Telecom Argentina "Earnings Quality Drives Upside, Macro Tailwinds..."

Research evidence excerpt

Telecom Argentina "Earnings Quality Drives Upside, Macro Tailwinds..."

TEO/TMA merger: remedies sizable but process advancing, key swing factor for

upside potential

The regulatory review has advanced, with ENACOM submitting a non-binding

recommendation to the antitrust authority outlining conditions for approval that

are now under final evaluation. The remedies proposed by ENACOM include the

divestment of 6mn mobile clients and the return of 130 MHz of spectrum. While

these measures appear sizable, they should be viewed as a starting point for

negotiation rather than a final outcome, as the final decision remains with the

competition authority. The process appears to be moving toward resolution,

although timing remains uncertain. From a fundamental perspective, we continue

to see asymmetry, where approval—even with remedies—should unlock synergies

and pricing coordination, while a full block would remove key benefits and likely

increase standalone investment needs. We therefore maintain the merger as the

main monitoring point and a key valuation swing factor, without seeing current

developments as thesis-breaking.

Main changes in estimates

Revenue: +8% in 2026E and +3% in 2027E, reflecting faster market repair and

inflation-linked price increases, with additional upside potential from future

TMA pricing coordination.

EBITDA: +14% in 2026E and +7% in 2027E, supported by faster-than-expected

potential synergies from the TMA merger and continued cost discipline,

reinforcing a profitability-led thesis.

Financial expenses: materially higher vs. prior estimates, reflecting a

reassessment closer to market levels rather than a change in company

fundamentals.

Capex: increased across the forecast period, aligning with sustained 5G and