Telecom Argentina S.A. announces consolidated results for the first half ("1H26") and second quarter of fiscal year 2026 ("2Q26")²

Telecom Argentina (TEO) reported 1H26 net income of P$869,038 million (vs. a net loss of P$100,900 million in 1H25), driven mainly by higher real foreign exchange gains as peso appreciation reduced FX pressure. Consolidated revenues rose 13.4% to P$5,075,511 million and Operating Income before D&A&I increased 35.1% to P$1,816,819 million, with the margin reaching 35.8% (+5.8pp). Leverage improved as consolidated net financial debt fell to P$4,646,726 million (real -14.7% vs. Dec-2025), while CAPEX jumped 47.3% to P$946,470 million (18.6% of revenues). Separately, the Argentine Antitrust Tribunal conditioned the Telefónica Móviles Argentina acquisition on remedies including transferring at least 6.0M mobile customers and spectrum usage rights.

Analysis

TEO is trading like a cyclical recovery story, but the cleaner read is “inflation hedge with regulatory overhang.” The real win is not headline earnings; it is the combination of real-terms ARPU growth, de-levering, and an inflation regime that still allows pricing to outrun churn. That supports valuation stability, but only if the peso does not reaccelerate lower in a way that turns current FX gains into a reversal.

The hidden loser is future scale: the divestiture remedy effectively forces TEO to give up the highest-friction/lowest-quality parts of the acquired footprint, which can be good for competition but dilutive to medium-term revenue density. That matters because telecom equity value is driven less by reported EBITDA than by how much of that EBITDA survives after capex, spectrum, and regulatory costs. NFLX gets a small, second-order benefit from bundle distribution, but this is a retention tool for TEO more than a meaningful revenue catalyst for Netflix.

Over the next 1-3 months, the stock should trade on remedy implementation clarity and whether 2H pricing keeps pace with inflation; if it doesn’t, margin optics will fade quickly. Over 6-18 months, the key question is whether the higher fiber/5G capex converts into higher free cash flow or just defends share. Consensus is probably overconfident on the quality of net income and underweight the fact that accounting-driven gains can reverse fast if FX or rates move against them.

Key Decisions for Investors

• Tactically buy TEO on any post-print pullback over the next 1-2 weeks; target a 1-3 month re-rating if management confirms 2H pricing discipline and remedy execution stays orderly. Falsify if service revenue growth slips below inflation or ARPU decelerates sharply.
• Use a 3-6 month TEO call spread instead of an outright long to express the upside in de-levering while capping downside from an adverse regulatory or FX move. Best risk/reward if implied volatility cools after the release.
• Do not chase NFLX on this headline alone; the distribution win is real but too small to move consolidated numbers. Revisit only if the bundled offer drives measurable subscriber retention or net adds in Argentina over the next two quarters.