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Telecom Argentina S.A. Announces Consolidated Nine-month Period ("9M05") and Third Quarter Results for Fiscal Year 2005 ("3Q05")

Telecom Argentina (NYSE: TEO) (BASE: TECO2), one of Argentina's largest telecommunications groups, announced today consolidated net income of P$1,623 million for the nine-month period ended September 30, 2005 ("9M05") mainly due to the positive effect of P$1,424 million as a consequence of the closing of the debt restructuring process of Telecom Argentina. Comparatively, consolidated net loss for the nine-month period ended September 30, 2004 ("9M04") was P$491 million. Consolidated net income for the third quarter of fiscal year 2005 ("3Q05") was P$1,165 million million, Comparatively, consolidated net loss for the third quarter of fiscal year 2004 ("3Q04") was P$261 million. Earnings/loss per share and ADR for 9M05 amounted to P$1.65 and P$8.25, respectively. In comparison, (loss) per share and ADR for 9M04 were P$(0.50) and P$(2.49), respectively. Earnings per share and ADR for 3Q05 amounted to P$1.18 and P$5.92, respectively. In comparison, (loss) per share and ADR for 3Q04 were P$(0.26) and P$(1.32), respectively. Operating profit before depreciation and amortization, operating profit/(loss) and net income/(loss) for 9M05 represented 37%, 9% and 40% of net sales, respectively; compared with 46%, 6% and (15%), respectively, for 9M04. Operating profit before depreciation and amortization, operating profit/(loss) and net income/(loss) for 3Q05 represented 35%, 8% and 79% of net sales, respectively; compared with 44%, 7% and (23%), respectively, for 3Q04. The expansion in the number of subscribers in the cellular telephony business has resulted in higher revenues but also increased costs, this latter mainly generated by higher agent commissions and subsidies in the sale of handsets. As a consequence, the Operating Profit before Depreciation and Amortization for 9M05 has remained at a similar level as in 9M04 reaching P$ 1,481 million. Company Activities Evolution of Consolidated Net Revenues (9M05 vs. 9M04 comparison) Consolidated net revenues for 9M05 totaled P$4,057 million, an increase of P$846 million, or 26%, compared with P$3,211 million for 9M04, mainly as a consequence of the increase in revenues generated by the cellular and Internet businesses. Fixed Telephony In fixed telephony operations, local measured service revenues increased by P$10 million to P$387 million during 9M05. Domestic long distance ("DLD") revenues increased by P$12 million reaching P$334 million. Revenues in both services increased as a consequence of the higher traffic due to incremental demand and higher number of Lines in Service. DLD traffic increased by 9% as a consequence of the implementation of new discount plans while local traffic increased by 1% mainly due to the increase of lines in service. Monthly charges increased by P$30 million, or 6%, to P$501 million for 9M05, mainly due to the increase in customer lines that had reached 3,582,000, equivalent to an increase of 4%. It must be noted that the number of lines in service has recovered in 3Q05 to the same level it had as of December 2001, when the economic crisis began. Revenues generated by interconnection services increased by P$31 million, or 21%, to P$181 million, mainly due to the increase in cellular traffic transported and terminated on the fixed line network of Telecom. Regarding international telephony activities, during 9M05 revenues reached P$167 million increasing by P$9 million or 6%, mainly due to higher incoming and outgoing traffic partially offset by a decrease in rates. Internet and Data Transmission Revenues generated by the data transmission and Internet business totaled P$342 million, representing an increase of P$34 million, or 11%, mainly due to the increase in revenues generated by the Internet business as a consequence of the increase in the number of ADSL clients. Since 4Q04, the Company has been experiencing a migration process of dial-up clients to ADSL services. This process has intensified and has resulted in lower dial-up traffic. As of September 30, 2005 total lines in service with ADSL connections amounted to 188,000, an increase of 75,000, or 66%. The number of Arnet's ADSL subscribers reached approximately 129,000, increasing by 84% while Internet dial-up customers reached approximately 137,000, decreasing 12%. Internet dial-up minutes represented 27% of total traffic measured in minutes transported over the fixed-line network. Cellular Telephony The cellular market in Argentina has grown rapidly during the last months helped by the evolution of the GSM technology and the introduction of new value added services and handsets that has resulted in a substantial increase in the total number of subscribers and penetration. In this environment, total cellular subscribers of Telecom Personal in Argentina reached approximately 5,308,000 as of September 30, 2005, representing an increase of approximately 1,933,000 customers, or 57%. This increase in the client base was fueled by an impressive growth in the number of GSM subscribers, which currently represent 51% of the total customer base. The customer base in Argentina as of September 30, 2005 amounted to approximately 3,579,000 prepaid subscribers, representing 