Investments Current investments Government bonds at fair value Government bonds at fair value – dollar linked - Government bonds at amortized cost in foreign currency Provincial government and Municipal bonds at amortized cost – dollar linked Provincial government and Municipal bonds at amortized cost in foreign currency - Provincial government and Municipal bonds at amortized cost Other short-term investments Lebacs at fair value - Total current investments Non-current investments Government bonds at amortized cost in foreign currency Provincial government and Municipal bonds at amortized cost – dollar linked Provincial government and Municipal bonds at amortized cost - Provincial government and Municipal bonds at amortized cost in foreign currency - Tuves Paraguay S.A. shares purchase option - 2003 Telecommunications Fund Total non-current investments b) Additional information on the consolidated statements of cash flows The Company applies the indirect method to reconcile the net income for the year with the cash flows generated by its operations. For purposes of the statements of cash flows, cash and cash equivalents comprise cash, bank current accounts and short-term highly liquid investments (with a maturity of three months or less from the date of acquisition). Bank overdrafts are disclosed in the statement of financial position as financial debts. During 2017, 2016 and 2015 bank overdrafts have been part of the permanent short-term financing structure of Personal, so, net funds requests under that method (with maturities less than three months) are included in financing activities. Additional information on the breakdown of the net cash flow provided by operating activities is given below: Years ended December 31, 2017 2016 2015 Collections Collections from customers Interests from customers Interests from investments Mobile operators collections Subtotal Payments For the acquisition of goods and services and others For the acquisition of inventories Salaries and social security payables and severance payments CPP payments Income taxes (include tax returns and payments in advance) Other taxes and taxes and fees with the Regulatory Authority Foreign currency exchange differences related to the payments to suppliers Inventory suppliers PP&E suppliers Other suppliers NDF Subtotal Net cash flow provided by operating activities Changes in assets/liabilities components: Years ended December 31, 2017 2016 2015 Net decrease (increase) in assets Trade receivables Other receivables Inventories Net increase (decrease) in liabilities Trade payables Deferred revenues Salaries and social security payables Other taxes payables Other liabilities Provisions (Note 17) Main non-cash operating transactions: Years ended December 31, 2017 2016 2015 Offsetting of capitalized trade receivables of Tuves Paraguay acquisition - - Offsetting of tax on personal property – on behalf of Shareholders - Income tax offset with VAT and internal taxes - - Offsetting of other receivables with regulatory provisions - VAT offset with income tax payments - - SAC acquisitions offset with trade receivables Other receivables of PP&E sales offset with trade payables - - Most significant investing activities: Fixed assets acquisitions include: Years ended December 31, 2017 2016 2015 CAPEX (Note 8) Acquisition of Materials (net transfers to CAPEX, Note 8) Subtotal Plus: Payments of trade payables originated in prior years acquisitions Less: Acquisition of fixed assets through incurrence of trade payables Assets retirement obligations Mobile handsets lent to customers at no cost (i) (i) Under certain circumstances, Personal and Núcleo lend handsets to customers at no cost pursuant to term agreements. Handsets remain the property of the companies and customers are generally obligated to return them at the end of the respective agreements. Intangible assets acquisitions include: Years ended December 31, 2017 2016 2015 Acquisition of licenses 3G and 4G - - Other intangible assets acquisitions (Note 9) Plus: Payments of trade payables originated in prior years acquisitions SAC acquisition offset with trade receivables Less: Acquisition of intangible assets through incurrence of trade payables The following table presents the cash flows from purchases, sales and maturities of securities which were not considered cash equivalents in the statement of cash flows: Years ended December 31, 2017 2016 2015 Government bonds acquisition Sales of Government bonds - Government bonds collection Other short-term investments and time deposits - Sales of Other short-term investments - - Argentine companies notes collection - - Financing activities components: The following table presents the financing activities components of the consolidated statements of cash flows: Years ended December 31, 2017 2016 2015 Bank overdrafts - Notes - Bank loans 1 ,730 Total financial debt proceeds Bank overdrafts - Notes - - Bank loans Total payment of debt Bank overdrafts Interests on Notes and related expenses Interests on bank loans and related expenses NDF - - Total payment of interest and related expenses Dividends paid by company breakdown are as follows: Years ended December 31, 2017 2016 2015 Núcleo to ABC Telecomunicaciones - Telecom Argentina Dividends advance declared by Sofora and paid by Telecom in December 2017 - - Telecom Argentina’s Dividends Distribution Fiscal year 2017 The Company’s Board of Directors’ Meeting held on December 18, 2017, resolved in exercise of the powers delegated by the Ordinary Shareholders’ Meeting held on the same date, to allocate $4,150.3 (equivalent to $4.28 pesos per outstanding share) from the “Voluntary reserve for future dividends payments” to a cash dividend distribution that was available to shareholders as from December 29, 2017. Fiscal year 2016 The Company’s Board of Directors’ Meeting held on April 29, 2016, resolved to allocate $2,000 (equivalent to $2.06 pesos per outstanding share) of the “Voluntary reserve for future dividends payments” to a cash dividend distribution in two installments: $700 that was available to shareholders as from May 13, 2016 and $1,300 that was available to shareholders since August 26, 2016. Fiscal year 2015 The Company’s Ordinary Shareholders’ Meeting held on April 29, 2015, approved the payment of cash dividends of $804 (equivalent to $0.83 pesos per outstanding share), which was made available to shareholders on May 11, 2015. Advance of dividends declared by Sofora and paid by Telecom On December 29, 2017, Telecom Argentina as surviving company of the merger, paid the pending advance of dividends of $2.9 declared by Sofora in its Board of Directors’ meeting held on November 29, 2017. Núcleo’s Dividends Distribution Fiscal year 2017 Núcleo’s shareholders, at their meeting held on March 28, 2017, approved the distribution of cash dividends for an amount equivalent to $109 (that correspond to 40,000 million of Guaraníes translated to argentine pesos at the exchange rate of the approval day), with the following schedule of payments: Month of dividends Dividends Dividends Total May 2017 (*) 37 17 54 October 2017 (**) 37 18 55 Total 74 35 109 (*) As of the payment date, the amounts were 39 and 18, respectively. (**) As of the payment date, the amounts were 41 and 20, respectively. Fiscal year 2015 Núcleo’s shareholders, at their meeting held on March 26, 2015, approved the distribution of cash dividends for an amount equivalent to $63 (that correspond to 35,000 million of Guaraníes translated to argentine pesos at the exchange rate of the approval day), with the following schedule of payments: The Ordinary Shareholders’ Meeting also delegate in Nucleo’s Board of Directors the possibility and opportunity of distribution of a second cash dividends for an amount of up to 35,000 million of Guaraníes (equivalent to approximately $80). Finally, the Board of Directors, at their meeting held on December 17, 2015, approved the distribution of cash dividends for an amount $80 (that correspond to 35,000 million of Guaraníes translated to argentine pesos at the exchange rate of the approval day). According to this, the total dividends amount paid during 2015 was as follows: Month of dividends Dividends Dividends – ABC Total May 2015 (*) December 2015 (**) Total (*) As of the payment date, the amounts were 41 and 19, respectively. (**) As of the payment date, the amounts were 52 and 26, respectively. Additional information required by IAS 7 In January 2016, IAS 7 was amended through the incorporation of paragraphs 44A to 44E. This amendment included additional information requirements that allow financial statements’ users to assess changes in liabilities generated by financing activities. Reconciliation between the opening and closing balances of liabilities generated by financing activities is disclosed below. Balances Transfers Cash Accrued interests Exchange Balances as Bank overdrafts - - - Bank loans – principal Notes – principal - NDF - Accrued interests Total current financial debt (Note 12) - (a) (a) Correspond to $1,730 of debt proceeds, $2,986 of principal payments and $848 of interest payments. |
Trade receivables
Trade receivables | 12 Months Ended |
Dec. 31, 2017 | |
Trade receivables | |
Trade receivables | Note 5 – Trade receivables Trade receivables consist of the following: As of December 31, Current trade receivables 2017 2016 Fixed and mobile services Allowance for doubtful accounts Non-current trade receivables Fixed and mobile services Total trade receivables, net Movements in the allowance for current doubtful accounts are as follows: Years ended December 31, 2017 2016 At the beginning of the fiscal year Additions –Bad debt expenses Uses Currency translation adjustments At the end of the year |
Other receivables
Other receivables | 12 Months Ended |
Dec. 31, 2017 | |
Other receivables | |
Other receivables | Note 6 – Other receivables Other receivables consist of the following: As of December 31, Current other receivables 2017 2016 Prepaid expenses Deposit in auction’s warrant to CONATEL (Note 2.i) - Expenditure reimbursement Tax credits Restricted funds Receivables for return of handsets under warranty PP&E disposal receivables Guarantee deposits Tax on personal property – on behalf of Shareholders - NDF (Note 20) (*) Other Subtotal Allowance for doubtful accounts (*) Includes 60 of Financial NDF as of December 31, 2017. Non-current other receivables Prepaid expenses Credit on SC Resolution No. 41/07 and IDC (Note 2.m and n) Restricted funds Regulatory receivables (Paraguay) Tax on personal property – on behalf of Shareholders Tax credits Guarantee deposits Credit of indemnity for Tuves Paraguay acquisition - Financial NDF (Note 20) - Other Subtotal Allowance for regulatory matters (Note 2.m and n) Allowance for tax on personal property Allowance for tax on other credits (i) - Total other receivables (i) 6 allocated to Taxes with the Regulatory Authority and 1 to Currency translation adjustments. Movements in the allowances are as follows: Years ended December 31, Current allowance for doubtful accounts 2017 2016 At the beginning of the year Additions - Uses - At the end of the year Years ended December 31, 2017 2016 Non-current allowance for regulatory matters At the beginning of the year Compensation of Telecom Argentina’s regulatory liabilities At the end of the year Years ended December 31, Non-current allowance for tax on personal property 2017 2016 At the beginning of the year Additions - - At the end of the year |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Inventories | Note 7 – Inventories Inventories consist of the following: As of December 31, 2017 2016 Mobile handsets and others Fixed telephones and equipment Inventories for construction projects - Subtotal Allowance for obsolescence of inventories Movements in the allowance for obsolescence of inventories are as follows: Years ended December 31, 2017 2016 At the beginning of the year Additions – Fees for services, maintenance and materials Uses At the end of the year Sale and cost of equipment and handsets by business segment is as follows: Years ended December 31, 2017 2016 2015 Equipment sales Fixed Services Cost of equipment Fixed Services Total equipment gain (loss) – Fixed Services Equipment and handsets sales Mobile Services - Personal Cost of equipment and handsets Mobile Services - Personal (net of SAC capitalizations) Total equipment gain – Mobile Services – Personal Equipment and handsets sales Mobile Services - Núcleo Cost of equipment and handsets – Mobile Services Núcleo (net of SAC capitalizations) Total equipment loss – Mobile Services – Núcleo Total equipment and handsets sale Total cost of equipment and handsets (net of SAC capitalizations) Total income for sale of equipment and handsets Cost of equipment and handsets is as follows: Years ended December 31, 2017 2016 2015 Inventories at the beginning of the year Plus: Equipment acquisitions SAC deferred costs (Note 3.j) Decreases net of allowance of obsolescence Handsets lent to customers at no cost Decreases not charged to cost of equipment Less: Inventories at the end of the year Cost of equipment and handsets |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, plant and equipment | |
Property, plant and equipment | Note 8 – Property, plant and equipment PP&E consist of the following: As of December 31, 2017 2016 Land, buildings and installations Computer equipment and software Switching and transmission equipment (i) Mobile network access and external wiring Construction in progress Other tangible assets Subtotal PP&E Materials Valuation allowance for materials and impairment of materials Impairment of PP&E Total (i) Includes tower and pole, transmission equipment, switching equipment, power equipment, equipment lent to customers at no cost and handsets lent to customers at no cost. Movements in Materials are as follows: Years ended December 31, 2017 2016 At the beginning of the year Plus: Increase for Tuves Paraguay acquisition - Purchases Less: Transfers to CAPEX Disposal for maintenance Currency translation adjustments At the end of the year Movements in the valuation allowance for materials and impairment of materials are as follows: Years ended December 31, 2017 2016 At the beginning of the year Additions – Fees for services, maintenance and materials Decrease - At the end of the year Movements in the impairment of PP&E are as follows: Years ended December 31, 2017 2016 At the beginning of the year Additions Uses At the end of the year Details on the nature and movements during the years ended December 31, 2017 and 2016 are as follows: Gross Tuves CAPEX Currency Transfers and Decreases Gross Land - - - - Building - - - Tower and pole - - - Transmission equipment - Mobile network access - External wiring - - - Switching equipment - - Power equipment - - Computer equipment and systems - Telephony equipment and instruments - - Handsets lent to customers at no cost - Equipment lent to customers at no cost - - Vehicles - - Furniture - - Installations - - - Improvements in third parties buildings - - Special projects - - - - Construction in progress - Asset retirement obligations - - - - Total - Accumulated Tuves Depreciation Currency Decrease Accumulated Net carrying Land - - - - - - Building - - Tower and pole - - Transmission equipment - Mobile network access - External wiring - - - Switching equipment - Power equipment - Computer equipment and systems - Telephony equipment and instruments - - Handsets lent to customers at no cost Equipment lent to customers at no cost - - Vehicles - Furniture - - Installations - - Improvements in third parties buildings - - Special projects - - - Construction in progress - - - - - - Asset retirement obligations - - - Total Gross value CAPEX Currency Transfers and Decreases Gross Value Land - - - Building - - Tower and pole - - Transmission equipment Mobile network access External wiring - - Switching equipment Power equipment - Computer equipment and systems Telephony equipment and instruments - Handsets lent to customers at no cost - Equipment lent to customers at no cost - Vehicles - Furniture - Installations - - Improvements in third parties buildings - Special projects - - - Construction in progress Asset retirement obligations - - Total - Accumulated Depreciation Currency Decreases Accumulated Net Land - - - - - Building - Tower and pole - Transmission equipment Mobile network access External wiring - Switching equipment Power equipment Computer equipment and systems Telephony equipment and instruments Handsets lent to customers at no cost Equipment lent to customers at no cost - Vehicles Furniture - Installations - Improvements in third parties buildings - Special projects - - Construction in progress - - - - - Asset retirement obligations - Total |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets | |
Intangible assets | Note 9 – Intangible assets Intangible assets consist of the following: Gross value Acquisition CAPEX Currency Decreases Gross value as SAC fixed services - - SAC mobile services Service connection or habilitation costs - - 3G/4G licenses - - - - PCS license (Argentina) - - - - PCS and Band B (Paraguay) - - Rights of use Exclusivity agreements - - - - Customer relationship - - Goodwill Tuves Paraguay - - - - Software developed for internal use - - - Total Accumulated Acquisition Amortization Currency Decreases Accumulated Net SAC fixed services - - SAC mobile services Service connection or habilitation costs - - 3G/4G licenses - - - PCS license (Argentina) - - - - PCS and Band B (Paraguay) - - - Rights of use Exclusivity agreements - - - Customer relationship (*) - - - Goodwill Tuves Paraguay - - - - - - Software developed for internal use - - - - Total (*) The net carrying value as of December 31, 2017, correspond 134 to Tuves Paraguay and 1 to Cubecorp. Gross value CAPEX Currency Decreases Gross value as SAC fixed services - SAC mobile services Service connection or habilitation costs - 3G/4G licenses - - - PCS license (Argentina) - - - PCS and Band B (Paraguay) - - Rights of use - Exclusivity agreements - - - Cubecorp’s Customer relationship - - - Software developed for internal use - - Total Accumulated Amortization Currency Decreases Accumulated Net SAC fixed services - SAC mobile services Service connection or habilitation costs - 3G/4G licenses - - PCS license (Argentina) - - - PCS and Band B (Paraguay) - - - Rights of use - Exclusivity agreements - - Cubecorp’s Customer relationship - - - Software developed for internal use - - - Total |
Trade payables
Trade payables | 12 Months Ended |
Dec. 31, 2017 | |
Trade payables | |
Trade payables | Note 10 – Trade payables Trade payables consist of the following: • purchase of materials and supplies; • purchase of handsets and equipment; • agent and retails commissions; • procurement of services; and • purchase of goods included in PP&E. As of December 31, Current trade payables 2017 2016 PP&E Other assets and services Inventory Subtotal trade payables Agent commissions Non-current trade payables PP&E Total trade payables |
Deferred revenues
Deferred revenues | 12 Months Ended |
Dec. 31, 2017 | |
Deferred revenues | |
Deferred revenues | Note 11 – Deferred revenues Deferred revenues consist of the following: revenues received from connection fees for fixed telephony, data and Internet, nonrefundable; revenues collected by remaining traffic and packages of data from unexpired cards; the value assigned to the points delivered by customer loyalty programs in the mobile telephony; the advanced collection of revenues from services of international capacity; the advanced collection of construction projects; and subsidies received for the construction of infrastructure which are deferred in the same period of amortization of the related works. As of December 31, Current deferred revenues 2017 2016 On prepaid calling cards – Fixed and Mobile Services On construction projects - On connection fees – fixed services On capacity rental On mobile customer loyalty programs From CONATEL – mobile services Núcleo (Note 18.d) Other Non-current deferred revenues On capacity rental – Fixed Services On connection fees – Fixed services On mobile customer loyalty programs Total deferred revenues |
Financial debt
Financial debt | 12 Months Ended |
Dec. 31, 2017 | |
Financial debt | |
Financial debt | Note 12 – Financial debt Financial debt consists of the following: As of December 31, Current financial debt 2017 2016 Bank overdrafts – principal Bank loans – principal Notes – principal NDF (Note 20) Accrued interest and related expenses Non-current financial debt Notes – principal - Bank loans – principal NDF (Note 20) - Accrued interests and related expenses - Total financial debt Bank overdrafts As of December 31, 2017, Telecom Argentina had bank overdrafts amounting to $135. Bank and other financing entities loans Personal On July 5, 2016, Personal had accepted an offer from the International Finance Corporation (IFC) for the assessment and transfer of funds for purposes of financing investment needs, work capital and debt refinancing for an amount of up to US$ 400 million. On October 5, 2016 Personal and the IFC signed the loan agreement (“IFC Loan”) for an amount of US$ 400 million and for a six year period, payable in 8 equal half-yearly installments since the 30 th month, with a 6 month LIBOR rate + 400bp. This loan will be used to deploy the 4G network and refinance short-term financial liabilities. The loan terms include standard commitments and limitations for this type of financial transactions. On October 26, 2016 Personal received the loan proceeds for an amount of US$ 392.5 million, net of expenses of US$ 7.5 million (equivalent to $5,956 as of the date of the disbursement). In April 2017, Personal and the Inter-American Investment Corporation (“IIC”), a member of the Inter-American Development Bank (“IDB”) Group, signed a loan agreement (“IIC Loan”) for an amount of US$ 100 million maturing in September 2022, payable in 8 equal half-yearly installments since the 24th month, with a 6 month LIBO rate + 400bp. The funds of this loan will be allocated to deploy the 4G network and for financing working capital and other financial needs. The loan terms include standard commitments and covenants for this type of financial transactions. The funds were effectively disbursed by IIC on September 18, 2017 (approximately $1,723). Núcleo The following table shows the outstanding loans with different local financing entities in Paraguay and their main terms as of December 31, 2017: Principal nominal Amortization Book value Current Non-current 80,000 1.9 years 132 132 40,000 1.7 years 50 83 120,000 182 215 The weighted average annual rate of these loans is 8.83% in Guaraníes and the weighted average amortization term of these loans is approximately 2 years. The terms and conditions of Núcleo’s loans provide for certain events of default which are considered standard for these kinds of operations. Global Programs for the issuance of Notes Telecom Argentina The Ordinary and Extraordinary Shareholders’ Meeting of Telecom Argentina held on December 15, 2011, approved the creation of a Medium Term Notes Global Program for a maximum outstanding amount of US$ 500 million or its equivalent in other currencies for a term of five years. On December 28, 2017, Telecom Argentina held an Ordinary Shareholders’ Meeting that approved a Notes Global Program for a maximum outstanding amount of US$ 3,000 million or its equivalent in other currencies. The delegation of powers in the Board of Directors was also approved to determine and modify the terms and conditions of the Program as well as to establish the issuance opportunities. Personal The Ordinary and Extraordinary Shareholders’ Meeting of Personal held on December 2, 2010, had approved the creation of a Medium Term Notes Global Program for a maximum outstanding amount of US$ 500 million or its equivalent in other currencies for a term of five years. On October 13, 2011, the CNV had authorized such Program, through Resolution No. 16,670. Personal’s Ordinary Shareholders’ Meeting held on May 26, 2016 authorized to extend the due date and expand the Program’s maximum circulation amount up to US$ 1,000 million or its equivalent in other currencies. On October 20, 2016, the CNV authorized the extension and expansion of the mentioned Program through Resolution No. 18,277. Within such Program, Personal issued notes in four series under the following conditions: Series II Issuance date: December 10, 2015. Amount involved: $149,000,000 Expiration Date: 36 months from its issuance date (December 10, 2018). Amortization: Capital will be settled by one payment in an amount equal to 100% of total capital, payable on their maturity date (December 10, 2018). Interest rate: Series II notes bear interest from its issuance date until the ninth month maturity (inclusive) at a nominal fixed annual rate equivalent to 28.75% per annum and since the beginning of the tenth month until its maturity date will bear at a floating rate equivalent to the Badlar Privada rates published by the BCRA plus 4.00% per annum. Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be the maturity date. Series III Issuance date: November 16, 2016. Amount involved: $721,969,404. Expiration Date: 18 months from its issuance date (May 16, 2018). Amortization: Capital will be settled by one payment in an amount equal to 100% of total capital, payable on their maturity date (May 16, 2018). Interest rate: Series III notes bear interest from its issuance date until their maturity date at a nominal floating annual rate equivalent to the Badlar Privada rates published by the BCRA plus 2.90% per annum. Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be the maturity date. Series IV Issuance date: November 16, 2016. Amount involved: US$ 77,900,400 (equivalent to approximately $ 1,207 as of the issuance date). Expiration Date: 24 months from its issuance date (November 16, 2018). Amortization: Capital will be settled by one payment in an amount equal to 100% of total capital, payable on their maturity date (November 16, 2018). Interest rate: Series IV notes bear interest from its issuance date until their maturity date at a nominal fixed annual rate equivalent to 4.85%. Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be the maturity date. Use of Funds The funds arising from the Series I (already cancelled), and II notes placement were used for the partial settlement of bank overdrafts that Personal had taken to finance the acquisition of 3G and 4G frequencies bands. Funds from notes placement have been applied to “debt refinancing”. The funds arising from the Series III and IV notes were used for local bank overdrafts cancellation (“refinancing of liabilities”). Notes Rating The mentioned notes have a local risk rating awarded by FIX SCR S.A. of “AA+(arg)” with a stable outlook. National “AA” involves a solid credit quality with respect to other note’s issuers of the country or other notes issued in the country. Events of default The terms and conditions of the Notes provide for certain events of default as follows: ü lack of payment of capital and/or interests of any of the notes at the maturity date during the term stated in the respective contracts; ü lack of payment of capital and/or interests of any other financial debt of Personal or its subsidiaries for an amount of at least US$ 20 million (“cross default” clause), after the expiration of the agreed grace period; ü final court sentence dictamination (including seizure, executions of property, and similar court decisions) for an amount of at least US$ 20 million; ü bankruptcy petition, presentation of reorganization proceeding, or homologation petition of out-of-court preventive agreement of Personal or any of its subsidiaries; ü any other situation that could cause the revocation of licenses granted to Personal or its subsidiaries (if applicable), in the case of total or partial license revocation that derives in negative effect on the commercial activity, assets, financial and economic situation of Personal or its subsidiaries (taken as a whole). According to the terms of the notes issued if any case of non-compliance is verified, the debt holders are allowed to demand the payment of the outstanding amount of capital and accrued interest at the time of non-compliance (“acceleration clause”). The application of this clause is generally optional for the debt holders and it is subject to compliance of certain requirements and conditions. As of the date of issuance of these consolidated financial statements, Telecom Group is in compliance with its respective loans agreements’ commitments. |
Salaries and social security pa
Salaries and social security payables | 12 Months Ended |
Dec. 31, 2017 | |
Salaries and social security payables | |
Salaries and social security payables | Note 13 – Salaries and social security payables Salaries and social security payables include unpaid salaries, vacation and bonuses and its related social security contributions and termination benefits. As of December 31, 2017, the total number of employees was 15,396, of which approximately 82% were unionized. All Management and senior positions are held by non-unionized employees. In the field of compensation policy for Directors and Managers, the Company and its subsidiaries have a scheme that includes fixed and variable components. While fixed compensation is dependent upon the level of responsibility required for the position and its market competitiveness, variable compensation is comprised of compensation driven by the goals established on an annual basis and also by compensation regarding the fulfillment of long and medium term goals. The Company and its subsidiaries have no stock option plans for their employees. Salaries and social security payables consist of the following: As of December 31, Current 2017 2016 Vacation and bonuses Social security payables Termination benefits Non-current Termination benefits Bonuses Total salaries and social security payables Compensation for the Key Managers for the years ended December 31, 2017, 2016 and 2015 is shown in Note 27.e). Employee benefit expenses and severance payments are composed of: Years ended December 31, 2017 2016 2015 Salaries Social security expenses Severance indemnities and termination benefits Other employee benefits |
Income tax payables, income tax
Income tax payables, income tax assets and deferred income tax | 12 Months Ended |
Dec. 31, 2017 | |
Income tax payables, income tax assets and deferred income tax | |
Income tax payables, income tax assets and deferred income tax | Note 14 – Income tax payables, income tax assets and deferred income tax Income tax asset and liability, net as of December 31, 2017 and 2016 consist of the following: As of December 31, 2017 2016 Income tax payables (a) Withholdings and payments in advance of income taxes Law No. 26,476 Tax Regularization Regime (b) Current income tax liability, net Law No. 26,476 Tax Regularization Regime (b) Non-current Income tax liability (a) Includes 3,678 for Income tax payable attributable to Telecom Personal as of November 30, 2017. (b) Tax liability valuated to its discount value at each time of valuation. The tax effects of temporary differences that give rise to significant portions of the Telecom Group’s deferred tax assets and liabilities and the actions for recourse tax receivable are presented below: Income tax assets Deferred tax liabilities As of December 31, 2017 Telecom Telecom Total Núcleo Total Allowance for doubtful accounts Provisions - - - PP&E - - - Inventory - - - Pension and termination benefits - - - Deferred revenues - - - Other deferred tax assets, net - Total deferred tax assets PP&E and Intangible assets - - Cash dividends from foreign companies (*) (129) - Mobile handsets financed sales - - - Tuves Paraguay´s Deferred tax liabilities, net - - - (***) (25) Total deferred tax liabilities Total deferred tax (liability) asset, net (**) (150) (****) (48) Actions for recourse tax receivable - Total income tax assets (*) Include 46 recorded in Other Comprehensive Income for the year ended December 31, 2017. (**)Include (3) and (11) in Telecom Argentina y Personal, respectively, of temporary differences withdrawals related to the filing of the affidavit for the year 2016. (***) Originated in Tuves Paraguay acquisition. (****) Include (2) related to Currency translation adjustments on initial balances. Income tax assets Deferred tax liabilities As of December 31, 2016 Telecom Telecom Total Personal Núcleo Total Allowance for doubtful accounts Provisions - - PP&E - - Inventory - - - - Pension and termination benefits - - - - Deferred revenues - - - - Other deferred tax assets, net - - Total deferred tax assets PP&E and intangible assets - - Cash dividends from foreign companies - - - Mobile handsets financed sales - - - - Investments - - - - Other deferred tax liabilities, net - - - - Total deferred tax liabilities - Total deferred tax asset (liability), net Action for recourse tax receivable - Total income tax assets Income tax expense for the years ended December 31, 2017, 2016 and 2015 consists of the following: Year ended December 31, 2017 2016 2015 Profit (loss) Current tax expense Deferred tax benefit Action for recourse income tax receivable Income tax expense Income tax expense for the years ended December 31, 2017, 2016 and 2015 differed from the amounts computed by applying the Company’s statutory income tax rate to pre-tax income as a result of the following: For the years ended December 31, 2017 2016 2015 Pre-tax income Non taxable items Subtotal Weighted statutory income tax rate (*) Income tax expense at weighted statutory tax rate Income tax on cash dividends of foreign companies – Núcleo Effect of changes in tax rate - - Other changes in tax assets and liabilities - - Actions for recourse income tax receivable Income tax expense (*) Effective income tax rate based on weighted statutory income tax rate in the different countries where the Company has operations. The statutory tax rate in Argentina was 35% for all the years presented. In Paraguay was 10% plus an additional rate of 5% in case of payment of dividends for all the years presented and in the USA the effective tax rate was 39.5% for all the years presented. Income tax - Actions for recourse filed with the Tax Authority Article 10 of Law No. 23,928 and Article 39 of Law No.24,073 suspended the application of the provisions of Title VI of the Income Tax Law relating to the income tax inflation adjustment since April 1, 1992. Accordingly, Telecom Argentina determined its income tax obligations in accordance to those provisions, without taking into account the income tax inflation adjustment. After the economic crisis of 2002, many taxpayers began to question the legality of the provisions suspending the income tax inflation adjustment. Also, the Argentine Supreme Court of Justice issued its verdict in the “Candy” case (07/03/2009) in which it stated that particularly for fiscal year 2002 and considering the serious state of disturbance of that year, the taxpayer could demonstrate that not applying the income tax inflation adjustment resulted in confiscatory income tax rates. More recently, the Argentine Supreme Court of Justice applied a similar criterion to the 2010, 2011 and 2012 fiscal years in the cases brought by “Distribuidora Gas del Centro” (10/14/2014, 06/02/2015 and 10/04/2016), enabling the application of income tax inflation adjustment for periods not affected by a severe economic crisis such as 2002. According to the above-mentioned new legal background that the Company took knowledge during 2015, and after making the respective assessments, Telecom Argentina filed during 2015, 2016 and 2017 actions for recourse with the AFIP to claim the full tax overpaid for fiscal years 2009, 2010, 2011 and 2012 for a total amount of $509 plus interest, under the argument that the lack of application of the income tax inflation adjustment is confiscatory. As of the date of issuance of these consolidated financial statements, the actions for recourse filed are pending of resolution by the Tax Authority. However, the Company’s Management, with the assessment of its tax advisor, considers that the arguments presented in those recourse actions follow the same criteria as the one established by the Argentine Supreme Court of Justice jurisprudence mentioned above, among others, which should allow the Company to obtain a favorable resolution of actions of recourse filed. Consequently, the income tax determined in excess qualifies as a tax credit in compliance with IAS 12 and the Company recorded a non-current tax credit of $774 as of December 31, 2017 ($98 were recorded in fiscal year 2015, $368 in fiscal year 2016 and $308 in fiscal year 2017). For the measurement of the tax credit, the Company has estimated the amount of the tax determined in excess for all fiscal years not covered by the statute of limitation (2009-2017) weighting the likelihood of certain variables according to the jurisprudential antecedents known until such date. The Company’s Management will assess Tax Authority’s resolutions related to actions of recourse filed as well as the jurisprudence evolution in order to annually re-measure the tax credit recorded. |
Other taxes payables
Other taxes payables | 12 Months Ended |
Dec. 31, 2017 | |
Other taxes payables | |
Other taxes payables | Note 15 – Other taxes payables Other taxes payables consist of the following: As of December 31, 2017 2016 Current VAT, net Tax withholdings Internal taxes Tax on SU (Note 2.h) Regulatory fees Turnover tax Municipal taxes Retention Decree No.583/10 ENARD Tax on personal property – on behalf of Shareholders - |
Other liabilities
Other liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Other liabilities | |
Other liabilities | Note 16 – Other liabilities Other liabilities consist of the following: · pension benefits; · guarantees received; · legal fees payable by adhesion to the tax regularization schemes; · any liability not included in the other liability items. As of December 31, 2017 2016 Current Compensation for directors and members of the Supervisory Committee Guarantees received Other Non-current Pension benefits (Note 3.m) Legal fees Other Total other liabilities Movements in the pension benefits are as follows: Years ended 2017 2016 At the beginning of the year Service cost (*) Interest cost (**) Payments Actuarial loss /(gain) (***) At the end of the year (*) Included in Employee benefit expenses and severance payments. (**) Included in Financial expenses. (***) Included in Other comprehensive income as required by IAS 19R. |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2017 | |
Provisions | |
Provisions | Note 17 – Provisions The Company is a party to several civil, tax, commercial, labor and regulatory proceedings and claims that have arisen in the ordinary course of business. In order to determine the proper level of provisions, Management of the Company, based on the opinion of its internal and external legal counsel, assesses the likelihood of any adverse judgments or outcomes related to these matters as well as the range of probable losses that may result from the potential outcomes. A determination of the amount of provisions required, if any, is made after careful analysis of each individual case. The determination of the required provisions may change in the future due to new developments or unknown facts at the time of the evaluation of the claims or changes as a matter of law or legal interpretation. Consequently, as of December 31, 2017, the Company has established provisions in an aggregate amount of $2,088 ($56 to cover potential losses under these claims for regulatory contingencies deducted from assets and $2,032 included under provisions) and certain amounts deposited in the Company’s bank accounts have been restricted as to their use due to some judicial proceedings. As of December 31, 2017, these restricted funds totaled $98 (included under Other receivables, net line item in the consolidated statement of financial position). Provisions consist of the following: Balances Additions/ Reclassifications Uses Balances Additions/ Reclassifications Uses Balances as of Capital Interest Debt Payments Capital Interest Debt Payments as of Current Provision for civil and commercial proceedings - - - Provision for labor claims - - - - - Provision for regulatory, tax and other matters claims - - - - Total current provisions - - - Non-current Provision for civil and commercial proceedings - - - - Provision for labor claims - - - Provision for regulatory, tax and other matters claims - - - - Asset retirement obligations - - Total non-current provisions - Total provisions (ii) 234 (iii) 27 (iv) 655 - (i) Charged to finance costs, interest on provisions line item. (ii) Charged 187 to Provisions, 45 to PP&E (CAPEX) and 2 to currency translation adjustments. (iii) Use of Resolution No. 41/07 receivables. (iv) Charged 590 to Provisions, 35 to CAPEX, 3 to currency translation adjustments and 27 to acquisition of Tuves Paraguay. 1 . Probable Contingent liabilities Below is a summary of the most significant claims and legal actions for which provisions have been established: Profit sharing bonds Various legal actions are brought, mainly by former employees of the Company against the Argentine government and Telecom Argentina, requesting that Decree No. 395/92 – which expressly exempted Telefónica and the Company from issuing the profit sharing bonds provided in Law No. 23,696 – be struck down as unconstitutional. The plaintiffs also claim the compensation for damages they suffered because such bonds have not been issued. In August 2008, the Argentine Supreme Court of Justice found Decree No. 395/92 unconstitutional when resolving a similar case against Telefónica. Since the Argentine Supreme Court of Justice’s judgment on this matter, the Divisions of the Courts of Appeal ruled that Decree No. 395/92 was unconstitutional. As a result, in the opinion of the legal counsel of the Company, there is an increased probability that the Company has to face certain contingencies, notwithstanding the right of reimbursement that attends Telecom Argentina against the National State. Said Court decision found the abovementioned Decree unconstitutional and ordered that the proceedings be remanded back to the court of origin so that such court could decide which defendant was compelled to pay –the licensee and/or the Argentine government- and the parameters that were to be taken into account in order to quantify the remedies requested (percent of profit sharing, statute of limitations criteria, distribution method between the program beneficiaries, etc). It should be mentioned that there is no uniformity of opinion in the Courts in relation to each of those concepts. Later, in “Ramollino Silvana c/Telecom Argentina S.A.”, the Argentine Supreme Court of Justice, on June 9, 2015, ruled that the profit sharing bonds do not correspond to employees who joined Telecom Argentina after November 8, 1990 and that were not members of the PPP. This judicial precedent is consistent with the criteria followed by the Company for estimating provisions for these demands, based on the advice of its legal counsel, which considered remote the chances of paying compensation to employees not included in the PPP. Legal action’s statute of limitations criteria: Argentine Supreme Court of Justice ruling “Dominguez c/ Telefónica de Argentina S.A.” In December 2013, the Argentine Supreme Court ruled on a similar case to the above referred legal actions, “Domínguez c/ Telefónica de Argentina S.A”, overturning a lower court ruling that had barred the claim as having exceeded the applicable statute of limitations since ten years had passed since the issuance of Decree No. 395/92. The Argentine Supreme Court of Justice ruling states that the Civil and Commercial Proceedings Court must hear the case again to consider statute of limitations arguments raised by the appellants that, in the opinion of the Argentine Supreme Court of Justice, were not considered by the lower court and are relevant to the resolution of the case. After the Argentine Supreme Court of Justice’s ruling and until the date of issuance of these consolidated financial statements, two chambers of the Civil and Commercial Federal Proceedings Court have issued opinions interpreting the doctrine developed by the Argentine Supreme Court of Justice in its ruling, acknowledging that the statute of limitations must be applied periodically –as of the time of each balance sheet- but limited to five years; and Chamber III ruled, by a majority of votes, that the statute of limitations must not be applied periodically, but that instead, was exceeded ten years after the issuance of Decree No. 395/92. Criteria for determining the relevant profit to calculate compensation: ruling of the Civil and Commercial Federal Proceedings Court in Plenary Session “Parota c/ Estado Nacional y Telefónica de Argentina S.A.” On February 27, 2014, the Civil and Commercial Appeals Court issued its decision in plenary session in the case “Parota, César c/ Estado Nacional”, as a result of a complaint filed against Telefónica de Argentina S.A, ruling: “that the amount of profit sharing bonds the corresponding to former employees of Telefónica de Argentina S.A. should be calculated based on the taxable income of Telefónica de Argentina S.A. on which the income tax liability is to be assessed”. The Court explained that in order to make such determination: “it is necessary to clarify that “taxable income” (pre-tax income) means the amount of income subject to the income tax that the company must pay, which generally means gross income, including all revenue obtained during the fiscal year (including contingent or extraordinary revenue), minus all ordinary and extraordinary expenses accrued during such fiscal year”. As of December 31, 2017, the Company’s Management, with the advice of its legal counsel, has recorded the provisions for contingencies that it estimates are sufficient to cover the risks associated with these legal actions, having considered the available legal background as of the date of issuance of these consolidated financial statements. Additionally, on June 3, 2013 Telecom Argentina was notified of a lawsuit filed by four unions claiming the issuance of a profit sharing bonds (hereinafter “the bonds”) for future periods and for periods for which the statute of limitations is not expired. To enforce this claim, the plaintiffs require that Decree No. 395/92 should be declared unconstitutional. This collective lawsuit is for an unspecified amount. The plaintiffs presented the criteria that should be applied for the determination of the percentage of participation in the Company’s profit. The lawsuit requiring the issuance of a profit sharing bond represents an obligation with potential future economic impact for Telecom Argentina. In June 2013, the Company filed its answer to the claim, arguing that the labor courts lack of jurisdiction. On October 30, 2013, the judge rejected the lack of jurisdiction plea, established a ten year period as statute of limitation and deferred ruling on the defenses of res judicata, lis pendens and on the third party citation required after a hearing is held by the court. Telecom Argentina has appealed the judge’s ruling. On December 12, 2013 this hearing took place and the intervening court differed the defense of statute of limitations filed by the Company to the moment of the final ruling, among other matters. It also ordered the plaintiff to establish that they have permission to bring the case on behalf Telecom Argentina’s employees included in the claim; meanwhile the trial proceeding will be suspended. The plaintiff appealed the decision and the judge deferred this issue to the time of sentencing. As of the date of issuance of these consolidated financial statements, the appeal regarding lack of jurisdiction raised by the Company is pending, until the documentation requested by the court to the plaintiffs was resolved. The Company, based on the advice of its legal counsel, believes that there are strong arguments to defend its rights in this claim based, among other things, in the expiration of the statute of limitations of the claim for the unconstitutionality of Decree No. 395/92, the lack of active legal standing for collective claim for bonds issuance -due to the existence of individual claims-, among other reasons regarding lack of active legal standing. Sales representative claims Former sales representatives of Personal have brought legal actions for alleged improper termination of their contracts and have submitted claims for payment of different items such as commission differences, value of the customers’ portfolio and lost profit, among other matters. Personal believes, based on the advice of its legal counsel, that certain items included in the claims would not be sustained while other items, if sustained, would result in significantly lower amounts than those claimed. As of the date of issuance of these consolidated financial statements, some legal actions are in the discovery phase and with expert opinions in progress. Personal’s Management, based on the advice of its legal counsel, has recorded provisions that it estimates are sufficient to cover the risks associated with these claims, which are considered that would not have a negative impact on Personal’s results and financial position. Regulator’s Penalty Activities Telecom Argentina is subject to various penalty procedures, in most cases promoted by the Regulatory Authority, for delays in the reparation and installation of service to fix-line customers. Although generally a penalty considered on an individual basis does not have a material effect on Telecom Argentina’s equity, there is a significant disproportion between the amounts of the penalty imposed by the Regulatory Authority and the revenue that the affected customer has generated to Telecom Argentina. In determining the provisions for regulatory charges and sanctions, the Telecom Argentina’s Management, with the assessment of its legal counsel, determines the likelihood of such sanctions being imposed, the amount thereof based on historical information and judicial precedents, also contemplating various probable scenarios of statute of limitation for charges and sanctions received, the current levels of execution of sanctions and the eventual results of legal actions that Telecom Argentina has undertaken to demonstrate, among other things, the disproportionate sanctions imposed by the Regulatory Authority since 2013. Telecom Argentina has recorded certain provisions that it deems sufficient to cover the above mentioned sanctions and charges, estimating that they should not prosper in amounts individually higher than 200 thousand UT (9,380 argentine pesos) per each alleged violation against its clients in the normal course of business, in accordance with the legal and regulatory analysis performed as of December 31, 2017. If Telecom Argentina and its legal advisors’ arguments do not prevail, the Management of Telecom Argentina estimates that the amount of provisions for regulatory charges and sanctions might be increased in approximately $103 as of December 31, 2017. Interest rate applicable to the matters under Labor Courts of the City of Buenos Aires On May 21, 2014 the National Labor Court of Appeals agreed, as a result of a divided vote, that the interest rate applicable to the matters under its jurisdiction in the City of Buenos Aires shall be the nominal annual rate for personal loans with free use of funds of the Argentine National Bank for a 49 to 60 month term (as of December 31, 2015 the mentioned rate was 3% per month). The Court also resolved that in those cases that the Court sentences are still pending, this new rate shall be applied as from the date on which each amount is due. As from 2002 the above mentioned Court had resolved to apply the interest rate resulting from the monthly average of the interest rate used by the National Bank of Argentina for the granting of loans (as of December 31, 2015 the mentioned average rate was 2.055% per month). This prospective criterion was sustained until the date of issuance of these consolidated financial statements as of December 31, 2016, since Telecom Group’s Management, with the assistance of its legal counsel, considered that there were strong legal grounds to challenge the retroactive application of the new rate. However, later, the lower labor courts applied the new rate criterion retroactively as from the date that each amount is considered due. The Company has appealed these decisions, but the Labor Court of Appeals validated the criterion mentioned in recent cases and extraordinary appeals have been dismissed before the Supreme Court. For this reason, during 2017, the Company recorded additional provisions as it deemed sufficient to cover the impacts that these rulings could have. 2 . Possible Contingencies In addition to the possible contingencies related to regulatory matters described in Note 2 h) SU Fund in Telecom Argentina and in the last paragraph of section “Regulator’s Penalty Activities” mentioned above, is a summary of the most significant claims and legal actions for which no provisions have been established, although it cannot be ensured the final outcome of these lawsuits: “Consumidores Financieros Asociación Civil para su Defensa” claim In November 2011, Personal was notified of a lawsuit filed by the “Consumidores Financieros Asociación Civil para su Defensa” claiming that Personal made allegedly abusive charges to its customers by implementing per-minute billing and setting an expiration date for prepaid telecommunication cards. The plaintiff claim Personal to: i) cease such practices and bill its customers only for the exact time of telecommunication services used; ii) reimburse the amounts collected in excess in the ten years preceding the date of the lawsuit; iii) credit its customers for unused minutes on expired prepaid cards in the ten years preceding the date of the lawsuit; iv) pay an interest equal to the lending rate charged by the Banco de la Nación Argentina; and v) pay punitive damages provided by article 52 bis of Law No. 24,240. Personal responded in a timely manner, arguing the grounds by which the lawsuit should be dismissed, with particular emphasis on the regulatory framework that explicitly endorses Personal’s practices, now challenged by the plaintiff in disregard of such regulations. The plaintiffs are seeking damages for unspecified amounts. Although the Company believes there are strong defenses according to which the claim should not succeed, in the absence of jurisprudence on the matter, the Company’s Management (with the advice of its legal counsel) has classified the claim as possible until a judgment is rendered. This claim was at a preliminary stage as of the date of issuance of these consolidated financial statements. However, the judge has ordered the accumulation of this claim with two other similar claims against Telefónica Móviles Argentina S.A. and AMX Argentina S.A. So, the three legal actions will continue within the Federal Civil and Commercial Court No. 9. Lawsuit against Personal on changes in services prices In June 2012 the consumer trade union “Proconsumer” filed a lawsuit against Personal claiming that the company did not provide the clients with enough information regarding the new prices for the services provided by Personal between May 2008 and May 2011. It demands the reimbursement of the increase in the price billed to customers for a period of two months. The Company’s Management considers that Personal had adequately informed its clients the modifications of the terms and conditions in which the service would be provided, and therefore, believes that this lawsuit should not succeed. On September 5, 2012 the Court took notice of the lawsuit. On June 26, 2013, the judge upheld the jurisdictional plea filed by Personal and ordered to send the lawsuit to the Administrative and Contentious court, which decided that the jurisdiction corresponded to the Commercial Court. That decision was appealed by Personal through an extraordinary motion. The extraordinary motion was denied and Personal filed a complaint with the Argentine Supreme Court of Justice, which on May 27, 2016 provided that the demand will continue its proceedings in the commercial courts. The lawsuit is in the discovery phase and both parts are preparing the evidence required. The Company’s Management considers that there are solid arguments for the favorable resolution of this lawsuit, but, in the event it is resolved unfavorably, it would not have a significant impact on Personal’s results and financial position. Proceedings related to value added services - Mobile contents On October 1, 2015 Personal was notified of a claim seeking damages for unspecified amounts initiated by consumer trade union “Cruzada Cívica para la defensa de los consumidores y usuarios de Servicios públicos”. The plaintiff invokes the collective representation of an undetermined number of Personal customers. The plaintiff claims the way that content and trivia are contracted, in particular the improper billing of messages sent offering those services and their subscription. Additionally, it proposes the application of a punitive damages to Personal. This claim is substantially similar to other claims made by a consumer association (Proconsumer) where collective representation of customers is also invoked. As of the date of issuance of these consolidated financial statements, those claims are at preliminary stages. Personal has answered the claims through the presentation of legal and factual defenses, subpoenaing third parties involved in the provision of VAS. Likewise, with the advice of its legal counsel, Personal believes to have strong arguments for its defense in these lawsuits. However, given the absence of jurisprudential precedents, the final outcome of these claims cannot be assured. Claims of some Content Providers to the Company In the framework of the general reorganization of the content business started out by Personal in 2016, and given the expiration of agreements with content providers, some of the latter have been notified that such agreements will not be renewed. By virtue of that communication, four of those companies initiated and obtained in court, precautionary measures against Personal, in order to avoid that the duly notified decision of not renewing the agreements be effective, and thus, forcing Personal to refrain from disconnecting or interrupting the contractual relationship on the scheduled dates. On February 24, 2017, the ENACOM notified Personal the Resolution 2017-1122-APN-ENACOM # MCO (Resolution No. 1,122), which set out that Mobile Operators providers of audiotext and mass calling Value Added Services may receive, in every respect, a percentage that should not exceed 40% of the services invoiced on behalf and to the order those provider. In addition, the Resolution sets forth a 30-day period to file under the ENACOM the interconnection contracts or the addenda to the existing ones, that ensure adjustments to the contracts already in force and with relation to the services rendered by the members of CAVAM. On March 22, 2017, Personal’s Management, with the assistance of its legal advisors and due to its solid grounds, filed an administrative appeal against Resolution No. 1,122 before the former Ministry of Communications (MINCOM - currently the Ministry of Modernization.) In addition, Personal has brought legal actions to safeguard its rights. On the other hand, it should be noted that the Company has renewed the commercial agreements with most of the providers of these contents, which are still in force. On September 29, 2017, the ENACOM notified Personal with ENACOM Resolution No. 2,408/17, whereby it rejected the reconsideration appeals filed by Movistar and Claro against Resolution No. 1,122, and the suspension of the effects of said resolution requested by Personal, Movistar and Claro. In addition, in the same act, it rejected the reconsideration appeal filed by Personal against ENACOM Note No. 29/17 (in connection with the supplier MOVICLIPS). The appeal filed by Personal against Resolution No. 1,122 with the former MINCOM is still pending resolution. “Asociación por la Defensa de Usuarios y Consumidores c/Telecom Personal S.A.” claim In 2008 the “Asociación por la Defensa de Usuarios y Consumidores” sued Personal, seeking damages for unspecified amounts, claiming the billing of calls to the automatic answering machine and the collection system called “send to end” in collective representation of an undetermined number of Personal customers. The claim is currently in evidence phase. In the third quarter of 2015 Personal took knowledge of an adverse court ruling in a similar trial, promoted by the same consumers association against other mobile operator. The Company’s Management, with the advice of its legal counsel, believes that it has strong arguments for its defense, but given the new jurisprudential precedent, the outcome of this claim cannot be ensured. Radioelectric Spectrum Fees In October 2016 Personal modified the criteria used for the statement of some of its commercial plans (“Abono fijo”) for purposes of paying the radioelectric spectrum fees (derecho de uso de espectro radioeléctrico or “DER”), taking into account certain changes in such plans’ composition. This meant a reduction in the amount of fees paid by Personal. In March 2017, the ENACOM demanded Personal to rectify its statements, requiring that such plans’ statements continue to be prepared based on the previous criteria. Personal’s Management believes that it has solid legal arguments to defend its position, which are actually confirmed by Resolution ENACOM No. 840/18. On August 15, 2017, Personal received a note for the differences owed, and on August 31, 2017 presented the corresponding administrative note. Personal’s Management believes that it has solid legal arguments to defend its position. However, it cannot be assured that such arguments will be accepted by the ENACOM. The difference resulting from both sets of liquidation criteria is of approximately $403 since October 2016, plus interests. 3 . Remote Contingencies The Group faces other legal proceedings, fiscal and regulatory considered normal in the development of its activities. The Company Directors and its legal advisors estimate it will not generate an adverse impact on their financial position and the result of its operations, or its liquidity. In accordance with IAS 37 provisions, not any provision has been constituted related to the resolution of these issues 4 . Contingency Asset “AFA Plus Project” Claim On July 20, 2012, the Company entered into an agreement with the Argentine Football Association (“AFA”), for the provision of services to a system called “Argentine Football System Administration” (“AFA Plus Project”) related to the secure access to first division football stadiums whereby Telecom Argentina should provide the infrastructure and systems to enable the AFA to manage the aforementioned project. The recovery of investments and expenses incurred by Telecom Argentina and its profit margin would come from charging AFA with a referring price stated in 20% of the popular ticket price per each football fan that attend the stadiums during the term of the agreement, so the recoverability of the Company’s assets related to the Project depended on AFA implementing the “AFA Plus Project”. From 2012 and in compliance with its contractual obligations, the Company made investments and incurred in expenses amounting to $182 as of December 31, 2017, of which $143 are included in PP&E for the provision and installation of equipment and the execution of civil works for improving the football stadiums, registration centers equipment, inventories and material storage and attend other expenses directly associated with AFA Plus Project. For several specific reasons of the Project, the football environment and the country context, the AFA Plus system was not implemented by AFA, not even partially. Accordingly, Telecom Argentina has not been able to begin collecting the agreed price. Finally, throughout the agreement, Telecom Argentina received no compensation from AFA for the services provided and the work performed. In September 2014, AFA notified the Company of its decision to terminate the agreement with Telecom Argentina, modifying the AFA Plus Project, and also informed that it will assume the payment of the investments and expenditures incurred by the Company. Accordingly, negotiations between the parties have started. In February 2015, AFA made a proposal to compensate the investments and expenditures incurred by the Company through advertising exchange exclusively related to the AFA Plus Project (or the one that replaces this Project in the future), in the amount of US$ 12.5 million. The proposal considered that if the advertising compensation was not realized in one year, AFA would pay to Telecom the agreed amount. The Company analyzed the quality of the assets offered by AFA in its offer of advertising exchange, and rejected the offer as insufficient. New negotiations were conducted in 2015 to improve the mentioned offer (requiring a combination of cash payments and advertising) but a satisfactory agreement was not reached and negotiations were suspended for AFA internal affairs. In October 2015, the Company formally demanded that AFA pay the amounts due ($179.2 plus interest from its implementation). AFA rejected the claim but agreed to resume negotiations for a closing agreement which was then suspended by the AFA electoral process. In January 2016 both parties resumed conciliatory negotiations, while the Company reserved its right to exercise legal claims on the amounts due. In June 2016 the Company initiated a compulsory pre-judicial mediation procedure. The first audience, held on July 12, 2016, was attended by both parties. A second audience was held on August 3, 2016 and a third and the last one was held on August 23, 2016, which resulted in no agreement between the parties. As of the date of issuance of these consolidated financial statements, the Company initiated a new pre-judicial mediation procedure which was finished without agreement on February 15, 2018, and its preparing the lawsuit against AFA in order to claim the owed amounts through the judicial system. The Company’s Management with the assistance of its external advisor believes that they have solid and legal arguments for claiming and are evaluating the actions to be followed for recovering the investments and expenses made. It is worth mentioning that the impairment recorded by the Company arising from the uncertainties related to the recoverable value of assets recognized by the AFA Plus Project (Works in Progress and Materials amounting to $143 as of December 31, 2017) have been only recorded for the purpose to comply with accounting standards and in no way involves giving up or limiting the rights given to the Company as a genuine creditor for the AFA Plus Project agreement. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments | |
Commitments | Note 18 – Commitments (a) Purchase commitments The Company has entered into various purchase orders amounting in the aggregate to approximately $10,590 as of December 31, 2017 (of which $4,205 corresponds to PP&E commitments), primarily related to the supply of switching equipment, external wiring, infrastructure agreements, inventory and other service agreements. This amount also includes the commitments mentioned in c). (b) Investment commitments In August 2003, Telecom Argentina was notified by the SC of a proposal for the creation of a $70- fund (the “Complejo Industrial de las Telecomunicaciones 2003” or “2003 Telecommunications Fund”) to be funded by the major telecommunication companies and aimed at developing the telecommunications sector in Argentina. Banco de Inversion y Comercio Exterior (“BICE”) was designated as Trustee of the Fund. In November 2003, the Company contributed $1.5 at the inception of the Fund. In addition, Management announced that it is the Company’s intention to promote agreements with local suppliers which would facilitate their access to financing. (c) Commitments assumed by Telecom Argentina from the sale of Publicom On March 29, 2007, Telecom Argentina’s Board of Directors approved the sale of its equity interest in Publicom (a company engaged in directories’ publishing business) to Yell Publicidad S.A. (a company incorporated in Spain, member of the Yell Group- Grupo Yell ), which was executed on April 12, 2007 (the “Closing Date”). On Closing Date and after the stock transfer was actually performed, Publicom accepted a proposal from Telecom Argentina. According to said proposal, Telecom Argentina: ü engages Publicom to publish and print Telecom Argentina’s directories (“white pages”) for a 5-year period, which was extended annually; ü engages Publicom to distribute Telecom Argentina’s white pages for a 20-year period, which may be extended upon expiry date; ü engages Publicom to maintain the Internet portal, which allows to access the white pages through the web, for a 20-year period, term which may be extended upon expiry date; ü grants Publicom the right to lease advertising spaces on the white pages for a 20-year period, which may be extended upon expiry date; and ü authorizes the use of certain trademarks for the distribution and/or consultation on the Internet and/or advertising spaces agreements for the same specified period. Telecom Argentina reserves the right to supervise certain matters associated with white pages publishing and distribution activities that allow Telecom Argentina to assure the fulfillment of its regulatory obligations during the term of the proposal. The terms and conditions of the proposal include usual provisions that allow Telecom Argentina to apply economic sanctions in the case of non-compliance, and in the case of serious non-compliance, allow Telecom Argentina to require an early termination. In the latter case, the Company could enter into an agreement with other providers. The proposal set prices for the publishing, printing and distribution of the 2007 directories, and provided clauses for the subsequent editions in order to ensure Telecom Argentina that said services will be contracted at market price. Telecom Argentina shall continue to include in its own invoices the amounts to be paid by its customers to Publicom for the contracted services or those that may be contracted in the future, and subsequently collect the amounts for said services on behalf and to the order of Publicom, without absorbing any delinquency. (d) Commitments assumed by Núcleo During 2010, the CONATEL awarded Núcleo a public bidding for the implementation of the expansion of the infrastructure of networks used as platform for the mobile telephony access services and the basic service in areas of public or social interest in Paraguay. The total investment was approximately of $17, of which $12 were subsidized by CONATEL. As of the date of issuance of these consolidated financial statements, Núcleo has timely fulfilled its investments obligations and the total assets and services have been installed and are satisfactorily functioning. The CONATEL has disbursed approximately $11 related to this bidding. Additionally, in August 2011, the CONATEL awarded Núcleo a new public bidding for the implementation of the expansion of the infrastructure of networks as a platform for the mobile telephony access services and the basic service in the Department of Caaguazú. Núcleo committed to install and render satisfactorily functioning all the assets and services covered by the bidding within six months from the date of signing of the contract, by means of an approximate investment of $6 of which $5 were subsidized by the CONATEL. As of the date of issuance of these consolidated financial statements, the work is finished. The CONATEL has disbursed approximately $4 related to this bidding. CONATEL’s total deferred disbursements as of December 31, 2017 amounted to $15 and were included under “Deferred revenues” line item, corresponding $5 to current deferred revenues, having accrued gains for $10 since fiscal year 2011. On August, 2017 the CONATEL started a bidding of universal service fund for the provision of internet services, data transmission services, and office equipment for the telemedicine program with the Ministry of Public Health and Social Welfare, being Núcleo awarded for the provision of such goods and services for the programs of Central and Guairá Departments, the subsidy amounted approximately to $19. (e) Commitments assumed from the acquisition of Spectrum by Personal The Auction Terms and Conditions convened by SC Resolution No. 38/14 established high and demanding obligations of coverage and network deployment, which would require significant investments in PP&E that were estimated at the time of submission of Personal´s bid in approximately US$ 450 million over the next five years and whose failure could result in sanctions and adverse effects to Personal. Some of the obligations included in the Terms and Conditions are the following: · Extend the SRMC, STM and PCS coverage in such a way that it reaches all locations with at least 500 inhabitants in a time period that would not exceed 60 months. · Upgrade the network infrastructure in a time period that would not exceed 60 months, in such a manner that in all the network locations where mobile Internet services are offered a minimum of 1 Mbps per user be guaranteed in the downlink for SRMC, STM and PCS. · For the SCMA (Annex III of Terms and Conditions) progressive coverage obligations in the Argentine Republic territory are established, in five differenced stages, completed in the 60-month-period with coverage in locations with more than 500 inhabitants. For further detail of the obligations involved, see SC Resolution No.37/14, No. 38/14 and its amendments and supplementary regulations. Taking into account that the frequency bands of SC Resolution No.83/14 had been partially awarded, Personal requested the SC that all the mentioned deadlines were calculated from the date on which the frequency band 713-723 Mhz to 768-778 Mhz were awarded, what would complete Lot 8 award. Such requirement was satisfied by the provisions of section 4 d) of Decree No. 1,340/16. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity | |
Equity | Note 19 – Equity Equity includes: As of December 31, 2017 2016 Equity attributable to Telecom Argentina (Controlling Company) Equity attributable to non-controlling interest (Note 1.a) Total equity (*) (*) Additional information is given in the consolidated statements of changes in equity. (a) Capital information As of December 31, 2017 the total capital stock of Telecom Argentina amounted to $984,380,978 pesos, represented by an equal number of ordinary shares, of $1 argentine peso of nominal value, of which 969,159,605 outstanding shares were entitled to one vote, since 15,221,373 treasury shares were acquired by the Company and are kept in the portfolio. As a consequence of the Corporate reorganization described in Note 31, Telecom Argentina’s breakdown of capital stock as of December 31, 2017 is as follows: Registered, subscribed and authorized for public offering Shares Outstanding shares Treasury shares Total capital stock Ordinary shares, $1 argentine peso of nominal value each Class “A” - Class “B” Class “C” - Total Each ADS represents 5 Class B shares and are traded on the NYSE under the ticker symbol TEO. All of the Company’s shares as of December 31, 2017 were authorized by the CNV, the Buenos Aires Stock Exchange (the “BYMA”) and the New York Stock Exchange (the “NYSE”) for public trading. Taking into account the particular transfer conditions of the Class “A” and Class “C” shares, only Class “B” shares were available for public trading in the BYMA and the NYSE. Each ADS represents 5 Class B shares and are traded on the NYSE under the ticker symbol TEO. As of December 31, 2017, the capital stock was fully integrated and registered in IGJ. As of January 1, 2018, due to the merger between Telecom Argentina and Cablevisión S.A., the new breakdown of capital stock is as follows: Shares Outstanding shares Treasury shares Total capital stock Class “A” - Class “B” Class “C” - Class “D” - Since the increase of Telecom’s capital stock is the result of the merger between Telecom Argentina as absorbing company and Cablevisión S.A. as absorbed company, according to the terms approved by the respective Shareholders Meeting, 342,861,748 Class “A” shares and 841,666,658 Class “D” shares are fully integrated and in process of registration. Additional information is given in Note 32 to these consolidated financial statements. (b) Share Ownership Plan In 1992, a Decree from the Argentine government, which provided for the creation of the Company upon the privatization of ENTel, established that 10% of the capital stock then represented by 98,438,098 Class “C” shares was to be included in the PPP (an employee share ownership program sponsored by the Argentine government). Pursuant to the PPP, the Class “C” shares were held by a trustee for the benefit of former employees of the state-owned company who remained employed by the Company and who elected to participate in the plan. In 1999, Decree No. 1,623/99 of the Argentine government eliminated the restrictions on some of the Class “C” shares held by the PPP, although it excluded Class “C” shares of the Fund of Guarantee and Repurchase subject to an injunction against their use. In March 2000, the shareholders’ meeting of the Company approved the conversion of up to unrestricted 52,505,360 Class “C” shares into Class “B” shares (these shares didn’t belong to the Fund of Guarantee and Repurchase), most of which was sold in a secondary public offering in May 2000. The Annual General and Extraordinary Meetings held on April 27, 2006, approved that the power for the additional conversion of up to 41,339,464 Class “C” ordinary shares into the same amount of Class “B” ordinary shares, be delegated to the Board of Directors. As granted by the Meetings, the Board transferred the powers to convert the shares to some of the Board’s members and/or the Company’s executive officers. As of December 31, 2011, all the 41,339,464 shares were converted into Class “B” ordinary shares in eleven tranches. The remaining 4,593,274 Class “C” shares were affected by an injunction measure recorded in file “Garcías de Vicchi, Amerinda y otros c/ Sindicación de Accionistas Clase C del Programa de Propiedad Participada s/nulidad de acto jurídico ”, which was released. The General Ordinary and Extraordinary and Special Class “C” Shares Meetings held on December 15, 2011, approved that the power for the additional conversion of up to 4,593,274 Class “C” shares into the same amount of Class “B” shares in one or more tranches, be delegated to the Board of Directors. Of such amount, 4,358,526 Class “C” shares have already been converted into Class “B” shares in 10 tranches. As of the date of issuance of these consolidated financial statements, 234,748 Class “C” shares are still pending to be converted into Class “B” shares. (c) Capital Market Act - Law No. 26,831 On December 28, 2012 the new Capital Market Law (Law No. 26,831) was published in the Official Gazette. This Law eliminates self-regulation of the capital market; grants new powers to the CNV and supersedes Law No. 17,811 and Decree No. 677/01, among other rules. The Law became effective on January 28, 2013. Since that date, governs the universal scope of the Statutory Regime of Public Offer of Mandatory Acquisition, as provided the Law, which states: “Article 90. – Universal scope. The Statutory Regime of Public Offer of Mandatory Acquisition regulated in this chapter and the residual rules of participation regulated in the following chapter includes all listed companies, even those that, under the previous regime, have opted to be excluded of its application.” (d) Acquisition of Treasury Shares The Company’s Ordinary Shareholders’ Meeting held on April 23, 2013, which was adjourned until May 21, 2013, approved at its second session of deliberations, the creation of a “Voluntary Reserve for Capital Investments” of $1,200, granting powers to the Company’s Board of Directors to decide its total or partial application, and to approve the methodology, terms and conditions of such investments. In connection with the above mentioned, on May 22, 2013, the Board of Directors approved a Company’s Treasury Shares Acquisition Program in the market in Argentine pesos (the “Treasury Shares Acquisition Program”) so as to avoid any possible damages to the Company and its shareholders derived from fluctuations and unbalances between the shares’ price and the Company’s solvency, for the following maximum amount and deadline: · Maximum amount to be invested: $1,200. · Deadline for the acquisitions: until April 30, 2014. According to the offer made on November 7, 2013 by Fintech for the acquisition of the controlling interest of the Telecom Italia Group in Telecom Argentina, Telecom Argentina suspended the acquisition of treasury shares and its Board of Directors considered appropriate to request the opinion of the CNV on the applicability of the new provisions contained in the rules issued by that entity (Title II, Chapter I, Art.13 and concurring) with respect to the continuation of the Treasury Shares Acquisition Program. The CNV did not answer the Company’s request and the Telecom Argentina’s Board of Directors, at its meeting held on May 8, 2014, decided to conclude the request considering that the Treasury Shares Acquisition Program finished on April 30, 2014, which had been approved by Telecom Argentina’s Board of Directors Meeting held on May 22, 2013. Telecom Argentina’s Board of Directors, at its meeting held on June 27, 2014, decided to request a new opinion from the CNV to confirm whether Telecom Argentina is obliged to refrain from acquiring treasury shares in the market under Section 13, Chapter I, Title II of the CNV rules (NT 2013). Pursuant to Section 67 of Law No. 26,831, the Company should sell its treasury shares within three years of the date of acquisition, although the Company´s Shareholders’ Meetings provides an extension. Pursuant to Section 221 of the LGS, the rights of treasury shares shall be suspended until such shares are sold, and shall not be taken into account to determine the quorum or the majority of votes at the Shareholders’ Meetings. No restrictions apply to Retained Earnings as a result of the creation of a specific reserve for such purposes named “Voluntary Reserve for Capital Investments”, which as of December 31, 2017 amounts to $461. The Company’s Shareholders’ Meeting held on April 29, 2016 approved a three year extension to the term established in Section 67 of Law No. 26,831 for the disposal of the treasury shares. As of December 31, 2017 the Company owns 15,221,373 treasury shares, representing 1.55% of its total capital. The acquisition cost of these shares in the market amounted to $461. (e) Law No. 27,260 of “Historical Repair to Retired and Pensioned” On July 22, 2016, Law No. 27,260 of “Historic Reparation for Retired Persons and Pensioners”, abolishing Law No. 27,181 on “Declaration of public interest of the protection of the social participations of the National State that make up the investment portfolio of the “Sustainability Guarantee Fund of the Argentine Pension Integrated System” in its Section 35, was published in the Official Gazette. In addition, Section 30 of Law No. 27,260 provides that the transfer of shares of public corporations authorized by the CNV that are part of the FGS is banned without a previous and express authorization of the Federal Congress if, as a result of such transfer, the FGS’s holding of the above referred securities becomes less than 7% of the aggregate assets of the FGS. The following exceptions apply: “ 1.Tender offers addressed to all holders of such assets at a fair price authorized by the CNV, pursuant to the terms of Chapters II, III and IV of Title III of Law No. 26,831. 2. Swaps of shares for other shares of the same or another corporation as a result of a merger, split or other corporate reorganization.” (f) Decree No. 894/2016: exercise of corporate, political and economic rights by the ANSES On July 28, 2016, Decree No. 894/2016 was published in the Official Gazette, providing that in those corporations which shares are part of the Sustainability Guarantee Fund of the Argentine Pension Integrated System’ portfolio, the corporate, political and economic rights corresponding to such shares shall not be exercised by the Secretary of Economic Politics and Development Planning, but shall instead be exercised by the Federal Management of Social Security (“ANSES”). In addition, Decree No. 894/2016 provides that the Directors appointed by ANSES shall have the functions, duties and powers provided in the LGS, the Capital Market Law No. 26,831 and their complementary regulations, all other rules applicable to corporations in which they act as directors, and their bylaws and internal regulations, and that they shall be exposed to all the liabilities applicable under such rules, not being subject to the provisions of Decree No. 1,278/2012 and No.196/2015 (the latter in connection with its delimitation of responsibility). |
Financial instruments
Financial instruments | 12 Months Ended |
Dec. 31, 2017 | |
Financial instruments | |
Financial instruments | Note 20 – Financial instruments Categories of financial assets and financial liabilities The following tables set out, for financial assets and liabilities as of December 31, 2017 and 2016, the supplementary disclosures on financial instruments required by IFRS 7 and the detail of gains and losses established by IFRS 9. Fair value As of December 31, 2017 Amortized accounted accounted Total Assets Cash and cash equivalents (1) - Investments - Trade receivables - - Other receivables (2) Total Liabilities Trade payables - - Loans - Salaries and social security payables - - Other liabilities (2) - - Total - (1) Includes 1,364 as of December 31, 2017, corresponding to Cash and banks, which were measured as financial assets at amortized cost by the Company. (2) Only includes financial assets and liabilities according to the scope of IFRS 7. Fair value As of December 31, 2016 Amortized accounted accounted Total Assets Cash and cash equivalents (1) - Investments - Trade receivables - - Other receivables (2) - Total - Liabilities Trade payables - - Loans Salaries and social security payables - - Other liabilities (2) - - Total (1) Includes 934 as of December 31, 2016, corresponding to Cash and banks, which were measured as financial assets at amortized cost by the Company. (2) Only includes financial assets and liabilities according to the scope of IFRS 7. Gains and losses by category – Year 2017 Net gain/(loss) Of which interest Financial assets at amortized cost Financial liabilities at amortized cost Financial assets at fair value through profit or loss (a) - Financial liabilities at fair value through profit or loss (b) - Total (a) Includes 121 corresponding to other short-term investments and 783 corresponding to Government bonds. (b) Corresponding to NDF. Gains and losses by category – Year 2016 Net gain/(loss) Of which interest Financial assets at amortized cost Financial liabilities at amortized cost Financial assets at fair value through profit or loss (a) - Financial liabilities at fair value through profit or loss (b) - Total (a) Includes 61 corresponding to other short-term investments, 6 corresponding to NDF, 11 corresponding to Tuve’s share purchase option and 227 corresponding to Government bonds. (b) Corresponding to NDF. Fair value hierarchy and other disclosures IFRS 7 establishes a hierarchy of fair value, based on the information used to measure the financial assets and liabilities and also establishes different valuation techniques. According to IFRS 7, valuation techniques used to measure fair value shall maximize the use of observable inputs. The measurement at fair value of the financial instruments of the Group is classified according to the three levels set out in IFRS 7. The fair value hierarchy introduces three levels of input: - Level 1: Fair value determined by quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2: Fair value determined based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). - Level 3: Fair value determined by unobservable inputs where the reporting entity is required to develop its own assumptions. Financial assets and liabilities recognized at fair value as of December 31, 2017 and 2016, their inputs, valuation techniques and the level of hierarchy are listed below: Other short-term investments: These investments are included in Cash and cash equivalents and Investments. The Group had other short-term investments amounting to $2,532 and $1,779 as of December 31, 2017 and 2016, respectively. The fair value is based on information obtained from active markets and corresponds to quoted market prices as of year-end; therefore its valuation is classified as Level 1. Lebacs: These investments are included in Cash and cash equivalents and Investments. The Group had Lebacs amounting to $1,372 as of December 31, 2017. The fair value is based on information obtained from active markets and corresponds to quoted market prices as of year-end; therefore its valuation is classified as Level 1. Government bonds: These bonds are included in “Investments” in the consolidated statement of financial position. As of December 31, 2017 and 2016 the Group has Government bonds in an amount of $371 and $1,456, respectively. The fair value was determined using information from active markets, valuing each bond to its closing year market value, so, its valuation qualifies as Level 1. Derivative financial instruments (Forward contracts to purchase US dollars at fixed exchange rates): The fair value of the Telecom Group’s NDF contracts, disclosed below in the chapter “Hedge Accounting” was determined by information obtained in the most representative financial institutions in Argentina, the derivative financial instruments’ valuation was classified as Level 2. During 2017 and 2016 there were no transfers between Levels of the fair value hierarchy. According to IFRS 7, it is also required to disclose fair value information about financial instruments whether or not recognized at fair value in the balance sheet, for which it is practicable to estimate fair value. The financial instruments which are discussed in this section include, among others, cash and cash equivalents, accounts receivable, accounts payable and other instruments. Derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instrument. Also, because of differences in methodologies and assumptions used to estimate fair value, the Company’s fair values should not be compared to those of other companies. The methods and assumptions used to estimate the fair values of each class of financial instrument falling under the scope of IFRS 7 as of December 31, 2017 and 2016 are as follows: Cash and banks Carrying amounts approximate its fair value. Time deposits and National Government bonds (included in Cash and cash equivalents The Telecom Group considers as cash and cash equivalents all short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not exceed 3 months. The carrying amount reported in the statement of financial position approximates fair value. Investments Investments in Government bonds and valued at amortized cost with its fair value at December 31, 2017 and 2016 are as follows: As of December 31, 2017 As of December 31, 2016 Investments Book value Fair value (*) Book value Fair value (*) Government bonds (dollar linked) - - Government bonds in foreign currency Provincial and Municipal government bonds currency - - Provincial government bonds in pesos Provincial and Municipal government bonds (dollar linked) Total (*) According to IFRS selling costs are not deducted. Trade receivables Carrying amounts are considered to approximate fair value due to the short term nature of these accounts receivables. Noncurrent trade receivables have been recognized at their amortization cost, using the effective interest method and are not significant. All amounts that are assumed to be uncollectible within a reasonable period are written off and/or reserved. Trade payables (except for NDF) The carrying amount of accounts payable reported in the consolidated statement of financial position approximates its fair value due to the short term nature of these accounts payable. Noncurrent trade payables have been discounted and are not significant. Loans As of December 31, 2017 loans’ fair value amounts to $12,262 and its carrying value amounts to $12,235. As of December 31, 2016 loans’ fair value amounts to $13,988 and its carrying value amounts to $11,912. Salaries and social security payables The carrying amount of Salaries and social security payables reported in the consolidated statement of financial position approximates its fair value. Other receivables, net (except for NDF) and other liabilities The carrying amount of other receivables, net and other liabilities reported in the consolidated statement of financial position approximates its fair value. Hedge accounting In November 2013, a new chapter was introduced in IFRS 9 on Hedge Accounting replacing the provisions contained in IAS 39. This amendment represents a major review of hedge accounting, introducing significant improvements over the previous model, basically aligning accounting and risk management as well as related disclosures. The Telecom Group believes that a hedging relationship qualifies for hedge accounting if all of the following conditions established by the rule are met: a) The hedging relationship consists only of eligible hedging instruments and hedged items; b) At the beginning of the hedge relationship, there is a formal designation and documentation of the hedging relationship and objective and strategy for risk management of the Company for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity assesses whether the hedging relationship meets the requirements of hedge effectiveness (including analysis of sources of hedge ineffectiveness and how to determine the hedge ratio); and c) The hedging relationship satisfies the following requirements of hedge effectiveness: (i) the economic relationship between the hedged item and the hedging instrument; (iii) the coverage ratio of the hedging relationship is the same as that provided by the amount of the hedged item that really covers the entity and the amount of the hedging instrument that the entity actually used to cover that amount of the hedged item. - During 2017 During 1Q 2017, the Telecom Group entered into several NDF agreements to hedge the fluctuation of LIBO rate from the “IFC” loan amounting to US$ 400 million. The agreements effective from March 15, 2017 hedge an amount if US$ 300 million, while those effective from September 15, 2017 hedge the outstanding US$ 100 million. Such NDF allow fixing the variable rate all along the loan term in a range between 2.087% and 2.4525% nominal annual rate (resulting in a weight average of 2.2258%). As of December 31, 2017, the Group recognized a liability of $17, which is included in loans ($8 current and $9 non-current). Likewise during year 2017 the Group recognized losses amounting to $36 related with this contracts which are included in interest on loans in financial results. During 2Q 2017, the Group entered into several NDF agreements to hedge the fluctuation of the exchange rate from the “IFC” loan amounting to US$ 53.5 million fixing the average exchange rate in $18.30, expiring between February and April 2018. As of December 31, 2017, the Group recognized a receivable of $59 which is included in other current receivables and holds a reserve of $6 in other comprehensive income in the equity. Consequently, during year 2017 the Group recognized gains amounting to $53 related with this contract which is included in financial results. During 3Q 2017, the Group entered into several NDF agreements to hedge the fluctuation of LIBO rate from the “IFC” loan amounting to US$ 40 million. Such NDF were agreed in two tranches of US$ 20 million each one, both of them starting on March 15, 2018 and fixing the variable rate all along the term of the loan to 2.1325% and 2.085% nominal annual rate, respectively. As of December 31, 2017, the Group recognized a receivable of $4, which is included in other receivables ($2 current and $2 non-current) with counterpart in other comprehensive income in the equity. On the other hand, during year 2017, the Group entered into several NDF agreements to hedge the fluctuation of the exchange rate from certain commercial obligations for an amount of US$6.3 million fixing the average exchange rate in $18.94 expiring between March and August 2018. As of December 31, 2017, the Group recognized a receivable of $6, which is included in other current receivables. Likewise during year 2017 the Group recognized gains amounting to $6 related with this contracts which are included in foreign currency exchange rate gains in financial results. - During 2016 Due to the existence of commitments denominated in US Dollars as of December 31, 2016, the Telecom Group entered into several NDF agreements during 2016 to purchase a total amount of US$ 7 million. The purpose of these NDF is to eliminate the risks associated to the fluctuation of the future exchange rate and to align the payment currency of Telecom Argentina’s and Personal’s commitments (hedged item) to its functional currency. As the effect of the fluctuation of the exchange rate over the hedged items is recognized in the Income Statement, changes in the fair value of NDF in 2016 (net gain of approximately $2) have also been recognized in the Income Statement, within Finance expenses – Exchange Differences with counterpart in current assets (Other receivables), maturing in February 2017. During 2016, Personal entered into several NDF agreements for US$9 million, maturing in March 2017 in order hedge the first interest installment of the IFC Loan. These NDF agreements were qualified as “effective” cash flow hedges for accounting purposes The Telecom Group recognizes the hedging instruments results, distinguishing between gains and losses of such agreements that generate assets and liabilities, as appropriate, without offsetting balances with different counterparties. As of December 31, 2016, the Telecom Group has a current liability amounting to $2, negative deferred results amounting to $1 (before income tax) and a net loss amounting to $1 included in Finance expenses – Exchange Differences related to the US$9 million outstanding NDF to such date, which will mature in March 2017. During 2016 Personal also settled US$ 159 million of NDF agreements in US dollars that had as of December 31, 2015, which resulted in a gain of $2 recognized in the Income Statement, within Other operating costs. The purpose of these NDF was also to eliminate the risks associated to the fluctuation of the future exchange rate and to align the payment currency of Personal’s commercial commitments (hedged item) to its functional currency. - Offsetting of financial assets and financial liabilities The information required by the amendment to IFRS 7 as of December 31, 2017 and 2016 is as follows: As of December 31, 2017 Trade Other Trade Other Current and noncurrent assets (liabilities) - Gross value Offsetting Current and noncurrent assets (liabilities) – Booked value (1) Includes financial assets and financial liabilities according to IFRS 7. As of December 31, 2016 Trade Other Trade Other Current and noncurrent assets (liabilities) - Gross value Offsetting Current and noncurrent assets (liabilities) – Booked value (1) Includes financial assets and financial liabilities according to IFRS 7. The Telecom Group offsets the financial assets and liabilities to the extent that such offsetting is provided by offsetting agreements and provided that the Group has the intention to make such offsetting, in accordance with requirements established in IAS 32. The main financial assets and liabilities offset correspond to transactions with other national and foreign operators (including interconnection, CPP and Roaming), being offsetting a standard practice in the telecommunications industry at the international level that the Telecom Group applies regularly. Offsetting is also applied to transactions with agents. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2017 | |
Revenues | |
Revenues | Note 21 – Revenues Revenues and other income include: Years ended December 31, 2017 2016 2015 Services Voice Internet Data Subtotal Fixed Services Outbound Postpaid Abono Fijo Prepaid Total outbound Inbound From Fixed Services – CPP From Mobile Services – TLRD Total inbound Other Subtotal Personal Mobile Services Outbound Postpaid Abono Fijo Prepaid Total outbound From Fixed Services – Interconnection From Mobile Services – TLRD Total inbound Other Subtotal Núcleo Mobile Services Total service revenues (a) Equipment Fixed Services Personal Mobile Services Núcleo Mobile Services Total equipment revenues (b) Total revenues (a) + (b) Other income Fixed Services Personal Mobile Services Nucleo Mobile Services - - Total other income (c) (*) 133 (*) 83 Total revenues and other income (a)+(b)+(c) (*) Includes 21 y 17 of PP&E disposal of years 2017 and 2016, respectively. |
Operating expenses
Operating expenses | 12 Months Ended |
Dec. 31, 2017 | |
Operating expenses | |
Operating expenses | Note 22 – Operating expenses Operating expenses disclosed by nature of expense amounted to $ 53,207, $45,480 and $34,311 for the years ended December 31, 2017, 2016 and 2015, respectively. The breakdown of Employee benefit expenses and severance payments, Cost of equipments and handsets, Provisions and Bad debt expenses are disclosed in Notes 13, 7, 17 and 5, respectively. The main components of the remaining operating expenses are the following: Interconnection costs and other telecommunication charges Years ended December 31, 2017 2016 2015 Fixed telephony interconnection costs Cost of international outbound calls Lease of circuits and use of public network Mobile Services - charges for roaming Mobile Services - charges for TLRD Fees for services, maintenance, materials and supplies Years ended December 31, 2017 2016 2015 Maintenance of hardware and software Technical maintenance Service connection fees for fixed lines and Internet lines Service connection fees capitalized as SAC (Note 3.j) Service connection fees capitalized as Intangible assets (Note 3.j) Other maintenance costs Obsolescence of inventories – Mobile Services (Note 7) Call center fees Other fees for services Directors and Supervisory Committee’s fees Taxes and fees with the Regulatory Authority Years ended December 31, 2017 2016 2015 Turnover tax Taxes with the Regulatory Authority Tax on deposits to and withdrawals from bank accounts Municipal taxes Other taxes Commissions Years ended December 31, 2017 2016 2015 Agent commissions Agent commissions capitalized as SAC (Note 3.j) Distribution of prepaid cards commissions Collection commissions Other commissions Advertising Years ended December 31, 2017 2016 2015 Media advertising Fairs and exhibitions Other advertising costs Cost of VAS Years ended December 31, 2017 2016 2015 Cost of mobile value added services Cost of fixed value added services Other operating expenses Years ended December 31, 2017 2016 2015 Transportation, freight and travel expenses Delivery costs capitalized as SAC Rental expense Energy, water and others International and satellite connectivity D&A Years ended December 31, 2017 2016 2015 Depreciation of PP&E Amortization of SAC and service connection costs Amortization of 3G/4G licenses Amortization of other intangible assets Disposals and impairment of PP&E Years ended December 31, 2017 2016 2015 Gain on disposal and impairment of PP&E (*) - - Impairment of PP&E – Fixed services Impairment of PP&E – Mobile services Decrease of PP&E – Fixed services - Decrease of PP&E – Mobile services - (*) Since 2016 these results are included in Other Income. Operating expenses, disclosed per function are as follows: Years ended December 31, 2017 2016 2015 Operating costs Administration costs Commercialization costs Other expenses – provisions Gain on disposal of PP&E and impairment of PP&E Operating leases Future minimum lease payments from of non cancellable operating lease agreements as of December 31, 2017, 2016 and 2015 are as follows: Less than 1 1-5 years More than 5 Total 2015 2016 2017 Further information is provided in Note 3.k) to these consolidated financial statements. |
Operating income
Operating income | 12 Months Ended |
Dec. 31, 2017 | |
Operating income | |
Operating income | Note 23 – Operating income Years ended December 31, 2017 2016 2015 Operating income from services and other income Revenues and other income Operating expenses Operating income before depreciation and amortization (a) D&A Disposals and impairment of PP&E Operating income from services and other income Operating income (loss) from equipment sales Revenues Cost of equipments and handsets Operating income (loss) from equipment sales (b) Total operating income Consolidated net income Operating income before depreciation and amortization (a) + (b) D&A Disposals and impairment of PP&E Total operating income The breakdown of Operating income by segment is as follows: Year ended December 31, 2017 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before depreciation and amortization (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) Year ended December 31, 2016 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before depreciation and amortization (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) - Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) Year ended December 31, 2015 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before D&A for services and other income (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) - Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) |
Finance income and expenses
Finance income and expenses | 12 Months Ended |
Dec. 31, 2017 | |
Finance income and expenses | |
Finance income and expenses | Note 24 – Finance income and expenses Years ended December 31, 2017 2016 2015 Interest on cash equivalents Gains on other short-term investments Gains on investments (Argentine companies notes and Governments bonds) Interest on receivables Foreign currency exchange gains TUVES share purchase option - Other - Total finance income Interest on loans Interest on salaries and social security payable, other taxes payables and accounts payable Interest on provisions (Note 17) Loss on discounting of salaries and social security payables, other taxes payable and other liabilities Foreign currency exchange losses (*) TUVES share purchase option - - Interest on pension benefits (Note 16) Other Total finance expenses Total finance income, net (*) Includes 40, 5 and 432 of foreign currency exchange gains (losses), net generated by NDF for the years ended on December 31, 2017, 2016 and 2015, respectively. |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per share | |
Earnings per share | Note 25 – Earnings per share The Company computes net income per common share by dividing net income for the year attributable to Telecom Argentina (Controlling Company) by the weighted average number of common shares outstanding during the year. Diluted net income per share is computed by dividing the net income for the year by the weighted average number of common and dilutive potential common shares then outstanding during the year. Since the Company has no dilutive potential common stock outstanding, there are no dilutive earnings per share amounts. For financial years ended December 31, 2017, 2016 and 2015 the weighted average number of shares outstanding amounted to 969,159,605 due to the changes caused by the Treasury Shares Acquisition Process that began in May 2013, as described in Note 19.d) to these consolidated financial statements. |
Financial risk management
Financial risk management | 12 Months Ended |
Dec. 31, 2017 | |
Financial risk management | |
Financial risk management | Note 26 – Financial risk management Financial risk factors Telecom Group is exposed to the following financial risks in the ordinary course of its business operations: market risk: stemming from changes in exchange rates and interest rates in connection with financial assets that have been originated and financial liabilities that have been assumed. credit risk: representing the risk of the non-fulfillment of the obligations undertaken by the counterpart with regard to the liquidity investments of the Group; liquidity risk: connected with the need to meet short-term financial commitments. These financial risks are managed by: the definition of guidelines for directing operations; the activity of the Board of Directors and Management which monitors the level of exposure to market risks consistently with prefixed general objectives; the identification of the most suitable financial instruments, including derivatives, to reach prefixed objectives; the monitoring of the results achieved; The policies to manage and the sensitivity analyses of the above financial risks by Telecom Group are described below. Ø Market risk The main Telecom Group’s market risks are its exposure to changes in foreign currency exchange rates in the markets in which it operates principally Argentina and Paraguay. As regards to changes in interest rates, as of December 31, 2017 the Telecom Group has mainly outstanding floating rate borrowings (see Note 12). Foreign currency risk is the risk that the future fair values or cash flows of a financial instrument may fluctuate due to exchange rate changes. Telecom Group’s exposure to exchange variation risks is related mainly to its operating activities (when income, expenses and investments are denominated in a currency other than the Telecom Group’s functional currency). The Telecom Group have part of its commercial debt nominated in US$ and euro. Additionally, holds part of its financial debt is denominated in US$ at variable rate. The financial risk management policies of the Group are directed towards diversifying market risks by the acquisition of goods and services in the functional currency and minimizing interest rate exposure by an appropriate diversification of the portfolio. This may also be achieved by using carefully selected derivative financial instruments to mitigate long-term positions in foreign currency and/or adjustable by variable interest rates (See Note 20). Additionally, the Telecom Group has cash and cash equivalents and investments denominated in US$ and euro (approximately 66% of these items) that are also sensitive to changes in peso/dollar exchange rates and contribute to reduce the exposure to trade payables in foreign currency. On the other hand the Telecom Group holds investments adjustable to the variation of the US$/$ exchange rate (“dollar linked”). They are also sensitive to variations in exchange rates and contribute to reduce the exposure of the commercial and financial commitments in foreign currency. Dollar linked investments and represent approximately 4% of total cash and cash equivalent and investments of Telecom Group as of December 31, 2017. The following table shows a breakdown of Telecom Argentina’s net assessed financial position exposure to currency risk as of December 31, 2017 and 2016: 12.31.17 Amount of foreign currency (i) Exchange rate Amount in local currency (ii) Assets US$ 18.549 (iii) 7,094 G 0.003 EURO 22.283 Total assets Liabilities US$ 18.649 G 0.003 EURO 22.450 Total liabilities Net liabilities (i) US$ = United States dollar; G= Guaraníes. (ii) As foreign currency figures and their amount in argentine pesos are in millions, the calculation of the amount of the foreign currency by its exchange rate could not be exact. (iii) Includes 371 corresponding to Government bonds at fair value (equivalent to US$ 12 million). In order to partially reduce this net liability position in foreign currency, the Telecom Group, as of December 31, 2017, hold dollar linked investments by $365. According to this, the Telecom Group’s net liability position in foreign currency amounts to $10,672 as of December 31, 2017, equivalent to approximately US$ 578 million. Additionally, the Group entered into several NDF contracts as of December 31, 2017 amounting to US$ 60 million, so, the portion of the net liability position in foreign currency not covered by these instruments amounted to US$ 518 million as of December 31, 2017. 12.31.16 Amount of foreign currency (i) Exchange rate Amount in local currency (ii) Assets US$ 15.790 (iii) 4,067 G 0.003 EURO 16.625 Total assets Liabilities US$ 15.890 G 0.003 EURO 16.770 Total liabilities Net liabilities (i) US$ = United States dollar; G= Guaraníes. (ii) As foreign currency figures and their amount in argentine pesos are in millions, the calculation of the amount of the foreign currency by its exchange rate could not be exact. (iii) Includes 735 corresponding to Government bonds at fair value (equivalent to US$ 45 million). In order to partially reduce this net liability position in foreign currency, the Telecom Group, as of December 31, 2016, hold dollar linked investments by $74. According to this, the Telecom Group’s net liability position in foreign currency amounted to $9,705, as of December 31, 2016, equivalent to approximately US$ 611 million. Additionally, the Group entered into several NDF contracts as of December 31, 2016 amounting to US$ 16 million, so, the portion of the net liability position in foreign currency not covered by these instruments amounted to US$ 595 million as of December 31, 2016. The exposure to the various market risks can be measured by sensitivity analyses, as set forth in IFRS 7. These analyses illustrate the effects produced by a given and assumed change in the levels of the relevant variables in the various markets (exchange rates, interest rates and prices) on finance income and expenses and, at times, directly on Other comprehensive income. A description on the sensitivity analysis of exchange rate and interest rate risks is given below: Exchange rate risk – Sensitivity analysis Based on the composition of the consolidated statement of financial position as of December 31, 2017, which is a net liability position in foreign currency of $11,037 equivalent to US$592 million, Management estimates that every variation in the exchange rate of $0.10 pesos against the U.S. dollar and proportional variations for euro and guaraníes against the Argentine peso, plus or minus, would result in a variation of approximately $59 of the consolidated amounts of foreign currency position. If we consider only the portion not covered by derivative financial instruments and other assets adjusted by the variation of the U.S. dollar, the net liability position totaled $9,559 equivalent to approximately US$518 million, and a variation of the exchange rate of $ 0.10 pesos as described in the previous paragraph, would generate a variation of approximately $52 in the consolidated financial position in foreign currency. This analysis is based on the assumption that this variation of the Argentine peso occurred at the same time against all other currencies. This sensitivity analysis provides only a limited, point-in-time view of the market risk sensitivity of certain of the financial instruments. The actual impact of market foreign exchange rate changes on the financial instruments may differ significantly from the impact shown in the sensitivity analysis. Interest rate risk – Sensitivity analysis Within its structure of financial debt, the Telecom Group has bank overdrafts denominated in argentine pesos accruing interest at rates that are reset at maturity, notes that bear interest at a mixed rate (fixed rate and floating rate) and fixed rate and foreign bank loans denominated in U.S. dollar and guaraníes that bear interest at a floating rate. Management believes that any variation of 10 bps in the agreed interest rates would become in the following results: Financial debt Financial debt Amount Effect Bank overdrafts $ Notes $ Notes US$ Bank loans US$ This analysis is based on the assumption that this change in interest rates occurs at the same time and for the same periods. This sensitivity analysis provides only a limited point of view of the sensitivity to market risk of certain financial instruments. The actual impact of changes in interest rates of financial instruments may differ significantly from this estimate. Ø Credit risk Credit risk represents Telecom Group’s exposure to possible losses arising from the failure of commercial or financial counterparts to fulfill their assumed obligations. Such risk stems principally from economic and financial factors, or from the possibility that a default situation of a counterpart could arise or from factors more strictly technical, commercial or administrative. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. Telecom Group’s maximum theoretical exposure to credit risk is represented by the carrying amount of the financial assets and trade receivables, net recorded in the consolidated statement of financial position. Date due Banks and cash Investments Trade Other Total Total due - - - Total not due Total as of December 31, 2017 The accruals to the allowance for doubtful accounts are recorded: (i) for an exact amount on credit positions that present an element of individual risk (bankruptcy, customers under legal proceedings with the Company); (ii) on credit positions that do not present such characteristics, by customer segment considering the aging of the accounts receivable balances, customer creditworthiness and changes in the customer payment terms. Total overdue balances not covered by the allowance for doubtful accounts amount to $1,807 as of December 31, 2017 ($1,738 as of December 31, 2016). Regarding the credit risk relating to the asset included in the “Net financial debt or asset”, it should be noted that the Telecom Group evaluates the outstanding credit of the counterparty and the levels of investment, based, among others, on their credit rating and the equity size of the counterparty. Deposits are made with leading high-credit-quality banking and financial institutions and generally for periods of less than three months. The Telecom Group serves a wide range of customers, including residential customers, businesses and governmental agencies. As such, the Telecom Group’s account receivables are not subject to significant concentration of credit risk. In order to minimize credit risk, the Group also pursues a diversification policy for its investments of liquidity and allocation of its credit positions among different first-class financial entities. Consequently, there are no significant positions with any one single counterpart. Ø Liquidity risk Liquidity risk represents the risk that the Telecom Group has no funds to accomplish its obligations of any nature (labor, commercial, fiscal and financial, among others). The Group’s working capital breakdown and its main variations are disclosed below: 2017 2016 Variation Trade receivables Other receivables (not considering financial NDF) Inventories Current liabilities (not considering financial debt) Operative working capital - negative Over revenues (10.5)% (6.4)% Cash and cash equivalents Financial NDF - Investments Current financial debt Net Current financial asset Negative operating working capital (current assets – current liabilities) Liquidity rate The Telecom Group has a typical working capital structure corresponding to a company with intensive capital that obtains spontaneous financing from its suppliers (especially PP&E) for longer terms than those it provides to its customers. According to this, the negative operating working capital amounted to $6,872 as of December 31, 2017 (increasing $3,493 vs. December 31, 2016) showing higher levels of suppliers financing (10.5% of consolidated revenues as of December 31, 2017 vs. 6.4% of consolidated revenues as of December 31, 2016). During 2017 the Telecom Group continued demanding funds to the financial market in Argentina (See Notes 12 and 33.d), what has allowed financing the Group’s growth in PP&E and intangible assets at very reasonable rates. The Group has an excellent credit rating (the Company’s notes have been qualified “AA + (arg)” by FIX SCR S.A) related to the Group’s operating cash flow record and low leverage (net financial debt ratio over company market value amounts only 2%). All the above mentioned generates that the total working capital (current assets - current liabilities) amounted to a net debt of $3,749 as of December 31, 2017, resulting from an increase in negative operating working capital amounting to $3,493 partially offsetted by an increase in net current financial asset of $693. The Group has several financing sources and several offers from first-class international institutions to diversify its current short-term funding structure, which includes accessing to domestic and international capital market and obtaining competitive bank loans in what relates to terms and financial costs. The low financial debt of the Group and the merge by absorption with Cablevisión S.A. since January 1, 2018, make possible to obtain financial resources for longer terms at a reasonable cost. The Group’s management evaluates the national and international macroeconomic context to take advantage of market opportunities that allows it preserving its financial health for the benefit of its investors. The Telecom Group manages its cash and cash equivalents and its financial assets trying to match the term of investments with those of its obligations. The average term of its investments should not exceed the average term of its obligations. Cash and cash equivalents position is invested in highly-liquid short-term instruments through first-class financial entities. The Telecom Group maintains a liquidity policy that results into a significant volume of available cash through its normal course of business as it is shown in the consolidated statement of cash flows. The Telecom Group has consolidated cash and cash equivalents amounting to $2,831 (equivalent to US$ 153 million) as of December 31, 2017 (in 2016, $3,945, equivalent to US$ 250 million). The Telecom Group has bank credits and a program of Notes that allow to finance its short-term obligations and an investment plan in addition to the operative cash flow for the next years. The table below contains a breakdown of financial liabilities into relevant maturity groups based on the remaining period at the date of the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Maturity Date Trade Debt Salaries and Other Total Due - - - January 2018 thru December 2018 January 2019 thru December 2019 January 2020 thru December 2020 - January 2021 and thereafter - Capital management The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments considering the business evolution and changes in the macreoeconomic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders and the level of indebtedness. No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2017 and 2016. The Telecom Group does not have to comply with regulatory capital adequacy requirements. |
