Q3 2019 Telecom Argentina SA Earnings Call
Buenos Aires Dec 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Telecom Argentina SA earnings conference call or presentation Tuesday, November 12, 2019 at 4:00:00pm GMT
TEXT version of Transcript
* Carlos Alberto Moltini
Telecom Argentina S.A. - CEO
* Gabriel Pablo Blasi
Telecom Argentina S.A. - CFO
* Roberto Daniel Nóbile
Telecom Argentina S.A. - Deputy Director General
* Solange Barthe Dennin
Telecom Argentina S.A. - IR Manager
Solange Barthe Dennin, Telecom Argentina S.A. - IR Manager 
Good morning. On behalf of Telecom Argentina, I would like to thank everybody who have participated on today's conference call.
The participants of today's conference call are Carlos Moltini, Chief Executive Officer; Roberto Nóbile; Deputy General Director (sic) [Deputy Director General]; Gabriel Blasi, Chief Financial Officer; and myself, Solange Barthe Dennin, Manager of Investor Relations.
The purpose of this call is to share with you the results of the 9 months' period ended September 30 of 2019. We would like to remind all those that have not received our press release or presentation that they can call our Investor Relation office to request the documents or download them from the Investor Relations section of our website located at www.telecom.com.ar.
Additionally, this conference call and the slide presentation is being broadcasted through the webcast feature available in such section and can also be replayed through the 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 might 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 operation to differ materially. Such uncertainties include, but are not limited to, the effect of ongoing industry and economic regulation, possible changes in the demand for Telecom's products and services and the effect of more general factors such as changes in general market or economic conditions in legislation or in regulation.
Our press release dated November 7, 2019, a copy of which was included in our 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.
As far as the figures included in the financial statements, the company has accounted for the effect on inflation adjustment adopted by Resolution 777/2018 of the Comisión Nacional de Valores, or CNV, which established that the re-expression will be applied to the annual financial statements for intermediate and special periods ended as of December 31, 2018, inclusive. Accordingly, the reported figures correspond to 9 months 2019, include the effect of the adoption of inflationary accounting in accordance with IAS 29. Moreover, over this presentation, we will discuss figures in historical values in order to ease the understanding and analysis of the earnings evolution by user in a similar way as analyzed by the management of the company, with the aim of reaching a better comprehension of this figure in the meantime.
Additionally, and with the aim to reach a better understanding of the figures presented on our press release, we encourage our financial community to consider such release in conjunction with the earnings presentation. We know analysts and investors are aware of the difficulties concerning the impact of the inflation on accounting standards. But we are confident that at the end of the day, it's not a driver of value other than a derivative effect like for example some [social investors]. Furthermore, we urge the audience of this conference call to read the disclaimer clause contained on Slide 1 and 2 of the presentation.
The agenda for today's conference call as seen on Slide 3 is first to go over general macro overview, which will be followed by the discussion of our finance -- business highlights and immediately after, we will go into the evolution of our financial figures. Afterwards, 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 would like to pass the call to Carlos Moltini, who would like to say some words.
Carlos Alberto Moltini, Telecom Argentina S.A. - CEO 
Thank you, Solange, and hello to you all. I'm glad to be here once again. As was publicly announced, I will cease my duty as Chief Executive Officer of Telecom Argentina at the end of this year to assume new responsibilities in the company. As you know, I was invited to be a Member of the Board and the Executive Committee as soon as I cease as CEO.
It has been 2 excellent years with great advances in the strategic planning that we promoted from the beginning. Today, Telecom advanced a lot in its integration with Cablevisión, it's a commercial company with fixed-mobile network that grew in coverage and capacity. We have a very good recovery of our NPS. And day-by-day, we'll grow in market share. Our IT plan is soon to show its capabilities and the cultural transformation plan every day advanced more and more, seeking to share the idea of a new company. It has been a pride to be the CEO of Telecom, and it will be a huge commitment to collaborate with the company from my new position.
I really thank to you for the support and the useful insight and comments that I received from you all in the past months. I turn over my duty as CEO to Roberto Nóbile, who we've worked together for more than 15 years, transforming the -- this industry. He has a wealth of experience and capacity in operational management of the company, and he has been serving as Deputy Director General of Telecom Argentina and previous COO of the company.