67% of the total customer base, and approximately 1,729,000 postpaid subscribers, representing the remaining 33% (including clients of "Cuentas Claras" a hybrid prepaid/postpaid product). These percentages were 76% and 24%, respectively, as of September 30, 2004. The substantial improvement of the composition of the customer base is a consequence of the strategy of Telecom Personal in Argentina to focus in the acquisition of high-end clients and to increase the participation in the postpaid services, among them the "Cuentas Claras" product, taking into account the current demand of the cellular market. Revenues of Telecom Personal in Argentina, after inter-company revenue elimination, reached P$1,763 million increasing by P$679 million, or 63%, mainly due to the higher number of subscribers, to the increase in total traffic, to incremental use of value added services and to the increase in sales of handsets. The average monthly revenue per customer in Argentina increased to P$36 or 3% when compared with 9M04 notwithstanding the significant increase in the number of clients. Additionally, total cellular traffic increased by 53% when compared with 9M04. Nucleo, Telecom Personal's subsidiary that provides cellular services in Paraguay, generated P$155 million in revenues during 9M05 that represent an increase of P$34 million, or 28%. The revenues of Nucleo are consolidated into the mobile telephony business together with the revenues of Telecom Personal. As of September 30, 2005, Nuleo had approximately 591,000 customers an increase of 133,000, or 29%. Nucleo's postpaid subscribers increased by 20% reaching 112,000 clients, representing 19% of the customer base. Prepaid customers increased by 31% reaching 479,000, equivalent to 81% of the customer base. Directories Publicom sales increased by P$9 million or 113% reaching P$17 million due to higher sales of advertising space and the acquisition of new customers. Evolution of Operating Costs The cost of services provided, administrative expenses and selling expenses for 9M05 increased by P$707 million, or 24%, to P$3,710 million. The evolution of costs is mainly related to the increase in sales and competition in the mobile telephony business in Argentina. As an example of this, subscriber acquisition cost (including handset subsidies, agent commissions and advertising) increased by P$240 million or 152% reaching P$398 million. Salaries and social security contributions increased by P$70 million, or 16%, to P$504 million primarily due to the increase in salaries. As of September 30, 2005, the headcount totaled 14,369 compared to 14,263 as of September 30, 2004. The increase in headcount is also related to the expansion of the cellular business. Taxes reached $280 million, an increase of $64 million when compared with 9M04 due to the impact of taxes that are calculated on the basis of revenues and higher fees paid to the regulator, the latter, in the cellular telephony activity. The allowance for doubtful accounts increased to P$18 million, equivalent to 0.4% of revenues. The increase of P$17 million is mainly due to a lower level of recovery of past due receivables in the fixed telephony business and a slight increase of uncollectables in the postpaid cellular telephony after the significant expansion of the customer base. Sales commissions increased by P$132 million, or 107%, to P$255 million for 9M05, mainly as a consequence of the commissions paid for new customers and higher sales of prepaid cards, mainly in the cellular business. Costs related to advertising increased by P$33 million or 52% to P$97 million, as Telecom Personal and Arnet continued with their promotions and media advertising campaigns. The cost of cellular handsets increased by P$241 million reaching P$391 million mainly due to the increase in handset sales as the number of subscribers in the market has increased substantially. TLRD (termination charges in third parties cellular networks) and roaming cost increased by P$143 million reaching P$272 million, due to the increase in traffic among cellular operators. Depreciation of fixed and intangible assets decreased by P$140 million, or 11%, to P$1,134 million during 9M05 as a consequence of the end of the amortization period of certain assets in the fixed telephony business. Net Financial Results The gain resulting from net financial results reached P$91 million for 9M05 as compared to a loss of P$622 million in 9M04. The difference can be largely attributed to the P$711 million gain registered as net currency exchange differences. The gain was a consequence of the effect of the appreciation of the Argentine Peso against the Euro and the Dollar on the net financial debt of the Company. Other Expenses Other expenses (net) increased by P$39 million, or 57%, to P$108 million for the 9M05 mainly as a consequence of higher provisions for lawsuits and other contingencies partially compensated by lower severance charges. Cash flow and Net Financial Debt (Nominal Value)-Debt Restructuring Results On August 31, 2005, Telecom Argentina successfully completed its debt restructuring process by issuing the new Notes and paying the cash consideration in exchange for the Outstanding Debt, in accordance with the terms of the Acuerdo Preventivo Extrajudicial entered into by Telecom Argentina