Good day, everyone, and welcome to the Telecom Argentina CEO first quarter 2018 earnings conference call. Today's call is being recorded. Participating on today's call, we have Mr. Gabriel Blasi, Chief Financial Officer, and Ms. Solange Barthe-Dinnon, Investor Relations Manager. At this time, I'll turn the call over to Ms. Solange Barthe-Dinnon. Please go ahead, ma'am.
Okay. Thank you, Maddie. Good morning. On behalf of Telecom Argentina, I would like to thank everybody for participating on this conference call. As stated by our moderator, the purpose of this call is to share with you the results of the first quarter 2018, ended March 31st of 2018. We would like to remind all of those that have not received our press release presentation that they can call our investor relation office to request the documents or download them from the investor relation section of our website located at www.telecom.com.ar. Additionally, this conference call and slide presentation is being broadcasted through the webcast feature available in such section and can also be replayed through this same channel.
Before we continue with the conference call, I would like to go over some safe harbor information and other details of the call, as we usually do in this type of event. 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 ongoing industry and economic regulation, possible changes in the demand for Telecom's products and services, and the effects of more general factors such as changes in the market or economic conditions, in legislation or in regulation.
Our press release dated May 11, 2018, a copy of which has been included in a Form 6-K report 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 and two of the presentation. The agenda for today's conference call, as seen in Slide three, is first to go over a general macro and industry overview, then moving on to our vision and strategy, which will be followed by a brief discussion of our business highlights, and immediately after, we will go into the evolution of our financial figures. Finally, we will end the call with a Q&A session, as is customary in our quarterly calls with the financial community.
Having gone through these procedural matters, I will now go over a brief characterization of the macroeconomic context in which we operate. Continuing with the trend observed during the second half of 2017, economic activity continued to reduce the steady growth rate with a positive performance of most sectors. In turn, the pace of decline of inflation slowed noticeably as regulated prices were impacted by tariff hikes, while core inflation remained almost unchanged when compared with the last month of 2017. In this context, private consumption is still showing a positive reaction on the adoption of a cautious stance ahead of evolution of real income for this year. Please refer to Slide 5, where we include a summary of the current external front situation and FX rate evolution in Argentina.
Exchange rate experienced depreciation approximately 7% during the first quarter of 2018, but during these last days, the peso depreciation has ramped up to almost 20%. In real terms, the Central Bank has exercised a heavier intervention that observed improved occasions, selling currency for ARS 2 billion in March, but reaching a total of ARS 7.7 billion as of the first day of May 2018. As for interest rates, the monetary authority began to exercise a reduction of policy reference rates during the first quarter, as inflation targets for 2018 has been relaxed to 15% in December 2018. As the peso depreciation began to rise in speed and importance, it implemented a sharp rise in order to avoid disruptive dynamics in the exchange markets that can compromise the disinflation process.
Meanwhile, accumulation of international reserves show a positive balance as of March 2018, as capital inflows for international debt issuances allow a net increase to almost ARS 62 billion. Now, understanding these facts, heavy interventions performed by the Central Bank brought the national level back to levels closer as of the end of 2017. Finally, trade balance accumulated a deficit of ARS 2.5 billion during the past year, mostly due to the growth on imports of capital goods, its accessories, and passenger vehicles, combined with a negative evolution of exports. Turning to Slide 6, we follow with an overview of the domestic macroeconomic situation and inflation. During the first quarter of 2018, the CPI measured by the Buenos Aires City experienced a decrease from the full year 2017 readings. When looking at year-over-year, the figures reaching 25.4% in March 2018.
During these three months period, it has shown evidence that inflation figures have a high persistence as increases in public services are being implemented. In particular, during this quarter, transport and electricity tariff had suffered increases. Besides this, core inflation measures remain still at similar monthly levels that those registered at the end of 2017 and partially affected by the FX rate evolution. This shows that inflation decline may slow down naturally, fact that is reflected on the main economic consensus on inflation that is published by the Central Bank. As for the economic activity, output continued to grow during the first quarter of 2018 at a steady rate, with the main pool of activity being exercised by the construction sector. Nonetheless, as agriculture has been affected strongly by climate factors, the total effect over activity remains yet to be seen.
As for industrial production, it has expanded its growth rate during the first quarter of 2018, registering an increase of 3.9% versus first quarter 2017, mainly pushed by car and steels and by intermediate and durable goods production. Considering fiscal figures, during the first quarter of 2018, it can be observed that government efforts are centered on overachievement on the fiscal target. Primarily, deficit turned 0.3%, half of the expected target set on 0.6%. In fact, national authorities have made public that they are considering a more ambitious goal for 2018, setting the fiscal target to 2.7% of GDP from the previous 3.2% accounted for this year. Finally, aggregate household consumption has recovered strongly during the last half of 2017 and continues to show a stable trend of growth.