Now let me pass the call to Roberto, who will introduce himself.
Roberto Daniel Nóbile, Telecom Argentina S.A. - Deputy Director General 
Hi, everyone. Thank you, Carlos. And hello to everyone. We've been working with Carlos for almost 15 years, as he mentioned, more than 15 years. We have been able to make this company grow. And the -- what it is today. And I believe that we will keep the track of making the company bigger, bigger year after year with consistent numbers and going forward with our market shares, our NPS and all the several projects that we are dealing with since the merge of the network, BSS transformation, OSS transformation and all the projects that are transforming the company into the new company, the one we really think of and we envision. And with that in mind, we will keep on working as we've been doing for the last 2 years with Carlos.
I personally will be participating on a regular basis on the conference calls. So we will -- I hope we can be in touch periodically.
Now having gone through this introduction. Let me pass to -- the call to Gabriel Blasi, who will go over a bit characterization of the macroeconomic context in which we operate.
Gabriel Pablo Blasi, Telecom Argentina S.A. - CFO 
Thank you, Roberto. Please refer to Slide 5, where we included a summary of the evolution of some macro variables in Argentina, regarding FX rates, inflation and monetary bonds.
During the third quarter of 2019, the economic scenario was mainly responsive to the political calendar. The FX markets experienced a quiet season with no disruptive developments up to the primary stage. In this less volatile context described, the exchange rate experienced a depreciation of almost 3% during July, and the country resettled between 700 and 800 basis points.
During the first days of August, volatility began to rise again as exchange rate depreciated another 3%, and country risk raised up to almost 900 basis points.
Finally, after the primary selections, financial markets experienced a sharp movement and demand for foreign currency began to accelerate quickly. In this context, the Central Bank responded banking on international reserves position with daily interventions in the exchange markets.
Finally, as the loss in reserves become greater with passing days, the authorities decided to impose capital controls in order to prevent further utilization in a context where the demand of pesos was downsized considerably.
As of the end of September, the peso experienced a depreciation of almost 36% during the third quarter, and the country risk reached levels above 2,000 basis points. Since then, demand for foreign currency destabilized in the FX markets, only with an increased tightening imposed by the Central Bank.
Amidst this scenario just described, interest rates experienced an increasing response to the greater withdrawal of deposits from the financial systems. Moreover, and after registering a downward trend up from March up to July, inflation accelerated as it was impacted by the FX rate increase. After this renewed round of increased inflation, it is expected that it will remain high for the rest of the year, currency reaching even close to 54%.
Turning to Slide 6. We summarize the evolution of the real economies performance, in particular, the aggregate activity and the private consumption in order to describe certain economic trends that impact our businesses.
According to last available data, the economic activity was reaching a turning point as of -- as from the end of the first quarter and during the second quarter. However, after the turmoil in the financial market just described, the most probable scenario should be a [double-dip] in the economic activity. As we mentioned, that all economic sectors remain affected as of the end of the third quarter with all these specific exceptions, such as agriculture.
In the sense, still a high degree of uncertainty dominates the behavior of economic variables imposing caution when considering the future evolution of activity. As far as unemployment is concerned, it can be known that the lower economic activity has taken its toll over employment as unemployment has currently risen to levels above 10%. Of course, the evolution of employment should be very linked to the capacity of the economy to stabilize and return to growth over the long run.
Finally, when observing past episodes of declining economic activity, it can be noted that household consumption has decreased very rapidly during this latter recessive period. In fact, that has been the cost of consumption of durable goods, which has been notoriously impacted, not only because of the reduction in purchasing power, but also because of higher difficulties to access consumer financing. Recovery of consumption will probably be linked to the possibility of recovery in real income, over which the current authorities exercise several compensation measures after the primaries. And the reduction of the uncertainty of the evolution of economic variables.
In this sense, the consumer confidence readings, although improving from minimum levels registered in 2019 are still well below the long-term average. Notwithstanding the challenging macroeconomic context just described, Telecom Argentina has managed to achieve growth of the top line in real terms when compared with the second quarter and maintained a solid operating profitability.
Having gone through this introduction of the macro environment, we will go over the business highlights section. Please refer to Slide 8, where we are putting together some of the achievements the company has reached during the third quarter of the year.