Related party balances and tran
Related party balances and transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related party balances and transactions | |
Related party balances and transactions | Note 27 – Related party balances and transactions (a) Controlling group Until November 30, 2017 Nortel was the holder of the 54.74% stake in the Company, meaning that exercised control of the Company in the terms of Section 33 of LGS. As of that date, Nortel owned all of the Class “A” Preferred shares (51% of total shares of the Company) and 7.64% of the Class “B” Preferred shares (3.74% of total shares of the Company). As a result of the Company’s Treasury Shares Acquisition Process described in Note 19.d), Nortel’s equity interest in Telecom Argentina amounted to 55.60% of the Company’s outstanding shares as of November 30, 2017. Pursuant to Section 221 of the LGS, the rights of treasury shares shall be suspended until such shares are sold, and shall not be taken into account to determine the quorum or the majority of votes at the Shareholders’ Meetings. All of the common shares of Nortel belonged to Sofora. As of November 30, 2017 these shares represented 78.38% of the capital stock of Nortel. Sofora’s capital stock consisted of common stock shares, with a par value of $1 argentine peso each and one vote per share. As of November 30, 2017, Sofora’s total shares were held by Fintech, as a result of the total amortization of the Sofora’s shares held by WAI during the fiscal year 2017 (see Note 31.1). As of December 31, 2017, after the effect of the Corporate reorganization of the Telecom Group and its controlling companies (Note 31), Fintech is the direct controller of Telecom Argentina with a share of 39.5% of Telecom Argentina’s capital stock. Before such reorganization, Fintech was the indirect controller since the acquisition of Sofora’s control to Telecom Italia on March 8, 2016. Fintech, a Delaware (United States) limited liability company, is a wholly-owned direct subsidiary of Fintech Advisory Inc. and its primary purpose is to hold, directly and indirectly, the securities of Telecom Argentina. Fintech Advisory Inc., a Delaware (United States) company, is directly controlled by Mr. David Martínez. Fintech Advisory Inc. is an investor and investment manager in equity and debt securities of sovereign and private entities primarily in emerging markets. In connection with the Shareholders’ Agreement entered into by the Telecom Italia Group and WAI, through which Fintech acquired all the rights and obligations of the Telecom Italia Group, it was no longer into effect with respect to (i) the political rights therein provided, on May 23, 2017, when 17% of Sofora’s shares were amortized; and (ii) the rest of its provisions, on June 22, 2017, when 15% of Sofora’s shares were amortized (see Note 31.1). As of the date of issuance of these consolidated financial statements, Cablevisión Holding S.A. is the legal controlling company of Telecom Argentina as a result of becoming effective on January 1, 2018 the Merger described in Note 32 and the shareholders agreement signed on July 7, 2017, also mentioned in such note. The change of control was authorized by Resolution ENACOM No. 5644-E/2017. (b) Related parties For the purposes of these consolidated financial statements, related parties are those individuals or legal entities which are related (in terms of IAS 24) to Fintech, ABC Telecomunicaciones S.A. (non-controlling shareholder of Núcleo) and TU VES S.A –Chile (non-controlling shareholder of Tuves Paraguay), except companies under sect. 33 of the LGS. For the years presented, the Telecom Group has not conducted any transactions with Key Managers and/or persons related to them, except the mentioned in e) below. (c) Balances with related parties Type of related party As of December 31, 2017 2016 CURRENT ASSETS Cash and cash equivalents Banco Atlas S.A.(a) Other related party - Total cash and cash equivalents - Trade receivables Editorial Azeta S.A. (a) Other related party CURRENT LIABILITIES Trade payables Experta ART S.A. (b) Other related party - Haras El Capricho S.A. (b) Other related party - Telteco S.A. (c) Other related party - Penta S.A (a) Other related party - Total trade payables Financial Debt – Notes (current and non-current) La Estrella Sociedad Anónima de Seguros de Retiro (b) Other related party - Experta ART S.A. (b) Other related party - - (d) Transactions with related parties and companies under sect. 33 of the LGS Companies under sect. 33 of the LGS Transaction description Type of related party Years ended December 31, 2017 2016 2015 Other income Nortel Rental revenues Direct parent Company - Total other income - Related parties Transaction description Type of related party Years ended December 31, Services rendered 2017 2016 2015 Editorial Azeta S.A. (a) Voice retail Other related party Banco Atlas S.A. (a) Voice retail Other related party Penta S.A. (a) Voice retail Other related party - Total services rendered Transaction description Type of related party Years ended December 31, Services received 2017 2016 2015 Editorial Azeta S.A. (a) Advertising Other related party Penta S.A. (a) Rental Other related party - Total services received (a) Such companies relate to ABC Telecommunications Group of Paraguay (Non-controlling shareholders’ of Núcleo). (b) Such companies relate to W de Argentina – Inversiones S.A. until May 23, 2017. (c) Such company relates to a member of the Board of Directors appointed by W de Argentina – Inversiones S.A. until May 23, 2017. The transactions discussed above were made on terms no less favorable to the Telecom Group than would have been obtained from unaffiliated third parties. The Board of Directors approved transactions representing more than 1% of the total shareholders’ equity of the Company, after being approved by the Audit Committee in compliance with Law No. 26,831. In connection with the change of control explained, on March 8, 2016, Fintech acquired 51% of Sofora’s shares from the Telecom Italia Group. As a result, since January 1, 2016 until such date (in which the Telecom Italia Group ceased to be a related party of the Telecom Group), the transactions carried out with the Group amounted to $111 for services rendered, $72 for services received and $18 for purchase of PP&E for the year ended December 31, 2016; and amounted to $564 for services rendered, $352 for services received and $103 for purchase of PP&E for the year ended December 31, 2015. It should be mentioned that no transactions with related parties of Fintech were identified since March 8, 2016 according to IAS 24. In addition, with the first trance amortization of Sofora’s ordinary shares owned by WAI (see Note 31.1 to these consolidated financial statements), as of May 23, 2017 WAI ceased to be a related party of the Telecom Group. The operations carried out with the aforementioned Group since January 1, 2017 until such date amounted to $7 for services rendered, $72 for services received and $34 for financial costs related to loans. Operations carried out in the year ended December 31, 2016 amounted to $7 for services rendered, $153 for services received, $1 for PP&E acquisition, and $55 for financial costs related to loans. While amounted to $120 services rendered and $4 for purchase of PP&E in the year ended December 31, 2015. (e) Key Managers Compensation for Directors and Key Managers, including social security contribution, amounted to $323, $200 and $106 for the years ended December 31, 2017, 2016 and 2015, respectively, and was recorded as expenses under the line item “Employee benefits expenses and severance payments”. Years ended December 31, 2017 2016 2015 Salaries (*) Variable compensation (*) Social security contributions Hiring benefits - - Termination benefits (*) Gross compensation. Social security contributions and income tax retentions that are deducted from the gross compensation are in charge of the employee. As of December 31, 2017 and 2016, respectively, an amount of $45 and $66 remained unpaid. The estimated compensation of Telecom Argentina’s Board of Directors for fiscal year 2017 is approximately $49.8. The compensation of Telecom Argentina’s Board of Directors approved by the General Shareholders Meetings of the years 2016 and 2015 were $ 34.6 and $20, respectively. The members and alternate members of the Board of Directors do not hold executive positions in the Company or Company’s subsidiaries. |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2017 | |
Segment information | |
Segment information | Note 28 – Segment information Until 2016, the Telecom Group carried out its activities through six companies grouped in operating segments. While the segment information as of December 31, 2017, includes additionally Tuves Paraguay’s operations corresponding to 2°semester of 2017, which were included in “Mobile Services – Núcleo”. On January 1, 2018, the Corporate Reorganization described in Note 31 was effective. Although Personal’s operations were absorbed by Telecom, since that date the Management keeps a separate assessment of the operations carried out by Personal. As a consequence, the segment information for year 2017 shows the operations of Mobile Services – Personal as an independent reportable segment. The Telecom Group has combined the operating segments into three reportable segments: “Fixed Services”, “Personal Mobile Services” and “Núcleo Mobile Services” based on the nature of products provided by the entities and taking into account the regulatory and economic framework in which each entity operates. Segment financial information for the years 2017, 2016 and 2015 was as follows: For the year ended December 31, 2017 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial debt q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by location of operations Argentina Abroad Total For the year ended December 31, 2016 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial debt - q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by Argentina Abroad Total For the year ended December 31, 2015 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial asset (debt) q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by Argentina Abroad Total |
Quarterly consolidated informat
Quarterly consolidated information (unaudited information) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly consolidated information (unaudited information) | |
Quarterly consolidated information (unaudited information) | Note 29 – Quarterly consolidated information (unaudited information) Quarter Revenues Operating Operating Financial Results, Net Net income Fiscal year 2015: March 31 June 30 September 30 December 31 Fiscal year 2016: March 31 June 30 September 30 December 31 Fiscal year 2017: March 31 June 30 September 30 December 31 |
Restrictions on distribution of
Restrictions on distribution of profits and dividends | 12 Months Ended |
Dec. 31, 2017 | |
Restrictions on distribution of profits and dividends | |
Restrictions on distribution of profits and dividends | Note 30 – Restrictions on distribution of profits and dividends (a) Restrictions on distribution of profits Under the LGS, the by-laws of the Company and rules and regulations of the CNV, a minimum of 5% of net income for the year in accordance with the statutory books, plus/less previous years adjustments and accumulated losses, if any, must be appropriated by resolution of the shareholders to a legal reserve until such reserve reaches 20% of the outstanding capital (common stock plus inflation adjustment of common stock). On May 21, 2014, Telecom Argentina reached the maximum amount of its Legal Reserve according to LGS and CNV provisions previously disclosed. (b) Dividends The Company is able to distribute dividends up to the limit of retained earnings determined under the LGS, and reserves constituted to such purpose. Retained earnings as of December 31, 2017 are positive and amounted to $7,630, while Voluntary reserve for future dividends payment amounted to $9,730 (See dividends distribution approved by the Board of Directors on January 31, 2018 in Note 33). 2017 2016 2015 Dividends declared and paid by Telecom Argentina during the year peso per share, respectively) (*) 4,151 (*) 2,000 Proposed for approval at the Annual General Meeting (not recognized as a liability as of December 31) (**) - - (*) By reversal of the Voluntary reserve for future dividends payments. (**) The Company’s Board of Directors has proposed to the Shareholder’s Meeting the confirmation of the dividends’ distribution in advance (Note 33.b) and the allocation of the outstanding retained earnings ($1,989) to the constitution of a “Voluntary reserve for future dividends payments”, with delegation to the Board of Directors its subsequent reversal and availability. |
Corporate Reorganization of the
Corporate Reorganization of the Telecom Group and Its controlling companies | 12 Months Ended |
Dec. 31, 2017 | |
Corporate Reorganization of the Telecom Group and Its controlling companies | |
Corporate Reorganization of the Telecom Group and Its controlling companies | Note 31 – Corporate Reorganization of the Telecom Group and its controlling companies 1) Amortization of Sofora shares In March 2017, WAI offered to Sofora and Sofora accepted, with the consent of Fintech (the controlling shareholder of Sofora), an offer to amortize in two tranches all of the 140,704,640 shares issued by Sofora and owned by WAI, according to the provisions of Sections 223 and 228 of the LGS. As a result of the amortization, Sofora agreed to pay WAI an amount equal to the par value of WAI’s shares of capital stock issued by Sofora, such amount being equivalent to $140,704,640 pesos, and issue in the name of WAI one or more dividend certificates (Class “A” “Bono de Goce”) evidencing WAI’s rights to dividends up to an aggregate amount of US$ 470 million minus the amounts paid to amortize the shares of Sofora owned by WAI (equivalent to US$ 8,683,596). On May 23, 2017 the first tranche of the ordinary shares of Sofora owned by WAI (74,749,340 ordinary shares), representing 17% of Sofora’s capital stock was amortized. As a result of the mentioned amortization: i. Sofora paid $74,749,340 pesos to WAI and issued a Class “A” Bono de Goce on behalf of WAI which granted them the right to dividends in the amount of US$ 245,036,017, and ii. The members and alternate members of the Board of Directors and of the Supervisory Committee of Telecom Argentina, Personal, Nortel and Sofora appointed by WAI presented their resignations. In the case of Telecom Argentina, the General Ordinary and Extraordinary Shareholders’ Meeting held on May 23, 2017, in its second tranche of deliberations held on June 6, 2017, appointed two directors, two alternate directors, one member of the Supervisory Committee and one alternate member of the Supervisory Committee to complete the term of duties of the resigning members and alternate members of the Board of Directors and of the Supervisory Committee of Telecom Argentina. As a result of obtaining one of the authorizations of ENACOM in the context of the Reorganization of the Telecom Group mentioned in 2) of this Note, on June 22, 2017, the second tranche of the ordinary shares of Sofora owned by WAI (65,955,300 shares) representing 15 % of Sofora’s capital stock before the first tranche of ordinary shares amortization, was amortized. As a result of this amortization, Sofora paid $65,955,300 pesos to WAI and issued an additional Class “A” Bono de Goce on behalf of WAI which granted them the right to dividends in the amount of US$ 216,280,387. The principal terms and conditions of each Bono de Goce provide that: (i) dividend payments of up to the maximum amount under the Bono de Goce will be made only if and when Sofora resolves to pay a dividend, (ii) dividend payments made by Sofora shall be paid to the holder of the Bono de Goce with priority over all other shareholders of Sofora, (iii) all dividends to be paid under the Bono de Goce will be paid by Sofora with liquid and realized profits, (iv) the maximum amount of dividends to be collected under the Bono de Goce shall accrete every year on June 1 on the amount of dividends that remain unpaid by Sofora as of May 31 of the relevant year at a 2% annually, (v) Sofora has a right to redeem the Bono de Goce at any time after the later of 36 months from the date of issuance or the payment of 60% of the maximum amount of dividends under the Bono de Goce and, whatever occur at last (vi) in the event that Sofora is absorbed by another continuing company of Sofora’s activities, the preference of the Class “A” Bono de Goce will remain only in respect of those shares of the continuing company that Sofora’s shareholders receive according to the expected exchange ratio of the Reorganization, so that this preference does not affect the other shareholders of the absorbing company, meaning that, in the case of the reorganization mentioned in this Note (the “Telecom Group’s Reorganization”), the preference for the Class “A” Bono de Goce will only be verified with respect to the Class “A” Shares of Telecom Argentina that receives Fintech and will not affect the Class “B” Shares or Class “C” Shares of Telecom Argentina. Considering that the Reorganization of the Telecom Group is consummated, Telecom Argentina assumed all the rights and obligations of Sofora as issuer of the Class “A” Bonos de Goce. In no event shall the dividend rights under the Class “A” Bonos de Goce affect the dividend rights of holders of Telecom Argentina Class “B” or Class “C” Shares or any other class of shares. 2) The Telecom Group’s Reorganization On March 31, 2017, each of the Board of Directors of Sofora, Personal and Nortel and Telecom Argentina approved a preliminary reorganization agreement (the “Preliminary Reorganization Agreement”). Under the terms of the Preliminary Reorganization Agreement, Telecom Argentina will absorb Nortel, Sofora and Personal according to the provisions of sections 82 and 83 of the LGS. Telecom Argentina’s and Personal’s General Ordinary and Extraordinary Shareholders’ Meetings held on May 23, 2017, and Nortel’s and Sofora’s General Extraordinary Shareholders’ Meeting held on May 22, 2017 approved the Telecom Group’s Reorganization jointly with the following documents: i. Special-purpose unconsolidated financial statements of their respective companies as of December 31, 2016; ii. Special-purpose combined financial statements of Sofora, Nortel, Telecom Argentina y Telecom Personal as of December 31, 2016; iii. The corresponding preliminary reorganization agreement approved on March 31, 2017. Additionally, the mentioned Telecom Argentina’s General Ordinary and Extraordinary Shareholders’ Meeting approved: i. the conversion of up to 161,039,447 Class A Ordinary Shares, par value $1 entitled to one vote per share into equal Class B Ordinary Shares, par value $1 and entitled to one vote per share to be delivered to Nortel’s Preferred Class “B” Shares holders, as explained in Section 4th of the related preliminary reorganization agreement (the conversion was effective on December 15, 2017); and ii. the amendment of the following sections of the Bylaws: a. Section 4°: to establish a dynamic conversion procedure for the shares representing capital stock from one Class to the other with equal political and equity rights; and b. Section 5°: to allow the total or partial amortization of integrated shares according to the provisions of Section 223 of LGS and allow the issuance of Bonos de Goce according to the provisions of Section 228 on the mentioned Law. iii. The removal of Section 9° of the Bylaws, which includes limitations for transferring Class “A” Shares, which is effective since the authorization of the ENACOM of the Nortel’s dissolution related to the Reorganization of the Telecom Group and the distribution to holders of Nortel’s Class “B” Preferred Shares of a portion of Class “A” Shares of Telecom Argentina through its conversion to Class “B” Shares in accordance to the provisions of the corresponding preliminary reorganization agreement. As of the date of issuance of these consolidated financial statements, the amendment of the bylaws mentioned in items ii) and iii) above is in process of registration. At least, Personal’s, Nortel’s and Sofora’s Shareholders’ Meeting approved the dissolution without liquidation of such companies in accordance with Section 94, item 7 of the LGS as a consequence of their incorporation to Telecom Argentina through the Telecom Group’s Reorganization. The companies involved requested ENACOM the following authorizations provided for in the previous reorganization agreement: a) ENACOM authorization for releasing the shares that comprised the second amortization tranche of Sofora’s ordinary shares (owned by WAI representing 15% of Sofora’s capital stock) of the allocation to the main core of shares of the investment consortium for the acquisition, in the process of privatization of ENTel, of the Sociedad Licenciataria Norte (currently Telecom Argentina) pursuant to the provisions of Decree No. 62/90 issued on January 5, 1990 and the terms of such privatization and Resolution No. 111/03 issued by the SC on December 10, 2003. b) ENACOM authorization for the dissolution of Nortel as a result of the Reorganization of the Telecom Group and the distribution to the holders of Nortel’s Class “B” Preferred Shares of a portion of Telecom Argentina’s Class “A” Shares through Its conversion to Telecom Argentina’s Class “B” Shares pursuant to the corresponding reorganization agreement. c) ENACOM authorization for the transfer to Telecom Argentina, as a result of the Reorganization of the Telecom Group, of all licenses for the provision of ICT Services and the records of ICT Services, together with the corresponding permissions for the use of frequencies, which were granted or awarded to Personal. On June 16, 2017, the ENACOM Authorization referred to in a) above was granted by Resolution No. RESOL-2017-5120-APN-ENACOM # MCO, allowing the amortization of the second tranche of Sofora’s ordinary shares, described in 1). Being approved the Reorganization of the Telecom Group by General and Special shareholders’ meetings, and having expired the term for the opposition of creditors in accordance with the applicable rules, on November 13, 2017, Telecom Argentina, Nortel, Sofora, and Telecom Personal subscribed the Final Reorganization Agreement which was filed to the regulatory authorities according with the respective applicable bylaws. On November 24, 2017, the Company, Personal, Nortel and Sofora were notified through Resolution No. 2017-4545-APN-ENACOM#MM, by which ENCAOM granted the authorizations mentioned in sections b) and c) mentioned above. The Reorganization Effective Date was at 00.00 am December 1, 2017, date on which the Chairmen of the Boards of Directors of the companies that were part of the Telecom Group subscribed the Transfer of Operations Record whereby the following was put on record: (i) Telecom Argentina prepared its technical and operational systems with the capacity to absorb the operations of Personal, Nortel and Sofora, and ii) the effective transfer of the operations and activities of the absorbed companies to Telecom Argentina being satisfied all the following conditions to which the Reorganization of the Telecom Group was subject: · approval of the Reorganization on the terms and conditions set forth in the Preliminary Reorganization Agreement by special shareholders’ meetings in the case of Nortel; · the execution of the Final Reorganization Agreement; · the receipt of certain regulatory approvals by ENACOM; · Telecom Argentina preparing its technical and operational systems with the capacity to absorb the operations of Personal, Nortel and Sofora. As a consequence of the reorganization and with effect as of the date thereof: (i) the total equities of the absorbed companies were transferred to Telecom Argentina at the book values of such items in the respective special-purpose unconsolidated financial statements. According to this, Telecom Argentina will acquire all rights, obligations and responsibilities of any nature of Personal, Sofora and Nortel; (ii) Telecom Argentina is the continuing company of all Personal, Sofora and Nortel activities; (iii) Personal, Sofora and Nortel were dissolved without liquidation. As of the date of issuance of these consolidated financial statements, the corresponding inscription is pending. As a consequence of the Reorganization: (i) A portion of Class “A” Shares issued by Telecom Argentina was distributed to Fintech as the only holder of Sofora Common Shares, (ii) The remaining Class “A” issued by Telecom Argentina were converted to Telecom Argentina Class “B” Shares, (iii) All Class “B” Shares issued by Telecom Argentina owned by Nortel (including Class “B” Shares as a result of the conversion mentioned above were distributed to the holders of Nortel Preferred Shares. Telecom Argentina didn’t issue any new Class “B” Shares or Class “A” Shares in connection with the Reorganization. Additionally, the effectiveness of the administrative procedures of the Reorganization of the Telecom Group is subject to the following conditions, among others: (i) to obtain the administrative approval of the CNV regarding the Reorganization of the Telecom Group, which was obtained on January 4, 2018, (ii) the registration of the “Final Reorganization Agreement” in IGJ (which is in process), and (iii) to obtain any other authorization that could be required from other regulatory authority (SEC, among others). |
Merger by absorption between Te
Merger by absorption between Telecom Argentina and Cablevision S.A. | 12 Months Ended |
Dec. 31, 2017 | |
Merger by absorption between Telecom Argentina and Cablevision S.A. | |
Merger by absorption between Telecom Argentina and Cablevision S.A. | Note 32 – Merger by absorption between Telecom Argentina and Cablevisión S.A. On June 30, 2017 the Board of Directors of Telecom Argentina and Cablevisión S.A. approved a preliminary merger agreement by which they agree that Telecom Argentina absorbed by merger Cablevisión S.A., which was dissolved without liquidation as of the merger effective date, in accordance with the provisions of Sections 82 and 83 of the LGS, and ad referendum of the corporate and regulatory approvals (the “Merger”). The purpose of the Merger is to enable the surviving company by merger to efficiently offer, in line with the trend both at a national and international level, technological convergence products between media and telecommunications services, in a separate or independent basis, to provide voice, data, sound and image services, both fixed and wireless, in a single product or groups of products for the self benefit and the benefit of consumers of such multiple individual services. Likewise, both companies considered that their respective operational and technical structures are highly complementary and could be optimized through a structural consolidation, achieving synergies and efficiencies in the development of convergence products that the market will demand. The Merger Effective Date was since 0:00 hours of the date in which the Chairmen of the Boards of Directors of Telecom Argentina and Cablevisión S.A. subscribed an operations transfer minute stating that: (i) Telecom Argentina has adapted its operational- technical systems to assume the operations and activities of Cablevisión S.A., and (ii) that on such Merger Effective Date the transfer of the activities and operations of Cablevisión S.A. to Telecom Argentina was finalized as the following conditions to which the Merger was subject were accomplished: i. the subscription of the definitive merger agreement (which was subscribed on October 31, 2017, ad referéndum of the ENACOM authorizations under Decree No. 267/15), and ii. the ENACOM operation authorization (this authorization was issued by Res. ENACOM No. 5644-E/2017, which was notified on December 22, 2017). The operations transfer minute mentioned above was subscribed on January 1, 2018. According to the Merger, and to the provisions of Section 83, item c) of the LGS, the following distribution rate was settled: one ordinary share of Cablevisión S.A. (both, Class “A” and “B” shares) for every 9,871.07005 new ordinary shares of Telecom Argentina (the “Distribution Ratio”). The determined Distribution Ratio was considered fair from a financial perspective by the independent valuation experts JPMorgan Securities LLC and Lion Tree Advisors LLC. The Ordinary and Extraordinary Shareholders’ Meeting of Telecom Argentina and Extraordinary Shareholders’ Meeting of Cablevisión S.A., respectively, which both were held on August 31, 2017 approved the preliminary merger agreement and, relating Cablevisión S.A., its dissolution as of the Merger Effective Date and, relating Telecom Argentina, the Bylaws amendment and the increase of its capital stock. As of the date of issuance of these consolidated financial statements, the amendment of the bylaws is in process of registration. On July 7, 2017, Cablevisión Holding S.A. accepted an offer of call option granted by Fintech Advisory Inc. and its subsidiaries Fintech Telecom LLC and Fintech Media LLC, for the acquisition of 13.51% equity interest in Telecom Argentina (representing a participation of approximately 6% of Telecom Argentina after the merger) in the amount of US$ 634,275,282 (the “Option”). The Option can be executed during one year since July 7, 2017. Likewise, Cablevisión Holding S.A. should pay to Fintech Advisory Inc. within thirty days since July 7, 2017, a share premium amounting to US$ 3,000,000, which was paid on July 2017. On October 5, 2017, Cablevisión Holding S.A. paid in advance the full Option price of US$ 634,275,282. On December 27, 2017 Cablevisión Holding S.A. executed the Option, therefore, as of the merger effective date, received an additional VLG Argentina LLC’ share of 21.55% (representing an indirect share of approximately 6% in Telecom after the merger). Likewise, in the scope of the call option contract, the price was established in US$ 628,008,363. As a consequence, Fintech Media LLC became the owner of 28.45% of VLG Argentina LLC stock and Cablevision Holding S.A. became the owner of the remaining 71.55% of VLG Argentina LLC stock. On September 6, 2017 Telecom Argentina S.A. and Cablevisión S.A. entered a presentation before the ENACOM requesting authorization for: (i) The transfer and incorporation of the “Licencia Unica Argentina Digital” (Digital Argentina Sole License) owned by Telecom Argentina S.A., of the records, resources, assignments, and ratings owned by Cablevisión S.A. (ii) The transfer in favor of Telecom Argentina S.A. of the authorizations of usage and the resources assigned for the provision of the services registered under the ownership of Cablevisión S.A. and / or the companies absorbed by the latter. (iii) The change of corporate control that will take place in Telecom Argentina S.A. once the aforementioned ENACOM authorization has been obtained, the Merger becomes effective and the shareholder agreement of July 7, 2017 becomes effective, as a result of which Cablevisión Holding S.A. will be the legal controlling company of Telecom Argentina S.A. as the surviving company of Cablevisión S.A. On October 31, 2017, the definitive merger agreement was subscribed pursuant art. 83 section 4) of LGS, ad referéndum of the ENACOM authorizations that may correspond. Being satisfied all the conditions to which the Merger was subject according with art. 7° of the Preliminary Merger Agreement and the Final Merger Agreement, on January 1, 2018, the Transfer of Operations Record from the absorbed company to the absorbing company was subscribed. As a consequence, and according with the Preliminary Merger Agreement and the Final Merger Agreement, since 00.00 am January 1, 2018 the Merger is effective and, consequently, the composition of the Board of Directors was changed which was notified on December 28, 2017; and also, the change of the controlling company to Cablevisión Holding S.A. since January 1, 2018. In accordance with the Preliminary Merger Agreement and the Final Merger Agreement and the notification received from Fintech Telecom and Fintech Media LLC (“Fintech Media”) on December 29, 2017 informing of a corporate reorganization process by which Fintech Telecom absorbs by merger Fintech Media and VLG Argentina Escindida LLC (a spin-off of VLG Argentina LLC) with effect on the Merger Effectiveness Date. The shares issued by Telecom as decided by the Board of Directores were delivered as follows: i) to Fintech Telecom LLC: 342,861,748 Class A shares; ii) to Cablevisión Holding S.A.: 406,757,183 Class D shares; and iii) to VLG Argentina LLC: 434,909,475 Class D shares. Such exchange of shares occurred on January 1, 2018. Telecom Argentina’s breakdown of capital stock as of January 1, 2018 is as follows: Outstanding shares Treasury shares Total capital stock Shares Class “A” - Class “B” Class “C” - Class “D” - Total Fintech Telecom LLC, controlling company of Telecom Argentina until December 31, 2017, is a Delaware (United States) limited liability company, wholly-owned direct subsidiary of Fintech Advisory Inc. and its primary purpose is to hold, directly and indirectly, the securities of Telecom Argentina. Fintech Advisory Inc., a Delaware (United States) corporation, is directly controlled by Mr. David Martínez. Fintech Advisory Inc. is an investor and investment manager in equity and debt securities of sovereign and private entities primarily in emerging markets. Cablevisión Holding S.A., legal controlling company of Telecom Argentina since January 1, 2018, is an argentine corporation and its primary purpose is to hold capital stock in corporations whose object and purpose is to provide Information and Communication Technology Services (ICT Services) and to provide Audiovisual Communication Services (ICT Services). Its controlling shareholder is GC Dominio S.A. Since the Merger Effective Date, (i) the whole assets and liabilities (including registered assets, licenses, rights and obligations) belonging to Cablevisión S.A. will be incorporated to Telecom Argentina’s equity, (ii) Telecom Argentina will continue the operations of Cablevisión S.A., generating the corresponding operational, accounting and tax effects, (iii) the administration and representation of Cablevisión S.A. will be in charge of the administration and representations boards of Telecom Argentina. The Merger was accounted for effective January 1, 2018, using the acquisition method, as outlined by IFRS 3. IFRS 3 requires, in a business combination effected through an exchange of equity interests, all relevant facts and circumstances to be considered when identifying the acquirer. Based on the terms of the preliminary merger agreement, Cablevisión S.A. (the legally absorbed entity) is to be considered the accounting acquirer and Telecom Argentina (the surviving entity) is to be considered the accounting acquiree, which qualifies the transaction as a “reverse acquisition” in accordance with IFRS. The factors that were relied upon to determine that Cablevisión S.A. should be treated as the accounting acquirer in the Merger were: 1. the relative voting rights in the surviving entity (55% for the shareholders of Cablevisión S.A. before the Merger Effective Date, and 45% for the shareholders of Telecom Argentina, before the Merger Effective Date, both percents previous to the Merger Effective Date); 2. the composition of the board of directors in the surviving entity and other committees (Audit, Supervisory and Executive), 3. the relative fair value assigned to Telecom Argentina and Cablevisión S.A. and 4. the composition of the key management of the surviving entity. Accordingly, the assets and liabilities of Cablevisión S.A. were recognized and measured in the consolidated financial statements at their pre-Merger carrying amounts, while the identifiable assets and liabilities of Telecom Argentina will be recognized at fair value as of the Merger Effective Date (January 1, 2018). Goodwill resulting from the application of the acquisition method was measured as the excess of the fair value of the consideration paid over the net fair value of Telecom Argentina’s identifiable assets and liabilities. The retained earnings and other equity balances recognized in the consolidated financial statements of the combined entity are the sum of the respective amounts of the individual financial statements of Telecom Argentina and Cablevisión S.A. immediately before the Merger. Business Combinations Reporting required under IFRS 3 IFRS 3 “Business Combinations” in its paragraphs 59 to 63 establishes that for a significant business combination occurred between the end of the reporting and the issuance date of the financial statements, certain information regarding the transaction must be included. The merger by absorption of Telecom Argentina and Cablevisión S.A., which was produced on January 1, 2018, qualifies as a Business Combination according to IFRS 3, therefore, in compliance of this standard the following information is disclosed. The information disclosed below represents the best estimation of the Company with the information available as of the date of issuance of these consolidated financial statements, therefore, in case the Company obtains new information about the events and circumstances existing on the date of acquisition, the amounts will be updated re-estimating the fair value of the identified net assets, and/or recognizing additional assets or liabilities during the measurement period, which shall not exceed one year as from the acquisition date, according to paragraph 45 of IFRS 3. Due to the fact that the merger between Telecom and Cablevisión S.A. is a business combination carried out through an exchange of interests in equity, the consideration is based on the fair value of the shares of Telecom on the Merger Effective Date. Such amount is $132 billion, determined based on the market value of Telecom’s ADR in the NYSE as of the transaction date (January 1, 2018). Pursuant to IFRS 3, the net identifiable assets acquired were valued at fair value, amounting to an estimated of $74 billion. In that respect, it’s important to highlight the following: Property, Plant and Equipment, which estimated fair value reached $63 billion, and Intangible Assets, which estimated fair value reached $40 billion (includes the recognition of the Customer Relationship for $10 billion, Trademarks for $9 billion, and Licenses for $21 billion). Additionally, a deferred income tax liability was recognized due to the higher value assigned to net identifiable assets, that added to the book value as of the Merger Effective Date, amounts to $17 billion. On the other hand, a non-controlling interest estimated in $1 billion is recognized, determined as the proportionate share of the Company’s net identifiable assets. As a consequence of the allocation of the purchase price to the acquired assets, a goodwill estimated in $59 billion was generated. Goodwill represents the future economic benefits that are not individually identified or recognized separately. It represents the excess of the consideration and non-controlling interest over the fair value of the net identifiable assets acquired under the business combination. Goodwill is not amortized. It shall be tested for impairment at least once a year as required under IAS 38. Shareholders’ Agreement: Fintech - CVH Effective as of May 23, 2017, W de Argentina Inversiones and Fintech as shareholders at that time of Sofora, left without effect the political rights of the shareholders agreement that bounded them. As of June 22, 2017, the lattest ceased to be a shareholder of Sofora. As a result, the shareholders’ agreement that linked the Sofora shareholders was entirely left without effect. On July 7, 2017 Cablevisión Holding S.A., VLG Argentina LLC, Fintech Media LLC, Fintech Advisory Inc., GC Dominio S.A. (all of them direct or indirect shareholders of Cablevisión S.A.) and Fintech Telecom LLC (then controlling shareholder of Telecom Argentina) entered into a shareholders agreement that governs the exercise of their rights as shareholders of Telecom Argentina as from the Merger Effective Date (January 1, 2018) (the “Shareholders´ Agreement”). The Shareholders´ Agreement establishes basically: · the representation in the corporate bodies, provided that subject to the fulfillment of certain conditions and as long as CVH holds a certain percentage of Telecom Shares, CVH shall be entitled to designate the majority of the directors, alternate directors, members of the Supervisory Committee, Executive Committee, Audit Committee, CEO and any other Key Employee (other than the CFO and the Internal Auditor, who shall be designated by Fintech). CVH shall also be entitled to nominate the Chairman of the Board of Directors and Fintech to nomínate de Vicechairman of the Board of Directors. · a scheme of supermajorities and required votes for the approval by the Shareholders´Meetings or Board of Directors´ Meetings, respectively, of certain matters such as: i) the approval of the Business Plan and the Annual Budget of Telecom Argentina; ii) amendments of the bylaws, iii) changes in Independent Auditors, iv) the creation of committees of the Board of Directors, v) hiring of Key Employees as defined in the Shareholders´ Agreement; vi) mergers, vii) acquisitions, viii) sale of assets, ix) capital increases; x) incurrence of indebtedness over certain limits, xi) capital investments in infrastructure, plant and equipment above certain amounts; xii) related party transactions, xiii) contracts that may impose restrictions to the distribution of dividends; xiv) new lines of business or discontinuing existing lines of business; xv) contracting for significant amounts not contemplated in the Business Plan and the Annual Budget, among others. |
Subsequent events to December 3
Subsequent events to December 31, 2017 | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent events to December 31, 2017 | |
Subsequent events to December 31, 2017 | Note 33 – Subsequent events to December 31, 2017 a) Decisions issued by the shareholders of Telecom Argentina at the General Ordinary Shareholders’ Meeting On January 31, 2018, the shareholders of Telecom Argentina held a General Ordinary Shareholders’ Meeting at which they approved the changes in the composition of the Board of Directors and the delegation of the powers vested on the Board of Directors to decide on the total or partial reversal of the “Voluntary reserve for future dividends payments” of Telecom Argentina as of December 31, 2017 and the distribution of the amount of cash dividends under said reversal in the amounts and on the dates to be established by the Board of Directors. b) Reversal of the Reserve for future cash dividends and distribution of dividends On January 31, 2018, the Board of Directors of Telecom Argentina approved: 1. Pursuant to the powers delegated by the shareholders at the General Ordinary Shareholders’ Meeting mentioned in item a) above, the reversal of $9,729,418,019 Argentine pesos of the “Voluntary reserve for future dividends payments” of Telecom Argentina as of December 31, 2017, and its distribution as cash dividends in two installments: i) $2,863,000,000 Argentine pesos on February 15, 2018 and ii) $6,866,418,019 Argentine pesos on April 30, 2018, being the Board empowered to make such payment on an earlier date if it deems it convenient in the future. Later, the Board of Directors approved on March 7, 2018 the anticipation of the availability for March 27, 2018 or in a previous date that the President of the Company may decide. 2. The distribution of $5,640,728,444 Argentine pesos as interim cash dividends under the provisions of Section 224, 2nd paragraph of the General Associations Law, corresponding to the net profit (liquid and realized) of the period ranging from January 1, 2017 to September 30, 2017 as it arises from the special-purpose unconsolidated financial statements of Telecom Argentina as of September 30, 2017, which were settled on February 15, 2018; and 3. The distribution of $4,502,777,155 Argentine pesos as distribution of interim cash dividends under the provisions of Section 224, 2nd paragraph of the General Associations Law, corresponding to the net profit (liquid and realized) of the period ranging from January 1, 2017 to September 30, 2017 as it arises from the special-purpose unconsolidated financial statements of Cablevisión S.A.-absorbed by Telecom Argentina- as of September 30, 2017, which were settled on February 15, 2018. On February 15, 2018, the Company paid dividends for a total of $13,006,505,599 Argentine pesos (equivalent to $6.04 dividends per outstanding share), corresponding to the above-mentioned distributions. c) Payment by Telecom of the dividends declared by Cablevisión S.A. On January 8, 2018, Telecom Argentina, as surviving company of Cablevisión S.A. paid the dividends declared by Cablevisión S.A. on December 18, 2017 for $4,077,790,056 Argentine pesos. d) Syndicated Loan At its meeting held on January 31, 2018, the Board of Directors of Telecom Argentina approved the execution of a syndicated loan agreement with several banks for up to a total of US$ 1,000 million which will accrue compensatory interest at an annual rate equal to LIBOR for each period of interest accrual plus an applicable margin (ranging from 1.25 to 2.25 percentage points), payable on a quarterly or semi-annual basis at the choice of Telecom Argentina. The term shall be of 12 months and principal shall be repaid in full at maturity. The funds from the loan will be used by Telecom Argentina for increasing its working capital in Argentina, investing in physical assets in Argentina and for other corporate purposes. In case Telecom subsequently applies for a loan or issues debt for a term of 3 years for more than US$ 500 million, the day after it receives the funds it shall repay in full the syndicated Loan. On February 2, 2018, Telecom Argentina notified its intention to request a disbursement under the loan for US$ 650 million, which was received on February 9, 2018. |
Significant accounting polici42
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant accounting policies | |
Going concern | a) Going concern The consolidated financial statements for the years ended December 31, 2017, 2016 and 2015 have been prepared on a going concern basis as there is a reasonable expectation that Telecom Argentina and its subsidiaries will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve months). |
Foreign currency translation | b) Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Argentine pesos ($), which is the functional currency of all Telecom Group’s companies located in Argentina. The functional currency for the foreign subsidiaries of the Telecom Group is the respective legal currency of each country. The financial statements of the Company’s foreign subsidiaries (Núcleo, Personal Envíos, Telecom USA and Tuves Paraguay since June 30, 2017) are translated using the exchange rates in effect at the reporting date; for assets and liabilities while income and expenses are translated at the average exchange rates for the year. Exchange differences resulting from the application of this method are recognized in Other Comprehensive Income. The cash flows of foreign consolidated subsidiaries expressed in foreign currencies included in the consolidated statement of cash flows are translated at the average exchange rates for each year. |
Foreign currency transactions | c) Foreign currency transactions Transactions in foreign currencies are translated into the functional currency using the foreign exchange rate prevailing at the date of the transaction or valuation where items are re-measured. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate prevailing at the reporting date. Exchange differences are recognized in the consolidated income statement and are included in Financial income/expenses as Foreign currency exchange gains or losses. |
Consolidation | d) Consolidation These consolidated financial statements include the accounts of Telecom Argentina and its subsidiaries over which it has effective control (Núcleo, Micro Sistemas, Telecom USA, Personal Envíos, Tuves Paraguay – only as of December 31, 2017- and the second semester of 2017 and Telecom Personal until November 30, 2017) as of December 31, 2017, 2016 and 2015. Control exists when the investor (Telecom Argentina) has power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to use its power to affect the amount of the returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They should be deconsolidated from the date that control ceases. In the preparation of these consolidated financial statements, assets, liabilities, revenues and expenses of the consolidated companies are consolidated on a line-by-line basis and non-controlling interests in the equity and in the profit (loss) for the year are disclosed separately under appropriate captions, respectively, in the consolidated statement of financial position, in the consolidated income statement and in the consolidated statement of comprehensive income. All intercompany accounts and transactions have been eliminated in the preparation of these consolidated financial statements. Financial year-end of all the subsidiaries’ financial statements coincides with that of the Parent and are prepared as of the same closing date and in accordance with the same accounting policies. |
Acquisition of the controlling interest in Tuves Paraguay | e) Acquisition of the controlling interest in Tuves Paraguay On October 6, 2016 Tuves Paraguay’s controlling shareholder (TU VES S.A – Chile) accepted Núcleo’s proposal for executing the Tuves Paraguay’s shares purchase option, which was subject to the approval of the Comisión Nacional de Telecomunicaciones (“CONATEL”). On April 11, 2017, the CONATEL’s Board of Directors through Resolution No. 460/17authorized TU VES S.A. (Chile) to transfer Núcleo 350 shares of Tuves Paraguay, that represent 70% Tuves Paraguay’ total capital stock. Accordingly, and pursuant to the provisions of the shares’ purchase agreement, on June 30, 2017, the transaction was performed and Núcleo acquired the 70% capital stock and votes of Tuves Paraguay through the payment of approximately $0.1 (35 million of Guaraníes) and the partial capitalization of receivables that Núcleo had at such date for approximately $147 (49,396 million of Guaraníes). Tuves Paraguay is a Paraguayan company whose main purpose is the provision of telecommunications services and also the distribution of digital audio and television signals to homes, in accordance with the license granted by CONATEL. The acquisition of control of Tuves Paraguay was recognized in the consolidated financial statements as of June 30, 2017, in accordance with the provisions of IFRS 3 “Business Combinations”. For this purpose, the total purchase price provided by IFRS 3 of approximately $149 (50,056 million of Guaraníes) was determined including the book value of the call option as of the date of the transaction, the assets and liabilities of Tuves Paraguay were measured at fair value, recognizing a higher value of PP&E and identifying a customer relationship and a goodwill of approximately $2 within Intangible Assets (662 million of Guaraníes), which will be annually reviewed through its impairment test. |
