Good day, everyone, and welcome to the Telecom Argentina, TEO, second quarter 2011 earnings conference call. Participating on our call today, we have Mr. Franco Bertone, Chief Executive Officer of Telecom Argentina; Mr. Adrián Calaza, Chief Financial Officer; Mr. Pedro Insussarry, Head of Finance; and Mrs. Solange Barthe Dennin, Manager of Investor Relations. At this time, I'll turn the call over to Mr. Pedro Insussarry.

Good morning to everybody. On behalf of Telecom Argentina I would like to thank you for participating in this conference call. As mentioned by John our moderator, the purpose of this call is to share with you the consolidated results of Telecom Argentina and correspond to the first half of the current fiscal year 2011 ended on June 30, 2011. We would like to remind you that for all those that have not received our press release or presentation you can call our Investor Relations office or download them from the Investor Relation section of our website at www.telecom.com.ar/investors. Additionally, this conference call is being broadcasted through the website feature available in sub section and can also be replayed through this same feature. Before we continue with the conference call, I would like to go over some Safe Harbor information and other details of the call. We would like to clarify that during the conference call and Q&A session we may produce certain forward-looking statements about Telecom's future performance, plans, strategies and targets. Such statements are subject to uncertainties that could cause Telecom's actual results and operations to differ materially. Such uncertainties include, but are not limited to, the effects of public emergency law and complementary regulation, the effects of ongoing industry and economic regulation, possible changes in demand for Telecom products and services, and the effects of marginal factors such as changes in general market or economic conditions, in legislation, or in regulation. Our press release dated August 1st, 2011, a copy of which is being included in Form 6-K report to be furnished to the SEC, describes certain factors that may affect any forward-looking statements that we may produce during this session. Furthermore, we urge the audience of this conference call to read the disclaimer clause contained in…

Thank you, Pedro, and good morning to everyone. Second quarter 2011 posted a fairly solid performance in all lines of businesses. We led the mobile market with highest growth of net cash and subscribed lines, and we had a healthy growth in the fixed segments too. As highlighted in Slide 5, please turn to Slide 5. We were leaders in the mobile net adds, while improving our mix of addition and recording record-fast revenues that currently are at high as 46% of service revenues. Our Paraguayan operation as well performed well in a consolidated environment. Our position as an integrated ICT provider is getting stronger and new product launches boost the fixed broadband business. Consequently internet and data revenues rose 28% year-on-year and the overall fixed business revenue posted a consistent 16% year-on-year growth in the third semester of 2011. Because of strong operating performance, our free cash flow exceeded the equivalent of P$500 million in the last 12 months. And net income rose 41%, reaching at P$1.2 billion in the first half of this year. Let me now address some of the phase around mobile operation that are detailed in Slide 6 of the presentation. In the Argentine mobile market we posted another strong quarter result with a 16% year-on-year ARPU increase and 13% customer based growth, posting over P$0.5 million in net adds in the second quarter. We have also continued gain in market share with 230 basis point increase that is taking us to 33.2% market share in the mobile industry. This represent a market share of net adds in excess of 75% over the last 12 months. This was accomplished, promoting all inclusive plans that increased overall mobile usage as well as ARPU, while enabling effective customer console (inaudible). Our value proposition together with customer retention…

(Operator Instructions) We will take our first question from Ricardo Cavanagh with Itaú BBA. Ricardo Cavanagh - Itaú BBA: I have two questions. The first one is on the net adds you are showing 75% share that has been rising, well basically in the past quarter and compared to the last year that was very strong as well. What are the main factors that you achieved such a strong performance relative to the rest of the market, and if you think that this large percentage share of net adds is likely to prevail? And the second one is, you mentioned a growing component within value-added services of non-SMS, if you could provide details on the percentage that non-SMS are representing within total value-added service revenues?

In relation to your remark about the net adds, market share we had is certainly strong 75%. It's the third time we hit the percentage as high as this. We don't expect that to be maintained in future guidance for sure, but it certainly represents that we are in a strong recovery past from the past few years, in which we have been certainly affected by the restriction that the company had as a consequence of the defaulter effect. All that is behind our shoulders and we started a strong recovery, both in market share and revenue share, and we definitely made some important and definite steps over the last few quarters. We believe that this kind of growth and this kind of positioning is a stronger element, both of the strengths and security facing the possibility period that will start some time early in 2012. As far as the value-added services' percentage of service revenues, certainly SMS (inaudible), it's around 80% of the TOU sold there, being indicative that there is a progressive solution of the percentage as SMS services in absolute terms are growing at a lower pace than the overall value-added service revenues. And growth rates of new innovative value-added services is about twice as much as the total one, so that I think is a fair indication I can provide to you about the dynamic source of that revenue trend.

We'll turn our next question from Miguel Garcia with Deutsche Bank.

My question is regarding the regulatory environment and how are the conversations regarding the possibility of offering video services should be playing? And also, are there telecom operators maybe smaller ones that are already authorized to do so?

Yes, regulation in that respect depends on the nature of the main license each operator is varied upon, and there is a non-symmetry in the market between cable service operators that do have access to providing telephony services to their customer base. And operators like ourselves that are telecom operators that cannot provide video services to our customer base, and the same condition as the cable operator can. That does not mean in definite terms that telecom operators cannot provide video services. And as a matter of fact there is an element of interpretation of the Paraguayan regulation that gives certain options that are getting more and more interesting from commercially and marketing purposes as video technology do progress. As a matter of fact, one of our competitive has already launched video streaming services. It's an option that we have in front of us and that we have been preparing network and system for and maybe (inaudible) future as well.