During the 9-month period 2019, Telecom's revenues totaled ARS 159.7 billion, growing 39% in current peso, although diminishing in constant currency. Please bear in mind that total revenues contained approximately ARS 21.8 billion and ARS 78.4 billion for the 9 first month 2019 and 9 first month 2018, respectively, related to the re-expression in terms of the current measuring unit as of September 30, 2019.
As far as EBITDA totaled ARS 53.2 billion, implying a 33.3% margin of revenues, achieving a challenging economic context, remaining relatively stable compared with the previous quarter.
In addition, fixed voice ARBU and broadband ARPU were up more than ARS 390 and ARS 967 -- sorry, ARS 967 per month, respectively.
Meanwhile, pay TV ARPU reached ARS 1,066 and Mobile ARPU reached ARS 281. It is worth to highlight that all of these were re-expressed in terms of the measuring unit as of September 30, 2019.
We would like to remind you that the General Index of inflation is currently substantially influenced by a food and beverage component with participation in the index, it's approximately 30%. Not being this component, a significant benchmark for the company costs.
As far as our subscribers, mobile subs in Argentina amount to 19.0 million, of which 13.4 million were 4G clients. Pay TV subs totaled 3.5 million. Fixed broadband subs amounted to 4.1 million and fixed voice line come to 3.2 million (sic) [3.3 million].
In relation to the total customer base, it is important to remark that the old mobile, broadband and cable TV segment, the total number of subscribers increased when compared to the previous quarter, following with the trend observed in the second quarter of the year. The increase is mainly explained by the set of actions which has change of products, bundling and upselling, allowing us to increase the weight of value customers and ratifying the company leadership in mobile profitability in broadband and video platforms.
This is a very important achievement for the company as a higher client base will be the driver for revenue growth once inflation has started to decelerate and price increases perform being to allow in a recovery in real terms. As a result, the company increased the share of value customers and convergent clients that would allow to maximize ARPU in the future once the discounts and promotions start to expire, our economic contracts improved net increases of household consumption.
It should be remarked that during September, the company was able to increase revenues at a similar rate than year-over-year inflation, thanks to greater demand for higher-value services and the full effect of price adjustment. This has been achieved in a highly volatile context while nevertheless, the significant devaluation of the currency and its effect on prices, the consumption and location to telecommunication services remains stable.
On the other hand, and regarding corporate matters, in September 2019, [Núcleo S.A.] acquired 211,848 Series B shares, representing 30% of the capital stock Tuves, Paraguay, thus reaching a participation of 99.99%.
Additionally, it is important to mention that the Board of Directors authorized a firm cash dividend distribution of $300 million on October 10, which were made available to the use of cash and resources driven by the company's solid operative generation.
This dividend payment represented an amount of approximately $0.14 per share.
Finally, the General Extraordinary Shareholders' Meeting held on October 24, 2019, approved the Corporate Reorganization, whereby Telecom Argentina, as surviving company, merges with CV Berazategui, Última Milla and split away assets of PEM.
Before going in details to the evolution of the performance of our businesses, we would like to invite you in Slide 9 to a key review of some of our initiatives and projects that we are working on with the aim to transform the company capabilities in order to become a leading digital telco. In this sense, you may find 4 cornerstones, which we are basing our initiatives.
#FAN is one of the company's biggest projects that includes an entire BSS transformation. This project foresees the integration of the different products into a friendly CRM with the user, which will allow us to enhance the digital experience of our customers. One of the main challenges is to centralize all the catalogs into 1 to generate a simplified view of our customers that allows us to respond in a personalized way to our clients' requirements. In this sense, work -- steps have been achieved.
For example, the number of processes has been reduced notoriously. The customer display screens went from 20 to just 2, and all the actions refer to plan changes were unified into a unique process. Moreover, the training time of employees was reduced in more than 4x.
SWITCH is a project that [seats] the integration of all the self-management digital channels of the clients. The advantages in this aspect has been notorious, since today, there are only 2 channels, while in the past, there were around 20. The e-commerce solutions have been unified into 1, and the number of catalogs have been reduced more than half. The final objective is to create an agile model that improves the customer digital experience. Moreover, improve our company processes and back office, we are carrying out another ambitious project denominated 4UP based on unification of different corporate systems and the digital office concept. We are extending the standardization of different processes across the structure. The digitalization of internal documentation and unification of the diverse applications in systems in order to reduce operational time and generate cost savings.
