Telecom Argentina (TEO) 20-F 2021 FY Annual report (foreign)

As filed with the Securities and Exchange Commission on March 22, 2022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                      to
OR
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from                       to

Commission file number: 1-13464

TELECOM ARGENTINA S.A.

(Exact name of Registrant as Specified in its charter)

Republic of Argentina

(Jurisdiction of incorporation or organization)

General Hornos 690

(C1272ACK) - Buenos Aires
Argentina

(Address of Principal Executive Offices)

Gabriel Blasi
(Tel: 54-11-4968-4019, E-mail: GBlasi@teco.com.ar,
General Hornos 690, (C1272ACK), Buenos Aires, Argentina)

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
American Depositary Shares, representing Class B Ordinary Shares	TEO	New York Stock Exchange
Class B Ordinary Shares, nominal value P$1.00 per share	TECO2	New York Stock Exchange*

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Class A Ordinary Shares, nominal value P$1.00 each	683,856,600
Class B Ordinary Shares, nominal value P$1.00 each	628,058,019
Class C Ordinary Shares, nominal value P$1.00 each	106,734
Class D Ordinary Shares, nominal value P$1.00 each	841,666,658

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

◻ Yes ⌧ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

◻ Yes ⌧ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

⌧ Yes ◻ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP ◻ International Financial Reporting Standards as issued
by the International Accounting Standards Board ⌧ Other ◻

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

◻ Item 17 ◻ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

◻ Yes ⌧ No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

◻ Yes ◻ No

TABLE OF CONTENTS

		Page
PRESENTATION OF FINANCIAL INFORMATION		1
FORWARD-LOOKING STATEMENTS		3
GLOSSARY OF TERMS		5
	PART I
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	12
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	12
ITEM 3.	KEY INFORMATION	12
ITEM 4.	INFORMATION ON THE COMPANY	44
ITEM 4A.	UNRESOLVED STAFF COMMENTS	72
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	73
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	105
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	120
ITEM 8.	FINANCIAL INFORMATION	124
ITEM 9.	THE OFFER AND LISTING	125
ITEM 10.	ADDITIONAL INFORMATION	126
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	150
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	152
	PART II
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	153
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	153
ITEM 15.	CONTROLS AND PROCEDURES	153
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	154
ITEM 16B.	CODE OF ETHICS	154
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	154
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	156
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED PURCHASERS	156
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	156
ITEM 16G.	CORPORATE GOVERNANCE	156
ITEM 16H.	MINE SAFETY DISCLOSURE	157
ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	157
	PART III
ITEM 17.	FINANCIAL STATEMENTS	158
ITEM 18.	FINANCIAL STATEMENTS	158
ITEM 19.	EXHIBITS	158

PRESENTATION OF FINANCIAL INFORMATION

Telecom Argentina S.A. is a company incorporated under the laws of Argentina. As used in this Annual Report on Form 20-F (the “Form 20-F” or “Annual Report”), the terms “the Company,” “Telecom,” “we,” “us,” and “our” refer to Telecom Argentina S.A. and its consolidated subsidiaries as of December 31, 2021. Unless otherwise stated, references to the financial results of “Telecom” are to the consolidated financial results of Telecom Argentina and its consolidated subsidiaries. Telecom is primarily engaged in the provision of fixed and mobile telecommunications services, data services, Internet services and cable television services.

The term “Telecom Argentina” refers to Telecom Argentina S.A., excluding its subsidiaries. The term “Cablevisión” refers to Cablevisión S.A., together with its consolidated subsidiaries. The term “Merger” refers to the merger between Telecom and Cablevisión, effective as of January 1, 2018, through which Cablevisión was merged with and into Telecom Argentina, with Telecom Argentina being the surviving entity. As of December 31, 2021, Telecom Argentina’s subsidiaries were Núcleo S.A.E, PEM S.A.U, Cable Imagen S.R.L., Televisión Dirigida S.A., Adesol S.A., AVC Continente Audiovisual S.A., Inter Radios S.A.U., Telecom Argentina USA Inc., Micro Sistemas S.A.U., Personal Smarthome S.A. and Opalker S.A.  For further information on our subsidiaries, see Exhibit 8.1 to this Annual Report. The Company has no significant subsidiaries.

Our consolidated financial statements as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019, and the notes thereto (the “Consolidated Financial Statements”) are set forth on pages F-1 through F-113 of this Annual Report.

