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Telecom Argentina S.A. Announces Consolidated Six-Month Period ('1H05') and Second Quarter Results

Telecom Argentina, one of Argentina's largest telecommunications groups, announced today consolidated net income of P$458 million for the six-month period ended June 30, 2005 ("1H05") mainly due to
positive financial results as a consequence of currency exchange differences.
Comparatively, consolidated net loss for the six-month period ended June 30,
2004 ("1H04") was P$230 million. Consolidated net income for the second
quarter of fiscal year 2005 ("2Q05") was P$179 million, Comparatively,
consolidated net loss for the second quarter of fiscal year 2004 ("2Q04") was
P$354 million.

MAJOR EVENTS AND DEVELOPMENTS
- During 1H05 the following results were achieved:

* Net Revenues increase by P$515 MM (+25% vs. 1H04) reaching P$2,585 MM
mainly due to the expansion of the mobile business.

* Operating Profit before depreciation and amortization slightly
decreased when compare to that of 1H04 (-P$11 MM or 1% vs. 1H04) as a
consequence of cost increases related to the expansion of the cellular
business and the pressure evidenced in the operating cost structure of
the Company, in an environment where the fixed-line regulated tariffs
continue to be frozen.

* Net Income of +P$458 MM (+P$688 MM vs 1H04) was mainly as a
consequence of positive financial results due to currency exchange
differences.

- Shareholders Equity as June 30, 2005 amounted to P$960 MM (+P$22 MM
or +2% vs. 1H04).

- Net Financial Debt as of June 30, 2005 reached P$5,947 MM (-P$1,214 MM
or -17% vs. 1H04).

* The Ratio of Net Financial Debt to Operating Profit before
Depreciation and Amortization for the last 12 months decreased to 2.9
(from 3.5 as of June 30, 2004), mainly due to the appreciation of the
Argentine Peso against the Euro and the Dollar, since the Company's
debt is mainly denominated in these currencies, to the effect of the
debt restructuring of Telecom Personal and Nucleo that took place
during the last quarter of FY04, and to the cash flow generation of
the Group.

Earnings/loss per share and ADR for 1H05 amounted to P$0.47 and P$2.33,
respectively. In comparison, (loss) per share and ADR for 1H04 were P$(0.23)
and P$(1.17), respectively. Earnings per share and ADR for 2Q05 amounted to
P$0.18 and P$0.91, respectively. In comparison, (loss) per share and ADR for
2Q04 were P$(0.36) and P$(1.80), respectively.
Operating profit before depreciation and amortization, operating
profit/(loss) and net income/(loss) for 1H05 represented 38%, 9% and 18% of
net sales, respectively; compared with 47%, 6% and (11%), respectively, for
1H04. Operating profit before depreciation and amortization, operating
profit/(loss) and net income/(loss) for 2Q05 represented 34%, 6% and 13% of
net sales, respectively; compared with 46%, 6% and (34%), respectively, for
2Q04.
In a context of an increase in sales due to the strong expansion of the
cellular business, the Operating Profit before Depreciation and Amortization
for 1H05 has slightly decreased by 1%, reaching P$972 million. This decrease
was a result of higher costs in the cellular telephony business mainly
generated by greater agent commissions and subsidies in the sale of handsets.

Company Activities

Evolution of Consolidated Net Revenues
(1H05 vs. 1H04 comparison)
Consolidated net revenues for 1H05 totaled P$2,585 million, an increase of
P$515 million, or 25%, compared with P$2,070 million for 1H04 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$1 million to P$247 million during 1H05. Domestic long distance (DLD)
revenues increased by P$8 million reaching P$220 million. Revenues in both
services increased as a consequence of the higher traffic due to incremental
demand and higher number of Lines in Service. Traffic in Domestic Long
Distance service increased by 9% while local traffic increased by 1%.
Monthly charges increased by P$20 million, or 6%, to P$331 million for
1H05, mainly due to the increase in customer lines. Customer lines as of June
30, 2005 increased by 4% to approximately 3,534,000 when compared to
approximately 3,409,000 as of June 30, 2004 due to the constant demand of
fixed-line services. Nevertheless, the current level of customer lines as well
as the number of lines in service is still below the level reached before the
economic crisis in December 2001.
Revenues generated by interconnection services increased by P$20 million,
or 20%, to P$118 million, mainly due to the increase in cellular traffic
transported by the fixed line network.
Regarding international telephony activities, during 1H05 revenues reached
P$110 million increasing by P$5 million or 5%, mainly due to higher incoming
and outgoing traffic levels partially offset by a decrease in rates.