Finally, as far as the OSS project is concerned, we are aiming to improve the workforce management of our views with platforms unification, which allows to simplify the processes with new functionalities and unified visualization.
Having gone through this brief description of some of the projects we are working on, let us move to the performance of our businesses. Please turn to Slide 10. Where -- here, we can see the evolution of our service revenues and which services have grown the most. We can see that in the last 3 months, service revenues growth has taken an accelerated pace, which is related to the incremental usage and price adjustments. Additionally, we can observe the breakdown of our revenues, where mobile services business still holds the main participations, our telecom revenues followed by broadband and pay TV. We can highlight the recurrent revenue mix as a participation of mobile revenues about 34%, followed by broadband revenues that represented near 23%, and afterwards by pay TV revenues, which accounted for almost 21% participation. In turn, fixed telephone and data represented almost 16%, increasing its participation while devices achieved more than 6% of total revenues, still strongly impacted by the fall in consumption of durable goods due to the economic context and high-interest rate, but still with a positive margin contribution.
As we already mentioned, mobile and broadband are the segments that mostly contribute to the total revenues composition, generating revenues for ARS 54.8 billion and ARS 35.9 billion, respectively.
In addition, the pay TV revenues totaled almost ARS 33.4 billion followed by fixed and data revenues with the aggregate amount of almost ARS 35 billion.
To a lesser extent, we can highlight the contribution of handsets and others with ARS 10.1 billion and ARS 0.5 billion, respectively. It should be observed that in general terms, that although the company's revenues are growing at a faster rate when looking at historical values during this 9-month period acceleration in inflationary context during the last 12 months, as discussed in our macro chapter it has posed a challenge. This is basically reflected in the figures restated for inflation. Notwithstanding, we would like to remark that during the third quarter, revenue showed an increase in real terms compared with the previous quarter.
We will go in some details on these following slides. Let's move to Slide 11 to review the evolution of the company's mobile businesses in Argentina. As the intensity in data usage continues to increase, we can observe that there has been also a sustained growth in postpaid subscribers, which represent our high-value mobile segment. In fact, this segment has been growing steadily over the last 9 months due to good results in the convergence offer to cable TV and Internet subscribers that were not mobile clients of the company that's leading the mobile flow share in the market.
Additionally, the company has been successfully upselling the top-notch mobile prepaid customers to postpaid, which also implies getting them accustomed to regular billing with a view to perform cross-selling initiatives later on. Notwithstanding, during the third quarter, we registered a significant increase in our prepaid customer base, which explains why the composition in percentage between postpaid and prepaid subscribers remain the same.
During the first 9 months of 2019, postpaid subscribers accounted for 40% of the total customer base, up from 38% compared with the same period of 2018. Moreover, the company has registered a positive subscriber inflow in the last quarters, which reflects its effort to optimize the quality and capacity of the mobile network.
Regarding mobile ARPU, currently, it's been impacted by promotions given to incentive the capture of the client, but it should begin to grow substantially once the 12-month period of this promotion expires. Furthermore, the intensity of mobile Internet usage continues to increase, which as of the first 9 months of 2019 has reached an average of more than 3.3 gigabytes per user per month that represent a 27% increase versus first 9 months of 2018.
Where we focus in the evolution of our 4G rollout, we can highlight that there has been an important increasing of 4G subscribers, which totals 13.4 million as of September 2019. This rapid growth in subscribers that use the 4G network has been the driver of increasing data traffics in 2015. Currently, the coverage of our 4G network reached more than 1,670 locations, an increase of around 40 locations quarter-over-quarter.
Moreover, Personal's 4G network is the fastest network in the country, according to the result of international reference, who measure the network standards, those experience of the customers worldwide.
Turning to Slide 12. We describe the performance of our Internet and pay TV Services segments, which aim to differentiate [asking] to an enhanced customer experience. Related to our broadband segment, we can point out that the number of subscribers grew almost 11,000 year-over-year, achieving a 4.4 million -- 4.14 million users, sorry.