Revenues | f) Revenues Revenues are recognized to the extent that it is considered probable that economic benefits will flow to the Company and their amount can be measured reliably. Final outcome may differ from those estimates. Revenues are stated net of discounts and returns. The Company discloses its revenues into two groups: services and equipment. Service revenues are the main source of income for the Company and are disclosed by nature: Voice services, Internet services and Data transmission services. This classification of revenues is given by different commercial offers and products, type of contracts and kind of customers. Equipment sales represent a precursor of the mentioned service revenues; therefore, the Group only sells equipment to customers and, from time to time, the Management of the Company and Núcleo decide to sell mobile handsets at prices lower than their respective costs in order to acquire new contracts with a minimum non-cancelable period of permanence. Other income mainly includes penalties collected from suppliers and gains on disposal of PP&E, which are realized in the ordinary course of business but are not the main business objective. The Company’s principal sources of revenues are: Fixed telecommunication services and products Domestic services revenues consist of monthly basic fees, measured service, long-distance calls and monthly fees for additional services, including call forwarding, call waiting, three-way calling, itemized billing and voicemail. Revenues are recognized when services are rendered. Unbilled revenues from the billing cycle dating to the end of each month are calculated based on traffic and are accrued at the end of the year. Basic fees are generally billed monthly in advance and are recognized when services are provided. Billed basic fees for which the related service has not yet been provided are deducted from corresponding accounts receivable. Revenues derived from other telecommunications services, principally network access, long distance and airtime usage, are recognized on a monthly basis as services are provided. Revenues from the sale of prepaid calling cards are recognized on the basis of the minutes used, at the contract price per minute, or when the card expires, whichever happens first. Remaining unused traffic for unexpired calling cards is shown as “Deferred revenue on prepaid calling cards” under Deferred revenues line item in the statement of financial position. Interconnection charges represent amounts received by the Company from other local service providers and long-distance carriers for calls that are originated on their networks and transit and/or terminate on the Company’s network. Revenue is recognized as services when they are provided. Traffic revenues from interconnection and roaming are reported gross of the amounts due to other telecommunication operators. Non-refundable up-front connection fees for fixed telephony, data and Internet services are accounted for as a single transaction and deferred (as well as the related costs not in excess of the amount of revenues) over the term of the contract or, in the case of indefinite period contracts, over the average period of the customer relationship (approximately 8 years in the case of fixed telephony’s voice services). Reconnection fees charged to customers when resuming service after suspension are deferred and recognized ratably over the average life for those customers who are assessed a reconnection fee. Associated direct expenses are also deferred over the estimated customer relationship period up to an amount equal to or less than the amount of deferred revenues. Generally, reconnection revenues are higher than its associated direct expenses. Revenues from sales of goods, such as telephone and other equipment, are recognized when the significant risks and rewards of ownership are transferred to the buyer. Revenues on construction contracts are recognized based on the stage of completion (percentage of completion method). When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract are recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. Revenue on construction contracts recognized in the year ended December 31, 2017 amounted to $614. The 2017 agreement provides finance within 48 months from January 1, 2017, the date when the implementation of the project was effective. $83 and $17 are receivables as of December 31, 2017 and 2016, respectively. Cost on construction contracts recognized in the year ended December 31, 2017 amounted to $429. No revenue or costs on construction contracts were recorded for years 2016 and 2015. Revenue from international telecommunications services mainly includes voice and data services and international point-to-point leased circuits. Revenues from international long-distance service reflect payments under bilateral agreements between the Company and foreign telecommunications carriers, covering inbound international long-distance calls. Revenues are recognized as services when they are provided. Data and Internet revenues mainly consist of fixed monthly fees received from residential and corporate customers for data transmission (including private networks, dedicated lines, broadcasting signal transport and videoconferencing services) and Internet connectivity services (dial-up and broadband). These revenues are recognized as services when they are rendered. Mobile telecommunication services and products Telecom Group provides mobile services throughout Argentina via cellular and PCS networks. Cellular fees consist of monthly basic fees, airtime usage charges, roaming, charges for TLRD, CPP charges and additional charges for VAS, including call waiting, call forwarding, three-way calling, voicemail, SMS, GPRS, Mobile Internet and for other miscellaneous cellular services. These revenues are recognized as services when they are rendered. Basic fees are generally billed monthly in advance and are recognized when services are provided. Billed basic fees for which the related service has not yet been provided are deducted from the corresponding accounts receivable. Revenues from the sale of prepaid calling cards are recognized on the basis of the traffic used, at the contract price per minute, or when the card expires, whichever happens first. Remaining unused traffic for unexpired calling cards is shown as “Deferred revenue on prepaid calling cards” under Deferred revenues line item in the statement of financial position. Revenues from sales of goods, such as handsets, sim cards, tablets, smartphones and other equipment are recognized when the significant risks and rewards of ownership are transferred to the buyer. The Company and Núcleo offer to their subscribers a customer loyalty program. Under such program the Company and Núcleo grant award credits as part of the sales transactions which can be subsequently redeemed for goods or services provided by Personal and Núcleo or third parties. The fair value of the award credits is accounted for as deferred revenue, and recognized as revenue when the award credits are redeemed or expire, whichever occurs first. Those revenues are classified as service or goods revenues depending on the goods or services redeemed by the customers. Applicable to both fixed telephony and mobile telephony, for offerings including separately identifiable components (as equipment and service), the Company and its subsidiaries recognize revenues related to the sale of the equipment when it is delivered to the final customer whereas service revenues are recorded when rendered. The total revenue generated by this type of transactions is assigned to the separately identifiable units of accounting based on their fair values, provided that the total amount of revenue to be recognized does not exceed the contract revenue. IFRS does not prescribe a specific method for such assignation of revenue. However, telecommunications industry practice generally applies the method known as “residual method”, which was used in the preparation of these consolidated financial statements. The “residual method” requires identifying all the components that comprise a transaction and allocating its fair value on an individual basis to each of them. Under this method, the fair value of a delivered item (which could not be individually determined) is determined as the difference between the total arrangement consideration and the sum of the fair values of those elements for which fair value can be estimated on a stand-alone basis. |
Financial instruments | g) Financial instruments Financial assets and liabilities, on initial recognition, are measured at transaction price as of the acquisition date. Financial assets are derecognized in the financial statement when the rights to receive cash flows from them have expired or have been transferred and the Company has transferred substantially all the risks and benefits of ownership. g.1) Financial assets Upon acquisition, in accordance with IFRS 9, financial assets are subsequently measured at either amortized cost , or fair value , on the basis of both: (a) the entity’s business model for managing the financial assets; and (b) the contractual cash flow characteristics of the financial asset. A financial asset shall be measured at amortized cost if both of the following conditions are met: (a) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Additionally, for assets that met the abovementioned conditions, IFRS provides for an option to designate, at inception, those assets as measured at fair value if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. A financial asset that is not measured at amortized cost according to the paragraphs above is measured at fair value . Financial assets include: Cash and cash equivalents Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not exceed three months. Cash and cash equivalents are recorded, according to their nature, at fair value or amortized cost. Time deposits are valued at their amortized cost. Investments in other short-term investments are carried at fair value. Gains and losses are included in financial results as other short-term investment gains. Investments in Lebacs are valued at fair value. Trade and other receivables Trade and other receivables classified as either current or non-current assets are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowances for doubtful accounts. Investments During 2016, Telecom Argentina received in payment certain Provincial Government bonds denominated in argentine pesos (Provincia de Mendoza and Provincia de Buenos Aires) that bear interests in argentine pesos. These Provincial Government bonds are valued at amortized cost and their results are included in Financial results as investment gains. Those National, Provincial and Municipal Governments bonds denominated in foreign currency whose initial intention is to keep them until their maturity, are measured at amortized cost and bear an interest in foreign currency. In this particular case, Management estimated the US Dollar denominated cash flows to be generated until maturity and compared that amount to the fair value of the instrument in US Dollars at the acquisition date. The acquisition cost in US Dollars has been adjusted by applying the IRR and the resulting value was converted to Argentine pesos using the exchange rate as of the date of measurement. The exchange differences generated by these bonds are included in Financial expenses as Foreign currency exchange gains or losses. Likewise, Telecom Argentina and Personal acquired Government bonds. Taking into account the business model chosen to manage these financial assets, and according to the provisions of IFRS 9, these bonds are recorded at their fair value and its results were included in Financial results – Other investments gains. Investments in other short-term investments are carried at fair value. Gains and losses are included in financial results as other short-term investment gains. Investments in Lebacs are valued at fair value. The 2003 Telecommunications Fund is recorded at fair value. Impairment of financial assets At every annual or interim closing date, assessments are made as to whether there is any objective evidence that a financial asset or a group of financial assets may be impaired. If any such evidence exists, an impairment loss is recognized in the consolidated income statement. Certain circumstances of impairment of financial assets that the Group assesses to determine whether there is objective evidence of an impairment loss could include: delay in the payments received from customers; customers that enter bankruptcy; the disappearance of an active market for that financial asset because of financial difficulties; observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets, significant financial difficulty of the obligor, among others. g.2) Financial liabilities Financial liabilities comprise trade payables (excluding Derivatives), financial debt, salaries and social security payables (see Note 3.o) below) and certain other liabilities. Financial liabilities other than derivatives are initially recognized at fair value and subsequently measured at amortized cost. Amortized cost represents the initial amount net of principal repayments made, adjusted by the amortization of any differences between the initial amount and the maturity amount using the effective interest method. g.3) Derivatives Derivatives are used by Telecom Group to manage its exposure to exchange rate and sometimes interest rate risks and to diversify the parameters of debt so that costs and volatility can be reduced to pre-established operational limits. All derivative financial instruments are measured at fair value in accordance with IFRS 9. Derivative financial instruments qualify for Hedge Accounting only when: a) The hedging relation consists only on hedging instruments and hedged items eligible; b) Since its inception the hedging relation and the purpose and risk management strategy, are formally designated and documented; c) the hedge is expected to fulfill the efficacy requirements described in Note 20 – Hedge Accounting. When a derivative financial instrument is designated as a cash flow hedge (the hedge of the exposure to variability in cash flows of an asset or liability, a firm commitment or a highly probable forecasted transaction) the effective portion of any gain or loss on the derivative financial instrument is recognized directly in OCI. The cumulative gain or loss is removed from OCI and recognized in the consolidated income statement at the same time as the hedged transaction affects the consolidated income statement. The gain or loss associated with the ineffective portion of a hedge is recognized in the consolidated income statement immediately. If the hedged transaction is no longer probable, the cumulative gains or losses included in OCI are immediately recognized in the consolidated income statement. If hedged item is a prospective transaction that results in the recognition of a non-financial asset or liability or a firm commitment, the cumulative gain or loss that was initially recognized in OCI is reclassified to the carrying amount of such asset or liability. If Hedge Accounting is not appropriate, gains or losses arising from the fair value measurement of derivative financial instruments are directly recognized in the consolidated income statement. For additional information about derivatives operations during 2017 and 2016, see Note 20. |
Inventories | h) Inventories Inventories are measured at the lower of cost and estimated net realizable value. Cost is determined on a weighted average cost basis. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Allowances are made for obsolete and slow-moving inventories. From time to time, the Management of the Company and Núcleo decide to sell mobile handsets at prices lower than their respective costs. This strategy is aimed at achieving higher service revenues or at retention of high value customers by reducing customer access costs while maintaining the companies’ overall mobile business profitability since the customer subscribes a monthly service contract for indefinite period with a minimum period of permanence and, if the contract is abandoned in advance, the mobile company has the right to cancel, totally or partially, the bonus granted to the customer at the beginning of the contractual relationship. For the estimation of the net realizable value in these cases the Company considers the estimated selling price in normal course of business less applicable variable selling expenses plus the expected margin from the service contract signed during its minimum non-cancelable term. |
PP&E | i) PP&E PP&E is stated at acquisition or construction cost. Subsequent expenditures are capitalized only when they represent an improvement, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other subsequent costs are recognized as expense in the period in which they are incurred, unless they are improvements. When a tangible fixed asset comprises major components having different useful lives, these components are accounted for as separate items if they are significant. PP&E cost also includes the expected costs of dismantling the asset and restoring the site if a legal or constructive obligation exists. The corresponding liability is recognized in the statement of financial position under Provisions line item at its present value. These capitalized costs are depreciated and charged to the consolidated income statement over the useful life of the related tangible assets in the Depreciation and amortization item line. The accounting estimates for dismantling costs, including discount rates, and the dates in which such costs are expected to be incurred are annually reviewed. Changes in the above liability are recognized as an increase or decrease of the cost of the relative asset and are depreciated prospectively. Depreciation of PP&E owned is calculated on a straight-line basis over the ranges of estimated useful lives of the assets; the ranges of the estimated useful lives of the main PP&E are the following: Asset Estimated useful Buildings received from ENTel 35 Buildings acquired subsequent to 11/8/90 50 Improvements in third parties buildings 2 – 5 Tower and pole 10 – 20 Transmission equipment 3 – 20 Wireless network access 3 – 7 Switching equipment 5 – 7 Power equipment 7 – 15 External wiring 3 – 20 Computer equipment and software 3 – 5 Telephony equipment and instruments 5 Installations 2 – 10 The depreciation rates are reviewed annually and revised if the current estimated useful life is different from that estimated previously taking into account, among others, technological obsolescence, maintenance and condition of the assets and different intended use from previous estimates. The effect of such changes is recognized prospectively in the consolidated income statement. |
Intangible assets | j) Intangible assets Intangible assets are recognized when the following conditions are met: the asset is separately identifiable, it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably. Intangible assets with a finite useful life are stated at cost, less accumulated amortization and impairment losses, if any. Intangible assets with an indefinite useful life are stated at cost, less accumulated impairment losses, if any. Intangible assets comprise the following: - Subscriber acquisition costs (“SAC”) Direct and incremental costs incurred for the acquisition of new subscribers are capitalized when the conditions for the recognition of an intangible asset are met. The cost of acquiring broadband customers meets the conditions established by IFRS for its recognition as intangible asset. The amount of costs deferred is limited to the non-contingent part of the revenues generated by that subscriber. The costs above revenues are expensed when incurred. Capitalized SAC related to the acquisition of broadband customers are amortized on a straight-line basis over the average period of the customer relationship. The cost of acquiring postpaid and “cuentas claras” subscribers in mobile telephony meet the conditions established by IFRS for its recognition as intangible asset. In the event of early cancellation, grants the right to cancel bonuses granted at the beginning of the contractual relationship (i.e, equipment bonuses). SAC are mainly comprised of upfront commissions paid to third parties and, to a lower extent, of subsidies granted to customers on the sale of handsets. In all other cases, subscriber acquisition costs are expensed when incurred. Capitalized SAC related to the acquisition of post-paid and “cuentas claras” subscribers are amortized on a straight-line basis over the term in which the customer must pay a cancellation charge, in case of early termination of the relationship. - Service connection or habilitation costs Direct costs incurred for connecting customers to the network are accounted for as intangible assets and then amortized over the term of the contract with the customer if required conditions are met. For indefinite period contracts, the deferral of these costs is limited to the amount of non contingent revenue from the customer and expensed over the average period life of the customer relationship. Costs exceeding that amount are expensed as incurred. Connection costs are generated mainly for the installation of fixed lines and amortized over an average period of 8 years. - 3G/4G licenses As described in Note 2.i, it includes 3G and 4G frequencies awarded by the SC to Personal in November 2014 and June 2015. In accordance with Article 12 of the Auction Terms and Conditions they were granted for a period of 15 years as from the date of awarding notification. After this deadline, the Regulatory Authority may extend the term at Personal´s request. The extension of the term, the related cost and conditions shall be defined by the Regulatory Authority. Consequently, the Company’s management has concluded that the 3G and 4G licenses have a finite useful life and therefore are amortized under the straight-line method over 180 months. As a consequence of Section 4 (d) of PEN Decree No. 1,340/16, which is described in Note 2.i), the remaining useful life of the frequencies included in lot 8 of the auction was re-estimated in 4Q16. It was considered that 700 Mhz bands would be released since May 2017 and, in compliance with the mentioned Decree, the period of 15 years from such date was computed. After that, such date was re-estimated being the effective day of release on April 2018. - PCS license (Argentina) The Company, based on an analysis of all of the relevant factors, has considered the license having an indefinite useful life since there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. - PCS and Band B licenses (Paraguay) PCS license is amortized under the straight-line method over 60 months. These licenses were successively renewed for a period of 5 years, the amortization finalized during year 2017. On the other hand, Band B license finished its amortization during year 2012. On June 2017, Núcleo required the renewal of this license. Before the expiration date, CONATEL issued, according with the telecommunications law, resolutions of temporary extensions which are valid for 90 days, with the possibility of one only extension for the same term. Therefore, it is expected to have the definitive renewal en the next months. - Internet and data transmission license (Paraguay) Núcleo’s license 60 months amortization was finished in fiscal year 2016. However, on July 2017 CONATEL granted the Company with the renewal of such licenses. Therefore, the term of the license is extended until May 2021. - Rights of use The Company purchases network capacity under agreements which grant the exclusive right to use a specified amount of capacity for a specified period of time. Acquisition costs are capitalized as intangible assets and amortized over the terms of the respective capacity agreements, generally 180 months. - Exclusivity agreements Exclusivity agreements were entered into with certain retailers and third parties relating to the promotion of the Company’s services and products. Amounts capitalized are being amortized over the life of the agreements, with expiration up to financial year 2028. - Cubecorp ‘s Customer relationships Customer relationships identified as part of the purchase price allocation performed upon the acquisition of Cubecorp Argentina S.A. (a company engaged in data center business) in financial year 2008, are being amortized over the estimated duration of the relationship for customers in the data center business (180 months). - Tuves Paraguay’s Customer relationships It is related to the acquisition of Tuves Paraguay (see Note 3.e). It is amortized over the term of the relationship with the acquired customers, which is estimated in 78 months. - Goodwill It is related to the acquisition of Tuves Paraguay (see Note 3.e) measured as the difference between the fair value of the amount transferred less the fair value of the identified net assets. The goodwill has indefinite useful life and the impairment must be analyzed at least annually. |
Leases | k) Leases Finance leases Leases that transfer substantially all the risks and benefits incidental to ownership of the leased asset are classified as finance leases. The Company recognizes finance leases as assets and liabilities in its statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Subsequently, minimum lease payments are apportioned between a finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. The depreciation policy for depreciable leased assets is consistent with that for depreciable assets that are owned. As of December 31, 2017 the Telecom Group hold finance leases which represents liabilities in the amount of $13. The total payable at these leases’ maturity amounts to $13. PP&E related to these financial leases and several of the mentioned leases contracts characteristics as of December 31, 2017 are detailed below: Book value Lease term Depreciation PP&E – Computer equipment 3 years 3 years Accumulated depreciation Net carrying value as of December 31, 2017 Operating leases Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term unless another systematic basis is more representative. In the normal course of business, the Company leases cell sites, switch sites, satellite capacity and circuits under various non-cancellable operating leases that expire on various dates through 2035. Rental expenses are included under Interconnection costs and other telecommunication charges and Other operating expenses items lines in the consolidated income statements. |
Impairment of intangible assets and PP&E | l) Impairment of intangible assets and PP&E At least annually, the Company assesses whether there are any indicators of impairment of assets that are subject to amortization. Both internal and external sources of information are used for this purpose. Internal sources include, among others, obsolescence or physical damage of the asset, and significant changes in the use of the asset and the economic performance of the asset compared to estimated performance. External sources include, among others, the market value of the asset, changes in technology, markets or laws, increases in market interest rates and the cost of capital used to evaluate investments, and an excess of the carrying amount of the net assets of the Group over market capitalization. The carrying value of an asset is considered impaired by the Company when it is higher than its recoverable amount. In that event, a loss shall be recognized in the statement of income. The recoverable value of an asset is the higher of its fair value less costs to sell and its value in use. In calculating the value in use, the estimated future cash flows are discounted to present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the evaluated asset. Where it is not possible to estimate the recoverable value of an individual asset, the Company estimates the recoverable value of the cash-generating unit to which the asset belongs. The Company considers each legal entity of the Group as a cash-generating unit. When the conditions that gave rise to an impairment loss no longer exist, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, up to the carrying amount that would have been recorded if no impairment loss had been recognized. The reversal of an impairment loss is recognized as income in the consolidated income statement. Intangible assets with an indefinite useful life (including intangible assets under development or not ready to use) are not subject to amortization and are tested at least annually for impairment. The only intangible asset with an indefinite useful life held by the Company as of December 31, 2017 and 2016 is the PCS license (Argentina), which is entirely allocated to the Personal Mobile Service operating segment. Its recoverable amount is determined based on the value in use, which is estimated using discounted net cash flows projections. For the years presented, the Company estimates that does not exist indicators of impairment of assets that are subject to amortization, with the exception of those related to process of modernization and replacement of its mobile network access technology in the Argentine Republic and a group of longstanding work in progress. The net effects of the constitution and recovery of the mentioned impairments are recorded under “Impairment of PP&E” line item. Additional information disclosed in Note 22. |
Other liabilities | m) Other liabilities Pension benefits Argentine laws provide for pension benefits to be paid to retired employees from government pension plans and/or privately managed fund plans to which employees may elect to contribute. Amounts payable to such plans are accounted for on an accrual basis. The Company does not sponsor any stock option plan. Pension benefits shown under Other liabilities represent benefits under collective bargaining agreements for employees who retire upon reaching normal retirement age, or earlier due to disability in Telecom Argentina. Benefits consist of the payment of a single lump sum equal to the salary of one month for each five years of service. There is no vested benefit obligation until the occurrence of those conditions. The collective bargaining agreements do not provide for other post-retirement benefits such as life insurance, health care, and other welfare benefits. The net periodic pension costs are recognized in the income statement, segregating the financial component, as employees render the services necessary to earn pension benefits. However, actuarial gains and losses should be presented in the statements of comprehensive income. Actuarial assumptions and demographic data, as applicable, were used to measure the benefit obligation as required by IAS 19 revised. The Company does not make plan contributions or maintain separate assets to fund the benefits at retirement. The actuarial assumptions used are based on market interest rates, past experience and Management’s best estimate of future economic conditions. Changes in these assumptions may impact future benefit costs and obligations. The main assumptions used in determining expense and benefit obligations are the following rates and salary ranges: 2017 2016 2015 Discount rate (1) 4.6% - 9.2% 4.8% - 6.2% 6.5% - 8.5% Projected increase rate in compensation (2) 8.0% - 16.3% 8.0% - 22.5% 12.0% - 26.8% (1) Represents estimates of real rate of interest rather than nominal rate in $. (2) In line with an estimated inflationary environment for the next three financial years. Additional information on pension benefits is provided in Note 16. Legal fee Pursuant to Law No. 26,476 - Tax Regularization Regime (“Régimen de Regularización Impositiva Ley Nº 26,476”), the Company is subject to a legal fee which shall be paid in twelve monthly consecutive installments without interest as from final judgment. It is carried at amortized cost. |
Deferred revenues | n) Deferred revenues Deferred revenues include: - Deferred revenues on prepaid calling cards Revenues from unused traffic and data packs for unexpired calling cards are deferred and recognized as revenue when the minutes and the data are used by customers or when the card expires, whichever happens first. See Note 3.f. Revenues – Fixed telecommunication services and products and Mobile telecommunication services and products. - Deferred revenues on connection fees Non-refundable up-front connection fees for fixed telephony, data and Internet services are accounted for as a single transaction and deferred over the term of the contract, or in the case of indefinite period contracts, over the average period of customer relationship. See Note 3.f. Revenues – Fixed telecommunication services and products and Mobile telecommunication services and products. - Customer Loyalty Programs The fair value of the award credits regarding the Company and Núcleo’s customer loyalty program is accounted for as deferred revenue, and recognized as revenue when the award credits are redeemed or expire, whichever occurs first. See Note 3.f. Revenues – Mobile telecommunication services. - Deferred revenue on sale of capacity and related services Under certain network capacity purchase agreements, the Company sells excess purchased capacity to other carriers. Revenues are deferred and recognized as services are provided. Those revenues are recorded under “Data” line item. - Deferred income for CONATEL’s government grants During 2010 and 2011, the CONATEL awarded to Núcleo public tenders for the expansion of the network infrastructure that provides a platform for access to mobile services and basic services in social interest areas in Paraguay. Government grants are recognized on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. In accordance with IAS 20 the government grants related to assets can be presented either in the statement of financial position as deferred income or as a reduction of the carrying amount of related asset. The Company elected the first alternative provided by the standard considering that recognition as deferred income adequately reflects the business purpose of the transaction. Therefore, the related assets were recognized at the cost incurred by Núcleo in the construction of the engaged infrastructure and the government grant was accounted for as deferred income and recognized in profit or loss starting at the time the infrastructure becomes operative and throughout its useful life. |
Salaries and social security payables | o) Salaries and social security payables Include unpaid salaries, vacation and bonuses and its related social security contributions, as well as termination benefits. See Note 3.g.2) above for a description of the accounting policy regarding the measurement of financial liabilities. Termination benefits represent severance indemnities that are payable when employment is terminated in accordance with labor regulations and current practices, or whenever an employee accepts voluntary redundancy in exchange for these benefits. In the case of severance compensations resulting from agreements with employees leaving the Company upon acceptance of voluntary redundancy, the compensation is usually comprised of a special cash bonus paid upon signing the severance agreement, and in certain cases may include a deferred compensation, which is payable in monthly installments calculated as a percentage of the prevailing wage at the date of each payment ( “prejubilaciones” ). The employee’s right to receive the monthly installments mentioned above starts on the date they leave the Company and ends either when they reach the legal mandatory retirement age or upon the decease of the beneficiary, whichever occurs first. |
Taxes payables | p) Taxes payables The Company is subject to different taxes and levies such as municipal taxes, tax on deposits to and withdrawals from bank accounts, turnover taxes, regulatory fees (including SU) and income taxes, among others, that represent an expense for the Group. It is also subject to other taxes over its activities that generally do not represent an expense (internal taxes, VAT, ENARD tax). The principal taxes that represent an expense for the Company are the following: - Income taxes Income taxes are recognized in the consolidated income statement, except to the extent that they relate to items directly recognized in Other comprehensive income or directly in equity. In this case, the tax is also recognized in Other comprehensive income or directly in equity, respectively. The income tax expense for the year comprises current and deferred tax. If the income tax payments and withholdings exceed the amount to pay for the current tax, the excess shall be recognized as a tax credit, only if it is recoverable. As per Argentinean Tax Law, income taxes payables have been computed on a separate return basis (i.e., the Company is not allowed to prepare a consolidated income tax return). All income tax payments are made by each of the subsidiaries as required by the tax laws of the countries in which they operate. The Company records income taxes in accordance with IAS 12. Deferred taxes are recognized using the “liability method”. Temporary differences arise when the tax base of an asset or liability differs from their carrying amounts in the consolidated financial statements. A deferred income tax asset or liability is recognized on those differences, except for those differences related to investments in subsidiaries that generate a deferred income tax liability, where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets relating to unused tax loss carry forwards are recognized to the extent that it is probable that future taxable income will be available against which they can be utilized. Deferred tax assets arising from investment in subsidiaries are recognized when it is probable that the temporary differences will be reversed in the foreseeable future and when future taxable income would be sufficient to apply those temporary differences. The book value of a deferred tax asset shall be revised at the end of every reporting period. The company shall reduce the carrying amount of a deferred tax asset if it is probable that future taxable income will not be available to offset the benefits of the deferred tax asset. This reduction shall be reassessed at each reporting period and reversed if it becomes probable that future taxable income to offset the deferred tax asset will be available. The statutory income tax rate in Argentina was 35% for all years presented. Cash dividends received from a foreign subsidiary are computed on the statutory income tax rate. As per Argentinean Tax Law, income taxes paid abroad may be recognized as tax credits. However, for the calculation of deferred tax as of December 31, 2017, Law No.27.430 (issued on December 29, 2017, see Section at the end of Note 3.p) was considered as a reference. This law states a decrease from 35% to 30% in the income tax rate for companies for fiscal years started from January 1, 2018 to December 31, 2019; and a decrease to 25% for fiscal years started from January 1, 2020. Therefore, the company considered, following the statements of IAS 12, the periods in which temporary differences as of December 31, 2017, will be reversed to apply the proper tax rate in the calculation of deferred tax. The effect of changes in future rates of income tax was included as “Effect of changes in income tax rate” in the reconciliation between the amount charged in results and pre-tax income in Note 14. The statutory income tax rate in Paraguay was 10% for all years presented. As per Paraguayan Tax Law, dividends paid are computed with an additional income tax rate of 5% (this is the criterion used by Núcleo for the recording of its deferred tax assets and liabilities, representing an effective tax rate of 15%). However, the effect of the additional income tax rate according to the Argentine tax law in force on the undistributed profits of Núcleo is fully recognized as it is considered probable that those results will flow in the form of dividends. The statutory income tax rate in the United States was 39.50% for the years ended December 31, 2017, 2016 and 2015. Since January 1, 2018, a new Income Tax Law is applicable in the United States, which modifies the flat rate to 21% changing the legal income tax rate from 39.5% to 26.5%. This change in the tax rate has a similar impact in deferred tax than the explained above regarding the changes in Argentina’s income tax rate. - Turnover tax Under Argentine tax law, the Company is subject to a tax levied on revenues and other income. Rates differ depending on the jurisdiction where revenues are earned for tax purposes and on the nature of revenues (services and equipment). Average rates resulting from the turnover tax charge over the total revenues were approximately 5.4%, 5.3% and 5.2% for the years ended December 31, 2017, 2016 and 2015, respectively. - Other taxes and levies Since the beginning of 2001, telecommunication services companies have been required to make a SU contribution to fund SU requirements (Note 2.h). The SU tax is calculated as a percentage of the total revenues received from the rendering of telecommunication services, net of taxes and levies applied on such revenues, excluding the SU tax and other deductions stated by regulations. The rate is 1% of total billed revenues and adopts the “pay or play” mechanism for compliance with the mandatory contribution to the SU fund. Telecom Argentina’s declaration as proper taxpayer Pursuant to Law No. 27,260, Argentine companies that have properly fulfilled their tax obligations during the two fiscal year periods prior to the 2016 fiscal year and comply with other requirements may qualify for an exemption from the personal assets tax for the 2016, 2017 and 2018 fiscal years. The request for this tax exemption should be filed before March 31, 2017. Telecom Argentina has already filed this request related to the payment of the tax on personal property– on behalf of Shareholders. As a consequence, Telecom Argentina recorded in 2017 the reversal of the current tax credit on personal property – on behalf of Shareholders and the corresponding liability that it had recorded as of December 31, 2016 which amounted to $8 and has discontinued recording such receivables and liabilities since January 1, 2017. Likewise, Nortel and Sofora (companies absorbed by Telecom) filed such exemption. Notwithstanding, it cannot be assured that in the future, Telecom Argentina can fulfill those requirements and maintain the referred exemption. Tax reform and consensus on taxation – Laws No. 27,429, 27,430 and 27,432 Tax reform : On December 29, 2017, the PEN issued Law No. 27,430 which established a comprehensive reform of the tax system with effect beginning in fiscal year 2018. Among others, the law includes modifications in tax income in both corporate income tax and individual income tax, value added tax, internal taxes, social security contributions, tax procedure code and tax criminal procedure code. The main changes with impact in corporate taxes are the following: Income Tax: Modification of corporate income tax and withholding tax on dividends The Law decreases the corporate income tax rate from 35% to 30% for fiscal years starting January 1, 2018 to December 31, 2019, and to 25% for fiscal years starting January 1, 2020 and onwards. The Law also establishes a withholding tax on dividends at a 7% rate on profits accrued during fiscal years starting January 1, 2018 to December 31, 2019, and a 13% rate on profits accrued in fiscal years starting January 1, 2020 and onwards. Income of fiscal years closed until December 31, 2017 will not be subject to withholding tax at the moment of distribution. The new withholding tax rates apply to distributions made to shareholders qualifying either as resident individuals or nonresidents. Additionally, the Law repeals the “equalization tax” (i.e., 35% withholding applicable to dividends distributed in excess of the accumulated taxable income) on income accrued from January 1, 2018 and onwards. Results derived from transfers of shares The effective tax rate applicable for individuals residents and non-residents is 15% (in case of non-residents its applicable over a presumed income equivalent to 90% of the transfer price). For local companies the applicable rate is 30% for both fiscal years 2018 and 2019, and 25% onwards. However, in the case of individuals residing in Argentina, the results derived from transfers of shares are exempted from taxes to the extent that it is a placement through public offering authorized by the Argentine Securities Commission or that the transactions were carried out in markets authorized by that agency under segments that guarantee price/time priority and by crossing of offers (such as the shares of Telecom Argentina) or carried out through a public tender offering and/or exchange authorized by the Argentine Securities Commission. The exemptions will only apply if the foreign beneficiaries do not reside in or the funds do not arise from “non-cooperating” jurisdictions. It also establishes an exemption for interest income and capital gains on the sale of negotiable obligations and share certificates issued abroad that represent shares issued by Argentine companies (ADRs). Optional tax revaluation of assets The law established the revaluation of the cost of diverse assets –in case of disposal- and the revaluation of the deductible depreciation for all the acquisitions or investments since January 1, 2018 on the base of IPIM evolution from that date. Additionally, the law establishes an option to revaluate for tax purposes their assets located in Argentina that generate taxable income. The revaluation option is applicable for the Company on the assets as of December 31, 2017. Under the Law, the new tax value of the assets will be determined by applying a “revaluation factor,” as established in the Law, to the tax value originally determined in each year or period of the asset’s acquisition or construction. In the case of immovable or movable property qualifying as fixed assets, the value may be determined by an independent appraiser under certain conditions. The Law imposes a one-time special tax on the amount of the revaluation. The applicable rate will vary depending on the assets revaluated: • Real estate (regarded as capital assets): 8% • Real estate (regarded as inventories): 15% • Shares, quotas and other participations in Argentine companies owned by resident individuals: 5% • All other assets (except inventories and cars, which may not be revaluated): 10%. The option must be exercised on all the taxpayer’s assets that integrate the same category of assets. Once the option is exercised, the taxpayer is able to calculate the amortization and cost in the income tax over the revalued assets. Likewise, such revaluation is updated on the base of the variation of Internal Wholesale Price Index since January 1, 2018. The Law requires taxpayers that opt for the special revaluation regime to withdraw from any judicial or administrative process in which they are claiming, for tax purposes, an adjustment process of any kind regarding the period of the option, and those who started process in previous fiscal years must desist from making a new claim. (See Note 14 -Income tax – Actions for recourse filed with the Tax Authority). The company is currently taking actions to evaluate the convenience of exercing this option. As of the date of issuance of these consolidated financial statements, the regulations hasn’t established the term in which the option can be exercised. Internal Taxes and Tax Collection ENARD: The Law also provides for an increase in the effective internal tax rate applicable to mobile telephone services from 4.16% to 5.26%. In addition, the law provides for the repeal of the tax collection at source of the charge required by the ENARD. In addition, pursuant to Decree No. 979/2017, as from November 15, 2017, the effective internal tax rate that levies the sale of imported mobile phones and other wireless networks is reduced from 20.48% to 11.73%. Said rate, pursuant to Law No. 27,430, will decrease gradually until its complete phase out as from January 1, 2024. In the case of goods manufactured in Tierra del Fuego, the rate is set at 0% as from November 15, 2017. Tax on deposits to and withdrawals from bank accounts: Pursuant Law No 27.432 The National Executive Power may decide that the percentage of the tax that on the date of entry into force of this law is not computable as payment on account of income tax, will be progressively reduced by up to twenty percent (20%) per year as of January 1, 2018, and also may decide that, in 2022, the tax provided for in Law 25,413 and its amendments as a payment on account of income tax will be computed in full. Social Security: The Law gradually reduces the percentage of employers’ contributions to be paid by large companies from 21% to 19.5% in 2022. It establishes a non-taxable base for calculating employers’ contributions of $ 2,400 Argentine pesos for 2018, which will increase until reaching $12,000 Argentine pesos in 2022. The Law gradually phases out employers’ contributions creditable against VAT. Tax Consensus : On the other hand, on January 2, 2018, Law No. 27,429 - “Tax Consensus” was published in the Official Gazette. Said Law approves the Tax Consensus signed between the National Executive Branch and the representatives of the Provinces and the Autonomous City of Buenos Aires. The tax consensus seeks to harmonize the tax structures of the different jurisdictions to promote employment, investment and economic growth and to promote uniform policies. In this sense, the National Government, the Provinces and the Autonomous City of Buenos Aires agreed to fulfill certain commitments. Among the commitments regarding Turnover Tax undertaken by the Provinces, the most relevant are the immediate elimination of differential treatments based on the place of business or the location of the taxpayer’s establishment or the location where goods are manufactured and the establishment of exemptions and application of tax rates that shall not exceed those set for each activity and period under the Annex to the Consensus (in the case of communications 5% in 2018, which will decrease until reaching 3% in 2022, and in the case of mobile telephone 7% in 2018, which will decrease until reaching 5% in 2022.) As to stamp tax rates, for certain activities and contracts, the establishment of a maximum stamp tax rate of 0.75% as from January 1, 2019, with a gradual decrease until its complete phase out as from January 1, 2022 and the repeal of all payroll taxes. |
Provisions | q) Provisions The Group records provisions for risks and charges when it has a present obligation, legal or constructive, to a third party, as a result of a past event, when it is probable that an outflow of resources will be required to satisfy the obligation and when the amount of the obligation can be estimated reliably. If the effect of the time value of money is material, and the payment date of the obligations can be reasonably estimated, provisions to be accrued are the present value of the expected cash flows, taking into account the risks associated with the obligation. The increase in the provision due to the passage of time is recognized as “Finance expenses”. Additional information is given in Note 17. Provisions also include the expected costs of dismantling assets and restoring the corresponding site if a legal or constructive obligation exists, as mentioned in Note 3.i) above. The accounting estimates for dismantling costs, including discount rates, and the dates in which such costs are expected to be incurred are reviewed annually, at each financial year-end. |
Dividends | r) Dividends Dividends payable are reported as a change in equity in the year in which they are approved by the Shareholders’ Meeting. |
Finance income and expenses | s) Finance income and expenses Finance income and expenses include: · interest accrued on the related financial assets and liabilities using the effective interest rate method; · changes in fair value of derivatives and other financial instruments measured at fair value through profit or loss; · gains and losses on foreign exchange and financial instruments; · other financial results. |
Treasury Shares Acquisition | t) Treasury Shares Acquisition In connection with the Treasury Shares Acquisition Process described in Note 19 d) to these consolidated financial statements, the Company has applied the guidance set forth in IAS 32, which provides, consistently with the CNV Regulations, that any instruments of its own equity acquired by the Company must be recorded at the acquisition cost and must be deducted from Equity under the caption “Treasury shares acquisition cost”. No profit or loss resulting from holding such instruments of own Equity shall be recognized in the income statement. If the treasury shares are sold, the account “Treasury shares acquisition cost” shall be recorded within Equity under the “Treasury shares negotiation premium” caption. If such difference is negative, the resulting amount shall be recorded within Equity under the “Treasury shares negotiation discount” caption. |
Cost of the increase of the share in controlled companies | u) Cost of the increase of the share in controlled companies On March 31, 2017 the Board of Directors of Nortel approved the sale of the share in Personal (120,000 shares) to Telecom Argentina (that represented 0.008% of Telecom Personal) in an amount of $ 4, which were paid in April 2017. As a result, Telecom Argentina reached 100% of interest in Telecom Personal. Through this transaction, the difference between the purchase value and the investment acquired valued using the Equity Method ($ 3) was recorded in “Cost of the increase of the share in controlled companies” in the Equity attributable to controlling interest as of December 31, 2017, according with IFRS 10. |
Earnings per share | v) Earnings per share Basic earnings per share are calculated by dividing the net income or loss attributable to owners of the Parent by the weighted average number of ordinary shares outstanding during the year (see Note 25). |
Use of estimates | w) Use of estimates The preparation of consolidated financial statements and related disclosures in conformity with IFRS requires Management to make estimates and assumptions based also on subjective judgments, past experience and hypotheses considered reasonable and realistic in relation to the information known at the time of the estimate. Such estimates have an effect on the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of these consolidated financial statements as well as the amount of revenues and costs during the year. Actual results could differ, even significantly, from those estimates owing to possible changes in the factors considered in the determination of such estimates. Estimates are reviewed periodically. The most important accounting estimates which require a high degree of subjective assumptions and judgments are addressed below: Financial statement item / area Accounting estimates Revenues Revenue recognition is influenced by: • the expected duration of the relationship with the customer for deferred revenues regarding upfront connection fees; • the estimation of traffic measures. Useful lives and residual value of PP&E and Intangible assets PP&E and intangible assets, except for indefinite useful life intangibles, are depreciated or amortized on a straight-line basis over their estimated useful lives. The determination of the depreciable amount of the assets and their useful lives involves significant judgment. The Company periodically reviews, at least at each financial year-end, the estimated useful lives of its PP&E and amortizable intangible assets. Recoverability of PP&E and intangible assets with finite useful life At least at every annual closing date, an assessment is made regarding whenever events or changes in circumstances indicate that PP&E and amortizing intangible assets may be impaired. The recoverable amount is the higher of the fair value (less costs to sell) and its value in use. The identification of impairment indicators and the estimation of the value in use for assets (or groups of assets or cash generating units) require management to make significant judgments concerning the validation of impairment indicators, expected cash flows and applicable discount rates. Estimated cash flows are based on significant Management’s assumptions about the key factors that could affect future business performance such as the future market share, competition level, capital expenditures, salary increases, foreign exchange rates evolution, capital structure, capital cost, etc. For the years presented the Company estimated that there are no indicators of impairment of assets that are subject to amortization, with the exception of those mentioned in the point l) of this note. However, changes in our current expectations and operating assumptions, including changes in our business strategy, technology, competition and changes in market conditions, could significantly impact these judgments and could require future adjustments to the recorded assets. Intangible assets with indefinite useful life The Telecom Group determined that Personal’s PCS license met the definition of an indefinite-lived intangible asset for the years presented and tests it annually for impairment. The recoverability assessment of an indefinite-lived intangible asset such as the PCS license and Tuves Paraguay’s Goodwill requires our Management to make assumptions about the future cash flows expected to be derived from such asset. Such estimated cash flows are based on significant Management’s assumptions about the key factors that could affect future business performance such as the future market share, competition level, capital expenditures, salary increases, foreign exchange rates evolution, capital structure, discount rate, etc. The discount rate used to determine the discounted cash flow is an annual US dollar rate of approximately 10.5%. Our judgments regarding future cash flows may change due to future market conditions, business strategy, the evolution of technology and other factors. These changes, if any, may require adjustments to the carrying amount of the PCS license and Tuves Paraguay’s Goodwill. Income taxes, recoverability assessment of deferred tax assets and other tax receivables Deferred income tax measuring Income taxes (current and deferred) are calculated in each company of the Telecom Group according to a reasonable interpretation of the tax laws in effect in each jurisdiction where the companies operate. The recoverability assessment of deferred tax assets sometimes involves complex estimates to determine taxable income and deductible and taxable temporary differences between the carrying amounts and the taxable amounts. In particular, deferred tax assets are recognized to the extent that future taxable income will be available against which they can be utilized. The measurement of the recoverability of deferred tax assets takes into account the estimate of future taxable income based on the Company’s projections and on conservative tax planning. The recoverability assessment of the tax receivable related to the actions of recourse filed by the Company’s related to income tax inflation adjustment (Note 14) is based on the existing legal arguments on this matter and the behavior of the National Tax Authority in revising the actions of recourse filed by the Company. Since the change provided by Law No. 27,429, the corporate income tax rate decreases from 35% to 30% for fiscal years starting January 1, 2018 to December 31, 2019, and to 25% for fiscal years starting January 1, 2020 and onwards. Therefore, for the measuring of deferred tax, the fiscal year of future reversals of temporary differences that originate deferred tax/liability has been estimated, applying the income tax rate of each reversal period. The actual moment of the future income and tax deductions may differ from the estimated, and may produce impact in future income. Receivables and payables valued at amortized cost Receivables and payables valued at amortized cost are initially recorded at their fair value, which is generally determined by using a discounted cash flow valuation method. The fair value under this method is estimated as the present value of all future cash flows discounted using an estimated discount rate, especially for long term receivables and payables. The estimated discount rate used to determine the discounted cash flow of non-current receivables is an annual rate in pesos of approximately 34% for year 2017. Additionally, a 13% annual U.S. dollars was used for discounting long term receivables denominated in U.S. dollars during 2017 and 2016, respectively. Discount rates for accounts receivables were 9.8% in both years and discount rates in Guaranies for loans were 8.83% and 9.42% for years 2017 and 2016, respectively. Provisions The Company is subject to proceedings, lawsuits and other claims related to labor, civil, tax, regulatory and other matters. In order to determine the proper level of provisions, Management assesses the likelihood of any adverse judgments or outcomes related to these matters as well as the range of probable losses that may result from the potential outcomes. Internal and external legal counsels are consulted on these matters. A determination of the amount of provisions required, if any, is made after careful analysis of each individual issue. The determination of the required provisions may change in the future due to new developments in each matter, changes in jurisprudential precedents and tribunal decisions or changes in its method of resolving such matters, such as changes in settlement strategy. Allowance for Doubtful Accounts The recoverability of trade receivables is measured by considering the aging of the accounts receivable balances, the necessity or request of customers unsubscribe, historical write-offs, Public Sector and corporative customer creditworthiness and changes in the customer payment terms. If the financial condition of the customers were to deteriorate, the actual write-offs could be higher than expected. In the absence of a Standard or an Interpretation that specifically applies to a particular transaction, Management carefully considers the IFRS general framework and valuation techniques generally applied in the telecommunication industry and uses its judgment to evaluate the accounting methods to adopt with a view to providing financial statements which faithfully represent the financial position, the results of operations and the cash flows of the Group, reflect the economic substance of the transactions, be neutral, be prepared on a prudent basis and be completed in all material respects. |
