Good day everyone, and welcome to the Telecom Argentina, TEO, third quarter 2011 earnings conference call. Today's call is being recorded. Participating on today's call we have Mr. Franco Bertone, Chief Executive Officer of Telecom Argentina, Mr. Adrián Calaza, Chief Financial Officer; Mr. Pedro Insussarry, Finance Director and Mrs. Solange Barthe Dennin, Manager of Investor Relations. At this time, I'll turn the call over to Mr. Pedro Insussarry. Please go ahead.

Good morning to everybody. And on behalf of Telecom Argentina, we would like to thank everybody for participating on this conference call. As our moderator mentioned, the purpose of this call is to share with you the consolidated results of Telecom Argentina that correspond to the third quarter of fiscal year 2011 ended on September 30th. 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 Relations section at our website www.telecom.com.ar/investors. Additionally, this conference call is being broadcasted through the webcast feature available in subsection and you can also replay it through the same channel. Before we continue with the conference call, I will go over the typical 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 regulations. Our press release dated November 2, 2011, a copy of which is being included in the 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 slide one of the presentation.…

Thank you, Pedro and good morning everyone. We really had an outstanding performance this quarter, and mobile business continues to beat the markets and our fixed business is a very, very healthy growth. Our mobile business maintained a consistent growth in the postpaid segment including subscriber mix and increases in customer base profitability. We continue to focus in value-added services where we target every client having mobile internet access, creating client and services packs design to meet the needs of each customer in this segment. We recently launched Arnet Play, our video streaming services. This creates value to our fixed broadband business that has been showing solid performance, increasing ARPU and 28% revenue growth with low churn. Our financial show our focus on cost efficiency, delivering an improved EBITDA margin and a 1.8 billion peso net income in the nine month period of the year that represents a 36% year-on-year increase. Our financial position is sound and has consistently improved in recent years. I’ll now address some details of our mobile operation as we refer to slide six of the presentation we made here. In the Argentine and mobile market, we continue to deliver strong quarterly results. ARPU increased 17% year-on-year and our customer base grew 11% as we posted close to $400,000 net adds in the third quarter of this year. We increased our market share 150 basis points in one year reaching 33.3% share of the mobile market; among the three operator in the Argentinean GSM market. Our revenue shares also improved substantially. Postpaid net adds growth accelerated consistently leveraged by successful all inclusive plans and effective customer acquisition combined. This quarter, we launched the first Facebook SIM card which enables access to the social network whatever the handset or plan the client might have. Please turn to…

(Operator Instructions) And it looks like our first question will come from the site of Rodrigo Villanueva. Your line is open. Please go ahead.

A couple of questions, if I may. First, could you share with us the reason for the Q-on-Q decline in fixed data revenues?

Yeah, I mean we had to think about really I mean your question, because it wasn't too clear for us, I mean, where the resulting data revenue comes from. As a matter of fact there is no, that drop in data revenues. The fact that in the second quarter this year, we posted a very substantial contract progress that’s with a particular contract with the government agency here in Buenos Aires that boosted the data revenue for that particular quarter. If you put it on a string line, I mean the data revenue evolution of the last few quarter, you will see that it has a tendency to grow with this particular strong growth in that particular quarter for that reason.

And my next question is on the reason behind the increase in other expenses.

As we mentioned before these other expenses are coming from different contingencies than severance charges that we did this quarter.

And our next question will come from the side of Alex Garcia. Your line is open. Please go ahead.

I have two questions. The first one is regarding the news we’ve read on newspapers today. I know it maybe a bit early to talk about it, but I just wanted to check with you guys, is there going to be any changes or any impacts coming from our reduction on subsidies and is that relevant and my second question is you guys will sit on the release about the delays on the leftover auctions of license, I just wanted to have an idea from you guys, a little more color on what is the new schedule, what is the new expectations regarding those auctions? Thank you very much.

Yeah, on the issue of the announcement made yesterday by the government of some sort of sort intervention on public service subsidy currently in the US, I mean, they mentioned several industry that will be effected by that and they mentioned cellular telephony in particular. And in cellular telephony in our particularly operational side of personnel is affected as a consumer of public utilities and not in any other term, the power consumption of our mobile operation as is posted and recorded with the mobile legal entity is a minor element of cost and the reduction of the current tariff subsidy that we enjoy is really negligible to the effect of our operations. As far as you asked about the auction of new frequency, I am sorry to say, has been delayed again, by three months, so we are now targeting some time in March next year. Well that is certainly affecting the ability of the industry as a whole to further develop and there is not much more that I can comment to you, I mean, the efficiency or the usage of our current frequency allocated band is reaching I think record levels. There isn’t much more we can get out of the frequency than we have. And so we hope that the auction will be released. We don’t have any much more to say or comment other than what has been made public by the authority.