The aforementioned increase in subscribers was supported by the offer of higher connection speed. As a consequence, subscribers with speeds equal or above 20 megabytes have increased to 58% of the total client base versus 34% over a year ago.
ARPU expressed in terms of measuring units as of September 30, 2019, for broadband services, reaching more than ARS 967 per month.
Price adjustment applied on average broadband plans compared with those as of the first 9 months of 2019 contributed to offset the ARPU decrease in real terms. It should also be noted that fixed products are during the positive mobile portability related to the discount performance to increase the bundling of services.
As far as the churn is concerned, it has increased slightly to 1.5% compared with the same period of last year. The company has assumed cases of change of address and our technology or churn calculation purposes as, in fact, those subscribers remain active within the client base. Data for previous periods has been restated accordingly with this criteria.
Focusing on pay TV services, during the first 9 months of 2019, cable TV subscribers remained stable, showing a second consecutive increase quarter-over-quarter.
Furthermore, Flow Boxes achieved 871,000, almost starting from figures observed over a year ago. During the last 9 months, flow -- through its flow up version has continued to expand its penetration in areas where Personal has a great presence, that is in the northern region of the country. This has allowed an increasing capture of cable TV subscribers in regions in which the company reaches to its XDSL and FTTH network. In fact, [this net] has explained an important portion of total cable TV capture as of September, contributing additionally to sustained ARPU growth.
Finally, cable TV ARPU expressed in terms of the measuring unit as of September 30, 2019 reached more than ARS 1,066 per month in the first 9 months of 2019. While churn increased slightly 1.3% year-over-year, remaining at same level of the previous quarter.
Having gone through the business highlights, now I will pass the call to Solange, who will go over our financial performance.
Solange Barthe Dennin, Telecom Argentina S.A. - IR Manager 
Thank you, Gabriel. We'll go over the impact that these business trends just described by Gabriel, generated over our operating income. Let's move to Slide 14, where we can analyze the consolidated revenues and EBITDA. For the 9 months' period of 2019, consolidated revenues on current terms grew by 39%, reaching almost ARS 137.9 billion.
When comparing in constant measuring unit terms, revenues amounted to almost ARS 159.7 billion, showing a decrease of 10% in real terms, reducing the gap with inflation in around 200 basis points when compared with the first 6 months of the year. The company has been increasing its efforts on offsetting the high inflation effect over the top line and costs. Also as we mentioned, that adjusted figure contained the effect of year-over-year inflation as of September 30, 2019, which reaches 53.7%. It is important to highlight this impact when performing an analysis of the company's operational performance that inflation adjustment has a considerable impact in terms of the re-expression of 2018 figures.
In this sense, during the third quarter of 2019, the company was able to increase its revenues at a faster rate than the level of inflation achieving a real increase in revenues quarter-over-quarter. In turn, service revenues grew even more, reaching a 41% increase, thanks mainly to a better performance of Internet and fixed telephony and data service revenues.
It can also be noted that mobile revenues are accelerating, reaching a nominal growth of almost 47% when comparing quarterly figures of third quarter 2019 and third quarter of 2018. Furthermore, price increases performed in May and September had an important effect on the aforementioned inflation gap reduction.
Moreover, EBITDA experienced a lower growth, growing by 34% year-on-year in current terms, and EBITDA margin in current terms with 34.1%. EBITDA in the real term experienced a decrease of 14%, improving almost 700 basis points compared with the first 6 months of the year, while EBITDA margin in real term was 33.3%, remained stable compared with the first 6 months of the year.
The margin decrease in the year-over-year comparison was mainly due to the temporary effect on one-off related to the margin [compression] that impacted the EBITDA of the first 9 months of 2018.
In fact, operating cost before depreciation and amortization, decreased 8% in the real terms versus the same period of 2018.
Please refer to Slide 15, where we show the performance of the EBITDA and the behavior of the different components of revenues and costs. As it can be remarked, from the previously mentioned reduction of operating costs in real terms, it is noted [totally] that most of the component have worked positively despite a challenging economic content, indicated in most of the cases, improvement of our synergies. It should also be observed that the dynamic of cost adjustment is in many cases, even over time the net of the increase in revenues. We can observe the positive evolution of handset costs with a positive margin contribution which was mainly affected by a lower sell out due to the decrease in consumption of durable goods producer and at aggregate level in the economy and also cost management has delivered good result, commission and advertisement. So lower charges for agent commission as a consequence of the sales channel organizations.