Our Consolidated Financial Statements, which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), have been approved by resolution of the Board of Directors’ meeting held on March 9, 2022 and have been audited by an independent registered public accounting firm.

Due to the high level of inflation prevailing in Argentina during the period 2016-2018, management analyzed the parameters established by IAS 29 “Financial reporting in hyperinflationary economies” - paragraph 3, which describe the conditions to consider an economy as hyperinflationary, and concluded that, with respect to Argentina, such conditions have been met for accounting periods ending after July 1, 2018. Therefore, we have restated our Consolidated Financial Statements and the financial information for all the periods reported in this Annual Report based on certain price indexes to take into account the effect of inflation in Argentina. The Consolidated Financial Statements and the financial information included in this Annual Report for all the periods reported are presented on the basis of constant Argentine Pesos as of December 31, 2021 (“current currency”). See “—Risk Factors—Risk Relating to Argentina—Inflation could accelerate, causing adverse effects on the economy and negatively impacting Telecom’s margins and/or ratios,” “Item 5—Operating and Financial Review and Prospects—Factors Affecting Results of Operations” and Note 1.e) to our Consolidated Financial Statements.

Telecom Argentina and its subsidiaries maintain their accounting records and prepare their financial statements in Argentine Pesos, which is their functional currency, except for Núcleo and other subsidiaries in Paraguay, which use Guaraníes as their functional currency, Telecom Argentina USA, which uses U.S. dollars as its functional currency, and Adesol and other subsidiaries incorporated under the laws of Uruguay, which use Uruguayan Pesos as their functional currency. Our Consolidated Financial Statements include the results of these subsidiaries converted into Argentine Pesos.

PRESENTATION OF FINANCIAL INFORMATION TELECOM ARGENTINA S.A.

1

Certain financial information contained in this Annual Report has been presented in U.S. dollars. This Annual Report contains translations of various Argentine Peso amounts into U.S. dollars at specified rates solely for convenience of the reader. You should not construe these translations as representations by us that the Argentine Peso amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Except as otherwise specified, all references to “US$,” “U.S. dollars” or “dollars” are to United States dollars, references to “EUR,” “euro” or “€” are to the lawful currency of the member states of the European Union and references to “P$,” “Argentine Pesos,” “$” or “Pesos” are to Argentine Pesos. Unless otherwise indicated, we have translated the Argentine Peso amounts using a rate of P$ 102.72 = US$1.00, the U.S. dollar ask rate published by the Banco de la Nación Argentina (Argentine National Bank) on December 30, 2021. On March 17, 2022, the exchange rate was P$109.51 = US$1.00. As a result of fluctuations in the Argentine Peso/U.S. dollar exchange rate, the exchange rate at such date may not be indicative of current or future exchange rates. Consequently, these translations should not be construed as a representation that the Peso amounts represent, or have been or could be converted into, U.S. dollars at that or any other rate. See “Item 3—Key Information—Risk Factors—Risks Relating to Argentina— Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends,” and “Item 5— Operating and Financial Review and Prospects— Factors Affecting Results of Operations — Effects of Fluctuations in Exchange Rates between the Argentine Peso and the U.S. dollar and other major foreign currencies.”

Certain amounts and ratios contained in this Annual Report (including percentage amounts) have been rounded up or down to facilitate the summation of the tables in which they are presented. The effect of this rounding is not material. These rounded amounts and ratios are also included within the text of this Annual Report.

This Annual Report contains certain terms that may be unfamiliar to some readers. You can find a Glossary of these terms on page 5 of this Annual Report.

PRESENTATION OF FINANCIAL INFORMATION TELECOM ARGENTINA S.A.

2

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this Annual Report contains information that is forward-looking, including, but not limited to:

● our expectations for our future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure;

● the implementation of our business strategy;

● the changing dynamics and growth in the telecommunications and cable markets in Argentina, Paraguay, Uruguay and the United States;

● our outlook for new and enhanced technologies;

● the effects of operating in a competitive environment;

● industry conditions;

● the outcome of certain legal proceedings;

● regulatory and legal developments; and

● other factors identified or discussed under “Item 3—Key Information—Risk Factors”.