New Standards and Interpretations issued by the IASB not in force | New Standards and Interpretations issued by the IASB not in force As required by IAS 8, the IFRS issued by the IASB not in force as of the date of these consolidated financial statements are reported below and briefly summarized. These standards have not been adopted by the Company. IFRS 15 (Revenue from Contracts with Customers) In May 2014 the IASB issued IFRS 15. This IFRS applies to all revenue contracts (except for contracts that are within the scope of IAS 17, leases, IFRS 4, Insurance Contracts and IFRS 9, Financial Instruments). IFRS 15 provides a single model for the recognition and measurement of revenues and replaces IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. It also establishes additional disclosure requirements and a 5-step model for revenue recognition, being the identified steps: 1) Identify the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance obligation. The Company will apply IFRS 15 using the modified retrospective approach, as it is permitted by that Standard. Though the application is retrospective, the accumulated impact of the initial application is recognized as an adjustment to retained earnings initial balance of the year of initial application (only for contracts that are not completed contracts as of the date of initial application). The allocation of the transaction price among different performance obligations required by IFRS 15 is one of the main issues that telecommunications companies have to assess, mainly because of the great variety of plans they offer to their customers by combining services and equipments. Another relevant issue to the telecommunications industry is the capitalization of incremental costs of obtaining a contract if the entity estimates that they will be recovered. It is worth mentioning that in April 2016 amendments were made to IFRS 15, without changing the underlying principles of the standard, but clarifying them. The amendment provides the way of: 1) identifying a performance obligation, 2) determining whether a company is a principal or agent, and 3) determining whether license revenues must be recognized at a point in time or over time. In addition, the standard adds the following exemptions: (i) extends the possibility of not applying the standard to the recognition of “complete contracts” to the date of transition and full contracts at the beginning of the oldest period presented; and (ii) it allows to not retrospectively restate a contract in relation to the modifications that occur before the beginning of the earliest period presented, and shall instead reflect the aggregate effect, when the satisfied and unsatisfied performance obligations can be identified, and when the transaction price and its allocation can be determined . IFRS 15 is effective from annual periods beginning on January 1, 2018. Earlier application is permitted. The Company has concluded the analysis of the impact of the application of IFRS 15 and is currently measuring the effects. From that analysis resulted that IFRS 15 impacts are mainly related to contracts that include equipment revenues together with services in mobile services contracts (first sale of equipments or renewal of customer’s equipments together with postpaid and “abono fijo” services charges). The Company is able to offer services as well as handsets (equipment) separately or together (it means selling the plan service with the handset). Generally, in cases of combined sales, the handset is sold with a discount in the price, but not when the handset is sold separately. Currently, this kind of contracts of joint selling is recorded applying the Residual Method. This method requires firstly, the identification of all the elements that compose the transaction and allocate to each of them, its own fair value. Under this method, the fair value of a transferred element, a handset in mobile services for example (it is not possible to allocate an specific price because the company usually sells that element at different prices depending on the plan service), is calculated as the difference between the full price of the contract subscribed with the customer and the fair value of those elements that is possible to allocate a fair value on an individual basis (in our case it would be the difference between the full price of the contract and the price of the plan service to determine the price of the handset). However, under the application of IFRS 15 the Residual Method is not allowed. The standard requires allocating the price to each performance obligation according to its proportional standalone selling price, being the main performance obligations of those contracts the handset and the service revenues, considering a service term of 24 months. These amendments introduced by IFRS 15 will initially generate an early recognition of handset revenues that will have an impact on retained earnings (due to the partially retroactively application of the standard) with the recognition of contractual asset. Such increase is due to the fact that the discounts on handsets will be allocated between the sale of handsets and the services. Before the application of this standard, such discount was only allocated to the sale of handsets. In view of the above mentioned, as from January 1, 2018, this standard will generate a reallocation of revenues, increasing equipment sales revenues and reducing the recognition of services revenues. It will cause the initial recognition of a contractual asset that will decrease to the extent service revenues are recognized, which will be fully derecognized in the 24th month (the stipulated contractual term). The effect of the application of such method (determined based on the standalone selling price of each item) would generate a contractual asset of $781, which would be offset with an increase in deferred tax liabilities of $234 and an estimated increase in retained earnings as of January 1, 2018 in the amount of approximately $547 (net of income tax.) With regards to handset subsidies occasionally granted by the Company to new postpaid subscribers, Management believes that the capitalization of such costs will be discontinued under IFRS 15 in light of the interpretations of the new standard. On the other hand, Management believes that commissions paid for the acquisition of postpaid and “Cuentas Claras” customers in the Mobile Segment and broadband customers in the Fixed Segment will continue to be capitalized under IFRS 15, because these costs are necessary to obtain new contracts with customers and only if they continue satisfying the capitalization conditions under the new standard. The impact of not capitalizing handsets’ subsidies in the retained earnings as of January 1, 2018 amounts to $48 (lower retained earnings of $68, net of income tax of $ 20). Amendments to IFRS 9 “Financial Instruments” In July 2014, the IASB amended IFRS 9 “Financial Instruments”. The amendments incorporate: 1) a new classification of financial assets (valued at fair value through other comprehensive income); and 2) includes requirements related to the recognition of expected credit losses of financial assets removing the minimum requirements mentioned in IFRS 39 regarding the occurrence of events to recognize the losses and recognizing them at initial measurement if losses are expected. Regarding the expected credit losses, according to IFRS 9 the Company must recognize such loss as follows: · In the case of trade receivables, the allowance for doubtful accounts must be measured in an amount equal to the expected credit losses of the credit. · For other financial instruments: the expected credit losses for the next 12 months must be recognized (lifetime expected losses over the contractual payments of the financial instrument of which the default is estimated in the next 12 months), except the case of significant increase in the financial instrument’s credit risk so the lifetime expected credit losses must be recorded (expected credit losses for the full term of the financial instrument). IFRS 9 is effective from annual periods beginning on January 1, 2018. The impact of the initial estimation of the expected credit losses related to trade receivables in retained earnings as of January 1, 2018, amounts to $357 (lower retained earnings of $482, net of income tax of $125). Amendments to IFRS 9 (Prepayment features with negative compensation) On October 2017, the IASB amended IFRS 9. As a result, financial assets with negative compensation characteristics that could lead to reasonably negative compensation as of to the early end of a contract, can be measured at amortized cost or fair value with impact in other comprehensive income. The new standard is effective for fiscal years beginning on January 1, 2018. Earlier application is permitted. The Company does not expect impacts on the application of this amendment on the statements of financial position, results of operations or cash flows. IFRS 16 (Leases) In January 2016 IFRS 16 was issued. This standard replaces IAS 17, IFRIC 14 and SIC 15 and 27. The standard establishes the criteria for recognition and valuation of leases for lessees and lessors. The changes incorporated in this standard impact mainly on the lessees accounting. IFRS 16 provides that the lessee recognizes a right of use asset and a liability at present value with respect to those contracts that meet the definition of leases under IFRS 16. According to the standard, a lease is a contract that provides the right to control the use of an identified asset for a specified time period. For a company having control of use of an identified asset it: a) Must have the right to obtain substantially all the economic benefits of the identified assets and b) Must have the right to direct the use of the identified asset. The standard excludes short-term contracts (less than 12 months) and those in which the underlying asset has low value (as defined by the standard, low value should be defined by reference to a brand new asset rather than a used one or its net carrying amount). The new standard is effective for fiscal years beginning on or after January 1, 2019. Earlier application is permitted for companies that have adopted IFRS 15. During 2017 the Company continued analyzing the impact that this new standard may have on the Group’s financial position, cash flows and results of operations. IFRIC 22 (Foreign Currency Transactions and Advance Consideration) In December 2016 IFRIC 22 was issued. IFRIC 22 analyzes the accounting providing the exchange rate to apply for transactions that include the receipt or payment of an advance consideration. The interpretation concludes that the date of transaction that determines the exchange rate in the initial recognition of an asset, income or expense (or a part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration (If there is more than one payment or receipt of the advance consideration, the date of transaction is established for each payment or receipt of such advance consideration). IFRS 22 is effective from annual periods beginning on January 1, 2018. The adoption of these amendments will not have significant impacts on the statements of financial position, results of operations or cash flows of the Company. IFRIC 23 (Uncertainty over Income Tax Treatments) On October 2017, IASB issued IFRIC 23. In case of uncertainty over tax treatments, this IFRIC provides that: (i) if uncertain tax treatments must be assessed separately; (ii) the assumptions used by the tax authority over the tax treatments (the company will have to assess if it’s probable that the tax authority will accept the uncertain tax treatment assuming that the taxation authority is going to assess such uncertain tax treatment); (iii) how a company measures the tax income (loss), the tax bases, taxes and fiscal credits not deducted and tax rates (assessment of the probability of occurrence); and (iv) how the changes in facts and circumstances are considered. The new standard is effective for fiscal years beginning on January 1, 2019. Earlier application is permitted. The Company does not expect impacts on the application of this amendment on the statements of financial position, results of operations or cash flows. |
Description of business and b43
Description of business and basis of preparation of the consolidated financial statements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Description of business and basis of preparation of the consolidated financial statements | |
Schedule of entities included in the consolidation process and the respective equity interest owned by the company | Subsidiaries Percentage of capital Indirect Date of acquisition Segment that consolidates Telecom USA 100.00% 09.12.00 Fixed Services Micro Sistemas (ii) 100.00% 12.23.97 Fixed Services Personal (iii) - 07.06.94 Personal Mobile Services Núcleo (iv) 67.50% 02.03.98 Núcleo Mobile Services Personal Envíos (iv) 67.50% Núcleo 07.24.14 Núcleo Mobile Services Tuves Paraguay (v) 47.25% Núcleo 06.30.17 Núcleo Mobile Services (i) Percentage of equity interest owned has been rounded. (ii) Dormant entity as of and for the fiscal years ended December 31, 2017, 2016 and 2015. (iii) Until November 30, 2017, Telecom Argentina owned 100% of Personal. Since December 1, 2017 the reorganization described in Note 31 was effective and from that date, mobile services provided by Personal are continued by Telecom. (iv) Non-controlling interest of 32.50% is owned by the Paraguayan company ABC Telecomunicaciones S.A. (v) Non-controlling interest of 22.75% is owned by the Paraguayan company ABC Telecomunicaciones S.A and 30% is owned by TU VES S.A. (Chile). On June 30, 2017, the transaction by which Núcleo acquired the 70% of shares and votes of Tuves Paraguay was performed. |
Schedule of consumer price and internal wholesale price indexes according to official statistics (INDEC) | 2015 2016 2017 Consumer Price Index (*) (*) (**) Consumer Price Index (annual) 20.6% 36.3% 24.8% Consumer Price Index (3 years accumulated) 65.8% 103.7% 104.9% Internal Wholesale Price Index Internal Wholesale Price Index (annual) 19.2% 34.6% 18.8% Internal Wholesale Price Index (3 years accumulated) 75.4% 105.8% 90.7% (*) Consumer Price Index and Internal Wholesale Price Index published by INDEC until October were 11.9% and 10.6% respectively. These rates (which contain ten months accumulated), were updated with November and December 2015 Consumer Price Index average rates for this two months (7.8%) published by the Province of San Luis and the City of Buenos Aires. (**) Due to the unavailability of Consumer Price Index published by the INDEC, the Company estimated 16.6% for the period January-April 2016; this estimation is an average of the indexes published by the Province of San Luis and the City of Buenos Aires for that period. The Consumer Price Index at national level published by the INDEC for the period May-December 2016 was 16.9%. |
REGULATORY FRAMEWORK (Tables)
REGULATORY FRAMEWORK (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
REGULATORY FRAMEWORK | |
Schedule of frequency bands awarded to Personal | SC Lot Frequency Band Exploitation Amount Capitalized cost 80/14 5 PCS 1890-1892.5 MHz and 1970-1972.5 MHz Northern (3G) 81/14 2 SRMC 830.25-834 MHz and 875.25-879 MHz AMBA (3G) 82/14 6 PCS 1862.5-1867.5 MHz and 1942.5-1947.5 MHz Southern (3G) 83/14 8 SCMA 1730-1745 MHz and 2130-2145 MHz Country (4G) partial awarding (*) 3,530 (*) Includes $18 corresponding to the tax on debits to bank accounts that were capitalized in the cost of the licenses. |
Significant accounting polici45
Significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Significant accounting policies | |
Schedule of depreciation and estimated useful lives of property, plant and equipment | Asset Estimated useful Buildings received from ENTel 35 Buildings acquired subsequent to 11/8/90 50 Improvements in third parties buildings 2 – 5 Tower and pole 10 – 20 Transmission equipment 3 – 20 Wireless network access 3 – 7 Switching equipment 5 – 7 Power equipment 7 – 15 External wiring 3 – 20 Computer equipment and software 3 – 5 Telephony equipment and instruments 5 Installations 2 – 10 |
Schedule of property, plant and equipment related to financial leases | Book value Lease term Depreciation PP&E – Computer equipment 3 years 3 years Accumulated depreciation Net carrying value as of December 31, 2017 |
Schedule of assumptions used in determining expense and benefit obligations | 2017 2016 2015 Discount rate (1) 4.6% - 9.2% 4.8% - 6.2% 6.5% - 8.5% Projected increase rate in compensation (2) 8.0% - 16.3% 8.0% - 22.5% 12.0% - 26.8% (1) Represents estimates of real rate of interest rather than nominal rate in $. (2) In line with an estimated inflationary environment for the next three financial years. |
Cash and cash equivalents and46
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | |
Schedule of cash and cash equivalents and investments | As of December 31, Cash and cash equivalents 2017 2016 Cash Banks Time deposits Government bonds at amortized cost - Other short-term investments Lebacs at fair value - Total cash and cash equivalents Investments Current investments Government bonds at fair value Government bonds at fair value – dollar linked - Government bonds at amortized cost in foreign currency Provincial government and Municipal bonds at amortized cost – dollar linked Provincial government and Municipal bonds at amortized cost in foreign currency - Provincial government and Municipal bonds at amortized cost Other short-term investments Lebacs at fair value - Total current investments Non-current investments Government bonds at amortized cost in foreign currency Provincial government and Municipal bonds at amortized cost – dollar linked Provincial government and Municipal bonds at amortized cost - Provincial government and Municipal bonds at amortized cost in foreign currency - Tuves Paraguay S.A. shares purchase option - 2003 Telecommunications Fund Total non-current investments |
Schedule of additional information of net cash flow provided by operating activities | Years ended December 31, 2017 2016 2015 Collections Collections from customers Interests from customers Interests from investments Mobile operators collections Subtotal Payments For the acquisition of goods and services and others For the acquisition of inventories Salaries and social security payables and severance payments CPP payments Income taxes (include tax returns and payments in advance) Other taxes and taxes and fees with the Regulatory Authority Foreign currency exchange differences related to the payments to suppliers Inventory suppliers PP&E suppliers Other suppliers NDF Subtotal Net cash flow provided by operating activities |
Schedule of changes in assets/liabilities components | Years ended December 31, 2017 2016 2015 Net decrease (increase) in assets Trade receivables Other receivables Inventories Net increase (decrease) in liabilities Trade payables Deferred revenues Salaries and social security payables Other taxes payables Other liabilities Provisions (Note 17) |
Schedule of main non-cash operating transactions | Years ended December 31, 2017 2016 2015 Offsetting of capitalized trade receivables of Tuves Paraguay acquisition - - Offsetting of tax on personal property – on behalf of Shareholders - Income tax offset with VAT and internal taxes - - Offsetting of other receivables with regulatory provisions - VAT offset with income tax payments - - SAC acquisitions offset with trade receivables Other receivables of PP&E sales offset with trade payables - - |
Schedule of most significant investing activities | Fixed assets acquisitions include: Years ended December 31, 2017 2016 2015 CAPEX (Note 8) Acquisition of Materials (net transfers to CAPEX, Note 8) Subtotal Plus: Payments of trade payables originated in prior years acquisitions Less: Acquisition of fixed assets through incurrence of trade payables Assets retirement obligations Mobile handsets lent to customers at no cost (i) (i) Under certain circumstances, Personal and Núcleo lend handsets to customers at no cost pursuant to term agreements. Handsets remain the property of the companies and customers are generally obligated to return them at the end of the respective agreements. Intangible assets acquisitions include: Years ended December 31, 2017 2016 2015 Acquisition of licenses 3G and 4G - - Other intangible assets acquisitions (Note 9) Plus: Payments of trade payables originated in prior years acquisitions SAC acquisition offset with trade receivables Less: Acquisition of intangible assets through incurrence of trade payables The following table presents the cash flows from purchases, sales and maturities of securities which were not considered cash equivalents in the statement of cash flows: Years ended December 31, 2017 2016 2015 Government bonds acquisition Sales of Government bonds - Government bonds collection Other short-term investments and time deposits - Sales of Other short-term investments - - Argentine companies notes collection - - |
Schedule of financing activities components | Years ended December 31, 2017 2016 2015 Bank overdrafts - Notes - Bank loans 1 ,730 Total financial debt proceeds Bank overdrafts - Notes - - Bank loans Total payment of debt Bank overdrafts Interests on Notes and related expenses Interests on bank loans and related expenses NDF - - Total payment of interest and related expenses |
Schedule of breakdown of dividends paid by company | Years ended December 31, 2017 2016 2015 Núcleo to ABC Telecomunicaciones - Telecom Argentina Dividends advance declared by Sofora and paid by Telecom in December 2017 - - |
Schedule of additional information required by IAS 7 | Balances Transfers Cash Accrued interests Exchange Balances as Bank overdrafts - - - Bank loans – principal Notes – principal - NDF - Accrued interests Total current financial debt (Note 12) - (a) (a) Correspond to $1,730 of debt proceeds, $2,986 of principal payments and $848 of interest payments. |
Nucleo | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | |
Schedule of breakdown of dividends paid by company | Fiscal year 2017 Month of dividends Dividends Dividends Total May 2017 (*) 37 17 54 October 2017 (**) 37 18 55 Total 74 35 109 (*) As of the payment date, the amounts were 39 and 18, respectively. (**) As of the payment date, the amounts were 41 and 20, respectively. Fiscal year 2015 Month of dividends Dividends Dividends – ABC Total May 2015 (*) December 2015 (**) Total (*) As of the payment date, the amounts were 41 and 19, respectively. (**) As of the payment date, the amounts were 52 and 26, respectively. |
Trade receivables (Tables)
Trade receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Trade receivables | |
Summary of trade receivables | As of December 31, Current trade receivables 2017 2016 Fixed and mobile services Allowance for doubtful accounts Non-current trade receivables Fixed and mobile services Total trade receivables, net |
Schedule of movements in the allowance for doubtful accounts | Years ended December 31, 2017 2016 At the beginning of the fiscal year Additions –Bad debt expenses Uses Currency translation adjustments At the end of the year |
Other receivables (Tables)
Other receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other receivables | |
Schedule of other receivables | As of December 31, Current other receivables 2017 2016 Prepaid expenses Deposit in auction’s warrant to CONATEL (Note 2.i) - Expenditure reimbursement Tax credits Restricted funds Receivables for return of handsets under warranty PP&E disposal receivables Guarantee deposits Tax on personal property – on behalf of Shareholders - NDF (Note 20) (*) Other Subtotal Allowance for doubtful accounts (*) Includes 60 of Financial NDF as of December 31, 2017. Non-current other receivables Prepaid expenses Credit on SC Resolution No. 41/07 and IDC (Note 2.m and n) Restricted funds Regulatory receivables (Paraguay) Tax on personal property – on behalf of Shareholders Tax credits Guarantee deposits Credit of indemnity for Tuves Paraguay acquisition - Financial NDF (Note 20) - Other Subtotal Allowance for regulatory matters (Note 2.m and n) Allowance for tax on personal property Allowance for tax on other credits (i) - Total other receivables (i) 6 allocated to Taxes with the Regulatory Authority and 1 to Currency translation adjustments. |
Schedule of movements in the allowances | Years ended December 31, Current allowance for doubtful accounts 2017 2016 At the beginning of the year Additions - Uses - At the end of the year Years ended December 31, 2017 2016 Non-current allowance for regulatory matters At the beginning of the year Compensation of Telecom Argentina’s regulatory liabilities At the end of the year Years ended December 31, Non-current allowance for tax on personal property 2017 2016 At the beginning of the year Additions - - At the end of the year |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Schedule of inventories | Inventories consist of the following: As of December 31, 2017 2016 Mobile handsets and others Fixed telephones and equipment Inventories for construction projects - Subtotal Allowance for obsolescence of inventories Movements in the allowance for obsolescence of inventories are as follows: Years ended December 31, 2017 2016 At the beginning of the year Additions – Fees for services, maintenance and materials Uses At the end of the year |
Schedule of sale and cost of equipment and handsets | Sale and cost of equipment and handsets by business segment is as follows: Years ended December 31, 2017 2016 2015 Equipment sales Fixed Services Cost of equipment Fixed Services Total equipment gain (loss) – Fixed Services Equipment and handsets sales Mobile Services - Personal Cost of equipment and handsets Mobile Services - Personal (net of SAC capitalizations) Total equipment gain – Mobile Services – Personal Equipment and handsets sales Mobile Services - Núcleo Cost of equipment and handsets – Mobile Services Núcleo (net of SAC capitalizations) Total equipment loss – Mobile Services – Núcleo Total equipment and handsets sale Total cost of equipment and handsets (net of SAC capitalizations) Total income for sale of equipment and handsets Cost of equipment and handsets is as follows: Years ended December 31, 2017 2016 2015 Inventories at the beginning of the year Plus: Equipment acquisitions SAC deferred costs (Note 3.j) Decreases net of allowance of obsolescence Handsets lent to customers at no cost Decreases not charged to cost of equipment Less: Inventories at the end of the year Cost of equipment and handsets |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, plant and equipment | |
Schedule of PP&E | As of December 31, 2017 2016 Land, buildings and installations Computer equipment and software Switching and transmission equipment (i) Mobile network access and external wiring Construction in progress Other tangible assets Subtotal PP&E Materials Valuation allowance for materials and impairment of materials Impairment of PP&E Total (i) Includes tower and pole, transmission equipment, switching equipment, power equipment, equipment lent to customers at no cost and handsets lent to customers at no cost. |
Schedule of movements in materials | Years ended December 31, 2017 2016 At the beginning of the year Plus: Increase for Tuves Paraguay acquisition - Purchases Less: Transfers to CAPEX Disposal for maintenance Currency translation adjustments At the end of the year |
Schedule of movements in valuation allowance for materials and impairment of materials | Years ended December 31, 2017 2016 At the beginning of the year Additions – Fees for services, maintenance and materials Decrease - At the end of the year |
Schedule of movements in the impairment of PP&E | Years ended December 31, 2017 2016 At the beginning of the year Additions Uses At the end of the year |
Schedule of nature and movements of property, plant and equipment | Gross Tuves CAPEX Currency Transfers and Decreases Gross Land - - - - Building - - - Tower and pole - - - Transmission equipment - Mobile network access - External wiring - - - Switching equipment - - Power equipment - - Computer equipment and systems - Telephony equipment and instruments - - Handsets lent to customers at no cost - Equipment lent to customers at no cost - - Vehicles - - Furniture - - Installations - - - Improvements in third parties buildings - - Special projects - - - - Construction in progress - Asset retirement obligations - - - - Total - Accumulated Tuves Depreciation Currency Decrease Accumulated Net carrying Land - - - - - - Building - - Tower and pole - - Transmission equipment - Mobile network access - External wiring - - - Switching equipment - Power equipment - Computer equipment and systems - Telephony equipment and instruments - - Handsets lent to customers at no cost Equipment lent to customers at no cost - - Vehicles - Furniture - - Installations - - Improvements in third parties buildings - - Special projects - - - Construction in progress - - - - - - Asset retirement obligations - - - Total Gross value CAPEX Currency Transfers and Decreases Gross Value Land - - - Building - - Tower and pole - - Transmission equipment Mobile network access External wiring - - Switching equipment Power equipment - Computer equipment and systems Telephony equipment and instruments - Handsets lent to customers at no cost - Equipment lent to customers at no cost - Vehicles - Furniture - Installations - - Improvements in third parties buildings - Special projects - - - Construction in progress Asset retirement obligations - - Total - Accumulated Depreciation Currency Decreases Accumulated Net Land - - - - - Building - Tower and pole - Transmission equipment Mobile network access External wiring - Switching equipment Power equipment Computer equipment and systems Telephony equipment and instruments Handsets lent to customers at no cost Equipment lent to customers at no cost - Vehicles Furniture - Installations - Improvements in third parties buildings - Special projects - - Construction in progress - - - - - Asset retirement obligations - Total |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets | |
Schedule of Intangible assets | Gross value Acquisition CAPEX Currency Decreases Gross value as SAC fixed services - - SAC mobile services Service connection or habilitation costs - - 3G/4G licenses - - - - PCS license (Argentina) - - - - PCS and Band B (Paraguay) - - Rights of use Exclusivity agreements - - - - Customer relationship - - Goodwill Tuves Paraguay - - - - Software developed for internal use - - - Total Accumulated Acquisition Amortization Currency Decreases Accumulated Net SAC fixed services - - SAC mobile services Service connection or habilitation costs - - 3G/4G licenses - - - PCS license (Argentina) - - - - PCS and Band B (Paraguay) - - - Rights of use Exclusivity agreements - - - Customer relationship (*) - - - Goodwill Tuves Paraguay - - - - - - Software developed for internal use - - - - Total (*) The net carrying value as of December 31, 2017, correspond 134 to Tuves Paraguay and 1 to Cubecorp. Gross value CAPEX Currency Decreases Gross value as SAC fixed services - SAC mobile services Service connection or habilitation costs - 3G/4G licenses - - - PCS license (Argentina) - - - PCS and Band B (Paraguay) - - Rights of use - Exclusivity agreements - - - Cubecorp’s Customer relationship - - - Software developed for internal use - - Total Accumulated Amortization Currency Decreases Accumulated Net SAC fixed services - SAC mobile services Service connection or habilitation costs - 3G/4G licenses - - PCS license (Argentina) - - - PCS and Band B (Paraguay) - - - Rights of use - Exclusivity agreements - - Cubecorp’s Customer relationship - - - Software developed for internal use - - - Total |
Trade payables (Tables)
Trade payables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Trade payables | |
Schedule of Trade Payables | As of December 31, Current trade payables 2017 2016 PP&E Other assets and services Inventory Subtotal trade payables Agent commissions Non-current trade payables PP&E Total trade payables |
Deferred revenues (Tables)
Deferred revenues (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred revenues | |
Schedule of deferred revenues | As of December 31, Current deferred revenues 2017 2016 On prepaid calling cards – Fixed and Mobile Services On construction projects - On connection fees – fixed services On capacity rental On mobile customer loyalty programs From CONATEL – mobile services Núcleo (Note 18.d) Other Non-current deferred revenues On capacity rental – Fixed Services On connection fees – Fixed services On mobile customer loyalty programs Total deferred revenues |
Financial debt (Tables)
Financial debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial debt | |
Schedule of current and non-current financial debt | As of December 31, Current financial debt 2017 2016 Bank overdrafts – principal Bank loans – principal Notes – principal NDF (Note 20) Accrued interest and related expenses Non-current financial debt Notes – principal - Bank loans – principal NDF (Note 20) - Accrued interests and related expenses - Total financial debt |
Schedule of outstanding loans | Principal nominal Amortization Book value Current Non-current 80,000 1.9 years 132 132 40,000 1.7 years 50 83 120,000 182 215 |
Salaries and social security 55
Salaries and social security payables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Salaries and social security payables | |
Schedule of salaries and social security payables | As of December 31, Current 2017 2016 Vacation and bonuses Social security payables Termination benefits Non-current Termination benefits Bonuses Total salaries and social security payables |
Schedule of employee benefit expenses and severance payments | Years ended December 31, 2017 2016 2015 Salaries Social security expenses Severance indemnities and termination benefits Other employee benefits |
Income tax payables, income t56
Income tax payables, income tax assets and deferred income tax (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income tax payables, income tax assets and deferred income tax | |
Schedule of Income tax asset and liability, net | As of December 31, 2017 2016 Income tax payables (a) Withholdings and payments in advance of income taxes Law No. 26,476 Tax Regularization Regime (b) Current income tax liability, net Law No. 26,476 Tax Regularization Regime (b) Non-current Income tax liability (a) Includes 3,678 for Income tax payable attributable to Telecom Personal as of November 30, 2017. (b) Tax liability valuated to its discount value at each time of valuation. |
Schedule of tax effects of temporary differences to deferred tax assets and liabilities and actions for recourse tax receivable | Income tax assets Deferred tax liabilities As of December 31, 2017 Telecom Telecom Total Núcleo Total Allowance for doubtful accounts Provisions - - - PP&E - - - Inventory - - - Pension and termination benefits - - - Deferred revenues - - - Other deferred tax assets, net - Total deferred tax assets PP&E and Intangible assets - - Cash dividends from foreign companies (*) (129) - Mobile handsets financed sales - - - Tuves Paraguay´s Deferred tax liabilities, net - - - (***) (25) Total deferred tax liabilities Total deferred tax (liability) asset, net (**) (150) (****) (48) Actions for recourse tax receivable - Total income tax assets (*) Include 46 recorded in Other Comprehensive Income for the year ended December 31, 2017. (**)Include (3) and (11) in Telecom Argentina y Personal, respectively, of temporary differences withdrawals related to the filing of the affidavit for the year 2016. (***) Originated in Tuves Paraguay acquisition. (****) Include (2) related to Currency translation adjustments on initial balances. Income tax assets Deferred tax liabilities As of December 31, 2016 Telecom Telecom Total Personal Núcleo Total Allowance for doubtful accounts Provisions - - PP&E - - Inventory - - - - Pension and termination benefits - - - - Deferred revenues - - - - Other deferred tax assets, net - - Total deferred tax assets PP&E and intangible assets - - Cash dividends from foreign companies - - - Mobile handsets financed sales - - - - Investments - - - - Other deferred tax liabilities, net - - - - Total deferred tax liabilities - Total deferred tax asset (liability), net Action for recourse tax receivable - Total income tax assets |
Schedule of income tax expense | Year ended December 31, 2017 2016 2015 Profit (loss) Current tax expense Deferred tax benefit Action for recourse income tax receivable Income tax expense |
Schedule of income tax reconciliation between amounts computed based on statutory income tax rate and pre-tax income | For the years ended December 31, 2017 2016 2015 Pre-tax income Non taxable items Subtotal Weighted statutory income tax rate (*) Income tax expense at weighted statutory tax rate Income tax on cash dividends of foreign companies – Núcleo Effect of changes in tax rate - - Other changes in tax assets and liabilities - - Actions for recourse income tax receivable Income tax expense (*) Effective income tax rate based on weighted statutory income tax rate in the different countries where the Company has operations. The statutory tax rate in Argentina was 35% for all the years presented. In Paraguay was 10% plus an additional rate of 5% in case of payment of dividends for all the years presented and in the USA the effective tax rate was 39.5% for all the years presented. |
Other taxes payables (Tables)
Other taxes payables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other taxes payables | |
Schedule of other taxes payable | As of December 31, 2017 2016 Current VAT, net Tax withholdings Internal taxes Tax on SU (Note 2.h) Regulatory fees Turnover tax Municipal taxes Retention Decree No.583/10 ENARD Tax on personal property – on behalf of Shareholders - |
Other liabilities (Tables)
Other liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other liabilities | |
Schedule of other liabilities | As of December 31, 2017 2016 Current Compensation for directors and members of the Supervisory Committee Guarantees received Other Non-current Pension benefits (Note 3.m) Legal fees Other Total other liabilities |
Schedule of movements in the pension benefits | Years ended 2017 2016 At the beginning of the year Service cost (*) Interest cost (**) Payments Actuarial loss /(gain) (***) At the end of the year (*) Included in Employee benefit expenses and severance payments. (**) Included in Financial expenses. (***) Included in Other comprehensive income as required by IAS 19R. |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Provisions | |
Schedule of provisions | Balances Additions/ Reclassifications Uses Balances Additions/ Reclassifications Uses Balances as of Capital Interest Debt Payments Capital Interest Debt Payments as of Current Provision for civil and commercial proceedings - - - Provision for labor claims - - - - - Provision for regulatory, tax and other matters claims - - - - Total current provisions - - - Non-current Provision for civil and commercial proceedings - - - - Provision for labor claims - - - Provision for regulatory, tax and other matters claims - - - - Asset retirement obligations - - Total non-current provisions - Total provisions (ii) 234 (iii) 27 (iv) 655 - (i) Charged to finance costs, interest on provisions line item. (ii) Charged 187 to Provisions, 45 to PP&E (CAPEX) and 2 to currency translation adjustments. (iii) Use of Resolution No. 41/07 receivables. (iv) Charged 590 to Provisions, 35 to CAPEX, 3 to currency translation adjustments and 27 to acquisition of Tuves Paraguay. |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity | |
Schedule of entity's equity | As of December 31, 2017 2016 Equity attributable to Telecom Argentina (Controlling Company) Equity attributable to non-controlling interest (Note 1.a) Total equity (*) (*) Additional information is given in the consolidated statements of changes in equity. |
Schedule of entity's capital breakdown | As a consequence of the Corporate reorganization described in Note 31, Telecom Argentina’s breakdown of capital stock as of December 31, 2017 is as follows: Registered, subscribed and authorized for public offering Shares Outstanding shares Treasury shares Total capital stock Ordinary shares, $1 argentine peso of nominal value each Class “A” - Class “B” Class “C” - Total As of January 1, 2018, due to the merger between Telecom Argentina and Cablevisión S.A., the new breakdown of capital stock is as follows: Shares Outstanding shares Treasury shares Total capital stock Class “A” - Class “B” Class “C” - Class “D” - |
Financial instruments (Tables)
Financial instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial instruments | |
Schedule of financial assets and financial liabilities | Fair value As of December 31, 2017 Amortized accounted accounted Total Assets Cash and cash equivalents (1) - Investments - Trade receivables - - Other receivables (2) Total Liabilities Trade payables - - Loans - Salaries and social security payables - - Other liabilities (2) - - Total - (1) Includes 1,364 as of December 31, 2017, corresponding to Cash and banks, which were measured as financial assets at amortized cost by the Company. (2) Only includes financial assets and liabilities according to the scope of IFRS 7. Fair value As of December 31, 2016 Amortized accounted accounted Total Assets Cash and cash equivalents (1) - Investments - Trade receivables - - Other receivables (2) - Total - Liabilities Trade payables - - Loans Salaries and social security payables - - Other liabilities (2) - - Total (1) Includes 934 as of December 31, 2016, corresponding to Cash and banks, which were measured as financial assets at amortized cost by the Company. (2) Only includes financial assets and liabilities according to the scope of IFRS 7. |
Schedule of gains and losses of financial instruments by category | Gains and losses by category – Year 2017 Net gain/(loss) Of which interest Financial assets at amortized cost Financial liabilities at amortized cost Financial assets at fair value through profit or loss (a) - Financial liabilities at fair value through profit or loss (b) - Total (a) Includes 121 corresponding to other short-term investments and 783 corresponding to Government bonds. (b) Corresponding to NDF. Gains and losses by category – Year 2016 Net gain/(loss) Of which interest Financial assets at amortized cost Financial liabilities at amortized cost Financial assets at fair value through profit or loss (a) - Financial liabilities at fair value through profit or loss (b) - Total (a) Includes 61 corresponding to other short-term investments, 6 corresponding to NDF, 11 corresponding to Tuve’s share purchase option and 227 corresponding to Government bonds. (b) Corresponding to NDF. |
Schedule of investments in government bonds at amortised cost with its fair value | As of December 31, 2017 As of December 31, 2016 Investments Book value Fair value (*) Book value Fair value (*) Government bonds (dollar linked) - - Government bonds in foreign currency Provincial and Municipal government bonds currency - - Provincial government bonds in pesos Provincial and Municipal government bonds (dollar linked) Total (*) According to IFRS selling costs are not deducted. |
Schedule of offsetting of financial assets and financial liabilities | As of December 31, 2017 Trade Other Trade Other Current and noncurrent assets (liabilities) - Gross value Offsetting Current and noncurrent assets (liabilities) – Booked value (1) Includes financial assets and financial liabilities according to IFRS 7. As of December 31, 2016 Trade Other Trade Other Current and noncurrent assets (liabilities) - Gross value Offsetting Current and noncurrent assets (liabilities) – Booked value (1) Includes financial assets and financial liabilities according to IFRS 7. |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Revenues | |
Summary of Revenues and other income | Years ended December 31, 2017 2016 2015 Services Voice Internet Data Subtotal Fixed Services Outbound Postpaid Abono Fijo Prepaid Total outbound Inbound From Fixed Services – CPP From Mobile Services – TLRD Total inbound Other Subtotal Personal Mobile Services Outbound Postpaid Abono Fijo Prepaid Total outbound From Fixed Services – Interconnection From Mobile Services – TLRD Total inbound Other Subtotal Núcleo Mobile Services Total service revenues (a) Equipment Fixed Services Personal Mobile Services Núcleo Mobile Services Total equipment revenues (b) Total revenues (a) + (b) Other income Fixed Services Personal Mobile Services Nucleo Mobile Services - - Total other income (c) (*) 133 (*) 83 Total revenues and other income (a)+(b)+(c) (*) Includes 21 y 17 of PP&E disposal of years 2017 and 2016, respectively. |
Operating expenses (Tables)
Operating expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Operating expenses | |
Schedule of Interconnection costs and other telecommunication charges | Years ended December 31, 2017 2016 2015 Fixed telephony interconnection costs Cost of international outbound calls Lease of circuits and use of public network Mobile Services - charges for roaming Mobile Services - charges for TLRD |
Schedule of Fees for services, maintenance, materials and supplies | Years ended December 31, 2017 2016 2015 Maintenance of hardware and software Technical maintenance Service connection fees for fixed lines and Internet lines Service connection fees capitalized as SAC (Note 3.j) Service connection fees capitalized as Intangible assets (Note 3.j) Other maintenance costs Obsolescence of inventories – Mobile Services (Note 7) Call center fees Other fees for services Directors and Supervisory Committee’s fees |
Schedule of Taxes and fees with the Regulatory Authority | Years ended December 31, 2017 2016 2015 Turnover tax Taxes with the Regulatory Authority Tax on deposits to and withdrawals from bank accounts Municipal taxes Other taxes |
Schedule of Commissions | Years ended December 31, 2017 2016 2015 Agent commissions Agent commissions capitalized as SAC (Note 3.j) Distribution of prepaid cards commissions Collection commissions Other commissions |
Schedule of Advertising | Years ended December 31, 2017 2016 2015 Media advertising Fairs and exhibitions Other advertising costs |
Schedule of Cost of Value Added Services | Years ended December 31, 2017 2016 2015 Cost of mobile value added services Cost of fixed value added services |
Schedule of Other operating expenses | Years ended December 31, 2017 2016 2015 Transportation, freight and travel expenses Delivery costs capitalized as SAC Rental expense Energy, water and others International and satellite connectivity |
Schedule of Depreciation & Amortization | Years ended December 31, 2017 2016 2015 Depreciation of PP&E Amortization of SAC and service connection costs Amortization of 3G/4G licenses Amortization of other intangible assets |
Schedule of Disposals and Impairment of Property Plant and Equipment | Years ended December 31, 2017 2016 2015 Gain on disposal and impairment of PP&E (*) - - Impairment of PP&E – Fixed services Impairment of PP&E – Mobile services Decrease of PP&E – Fixed services - Decrease of PP&E – Mobile services - (*) Since 2016 these results are included in Other Income. |
Schedule of operating expenses disclosed per function | Years ended December 31, 2017 2016 2015 Operating costs Administration costs Commercialization costs Other expenses – provisions Gain on disposal of PP&E and impairment of PP&E |
Schedule of Future minimum lease payments on non cancellable operating lease agreements | Future minimum lease payments from of non cancellable operating lease agreements as of December 31, 2017, 2016 and 2015 are as follows: Less than 1 1-5 years More than 5 Total 2015 2016 2017 |
Operating income (Tables)
Operating income (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Operating income | |
Schedule of operating income | Years ended December 31, 2017 2016 2015 Operating income from services and other income Revenues and other income Operating expenses Operating income before depreciation and amortization (a) D&A Disposals and impairment of PP&E Operating income from services and other income Operating income (loss) from equipment sales Revenues Cost of equipments and handsets Operating income (loss) from equipment sales (b) Total operating income Consolidated net income Operating income before depreciation and amortization (a) + (b) D&A Disposals and impairment of PP&E Total operating income |
Schedule of breakdown of operating income by segment | Year ended December 31, 2017 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before depreciation and amortization (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) Year ended December 31, 2016 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before depreciation and amortization (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) - Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) Year ended December 31, 2015 Fixed Mobile Total Services revenues and other income Third party revenues Intersegment revenues Third party operating expenses Intersegment operating expenses Subtotal income for services revenues and other (1) Equipments revenues Third party revenues Third party operating expenses Subtotal income (loss) from equipments revenues (2) Total operating income before D&A for services and other income (3)=(1)+(2) D&A (4) Disposals and impairment of PP&E (5) Operating income (6)=(3)+(4)+(5) Net effect of the intersegment eliminations (7) - Net segment contribution to the Operating income before D&A (8)=(3)+(7) Net segment contribution to the Operating income (9)=(6)+(7) |
Finance income and expenses (Ta
Finance income and expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Finance income and expenses | |
Schedule of finance income and expenses | Years ended December 31, 2017 2016 2015 Interest on cash equivalents Gains on other short-term investments Gains on investments (Argentine companies notes and Governments bonds) Interest on receivables Foreign currency exchange gains TUVES share purchase option - Other - Total finance income Interest on loans Interest on salaries and social security payable, other taxes payables and accounts payable Interest on provisions (Note 17) Loss on discounting of salaries and social security payables, other taxes payable and other liabilities Foreign currency exchange losses (*) TUVES share purchase option - - Interest on pension benefits (Note 16) Other Total finance expenses Total finance income, net (*) Includes 40, 5 and 432 of foreign currency exchange gains (losses), net generated by NDF for the years ended on December 31, 2017, 2016 and 2015, respectively. |
Financial risk management (Tabl
Financial risk management (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial risk management | |
Schedule of break down of group's net assessed financial position exposure to currency risk | 12.31.17 Amount of foreign currency (i) Exchange rate Amount in local currency (ii) Assets US$ 18.549 (iii) 7,094 G 0.003 EURO 22.283 Total assets Liabilities US$ 18.649 G 0.003 EURO 22.450 Total liabilities Net liabilities (i) US$ = United States dollar; G= Guaraníes. (ii) As foreign currency figures and their amount in argentine pesos are in millions, the calculation of the amount of the foreign currency by its exchange rate could not be exact. (iii) Includes 371 corresponding to Government bonds at fair value (equivalent to US$ 12 million). 12.31.16 Amount of foreign currency (i) Exchange rate Amount in local currency (ii) Assets US$ 15.790 (iii) 4,067 G 0.003 EURO 16.625 Total assets Liabilities US$ 15.890 G 0.003 EURO 16.770 Total liabilities Net liabilities (i) US$ = United States dollar; G= Guaraníes. (ii) As foreign currency figures and their amount in argentine pesos are in millions, the calculation of the amount of the foreign currency by its exchange rate could not be exact. (iii) Includes 735 corresponding to Government bonds at fair value (equivalent to US$ 45 million). |
Schedule of sensitivity analysis for interest rate risk | Financial debt Financial debt Amount Effect Bank overdrafts $ Notes $ Notes US$ Bank loans US$ |
Schedule of theoretical exposure of credit risk | Date due Banks and cash Investments Trade Other Total Total due - - - Total not due Total as of December 31, 2017 |
Schedule of working capital breakdown and its main variations | 2017 2016 Variation Trade receivables Other receivables (not considering financial NDF) Inventories Current liabilities (not considering financial debt) Operative working capital - negative Over revenues (10.5)% (6.4)% Cash and cash equivalents Financial NDF - Investments Current financial debt Net Current financial asset Negative operating working capital (current assets – current liabilities) Liquidity rate |
Schedule of breakdown of financial liabilities into relevant maturity groups | Maturity Date Trade Debt Salaries and Other Total Due - - - January 2018 thru December 2018 January 2019 thru December 2019 January 2020 thru December 2020 - January 2021 and thereafter - |
Related party balances and tr67
Related party balances and transactions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related party balances and transactions | |
Schedule of balances and transactions with related parties | (c) Balances with related parties Type of related party As of December 31, 2017 2016 CURRENT ASSETS Cash and cash equivalents Banco Atlas S.A.(a) Other related party - Total cash and cash equivalents - Trade receivables Editorial Azeta S.A. (a) Other related party CURRENT LIABILITIES Trade payables Experta ART S.A. (b) Other related party - Haras El Capricho S.A. (b) Other related party - Telteco S.A. (c) Other related party - Penta S.A (a) Other related party - Total trade payables Financial Debt – Notes (current and non-current) La Estrella Sociedad Anónima de Seguros de Retiro (b) Other related party - Experta ART S.A. (b) Other related party - - (d) Transactions with related parties and companies under sect. 33 of the LGS Companies under sect. 33 of the LGS Transaction description Type of related party Years ended December 31, 2017 2016 2015 Other income Nortel Rental revenues Direct parent Company - Total other income - Related parties Transaction description Type of related party Years ended December 31, Services rendered 2017 2016 2015 Editorial Azeta S.A. (a) Voice retail Other related party Banco Atlas S.A. (a) Voice retail Other related party Penta S.A. (a) Voice retail Other related party - Total services rendered Transaction description Type of related party Years ended December 31, Services received 2017 2016 2015 Editorial Azeta S.A. (a) Advertising Other related party Penta S.A. (a) Rental Other related party - Total services received (a) Such companies relate to ABC Telecommunications Group of Paraguay (Non-controlling shareholders’ of Núcleo). (b) Such companies relate to W de Argentina – Inversiones S.A. until May 23, 2017. (c) Such company relates to a member of the Board of Directors appointed by W de Argentina – Inversiones S.A. until May 23, 2017. |
Schedule of compensation for Key Managers | Years ended December 31, 2017 2016 2015 Salaries (*) Variable compensation (*) Social security contributions Hiring benefits - - Termination benefits (*) Gross compensation. Social security contributions and income tax retentions that are deducted from the gross compensation are in charge of the employee. |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment information | |
Schedule of income statement information | For the year ended December 31, 2017 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income For the year ended December 31, 2016 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income For the year ended December 31, 2015 q Income statement information Fixed Mobile Services Services Personal Núcleo Subtotal Eliminations Total Total revenues and other income (1) Employee benefit expenses and severance payments - Interconnection costs and other telecommunication charges Fees for services, maintenance, materials and supplies Taxes and fees with the Regulatory Authority - Commissions Cost of equipments and handsets - Advertising - Cost of VAS - Provisions - - Bad debt expenses - Other operating expenses Operating income before D&A - Depreciation of PP&E - Amortization of intangible assets - Disposals and impairment of PP&E - Operating income - Financial results, net Income before income tax expense Income tax expense, net Net income Net income attributable to Telecom Argentina Net income attributable to non-controlling interest (1) Service revenues - Equipment sales - Other income - - Subtotal third party revenues and other income - Intersegment revenues - Total revenues and other income |
Schedule of balance sheet information | For the year ended December 31, 2017 q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial debt For the year ended December 31, 2016 q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial debt - For the year ended December 31, 2015 q Balance sheet information PP&E, net - Intangible assets, net Capital expenditures on PP&E (a) - Capital expenditures on intangible assets (b) - Total capital expenditures in PP&E and intangible assets (a)+ (b) - Total additions on PP&E and intangible assets - Net financial asset (debt) |
Schedule of geographic information | For the year ended December 31, 2017 q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by location of operations Argentina Abroad Total For the year ended December 31, 2016 q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by Argentina Abroad Total For the year ended December 31, 2015 q Geographic information Total revenues and other income Total non-current assets Breakdown by Breakdown by Breakdown by Argentina Abroad Total |