On the other hand, other costs registered [and equipment] mainly as a reduction in operating leases was implemented due to application of IFRS 16. These effects have been partially offset by a lower decrease in labor costs and a net decrease in recurrent labor costs after the start of a lower number of total employees as well as increases in salaries to unionized and nonunionized employees, was partially offset by nonrecurring labor costs. In the case of debt expenses increased year-over-year, but show a better evolution when analyzing quarter-over-quarter figures.
The final outcome was 160 basis point reduction in EBITDA in real terms when compared with the 9-month period of 2018 with as we mentioned, registered temporary savings and one-off in commission and advertising and labor costs.
Let's move on to Slide 16, where we can verify that the company's current operating income totaled almost ARS 14.4 billion. The decrease in cost of measuring unit represented higher than that of EBITDA can be explained by the increase in depreciation and amortization and [and disposal of an] impairment of PP&E, intangibles and right of use, which increased almost 15% in real terms year-on-year.
In addition to higher depreciation and amortization due to the re-expression of nonmonetary assets, the application of IFRS 16 since 2019 has entailed an impact of more than ARS 2.1 billion, mainly because of the aforementioned increase in depreciation and amortization in real terms.
Operating margins reached 9% of consolidated revenues. Moreover, the company registered an ordinary loss before income tax of ARS 165 million in 9 months 2019, improving 99.3% versus the same period last year, mainly reflecting a lower net losses from FX results measured in real terms.
As we observe, the final results performance over the first 9 months of 2019, we can verify that the company has reduced a lower negative FX result measured in real terms in 9 months 2019, or ARS 8.8 billion, due to the depreciation of the Argentine peso against the U.S. dollar of 53% versus an inflation of 38% during the same period. While negative FX results measured in real terms were registered in 9 months 2018 for ARS 56.7 billion, related to the depreciation of the Argentine peso against the U.S. dollar of 121% versus an inflation of 32% in the same period.
This has resulted in lower FX losses for more than ARS 47.8 billion partially offset by higher negative net interest and lower RECPAM of ARS 4.8 billion, down from ARS 8.4 billion compared with the previous year.
Meanwhile, the company registered a net loss attributable to the controlling company of ARS 12.7 billion in the same period, especially due to the recognition of the restatement by inflation for the calculation of income tax.
Please turn to Slide 17, where we can highlight the company's continuous investment efforts to improve the network and quality of services. During the first 9 months of 2019, Telecom has invested more than ARS 43.9 billion, being this amount 4% higher real terms than the same period of last year. The consolidated amount of capital expenditure increased to 28% of total revenue from the 24% during the same period last year.
Taking into account, the technical CapEx breakdown, an important amount of the technical CapEx was allocated to the network and technology. Being the access network, one of the most important components represented almost 45% of network and technology CapEx. The remaining of technical CapEx was mainly comprised of installation and customer premise equipment, and of investment done over our international operations in Paraguay and Uruguay.
It is worth to highlight that during the first 9 months of 2019, telecom continued working in the improvement of its mobile networks, deploying more than 300 new sites. Additionally, around 50 sites were upgraded to new technologies, the spectrum of more than 450 sites was increased, and over 1,850 sites were refarmed to 4G technology.
On the fixed network side, intensive work has been performed over the HFC network, adding new 1 giga capacity to the network footprint, and enabling new DOCSIS 3.1 carriers.
Finally, the IP telephony product was enabled in the AMBA and La Plata area with the objective to facilitating the convergence and gradual migration of the copper network.
Concluding and as remarked previously, in our conference call session. One of the advantages of the company's CapEx plan is that investments are performed in a very modular way. They are not huge projects involving large lot of investment. In this sense, the company has the ability to react to changes in the economy context, avoiding to harm its operational performance competitiveness or its cash generation capacity.
In fact, the maintenance [CapEx] for a company is around $300 million, meaning that taking a conservative approach, the return for additional investment over these as a whole is significant and will generate important improvement over the long-term EBITDA.