And our next question will come from the side of Ricardo Cavanagh. Your line is open. Please go ahead. Ricardo Cavanagh - Itaú BBA: Actually I have a question; my first one would be on dividends. I know that legislation is in full in place for companies to be able to pay dividends, but we have learned that the other companies, Argentine companies, the government has opposed to the payment of dividends. So the question would be how do you foresee your capability of paying dividends basically in the near future? That would be my first question.

Yeah what you read in the press today is specifically related to a specific company where the government shareholding representatives have already expressed a negative position a year ago, so there is nothing new in that. We don’t expect what happened in this particular case where there is specific capital structure of the company that is highly leveraged on the flow of dividends as is sort to say self-contained case and we do not expect that to affect other industry and particularly our industry. Ricardo Cavanagh - Itaú BBA: And then just two additional ones. First, I noticed that the EBITDA margin was quite strong basically, I think it was a little bit above of what expected, at least what was expected the company to be able to get to an EBITDA margin that was going to be closer to 30 or even lower. So my question would be, if you expect this margin to be sustained or is there something of one-time in the quarter allowing to picture the dividend – the margin in a high inflation environment? And the second and final is on the smartphones. You have been selling my understanding is one out of every two smartphones in the country. How has that been the case in the quarter? Thank you.

At times, we are pleased to surprise our analyst. I mean there was some extra percentage points in our rent ability. I think we enjoyed this quarter, a very strong top line and we enjoyed also the seasonal benefit of certain type of costs particularly related to commercial campaigns that are stronger in the following quarters. So I mean the combination of a strong top line and a traditionally sort of under expenditure in the third quarter made a difference. I mean, we view that 2% difference, 29.7% was last year, 31.7% this year. It’s promising for the future. And as far as the smartphone question you have, yes, I'll confirm you that independent sources still indicate that more than one out of two smartphones sold in this market comes from our brand. As a matter of fact, the growth that we keep experiencing of value added service is close to 60% year-on-year as you saw from our previous comment, really comes from that as well as from the new tariff schemes that we put in place for the prepaid base.

And next we go to the side of Rizwan Ali. Your line is open please go ahead.

My first question is and if you could just answer the previous question which is how sustainable is margin, I mean should we expect that margin going forward on an annual basis to be around 30% or there is a chance of it improving?

Yeah, I mean do you me to elaborate a bit more on what I said before? Now the fairly high margin we had at this month despite of the actual operational performance it was quite outstanding. I must say that portability start date also is late a few months and is deep into the first semester next year; we were expecting it to be by the year end. And there is a lot of I would say substantial cost elements that are associated with it and that obviously has been moved a bit forward. So I would just stress again that the strong increase you saw this month are coming from the combined affect of very strong saves in the quarter and some seasonality on cost as well as cost pushback to the next quarter because of external factors like for example the portability start date.

My second question is your fixed wireline operations appear to be still be doing reasonably well, and at least I am not able to dissect any migration of wireline traffic to wireless. I mean, do you keep a track of like what percentage of the total voice traffic now is on wireless networks in your case and it gives your company all the entire market, and why is it that we are not seeing the cannibalization that we’ve seen in other markets in Argentina?

Well, the answer is really straightforward. Check the tariffs. Our fixed line tariffs are this low or that low compared to any other forms of telephony tariffs in the market that obviously remain attractive. If you compare our monthly fee as well as our per minute value, a fraction of what we apply in comparable Latin American market; that’s an unfortunate situation, but on the other side justify why the migration of traffic from fixed mobile, fixed mobile substitution doesn’t happened as happen in other markets. On the other hand, all growth is on the mobile platform. So what you really see is a stable or marginal growth of the fixed line business of the so convenient tariffs – regulated tariffs that are in place. We also I mean are witnessing a construction, residential unit construction activity is really strong particularly in the metropolitan area that means a marginal of growth in numbers of line is still happening. And that’s basically what justifies what you noticed

One last thing is, I mean any forecast as to what kind of wireless penetration you can get and where does it stabilize?

Sorry, your question wasn’t too clear. But you’re asking about wireless penetration?

Yeah, wireless penetration. Where did it kind of level off?

It didn’t show any sign really in that respect, I mean we are well over 30%. We think that another 20% to go; I mean to get to the European kind of levels. Well, we think we’ll keep growing to reach to that level for few quarters in the future.

And we’ll move next to the side of Jasmine Earnshaw. You line is open. Please go ahead.

I have couple of questions. First, year-to-date CapEx seems lower at only 1.3 billion versus 2.5 billion you said earlier in the year. Do you have a revised target for the year? Adrián Calaza: Yeah we will confirm our target for the year, I mean, we had a time shift in our procurement process that was to an extent related to the integration of our purchasing calendars within the Telecom Italia Group that had some delays into issuing purchase orders to our suppliers and therefore executing them. So it’s a pure time difference. They may affect a slight margin of some carryover to the next year, but substantially we can confirm in broad terms our announced level of CapEx for the year.