Internet and Data Transmission
Revenues generated by the data transmission and Internet business totaled
P$224 million, representing an increase of P$26 million, or 13%, 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 is
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 June 30, 2005 total lines in service with ADSL connections amounted
to 159,000, an increase of 65,000, or 69%. The number of Arnet's ADSL
subscribers reached approximately 106,000, increasing by 80% while Internet
dial-up customers reached approximately 146,000, decreasing 7%. Internet
dial-up minutes represented 28% 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,
with a substantial increase in the total number of subscribers and
penetration.
In this environment, total cellular subscribers of Telecom Personal in
Argentina reached approximately 4,813,000 at June 30, 2005, representing an
increase of approximately 1,712,000 customers, or 55%. This increase in the
client base was fueled by an impressive growth in the number of GSM
subscribers that represent 37% of the total customer base.
The customer base as of June 30, 2005 amounted to approximately 3,324,000
prepaid subscribers, representing 69% of the total customer base, and
approximately 1,489,000 post-paid subscribers, representing the remaining 31%
(including clients of "Cuentas Claras" a mix prepaid/postpaid product). These
percentages were 79% and 21%, respectively, as of June 30, 2004. The
substantial improvement of the composition of the customer base is a
consequence of the strategy of Telecom Personal 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 increased by P$420 million, or
63%, to P$1,090 million, mainly due to the higher number of subscribers, to
the increase in total traffic, to incremental value added services and to the
increase in sales of handsets.
The average monthly revenue per customer increase to P$35 or 3% when
compared with 1H04 in spite of the significant increase in the number of
clients. Additionally, total cellular traffic increased by 51% when compared
with 1H04.
Nucleo, Telecom Personal's subsidiary that provides cellular services in
Paraguay, generated P$97 million in revenues during 1H05, which are
consolidated into the mobile telephony business together with the revenues of
Telecom Personal. Nucleo's 1H05 revenues represented an increase of P$14
million, or 17%.
As of June 30, 2005, Nucleo had approximately 567,000 customers an
increase of 91,000, or 19%. Nucleo's postpaid subscribers increased by 22%
reaching 107,000 clients, representing 19% of the customer base. Prepaid
customers increased by 19% reaching 460,000, equivalent to 81% of the customer
base.

Directories
Publicom sales increased by P$1 million or 17% reaching P$7 million due to
higher sales of advertising space and the acquisition of new customers. It is
expected that the favorable evolution of the commercial campaigns will be
reflected in the publication of the most important directories that are
distributed during the second half of the year.

Evolution of Operating Costs
The cost of services provided, administrative expenses and selling
expenses for 1H05 increased by P$424 million, or 22%, to P$2,362 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$138 million or 157% reaching P$226 million.
Salaries and social security contributions increased by P$43 million, or
15%, to P$329 million primarily due to the increase in salaries granted to
unionized and non-unionized employees and to the increase in headcount in the
cellular telephony business. As of June 30, 2005, the headcount totaled
14,332, compared to 14,175 as of June 30, 2004. The increase in headcount is
also related to the expansion of the cellular business.
Taxes reached $179 million, an increase of $38 million when compared with
1H04 due to the impact of sales tax and higher fees paid to the regulator, the
latter, in the cellular telephony activity. The allowance for doubtful
accounts increased to P$15 million, equivalent to 0.6% of revenues. The level
of allowances registered is significantly lower than the historical levels
registered by the Group. The increase of P$13 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 cellular telephony business after
the significant expansion of the customer base.
Sales commissions increased by P$66 million, or 87%, to P$142 million for
1H05, as a consequence of the commissions paid for new customers and higher
sales of cellular prepaid cards.
Costs related to advertising increased by P$18 million or 45% to P$58
million in spite of the fact that Telecom Personal and Arnet continued with
their promotions and media advertising campaigns.
The cost of cellular handsets increased by P$159 million reaching P$234
million mainly due to the increase in handset sales. As a consequence of the
strong competition and the growth in the cellular business, handset subsidies
have increased by P$78 million or 325%, reaching P$102 million.
TLRD (termination charges in third parties cellular networks) and roaming
cost increased by P$90 million reaching P$171 million, due to the increase in
traffic among cellular operators.
Depreciation of fixed and intangible assets decreased by P$102 million, or
12%, to P$749 million during 1H05 as a consequence of the end of the
amortization period of certain assets in the fixed telephony business.
Taking into account the speed of the technological evolution of the
telecommunication industry, Telecom Personal, with the assistance of an
external consultant, has made a review of the periods of useful lives used for
the depreciation period of fixed assets. As a consequence of this evaluation,
the useful lives of certain assets have been changed and have been adjusted as
from January 1st, 2005. Therefore, the depreciation charge for the six-month
period ended June 30, 2005 was increased by P$15 million.