Let's move to Slide 18, where we can find a summary of our international operations in Paraguay. Currently, Núcleo's operations are focused on the deployment of its fiber optic network in the biggest city of Paraguay, with promotion of the use of mobile financial servicing in the country and the transformation of the satellite TV service would highlight competitive products.
In this sense, Telecom business in Paraguay is growing. Núcleo, the company subsidiaries registered around $132 million, and $51 million of revenues and EBITDA in the 9 months this year, respectively.
This imply an EBITDA margin of 38.8%, improving 320 basis points compared with the same period last year. Growth in services accounted for 40% of the revenues, followed by voice with 26%, data with 15% and TV services with 8%.
As of September 13, 2019 (sic) [September 30, 2019], mobile customers totaled 2.3 million, which represents a market share of 31.5%. Moreover, the clients of Personal, which is data and mobile financial service that our subsidiary provides reached 158,000, up from 149,000 in the previous quarter.
Finally, fixed service subscribers amounted 29,000, with a market share of 10%. The fixed network deployment in the main cities of Paraguay has been increasing profitability during 2019, almost tripling the number of homes passed of 2018. It is expected that this line of business will continue to perform as they did in the course of this year.
Additionally, Núcleo's flow subscribers totaled 5,400 increasing 32% compared with the second quarter of 2019.
Please, now let me pass the call to Gabriel, who will go over the final part of our presentation, that will cover the company's financial management.
Gabriel Pablo Blasi, Telecom Argentina S.A. - CFO 
Thank you, Solange. Turning to Slide 19, we present some pro forma key figures for the fiscal years of 2018 and 2019 in constant measuring units. Company revenues achieved more than ARS 213 billion for the last 12 months as of September 30, 2019. Meanwhile, EBITDA amounted almost ARS 68.7 billion for the same period. EBITDA margin for the last 12-month period as of September 30, 2019, was 32.2%.
Regarding our gross debt, as of the end of September 30, 2019, and it amounted more than ARS 146.2 billion. But as the company holds an important cash and equivalents and investment position, net debt reached approximately ARS 105.4 billion, up 1% in real terms when compared with September 30, 2018.
In fact, net debt-to-EBITDA ratio remains in level of 1.5x.
Lastly, on Slide 24 (sic) [Slide 20], we can analyze the breakdown on the financial debt. The total debt outstanding of the company as of September 30, 2019, considering the new debt operations and cancellations in the period amounting to almost $2.5 billion. As we mentioned in our last call, on July 18, 2019, the company successfully completed an internationally note issuance for a total amount of 400 million, maturing in 2026.
Part of the proceeds of the issuance we are allocating to their financing liabilities in order to optimize the maturity schedule of the company. In this sense, $100 million were allocated to partially prepay the term loan agreement due 2022, and $34 million in total were allocated for a tender offer of its outstanding 6.5% Class A notes due 2021.
Notwithstanding, the company is always working and looking for the best opportunities to improve its capital structure and maturity schedule that recognize its solid credit metrics. As mentioned in previous calls, we feel it important to emphasize the manageable debt profile that the company has as well as the diversified source of funds currently available such as vendor financing, local and international bank lines and funding from multilateral credit agencies. The company looks for a permanent optimization for the term, rate and structure of its financial liabilities.
Having concluded with the presentation. But before going to the Q&A session, let me pass the call to Solange for a final remark.
Solange Barthe Dennin, Telecom Argentina S.A. - IR Manager 
Thank you, Gabriel. With this, now we are more than pleased to answer any question you may have. However, before we start. We would like to remind you the way you -- to correctly address your questions during the Q&A session. Remember that you should wait until we open the [referral page], and then send a message to [irtelecomargentina] through Q&A menu, identifying yourself and stating that you have a question.
We will let you know when it's your turn to speak. And we will unmute you so you can proceed with your question.
Hello, we are just open for any questions you may have. So please let us know if you have question or if not, we will end the call -- we will wait for your answer.
Considering that there are no questions, so we thank you for participating in our quarterly conference call. And please do not hesitate in contacting our Investor Relations Department for any further inquiries you may have. Good morning to all. Have a nice a day, and we expect to meet again soon.