Also, can you say anything else about the large other expense, someone asked before, 260 million in the quarter, was that cash or non cash? Adrián Calaza: Definitely not cash at the moment.

Then I still have another question, could you comment on the decline in equipment subsidies you are seeing. Is the main driver lower device cost, maybe high selling prices or a change in product mix, and where do you see it going forward?

Yeah, what you saw it’s a target we have of keeping on reducing the cost of acquisition particularly on the subsidy side, I think that our pricing, it is pretty accurate and it is pretty rigorous in that respect, I mean to progressively restrict any area of subsidy into our customer base. In this particular quarter, we also enjoyed some additional benefits in our purchasing of terminals with our supplier with a note of credit et cetera that reduced somehow our cost of purchasing. So in general terms, I think you can expect that percentage of the revenue here goes to subsidy to keep falling, maybe not as strong as in this quarter, but consistently falling.

And I have one final question which is more long term. So this past month we have seen launches of higher speeds broadband offerings by Cablevision, DOCSIS and fiber-to-home by MH. So there is not a big concern in the short term I think, but do you have any strategic plans for the long term you can share with us, like any upgrades?

We don’t really carry any concern about the current ability of our network as it is and as it will remain in the near future to carry and support the kind of services we are providing. The average speed of our broadband access is between 3 and 5 megs. Our video streaming services because of the technology we adopted, it’s very satisfactory with 3 meg. Therefore, we don’t currently have any application also that with the required bandwidth in excess of what we can provide at a time for the time being. Certainly looking forward and in the future that requires a stronger upgrade, that will part of our CapEx rollout in the next few years and basically we are looking into a fiber to the curb access network architecture that in the particular implementation made by an operator like ourselves that already owns a residential infrastructure with a pair of cables has its own form so being implemented at a reduced investment. So we certainly move into that. As a matter of fact the breakdown of the CapEx over the next three years will be strongly biased towards that. We don’t have any time pressure to do it as our current commercial office do not require any higher speed of what we can provide and besides some announcements from competition, they don’t even provide any service that require those speeds, but it’s certainly part of our long-term plan.

(Operator Instructions) We’ll move next to the side of Miguel Garcia. Your line is open. Please go ahead.

First, I wanted to ask you a question about the salary increase, I think it was 20% in July, but when we look at the actual expense in course of salaries, it increased only 13% from the previous quarter and you are also saying that your increase in the number of employees? And the second question is regarding the percentage of 3G and all smartphones that you have in your subscriber base?

As part of the salary increase is concerned, I mean, obviously we operate across the year with different time scale, the applied salary increase is to certain categories of our employees and therefore I mean it’s not surprising that you saw a percentage increase this quarter, that is different from the ones in the previous quarters, as matter of fact from July 1st we apply the yearly salary increase negotiated with the union to a large base of employees we have and at different time of the year. We apply salary increase to the level of management and technical and administrative staff. The increase you saw in employee’s base is the result of certain plans of in-sourcing that we are implementing in the company. Basically we’re targeting certain areas of technical areas, particularly of network and IT where we believe that certain know how that is currently shared with our source of suppliers should be more protected within the company and therefore we are applying certain policy of incorporating in our employment base activities or specialty activity there where in the past outsourced to contractors. In relation to your question about 3G and the smartphones, the percentage of 3G phones that we have in our base is approaching 15% and the devices is over 10%. The smartphone devices are 10% of the base.

I wanted to confirm one thing, as you said the CapEx guidance for this year is not changing. Is that guidance 2.3 billion pesos?

Correct.

And we will move next to the side of [Jennifer Leonard]. Your line is open. Please go ahead.

Hi, basically just wanted to follow-up on the question on dividends and looking at the new the capital controls that we’ve heard about. Do you think the capital controls will impair TEO’s ability to pay dividends going forward? Adrián Calaza: I would just like to refresh the comment I made to a similar question before, I mean we don’t expect that will happen, and I mean once that, a specific instance that were reported by press today on a specific company, I think, is a specific case that will not bias or affect our industry.

And we’ll move next for the side of Alex Garcia for a follow up. Your line is open. Please go ahead.

Just wanted to have an idea regarding is, kind of, like a follow up on dividends. The dividend that you plan to pay next year would it be enough to redeem the preferred shares of Nortel and so that the dividends can reach the controlling shareholders?

As matter of fact, we are unable to make comments on your question. I think the issue will be soon addressed. But I would say, your guess could not be too far of the reality in the next year.

And it does appear that we have no further questions in the queue at this time.

Well, thank you very much for participating on our quarterly conference call. Don’t hesitate to contact our Investor Relation Department if you have any further questions and query about our operation. Good morning to all of you, good afternoon as a matter of fact to all of you when I say and we’ll meet soon in the future. Thank you.

This does conclude today’s teleconference. Thank you for your participation. You may disconnect at any time and have a wonderful day.