Quarterly consolidated inform69
Quarterly consolidated information (unaudited information) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly consolidated information (unaudited information) | |
Schedule of quarterly consolidated information | Quarter Revenues Operating Operating Financial Results, Net Net income Fiscal year 2015: March 31 June 30 September 30 December 31 Fiscal year 2016: March 31 June 30 September 30 December 31 Fiscal year 2017: March 31 June 30 September 30 December 31 |
Restrictions on distribution 70
Restrictions on distribution of profits and dividends (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restrictions on distribution of profits and dividends | |
Schedule of dividends | 2017 2016 2015 Dividends declared and paid by Telecom Argentina during the year peso per share, respectively) (*) 4,151 (*) 2,000 Proposed for approval at the Annual General Meeting (not recognized as a liability as of December 31) (**) - - (*) By reversal of the Voluntary reserve for future dividends payments. (**) The Company’s Board of Directors has proposed to the Shareholder’s Meeting the confirmation of the dividends’ distribution in advance (Note 33.b) and the allocation of the outstanding retained earnings ($1,989) to the constitution of a “Voluntary reserve for future dividends payments”, with delegation to the Board of Directors its subsequent reversal and availability. |
Merger by Absorption Between 71
Merger by Absorption Between Telecom Argentina and Cablevision S.A. (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Merger by absorption between Telecom Argentina and Cablevision S.A. | |
Schedule of entity's capital breakdown | As a consequence of the Corporate reorganization described in Note 31, Telecom Argentina’s breakdown of capital stock as of December 31, 2017 is as follows: Registered, subscribed and authorized for public offering Shares Outstanding shares Treasury shares Total capital stock Ordinary shares, $1 argentine peso of nominal value each Class “A” - Class “B” Class “C” - Total As of January 1, 2018, due to the merger between Telecom Argentina and Cablevisión S.A., the new breakdown of capital stock is as follows: Shares Outstanding shares Treasury shares Total capital stock Class “A” - Class “B” Class “C” - Class “D” - |
Description of business and b72
Description of business and basis of preparation of the consolidated financial statements - Subsidiaries (Details) | 11 Months Ended | 12 Months Ended | |
Nov. 30, 2017 | Dec. 31, 2017 | Jun. 30, 2017 | |
Telecom USA | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 100.00% | ||
Micro Sistemas | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 100.00% | ||
Personal | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 100.00% | ||
Nucleo | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 67.50% | ||
Percentage of ownership interest held by a noncontrolling interest | 32.50% | ||
Nucleo | Tuves Paraguay | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Acquisition percentage | 70.00% | ||
Personal Envios | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 67.50% | ||
Percentage of ownership interest held by a noncontrolling interest | 32.50% | ||
Tuves Paraguay | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of capital stock owned and voting rights | 47.25% | ||
Tuves Paraguay | ABC Telecomunicaciones | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of ownership interest held by a noncontrolling interest | 22.75% | ||
Tuves Paraguay | TU VES S.A. (Chile) | |||
Description of business and basis of preparation of the consolidated financial statements | |||
Percentage of ownership interest held by a noncontrolling interest | 30.00% |
Description of business and b73
Description of business and basis of preparation of the consolidated financial statements - CPI (Details) | 2 Months Ended | 4 Months Ended | 8 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 30, 2016 | Dec. 31, 2016 | Oct. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consumer Price Index | |||||||
Consumer Price Index (annual as a percent) | 7.80% | 16.60% | 16.90% | 11.90% | 24.80% | 36.30% | 20.60% |
Consumer Price Index (3 years accumulated) | 104.90% | 103.70% | 65.80% | ||||
Number of years of accumulated price index | 3 years | ||||||
Internal Wholesale Price Index | |||||||
Internal Wholesale Price Index (annual as a percent) | 10.60% | 18.80% | 34.60% | 19.20% | |||
Internal Wholesale Price Index (3 years accumulated) | 90.70% | 105.80% | 75.40% |
Description of business and b74
Description of business and basis of preparation of the consolidated financial statements - Corporate Reorganization (Details) - ARS ($) $ in Millions | Nov. 30, 2017 | Sep. 05, 2017 | Jul. 31, 2008 |
Cubecorp | |||
Merger Information | |||
Percentage of voting equity interests acquired | 100.00% | ||
Cubecorp | Secretary of Commerce Resolution No. 2017-656-APN-SECC # MP | |||
Merger Information | |||
Percentage of voting equity interests acquired | 100.00% | ||
Telecom Argentina | |||
Corporate Reorganization of the Telecom Group and Its controlling companies | |||
Net assets from the investment | $ 14 | ||
Net liabilities from the investment | $ 14 |
REGULATORY FRAMEWORK (Details)
REGULATORY FRAMEWORK (Details) | May 31, 2016 | Dec. 31, 2014 | Nov. 30, 2014 | Dec. 31, 2017 |
ICT Services | ||||
Regulatory framework | ||||
Contribution to SU Fund, percentage | 1.00% | |||
Personal | SCMA license agreement | ||||
Regulatory framework | ||||
Term of the license agreement | 15 years | |||
Nucleo | License agreement for STM and PCS | ||||
Regulatory framework | ||||
Term of the license agreement | 5 years | |||
Nucleo | License agreement for installation and provision of Internet and Data | ||||
Regulatory framework | ||||
Term of the license agreement | 5 years | |||
Tuves Paraguay | License agreement for telecommunication services, distribution of digital audio and television signals | ||||
Regulatory framework | ||||
Term of the license agreement | 5 years | |||
Telecom Argentina | ||||
Regulatory framework | ||||
Minimum threshold obligation for non-revocability of license agreement, Notice period for transfer of shares | 30 days | |||
Telecom Argentina | ICT Services | ||||
Regulatory framework | ||||
Contribution to SU Fund, percentage | 1.00% | |||
Telecom Argentina | Personal | ICT Services | ||||
Regulatory framework | ||||
Contribution to SU Fund, percentage | 1.00% |
REGULATORY FRAMEWORK - Universa
REGULATORY FRAMEWORK - Universal Service Regulation (Details) - item | Apr. 04, 2008 | Dec. 31, 2017 |
Regulatory framework | ||
Period within which the coverage for fixed line networks is to be extended | 60 months | |
Telefonica | ||
Regulatory framework | ||
Number of members of the technical committee to be appointed by the company along with the counterparty | 2 | |
Telefonica | ||
Regulatory framework | ||
Period within which the coverage for fixed line networks is to be extended | 60 months |
REGULATORY FRAMEWORK - FFSU - I
REGULATORY FRAMEWORK - FFSU - Impact in the Company (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Oct. 01, 2012 | Sep. 13, 2012 | Mar. 31, 2011 | Jan. 31, 2011 |
Regulatory framework | |||||
Unrecorded accounts receivable | $ 2,925 | ||||
Investments included in the unrecorded accounts receivable | 2,691 | ||||
Deductions included in the unrecorded accounts receivable | 1,033 | ||||
Deposit payable, as required by the CNC | $ 208 | ||||
Personal | |||||
Regulatory framework | |||||
Deposits with the Bank, SU | $ 112 | ||||
Investment amount of the project for the development of a network infrastructure in locations in the Northern Region of Argentina with no mobile coverage | $ 70 | ||||
Deposits with the CNC, under protest | $ 23 | ||||
SU Fund Administrative Appeals | Minimum | |||||
Regulatory framework | |||||
Net assets (liabilities) | (799) | ||||
SU Fund Administrative Appeals | Maximum | |||||
Regulatory framework | |||||
Net assets (liabilities) | $ 2,925 |
REGULATORY FRAMEWORK - Spectrum
REGULATORY FRAMEWORK - Spectrum (Details) $ in Millions, $ in Millions | Sep. 01, 2016item | Nov. 27, 2014USD ($)item | Sep. 30, 2017USD ($)item | Dec. 31, 2017USD ($)item | Feb. 27, 2018USD ($) | Dec. 31, 2017ARS ($) | Dec. 31, 2016ARS ($) | Dec. 31, 2015ARS ($) |
Regulatory framework | ||||||||
Intangible assets | $ | $ 7,098 | $ 7,592 | $ 7,659 | |||||
3G/4G licenses | ||||||||
Regulatory framework | ||||||||
Intangible assets | $ | 4,780 | $ 5,105 | ||||||
Personal | 3G/4G licenses | ||||||||
Regulatory framework | ||||||||
Amount paid | $ | $ 410.7 | |||||||
Intangible assets | $ | 3,530 | |||||||
Tax on bank debits capitalized | $ | 18 | |||||||
Personal | 3G/4G licenses | 80/14 | ||||||||
Regulatory framework | ||||||||
Amount paid | $ | 5 | |||||||
Intangible assets | $ | $ 43 | |||||||
Personal | 3G/4G licenses | 80/14 | Minimum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,890 | |||||||
Frequency band awarded, two (in MHz) | 1,970 | |||||||
Personal | 3G/4G licenses | 80/14 | Maximum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,892.5 | |||||||
Frequency band awarded, two (in MHz) | 1,972.5 | |||||||
Personal | 3G/4G licenses | 81/14 | ||||||||
Regulatory framework | ||||||||
Amount paid | $ | $ 45 | |||||||
Intangible assets | $ | $ 387 | |||||||
Personal | 3G/4G licenses | 81/14 | Minimum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 830.25 | |||||||
Frequency band awarded, two (in MHz) | 875.25 | |||||||
Personal | 3G/4G licenses | 81/14 | Maximum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 834 | |||||||
Frequency band awarded, two (in MHz) | 879 | |||||||
Personal | 3G/4G licenses | 82/14 | ||||||||
Regulatory framework | ||||||||
Amount paid | $ | $ 6 | |||||||
Intangible assets | $ | $ 51 | |||||||
Personal | 3G/4G licenses | 82/14 | Minimum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,862.5 | |||||||
Frequency band awarded, two (in MHz) | 1,942.5 | |||||||
Personal | 3G/4G licenses | 82/14 | Maximum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,867.5 | |||||||
Frequency band awarded, two (in MHz) | 1,947.5 | |||||||
Personal | 3G/4G licenses | 83/14 | ||||||||
Regulatory framework | ||||||||
Amount paid | $ | $ 354.7 | |||||||
Intangible assets | $ | $ 3,049 | |||||||
Balance amount of the bid paid | $ | $ 247.3 | |||||||
Performance guarantee (as a percent) | 15.00% | |||||||
Usage period of the auctioned frequency bands | 15 years | |||||||
Frequencies in the Lot | 700 | |||||||
Personal | 3G/4G licenses | 83/14 | Minimum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,730 | |||||||
Frequency band awarded, two (in MHz) | 2,130 | |||||||
Personal | 3G/4G licenses | 83/14 | Maximum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 1,745 | |||||||
Frequency band awarded, two (in MHz) | 2,145 | |||||||
Personal | 3G/4G licenses | 18/14 | ||||||||
Regulatory framework | ||||||||
Deadline period for disengagement | 2 years | |||||||
Personal | 3G/4G licenses | 18/14 | Minimum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 698 | |||||||
Frequency band awarded, two (in MHz) | 512 | |||||||
Destination band | 12.2 | |||||||
Personal | 3G/4G licenses | 18/14 | Maximum | ||||||||
Regulatory framework | ||||||||
Frequency band awarded, one (in MHz) | 806 | |||||||
Frequency band awarded, two (in MHz) | 698 | |||||||
Destination band | 12.7 | |||||||
Nucleo | 3G/4G licenses | ||||||||
Regulatory framework | ||||||||
Deposit to be paid | $ | $ 15 | |||||||
Deposit paid, included in other current receivable | $ | $ 278 | |||||||
Nucleo | 3G/4G licenses | License Acquisition | ||||||||
Regulatory framework | ||||||||
Number of sub-bands awarded | 2 | |||||||
Consideration paid for each sub-bands | $ | $ 12 | |||||||
Auction price cancellation | $ | $ 9 |
REGULATORY FRAMEWORK - Other De
REGULATORY FRAMEWORK - Other Details (Details) $ in Millions | Aug. 08, 2017 | Jan. 06, 2002$ / $ | Dec. 31, 2017ARS ($) |
Regulatory framework | |||
Net receivable | $ 33 | ||
Receivable corresponding to IDC included in other receivable | 23 | ||
Regulatory liability provisions offset with receivables | $ 56 | ||
Exchange rate | $ / $ | 1 | ||
Concession period, notified | 15 days | ||
Period within which the Fixed Interest Access Service is to be offered | 60 days | ||
Period within which the company shall report about the Retail Internet Access Service | 60 days | ||
3G/4G licenses | |||
Regulatory framework | |||
Period within which the spectrum should be returned | 2 years | ||
Period in advance within which the proposal should be filed with ENACOM | 1 year |
Significant accounting polici80
Significant accounting policies - Acquisition of controlling interest (Details) - Tuves Paraguay - Nucleo ₲ in Millions, $ in Millions | Apr. 11, 2017shares | Jun. 30, 2017PYG (₲) | Jun. 30, 2017ARS ($) |
Acquisition of controlling interest | |||
Percentage of voting equity interests acquired | 70.00% | 70.00% | |
Cash payment | ₲ 35 | $ 0.1 | |
Partial capitalization of receivables | 49,396 | 147 | |
Total purchase price | 50,056 | 149 | |
Goodwill | ₲ 662 | $ 2 | |
CONATEL Resolution No. 460/17 | |||
Acquisition of controlling interest | |||
Number of shares acquired | 350 | ||
Percentage of voting equity interests acquired | 70.00% |
Significant accounting polici81
Significant accounting policies - Revenues and Financial instruments (Details) - Fixed telecommunication services and products - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Significant accounting policies | |||
Average period of the customer relationship | 8 years | ||
Revenue on construction contracts recognized | $ 614 | $ 0 | $ 0 |
2017 agreement finance period | 48 months | ||
Receivables on construction contracts | $ 83 | 17 | |
Cost on construction contracts recognized | $ 429 | $ 0 | $ 0 |
Significant accounting polici82
Significant accounting policies - Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Buildings received from ENTel | |
Significant accounting policies | |
Estimated useful life (in years) | 35 years |
Buildings acquired subsequent to 11/8/90 | |
Significant accounting policies | |
Estimated useful life (in years) | 50 years |
Telephony equipment and instruments | |
Significant accounting policies | |
Estimated useful life (in years) | 5 years |
Minimum | Improvements in third parties buildings | |
Significant accounting policies | |
Estimated useful life (in years) | 2 years |
Minimum | Tower and pole | |
Significant accounting policies | |
Estimated useful life (in years) | 10 years |
Minimum | Transmission equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 3 years |
Minimum | Wireless network access | |
Significant accounting policies | |
Estimated useful life (in years) | 3 years |
Minimum | Switching equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 5 years |
Minimum | Power equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 7 years |
Minimum | External wiring | |
Significant accounting policies | |
Estimated useful life (in years) | 3 years |
Minimum | Computer equipment and systems | |
Significant accounting policies | |
Estimated useful life (in years) | 3 years |
Minimum | Installations | |
Significant accounting policies | |
Estimated useful life (in years) | 2 years |
Maximum | Improvements in third parties buildings | |
Significant accounting policies | |
Estimated useful life (in years) | 5 years |
Maximum | Tower and pole | |
Significant accounting policies | |
Estimated useful life (in years) | 20 years |
Maximum | Transmission equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 20 years |
Maximum | Wireless network access | |
Significant accounting policies | |
Estimated useful life (in years) | 7 years |
Maximum | Switching equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 7 years |
Maximum | Power equipment | |
Significant accounting policies | |
Estimated useful life (in years) | 15 years |
Maximum | External wiring | |
Significant accounting policies | |
Estimated useful life (in years) | 20 years |
Maximum | Computer equipment and systems | |
Significant accounting policies | |
Estimated useful life (in years) | 5 years |
Maximum | Installations | |
Significant accounting policies | |
Estimated useful life (in years) | 10 years |
Significant accounting polici83
Significant accounting policies - Intangible assets (Details) - item | 1 Months Ended | 8 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Service connection or habilitation costs | ||||
Significant accounting policies | ||||
Average period for amortization | 8 years | |||
3G/4G licenses | ||||
Significant accounting policies | ||||
Average period for amortization | 180 months | |||
Grant period for licenses | 15 years | |||
PCS license (Paraguay) | ||||
Significant accounting policies | ||||
Average period for amortization | 60 months | |||
Renewed period of the licenses | 5 years | |||
Temporary extension period | 90 days | |||
Number of license extensions available | 1 | |||
Internet and data transmission license (Paraguay) | ||||
Significant accounting policies | ||||
Average period for amortization | 60 months | |||
Rights of use | ||||
Significant accounting policies | ||||
Average period for amortization | 180 months | |||
Customer relationships | Cubecorp | ||||
Significant accounting policies | ||||
Average period for amortization | 180 months | |||
Customer relationships | Tuves Paraguay | ||||
Significant accounting policies | ||||
Average period for amortization | 78 months | |||
83/14 | Personal | 3G/4G licenses | ||||
Significant accounting policies | ||||
Remaining useful life of frequencies | 15 years |
Significant accounting polici84
Significant accounting policies - Leases (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017ARS ($) | |
Significant accounting policies | |
Finance lease liabilities | $ 13 |
Total payable at leases' maturity | 13 |
Computer equipment and systems | |
Significant accounting policies | |
Net carrying value, Finance lease recognized as assets | 13 |
Computer equipment and systems | Gross carrying value | |
Significant accounting policies | |
Net carrying value, Finance lease recognized as assets | $ 77 |
Lease term | 3 years |
Depreciation period (in years) | 3 years |
Computer equipment and systems | Accumulated depreciation and amortization | |
Significant accounting policies | |
Net carrying value, Finance lease recognized as assets | $ (64) |
Significant accounting polici85
Significant accounting policies - Other liabilities (Details) - item | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Significant accounting policies | |||
Number of month's salary required for the payment of single lump sum | 1 | ||
Period of service calculated to pay benefits | 5 years | ||
Period for payment of legal fee | 12 months | ||
Minimum | |||
Significant accounting policies | |||
Discount rate | 4.60% | 4.80% | 6.50% |
Projected increase rate in compensation | 8.00% | 8.00% | 12.00% |
Maximum | |||
Significant accounting policies | |||
Discount rate | 9.20% | 6.20% | 8.50% |
Projected increase rate in compensation | 16.30% | 22.50% | 26.80% |
Significant accounting polici86
Significant accounting policies - Taxes payables (Details) - ARS ($) $ in Millions | Jan. 01, 2024 | Jan. 01, 2018 | Nov. 14, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Significant accounting policies | |||||||
Applicable tax rate | 34.30% | 34.30% | 34.50% | ||||
Argentina | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 35.00% | 35.00% | 35.00% | ||||
Average rates resulting from the turnover | 5.40% | 5.30% | 5.20% | ||||
Tax rate for SU fund | 1.00% | ||||||
Personal assets tax receivable reversed | $ 8 | ||||||
Personal assets tax liability reversed | $ 8 | ||||||
Effective tax rate applicable for individuals | 15.00% | ||||||
Presume income equivalent of transfer price for non-residents | 90.00% | ||||||
Effective internal tax rate, mobile telephone services | 4.16% | ||||||
Effective internal tax rate, sale of mobile phones and other wireless networks that will decrease gradually until its complete phase out as of January 1, 2024 | 11.73% | 20.48% | |||||
Effective internal tax rate, goods manufacture in Tierra del Fuego | 0.00% | ||||||
Percentage of employers' contributions | 21.00% | ||||||
Argentina | Tax Year 2018 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 30.00% | ||||||
Effective internal tax rate, mobile telephone services | 5.26% | ||||||
Social security, non-taxable base | $ 2,400 | ||||||
Argentina | Tax Year 2019 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 30.00% | ||||||
Argentina | Tax Year 2020 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 25.00% | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | |||||||
Significant accounting policies | |||||||
Real estate (regarded as capital assets) revaluation tax percentage | 8.00% | ||||||
Real estate (regarded as inventories) revaluation tax percentage | 15.00% | ||||||
Shares, quotas and other participations in Argentine companies owned by resident individuals revaluation tax percentage | 5.00% | ||||||
All other assets (except inventories and cars, which may not be revaluated), revaluation tax percentage | 10.00% | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | Tax Year 2018 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 30.00% | ||||||
Withholding tax rate on dividends | 7.00% | ||||||
Equalization tax rate percentage, repealed | 35.00% | ||||||
Turnover Tax, communications rate | 5.00% | ||||||
Turnover Tax, mobile telephone rate | 7.00% | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | Tax Year 2018 | Maximum | |||||||
Significant accounting policies | |||||||
Annual reduction in tax on deposits to and withdrawals from bank accounts | (20.00%) | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | Tax Year 2019 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 30.00% | ||||||
Stamp Tax rate percentage | 0.75% | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | Tax Year 2020 | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 25.00% | ||||||
Withholding tax rate on dividends | 13.00% | ||||||
Argentina | Changes in tax rates or tax laws enacted or announced | Tax Year 2022 | |||||||
Significant accounting policies | |||||||
Percentage of employers' contributions | 19.50% | ||||||
Social security, non-taxable base | $ 12,000 | ||||||
Turnover Tax, communications rate | 3.00% | ||||||
Turnover Tax, mobile telephone rate | 5.00% | ||||||
Paraguay | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 10.00% | 10.00% | 10.00% | ||||
Additional tax rate (as a percent) | 5.00% | 5.00% | 5.00% | ||||
Effective tax rate | 15.00% | 15.00% | 15.00% | ||||
United States of America | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 39.50% | 39.50% | 39.50% | ||||
Effective tax rate | 39.50% | 39.50% | 39.50% | ||||
United States of America | Changes in tax rates or tax laws enacted or announced | |||||||
Significant accounting policies | |||||||
Applicable tax rate | 21.00% | ||||||
Effective tax rate | 26.50% |
Significant accounting polici87
Significant accounting policies - Cost of Increase of Share in Controlled Companies (Details) - ARS ($) $ in Millions | Mar. 31, 2017 | Apr. 30, 2017 | Dec. 31, 2017 | |
Business combination | ||||
Increase (decrease) through changes in ownership interests | [1] | $ (3) | ||
Personal | ||||
Business combination | ||||
Number of Shares Acquired | 120,000 | |||
Proportion of voting rights held by non-controlling interests | 0.008% | |||
Total purchase price | $ 4 | |||
Ownership percentage by parent | 100.00% | |||
Increase (decrease) through changes in ownership interests | $ 3 | |||
[1] | See Note 3.u. |
Significant accounting polici88
Significant accounting policies - Use of estimates (Details) | Dec. 31, 2017 | Dec. 31, 2016 |
Trade receivables | ||
Receivables and payables valued at amortized cost | ||
Discount rates used to determine the discounted cash flow | 9.80% | 9.80% |
U.S. dollars | Intangible assets | ||
Receivables and payables valued at amortized cost | ||
Discount rates used to determine the discounted cash flow | 10.50% | |
U.S. dollars | Non-current receivables | ||
Receivables and payables valued at amortized cost | ||
Discount rates used to determine the discounted cash flow | 13.00% | 13.00% |
Pesos | Non-current receivables | ||
Receivables and payables valued at amortized cost | ||
Discount rates used to determine the discounted cash flow | 34.00% | |
Guaranies | Loans | ||
Receivables and payables valued at amortized cost | ||
Discount rates used to determine the discounted cash flow | 8.83% | 9.42% |
Significant accounting polici89
Significant accounting policies - New Standards (Details) - ARS ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
New Standards and Interpretations issued by the IASB not in force | ||||
Retained earnings | $ 7,630 | |||
Income tax expense | $ 3,902 | $ 1,594 | $ 1,692 | |
Increase (decrease) due to application of IFRS 15 | ||||
New Standards and Interpretations issued by the IASB not in force | ||||
Service term period | 24 months | |||
Contractual assets | $ 781 | |||
Deferred tax liabilities | 234 | |||
Retained earnings | 547 | |||
Advances for mobile handsets acquisitions | Increase (decrease) due to application of IFRS 15 | ||||
New Standards and Interpretations issued by the IASB not in force | ||||
Retained earnings | (48) | |||
Retained earnings, before income tax | (68) | |||
Income tax expense | (20) | |||
Credit losses related to trade receivables | Increase (decrease) due to application of IFRS 9 | ||||
New Standards and Interpretations issued by the IASB not in force | ||||
Retained earnings | (357) | |||
Retained earnings, before income tax | (482) | |||
Income tax expense | $ (125) |
Cash and cash equivalents and90
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Cash and cash equivalents and Investments (Details) $ in Millions, $ in Millions | Dec. 31, 2017USD ($) | Dec. 31, 2017ARS ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016ARS ($) |
Cash and cash equivalents | ||||
Cash | $ 52 | $ 56 | ||
Banks | 1,312 | 878 | ||
Time deposits | 105 | 898 | ||
Government bonds at amortized cost | 604 | |||
Other short-term investments | 99 | 1,509 | ||
Lebacs at fair value | 1,263 | |||
Total cash and cash equivalents | $ 153 | 2,831 | $ 250 | 3,945 |
Investments | ||||
Total current investments | 3,426 | 1,751 | ||
Total non-current investments | 2,657 | 347 | ||
Government bonds | Financial assets at fair value accounted through profit or loss | ||||
Investments | ||||
Total current investments | 371 | 1,456 | ||
Government bonds - dollar linked | Financial assets at fair value accounted through profit or loss | ||||
Investments | ||||
Total current investments | 293 | |||
Government bonds in foreign currency | Financial assets at amortized cost | ||||
Investments | ||||
Total current investments | 149 | 3 | ||
Total non-current investments | 2,228 | 255 | ||
Provincial government and municipal bonds - dollar linked | Financial assets at amortized cost | ||||
Investments | ||||
Total current investments | 30 | 13 | ||
Total non-current investments | 42 | 61 | ||
Provincial and municipal government bonds | Financial assets at amortized cost | ||||
Investments | ||||
Total current investments | 8 | 9 | ||
Total non-current investments | 8 | |||
Provincial And Municipal Government Bonds In Foreign Currency | Financial assets at amortized cost | ||||
Investments | ||||
Total current investments | 33 | |||
Total non-current investments | 386 | |||
Other short-term investments | ||||
Investments | ||||
Total current investments | 2,433 | 270 | ||
Lebacs | Financial assets at fair value accounted through profit or loss | ||||
Investments | ||||
Total current investments | 109 | |||
Tuve's Paraguay S.A shares purchase option | ||||
Investments | ||||
Total non-current investments | 22 | |||
2003 Telecommunications Fund | ||||
Investments | ||||
Total non-current investments | $ 1 | $ 1 |
Cash and cash equivalents and91
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Breakdown of the net cash flow provided by operating activities (Details) $ in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2017ARS ($) | Dec. 31, 2016ARS ($) | Dec. 31, 2015ARS ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017ARS ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016ARS ($) | Dec. 31, 2014ARS ($) | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | ||||||||
Cash and cash equivalents | $ 153 | $ 2,831 | $ 250 | $ 3,945 | ||||
Total cash and cash equivalents | $ 870 | $ 2,831 | $ 3,945 | $ 684 | ||||
Collections | ||||||||
Collections from customers | $ 71,113 | $ 55,928 | 41,930 | |||||
Interests from customers | 762 | 366 | 182 | |||||
Interests from investments | 670 | 59 | 190 | |||||
Mobile operators collections | 1,282 | 885 | 843 | |||||
Subtotal | 73,827 | 57,238 | 43,145 | |||||
Payments | ||||||||
For the acquisition of goods and services and others | (19,557) | (17,120) | (12,784) | |||||
For the acquisition of inventories | (5,520) | (5,383) | (6,343) | |||||
Salaries and social security payables and severance payments | (11,669) | (9,113) | (6,885) | |||||
CPP payments | (1,132) | (393) | (413) | |||||
Income taxes (include tax return and payments in advance) | (2,400) | (1,700) | (1,631) | |||||
Other taxes and taxes and fees with the Regulatory Authority | (13,399) | (10,731) | (7,775) | |||||
Foreign currency exchange differences related to the payments to suppliers | (818) | (1,433) | (502) | |||||
Inventory suppliers | (269) | (295) | (182) | |||||
PP&E suppliers | (425) | (1,467) | (188) | |||||
Other suppliers | (119) | (144) | (31) | |||||
NDF | (5) | 473 | (101) | |||||
Subtotal | (54,495) | (45,873) | (36,333) | |||||
Total cash flows provided by operating activities | $ 19,332 | $ 11,365 | $ 6,812 |
Cash and cash equivalents and92
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Changes in assets/liabilities components (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net decrease (increase) in assets | |||
Trade receivables | $ (2,072) | $ (2,773) | $ (2,364) |
Other receivables | (902) | 276 | (754) |
Inventories | (618) | 837 | (1,522) |
Total | (3,592) | (1,660) | (4,640) |
Net increase (decrease) in liabilities | |||
Trade payables | 1,067 | (1,391) | 1,368 |
Deferred revenues | 51 | (58) | (48) |
Salaries and social security payables | 513 | 369 | 221 |
Other taxes payables | 982 | 13 | 483 |
Other liabilities | 68 | 62 | 29 |
Provisions (Note 17) | (360) | (174) | (163) |
Total | $ 2,321 | $ (1,179) | $ 1,890 |
Cash and cash equivalents and93
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Main non-cash operating transactions (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Main non-cash operating transactions: | |||
Offsetting of capitalized trade receivables of Tuves Paraguay acquisition | $ 149 | ||
Offsetting of tax on personal property - on behalf of Shareholders | $ 8 | $ 15 | |
Income tax offset with VAT and internal taxes | 50 | ||
Offsetting of other receivables with regulatory provisions | 1 | 27 | |
VAT offset with income tax payments | 54 | ||
SAC acquisitions offset with trade receivables | $ 313 | 305 | $ 212 |
Other receivables of PP&E sales offset with trade payables | $ 25 |
Cash and cash equivalents and94
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Most significant investing activities (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fixed assets acquisitions include: | |||
CAPEX (Note 8) | $ (9,905) | $ (9,632) | $ (6,396) |
Acquisition of Materials (net transfers to CAPEX, Note 8) | (1,433) | (474) | (1,062) |
Subtotal | (11,338) | (10,106) | (7,458) |
Plus: Payments of trade payables originated in prior years acquisitions | (3,342) | (4,832) | (1,367) |
Less: Acquisition of fixed assets through incurrence of trade payables | 3,862 | 5,298 | 3,592 |
Assets retirement obligations | 35 | 45 | 53 |
Mobile handsets lent to customers at no cost | 56 | 54 | 32 |
Fixed assets acquisitions, total | (10,727) | (9,541) | (5,148) |
Intangible assets acquisitions include: | |||
3G/4G Licenses acquisitions (Note 9) | (2,256) | ||
Total | (2,256) | ||
Other intangible assets acquisitions (Note 9) | (1,238) | (1,754) | (1,448) |
Plus: Payments of trade payables originated in prior years acquisitions | (93) | (201) | (116) |
SAC acquisitions offset with trade receivables | (313) | (305) | (212) |
Less: Acquisition of intangible assets through incurrence of trade payables | 673 | 462 | 466 |
Total | $ (971) | $ (1,798) | $ (1,310) |
Cash and cash equivalents and95
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Cash flows from purchases, sales and maturities of securities (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | |||
Government bonds acquisition | $ (3,002) | $ (971) | $ (1,049) |
Sales of Government bonds | 1,986 | 1,051 | |
Government bonds collection | 276 | 165 | 45 |
Other short-term investments and time deposits | (2,063) | (265) | |
Sales of Other short-term investments | 176 | ||
Argentine companies notes collection | 28 | ||
Total | $ (2,627) | $ (20) | $ (976) |
Cash and cash equivalents and96
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Components of financing activities (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows | |||
Bank overdrafts | $ 1,344 | $ 3,150 | |
Notes | 1,869 | 716 | |
Bank loans | $ 1,730 | 6,124 | 435 |
Total financial debt proceeds | 1,730 | 9,337 | 4,301 |
Bank overdrafts | (1,572) | (2,793) | |
Notes | (566) | ||
Bank loans | (848) | (143) | (31) |
Total payment of debt | (2,986) | (2,936) | (31) |
Bank overdrafts | (58) | (1,243) | (405) |
Interests on Notes and related expenses | (340) | (205) | (3) |
Interests on bank loans and related expenses | (418) | (125) | (63) |
NDF | (32) | ||
Total payment of interest and related expenses | $ (848) | $ (1,573) | $ (471) |
Cash and cash equivalents and97
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Breakdown of dividends paid by company (Details) $ / shares in Units, ₲ in Millions, $ in Millions | Dec. 29, 2017ARS ($) | Dec. 18, 2017ARS ($) | Mar. 28, 2017PYG (₲) | Aug. 26, 2016ARS ($) | May 13, 2016ARS ($) | Apr. 29, 2016ARS ($)installment | Dec. 17, 2015PYG (₲) | May 11, 2015ARS ($) | Apr. 29, 2015$ / shares | Mar. 26, 2015PYG (₲) | Oct. 31, 2017ARS ($) | May 31, 2017ARS ($) | Dec. 31, 2015ARS ($) | May 31, 2015ARS ($) | Dec. 31, 2017ARS ($)$ / shares | Dec. 31, 2016ARS ($)$ / shares | Dec. 31, 2015ARS ($)$ / shares | Mar. 28, 2017ARS ($) | Dec. 17, 2015ARS ($) | Mar. 26, 2015ARS ($) | |||
Dividends paid by company | |||||||||||||||||||||||
Nucleo to ABC Telecomunicaciones | $ (38) | $ (45) | |||||||||||||||||||||
Nortel and Telecom Argentina non-controlling interest | $ (1,300) | $ (700) | (4,151) | $ (2,000) | (804) | ||||||||||||||||||
Dividends advance declared by Sofora and paid by Telecom in December 2017 | (3) | ||||||||||||||||||||||
Payment of cash dividend | $ (4,192) | $ (2,000) | $ (849) | ||||||||||||||||||||
Reserve for future cash dividends payments | $ 4,150.3 | $ 2,000 | |||||||||||||||||||||
Cash dividend per outstanding share | $ / shares | $ 0.83 | $ 4.28 | $ 2.06 | $ 0.83 | |||||||||||||||||||
Number of Cash Dividend Distribution installments | installment | 2 | ||||||||||||||||||||||
Dividends declared | $ 804 | $ 4,151 | [1] | $ 2,000 | [2] | $ 804 | [3] | ||||||||||||||||
Nucleo | |||||||||||||||||||||||
Dividends paid by company | |||||||||||||||||||||||
Dividends paid | ₲ 40,000 | ₲ 35,000 | ₲ 35,000 | $ 55 | $ 54 | $ 80 | $ 63 | 109 | 143 | ||||||||||||||
Dividends approved | $ 109 | $ 80 | $ 63 | ||||||||||||||||||||
Nucleo | Personal | |||||||||||||||||||||||
Dividends paid by company | |||||||||||||||||||||||
Payment of cash dividend | (41) | (39) | (52) | (41) | |||||||||||||||||||
Dividends paid | 37 | 37 | 54 | 42 | 74 | 96 | |||||||||||||||||
Nucleo | ABC Telecomunicaciones | |||||||||||||||||||||||
Dividends paid by company | |||||||||||||||||||||||
Payment of cash dividend | (20) | (18) | (26) | (19) | |||||||||||||||||||
Dividends paid | $ 18 | $ 17 | $ 26 | $ 21 | $ 35 | $ 47 | |||||||||||||||||
Sofora | |||||||||||||||||||||||
Dividends paid by company | |||||||||||||||||||||||
Dividends paid | $ 2.9 | ||||||||||||||||||||||
[1] | As approved by the Company’s Board of Directors’ Meeting held on December 18, 2017. The amount in pesos is $ 4,150,312,272, which was rounded in this Consolidated Statement of changes in equity to be presented in millions of pesos to 4,151. | ||||||||||||||||||||||
[2] | As approved by the Company's Board of Directors' Meeting held on April 29, 2016. | ||||||||||||||||||||||
[3] | As approved by the Company’s Ordinary Shareholders’ Meeting held on April 29, 2015. |
Cash and cash equivalents and98
Cash and cash equivalents and Investments and Additional information on the consolidated statements of cash flows - Additional information required by IAS 7 (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of liabilities generated by financing activities | |||
Proceeds from financial debt | $ 1,730 | $ 9,337 | $ 4,301 |
Payment of financial debt | 2,986 | 2,936 | 31 |
Payment of interest | 848 | 1,573 | $ 471 |
Total current financial debt | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 11,912 | ||
Cash Flows | (2,104) | ||
Accrued interests | 928 | ||
Exchange differences and currency translation adjustments | 1,499 | ||
Balances as of December 31, 2017 | 12,235 | 11,912 | |
Bank overdrafts | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 1,707 | ||
Cash Flows | (1,572) | ||
Balances as of December 31, 2017 | 135 | 1,707 | |
Bank loans - principal | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 7,401 | ||
Transfers | (1,092) | ||
Cash Flows | 882 | ||
Accrued interests | 11 | ||
Exchange differences and currency translation adjustments | 992 | ||
Balances as of December 31, 2017 | 8,194 | 7,401 | |
Notes - principal | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 2,650 | ||
Transfers | (57) | ||
Cash Flows | (566) | ||
Exchange differences and currency translation adjustments | 131 | ||
Balances as of December 31, 2017 | 2,158 | 2,650 | |
NDF | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 2 | ||
Cash Flows | (32) | ||
Accrued interests | 37 | ||
Exchange differences and currency translation adjustments | 10 | ||
Balances as of December 31, 2017 | 17 | 2 | |
Accrued interests | |||
Reconciliation of liabilities generated by financing activities | |||
Balances as of December 31, 2016 | 152 | ||
Transfers | 1,149 | ||
Cash Flows | (816) | ||
Accrued interests | 880 | ||
Exchange differences and currency translation adjustments | 366 | ||
Balances as of December 31, 2017 | $ 1,731 | $ 152 |
Trade receivables (Details)
Trade receivables (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current trade receivables | ||
Total current trade receivables | $ 8,636 | $ 7,577 |
Non-current trade receivables | ||
Non-current trade receivables | 12 | 208 |
Total trade receivables, net | 8,648 | 7,785 |
Fixed and mobile services | ||
Current trade receivables | ||
Total current trade receivables | 9,232 | 8,210 |
Non-current trade receivables | ||
Non-current trade receivables | 12 | 208 |
Accumulated impairment | ||
Current trade receivables | ||
Total current trade receivables | $ (596) | $ (633) |
Trade receivables - Movements i
Trade receivables - Movements in the allowance for current doubtful accounts (Details) - Trade receivables - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Trade receivables | ||
At the beginning of the fiscal year | $ (633) | $ (386) |
Additions -Bad debt expenses | (1,113) | (1,228) |
Uses | 1,162 | 989 |
Currency translation adjustments | (12) | (8) |
At the end of the year | $ (596) | $ (633) |
Other receivables (Details)
Other receivables (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current other receivables | ||
Total Current other receivables | $ 1,491 | $ 1,011 |
Non-current other receivables | ||
Total Non-current other receivables | 419 | 360 |
Total other receivables | 1,910 | 1,371 |
Financial NDF | 60 | |
Gross carrying value | ||
Current other receivables | ||
Prepaid expenses | 554 | 620 |
Deposit in auction's warrant to CONATEL (Note 2.i) | 278 | |
Expenditure reimbursement | 134 | 126 |
Tax credits | 218 | 46 |
Restricted funds | 45 | 33 |
Receivables for return of handsets under warranty | 15 | 29 |
PP&E disposal receivables | 20 | 18 |
Guarantee deposits | 13 | 10 |
Tax on personal property - on behalf of Shareholders | 8 | |
NDF (Note 20) | 66 | 2 |
Other | 171 | 140 |
Total Current other receivables | 1,514 | 1,032 |
Non-current other receivables | ||
Prepaid expenses | 266 | 258 |
Credit on SC Resolution No. 41/07 and IDC (Note 2.m and n) | 56 | 57 |
Restricted funds | 53 | 33 |
Regulatory receivables (Paraguay) | 39 | 27 |
Tax on personal property - on behalf of Shareholders | 18 | 18 |
Tax credits | 15 | 11 |
Guarantee deposits | 21 | 12 |
Credit of indemnity for Tuves Paraguary Acquistion | 29 | |
Financial NDF (Note 20) | 2 | |
Other | 1 | 19 |
Total Non-current other receivables | 500 | 435 |
Financial NDF | 60 | |
Accumulated impairment | ||
Current other receivables | ||
Total Current other receivables | (23) | (21) |
Non-current other receivables | ||
Allowance for regulatory matters (Note 2 m. and n) | (56) | (57) |
Allowance for tax on personal property | (18) | $ (18) |
Allowance for tax on other credits (i) | (7) | |
Allowance for tax on other credits allocated to taxes with the Regulatory Authority | (6) | |
Allowance for tax on other credits allocated to currency translation adjustments | $ (1) |
Other receivables - Movements i
Other receivables - Movements in the allowances (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Other current receivables | ||
Movements in the allowances of other receivables | ||
At the beginning of the fiscal year | $ (21) | $ (25) |
Additions | (2) | |
Uses | 4 | |
At the end of the year | (23) | (21) |
Non-current regulatory receivables | ||
Movements in the allowances of other receivables | ||
At the beginning of the fiscal year | (57) | (84) |
Compensation of Telecom Argentina's regulatory liabilities | 1 | 27 |
At the end of the year | (56) | (57) |
Non-current tax on personal property receivables | ||
Movements in the allowances of other receivables | ||
At the beginning of the fiscal year | (18) | (18) |
At the end of the year | $ (18) | $ (18) |
Inventories (Details)
Inventories (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Inventories and allowance for obsolescence of inventories | |||
Inventories | $ 1,854 | $ 1,278 | |
Gross carrying value | |||
Inventories and allowance for obsolescence of inventories | |||
Inventories | 1,901 | 1,332 | |
Gross carrying value | Mobile handsets and others | |||
Inventories and allowance for obsolescence of inventories | |||
Inventories | 1,631 | 1,321 | |
Gross carrying value | Fixed telephones and equipment | |||
Inventories and allowance for obsolescence of inventories | |||
Inventories | 18 | 11 | |
Gross carrying value | Inventories for construction projects | |||
Inventories and allowance for obsolescence of inventories | |||
Inventories | 252 | ||
Accumulated impairment | |||
Inventories and allowance for obsolescence of inventories | |||
Inventories | $ (47) | $ (54) | $ (86) |
Inventories - Movements in the
Inventories - Movements in the allowance for obsolescence of inventories (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Movements in the allowance for obsolescence of inventories | ||
At the beginning of the year | $ 1,278 | |
At the end of the year | 1,854 | $ 1,278 |
Accumulated impairment | ||
Movements in the allowance for obsolescence of inventories | ||
At the beginning of the year | (54) | (86) |
Additions - Fees for services, maintenance and materials | (17) | (45) |
Uses | 24 | 77 |
At the end of the year | $ (47) | $ (54) |
Inventories - Sale and cost of
Inventories - Sale and cost of equipment and handsets by business segment (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating segments | |||
Total equipment and handsets sale | $ 8,215 | $ 7,886 | $ 6,016 |
Total cost of equipment and handsets | (6,684) | (6,188) | (4,595) |
Total income for sale of equipment and handsets | 1,531 | 1,698 | 1,421 |
Fixed services | |||
Operating segments | |||
Total equipment and handsets sale | 663 | 91 | 61 |
Total cost of equipment and handsets | (524) | (136) | (82) |
Total income for sale of equipment and handsets | 139 | (45) | (21) |
Personal Mobile Services | |||
Operating segments | |||
Total equipment and handsets sale | 7,446 | 7,535 | 5,796 |
Total cost of equipment and handsets | (6,035) | (5,749) | (4,328) |
Total income for sale of equipment and handsets | 1,411 | 1,786 | 1,468 |
Nucleo Mobile Services | |||
Operating segments | |||
Total equipment and handsets sale | 106 | 260 | 159 |
Total cost of equipment and handsets | (125) | (303) | (185) |
Total income for sale of equipment and handsets | $ (19) | $ (43) | $ (26) |
Inventories - Cost of equipment
Inventories - Cost of equipment and handsets (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cost of equipment and handsets | |||
Inventories at the beginning of the year | $ (1,332) | $ (2,279) | $ (794) |
Plus: | |||
Equipment acquisitions | (7,416) | (5,491) | (6,233) |
SAC deferred costs (Note 3.j) | 80 | 130 | 93 |
Decreases net of allowance of obsolescence | 20 | 49 | 25 |
Handsets lent to customers at no cost | 56 | 54 | 32 |
Decreases not charged to cost of equipment | 7 | 17 | 3 |
Less: | |||
Inventories at the end of the year | 1,901 | 1,332 | 2,279 |
Cost of equipments and handsets | $ (6,684) | $ (6,188) | $ (4,595) |
Property, plant and equipment -
Property, plant and equipment - Property, plant and equipment, Net (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Property, plant and equipment | |||
Property, plant and equipment | $ 28,538 | $ 23,165 | $ 17,963 |
Gross carrying value | |||
Property, plant and equipment | |||
Property, plant and equipment | 61,157 | 51,149 | |
Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 28,538 | 23,165 | |
PP&E without materials | Gross carrying value | |||
Property, plant and equipment | |||
Property, plant and equipment | 72,138 | 61,157 | |
PP&E without materials | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 26,963 | 21,886 | |
PP&E without materials | Accumulated impairment | |||
Property, plant and equipment | |||
Property, plant and equipment | (305) | (282) | (203) |
Land, buildings and installations | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 1,576 | 1,310 | |
Computer equipment and systems | Gross carrying value | |||
Property, plant and equipment | |||
Property, plant and equipment | 13,250 | 11,401 | 9,663 |
Computer equipment and systems | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 2,586 | 2,265 | |
Switching and transmission equipment | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 6,576 | 5,614 | |
Mobile network access and external wiring | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 11,256 | 9,078 | |
Construction in progress | Gross carrying value | |||
Property, plant and equipment | |||
Property, plant and equipment | 4,138 | 2,915 | 3,015 |
Construction in progress | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 4,138 | 2,915 | |
Other tangible assets | Gross Carrying Amount, Net of Accumulated Depreciation | |||
Property, plant and equipment | |||
Property, plant and equipment | 831 | 704 | |
Materials | Gross carrying value | |||
Property, plant and equipment | |||
Property, plant and equipment | 2,024 | 1,629 | 1,652 |
Materials | Accumulated impairment | |||
Property, plant and equipment | |||
Property, plant and equipment | $ (144) | $ (68) | $ (52) |
Property, plant and equipmen108
Property, plant and equipment - Materials (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | $ 23,165 | $ 17,963 | |
Purchases | 9,905 | 9,632 | $ 6,396 |
Additions | (316) | (383) | (199) |
Property, plant and equipment at end of period | 28,538 | 23,165 | 17,963 |
Gross carrying value | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 61,157 | 51,149 | |
Purchases | 9,632 | ||
Currency translation adjustments | 1,430 | ||
Property, plant and equipment at end of period | 61,157 | 51,149 | |
Gross carrying value | Materials | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,629 | 1,652 | |
Increase for Tuves Paraguay acquisition | 72 | ||
Purchases | 5,133 | 3,647 | |
Disposal for maintenance | (1,125) | (507) | |
Transfers to CAPEX | (3,700) | (3,173) | |
Currency translation adjustments | 15 | 10 | |
Property, plant and equipment at end of period | 2,024 | 1,629 | 1,652 |
Accumulated impairment | Materials | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (68) | (52) | |
Additions | (94) | (16) | |
Decrease | 18 | ||
Property, plant and equipment at end of period | $ (144) | $ (68) | $ (52) |
Property, plant and equipmen109
Property, plant and equipment - Movements in impairment of PP&E (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movements in impairment of PP&E | |||
Property, plant and equipment at beginning of period | $ 23,165 | $ 17,963 | |
Additions | (316) | (383) | $ (199) |
Property, plant and equipment at end of period | 28,538 | 23,165 | 17,963 |
PP&E without materials | Accumulated impairment | |||
Movements in impairment of PP&E | |||
Property, plant and equipment at beginning of period | (282) | (203) | |
Additions | (234) | (367) | |
Uses | 211 | 288 | |
Property, plant and equipment at end of period | $ (305) | $ (282) | $ (203) |
Property, plant and equipmen110
Property, plant and equipment - Property, plant and equipment, Gross (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | $ 23,165 | $ 17,963 | |
CAPEX | 9,905 | 9,632 | $ 6,396 |
Property, plant and equipment at end of period | 28,538 | 23,165 | 17,963 |
Gross carrying value | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 61,157 | 51,149 | |
CAPEX | 9,632 | ||
Currency translation adjustments | 1,430 | ||
Decreases | (1,054) | ||
Property, plant and equipment at end of period | 61,157 | 51,149 | |
Gross carrying value | PP&E without materials | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 61,157 | ||
Increase for Tuves Paraguay acquisition | 171 | ||
CAPEX | 9,905 | ||
Currency translation adjustments | 1,775 | ||
Decreases | (870) | ||
Property, plant and equipment at end of period | 72,138 | 61,157 | |
Gross carrying value | Land | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 151 | 149 | |
Currency translation adjustments | 2 | 2 | |
Property, plant and equipment at end of period | 153 | 151 | 149 |
Gross carrying value | Building | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,877 | 1,771 | |
Currency translation adjustments | 12 | 11 | |
Transfers and reclassifications | 103 | 95 | |
Property, plant and equipment at end of period | 1,992 | 1,877 | 1,771 |
Gross carrying value | Tower and pole | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,697 | 1,238 | |
Currency translation adjustments | 103 | 82 | |
Transfers and reclassifications | 188 | 377 | |
Property, plant and equipment at end of period | 1,988 | 1,697 | 1,238 |
Gross carrying value | Transmission equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 8,010 | 6,880 | |
CAPEX | 66 | 64 | |
Currency translation adjustments | 189 | 147 | |
Transfers and reclassifications | 1,301 | 959 | |
Decreases | (58) | (40) | |
Property, plant and equipment at end of period | 9,508 | 8,010 | 6,880 |
Gross carrying value | Mobile network access | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 8,443 | 5,242 | |
CAPEX | 26 | 128 | |
Currency translation adjustments | 329 | 250 | |
Transfers and reclassifications | 2,072 | 3,435 | |
Decreases | (467) | (612) | |
Property, plant and equipment at end of period | 10,403 | 8,443 | 5,242 |
Gross carrying value | External wiring | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 11,529 | 10,208 | |
Transfers and reclassifications | 1,927 | 1,407 | |
Decreases | (1) | (86) | |
Property, plant and equipment at end of period | 13,455 | 11,529 | 10,208 |
Gross carrying value | Switching equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 8,916 | 7,791 | |
CAPEX | 64 | 75 | |
Currency translation adjustments | 331 | 272 | |
Transfers and reclassifications | 255 | 830 | |
Decreases | (52) | ||
Property, plant and equipment at end of period | 9,566 | 8,916 | 7,791 |
Gross carrying value | Power equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,727 | 1,449 | |
Currency translation adjustments | 76 | 60 | |
Transfers and reclassifications | 285 | 220 | |
Decreases | (2) | (2) | |
Property, plant and equipment at end of period | 2,086 | 1,727 | 1,449 |
Gross carrying value | Computer equipment and systems | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 11,401 | 9,663 | |
CAPEX | 56 | 28 | |
Currency translation adjustments | 518 | 408 | |
Transfers and reclassifications | 1,311 | 1,304 | |
Decreases | (36) | (2) | |
Property, plant and equipment at end of period | 13,250 | 11,401 | 9,663 |
Gross carrying value | Telephony equipment and instruments | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 845 | 806 | |
CAPEX | 4 | ||
Currency translation adjustments | 3 | 3 | |
Transfers and reclassifications | 51 | 37 | |
Decreases | (1) | ||
Property, plant and equipment at end of period | 903 | 845 | 806 |
Gross carrying value | Handsets lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 543 | 505 | |
Increase for Tuves Paraguay acquisition | 171 | ||
CAPEX | 56 | 54 | |
Currency translation adjustments | 97 | 99 | |
Decreases | (50) | (115) | |
Property, plant and equipment at end of period | 817 | 543 | 505 |
Gross carrying value | Equipment lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 267 | 190 | |
CAPEX | 224 | 150 | |
Transfers and reclassifications | 10 | 3 | |
Decreases | (126) | (76) | |
Property, plant and equipment at end of period | 375 | 267 | 190 |
Gross carrying value | Vehicles | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 429 | 380 | |
CAPEX | 130 | 56 | |
Currency translation adjustments | 9 | 7 | |
Decreases | (23) | (14) | |
Property, plant and equipment at end of period | 545 | 429 | 380 |
Gross carrying value | Furniture | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 202 | 165 | |
CAPEX | 3 | 2 | |
Currency translation adjustments | 11 | 9 | |
Transfers and reclassifications | 18 | 26 | |
Property, plant and equipment at end of period | 234 | 202 | 165 |
Gross carrying value | Installations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,172 | 905 | |
Currency translation adjustments | 17 | 15 | |
Transfers and reclassifications | 324 | 252 | |
Property, plant and equipment at end of period | 1,513 | 1,172 | 905 |
Gross carrying value | Improvements in third parties buildings | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 755 | 574 | |
CAPEX | 4 | 8 | |
Currency translation adjustments | 53 | 40 | |
Transfers and reclassifications | 55 | 133 | |
Property, plant and equipment at end of period | 867 | 755 | 574 |
Gross carrying value | Special projects | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 89 | 77 | |
Transfers and reclassifications | 32 | 12 | |
Property, plant and equipment at end of period | 121 | 89 | 77 |
Gross carrying value | Construction in progress | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 2,915 | 3,015 | |
CAPEX | 9,237 | 9,022 | |
Currency translation adjustments | 25 | 22 | |
Transfers and reclassifications | (7,932) | (9,090) | |
Decreases | (107) | (54) | |
Property, plant and equipment at end of period | 4,138 | 2,915 | 3,015 |
Gross carrying value | Asset retirement obligations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 189 | 141 | |
CAPEX | 35 | 45 | |
Currency translation adjustments | 3 | ||
Property, plant and equipment at end of period | $ 224 | $ 189 | $ 141 |
Property, plant and equipmen111
Property, plant and equipment - Property, plant and equipment. Accumulated Depreciation (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | $ 23,165 | $ 17,963 | |
Depreciation | (5,039) | (4,358) | $ (3,046) |
Property, plant and equipment at end of period | 28,538 | 23,165 | 17,963 |
Accumulated depreciation and amortization | PP&E without materials | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (39,271) | (34,583) | |
Increase for Tuves Paraguay acquisition | (83) | ||
Depreciation | (5,039) | (4,358) | |
Currency translation adjustments | (1,327) | (1,033) | |
Transfers and reclassifications | 703 | ||
Decreases | 545 | ||
Property, plant and equipment at end of period | (45,175) | (39,271) | (34,583) |
Accumulated depreciation and amortization | Building | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (1,171) | (1,134) | |
Depreciation | (52) | (41) | |
Currency translation adjustments | 13 | 4 | |
Property, plant and equipment at end of period | (1,210) | (1,171) | (1,134) |
Accumulated depreciation and amortization | Tower and pole | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (712) | (596) | |
Depreciation | (97) | (77) | |
Currency translation adjustments | (52) | (39) | |
Property, plant and equipment at end of period | (861) | (712) | (596) |
Accumulated depreciation and amortization | Transmission equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (5,793) | (5,265) | |
Depreciation | (633) | (476) | |
Currency translation adjustments | (113) | (87) | |
Transfers and reclassifications | 35 | ||
Decreases | (57) | ||
Property, plant and equipment at end of period | (6,596) | (5,793) | (5,265) |
Accumulated depreciation and amortization | Mobile network access | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (3,910) | (3,210) | |
Depreciation | (1,146) | (877) | |
Currency translation adjustments | (226) | (147) | |
Transfers and reclassifications | 324 | ||
Decreases | 257 | ||
Property, plant and equipment at end of period | (5,025) | (3,910) | (3,210) |
Accumulated depreciation and amortization | External wiring | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (6,984) | (6,597) | |
Depreciation | (593) | (472) | |
Transfers and reclassifications | 85 | ||
Property, plant and equipment at end of period | (7,577) | (6,984) | (6,597) |
Accumulated depreciation and amortization | Switching equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (7,342) | (6,327) | |
Depreciation | (703) | (856) | |
Currency translation adjustments | (282) | (211) | |
Transfers and reclassifications | 52 | ||
Decreases | 118 | ||
Property, plant and equipment at end of period | (8,209) | (7,342) | (6,327) |
Accumulated depreciation and amortization | Power equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (1,050) | (921) | |
Depreciation | (119) | (97) | |
Currency translation adjustments | (45) | (34) | |
Transfers and reclassifications | 2 | ||
Decreases | 2 | ||
Property, plant and equipment at end of period | (1,212) | (1,050) | (921) |