This Annual Report contains certain forward-looking statements and information relating to Telecom that are based on current views, expectations, estimates and projections of our Management and information currently available to Telecom. These statements include, but are not limited to, statements made in “Item 3—Key Information—Risk Factors,” “Item 5—Operating and Financial Review and Prospects” under the caption “Trend Information,” “Item 8—Financial Information—Legal Proceedings” and other statements about Telecom’s strategies, plans, objectives, expectations, intentions, capital expenditures, and assumptions and any other statement contained in this Annual Report that is not a historical fact. When used in this document, the terms “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “will,” “may” and “should” and other similar expressions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. In addition, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.

Many factors could cause actual results, performance or achievements of Telecom to be materially different from any future results, performance or achievements that may be expressed or implied by forward-looking statements. These factors include, among others:

● our ability to successfully implement our business strategy and to achieve synergies;

● our ability to introduce new products and services that enable business growth;

● our ability to service our debt and fund our working capital requirements;

● uncertainties relating to political and economic conditions in Argentina, Paraguay, United States and Uruguay;

● the impact of political and economic developments on demand for securities of Argentine companies;

● inflation, the devaluation of the Peso, the Guaraní and the Uruguayan Peso and exchange rate risks in Argentina, Paraguay and Uruguay;

FORWARD-LOOKING STATEMENTS TELECOM ARGENTINA S.A.

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● restrictions on the ability to exchange Argentine or Uruguayan Pesos or Paraguayan Guaraníes into foreign currencies and transfer funds abroad;

● the impact of additional currency and exchange measures or restrictions on our ability to access the international capital markets and our ability to repay our dollar-denominated indebtedness;

● the creditworthiness of our actual or potential customers;

● nationalization, expropriation and/or increased government intervention in companies;

● technological changes;

● the impact of legal or regulatory matters, changes in the interpretation of current or future regulations or reform and changes in the legal or regulatory environment in which we operate, including regulatory developments such as sanctions regimes in other jurisdictions (e.g., the United States) which impact on our suppliers;

● the effects of increased competition;

● reliance on content produced by third parties;

● increasing cost of our supplies;

● inability to finance on reasonable terms capital expenditures required to remain competitive;

● fluctuations, whether seasonal or in response to adverse macro-economic developments, in the demand for advertising;

● our capacity to compete and develop our business in the future;

● the impact of increased national or international restrictions on the transfer or use of telecommunications technology; and

● the effects of a pandemic or epidemic and any measures and policies adopted by governments to combat its effects, including mandatory lockdowns and other restrictions.

Many of these factors are macroeconomic and regulatory in nature and therefore beyond the control of the Company’s management. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. The Company does not intend and does not assume any obligation to update the forward-looking statements contained in this Annual Report.

These forward-looking statements are based upon a number of assumptions and other important factors that could cause our actual results, performance or achievements to differ materially from our future results, performance or achievements expressed or implied by such forward-looking statements. Readers are encouraged to consult the Company’s filings made on Form 6-K, which are periodically filed with or furnished to the United States Securities and Exchange Commission.

FORWARD-LOOKING STATEMENTS TELECOM ARGENTINA S.A.

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GLOSSARY OF TERMS

The following explanations are not provided as or intended to be technical definitions, but only to assist the general reader to understand certain terms used in this Annual Report.

2G (second-generation mobile system): Second-generation protocols using digital encoding and includes GSM, D-AMPS (TDMA) and CDMA. These protocols support high bit rate voice and limited data communications.

3G (third-generation mobile system): Third-generation mobile service, designed to provide high speed data, always-on data access, and greater voice capacity. 3G networks allow the transfer of both voice data services (telephony, messaging) and non-voice data (such as downloading Internet information, exchanging email, and instant messaging). The high data speeds, measured in Mbps, are significantly higher than 2G, and 3G networks technology enable full motion video, high-speed Internet access and videoconferencing. 3G technology standards include UMTS, based on WCDMA technology (quite often the two terms are used interchangeably), and CDMA2000.

4G (fourth-generation mobile system): Fourth-generation mobile service using the LTE technology (Long Term Evolution technology).

5G (fifth-generation mobile system): The next major phase of mobile telecommunications standards. 5G is a complete redesign of network architecture with the flexibility and agility to support upcoming service opportunities. It delivers higher speeds, higher capacity, extremely low latency and greater reliability.

Access (or Accesses): Connection provided by Telecom Argentina to Internet services.