Net Financial Results
The gain resulting from net financial results reached P$299 million for
1H05 as compared to a loss of P$298 million in 1H04. The difference can be
largely attributed to the P$586 million registered as net currency exchange
differences. The higher 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) decreased by P$5 million, or 9%, to P$50 million for
the 1H05 mainly as a consequence of lower severance charges partially
compensated by higher provisions for lawsuits and other contingencies.

Cash flow and Net Financial Debt (Face Value)
Net Debt (Loans minus Cash and Banks plus Investments) decreased by
P$1,214 million, or 17%, to P$5,947 million for 1H05 compared with 1H04
(P$7,161 million), mainly as a consequence of the effect on the financial debt
of the Company of the appreciation of the Argentine Peso against the Euro and
the Dollar, the reduction of the debt due to the successful restructuring of
Telecom Personal and Nucleo's debts and the cash flow generation of the
Company, partially offset by accrued interests.

Capital Expenditures
Of the total amount of P$169 million invested in fixed assets during 1H05,
P$89 million, or 53%, corresponds to fixed-line telephony, data transmission
and Internet, and P$80 million or 47% to the cellular business.
Additionally, during 1H05 the Company has invested P$86 million in
materials (of which P$75 correspond to cellular telephony) that in a short
period will be classified as investments in fixed assets.

Other Matters
Debt restructuring process of Telecom Argentina -- Homologation of the APE
On May 26, 2005, the Judge overseeing our debt restructuring process
issued a resolution approving the Acuerdo Preventivo Extrajudicial ("APE")
that was subscribed by the Company and its financial creditors. Such decision
became final on June 10, 2005.
As ordered by the Argentine court, Telecom Argentina published notices in
widely circulated national and foreign newspapers informing non-consenting
creditors of the court's decision to permit them to select among any of the
options offered by Telecom Argentina in its APE, within ten (10) court days
following the last publication of notices. The Argentine court had provided
that non-consenting creditors that do not submit an election before the
Argentine court within such timeframe would be allocated to Option A.
Moreover, Standard & Poors International Ratings and Fitch Ratings have
assigned an international rating of B- for the notes that will be issued as
consideration of the APE.

Universal Service Fund
On May 4, 2005, the Secretariat of Communication ("SC") issued a
resolution clarifying that the contribution to the Universal Service Fund is a
contribution that has to be made by the operators and should not be charge in
the invoices of the clients. Additionally, it orders to the National
Commission of Telecommunications ("CNC") to notify the companies that they
should cease with this practice and reimburse their customers for the fees
collected under such concept.
On July 8, 2005, the CNC issued a resolution implementing the resolution
of the SC, instructing the companies to stop billing their customers for
Universal Service with these fees and to reimburse the fees collected plus
interest in a 90 days period.
On August 9, 2005 Telecom Personal has filed an administrative recourse,
and is waiting for the resolution of this step in order to analyze further
actions in this matter.

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.

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 outcome 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," "projects,"
"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 and 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 further information concerning risks
and uncertainties faced by Telecom.

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

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

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