Accumulated depreciation and amortization | Computer equipment and systems | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (9,136) | (7,778) | |
Depreciation | (1,112) | (997) | |
Currency translation adjustments | (450) | (363) | |
Transfers and reclassifications | 2 | ||
Decreases | 34 | ||
Property, plant and equipment at end of period | (10,664) | (9,136) | (7,778) |
Accumulated depreciation and amortization | Telephony equipment and instruments | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (789) | (773) | |
Depreciation | (22) | (15) | |
Currency translation adjustments | (3) | (2) | |
Transfers and reclassifications | 1 | ||
Property, plant and equipment at end of period | (814) | (789) | (773) |
Accumulated depreciation and amortization | Handsets lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (508) | (475) | |
Increase for Tuves Paraguay acquisition | (83) | ||
Depreciation | (75) | (50) | |
Currency translation adjustments | (98) | (98) | |
Transfers and reclassifications | 115 | ||
Decreases | 50 | ||
Property, plant and equipment at end of period | (714) | (508) | (475) |
Accumulated depreciation and amortization | Equipment lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (141) | (101) | |
Depreciation | (155) | (116) | |
Transfers and reclassifications | 76 | ||
Decreases | 124 | ||
Property, plant and equipment at end of period | (172) | (141) | (101) |
Accumulated depreciation and amortization | Vehicles | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (223) | (183) | |
Depreciation | (57) | (47) | |
Currency translation adjustments | (4) | (4) | |
Transfers and reclassifications | 11 | ||
Decreases | 17 | ||
Property, plant and equipment at end of period | (267) | (223) | (183) |
Accumulated depreciation and amortization | Furniture | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (146) | (128) | |
Depreciation | (15) | (11) | |
Currency translation adjustments | (9) | (7) | |
Property, plant and equipment at end of period | (170) | (146) | (128) |
Accumulated depreciation and amortization | Installations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (719) | (603) | |
Depreciation | (137) | (102) | |
Currency translation adjustments | (16) | (14) | |
Property, plant and equipment at end of period | (872) | (719) | (603) |
Accumulated depreciation and amortization | Improvements in third parties buildings | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (529) | (403) | |
Depreciation | (89) | (98) | |
Currency translation adjustments | (42) | (28) | |
Property, plant and equipment at end of period | (660) | (529) | (403) |
Accumulated depreciation and amortization | Special projects | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (47) | (34) | |
Depreciation | (17) | (13) | |
Property, plant and equipment at end of period | (64) | (47) | (34) |
Accumulated depreciation and amortization | Asset retirement obligations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | (71) | (55) | |
Depreciation | (17) | (13) | |
Currency translation adjustments | (3) | ||
Property, plant and equipment at end of period | (88) | (71) | $ (55) |
Gross Carrying Amount, Net of Accumulated Depreciation | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 23,165 | ||
Property, plant and equipment at end of period | 28,538 | 23,165 | |
Gross Carrying Amount, Net of Accumulated Depreciation | PP&E without materials | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 21,886 | ||
Property, plant and equipment at end of period | 26,963 | 21,886 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Land | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 151 | ||
Property, plant and equipment at end of period | 153 | 151 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Building | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 706 | ||
Property, plant and equipment at end of period | 782 | 706 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Tower and pole | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 985 | ||
Property, plant and equipment at end of period | 1,127 | 985 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Transmission equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 2,217 | ||
Property, plant and equipment at end of period | 2,912 | 2,217 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Mobile network access | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 4,533 | ||
Property, plant and equipment at end of period | 5,378 | 4,533 | |
Gross Carrying Amount, Net of Accumulated Depreciation | External wiring | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 4,545 | ||
Property, plant and equipment at end of period | 5,878 | 4,545 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Switching equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,574 | ||
Property, plant and equipment at end of period | 1,357 | 1,574 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Power equipment | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 677 | ||
Property, plant and equipment at end of period | 874 | 677 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Computer equipment and systems | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 2,265 | ||
Property, plant and equipment at end of period | 2,586 | 2,265 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Telephony equipment and instruments | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 56 | ||
Property, plant and equipment at end of period | 89 | 56 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Handsets lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 35 | ||
Property, plant and equipment at end of period | 103 | 35 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Equipment lent to customers at no cost | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 126 | ||
Property, plant and equipment at end of period | 203 | 126 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Vehicles | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 206 | ||
Property, plant and equipment at end of period | 278 | 206 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Furniture | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 56 | ||
Property, plant and equipment at end of period | 64 | 56 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Installations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 453 | ||
Property, plant and equipment at end of period | 641 | 453 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Improvements in third parties buildings | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 226 | ||
Property, plant and equipment at end of period | 207 | 226 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Special projects | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 42 | ||
Property, plant and equipment at end of period | 57 | 42 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Construction in progress | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 2,915 | ||
Property, plant and equipment at end of period | 4,138 | 2,915 | |
Gross Carrying Amount, Net of Accumulated Depreciation | Asset retirement obligations | |||
Reconciliation of changes in property, plant and equipment | |||
Property, plant and equipment at beginning of period | 118 | ||
Property, plant and equipment at end of period | $ 136 | $ 118 |
Intangible assets - Gross Value
Intangible assets - Gross Value (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets | |||
Value, at the beginning of the year | $ 7,592 | $ 7,659 | |
CAPEX | 1,238 | 1,754 | $ 3,704 |
Value, at the end of the year | 7,098 | 7,592 | 7,659 |
SAC | Fixed services | |||
Intangible assets | |||
Value, at the beginning of the year | 96 | ||
Value, at the end of the year | 77 | 96 | |
SAC | Mobile Services | |||
Intangible assets | |||
Value, at the beginning of the year | 1,427 | ||
Value, at the end of the year | 1,140 | 1,427 | |
Service connection or habilitation costs | |||
Intangible assets | |||
Value, at the beginning of the year | 119 | ||
Value, at the end of the year | 136 | 119 | |
3G/4G licenses | |||
Intangible assets | |||
Value, at the beginning of the year | 5,105 | ||
Value, at the end of the year | 4,780 | 5,105 | |
PCS license (Argentina) | |||
Intangible assets | |||
Value, at the beginning of the year | 588 | ||
Value, at the end of the year | 588 | 588 | |
PCS and Band B (Paraguay) | |||
Intangible assets | |||
Value, at the end of the year | 3 | ||
Rights of use | |||
Intangible assets | |||
Value, at the beginning of the year | 244 | ||
Value, at the end of the year | 226 | 244 | |
Exclusivity agreements | |||
Intangible assets | |||
Value, at the beginning of the year | 12 | ||
Value, at the end of the year | 11 | 12 | |
Customer relationships | |||
Intangible assets | |||
Value, at the beginning of the year | 1 | ||
Value, at the end of the year | 135 | 1 | |
Goodwill | |||
Intangible assets | |||
Value, at the end of the year | 2 | ||
Gross carrying value | |||
Intangible assets | |||
Value, at the beginning of the year | 11,788 | 10,851 | |
Acquisition Tuves Paraguay | 190 | ||
CAPEX | 1,238 | 1,754 | |
Currency translation adjustments | 300 | 248 | |
Decreases | (1,535) | (1,065) | |
Value, at the end of the year | 11,981 | 11,788 | 10,851 |
Gross carrying value | SAC | Fixed services | |||
Intangible assets | |||
Value, at the beginning of the year | 226 | 234 | |
CAPEX | 87 | 137 | |
Decreases | (169) | (145) | |
Value, at the end of the year | 144 | 226 | 234 |
Gross carrying value | SAC | Mobile Services | |||
Intangible assets | |||
Value, at the beginning of the year | 2,838 | 2,157 | |
Acquisition Tuves Paraguay | 55 | ||
CAPEX | 1,081 | 1,544 | |
Currency translation adjustments | 35 | 30 | |
Decreases | (1,295) | (893) | |
Value, at the end of the year | 2,714 | 2,838 | 2,157 |
Gross carrying value | Service connection or habilitation costs | |||
Intangible assets | |||
Value, at the beginning of the year | 222 | 208 | |
CAPEX | 50 | 41 | |
Decreases | (30) | (27) | |
Value, at the end of the year | 242 | 222 | 208 |
Gross carrying value | 3G/4G licenses | |||
Intangible assets | |||
Value, at the beginning of the year | 5,786 | 5,786 | |
Value, at the end of the year | 5,786 | 5,786 | 5,786 |
Gross carrying value | PCS license (Argentina) | |||
Intangible assets | |||
Value, at the beginning of the year | 658 | 658 | |
Value, at the end of the year | 658 | 658 | 658 |
Gross carrying value | PCS and Band B (Paraguay) | |||
Intangible assets | |||
Value, at the beginning of the year | 951 | 774 | |
CAPEX | 3 | ||
Currency translation adjustments | 202 | 177 | |
Value, at the end of the year | 1,156 | 951 | 774 |
Gross carrying value | Rights of use | |||
Intangible assets | |||
Value, at the beginning of the year | 463 | 425 | |
Acquisition Tuves Paraguay | 4 | ||
CAPEX | 17 | 32 | |
Currency translation adjustments | 7 | 6 | |
Decreases | (41) | ||
Value, at the end of the year | 450 | 463 | 425 |
Gross carrying value | Exclusivity agreements | |||
Intangible assets | |||
Value, at the beginning of the year | 41 | 41 | |
Value, at the end of the year | 41 | 41 | 41 |
Gross carrying value | Customer relationships | |||
Intangible assets | |||
Value, at the beginning of the year | 2 | 2 | |
Acquisition Tuves Paraguay | 129 | ||
Currency translation adjustments | 15 | ||
Value, at the end of the year | 146 | 2 | 2 |
Gross carrying value | Goodwill | |||
Intangible assets | |||
Acquisition Tuves Paraguay | 2 | ||
Value, at the end of the year | 2 | ||
Gross carrying value | Software developed for internal use | |||
Intangible assets | |||
Value, at the beginning of the year | 601 | 566 | |
Currency translation adjustments | 41 | 35 | |
Value, at the end of the year | 642 | $ 601 | $ 566 |
Tuves Paraguay | Customer relationships | |||
Intangible assets | |||
Value, at the end of the year | $ 134 |
Intangible assets - Accumulated
Intangible assets - Accumulated Amortization (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible assets | ||
Value, at the beginning of the year | $ 7,592 | $ 7,659 |
Value, at the end of the year | 7,098 | 7,592 |
SAC | Fixed services | ||
Intangible assets | ||
Value, at the beginning of the year | 96 | |
Value, at the end of the year | 77 | 96 |
SAC | Mobile Services | ||
Intangible assets | ||
Value, at the beginning of the year | 1,427 | |
Value, at the end of the year | 1,140 | 1,427 |
Service connection or habilitation costs | ||
Intangible assets | ||
Value, at the beginning of the year | 119 | |
Value, at the end of the year | 136 | 119 |
3G/4G licenses | ||
Intangible assets | ||
Value, at the beginning of the year | 5,105 | |
Value, at the end of the year | 4,780 | 5,105 |
PCS license (Argentina) | ||
Intangible assets | ||
Value, at the beginning of the year | 588 | |
Value, at the end of the year | 588 | 588 |
PCS and Band B (Paraguay) | ||
Intangible assets | ||
Value, at the end of the year | 3 | |
Rights of use | ||
Intangible assets | ||
Value, at the beginning of the year | 244 | |
Value, at the end of the year | 226 | 244 |
Exclusivity agreements | ||
Intangible assets | ||
Value, at the beginning of the year | 12 | |
Value, at the end of the year | 11 | 12 |
Customer relationships | ||
Intangible assets | ||
Value, at the beginning of the year | 1 | |
Value, at the end of the year | 135 | 1 |
Goodwill | ||
Intangible assets | ||
Value, at the end of the year | 2 | |
Accumulated depreciation and amortization | ||
Intangible assets | ||
Value, at the beginning of the year | (4,196) | (3,192) |
Acquisition Tuves Paraguay | (49) | |
Amortization | (1,889) | (1,840) |
Currency translation adjustments | (272) | (229) |
Decreases | 1,523 | 1,065 |
Value, at the end of the year | (4,883) | (4,196) |
Accumulated depreciation and amortization | SAC | Fixed services | ||
Intangible assets | ||
Value, at the beginning of the year | (130) | (118) |
Amortization | (106) | (157) |
Decreases | 169 | 145 |
Value, at the end of the year | (67) | (130) |
Accumulated depreciation and amortization | SAC | Mobile Services | ||
Intangible assets | ||
Value, at the beginning of the year | (1,411) | (1,001) |
Acquisition Tuves Paraguay | (47) | |
Amortization | (1,385) | (1,288) |
Currency translation adjustments | (26) | (15) |
Decreases | 1,295 | 893 |
Value, at the end of the year | (1,574) | (1,411) |
Accumulated depreciation and amortization | Service connection or habilitation costs | ||
Intangible assets | ||
Value, at the beginning of the year | (103) | (101) |
Amortization | (33) | (29) |
Decreases | 30 | 27 |
Value, at the end of the year | (106) | (103) |
Accumulated depreciation and amortization | 3G/4G licenses | ||
Intangible assets | ||
Value, at the beginning of the year | (681) | (343) |
Amortization | (325) | (338) |
Value, at the end of the year | (1,006) | (681) |
Accumulated depreciation and amortization | PCS license (Argentina) | ||
Intangible assets | ||
Value, at the beginning of the year | (70) | (70) |
Value, at the end of the year | (70) | (70) |
Accumulated depreciation and amortization | PCS and Band B (Paraguay) | ||
Intangible assets | ||
Value, at the beginning of the year | (951) | (774) |
Currency translation adjustments | (202) | (177) |
Value, at the end of the year | (1,153) | (951) |
Accumulated depreciation and amortization | Rights of use | ||
Intangible assets | ||
Value, at the beginning of the year | (219) | (190) |
Acquisition Tuves Paraguay | (2) | |
Amortization | (29) | (27) |
Currency translation adjustments | (3) | (2) |
Decreases | 29 | |
Value, at the end of the year | (224) | (219) |
Accumulated depreciation and amortization | Exclusivity agreements | ||
Intangible assets | ||
Value, at the beginning of the year | (29) | (28) |
Amortization | (1) | (1) |
Value, at the end of the year | (30) | (29) |
Accumulated depreciation and amortization | Customer relationships | ||
Intangible assets | ||
Value, at the beginning of the year | (1) | (1) |
Amortization | (10) | |
Value, at the end of the year | (11) | (1) |
Accumulated depreciation and amortization | Software developed for internal use | ||
Intangible assets | ||
Value, at the beginning of the year | (601) | (566) |
Currency translation adjustments | (41) | (35) |
Value, at the end of the year | (642) | $ (601) |
Tuves Paraguay | Customer relationships | ||
Intangible assets | ||
Value, at the end of the year | 134 | |
Cubecorp | Customer relationships | ||
Intangible assets | ||
Value, at the end of the year | $ 1 |
Trade payables (Details)
Trade payables (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current trade payables | ||
PP&E | $ 3,854 | $ 4,496 |
Other assets and services | 4,783 | 3,422 |
Inventory | 2,697 | 676 |
Subtotal trade payables | 11,334 | 8,594 |
Agent commissions | 149 | 385 |
Total Current trade payables | 11,483 | 8,979 |
Non-current trade payables | ||
PP&E | 101 | 152 |
Total Non-current trade payables | 101 | 152 |
Total trade payables | $ 11,584 | $ 9,131 |
Deferred revenues (Details)
Deferred revenues (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current deferred revenues | ||
On prepaid calling cards - Fixed and Mobile Services | $ 292 | $ 261 |
On construction projects | 48 | |
On connection fees - fixed services | 36 | 35 |
On capacity rental | 32 | 41 |
On mobile customer loyalty programs | 95 | 87 |
From CONATEL - mobile services Nucleo (Note 18.d) | 5 | 4 |
Other | 7 | 15 |
Total current deferred revenues | 515 | 443 |
Non-current deferred revenues | ||
On capacity rental - Fixed Services | 195 | 252 |
On connection fees - Fixed services | 82 | 87 |
On mobile customer loyalty programs | 148 | 106 |
Total non-current deferred revenues | 425 | 445 |
Total deferred revenues | $ 940 | $ 888 |
Financial debt (Details)
Financial debt (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current and non-current financial debt | ||
Current financial debt | $ 3,194 | $ 3,266 |
Non-current | 9,041 | 8,646 |
Total financial debt | 12,235 | 11,912 |
Bank overdrafts | ||
Current and non-current financial debt | ||
Current financial debt | 135 | 1,707 |
Bank loans - principal | ||
Current and non-current financial debt | ||
Current financial debt | 182 | 839 |
Notes - principal | ||
Current and non-current financial debt | ||
Current financial debt | 2,158 | 566 |
NDF | ||
Current and non-current financial debt | ||
Current financial debt | 8 | 2 |
Accrued interest and related expenses | ||
Current and non-current financial debt | ||
Current financial debt | 711 | 152 |
Notes - principal | ||
Current and non-current financial debt | ||
Non-current | 2,084 | |
Bank loans - principal | ||
Current and non-current financial debt | ||
Non-current | 8,012 | $ 6,562 |
NDF | ||
Current and non-current financial debt | ||
Non-current | 9 | |
Accrued interests and related expenses | ||
Current and non-current financial debt | ||
Non-current | $ 1,020 |
Financial debt - Personal (Deta
Financial debt - Personal (Details) - Personal $ in Millions, $ in Millions | Sep. 18, 2017ARS ($) | Oct. 26, 2016USD ($) | Oct. 26, 2016ARS ($) | Oct. 05, 2016installment | Apr. 30, 2017USD ($)installment | Jul. 05, 2016USD ($) |
Bank loans - IFC Loan | ||||||
Current and non-current financial debt | ||||||
Borrowing term | 6 years | |||||
Half-yearly installments | installment | 8 | |||||
Loan proceeds | $ 392.5 | $ 5,956 | ||||
Net borrowing expenses | $ 7.5 | |||||
Bank loans - IFC Loan | 6 month LIBOR rate | ||||||
Current and non-current financial debt | ||||||
Applicable margin | 4.00% | |||||
Bank loans - IFC Loan | Maximum | ||||||
Current and non-current financial debt | ||||||
Notional amount | $ 400 | |||||
IIC Loan | ||||||
Current and non-current financial debt | ||||||
Notional amount | $ 100 | |||||
Half-yearly installments | installment | 8 | |||||
Loan proceeds | $ 1,723 | |||||
IIC Loan | 6 month LIBOR rate | ||||||
Current and non-current financial debt | ||||||
Applicable margin | 4.00% |
Financial debt - Nucleo (Detail
Financial debt - Nucleo (Details) ₲ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017PYG (₲) | Dec. 31, 2017ARS ($) | Dec. 31, 2016ARS ($) | |
Financial Debt | |||
Current financial debt | $ 3,194 | $ 3,266 | |
Non-current | 9,041 | $ 8,646 | |
Nucleo | Bank loans - principal | |||
Financial Debt | |||
Principal amount | ₲ | ₲ 120,000 | ||
Current financial debt | 182 | ||
Non-current | 215 | ||
Nucleo | Principal Nominal Value 80,000 | |||
Financial Debt | |||
Principal amount | ₲ | ₲ 80,000 | ||
Amortization term | 1 year 10 months 24 days | ||
Current financial debt | 132 | ||
Non-current | 132 | ||
Nucleo | Principal Nominal Value 40,000 | |||
Financial Debt | |||
Principal amount | ₲ | ₲ 40,000 | ||
Amortization term | 1 year 8 months 12 days | ||
Current financial debt | 50 | ||
Non-current | $ 83 | ||
Weighted average | Nucleo | Bank loans - principal | |||
Financial Debt | |||
Amortization term | 2 years | ||
Weighted average annual rate | 8.83% | 8.83% |
Financial debt - Global Program
Financial debt - Global Programs for the issuance of Notes (Details) | Nov. 16, 2016USD ($)payment | Dec. 10, 2015ARS ($)payment | Dec. 15, 2011USD ($) | Dec. 02, 2010USD ($) | Dec. 31, 2017USD ($) | Dec. 28, 2017USD ($) | Nov. 16, 2016ARS ($)payment | May 26, 2016USD ($) |
Term Notes | Minimum | ||||||||
Financial Debt | ||||||||
Minimum payable amount to default | $ 20,000,000 | |||||||
Minimum defaulted amount to final court sentence dictamination | $ 20,000,000 | |||||||
Telecom Argentina | Term Notes | ||||||||
Financial Debt | ||||||||
Amortization term | 5 years | |||||||
Telecom Argentina | Term Notes | Maximum | ||||||||
Financial Debt | ||||||||
Principal amount | $ 500,000,000 | $ 3,000,000,000 | ||||||
Personal | Term Notes | ||||||||
Financial Debt | ||||||||
Amortization term | 5 years | |||||||
Personal | Term Notes | Maximum | ||||||||
Financial Debt | ||||||||
Principal amount | $ 500,000,000 | $ 1,000,000,000 | ||||||
Personal | Series II | ||||||||
Financial Debt | ||||||||
Principal amount | $ 149,000,000 | |||||||
Amortization term | 36 months | |||||||
Number of debt payments | payment | 1 | |||||||
Percentage of capital settled | 100.00% | |||||||
Personal | Series II | Fixed interest rate | Until ninth month | ||||||||
Financial Debt | ||||||||
Borrowing interest rate | 28.75% | |||||||
Personal | Series II | Floating interest rate | After ninth month | ||||||||
Financial Debt | ||||||||
Floating interest rate | 4.00% | |||||||
Personal | Series III | ||||||||
Financial Debt | ||||||||
Principal amount | $ 721,969,404 | |||||||
Amortization term | 18 months | |||||||
Number of debt payments | payment | 1 | 1 | ||||||
Percentage of capital settled | 100.00% | 100.00% | ||||||
Personal | Series III | Floating interest rate | ||||||||
Financial Debt | ||||||||
Floating interest rate | 2.90% | 2.90% | ||||||
Personal | Series IV | ||||||||
Financial Debt | ||||||||
Principal amount | $ 77,900,400 | $ 1,207,000,000 | ||||||
Amortization term | 24 months | |||||||
Number of debt payments | payment | 1 | 1 | ||||||
Percentage of capital settled | 100.00% | 100.00% | ||||||
Personal | Series IV | Fixed interest rate | ||||||||
Financial Debt | ||||||||
Borrowing interest rate | 4.85% | 4.85% |
Salaries and social security120
Salaries and social security payables (Details) | 12 Months Ended |
Dec. 31, 2017employeeplan | |
Salaries and social security payables | |
Total number of employees | employee | 15,396 |
Employees unionized (in percent) | 82.00% |
Number of stock option plans available to employees | plan | 0 |
Salaries and social security121
Salaries and social security payables - Payables (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current | ||
Vacation and bonuses | $ 1,433 | $ 1,102 |
Social security payables | 499 | 383 |
Termination benefits | 119 | 125 |
Total current salaries and security payables | 2,051 | 1,610 |
Non-current | ||
Termination benefits | 160 | 144 |
Bonuses | 99 | 40 |
Total non-current salaries and security payables | 259 | 184 |
Total salaries and social security payables | $ 2,310 | $ 1,794 |
Salaries and social security122
Salaries and social security payables - Expenses (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee benefit expenses and severance payments | |||
Salaries | $ (8,741) | $ (6,954) | $ (5,166) |
Social security expenses | (2,846) | (2,147) | (1,642) |
Severance indemnities and termination benefits | (944) | (521) | (319) |
Other employee benefits | (187) | (178) | (126) |
Total employee benefits expense | $ 12,718 | $ 9,800 | $ 7,253 |
Income tax payables, income 123
Income tax payables, income tax assets and deferred income tax - Income tax asset and liability, net (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Nov. 30, 2017 | Dec. 31, 2016 |
Income tax payables, income tax assets and deferred income tax | |||
Income tax payables | $ 4,437 | $ 2,091 | |
Withholdings and payments in advance of income taxes | (1,695) | (1,372) | |
Law No. 26,476 Tax Regularization Regime | 6 | 5 | |
Current income tax liability, net | 2,748 | 724 | |
Law No. 26,476 Tax Regularization Regime | 2 | 7 | |
Non-current Income tax liability | $ 2 | $ 7 | |
Personal | |||
Income tax payables, income tax assets and deferred income tax | |||
Income tax payables | $ 3,678 |
Income tax payables, income 124
Income tax payables, income tax assets and deferred income tax - Temporary differences (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Temporary differences | |||
Total deferred tax liabilities, net | $ (48) | $ (569) | |
Total income tax assets | 626 | 680 | |
Included in other comprehensive income | 403 | 263 | $ 257 |
Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 1,021 | 774 | |
Total deferred tax liabilities | (1,169) | (560) | |
Total deferred tax assets, net | 214 | ||
Total deferred tax liabilities, net | (148) | ||
Actions for recourse tax receivable | 774 | 466 | |
Total income tax assets | 626 | 680 | |
Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 1,018 | 771 | |
Total deferred tax liabilities | (1,168) | (560) | |
Total deferred tax assets, net | 211 | ||
Total deferred tax liabilities, net | (150) | ||
Actions for recourse tax receivable | 774 | 466 | |
Total income tax assets | 624 | 677 | |
Income Tax Assets, Net, Noncurrent | Telecom USA | |||
Temporary differences | |||
Total deferred tax assets | 3 | 3 | |
Total deferred tax liabilities | (1) | ||
Total deferred tax assets, net | 2 | 3 | |
Total income tax assets | 2 | 3 | |
Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 41 | 570 | |
Total deferred tax liabilities | (89) | (1,139) | |
Total deferred tax liabilities, net | (48) | (569) | |
Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax assets | 540 | ||
Total deferred tax liabilities | (1,095) | ||
Total deferred tax liabilities, net | (555) | ||
Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax assets | 41 | 30 | |
Total deferred tax liabilities | (89) | (44) | |
Total deferred tax liabilities, net | (48) | (14) | |
Allowance for doubtful accounts | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 255 | 88 | |
Allowance for doubtful accounts | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 252 | 86 | |
Allowance for doubtful accounts | Income Tax Assets, Net, Noncurrent | Telecom USA | |||
Temporary differences | |||
Total deferred tax assets | 3 | 2 | |
Allowance for doubtful accounts | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 6 | 287 | |
Allowance for doubtful accounts | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax assets | 271 | ||
Allowance for doubtful accounts | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax assets | 6 | 16 | |
Provisions | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 504 | 341 | |
Provisions | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 504 | 341 | |
Provisions | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 149 | ||
Provisions | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax assets | 149 | ||
PP&E | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 1 | ||
PP&E | Income Tax Assets, Net, Noncurrent | Telecom USA | |||
Temporary differences | |||
Total deferred tax assets | 1 | ||
PP&E | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 33 | 13 | |
PP&E | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax assets | 33 | 13 | |
Inventory | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 62 | ||
Inventory | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 62 | ||
Inventory | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 120 | ||
Inventory | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax assets | 120 | ||
Pension and termination benefits | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 162 | 139 | |
Pension and termination benefits | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 162 | 139 | |
Deferred revenues | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 32 | 85 | |
Deferred revenues | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 32 | 85 | |
PP&E and Intangible assets | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax liabilities | (971) | (560) | |
PP&E and Intangible assets | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax liabilities | (970) | (560) | |
PP&E and Intangible assets | Income Tax Assets, Net, Noncurrent | Telecom USA | |||
Temporary differences | |||
Total deferred tax liabilities | (1) | ||
PP&E and Intangible assets | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax liabilities | (789) | ||
PP&E and Intangible assets | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities | (789) | ||
Cash dividends from foreign companies | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax liabilities | (129) | ||
Included in other comprehensive income | 46 | ||
Cash dividends from foreign companies | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax liabilities | (129) | ||
Cash dividends from foreign companies | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax liabilities | (64) | (194) | |
Cash dividends from foreign companies | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities | (150) | ||
Cash dividends from foreign companies | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax liabilities | (64) | (44) | |
Mobile handsets financed sales | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax liabilities | (69) | ||
Mobile handsets financed sales | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax liabilities | (69) | ||
Mobile handsets financed sales | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax liabilities | (84) | ||
Mobile handsets financed sales | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities | (84) | ||
Tuves Paraguay's Deferred tax liabilities, net | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax liabilities | (25) | ||
Tuves Paraguay's Deferred tax liabilities, net | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax liabilities | (25) | ||
Investments | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax liabilities | (4) | ||
Investments | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities | (4) | ||
Other | Income Tax Assets, Net, Noncurrent | |||
Temporary differences | |||
Total deferred tax assets | 6 | 120 | |
Other | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax assets | 6 | 120 | |
Other | Deferred Tax Liabilities, Net | |||
Temporary differences | |||
Total deferred tax assets | 2 | 1 | |
Total deferred tax liabilities | (68) | ||
Other | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities | (68) | ||
Other | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax assets | 2 | $ 1 | |
Reversals from Affidavit filings | Income Tax Assets, Net, Noncurrent | Telecom Argentina | |||
Temporary differences | |||
Total deferred tax liabilities, net | (3) | ||
Reversals from Affidavit filings | Deferred Tax Liabilities, Net | Personal | |||
Temporary differences | |||
Total deferred tax liabilities, net | (11) | ||
Currency translation adjustments | Deferred Tax Liabilities, Net | Nucleo | |||
Temporary differences | |||
Total deferred tax liabilities, net | $ (2) |
Income tax payables, income 125
Income tax payables, income tax assets and deferred income tax - Income tax expense (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income tax payables, income tax assets and deferred income tax | |||
Current tax expense | $ (4,438) | $ (2,091) | $ (1,721) |
Deferred tax benefit | 228 | 129 | (69) |
Actions for recourse income tax receivable | 308 | 368 | 98 |
Income tax expense | $ (3,902) | $ (1,594) | $ (1,692) |
Income tax payables, income 126
Income tax payables, income tax assets and deferred income tax - Reconciliation of income tax expense (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of income tax expense | |||
Pre-tax income | $ 11,626 | $ 5,599 | $ 5,127 |
Non taxable items | 738 | 79 | 8 |
Subtotal | $ 12,364 | $ 5,678 | $ 5,135 |
Weighted statutory income tax rate (*) | 34.30% | 34.30% | 34.50% |
Income tax expense at weighted statutory tax rate | $ (4,235) | $ (1,947) | $ (1,774) |
Income tax on cash dividends of foreign companies - Nucleo | (44) | (15) | (14) |
Effect of changes in tax rate | 69 | ||
Other changes in tax assets and liabilities | (2) | ||
Actions for recourse income tax receivable | 308 | 368 | 98 |
Income tax expense | (3,902) | (1,594) | (1,692) |
Income tax - Actions for recourse filed with the Tax Authority | |||
Amount of claim filed during 2015 and 2016 | 509 | ||
Tax credit recorded | $ 308 | $ 368 | $ 98 |
Argentina | |||
Reconciliation of income tax expense | |||
Weighted statutory income tax rate (*) | 35.00% | 35.00% | 35.00% |
Paraguay | |||
Reconciliation of income tax expense | |||
Weighted statutory income tax rate (*) | 10.00% | 10.00% | 10.00% |
Additional tax rate (as a percent) | 5.00% | 5.00% | 5.00% |
Effective tax rate | 15.00% | 15.00% | 15.00% |
United States of America | |||
Reconciliation of income tax expense | |||
Weighted statutory income tax rate (*) | 39.50% | 39.50% | 39.50% |
Effective tax rate | 39.50% | 39.50% | 39.50% |
Other taxes payables (Details)
Other taxes payables (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Other taxes payables | ||
VAT, net | $ 564 | $ 360 |
Tax withholdings | 89 | 319 |
Internal taxes | 162 | 138 |
Tax on SU (Note 2.h) | 119 | 110 |
Regulatory fees | 76 | 78 |
Turnover tax | 383 | 75 |
Municipal taxes | 82 | 35 |
Retention Decree No.583/10 ENARD | 30 | 26 |
Tax on personal property - on behalf of Shareholders | 8 | |
Total other taxes payables | $ 1,505 | $ 1,149 |
Other liabilities (Details)
Other liabilities (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current | |||
Compensation for directors and members of the Supervisory Committee | $ 53 | $ 44 | |
Guarantees received | 10 | 15 | |
Other | 22 | 10 | |
Other current liabilities | 85 | 69 | |
Non-current | |||
Pension benefits (Note 3.m) | 214 | 164 | $ 95 |
Legal fees | 4 | 4 | |
Other | 2 | 2 | |
Other non-current liabilities | 220 | 170 | |
Total other liabilities | $ 305 | $ 239 |
Other liabilities - Movements i
Other liabilities - Movements in the pension benefits (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Movements in the pension benefits | ||
At the beginning of the year | $ 164 | $ 95 |
Service cost | 15 | 11 |
Interest cost | 47 | 38 |
Payments | (6) | (4) |
Actuarial loss /(gain) | (6) | 24 |
At the end of the year | $ 214 | $ 164 |
Provisions - Rollforward (Detai
Provisions - Rollforward (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Provisions | ||
Aggregate provisions to cover potential losses | $ 2,088 | |
Regulatory Liability Provisions Offset with Receivables | 56 | |
Restricted funds included in other receivables | 98 | |
Current | ||
Balance in the beginning | 271 | $ 207 |
Additions/(recoveries), Capital | 77 | |
Reclassifications | 619 | 278 |
Uses, Debt recognition | (206) | (42) |
Uses, Payments | (355) | (172) |
Balance at the end | 406 | 271 |
Non-current | ||
Balance in the beginning | 1,352 | 1,165 |
Additions/(recoveries), Capital | 578 | 234 |
Additions/(recoveries), Interest | 320 | 207 |
Reclassifications | (619) | (251) |
Uses, Debt recognition | (1) | |
Uses, Payments | (5) | (2) |
Balance at the end | 1,626 | 1,352 |
Total provisions | ||
Total provisions in the beginning | 1,623 | 1,372 |
Additions/(recoveries), Capital | 655 | 234 |
Additions/(recoveries), Interest | 320 | 207 |
Reclassifications | 27 | |
Uses, Debt recognition | (206) | (43) |
Uses, Payments | (360) | (174) |
Total provisions at the end | 2,032 | 1,623 |
Other information | ||
Additions/(recoveries), Capital, charged to provisions | 590 | 187 |
Additions/(recoveries), Capital, charged to PP&E (CAPEX) | 35 | 45 |
Additions/(recoveries), Capital, charged to currency translation adjustments | 3 | 2 |
Additions/(recoveries), Capital, charged to acquisition of Tuves Paraguay | 27 | |
Provision for civil and commercial proceedings | ||
Current | ||
Balance in the beginning | 109 | 112 |
Additions/(recoveries), Capital | 76 | |
Reclassifications | 104 | 47 |
Uses, Debt recognition | (66) | (15) |
Uses, Payments | (65) | (35) |
Balance at the end | 158 | 109 |
Non-current | ||
Balance in the beginning | 261 | 240 |
Additions/(recoveries), Capital | 150 | 14 |
Additions/(recoveries), Interest | 53 | 54 |
Reclassifications | (104) | (47) |
Balance at the end | 360 | 261 |
Provision for labor claims | ||
Current | ||
Balance in the beginning | 91 | 51 |
Reclassifications | 232 | 159 |
Uses, Debt recognition | (27) | |
Uses, Payments | (223) | (92) |
Balance at the end | 100 | 91 |
Non-current | ||
Balance in the beginning | 377 | 329 |
Additions/(recoveries), Capital | 315 | 130 |
Additions/(recoveries), Interest | 141 | 78 |
Reclassifications | (232) | (159) |
Uses, Debt recognition | (1) | |
Balance at the end | 601 | 377 |
Provision for regulatory, tax and other matters claims | ||
Current | ||
Balance in the beginning | 71 | 44 |
Additions/(recoveries), Capital | 1 | |
Reclassifications | 283 | 72 |
Uses, Debt recognition | (140) | |
Uses, Payments | (67) | (45) |
Balance at the end | 148 | 71 |
Non-current | ||
Balance in the beginning | 416 | 407 |
Additions/(recoveries), Capital | 78 | 43 |
Additions/(recoveries), Interest | 83 | 11 |
Reclassifications | (283) | (45) |
Balance at the end | 294 | 416 |
Asset retirement obligations | ||
Non-current | ||
Balance in the beginning | 298 | 189 |
Additions/(recoveries), Capital | 35 | 47 |
Additions/(recoveries), Interest | 43 | 64 |
Uses, Payments | (5) | (2) |
Balance at the end | $ 371 | $ 298 |
Provisions - Probable contingen
Provisions - Probable contingent Liabilities (Details) | Oct. 30, 2013 | Jun. 03, 2013item | Dec. 31, 2013item | Dec. 31, 2017ARS ($) |
Labor contingencies | ||||
Provisions | ||||
Number of chambers of the Civil and Commercial Federal Proceedings Court who issued opinions interpreting the doctrine developed by the Argentine Supreme Court of Justice - Dominguez c/ Telefonica de Argentina S.A. | item | 2 | |||
Number of unions who filed lawsuit claiming the issuance of a profit sharing bonds | item | 4 | |||
Statute of limitation, period established | 10 years | |||
Provision for regulatory, tax and other matters claims | ||||
Provisions | ||||
Estimated increase in provision | $ | $ 103,000,000 | |||
Maximum | Labor contingencies | ||||
Provisions | ||||
Statute of limitation, period established, Argentine Supreme Court of Justice | 5 years | |||
Statute of limitation, period established, Chamber III | 10 years | |||
Maximum | Regulatory contingencies | ||||
Provisions | ||||
Estimated liabilities per each alleged violation against its clients | $ | $ 9,380 |
Provisions - Possible Contingen
Provisions - Possible Contingencies (Details) - Civil and commercial proceedings, contingencies - Personal $ in Millions | Feb. 24, 2017 | Jun. 30, 2012 | Nov. 30, 2011action | Feb. 28, 2017company | Dec. 31, 2017ARS ($) |
Consumidores Financieros Asociacion Civil para su Defensa | |||||
Provisions | |||||
Number of years to be considered for reimbursement of excess amount collected | 10 years | ||||
Number of years to be considered for crediting the customers for unused minutes on expired prepaid cards | 10 years | ||||
Total number of legal actions within the federal civil and commercial court | action | 3 | ||||
Changes in service prices | |||||
Provisions | |||||
Period considered for reimbursement of increased price billed to customer | 2 months | ||||
Claim by content providers | |||||
Provisions | |||||
Number of companies that initiated a claim | company | 4 | ||||
Maximum percentage of services invoiced that the mobile operators are entitled to receive | 40.00% | ||||
Period to file interconnection contracts under the ENACOM | 30 days | ||||
Radioelectric Spectrum Fees | |||||
Provisions | |||||
Difference resulting from both sets of liquidation excluding interests | $ | $ 403 |
Provisions - Contingent Asset -
Provisions - Contingent Asset - "AFA Plus Project" Claim (Details) - AFA Plus Project $ in Millions, $ in Millions | Jul. 20, 2012 | Oct. 31, 2015ARS ($) | Feb. 28, 2015USD ($) | Dec. 31, 2017ARS ($) |
Provisions | ||||
Referring price rate (as a percent) | 20.00% | |||
Investments made and expenses incurred | $ 182 | |||
Investments made and expenses incurred, included in PP&E | 143 | |||
Compensation received from AFA for services provided and work performed | 0 | |||
Compensation proposed by AFA for investment and expenditures incurred | $ 12.5 | |||
Waiting period to receive the proposed compensation | 1 year | |||
Amount due from AFA | $ 179.2 | |||
Recoverable value of Work in progress and Materials recognized by the project | $ 143 |
Commitments (Details)
Commitments (Details) $ in Millions, $ in Millions | Apr. 12, 2007 | Aug. 31, 2017ARS ($) | Aug. 31, 2011ARS ($) | Nov. 30, 2003ARS ($) | Dec. 31, 2017ARS ($)MB / s | Dec. 31, 2016ARS ($) | Dec. 31, 2015ARS ($) | Dec. 31, 2017ARS ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2017ARS ($)item | Jul. 07, 2014USD ($) | Dec. 31, 2010ARS ($) | Aug. 31, 2003ARS ($) |
Commitments | |||||||||||||
Purchase orders | $ 10,590 | ||||||||||||
PP&E commitments | $ 4,205 | ||||||||||||
Investment commitments fund | $ 70 | ||||||||||||
Contributions made to the fund | $ 1.5 | ||||||||||||
Total deferred revenues | $ 888 | 940 | |||||||||||
Investments for commitments | $ 10,727 | $ 9,541 | $ 5,148 | ||||||||||
Publicom | |||||||||||||
Commitments | |||||||||||||
Commitment period for publishing and printing of white pages | 5 years | ||||||||||||
Commitment period for distribution of white pages | 20 years | ||||||||||||
Commitment period for maintenance of internal portal to access white pages | 20 years | ||||||||||||
Period for right to lease advertising spaces on white pages | 20 years | ||||||||||||
Nucleo | |||||||||||||
Commitments | |||||||||||||
CONATEL's total deferred disbursements | 15 | ||||||||||||
Total deferred revenues | 5 | ||||||||||||
Accrued gains | $ 10 | ||||||||||||
Amount of subsidy from government | $ 19 | ||||||||||||
Nucleo | Implementation of expansion of the infrastructure networks, Paraguay | |||||||||||||
Commitments | |||||||||||||
Investment commitments | $ 17 | ||||||||||||
Amount of subsidy granted by the CONATEL | $ 12 | ||||||||||||
Amount of subsidy disbursed by the CONATEL | $ 11 | ||||||||||||
Nucleo | Implementation of expansion of the infrastructure networks, Department of Caaguazu Nucleo | |||||||||||||
Commitments | |||||||||||||
Investment commitments | $ 6 | ||||||||||||
Amount of subsidy granted by the CONATEL | $ 5 | ||||||||||||
Amount of subsidy disbursed by the CONATEL | $ 4 | ||||||||||||
Contract term | 6 months | ||||||||||||
Personal | |||||||||||||
Commitments | |||||||||||||
PP&E commitments | $ 450 | ||||||||||||
Personal | Minimum | |||||||||||||
Commitments | |||||||||||||
Number of inhabitants | item | 500 | 500 | |||||||||||
Guaranteed performance speed | MB / s | 1 | ||||||||||||
Personal | Maximum | |||||||||||||
Commitments | |||||||||||||
Contract term | 60 months |
Equity - Summary (Details)
Equity - Summary (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Equity | ||||
Equity attributable to Telecom Argentina (Controlling Company) | $ 23,086 | $ 19,336 | ||
Equity attributable to non-controlling interest (Note 1.a) | 793 | 542 | ||
TOTAL EQUITY (See Consolidated Statements of Changes in Equity) | $ 23,879 | $ 19,878 | $ 17,610 | $ 14,769 |
Equity - Capital information (D
Equity - Capital information (Details) | 12 Months Ended | |||
Dec. 31, 2017ARS ($)Vote$ / sharesshares | Jan. 01, 2018shares | Dec. 31, 2016$ / sharesshares | Dec. 31, 2015$ / sharesshares | |
Equity | ||||
Nominal value of issued shares | $ | $ 984,380,978 | |||
Nominal value (in pesos per share) | $ / shares | $ 1 | $ 1 | $ 1 | |
Number of votes per share | Vote | 1 | |||
Outstanding shares | 969,159,605 | |||
Treasury shares (in shares) | 15,221,373 | 15,221,373 | 15,221,373 | |
Total capital stock (in shares) | 984,380,978 | 984,380,978 | 984,380,978 | |
Shares issued | 984,380,978 | |||
Major ordinary share transactions | ||||
Equity | ||||
Outstanding shares | 2,153,688,011 | |||
Treasury shares (in shares) | 15,221,373 | |||
Shares issued | 2,168,909,384 | |||
Class "A" | ||||
Equity | ||||
Outstanding shares | 340,994,852 | |||
Shares issued | 340,994,852 | |||
Class "A" | Major ordinary share transactions | ||||
Equity | ||||
Outstanding shares | 683,856,600 | |||
Shares issued | 683,856,600 | |||
Class "A" | Preliminary Merger Agreement and the Final Merger Agreement | ||||
Equity | ||||
Shares issued | 342,861,748 | |||
Class "B" | ||||
Equity | ||||
Outstanding shares | 627,930,005 | |||
Treasury shares (in shares) | 15,221,373 | |||
Shares issued | 643,151,378 | |||
Number of shares each ADS represents | 5 | |||
Class "B" | Major ordinary share transactions | ||||
Equity | ||||
Outstanding shares | 627,930,005 | |||
Treasury shares (in shares) | 15,221,373 | |||
Shares issued | 643,151,378 | |||
Class "C" | ||||
Equity | ||||
Outstanding shares | 234,748 | |||
Shares issued | 234,748 | |||
Class "C" | Major ordinary share transactions | ||||
Equity | ||||
Outstanding shares | 234,748 | |||
Shares issued | 234,748 | |||
Class "D" | Major ordinary share transactions | ||||
Equity | ||||
Outstanding shares | 841,666,658 | |||
Shares issued | 841,666,658 | |||
Class "D" | Preliminary Merger Agreement and the Final Merger Agreement | ||||
Equity | ||||
Shares issued | 841,666,658 |
Equity - Share Ownership Plan (
Equity - Share Ownership Plan (Details) - Class "C" | Dec. 15, 2011trancheshares | Dec. 31, 2011trancheshares | Dec. 31, 2017shares | Apr. 27, 2006shares | Mar. 31, 2000shares |
Share Ownership Plan | |||||
Capital Stock to be included in PPP (as a percent) | 10.00% | ||||
Capital Stock to be included in PPP (in shares) | 98,438,098 | ||||
Conversion of shares, number of shares authorized | 4,593,274 | 41,339,464 | 52,505,360 | ||
Conversion of shares, number of shares converted | 4,358,526 | 41,339,464 | |||
Number of tranches | tranche | 10 | 11 | |||
Number of shares held for conversion | 234,748 |
Equity - Treasury Shares (Detai
Equity - Treasury Shares (Details) - ARS ($) $ in Millions | Apr. 29, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | May 21, 2013 | |||||
Equity | |||||||||||
Total equity | $ 23,879 | $ 19,878 | $ 17,610 | $ 14,769 | |||||||
Treasury shares (in shares) | 15,221,373 | 15,221,373 | 15,221,373 | ||||||||
Treasury shares, Capital nominal value | |||||||||||
Equity | |||||||||||
Total equity | [2] | $ 15 | [1] | $ 15 | [1],[3] | $ 15 | [3] | 15 | [3] | ||
Maximum time period for sale of treasury shares | 3 years | ||||||||||
Treasury shares (in shares) | 15,221,373 | ||||||||||
Percentage of treasury shares held | 1.55% | 1.55% | 1.55% | ||||||||
Voluntary reserve for capital investments | |||||||||||
Equity | |||||||||||
Total equity | $ 461 | [2] | $ 3,191 | [2] | $ 3,191 | [2] | 3,191 | [2] | $ 1,200 | ||
Treasury shares acquisition cost | |||||||||||
Equity | |||||||||||
Total equity | [2] | $ (461) | $ (461) | $ (461) | $ (461) | ||||||
[1] | As of December 31, 2017 and 2016, total shares (984,380,978), of $1 argentine peso of nominal value each, were issued and fully paid. As of the same dates; 15,221,373 were treasury shares. | ||||||||||
[2] | Corresponds to 15,221,373 shares of $1 argentine peso of nominal value each, equivalent to 1.55% of total capital. The treasury shares acquisition costs amounted to 461. See Note 19 - Equity to these consolidated financial statements. | ||||||||||
[3] | As of December 31, 2016, 2015 and 2014, total shares ( 984,380,978 ), of $1 argentine peso of nominal value each, were issued and fully paid. As of the same dates; 15,221,373 were treasury shares. |
Financial instruments - Details
Financial instruments - Details of financial assets and financial liabilities (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial instruments | ||
Assets | $ 18,016 | $ 14,162 |
Liabilities | 26,220 | 22,912 |
Financial liabilities at amortised cost | ||
Financial instruments | ||
Liabilities | 26,203 | 22,910 |
Financial liabilities at fair value accounted through profit or loss | ||
Financial instruments | ||
Liabilities | 17 | 1 |
Financial liabilities at fair value accounted through other comprehensive income | ||
Financial instruments | ||
Liabilities | 1 | |
Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 13,673 | 10,903 |
Financial assets at fair value accounted through profit or loss | ||
Financial instruments | ||
Assets | 4,333 | 3,259 |
Financial assets at fair value accounted through other comprehensive income | ||
Financial instruments | ||
Assets | 10 | |
Trade payables | ||
Financial instruments | ||
Liabilities | 11,584 | 9,131 |
Trade payables | Financial liabilities at amortised cost | ||
Financial instruments | ||
Liabilities | 11,584 | 9,131 |
Loans | ||
Financial instruments | ||
Liabilities | 12,235 | 11,912 |
Loans | Financial liabilities at amortised cost | ||
Financial instruments | ||
Liabilities | 12,218 | 11,910 |
Loans | Financial liabilities at fair value accounted through profit or loss | ||
Financial instruments | ||
Liabilities | 17 | 1 |
Loans | Financial liabilities at fair value accounted through other comprehensive income | ||
Financial instruments | ||
Liabilities | 1 | |
Salaries and social security payables | ||
Financial instruments | ||
Liabilities | 2,310 | 1,794 |
Salaries and social security payables | Financial liabilities at amortised cost | ||
Financial instruments | ||
Liabilities | 2,310 | 1,794 |
Other liabilities | ||
Financial instruments | ||
Liabilities | 91 | 75 |
Other liabilities | Financial liabilities at amortised cost | ||
Financial instruments | ||
Liabilities | 91 | 75 |
Cash and cash equivalents | ||
Financial instruments | ||
Assets | 2,831 | 3,945 |
Cash and cash equivalents | Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 1,469 | 2,436 |
Cash and cash equivalents | Financial assets at fair value accounted through profit or loss | ||
Financial instruments | ||
Assets | 1,362 | 1,509 |
Cash and banks | Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 1,364 | 934 |
Investments | ||
Financial instruments | ||
Assets | 6,082 | 2,097 |
Investments | Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 3,169 | 349 |
Investments | Financial assets at fair value accounted through profit or loss | ||
Financial instruments | ||
Assets | 2,913 | 1,748 |
Trade receivables | ||
Financial instruments | ||
Assets | 8,648 | 7,785 |
Trade receivables | Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 8,648 | 7,785 |
Other receivables | ||
Financial instruments | ||
Assets | 455 | 335 |
Other receivables | Financial assets at amortized cost | ||
Financial instruments | ||
Assets | 387 | 333 |
Other receivables | Financial assets at fair value accounted through profit or loss | ||
Financial instruments | ||
Assets | 58 | $ 2 |
Other receivables | Financial assets at fair value accounted through other comprehensive income | ||
Financial instruments | ||
Assets | $ 10 |
Financial instruments - Gains a
Financial instruments - Gains and losses (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments. | ||
Net gain (loss) on financial assets at amortised cost | $ 2,211 | $ 707 |
Net gain (loss) on financial liabilities at amortised cost | (3,213) | (3,010) |
Net gain (loss) on financial assets at fair value through profit or loss | 904 | 305 |
Net gain (loss) on financial liabilities at fair value through profit or loss | 3 | (1) |
Total gain (loss) on financial instruments | (95) | (1,999) |
Interest on financial assets at amortised cost | 947 | 374 |
Interest on financial liabilities at amortised cost | (940) | (1,667) |
Total interest income (expense) on financial instruments | 7 | (1,293) |
Other short-term investments | ||
Financial instruments. | ||
Net gain (loss) on financial assets at fair value through profit or loss | 121 | 61 |
NDF | ||
Financial instruments. | ||
Net gain (loss) on financial assets at fair value through profit or loss | 6 | |
Tuve's Paraguay S.A shares purchase option | ||
Financial instruments. | ||
Net gain (loss) on financial assets at fair value through profit or loss | 11 | |
Government bonds | ||
Financial instruments. | ||
Net gain (loss) on financial assets at fair value through profit or loss | $ 783 | $ 227 |
Financial instruments - Fair va
Financial instruments - Fair value disclosures (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value and other disclosures | ||
Lebacs | $ 1,372 | |
Net gain (loss) on financial assets at fair value through profit or loss | 904 | $ 305 |
Transfers out of Level 1 into Level 2 of fair value hierarchy, assets | 0 | 0 |
Transfers out of Level 2 into Level 1 of fair value hierarchy, assets | 0 | 0 |
Transfers out of Level 1 into Level 2 of fair value hierarchy, liabilities | 0 | 0 |
Transfers out of Level 2 into Level 1 of fair value hierarchy, liabilities | 0 | 0 |
Transfers into Level 3 of fair value hierarchy, assets | 0 | 0 |
Transfers out of Level 3 of fair value hierarchy, assets | 0 | 0 |
Transfers into Level 3 of fair value hierarchy, liabilities | 0 | 0 |
Transfers out of Level 3 of fair value hierarchy, liabilities | 0 | 0 |
Financial assets | 18,016 | 14,162 |
Financial liabilities | 26,220 | 22,912 |
Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets | 13,673 | 10,903 |
Other short-term investments | ||
Fair value and other disclosures | ||
Net gain (loss) on financial assets at fair value through profit or loss | 121 | 61 |
Other short-term investments | Level 1 | At fair value | ||
Fair value and other disclosures | ||
Financial assets | 2,532 | 1,779 |
Investments | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 3,172 | 351 |
Financial assets | 3,169 | 349 |
Government bonds | ||
Fair value and other disclosures | ||
Net gain (loss) on financial assets at fair value through profit or loss | 783 | 227 |
Government bonds | Level 1 | At fair value | ||
Fair value and other disclosures | ||
Financial assets | 371 | 1,456 |
Government bonds - dollar linked | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 301 | |
Financial assets | 293 | |
Government bonds in foreign currency | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 2,387 | 264 |
Financial assets | 2,377 | 258 |
Provincial and Municipal Government bonds currency | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 417 | |
Financial assets | 419 | |
Provincial government bonds in pesos | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 8 | 17 |
Financial assets | 8 | 17 |
Provincial and municipal government bonds | Financial assets at amortized cost | ||
Fair value and other disclosures | ||
Financial assets at fair value | 59 | 70 |
Financial assets | 72 | 74 |
Tuve's Paraguay S.A shares purchase option | ||
Fair value and other disclosures | ||
Net gain (loss) on financial assets at fair value through profit or loss | 11 | |
Loans | ||
Fair value and other disclosures | ||
Financial liabilities at fair value | 12,262 | 13,988 |
Financial liabilities | $ 12,235 | $ 11,912 |
Financial instruments - Hedge a
Financial instruments - Hedge accounting (Details) - Currency risk $ in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2017ARS ($)tranche | Dec. 31, 2017USD ($)$ / item | Dec. 31, 2017ARS ($) | Dec. 31, 2017ARS ($)$ / item | Sep. 15, 2017USD ($) | Jun. 30, 2017ARS ($)$ / item | Mar. 31, 2017USD ($) | Mar. 15, 2017USD ($) | |
Fair value hedges | Other comprehensive results | ||||||||
Hedge accounting | ||||||||
Receivables recognized | $ 4 | |||||||
Receivables recognized, Current | 2 | |||||||
Receivables recognized, Non-current | 2 | |||||||
Fair value hedges | Foreign currency exchange rate gains | ||||||||
Hedge accounting | ||||||||
Receivables recognized | 6 | |||||||
Gains recognized from receivables | $ 6 | |||||||
NDF | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount | $ 40 | $ 100 | $ 400 | $ 300 | ||||
Number of Tranches | tranche | 2 | |||||||
Liability of hedging instruments | 17 | |||||||
Current liability of hedging instrument | 8 | |||||||
Non-current liability of hedging instrument | $ 9 | |||||||
Net gain/loss | $ (36) | |||||||
NDF | Fair value hedges | Minimum | ||||||||
Hedge accounting | ||||||||
Interest rate (as a percent) | 208.70% | 208.70% | ||||||
NDF | Fair value hedges | Maximum | ||||||||
Hedge accounting | ||||||||
Interest rate (as a percent) | 245.25% | 245.25% | ||||||
NDF | Fair value hedges | Weighted average | ||||||||
Hedge accounting | ||||||||
Interest rate (as a percent) | 222.58% | 222.58% | ||||||
NDF | Maturing between February and April 2018 | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount | $ 53.5 | |||||||
Average exchange rate | $ / item | 18.30 | |||||||
NDF | Maturing February 2017 | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount, duration | $ 7 | |||||||
Net gain/loss | $ 2 | |||||||
NDF | Maturing between March and August 2018 | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount | $ 6.3 | |||||||
Average exchange rate | $ / item | 18.94 | 18.94 | ||||||
NDF | Personal | Commercial commitments | ||||||||
Hedge accounting | ||||||||
Notional amount, duration | $ 159 | |||||||
Net gain/loss | 2 | |||||||
NDF | Personal | Maturing March 2017 | Cash flow hedges | ||||||||
Hedge accounting | ||||||||
Notional amount, duration | $ 9 | |||||||
Current liability of hedging instrument | $ 2 | |||||||
Net gain/loss | (1) | |||||||
Deferred income/expense before income tax | (1) | |||||||
Other receivables | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Receivables recognized | 59 | |||||||
Reserve of receivables in other comprehensive income | $ 6 | |||||||
Gains recognized from receivables | $ 53 | |||||||
2.1325% NDF | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount | $ 20 | |||||||
Interest rate (as a percent) | 213.25% | |||||||
2.085% NDF | Fair value hedges | ||||||||
Hedge accounting | ||||||||
Notional amount | $ 20 | |||||||
Interest rate (as a percent) | 208.50% |
Financial instruments - Offsett
Financial instruments - Offsetting of financial assets and financial liabilities (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Trade payables | ||
Offsetting of financial assets and financial liabilities | ||
Current and noncurrent liabilities - Gross value | $ (13,091) | $ (10,542) |