Consumers are cautious as how purchasing may be impacted by the evolution of inflation in relation to household income increases, as it may be observed in consumer confidence readings that remain volatile. In the macroeconomic context described during the quarter, Telecom Argentina has managed to generate a solid revenue growth and a profitable increase when compared to past year figures. Finally, we deem important to remark that in the current macroeconomic context, the degree of uncertainty of economical variables has increased. In particular, FX markets remain highly volatilized during these days. Having gone through this introduction of the macro environment, let me pass the call to Gabriel Blasi, who will go over the vision strategy and the business highlights section.
Thank you, Solange. Hello to everyone. The merger between Telecom and Cablevisión was considered an inverse acquisition under IFRS 3, business combinations, with Cablevisión being the surviving entity for accounting purposes. Thus, for the purposes of preparing the consolidated financial statements of Telecom Argentina as of March 31, 2018. First, the comparative figures as of December 31, 2017, and March 31, 2017, correspond to those arise from the consolidated financial statements of Cablevisión at their respective dates. Second, the corresponding information for the three-month period ending in March 31, 2018, incorporates, on the basis of figures corresponding to Cablevisión, the effect of the application of Telecom Argentina's method of acquisition at its fair value in accordance with IFRS 3 guidelines and the operations of Telecom Argentina as of January 1, 2018.
In order to ease the understanding and analysis of the earnings evolution by its users, additional figures of the income statement are included, exposing on pro forma basis the comparative figures of first quarter 2017, as if the merger between Telecom and Cablevisión had been effective during that period. The variations of results versus first quarter 2017 identified in this presentation emanate from the comparison with the aforementioned pro forma information. You may find a detailed pro forma comparison in financial tables six, seven, and nine included in our press release. Please refer to slide eight, where we want to share with you how we are transforming the company to be competitive and leaders in what will be the new era of the telecommunication industry in our country.
The major objective of the company is to become a fully convergent four-play provider, as well as a Net Promoter Score leader. This indicator shows overall client satisfaction with the service. As a consequence of this, we are able to quantify our customer satisfaction in relation with the price and the service. To achieve this goal and being able to deliver a value-added proposal, Telecom is focused on three main pillars: the extension of coverage and the capacity of the network, the convergence of systems, and the transformation of its services and culture. These pillars provide the foundation of achieving a list of items that are essential to reach our goal, which are improving the quality of services, experience and video content, having a network with major market satisfaction, a fast and successful adequacy of processes and software, adopting a customer-centric culture, and focusing on big data.
Analytics are real-time digital. We are confident that improving this, among many other aspects, will get us to the top. Please refer to slide nine, where we will show some of the industry trends and market evolution. During the past years, consumption habits have changed. We can evidence the situation by taking a look over the content on demand growth with the yellow segment, which represents 54% of the total consumption. In line with this, we see that the usage of mobile devices has grown consistently, replacing the usage of desktop computers and traditional TV. Therefore, there has been a strong and rapid increase in data traffic consumption due to the fact that the possibilities in usage have also grown consistently.
When we take a look over the market evolution, we can see that there is a significant potential for growth in the fixed broadband segment, which is today one of the main drivers of the company revenues. Regarding the mobile market, we evidence that the postpaid customers have been winning market over prepaid subscribers. On the other hand, the pay TV market has shown stability in the last few years, mainly supported both by the pattern of consumption of people over 45 years and the development of on-demand platforms. Moving to slide 10, we can take a look over the next steps that the company has been taking over the last month and the progress on every front. The opportunities offered by the merger are related to a customer-centric vision and strategy.
In order to achieve the maximum potential of revenue growth and profitability, the company is carrying out a series of enhancements of its processes and technical platforms. With respect to the backend, in particular, we can highlight SAP integration. In this sense, we receive SAP prototype, which is being tested for implementation between June and August of this year. Moreover, associated to initiatives that have a direct effect on the customer at the front end, we continue working in different development fronts and intensive testing activities in order to achieve the objectives of the implementation. In addition to this, and together with Nokia Bell Labs, we are currently working on the consolidation of our backbone network and carrying out important network improvements. During the quarter, we conducted a test of 5G network under controlled environment. We achieved a speed of 10 gigabits per second. Let's move to our business highlights.
Referring to slide 12, where we highlight some of our key achievements during the first quarter of 2018. For the first quarter of 2018, Telecom's revenues totaled ARS 30.7 billion, increasing 27% over a year. EBITDA totaled ARS 11.8 billion, resulting in a margin of 38%. In addition, fixed voice ARPU and broadband ARPU were up to ARS 198 and ARS 578 per month, respectively. Meanwhile, PayTV ARPU reached ARS 637, and mobile ARPU reached ARS 161. Moreover, in relation with our subscribers, mobile subs in Argentina amounted to 19.5 million, of which 10.5 million were 4G clients. Fixed voice subs registered 3.7 million, and fixed broadband subs totaled 4.1 million. Finally, it is important to mention some relevant corporate matters. During the first quarter of 2018, Telecom issued 1,184.5 million new shares for Cablevisión S.A. shareholders amid the merger between both companies.