and its financial creditors (the "APE"), resulting in the extinguishment of all Outstanding Debt pursuant to the APE. The Company also made prepayments on the new Notes issued pursuant to the APE, further strengthening it postrestructuring debt profile. As a consequence of the successful Closing of the Debt Restructuring of Telecom Argentina, the Company has registered in 3Q05 a profit of P$1,424 million pesos mainly due to forgiveness of principal of P$167 million, forgiveness of interest (contractual and penalty) of P$984 million and effect of the net present value of P$352 million. This gain was partially compensated by charges related to exchange differences, accelerated amortization of expenses for the debt issuance and other expenses that amounted to P$79 million. The nominal value of Net Debt (Loans minus Cash and Banks plus Investments) decreased by P$2,582 million, or 36%, to P$4,545 million for 9M05 compared with 9M04 (P$7,127 million), mainly as a consequence of the reduction of the debt due to the successful restructuring of Telecom Argentina and the positive cash flow generation of the Group. Capital Expenditures Of the total amount of P$340 million invested in fixed assets during 9M05, P$149 million, or 44%, corresponds to fixed-line telephony, data transmission and Internet, and P$191 million or 56% to the cellular business. Additionally, during 9M05 the Company has invested P$68 million in materials (of which P$43 correspond to cellular telephony) that in a short period will be classified as investments in fixed assets. Telecom is the parent company of a leading telecommunications group in Argentina, where it offers directly or through its controlled subsidiaries local and long distance fixed-line telephony, cellular, data transmission, and Internet services, among other services. Additionally, through a controlled subsidiary the Telecom Group offers cellular services in Paraguay. The Company commenced operations on November 8, 1990, upon the Argentine Government's transfer of the telecommunications system in the northern region. Nortel Inversora S.A. ("Nortel"), which acquired the majority of the Company from the Argentine government, holds 54.74% of Telecom's common stock. Nortel is a holding company where the common stock (approximately 68% of capital stock) is owned by Sofora Telecomunicaciones S.A.. Additionally, the capital stock of Nortel is comprised of preferred shares that are held by minority shareholders. On June 30, 2005, Telecom had 984,380,978 shares outstanding. For more information, please contact Financial Planning & Investor Relations Department: Pedro Insussarry 54-11-4968-3743 pinsussa@ta.telecom.com.ar Moira Colombo 54-11-4968-3628 mcolombo@ta.telecom.com.ar Gaston Urbina 54-11-4968-6236 gurbina@ta.telecom.com.ar Voice Mail: 54-11-4968-3627 Fax: 54-11-4313-5842 For information about Telecom Group services visit: http://www.telecom.com.ar http://www.telecompersonal.com.ar http://www.arnet.com.ar http://www.highway.arnet.com.ar http://www.paginasamarillas.com.ar http://www.telecom.com.ar Disclaimer This document may contain statements that could constitute forward-looking statements, including, but not limited to the Company's expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; the effects of its debt restructuring process; the impact of emergency laws enacted by the Argentine Government; and the impact of rate changes and competition on the Company's future financial performance. Forward looking statements may be identified by words such as "believes", "expects", "anticipates", "pro ects", "intends", "should", "seeks", "estimates", "future" or other similar expressions. Forward-looking statements involve risks and uncertainties that could significantly affect the Company's expected results. The risks and uncertainties include, but are not limited to, uncertainties concerning the outcome of the court proceedings relating to the debt restructuring, the impact of emergency laws enacted by the Argentine Government which have resulted in the repeal of Argentina's Convertibility law, the devaluation of the peso, various changes in restrictions on the ability to exchange pesos into foreign currencies, and currency transfer policy generally, the "pesification" of tariffs charged for public services, the elimination of indexes to adjust rates charged for public services and the Executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive changes in laws and economic and business conditions in Argentina, it is difficult to predict the impact of these changes on the Company's financial condition. Other factors may include, but are not limited to, the evolution of the economy in Argentina, growing inflationary pressure and evolution in consumer spending and the outcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward looking statements which may be made to reflect events and circumstances after the date of this press release, including, without limitation, changes in the Company's business or to reflect the occurrence of unanticipated events. Readers are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are filed with or furnished to the United States Securities and Exchange Commission for futher information concerning risks and uncertainties faced by Telecom.

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