Offsetting | 1,507 | 1,411 |
Current and noncurrent liabilities - Booked value | (11,584) | (9,131) |
Other liabilities | ||
Offsetting of financial assets and financial liabilities | ||
Current and noncurrent liabilities - Gross value | (124) | (97) |
Offsetting | 33 | 22 |
Current and noncurrent liabilities - Booked value | (91) | (75) |
Trade receivables | ||
Offsetting of financial assets and financial liabilities | ||
Current and noncurrent assets - Gross value | 10,155 | 9,196 |
Offsetting | (1,507) | (1,411) |
Current and noncurrent assets - Booked value | 8,648 | 7,785 |
Other receivables | ||
Offsetting of financial assets and financial liabilities | ||
Current and noncurrent assets - Gross value | 488 | 357 |
Offsetting | (33) | (22) |
Current and noncurrent assets - Booked value | $ 455 | $ 335 |
Revenues (Details)
Revenues (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Revenue | |||
Total Services revenues | $ 56,971 | $ 45,354 | $ 34,480 |
Inbound | |||
Revenue from sale of telecommunication equipment | 8,215 | 7,886 | 6,016 |
Revenue from sale of equipment and rendering of services | 65,186 | 53,240 | 40,496 |
Other income | 133 | 83 | 44 |
Revenue from sale of equipment, rendering of services and other income | 65,319 | 53,323 | 40,540 |
Gain on disposal of property, plant and equipment | 21 | 17 | 31 |
Fixed services | |||
Disclosure of Revenue | |||
Revenue from voice service | 8,505 | 6,010 | 4,338 |
Revenue from internet service | 7,715 | 5,994 | 4,557 |
Revenue from data service | 3,577 | 2,919 | 1,780 |
Total Services revenues | 19,797 | 14,923 | 10,675 |
Inbound | |||
Revenue from sale of telecommunication equipment | 663 | 91 | 61 |
Other income | 71 | 66 | 39 |
Personal Mobile Services | |||
Disclosure of Revenue | |||
Total Services revenues | 34,289 | 28,049 | 22,258 |
Outbound | |||
Postpaid | 8,380 | 6,951 | 5,401 |
Abono Fijo | 13,241 | 10,365 | 7,919 |
Prepaid | 8,359 | 7,548 | 6,345 |
Total Outbound | 29,980 | 24,864 | 19,665 |
Inbound | |||
From Fixed Services - CPP | 1,012 | 779 | 624 |
From Mobile Services - TLRD | 1,698 | 932 | 924 |
Total Inbound | 2,710 | 1,711 | 1,548 |
Others | 1,599 | 1,474 | 1,045 |
Revenue from sale of telecommunication equipment | 7,446 | 7,535 | 5,796 |
Other income | 62 | 16 | 5 |
Nucleo Mobile Services | |||
Disclosure of Revenue | |||
Total Services revenues | 2,885 | 2,382 | 1,547 |
Outbound | |||
Postpaid | 81 | 62 | 36 |
Abono Fijo | 999 | 766 | 458 |
Prepaid | 1,445 | 1,134 | 742 |
Total Outbound | 2,525 | 1,962 | 1,236 |
Inbound | |||
From Mobile Services - TLRD | 133 | 118 | 80 |
From Fixed Services - Interconnection | 8 | 9 | 9 |
Total Inbound | 141 | 127 | 89 |
Others | 219 | 293 | 222 |
Revenue from sale of telecommunication equipment | $ 106 | 260 | $ 159 |
Other income | $ 1 |
Operating expenses - Interconne
Operating expenses - Interconnection costs and other telecommunication charges (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Operating expenses | $ 53,207 | $ 45,480 | $ 34,311 |
Fixed telephony interconnection costs | (486) | (445) | (327) |
Cost of international outbound calls | (272) | (268) | (192) |
Lease of circuits and use of public network | (490) | (461) | (336) |
Mobile Services - charges for roaming | (348) | (414) | (374) |
Mobile Services - charges for TLRD | (1,552) | (965) | (941) |
Total interconnection costs and other telecommunication charges | $ (3,148) | $ (2,553) | $ (2,170) |
Operating expenses - Fees for s
Operating expenses - Fees for services, maintenance, materials and supplies (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Maintenance of hardware and software | $ (671) | $ (546) | $ (331) |
Technical maintenance | (1,393) | (1,329) | (854) |
Service connection fees for fixed lines and Internet lines | (600) | (267) | (224) |
Service connection fees capitalized as SAC (Note 3.i) | 23 | 14 | 14 |
Service connection fees capitalized as Intangible assets (Note 3.i) | 50 | 41 | 36 |
Other maintenance costs | (716) | (524) | (396) |
Obsolescence of inventories - Mobile Services (Note 7) | (17) | (45) | (38) |
Call center fees | (1,999) | (1,428) | (1,297) |
Other fees for services | (1,211) | (862) | (793) |
Directors and Supervisory Committee's fees | (66) | (60) | (36) |
Total fees for services, maintenance, materials and supplies | $ (6,600) | $ (5,006) | $ (3,919) |
Operating expenses - Taxes and
Operating expenses - Taxes and fees with the Regulatory Authority (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Turnover tax | $ (3,528) | $ (2,817) | $ (2,122) |
Taxes with the Regulatory Authority | (1,049) | (1,078) | (917) |
Tax on deposits to and withdrawals from bank accounts | (626) | (539) | (403) |
Municipal taxes | (531) | (395) | (289) |
Other taxes | (373) | (296) | (212) |
Total taxes and fees with the regulatory authority | $ (6,107) | $ (5,125) | $ (3,943) |
Operating expenses - Commission
Operating expenses - Commissions (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Agent commissions | $ (2,602) | $ (3,078) | $ (2,659) |
Agent commissions capitalized as SAC (Note 3.j) | 986 | 1,403 | 1,172 |
Distribution of prepaid cards commissions | (842) | (763) | (635) |
Collection commissions | (1,147) | (1,295) | (983) |
Other commissions | (26) | (116) | (88) |
Total fee and commission expense | $ (3,631) | $ (3,849) | $ (3,193) |
Operating expenses - Advertisin
Operating expenses - Advertising (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Media advertising | $ (769) | $ (527) | $ (524) |
Fairs and exhibitions | (264) | (176) | (137) |
Other advertising costs | (185) | (171) | (153) |
Total advertising | $ (1,218) | $ (874) | $ (814) |
Operating expenses - Cost of VA
Operating expenses - Cost of VAS (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Cost of mobile value added services | $ (829) | $ (1,446) | $ (1,218) |
Cost of fixed value added services | (45) | (53) | (38) |
Total Cost of VAS | $ (874) | $ (1,499) | $ (1,256) |
Operating expenses - Other oper
Operating expenses - Other operating expenses (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Transportation, freight and travel expenses | $ (927) | $ (961) | $ (768) |
Delivery costs capitalized as SAC | 79 | 134 | 85 |
Rental expense | (1,069) | (765) | (540) |
Energy, water and others | (1,117) | (783) | (429) |
International and satellite connectivity | (246) | (215) | (202) |
Total other operating expenses | $ (3,280) | $ (2,590) | $ (1,854) |
Operating expenses - Depreciati
Operating expenses - Depreciation & Amortization (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Depreciation of PP&E | $ (5,039) | $ (4,358) | $ (3,046) |
Amortization of SAC and service connection costs | (1,524) | (1,474) | (1,045) |
Amortization of 3G/4G licenses | (325) | (338) | (324) |
Amortization of other intangible assets | (40) | (28) | (23) |
Total depreciation and amortisation expense | $ (6,928) | $ (6,198) | $ (4,438) |
Operating expenses - Disposals
Operating expenses - Disposals and Impairment of PP&E (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Gain on disposal and impairment of PP&E | $ 21 | $ 17 | $ 31 |
Disposal and impairment of PP&E | (316) | (383) | (199) |
Fixed services | |||
Operating expenses | |||
Impairment of PP&E | (5) | 2 | (116) |
Decrease of PPE | (16) | (1) | |
Mobile Services | |||
Operating expenses | |||
Impairment of PP&E | (229) | (369) | $ (114) |
Decrease of PPE | $ (66) | $ (15) |
Operating expenses - Expenses d
Operating expenses - Expenses disclosed per function (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating expenses | |||
Operating costs | $ (32,287) | $ (27,628) | $ (20,578) |
Administration costs | (3,306) | (2,453) | (1,827) |
Commercialization costs | (16,708) | (14,829) | (11,594) |
Other expenses - provisions | (590) | (187) | (113) |
Disposals and impairment of PP&E | (316) | (383) | (199) |
Total operating expense | $ (53,207) | $ (45,480) | $ (34,311) |
Operating expenses - Future min
Operating expenses - Future minimum lease payments (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Operating leases | |||
Future minimum lease payments | $ 2,009 | $ 1,879 | $ 1,357 |
January 2018 thru December 2018 | |||
Operating leases | |||
Future minimum lease payments | 681 | 636 | 436 |
1-5 years | |||
Operating leases | |||
Future minimum lease payments | 1,185 | 1,169 | 890 |
More than 5 years | |||
Operating leases | |||
Future minimum lease payments | $ 143 | $ 74 | $ 31 |
Operating income (Details)
Operating income (Details) - ARS ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating income from services and other income | |||||||||||||||
Revenues and other income | $ 57,104 | $ 45,437 | $ 34,524 | ||||||||||||
Operating expenses | (39,279) | (32,711) | (25,079) | ||||||||||||
Operating income before depreciation and amortization | 17,825 | 12,726 | 9,445 | ||||||||||||
D&A | (6,928) | (6,198) | (4,438) | ||||||||||||
Disposals and impairment of PP&E | (316) | (383) | (199) | ||||||||||||
Operating income from services and other income | 10,581 | 6,145 | 4,808 | ||||||||||||
Operating income (loss) from equipment sales | |||||||||||||||
Revenue from sale of telecommunication equipment | 8,215 | 7,886 | 6,016 | ||||||||||||
Cost of equipments and handsets | (6,684) | (6,188) | (4,595) | ||||||||||||
Total income for sale of equipment and handsets | 1,531 | 1,698 | 1,421 | ||||||||||||
Operating income | $ 3,094 | $ 3,167 | $ 2,958 | $ 2,893 | $ 2,320 | $ 1,802 | $ 1,724 | $ 1,997 | $ 1,770 | $ 1,311 | $ 1,468 | $ 1,680 | 12,112 | 7,843 | 6,229 |
Consolidated net income | |||||||||||||||
Operating income before depreciation and amortization | 19,356 | 14,424 | 10,866 | ||||||||||||
D&A | (6,928) | (6,198) | (4,438) | ||||||||||||
Disposals and impairment of PP&E | (316) | (383) | (199) | ||||||||||||
Operating income | $ 3,094 | $ 3,167 | $ 2,958 | $ 2,893 | $ 2,320 | $ 1,802 | $ 1,724 | $ 1,997 | $ 1,770 | $ 1,311 | $ 1,468 | $ 1,680 | $ 12,112 | $ 7,843 | $ 6,229 |
Operating income - Breakdown of
Operating income - Breakdown of operating income by segment (Details) - ARS ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Services revenues and other income | |||||||||||||||
Third party revenues | $ 57,104 | $ 45,437 | |||||||||||||
Third party operating expenses | (39,279) | (32,711) | |||||||||||||
Subtotal income for services revenues and other | 17,825 | 12,726 | $ 9,445 | ||||||||||||
Equipments revenues | |||||||||||||||
Equipment sales | 8,215 | 7,886 | 6,016 | ||||||||||||
Cost of equipments and handsets | (6,684) | (6,188) | (4,595) | ||||||||||||
Total income for sale of equipment and handsets | 1,531 | 1,698 | 1,421 | ||||||||||||
Total operating income before depreciation and amortization | 19,356 | 14,424 | 10,866 | ||||||||||||
D&A | (6,928) | (6,198) | (4,438) | ||||||||||||
Disposals and impairment of PP&E | (316) | (383) | (199) | ||||||||||||
Operating income | $ 3,094 | $ 3,167 | $ 2,958 | $ 2,893 | $ 2,320 | $ 1,802 | $ 1,724 | $ 1,997 | $ 1,770 | $ 1,311 | $ 1,468 | $ 1,680 | 12,112 | 7,843 | 6,229 |
Operating segment | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | 34,524 | ||||||||||||||
Third party operating expenses | (25,079) | ||||||||||||||
Eliminations | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | (2,737) | (2,105) | (1,971) | ||||||||||||
Third party operating expenses | 2,737 | 2,105 | 1,971 | ||||||||||||
Fixed services | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | 19,868 | 14,989 | |||||||||||||
Third party operating expenses | (18,262) | (13,464) | |||||||||||||
Equipments revenues | |||||||||||||||
Equipment sales | 663 | 91 | 61 | ||||||||||||
Cost of equipments and handsets | (524) | (136) | (82) | ||||||||||||
Total income for sale of equipment and handsets | 139 | (45) | (21) | ||||||||||||
Total operating income before depreciation and amortization | 1,745 | 1,480 | 830 | ||||||||||||
Operating income | (512) | (416) | (787) | ||||||||||||
Fixed services | Operating segment | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | 10,714 | ||||||||||||||
Third party operating expenses | (9,863) | ||||||||||||||
Subtotal income for services revenues and other | 3,711 | 3,314 | 2,548 | ||||||||||||
Equipments revenues | |||||||||||||||
Equipment sales | 663 | 91 | 61 | ||||||||||||
Cost of equipments and handsets | (524) | (136) | (82) | ||||||||||||
Total income for sale of equipment and handsets | 139 | (45) | (21) | ||||||||||||
Total operating income before depreciation and amortization | 3,850 | 3,269 | 2,527 | ||||||||||||
D&A | (2,236) | (1,897) | (1,526) | ||||||||||||
Disposals and impairment of PP&E | (21) | 1 | (91) | ||||||||||||
Operating income | 1,593 | 1,373 | 910 | ||||||||||||
Fixed services | Eliminations | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | (2,421) | (1,947) | (1,834) | ||||||||||||
Third party operating expenses | 316 | 158 | 137 | ||||||||||||
Equipments revenues | |||||||||||||||
Operating income | (2,105) | (1,789) | (1,697) | ||||||||||||
Mobile Services | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | 37,236 | 30,448 | |||||||||||||
Third party operating expenses | (21,017) | (19,247) | |||||||||||||
Equipments revenues | |||||||||||||||
Equipment sales | 7,552 | 7,795 | 5,955 | ||||||||||||
Total operating income before depreciation and amortization | 17,611 | 12,944 | 10,036 | ||||||||||||
Operating income | 12,624 | 8,259 | 7,016 | ||||||||||||
Mobile Services | Operating segment | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | 23,810 | ||||||||||||||
Third party operating expenses | (15,216) | ||||||||||||||
Subtotal income for services revenues and other | 14,114 | 9,412 | 6,897 | ||||||||||||
Equipments revenues | |||||||||||||||
Equipment sales | 7,552 | 7,795 | 5,955 | ||||||||||||
Cost of equipments and handsets | (6,160) | (6,052) | (4,513) | ||||||||||||
Total income for sale of equipment and handsets | 1,392 | 1,743 | 1,442 | ||||||||||||
Total operating income before depreciation and amortization | 15,506 | 11,155 | 8,339 | ||||||||||||
D&A | (4,692) | (4,301) | (2,912) | ||||||||||||
Disposals and impairment of PP&E | (295) | (384) | (108) | ||||||||||||
Operating income | 10,519 | 6,470 | 5,319 | ||||||||||||
Mobile Services | Eliminations | |||||||||||||||
Services revenues and other income | |||||||||||||||
Third party revenues | (316) | (158) | (137) | ||||||||||||
Third party operating expenses | 2,421 | 1,947 | 1,834 | ||||||||||||
Equipments revenues | |||||||||||||||
Operating income | $ 2,105 | $ 1,789 | $ 1,697 |
Finance income and expenses (De
Finance income and expenses (Details) - ARS ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finance income and expenses | |||||||||||||||
Interest on cash equivalents | $ 5 | $ 1 | $ 20 | ||||||||||||
Gains on other short-term investments | 121 | 61 | 169 | ||||||||||||
Gains on investments (Argentine companies notes and Governments bonds) | 979 | 287 | 432 | ||||||||||||
Interest on receivables | 763 | 373 | 183 | ||||||||||||
Foreign currency exchange gains | 1,217 | 273 | 316 | ||||||||||||
TUVES share purchase option | 11 | 9 | |||||||||||||
Other | 30 | 1 | |||||||||||||
Total finance income | 3,115 | 1,006 | 1,130 | ||||||||||||
Interest on loans | (928) | (1,613) | (566) | ||||||||||||
Interest on salaries and social security payable, other taxes payables and accounts payable | (49) | (37) | (26) | ||||||||||||
Interest on provisions (Note 17) | (320) | (207) | (137) | ||||||||||||
Loss on discounting of salaries and social security payables, other taxes payable and other liabilities | (6) | (15) | (9) | ||||||||||||
Foreign currency exchange losses (*) | (2,224) | (1,328) | (1,456) | ||||||||||||
TUVES share purchase option | (24) | ||||||||||||||
Interest on pension benefits (Note 16) | (47) | (38) | (28) | ||||||||||||
Other | (3) | (12) | (10) | ||||||||||||
Total finance expenses | (3,601) | (3,250) | (2,232) | ||||||||||||
Financial results, net | $ (210) | $ (16) | $ (384) | $ 124 | $ (562) | $ (636) | $ (489) | $ (557) | $ (910) | $ (73) | $ (30) | $ (89) | (486) | (2,244) | (1,102) |
NDF | |||||||||||||||
Finance income and expenses | |||||||||||||||
Foreign currency exchange gains | $ 40 | $ 5 | |||||||||||||
Foreign currency exchange losses (*) | $ (432) |
Earnings per share (Details)
Earnings per share (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings per share | |||
Dilutive potential common stock outstanding (in shares) | 0 | ||
Dilutive earnings per share (In pesos per share) | $ 0 | ||
Weighted average number of shares outstanding (in shares) | 969,159,605 | 969,159,605 | 969,159,605 |
Financial risk management - Mar
Financial risk management - Market risk (Details) ₲ in Millions, € in Millions, $ in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2017USD ($)$ / ₲$ / €$ / $ | Dec. 31, 2017EUR (€)$ / ₲$ / €$ / $ | Dec. 31, 2017PYG (₲)$ / ₲$ / €$ / $ | Dec. 31, 2017ARS ($)$ / ₲$ / €$ / $ | Dec. 31, 2016USD ($)$ / ₲$ / €$ / $ | Dec. 31, 2016EUR (€)$ / ₲$ / €$ / $ | Dec. 31, 2016PYG (₲)$ / ₲$ / €$ / $ | Dec. 31, 2016ARS ($)$ / ₲$ / €$ / $ | |
Financial risk management | ||||||||
Financial debt | $ 12,235 | $ 11,912 | ||||||
Cash and cash equivalents and investments sensitive to changes in Peso/Dollar exchange rates (as a percent) | 66.00% | |||||||
Dollar linked investments sensitive to changes in Peso/Dollar exchange rates (as a percent) | 4.00% | |||||||
TOTAL ASSETS | 57,588 | 47,914 | ||||||
TOTAL LIABILITIES | (33,709) | (28,036) | ||||||
Dollar linked investments held | 365 | 74 | ||||||
Net liability position in foreign currency | $ 518 | |||||||
Amount of several NDF contracts entered by the group | 60 | $ 16 | ||||||
Currency risk | ||||||||
Financial risk management | ||||||||
TOTAL ASSETS | 7,563 | 4,875 | ||||||
TOTAL LIABILITIES | (18,600) | (14,654) | ||||||
Net liabilities | (592) | (11,037) | (9,779) | |||||
Net liability position in foreign currency | 578 | 10,672 | 611 | 9,705 | ||||
Net liability position in foreign currency | 518 | 9,559 | 595 | |||||
U.S. dollars | Government bonds | ||||||||
Financial risk management | ||||||||
Government bonds at fair value | 12 | 371 | 45 | 735 | ||||
U.S. dollars | Currency risk | ||||||||
Financial risk management | ||||||||
TOTAL ASSETS | 372 | 7,094 | 241 | 4,067 | ||||
TOTAL LIABILITIES | $ (939) | $ (17,568) | $ (859) | $ (13,648) | ||||
Exchange rate, assets | $ / $ | 18.549 | 18.549 | 18.549 | 18.549 | 15.790 | 15.790 | 15.790 | 15.790 |
Exchange rate, liabilities | $ / $ | 18.649 | 18.649 | 18.649 | 18.649 | 15.890 | 15.890 | 15.890 | 15.890 |
G | Currency risk | ||||||||
Financial risk management | ||||||||
TOTAL ASSETS | ₲ 120,029 | $ 399 | ₲ 250,865 | $ 684 | ||||
TOTAL LIABILITIES | ₲ (233,891) | $ (773) | ₲ (311,279) | $ (848) | ||||
Exchange rate, assets | $ / ₲ | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 |
Exchange rate, liabilities | $ / ₲ | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 | 0.003 |
EURO | Currency risk | ||||||||
Financial risk management | ||||||||
TOTAL ASSETS | € 3 | $ 70 | € 7 | $ 124 | ||||
TOTAL LIABILITIES | € (11) | $ (259) | € (9) | $ (158) | ||||
Exchange rate, assets | $ / € | 22.283 | 22.283 | 22.283 | 22.283 | 16.625 | 16.625 | 16.625 | 16.625 |
Exchange rate, liabilities | $ / € | 22.450 | 22.450 | 22.450 | 22.450 | 16.770 | 16.770 | 16.770 | 16.770 |
Financial risk management - Sen
Financial risk management - Sensitivity analysis of exchange and interest rate risk (Details) $ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017USD ($)$ / $ | Dec. 31, 2017ARS ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016ARS ($) | |
Financial risk management | ||||
Net liability position in foreign currency | $ 518 | |||
Financial liabilities | $ 26,220 | $ 22,912 | ||
Loans | ||||
Financial risk management | ||||
Financial liabilities | 12,235 | 11,912 | ||
Currency risk | ||||
Financial risk management | ||||
Net liability position in foreign currency | $ 592 | 11,037 | $ 9,779 | |
Estimated variation in exchange rate | $ / $ | 0.10 | |||
Estimated variation in consolidated amounts of foreign currency position | 59 | |||
Net liability position in foreign currency | $ 518 | 9,559 | $ 595 | |
Estimated variation in consolidated amounts of foreign currency position on the portion not covered by derivative financial instruments and other assets | 52 | |||
Interest rate risk | ||||
Financial risk management | ||||
Variation in agreed interest rates (as a percent) | 0.10% | |||
Interest rate risk | Bank overdrafts | Pesos | ||||
Financial risk management | ||||
Financial liabilities | 135 | |||
Effect | 0.1 | |||
Interest rate risk | Term Notes | Pesos | ||||
Financial risk management | ||||
Financial liabilities | 871 | |||
Effect | $ 0.9 | |||
Interest rate risk | Term Notes | U.S. dollars | ||||
Financial risk management | ||||
Financial liabilities | $ 78 | |||
Effect | 1.4 | |||
Interest rate risk | Loans | U.S. dollars | ||||
Financial risk management | ||||
Financial liabilities | 500 | |||
Effect | $ 9.3 |
Financial risk management - Cre
Financial risk management - Credit risk (Details) - ARS ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Credit risk | ||
Credit risk exposure | ||
Total financial assets | $ 18,016 | |
Maximum holding period of deposits | 3 months | |
Credit risk | Due | ||
Credit risk exposure | ||
Total financial assets | $ 1,807 | |
Credit risk | Not due | ||
Credit risk exposure | ||
Total financial assets | 16,209 | |
Cash and cash equivalents | Credit risk | ||
Credit risk exposure | ||
Total financial assets | 2,831 | |
Cash and cash equivalents | Credit risk | Not due | ||
Credit risk exposure | ||
Total financial assets | 2,831 | |
Investments | Credit risk | ||
Credit risk exposure | ||
Total financial assets | 6,082 | |
Investments | Credit risk | Not due | ||
Credit risk exposure | ||
Total financial assets | 6,082 | |
Trade receivables | ||
Credit risk exposure | ||
Overdue balances not covered by the allowance for doubtful accounts | 1,807 | $ 1,738 |
Trade receivables | Credit risk | ||
Credit risk exposure | ||
Total financial assets | 8,648 | |
Trade receivables | Credit risk | Due | ||
Credit risk exposure | ||
Total financial assets | 1,807 | |
Trade receivables | Credit risk | Not due | ||
Credit risk exposure | ||
Total financial assets | 6,841 | |
Other receivables | Credit risk | ||
Credit risk exposure | ||
Total financial assets | 455 | |
Other receivables | Credit risk | Not due | ||
Credit risk exposure | ||
Total financial assets | $ 455 |
Financial risk management - Liq
Financial risk management - Liquidity risk (Details) $ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ARS ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017ARS ($) | Dec. 31, 2016ARS ($) | |
Operative working capital - negative | |||||
Trade receivables | $ 8,636 | $ 7,577 | |||
Other receivables (not considering financial NDF) | 1,431 | 1,011 | |||
Inventories | 1,854 | 1,278 | |||
Current liabilities (not considering financial debt) | (18,793) | (13,245) | |||
Operative working capital - negative | (6,872) | (3,379) | |||
Over revenues | (10.50%) | (6.40%) | |||
Variations in operative working capital - negative | |||||
Variation in trade receivables | $ 1,059 | ||||
Variation in other receivables | 420 | ||||
Variation in inventories | 576 | ||||
Variation in current liabilities (not considering financial debt) | (5,548) | ||||
Variation in operative working capital | (3,493) | ||||
Net current financial asset (debt) | |||||
Cash and cash equivalents | $ 250 | $ 153 | 2,831 | 3,945 | |
Financial NDF | 60 | ||||
Investments | 3,426 | 1,751 | |||
Current financial debt | (3,194) | (3,266) | |||
Net Current financial asset (debt) | 3,123 | 2,430 | |||
Variations in net current financial asset (debt) | |||||
Variation in cash and cash equivalents | (1,114) | ||||
Variation in investments | 1,675 | ||||
Variation in Financial NDF | 60 | ||||
Variation in current financial debt | 72 | ||||
Variation in net current financial asset (debt) | 693 | ||||
Negative operating working capital (current assets - current liabilities) | $ (3,749) | $ (949) | |||
Variation in working capital | $ (2,800) | ||||
Liquidity rate | 0.83 | 0.94 | |||
Variation in liquidity rate | (0.11) | ||||
Leverage rate | 2.00% |
Financial risk management - Mat
Financial risk management - Maturity analysis of financial liabilities (Details) - Liquidity risk $ in Millions | Dec. 31, 2017ARS ($) |
Schedule of maturity of financial liabilities | |
Financial liabilities | $ 28,138 |
Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 11,599 |
Loans | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 14,103 |
Salaries and social security payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 2,345 |
Other liabilities | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 91 |
Due | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 319 |
Due | Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 319 |
January 2018 thru December 2018 | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 16,678 |
January 2018 thru December 2018 | Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 11,164 |
January 2018 thru December 2018 | Loans | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 3,389 |
January 2018 thru December 2018 | Salaries and social security payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 2,055 |
January 2018 thru December 2018 | Other liabilities | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 70 |
January 2019 thru December 2019 | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 3,317 |
January 2019 thru December 2019 | Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 66 |
January 2019 thru December 2019 | Loans | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 3,043 |
January 2019 thru December 2019 | Salaries and social security payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 187 |
January 2019 thru December 2019 | Other liabilities | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 21 |
January 2020 thru December 2020 | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 2,788 |
January 2020 thru December 2020 | Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 45 |
January 2020 thru December 2020 | Loans | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 2,687 |
January 2020 thru December 2020 | Salaries and social security payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 56 |
January 2021 and thereafter | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 5,036 |
January 2021 and thereafter | Trade payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 5 |
January 2021 and thereafter | Loans | |
Schedule of maturity of financial liabilities | |
Financial liabilities | 4,984 |
January 2021 and thereafter | Salaries and social security payables | |
Schedule of maturity of financial liabilities | |
Financial liabilities | $ 47 |
Related party balances and t165
Related party balances and transactions - Controlling group (Details) - $ / shares | Nov. 30, 2017 | Jun. 22, 2017 | May 23, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 08, 2016 | Dec. 31, 2015 |
Related party balances and transactions | |||||||
Par value (in argentine peso per share) | $ 1 | $ 1 | $ 1 | ||||
Sofora | |||||||
Related party balances and transactions | |||||||
Par value (in argentine peso per share) | $ 1 | ||||||
Number of votes per share | 1 | ||||||
Fintech | Sofora | |||||||
Related party balances and transactions | |||||||
Acquisition percentage | 51.00% | ||||||
Telecom Argentina | Nortel | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 54.74% | ||||||
Ownership percentage after treasury shares acquisition | 55.60% | ||||||
Telecom Argentina | Nortel | Class A Preferred shares | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 51.00% | ||||||
Telecom Argentina | Nortel | Class B Preferred shares | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 3.74% | ||||||
Equity interest in preferred shares (as a percent) | 7.64% | ||||||
Telecom Argentina | Fintech | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 39.50% | ||||||
Nortel | Sofora | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 78.38% | ||||||
Sofora | Fintech | |||||||
Related party balances and transactions | |||||||
Ownership percentage by parent | 15.00% | 17.00% |
Related party balances and t166
Related party balances and transactions - Balances with related parties (Details) - ARS ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Total cash and cash equivalents | $ 2 | |
Total trade receivables, net | $ 1 | 1 |
CURRENT LIABILITIES | ||
Total trade payables | 2 | 21 |
Financial Debt - Notes (current and non-current) | 323 | |
Banco Atlas S.A. | ||
CURRENT ASSETS | ||
Total cash and cash equivalents | 2 | |
Editorial Azeta S.A. | ||
CURRENT ASSETS | ||
Total trade receivables, net | 1 | 1 |
Experta ART S.A. | ||
CURRENT LIABILITIES | ||
Total trade payables | 16 | |
Financial Debt - Notes (current and non-current) | 151 | |
Haras El Capricho S.A. | ||
CURRENT LIABILITIES | ||
Total trade payables | 1 | |
Telteco S.A. | ||
CURRENT LIABILITIES | ||
Total trade payables | 4 | |
Penta S.A. | ||
CURRENT LIABILITIES | ||
Total trade payables | $ 2 | |
La Estrella Sociedad Anonima de Seguros de Retiro | ||
CURRENT LIABILITIES | ||
Financial Debt - Notes (current and non-current) | $ 172 |
Related party balances and t167
Related party balances and transactions - Transactions with related parties and companies under sect. 33 of the LGS (Details) - ARS ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 08, 2016 | |
Related party balances and transactions | ||||
Total other income | $ 1 | $ 1 | ||
Total services rendered | $ 6 | 5 | 4 | |
Total services received | $ (6) | (5) | (2) | |
Minimum percent of transaction amount on the equity approved by the Board of Directors | 1.00% | |||
Sofora | ||||
Related party balances and transactions | ||||
Total services rendered | $ 7 | 7 | 120 | |
Total services received | (72) | (153) | ||
Total purchases of PP&E | 1 | 4 | ||
Total finance costs | 34 | 55 | ||
Nortel | ||||
Related party balances and transactions | ||||
Total other income | 1 | 1 | ||
Editorial Azeta S.A. | ||||
Related party balances and transactions | ||||
Total services rendered | 4 | 3 | 3 | |
Total services received | (3) | (3) | (2) | |
Banco Atlas S.A. | ||||
Related party balances and transactions | ||||
Total services rendered | 1 | 1 | 1 | |
Penta S.A. | ||||
Related party balances and transactions | ||||
Total services rendered | 1 | 1 | ||
Total services received | $ (3) | (2) | ||
Fintech | Sofora | ||||
Related party balances and transactions | ||||
Acquisition percentage | 51.00% | |||
Fintech | Sofora | ||||
Related party balances and transactions | ||||
Total services rendered | 111 | 564 | ||
Total services received | (72) | (352) | ||
Total purchases of PP&E | $ 18 | $ 103 |
Related party balances and t168
Related party balances and transactions - Key Managers (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related party balances and transactions | |||
Salaries | $ 81 | $ 54 | $ 37 |
Variable compensation | 121 | 53 | 26 |
Social security contributions | 58 | 30 | 18 |
Hiring benefits | 5 | ||
Termination benefits | 63 | 58 | 25 |
Total Compensation for Key Managers | 323 | 200 | 106 |
Amount payable under compensation for Key Managers | 45 | 66 | |
Estimated compensation | $ 49.8 | ||
Compensation for members of Board of Directors | $ 34.6 | $ 20 |
Segment information (Details)
Segment information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017ARS ($)segment | Sep. 30, 2017ARS ($) | Jun. 30, 2017ARS ($) | Mar. 31, 2017ARS ($) | Dec. 31, 2016ARS ($)segmentcompany | Sep. 30, 2016ARS ($) | Jun. 30, 2016ARS ($) | Mar. 31, 2016ARS ($) | Dec. 31, 2015ARS ($)segmentcompany | Sep. 30, 2015ARS ($) | Jun. 30, 2015ARS ($) | Mar. 31, 2015ARS ($) | Dec. 31, 2017ARS ($)segment | Dec. 31, 2016ARS ($)segmentcompany | Dec. 31, 2015ARS ($)segmentcompany | |
Operating segments | |||||||||||||||
Number of companies | company | 6 | 6 | 6 | 6 | |||||||||||
Number of reportable segments | segment | 3 | 3 | 3 | 3 | 3 | 3 | |||||||||
Total revenues and other income | $ 65,319 | $ 53,323 | $ 40,540 | ||||||||||||
Employee benefit expenses and severance payments | (12,718) | (9,800) | (7,253) | ||||||||||||
Interconnection costs and other telecommunication charges | (3,148) | (2,553) | (2,170) | ||||||||||||
Fees for services, maintenance, materials and supplies | (6,600) | (5,006) | (3,919) | ||||||||||||
Taxes and fees with the Regulatory Authority | (6,107) | (5,125) | (3,943) | ||||||||||||
Commissions | (3,631) | (3,849) | (3,193) | ||||||||||||
Cost of equipments and handsets | (6,684) | (6,188) | (4,595) | ||||||||||||
Advertising | (1,218) | (874) | (814) | ||||||||||||
Cost of VAS | (874) | (1,499) | (1,256) | ||||||||||||
Provisions | (590) | (187) | (113) | ||||||||||||
Bad debt expenses | (1,113) | (1,228) | (564) | ||||||||||||
Other operating expenses | (3,280) | (2,590) | (1,854) | ||||||||||||
Operating income before D&A | $ 5,110 | $ 4,902 | $ 4,706 | $ 4,638 | $ 4,214 | $ 3,446 | $ 3,362 | $ 3,402 | $ 3,202 | $ 2,529 | $ 2,501 | $ 2,634 | 19,356 | 14,424 | 10,866 |
Depreciation of PP&E | (5,039) | (4,358) | (3,046) | ||||||||||||
Amortization of intangible assets | (1,889) | (1,840) | (1,392) | ||||||||||||
Disposals and impairment of PP&E | (316) | (383) | (199) | ||||||||||||
Operating income | 3,094 | 3,167 | 2,958 | 2,893 | 2,320 | 1,802 | 1,724 | 1,997 | 1,770 | 1,311 | 1,468 | 1,680 | 12,112 | 7,843 | 6,229 |
Financial results, net | (210) | (16) | (384) | 124 | (562) | (636) | (489) | (557) | (910) | (73) | (30) | (89) | (486) | (2,244) | (1,102) |
Income before income tax expense | 11,626 | 5,599 | 5,127 | ||||||||||||
Income tax expense, net | (3,902) | (1,594) | (1,692) | ||||||||||||
Net income for the year | 2,029 | 2,056 | 1,673 | 1,966 | 1,510 | 758 | 802 | 935 | 657 | 800 | 937 | 1,041 | 7,724 | 4,005 | 3,435 |
Net income attributable to Telecom Argentina | $ 1,989 | $ 2,026 | $ 1,660 | $ 1,955 | $ 1,504 | $ 746 | $ 800 | $ 925 | $ 646 | $ 801 | $ 928 | $ 1,028 | 7,630 | 3,975 | 3,403 |
Net income attributable to non-controlling interest | 94 | 30 | 32 | ||||||||||||
Service revenues | 56,971 | 45,354 | 34,480 | ||||||||||||
Equipment sales | 8,215 | 7,886 | 6,016 | ||||||||||||
Other income | 133 | 83 | 44 | ||||||||||||
Eliminations | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | (2,758) | (2,119) | (1,989) | ||||||||||||
Interconnection costs and other telecommunication charges | 1,809 | 1,329 | 1,389 | ||||||||||||
Fees for services, maintenance, materials and supplies | 610 | 509 | 419 | ||||||||||||
Commissions | 95 | 59 | 48 | ||||||||||||
Other operating expenses | 244 | 222 | 133 | ||||||||||||
Fixed services | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 20,531 | 15,080 | 10,775 | ||||||||||||
Cost of equipments and handsets | (524) | (136) | (82) | ||||||||||||
Operating income | (512) | (416) | (787) | ||||||||||||
Service revenues | 19,797 | 14,923 | 10,675 | ||||||||||||
Equipment sales | 663 | 91 | 61 | ||||||||||||
Other income | 71 | 66 | 39 | ||||||||||||
Fixed services | Operating segment | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 22,952 | 17,027 | 12,609 | ||||||||||||
Employee benefit expenses and severance payments | (9,625) | (7,220) | (5,268) | ||||||||||||
Interconnection costs and other telecommunication charges | (1,200) | (961) | (719) | ||||||||||||
Fees for services, maintenance, materials and supplies | (3,546) | (2,311) | (1,769) | ||||||||||||
Taxes and fees with the Regulatory Authority | (1,581) | (1,118) | (818) | ||||||||||||
Commissions | (417) | (327) | (268) | ||||||||||||
Cost of equipments and handsets | (524) | (136) | (82) | ||||||||||||
Advertising | (194) | (126) | (108) | ||||||||||||
Cost of VAS | (45) | (53) | (38) | ||||||||||||
Provisions | (183) | (78) | (17) | ||||||||||||
Bad debt expenses | (193) | (152) | (79) | ||||||||||||
Other operating expenses | (1,594) | (1,276) | (934) | ||||||||||||
Operating income before D&A | 3,850 | 3,269 | 2,509 | ||||||||||||
Depreciation of PP&E | (2,072) | (1,686) | (1,341) | ||||||||||||
Amortization of intangible assets | (164) | (211) | (185) | ||||||||||||
Disposals and impairment of PP&E | (21) | 1 | (91) | ||||||||||||
Operating income | 1,593 | 1,373 | 910 | ||||||||||||
Operating income | 892 | ||||||||||||||
Equipment sales | 663 | 91 | 61 | ||||||||||||
Fixed services | Eliminations | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | (2,421) | (1,947) | (1,834) | ||||||||||||
Operating income | (2,105) | (1,789) | (1,697) | ||||||||||||
Mobile Services | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 44,788 | 38,243 | 29,765 | ||||||||||||
Operating income | 12,624 | 8,259 | 7,016 | ||||||||||||
Service revenues | 37,174 | 30,431 | 23,805 | ||||||||||||
Equipment sales | 7,552 | 7,795 | 5,955 | ||||||||||||
Other income | 62 | 17 | 5 | ||||||||||||
Mobile Services | Operating segment | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 45,125 | 38,415 | 29,920 | ||||||||||||
Employee benefit expenses and severance payments | (3,093) | (2,580) | (1,985) | ||||||||||||
Interconnection costs and other telecommunication charges | (3,757) | (2,921) | (2,840) | ||||||||||||
Fees for services, maintenance, materials and supplies | (3,664) | (3,204) | (2,569) | ||||||||||||
Taxes and fees with the Regulatory Authority | (4,526) | (4,007) | (3,125) | ||||||||||||
Commissions | (3,309) | (3,581) | (2,973) | ||||||||||||
Cost of equipments and handsets | (6,160) | (6,052) | (4,513) | ||||||||||||
Advertising | (1,024) | (748) | (706) | ||||||||||||
Cost of VAS | (829) | (1,446) | (1,218) | ||||||||||||
Provisions | (407) | (109) | (96) | ||||||||||||
Bad debt expenses | (920) | (1,076) | (485) | ||||||||||||
Other operating expenses | (1,930) | (1,536) | (1,053) | ||||||||||||
Operating income before D&A | 15,506 | 11,155 | 8,357 | ||||||||||||
Depreciation of PP&E | (2,967) | (2,672) | (1,705) | ||||||||||||
Amortization of intangible assets | (1,725) | (1,629) | (1,207) | ||||||||||||
Disposals and impairment of PP&E | (295) | (384) | (108) | ||||||||||||
Operating income | 10,519 | 6,470 | 5,319 | ||||||||||||
Operating income | 5,337 | ||||||||||||||
Equipment sales | 7,552 | 7,795 | 5,955 | ||||||||||||
Mobile Services | Eliminations | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | (337) | (172) | (155) | ||||||||||||
Operating income | 2,105 | 1,789 | 1,697 | ||||||||||||
Personal Mobile Services | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 41,797 | 35,600 | 28,059 | ||||||||||||
Cost of equipments and handsets | (6,035) | (5,749) | (4,328) | ||||||||||||
Service revenues | 34,289 | 28,049 | 22,258 | ||||||||||||
Equipment sales | 7,446 | 7,535 | 5,796 | ||||||||||||
Other income | 62 | 16 | 5 | ||||||||||||
Personal Mobile Services | Operating segment | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 42,128 | 35,766 | 28,203 | ||||||||||||
Employee benefit expenses and severance payments | (2,876) | (2,381) | (1,856) | ||||||||||||
Interconnection costs and other telecommunication charges | (3,537) | (2,721) | (2,686) | ||||||||||||
Fees for services, maintenance, materials and supplies | (3,384) | (2,975) | (2,417) | ||||||||||||
Taxes and fees with the Regulatory Authority | (4,413) | (3,925) | (3,071) | ||||||||||||
Commissions | (2,965) | (3,286) | (2,774) | ||||||||||||
Cost of equipments and handsets | (6,035) | (5,749) | (4,328) | ||||||||||||
Advertising | (915) | (644) | (628) | ||||||||||||
Cost of VAS | (614) | (1,329) | (1,136) | ||||||||||||
Provisions | (406) | (109) | (96) | ||||||||||||
Bad debt expenses | (844) | (951) | (462) | ||||||||||||
Other operating expenses | (1,740) | (1,378) | (960) | ||||||||||||
Operating income before D&A | 14,399 | 10,318 | 7,789 | ||||||||||||
Depreciation of PP&E | (2,325) | (2,088) | (1,379) | ||||||||||||
Amortization of intangible assets | (1,636) | (1,526) | (1,141) | ||||||||||||
Disposals and impairment of PP&E | (295) | (384) | (109) | ||||||||||||
Operating income | 10,143 | 6,320 | 5,160 | ||||||||||||
Personal Mobile Services | Eliminations | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | (331) | (166) | (144) | ||||||||||||
Nucleo Mobile Services | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 2,991 | 2,643 | 1,706 | ||||||||||||
Cost of equipments and handsets | (125) | (303) | (185) | ||||||||||||
Service revenues | 2,885 | 2,382 | 1,547 | ||||||||||||
Equipment sales | 106 | 260 | 159 | ||||||||||||
Other income | 1 | ||||||||||||||
Nucleo Mobile Services | Operating segment | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | 2,997 | 2,649 | 1,717 | ||||||||||||
Employee benefit expenses and severance payments | (217) | (199) | (129) | ||||||||||||
Interconnection costs and other telecommunication charges | (220) | (200) | (154) | ||||||||||||
Fees for services, maintenance, materials and supplies | (280) | (229) | (152) | ||||||||||||
Taxes and fees with the Regulatory Authority | (113) | (82) | (54) | ||||||||||||
Commissions | (344) | (295) | (199) | ||||||||||||
Cost of equipments and handsets | (125) | (303) | (185) | ||||||||||||
Advertising | (109) | (104) | (78) | ||||||||||||
Cost of VAS | (215) | (117) | (82) | ||||||||||||
Provisions | (1) | ||||||||||||||
Bad debt expenses | (76) | (125) | (23) | ||||||||||||
Other operating expenses | (190) | (158) | (93) | ||||||||||||
Operating income before D&A | 1,107 | 837 | 568 | ||||||||||||
Depreciation of PP&E | (642) | (584) | (326) | ||||||||||||
Amortization of intangible assets | (89) | (103) | (66) | ||||||||||||
Disposals and impairment of PP&E | 1 | ||||||||||||||
Operating income | 376 | 150 | 177 | ||||||||||||
Nucleo Mobile Services | Eliminations | |||||||||||||||
Operating segments | |||||||||||||||
Total revenues and other income | $ (6) | $ (6) | $ (11) |
Segment information - Balance s
Segment information - Balance sheet information (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating segments | |||
PP&E, net | $ 28,538 | $ 23,165 | $ 17,963 |
Intangible assets, net | 7,098 | 7,592 | 7,659 |
Purchases | 9,905 | 9,632 | 6,396 |
Capital expenditures on intangible assets (b) | 1,238 | 1,754 | 3,704 |
Total capital expenditures in PP&E and intangible assets (a)+ (b) | 11,143 | 11,386 | 10,100 |
Total additions on PP&E and intangible assets | 12,576 | 11,860 | 11,162 |
Net financial asset (debt) | (3,260) | (5,892) | (2,277) |
Eliminations | |||
Operating segments | |||
Intangible assets, net | (1) | (1) | (1) |
Fixed services | Operating segment | |||
Operating segments | |||
PP&E, net | 15,039 | 11,468 | 9,280 |
Intangible assets, net | 406 | 429 | 443 |
Purchases | 5,254 | 3,820 | 2,846 |
Capital expenditures on intangible assets (b) | 153 | 197 | 233 |
Total capital expenditures in PP&E and intangible assets (a)+ (b) | 5,407 | 4,017 | 3,079 |
Total additions on PP&E and intangible assets | 6,886 | 4,525 | 3,514 |
Mobile Services | Operating segment | |||
Operating segments | |||
PP&E, net | 13,499 | 11,697 | 8,683 |
Intangible assets, net | 6,693 | 7,164 | 7,217 |
Purchases | 4,651 | 5,812 | 3,550 |
Capital expenditures on intangible assets (b) | 1,085 | 1,557 | 3,471 |
Total capital expenditures in PP&E and intangible assets (a)+ (b) | 5,736 | 7,369 | 7,021 |
Total additions on PP&E and intangible assets | 5,690 | 7,335 | 7,648 |
Personal Mobile Services | Operating segment | |||
Operating segments | |||
PP&E, net | 10,901 | 9,541 | 6,899 |
Intangible assets, net | 6,482 | 7,086 | 7,131 |
Purchases | 4,161 | 5,249 | 3,157 |
Capital expenditures on intangible assets (b) | 1,032 | 1,481 | 3,395 |
Total capital expenditures in PP&E and intangible assets (a)+ (b) | 5,193 | 6,730 | 6,552 |
Total additions on PP&E and intangible assets | 5,173 | 6,708 | 7,158 |
Nucleo Mobile Services | Operating segment | |||
Operating segments | |||
PP&E, net | 2,598 | 2,156 | 1,784 |
Intangible assets, net | 211 | 78 | 86 |
Purchases | 490 | 563 | 393 |
Capital expenditures on intangible assets (b) | 53 | 76 | 76 |
Total capital expenditures in PP&E and intangible assets (a)+ (b) | 543 | 639 | 469 |
Total additions on PP&E and intangible assets | $ 517 | $ 627 | $ 490 |
Segment information - Geographi
Segment information - Geographic information (Details) - ARS ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Geographic information | |||
Total revenues and other income | $ 65,319 | $ 53,323 | $ 40,540 |
Total non-current assets Breakdown by location of operations | 39,350 | 32,352 | 26,973 |
By location of operations | |||
Geographic information | |||
Total revenues and other income | 65,319 | 53,323 | 40,540 |
Total non-current assets Breakdown by location of operations | 39,350 | ||
By location of customer | |||
Geographic information | |||
Total revenues and other income | 65,319 | 53,323 | 40,540 |
Argentina | |||
Geographic information | |||
Total non-current assets Breakdown by location of operations | 29,832 | 24,844 | |
Argentina | By location of operations | |||
Geographic information | |||
Total revenues and other income | 62,012 | 50,406 | 38,677 |
Total non-current assets Breakdown by location of operations | 36,429 | ||
Argentina | By location of customer | |||
Geographic information | |||
Total revenues and other income | 61,696 | 49,958 | 38,388 |
Abroad | |||
Geographic information | |||
Total non-current assets Breakdown by location of operations | 2,520 | 2,129 | |
Abroad | By location of operations | |||
Geographic information | |||
Total revenues and other income | 3,307 | 2,917 | 1,863 |
Total non-current assets Breakdown by location of operations | 2,921 | ||
Abroad | By location of customer | |||
Geographic information | |||
Total revenues and other income | $ 3,623 | $ 3,365 | $ 2,152 |
Quarterly consolidated infor172
Quarterly consolidated information (unaudited information) (Details) - ARS ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly consolidated information (unaudited information) | |||||||||||||||
Revenues | $ 17,923 | $ 16,719 | $ 15,818 | $ 14,726 | $ 14,422 | $ 13,412 | $ 12,951 | $ 12,455 | $ 11,906 | $ 10,094 | $ 9,624 | $ 8,872 | $ 65,186 | $ 53,240 | $ 40,496 |
Operating income before D&A | 5,110 | 4,902 | 4,706 | 4,638 | 4,214 | 3,446 | 3,362 | 3,402 | 3,202 | 2,529 | 2,501 | 2,634 | 19,356 | 14,424 | 10,866 |
Operating income | 3,094 | 3,167 | 2,958 | 2,893 | 2,320 | 1,802 | 1,724 | 1,997 | 1,770 | 1,311 | 1,468 | 1,680 | 12,112 | 7,843 | 6,229 |
Financial results, net | (210) | (16) | (384) | 124 | (562) | (636) | (489) | (557) | (910) | (73) | (30) | (89) | (486) | (2,244) | (1,102) |
Net income | 2,029 | 2,056 | 1,673 | 1,966 | 1,510 | 758 | 802 | 935 | 657 | 800 | 937 | 1,041 | 7,724 | 4,005 | 3,435 |
Net income attributable to Telecom Argentina | $ 1,989 | $ 2,026 | $ 1,660 | $ 1,955 | $ 1,504 | $ 746 | $ 800 | $ 925 | $ 646 | $ 801 | $ 928 | $ 1,028 | $ 7,630 | $ 3,975 | $ 3,403 |
Restrictions on distribution173
Restrictions on distribution of profits and dividends (Details) - ARS ($) $ / shares in Units, $ in Millions | May 11, 2015 | Apr. 29, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||
Restrictions on distribution of profits and dividends | ||||||||
Minimum percentage of net income to be appropriated | 5.00% | |||||||
Threshold percentage of statutory reserves of the outstanding capital, used as criteria of allocation requirement | 20.00% | |||||||
Retained earnings | $ 7,630 | |||||||
Voluntary reserve for future dividends payment | 9,730 | |||||||
Dividends declared and paid by Telecom Argentina during the year ($4.28, $2.06 and $0.83 peso per share, respectively) | $ 804 | $ 4,151 | [1] | $ 2,000 | [2] | $ 804 | [3] | |
Dividends declared and paid per share | $ 0.83 | $ 4.28 | $ 2.06 | $ 0.83 | ||||
Proposed for approval at the Annual General Meeting (not recognized as a liability as of December 31) | $ 1,989 | |||||||
[1] | As approved by the Company’s Board of Directors’ Meeting held on December 18, 2017. The amount in pesos is $ 4,150,312,272, which was rounded in this Consolidated Statement of changes in equity to be presented in millions of pesos to 4,151. | |||||||
[2] | As approved by the Company's Board of Directors' Meeting held on April 29, 2016. | |||||||
[3] | As approved by the Company’s Ordinary Shareholders’ Meeting held on April 29, 2015. |
Corporate Reorganization of 174
Corporate Reorganization of the Telecom Group and Its controlling companies - Amortization (Details) | Jun. 22, 2017USD ($)shares | Jun. 22, 2017ARS ($)shares | May 31, 2017 | May 23, 2017USD ($)directorshares | May 23, 2017ARS ($)directorshares | Mar. 31, 2017USD ($)trancheitem | Dec. 31, 2017ARS ($)shares | Mar. 31, 2017ARS ($)shares |
Amortization of Sofora shares | ||||||||
Shares issued | shares | 984,380,978 | |||||||
Issued capital | $ 984,380,978 | |||||||
Sofora | Argentina Inversiones S.A. | ||||||||
Amortization of Sofora shares | ||||||||
Number of tranches | tranche | 2 | |||||||
Shares issued | shares | 140,704,640 | |||||||
Issued capital | $ 140,704,640 | |||||||
Amortization of shares | $ 8,683,596 | |||||||
Shares amortized | shares | 65,955,300 | 65,955,300 | 74,749,340 | 74,749,340 | ||||
Percentage of capital stock owned and voting rights | 15.00% | 15.00% | 17.00% | 17.00% | ||||
Amount paid to acquire shares | $ 65,955,300 | $ 74,749,340 | ||||||
Unpaid dividends percentage | 2.00% | |||||||
Dividend rights certificate, redemption period | 36 months | |||||||
Paid percentage of maximum dividends payable, redemption threshold | 60.00% | |||||||
Sofora | Argentina Inversiones S.A. | Class A Bono de Goce | ||||||||
Amortization of Sofora shares | ||||||||
Dividend rights | $ 216,280,387 | $ 245,036,017 | ||||||
Sofora | Argentina Inversiones S.A. | Minimum | Class A Bono de Goce | ||||||||
Amortization of Sofora shares | ||||||||
Number of dividend certificates | item | 1 | |||||||
Sofora | Argentina Inversiones S.A. | Maximum | ||||||||
Amortization of Sofora shares | ||||||||
Dividend rights | $ 470,000,000 | |||||||
Telecom Argentina | ||||||||
Amortization of Sofora shares | ||||||||
Number of directors appointed | director | 2 | 2 | ||||||
Number of alternate directors appointed | director | 2 | 2 | ||||||
Number of members appointed to Supervisory Committee | director | 1 | 1 | ||||||
Number of alternates appointed to the Supervisory Committee | director | 1 | 1 | ||||||
WAI | ||||||||
Amortization of Sofora shares | ||||||||
Percentage of capital stock owned and voting rights | 15.00% |
Corporate Reorganization of 175
Corporate Reorganization of the Telecom Group and Its controlling companies - Telecom Group Reorganization (Details) | May 23, 2017Vote$ / sharesshares | Dec. 31, 2017$ / shares | Dec. 31, 2016$ / shares | Dec. 31, 2015$ / shares |
Conversion terms approved by board | ||||
Par value per share | $ 1 | $ 1 | $ 1 | |
Telecom Argentina | Class "A" | ||||
Conversion terms approved by board | ||||
Par value per share | $ 1 | |||
Number of Votes Per Share | Vote | 1 | |||
Telecom Argentina | Class "A" | Maximum | ||||
Conversion terms approved by board | ||||
Number of shares to be converted | shares | 161,039,447 | |||
Telecom Argentina | Class "B" | ||||
Conversion terms approved by board | ||||
Par value per share | $ 1 | |||
Number of Votes Per Share | Vote | 1 |
Merger by Absorption Between176
Merger by Absorption Between Telecom Argentina and Cablevision S.A. - Terms (Details) | Dec. 27, 2017USD ($) | Oct. 05, 2017USD ($) | Jul. 07, 2017USD ($) | Jun. 30, 2017 | Jul. 31, 2017USD ($) |
Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Percentage of voting equity interests acquired | 71.55% | ||||
Call Option, Equity interest in Telecom Argentina | Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Full option price paid in advance | $ 634,275,282 | ||||
Call Option, Equity interest in Telecom Argentina | VLG Argentina LLC | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Additional shares received under option (as a percent) | 21.55% | ||||
Additional indirect share received under option (as a percent) | 6.00% | ||||
Telecom Argentina | Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Merger agreement, distribution rate | 9,871.07005 | ||||
Fintech Advisory Inc. | Call Option, Equity interest in Telecom Argentina | Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Principal amount | $ 628,008,363 | ||||
Option term | 1 year | ||||
Subsidiaries | Fintech Advisory Inc. | Call Option, Equity interest in Telecom Argentina | Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Equity interest acquirable under option (as a percent) | 13.51% | ||||
Participation equity interest acquirable under option (as a percent) | 6.00% | ||||
Principal amount | $ 634,275,282 | ||||
Share premium paid | $ 3,000,000 | ||||
Fintech Media LLC | VLG Argentina LLC | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Percentage of voting equity interests acquired | 28.45% | ||||
Fintech Media LLC | Call Option, Equity interest in Telecom Argentina | Cablevision Holding S.A. | |||||
Merger by Absorption Between Telecom Argentina and Cablevision S.A. | |||||
Option term | 30 days |
Merger by Absorption Between177
Merger by Absorption Between Telecom Argentina and Cablevision S.A. - Capital Stock (Details) - shares | 6 Months Ended | ||||
Jun. 29, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity | |||||
Number of shares outstanding | 969,159,605 | ||||
Number of shares in entity held by entity or by its subsidiaries or associates | 15,221,373 | 15,221,373 | 15,221,373 | ||
Number of shares issued | 984,380,978 | ||||
Major ordinary share transactions | |||||
Equity | |||||
Number of shares outstanding | 2,153,688,011 | ||||
Number of shares in entity held by entity or by its subsidiaries or associates | 15,221,373 | ||||
Number of shares issued | 2,168,909,384 | ||||
Cablevision Holding S.A. | |||||
Equity | |||||
Ownership interest in acquirer held before merger | 55.00% | ||||
Telecom Argentina | |||||
Equity | |||||
Ownership interest in acquirer held before merger | 45.00% | ||||
Class "A" | |||||
Equity | |||||
Number of shares outstanding | 340,994,852 | ||||
Number of shares issued | 340,994,852 | ||||
Class "A" | Major ordinary share transactions | |||||
Equity | |||||
Number of shares outstanding | 683,856,600 | ||||
Number of shares issued | 683,856,600 | ||||
Class "A" | Preliminary Merger Agreement and the Final Merger Agreement | |||||
Equity | |||||
Number of shares issued | 342,861,748 | ||||
Class "A" | Preliminary Merger Agreement and the Final Merger Agreement | Fintech | |||||
Equity | |||||
Number of shares issued | 342,861,748 | ||||
Class "B" | |||||
Equity | |||||
Number of shares outstanding | 627,930,005 | ||||
Number of shares in entity held by entity or by its subsidiaries or associates | 15,221,373 | ||||
Number of shares issued | 643,151,378 | ||||
Class "B" | Major ordinary share transactions | |||||
Equity | |||||
Number of shares outstanding | 627,930,005 | ||||
Number of shares in entity held by entity or by its subsidiaries or associates | 15,221,373 | ||||
Number of shares issued | 643,151,378 | ||||
Class "C" | |||||
Equity | |||||
Number of shares outstanding | 234,748 | ||||
Number of shares issued | 234,748 | ||||
Class "C" | Major ordinary share transactions | |||||
Equity | |||||
Number of shares outstanding | 234,748 | ||||
Number of shares issued | 234,748 | ||||
Class "D" | Major ordinary share transactions | |||||
Equity | |||||
Number of shares outstanding | 841,666,658 | ||||
Number of shares issued | 841,666,658 | ||||
Class "D" | Preliminary Merger Agreement and the Final Merger Agreement | |||||
Equity | |||||
Number of shares issued | 841,666,658 | ||||
Class "D" | Preliminary Merger Agreement and the Final Merger Agreement | Cablevision Holding S.A. | |||||
Equity | |||||
Number of shares issued | 406,757,183 | ||||
Class "D" | Preliminary Merger Agreement and the Final Merger Agreement | VLG Argentina LLC | |||||
Equity | |||||
Number of shares issued | 434,909,475 |
Merger by Absorption Between178
Merger by Absorption Between Telecom Argentina and Cablevision S.A. - Business Combination (Details) - Cablevision Holding S.A. $ in Billions | Jan. 01, 2018ARS ($) |
Major ordinary share transactions | |
Consideration | |
Consideration paid, fair value of shares issued | $ 132 |
Purchases of assets | |
Net identifiable assets acquired | |
Net identifiable assets acquired | 74 |
Property, plant and equipment | 63 |
Intangible assets acquired | 40 |
Customer Relationship recognized | 10 |
Trademarks recognized | 9 |
Licenses recognized | 21 |
Deferred income tax liability recognized due to the higher value assigned to net identifiable assets | 17 |
Noncontrolling interest | 1 |
Goodwill | $ 59 |
Subsequent events to Decembe179
Subsequent events to December 31, 2017 - Reversal of Reserve (Details) | Apr. 30, 2018ARS ($) | Feb. 15, 2018ARS ($)$ / shares | Jan. 31, 2018ARS ($)installment | Dec. 31, 2017ARS ($) |
Subsequent events to December 31, 2017 | ||||
Dividends proposed or declared before financial statements authorised for issue but not recognised as distribution to owners | $ 1,989,000,000 | |||
Telecom Argentina | Major ordinary share transactions | ||||
Subsequent events to December 31, 2017 | ||||
Equity reclassified into financial liabilities | $ 6,866,418,019 | $ 2,863,000,000 | ||
Number of distributions | installment | 2 | |||
Dividends proposed or declared before financial statements authorised for issue but not recognised as distribution to owners | 13,006,505,599 | |||
Dividends paid corresponding to the net profit from January 1 - September 30, 2017 | $ 5,640,728,444 | |||
Dividends proposed or declared before financial statements authorised for issue but not recognised as distribution to owners per share | $ / shares | $ 6.04 | |||
Telecom Argentina | Voluntary reserve for future dividends payments | Major ordinary share transactions | ||||
Subsequent events to December 31, 2017 | ||||
Equity reclassified into financial liabilities | $ 9,729,418,019 | |||
Telecom Argentina | Cablevision Holding S.A. | Major ordinary share transactions | ||||
Subsequent events to December 31, 2017 | ||||
Dividends paid corresponding to the net profit from January 1 - September 30, 2017 | $ 4,502,777,155 |
Subsequent events to Decembe180
Subsequent events to December 31, 2017 - Cablevision Dividends (Details) | Jan. 08, 2018ARS ($) |
Cablevision Holding S.A. | Major ordinary share transactions | |
Subsequent events to December 31, 2017 | |
Dividends paid, ordinary shares | $ 4,077,790,056 |
Subsequent events to Decembe181
Subsequent events to December 31, 2017 - Syndicated Loan (Details) - Syndicated Loan - Entering into significant commitments or contingent liabilities - USD ($) $ in Millions | Feb. 09, 2018 | Jan. 31, 2018 |
Syndicated Loan | ||
Maximum borrowing capacity | $ 1,000 | |
Interest rate basis | LIBOR | |
Borrowing term | 12 months | |
Proceeds from loan | $ 650 | |
Minimum | ||
Syndicated Loan | ||
Applicable margin | 1.25% | |
Maximum | ||
Syndicated Loan | ||
Applicable margin | 2.25% | |
Debt issuance, debt term triggering repayment | 3 years | |
Debt covenant, new debt issued that would trigger repayment | $ 500 |