Did you have any date or estimate of when you could start doing something like that?

We're getting very, very ready.

We'll turn now to Michel Morin with Morgan Stanley.

I was wondering if you can talk about the progress regarding salary negotiations for the second half of this year. If I' am not mistaking you're probably in that process right now. And secondly in terms of the mobile market share are you noticing whether not any of your competitors are perhaps disconnecting customers more aggressively? Or in another words, do you feel that you're also gaining share of gross additions, in addition to net additions. And are you gaining share of revenue in the mobile segment?

As far as the negotiation with union employment base, they have been already concluded. They will take place from July 1st, as salary. And on annualize based 12 month's period there are 31% end-to-end salary growth. The 31% will be applied in two installments. Last year were three, so there was a positive target in July and another one in November and third one in 2011. So this year it will be one in July 2011 and the complete 31% will be first quarter next year. So that's how the salary negotiation ended up. As far as your observation about how we account for our customer base and disconnection and net adds, et cetera, and revenue, we do have a pretty consistent policy in that respect. Our criterion is pretty tight and conservative. I would say that the best proof of it is that our revenue share is increasing faster than our market share.

And then if I can just come back on the salary increase. Are you prepared to share with us what the increase was that the portion of the 31% that went through July 1st?

Yes, 31% (inaudible) will be applied from July 1st and the balance from this quarter next year.

(Operator Instructions) We'll go now to (Clara Tiroga) with Raymond James.

I have a couple of questions. First, if you can give us any guidance of CapEx for the auction of additional spectrum. If not, we can assume that the company has really reserved in that front from this investment? And then we can expect that the impair will be around 75% during 2012? Secondly, with some compression of margins during the quarter, if you see a further compression during the second half of the year, and given the number mobile portability has been postponed. So you believe that this could benefit 2011 numbers? Adrián Calaza: For your first question, we don't know how much it would cost us, the additional spectrum, given it's public based. So with a base price that is difficult to know how it will finish. So, yes, we'll do write a reserved money for this auctioning. So next year, we expect to pay the dividends in line with free cash flow generation, as we already several times. So in order to beat that, we have additional spectrum auctions. We will have to reserve money. If not, we will try to increase our bidder rating. As a mater of fact, what we already said in different opportunities, we will not try to conserve money, if we don't need it. We will try to pay dividends to all our cash flow generation.

As far as your second question, maybe I'll take that about the margin for the second half. Yes, we expect to have higher impression in our margin in the second semester compared to the figures we just tabled with you. The fact that number portability may delay a little longer, because of process reason, we'll not release at all pressure on margin on the second semester, because the cost associated with the implementation of portability are incurred beforehand and the additional revenues if any will occur after. So the effect of delaying a few months, so that as of today, we don't expect to happen, but just in case it was the case, we don't expect that to reduce at the cost of self-preparation So yes, we do have concern about salary, and we mentioned during the financial presentation that we expect lower margin in the second half than we had in the first.

We'll take our next question from Alex Garcia with Citi.

Still on the guidance, when we tried to do the math it's kind of like just basically subtracting what you guys have reached on the first half of this year versus your guidance. The drop in margin this is material. So I just wanted to touch points here such based on, basically if you guys are being conservative on the guidance or you guy's don't want to talk about any tariff fee raise throughout second quarter? But I mean when we do the math, the drop in margins on second half is a bit material. So I just wanted to make sure if you guys are being conservative or, and you should expect this guidance to be revised and/or to be beaten easily, especially on the EBITDA? That is my question. Thank you.

I would say, if had to mention a few factor of what we detected in doing the math, I would comment on the fact that this figure was stable over nine months ago, before we had visibility of the actual 2010, that are earlier being strongly above our end-market expectation as well and are stretched for a three-year period in which growth rate in revenues and margins are growing less and less as we progress into the three years period. So when they compare sum of the first six months, our three-year period also benefit of this different scale factor. I will also say the same thing that the second half of this year is significantly affected by the preparation work of portability that is up to the usual and traditional margin pressure that we experience in the second half of the year, after July 1st. And not only employees pay rates increased, I just provided before the scale of this increase that certainly today the majority of the unionized pay scale in the country is attacking. And therefore, not only human resource cost, but also third parties cost, as far as they are based on personal cost also increases. So that typical of our yearly calendar and is effecting the second half. On top of that we have the portability factor, and on top of that as I said, we have a third semester over three-year period in a prospect of declining growth rates and therefore is effecting your project.

And then, just 31%, 32% in the first half versus a sort of indication of margin of 26% in the second half is a big drop. So I was worried, should we be worried or should we be more expecting 26%? That's being exaggerated, doesn't it for the second half?

Maybe the comment is more appropriate to what you're saying is that, having achieved what we did achieve in the third semester, we are definitely confident our yearly target will be met and patched.

And just one another question if I may, have you guys have done any exercise or what should we expect was to yield starts to publish IFRS numbers. I mean we do can compare the Teleco Italia numbers in the presentation and guidance versus the Argentine GAAP. But just to refresh, what sort of changes should we expect once you guys start to publish IFRS numbers?

Yes, we understand your question and request. I mean there is a full discloser of it in our press release that was published today just to help you to cross-verify figures. And our Argentinean euro-converted IFRS figures would be releasing today at the Group level. But please refer to the press release we published today.

Thank you. And there are no further questions at this time.

Yes, alright. Just wanted to thank all of you for being in our conference call today. Please contact as your convenience if you wish to do so. And thank you to John for assisting us during the call. Thank you so much.

This does conclude of teleconference. You may disconnect your lines at any time. And have a wonderful day.