Company: TCMFF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0001104659-25-019133
Chunk: 103

Company: TELECOM ARGENTINA SA
Filing Date: 2025-02-28
Form: 20-F
Item: Item 5
Chunk 103
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 FINANCIAL REVIEW AND PROSPECTS   TELECOM ARGENTINA S.A.
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Since September 2019, following the economic instability and the significant devaluation of the Argentine Peso that took place after the primary elections, foreign exchange controls and restrictions to the transfer of currency abroad were reinstated. The previous Fernández administration sought to prevent additional demand for foreign currency by maintaining and reinforcing exchange controls (i.e., the imposition of higher taxes on the acquisition of foreign currency, among others). In response to these measures, several parallel U.S. dollar trading markets developed in which the Argentine Peso-U.S. dollar exchange rate differ substantially from the official Argentine Peso-U.S. dollar exchange rate.
The Milei administration has stated its intention to implement policies aimed at modifying Argentina’s macroeconomic conditions. In this regard, the BCRA announced the transition to a new macroeconomic stability framework, establishing a 2% monthly sliding path of the official exchange rate (this rate was adjusted to 1% during 2025). Additionally, the Relevamiento de Expectativas de Mercado (“REM”), published by the BCRA on February 6, 2024, estimated an annual inflation of 227 % for the year 2024. However, the effective inflation rate for 2024 was 117.8%. According to the REM, inflation for 2025 is projected to be approximately 25%.
See “Item 10—Additional Information—Foreign Investment and Exchange Controls in Argentina.” and “Item 3—Key Information—Risk Factors—Risks Relating to Argentina—Devaluation of the Argentine Peso and foreign exchange restrictions may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends”.
The majority of our revenues are in Pesos whereas a portion of the costs regarding materials and supplies related to the construction and maintenance of our networks and services are incurred in foreign currencies. Also, the high level of competition limited our ability to transfer to our customers the fluctuations in the exchange rates between the Peso and the U.S. dollar and other major foreign currencies. In addition, any devaluation of the Peso against foreign currencies may increase operating costs (partially offset by the increase of revenues in foreign currencies), capital expenditures and the cost of debt, which will adversely affect our results of operations, considering the net effect on revenues and costs. Additionally, any significant devaluation of the Peso will result in an increase in the cost of servicing our debt and, therefore,