During the quarter, the company has taken a syndicated loan for an amount of $1 billion. The company has dividend declared by Cablevisión of ARS 4 billion, and also it has distributed ARS 13 billion in cash dividends in February and ARS 6 billion in March. Turning to slide 13, we can see a brief summary of the merger between Telecom and Cablevisión, as well as the new ownership structure. On January 1st, 2018, the merger between Telecom and Cablevisión became effective. In order to complete the transaction, Telecom issued 1,184.5 million new shares for Cablevisión shareholders. All the resulting company share classes have equal economic and voting rights. The ownership structure of the company changed, and Cablevisión Holdings, CVH, became the controlling shareholder.
Fintech Telecom LLC owns as of today 31.53% of company total capital through Class A shares, where CVH owns 18.75% directly and also owns 20.06% indirectly through VLG Argentina LLC. Floating shares, that is Class B shares, represent 29.65% of total capital, and Class C shares account for 0.01% of company's total capital. Fintech Telecom owns 8.24% of the total capital through Class B shares. Turning to slide 14, we can observe that the main drivers of growth of Telecom revenues are the ones coming from mobile, which is still the most prevalent business of all. We can highlight that the current revenue mix has a participation of mobile revenues of almost 26%, followed by broadband revenues that apart from representing more than 33% of the total, it is the most fast-growing segment.
Revenues related to pay TV services accounted for 32% of total revenues, followed by the ones coming from fixed and data, which represented almost 12%, and devices with more than 7% of the total revenues. When compared with the first quarter 2017 consolidated pro forma results, we can see that the revenues grew by 27% year-over-year, reaching ARS 30,698 million. As we already mentioned, mobile and broadband are the segments that mostly contributed to the total revenues composition with ARS 10,945 million and ARS 7,153 million respectively. The pay TV revenues totaled ARS 3,666 million, followed by fixed and data to the aggregate amount of ARS 3,625 million. To a lesser extent, we can highlight the contribution of handsets and others with ARS 2,195 million and ARS 114 million respectively. We will go in some details of this in the following slide.
Slide 15, we will go through the evolution of the company's mobile business in the country. As intensity in data usage continues to increase, we can note the growth in the postpaid subscribers, which represent our most valuable customers. As of March 2018, postpaid clients totaled 6.7 million, representing 36% of the total customer base. In connection to this, data penetration grew by 13%, reaching 9.7 million monthly unique users. Heavy users are gaining participation, boosting the consumption of mobile data, which as of first quarter 2018 has reached an average of more than 2.3 gigabytes per user per month, which is 59% higher than in first quarter 2017. In addition, the significant growth in data usage has contributed to increase the browsing revenues and its participation in the mobile revenue mix, which now represents 51% of our total mobile services mix, up from 45% verified a year ago.
As far as browsing ARPU is concerned, it has risen by 35%, reaching more than ARS 191 per month. Moving to slide 16, we include a review of our 4G rollout evolution. Personal's 4G LTE network deployment carries on swiftly as coverage continue to expand. 4G high-speed services are now available in almost 1,200 locations, including all capital cities and the Buenos Aires metropolitan area, reaching a coverage ratio of 94% of the population in such cities and 86% of total population. More importantly, 4G customers totaled 10.5 million as of March 2018. This rapid growth in subscribers that use the network has been a driver of data traffic since 2015. Additionally, 4G traffic represents 71% of the total data traffic, with an average consumption of 2.6 gigabytes versus 1.7 gigabytes for the non-4G users.
Please turn to slide 17, where we include a review of our internet services segment with the objective of differentiation through customer experience. Related to our broadband segment, we can evidence that the number of subscribers grew more than 155,000 year-over-year, achieving 4.1 million users. The aforementioned increase in subscribers was supported by the offer of higher connection speeds. As a result, the number of ultra-broadband subscribers achieved more than 1 million subs in the first quarter of 2018 from 325,000 subs in first quarter 2017. Price adjustment contributed to the ARPU growth. In this sense, during the first quarter 2018, the ARPU for broadband services increases by 52% to more than ARS 578 per month. Now let's turn to slide 18, where we can take a look over pay TV services during the first quarter of 2018.
As we can see, cable TV subs remain stable, while Flow boxes achieved 292,000 and almost 707,000 subscribers using the Flow app. Moreover, cable TV ARPU achieved more than ARS 636 per month, while churn remained stable at 1.3%. As far as premium subscribers are concerned, they are growing at a rapid pace over the last quarters and as of March 2018, amounting to 1.2 million subs. Please move to slide 19, where we analyze the fixed telephone evolution over the last quarter. As we can see, lines in service remain stable despite of the fact that price adjustment took place over the quarter with a 33% increase in the mobile fee and 15% increase in the price for Arnet Plus, both in February. As a consequence of this, ARPU increases to almost ARS 200.
In the first quarter 2018, fixed data and ICT services achieved ARS 1 billion with a growth of 27% year-over-year. It is important to mention that the depreciation of the Argentine pesos versus the US dollar was of 26% when compared with the same period. On slide 20, we present the consolidated CapEx figures, where we continue to focus our efforts to give our competitive advantage in connectivity. In the first quarter of 2018, Telecom has invested more than ARS 6 billion, 35% higher than the same period of last year. Furthermore, Personal together with Nokia as a technological partner, conducted a test of 5G network under controlled environments. We achieved speeds of 10 gigabits per second. The 5G standard is a technological evolution of mobile networks that powers the IoT.
Its main application will be automatic vehicles, houses connected to smart cities, and artificial intelligence applied to industry and health. In addition, we can verify that the cap of distribution has been 48% in cable services, 32% mobile services, and 20% fixed services of the third quarter of 2018. It is important to mention that during February 2018, we announced that we will invest $5 billion between 2018 and 2020. This amount will be mainly used to increase the telephone and mobile internet radio bases to extend the NGN, next generation networks, and to expand and improve the connectivity infrastructure in order to be able to provide multi-play services in the framework of convergence. As we mentioned before, it is challenging by economic context, the evolution of many economic variables remain uncertain and will have to be closely monitored.
Although the Telecom industry is globally considered infrastructure sector, the mentioned CapEx plan is linked to the performance of the business. The strategic plan does not change, although execution over time will depend on the macro and business evolution. Having gone through the business highlights, now I will pass the call to Solange, who will go over financial performance.
Thank you, Gabriel. The positive business trends just described by Gabriel have resulted in a very positive performance in almost all financial results. Please turn to slide 22 where we can analyze the consolidated revenues and EBITDA. For the first quarter 2018, consolidated revenues amount almost ARS 30.7 billion, making a growth of 27% year-on-year. In turn, service revenues grew 26% thanks to strong performance of mobile service revenues, more specifically mobile internet together with broadband and pay TV. Furthermore, EBITDA show a strong evolution growing by 39% year-on-year. We have concentrated in improving our revenue quality and profitability. EBITDA margin increased substantially by 300 basis points to 38% for the first quarter 2018. It's important to highlight that improvement of EBITDA margin explained by synergies achieved in interconnection concepts in scale of cost , but also the term one-time cost savings related to the integration of both companies.
Let's turn to slide 23, where we can verify the company operating income totaling ARS 10.1 billion with a 59% increase year-on-year. EBIT growth that resulted higher than that of EBITDA can be explained by slowdown in the increase of depreciation and amortization and disposal and impairment of PP&E, which grew at 17% year-on-year. This contributed to this expansion in operating margins to 23% of consolidated results, increasing 400 basis points when compared with the first quarter 2017. Meanwhile, net income attributable to the controlling company reached almost ARS 3.5 billion, increasing by 17% year-over-year. This lower increase in net income was mainly explained by an important decrease in financial results linked to the deterioration observed in the quarter, and a higher net financial debt position and higher income taxes. As a result, net income margin stood at 11%, down from 12% a year ago.
Turning to slide 24, we present some performance key figures for the last 12 months as of first quarter 2018 and the full year 2017. Regarding company's revenues, they achieved more than ARS 112 billion for the last 12 months period, ending first quarter 2018, showing an increase of 6%. Meanwhile, EBITDA amounted more than ARS 38 billion for the last 12 months period, increasing 9%. Moreover, EBITDA margin reached 34%. Regarding our gross debt, as of first March 2018, amounted to almost ARS 46 billion, but thanks to a solid cash and equivalents and investment position of the company, net debt reached ARS 32 billion. This also offers a strong hedge against market volatility. Let's move on to slide 25, where we can analyze our net debt and maturity of the debt. The following is a description of the current maturity of the company.
We have public notes issued on international capital market, domestic capital market notes, debt with multilateral agencies, vendor financing, and overdraft with local banks. As we mentioned before, we issued syndicated loan of $1 billion with five banks in February. We have a manageable debt profile and many other sources of funds such as vendor financing, local bank lines, access to local and international capital markets for the coming years, and a low debt to EBITDA ratio. Moreover, the company is waiting for the right time to extend the tenor of its debt according to the evolution of the market conditions. Having concluded with the presentation, we are more than pleased to answer any questions you may have. Thank you very much.