ADS: American Depositary Shares issued by JP Morgan, listed on the New York Stock Exchange, each representing rights to five (5) Class B Shares under a Deposit Agreement.

ADSL (Asymmetric Digital Subscriber Line): A type of digital subscriber line technology (DSL); a data communications technology that enables faster data transmission over copper lines than a conventional voiceband modem can provide.

AFIP (Administración Federal de Ingresos Públicos): The Argentine federal tax authority.

AFJP (Administradoras de Fondos de Jubilaciones y Pensiones): Private entities that were in charge of managing the funds of the Private Pension and Retirement System established by Law No. 24,241, until its nationalization in November 2008 pursuant to Law No. 26,425.

AMBA (Area Metropolitana Buenos Aires): An area comprising the Autonomous city of Buenos Aires and the greater Buenos Aires area, which constitutes the most densely populated region of Argentina. Telephone calls within the area are considered local.

Analog: A mode of transmission or switching that is not digital, e.g., the representation of voice, video or other not in digital form.

ANSES: The Argentine administrator of social security pension and retirement benefits.

ANSES —FGS: The Fondo de Garantía y Sustentabilidad del Sistema Integrado Previsional Argentino managed by ANSES.

ARBU (Average Revenue Billed per User): The average monthly revenue billed per user of our fixed telephony services, calculated by dividing total monthly basic charges and traffic revenue by weighted-average number of fixed telephony lines in service during the relevant measurement period.

GLOSSARY OF TERMS TELECOM ARGENTINA S.A.

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ARPU (Average Revenue per User): The average monthly revenue per user of our mobile telephony, Internet and cable television services, calculated by dividing total revenue (including revenue earned from cable and Internet subscription fees, mobile telephony subscription fees, cable premium services, pay-per-view fees and additional outlets but excluding mainly handset, out collect (wholesale) roaming, cell site rental and activation fee revenue) by weighted-average number of subscribers of each service during the relevant measurement period.

ASPO (Aislamiento Social Preventivo y Obligatorio): the mandatory and preventive social isolation measure imposed by the Argentine government.

Auction Terms and Conditions: Terms and Conditions approved by SC Resolution No. 38/14 for the awarding of frequency bands.

AWS: self-service portal, jointly implementing the FinOps practice for better management of resources.

Backbone: Main connection network (mainly by fiber optics) that connect local areas.

Basic Telephone Services or BTS: The supply of fixed telecommunications links that form part of the public telephone network, or are connected to such network, and the provision of local and long-distance telephone service (domestic and international).

BCBA (Bolsa de Comercio de Buenos Aires): The Buenos Aires Stock Exchange is a qualified entity according to Section 32 of Law No. 26,831, which acts by delegation of BYMA (Bolsas y Mercados Argentinos).

BCRA (Banco Central de la República Argentina): The Central Bank of Argentina.

Broadband: Services characterized by a transmission speed of 2 Mbps or more. These services include interactive services such as video telephone/video conferencing (both point-to-point and multipoint); video monitoring; interconnection of local networks; file transfer; high-speed fax; e-mail for moving images or mixed documents; Broadband videotext; video on demand and retrieval of sound programs or fixed and moving images.

BYMA (Bolsas y Mercados Argentinos S.A.): The Buenos Aires stock exchange.

Cablevisión: Cablevisión S.A., together with its consolidated subsidiaries, dissolved without liquidation as a result of the Merger.

Carrier: Company that makes available the physical telecommunication network.

Caja de Valores S.A: Argentine depository that custodies both public and private trading securities.

CDMA (Code Division Multiple Accesses): A digital wireless technology used in radio communication for transmission between a mobile handset and a radio base station. It enables the simultaneous transmission and reception of several messages, each of which has a coded identity to distinguish it from the other messages.

Cell: Geographical portion of the territory covered by a base transceiver station.

Cellular: A technique used in mobile radio technology to use the same spectrum of frequencies in one network multiple times. Low power radio transmitters are used to cover a “Cell” (i.e., a limited area) so that the frequencies in use can be reused without interference for other parts of the network.

Channel: The portion of a communications system that connects a source to one or more destinations. Also called circuit, line, link or path.

GLOSSARY OF TERMS TELECOM ARGENTINA S.A.

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Churn: The termination of a mobile telephony, cable television or Internet services customer’s account. The churn rate is determined by calculating the total number of disconnected customers of each of our mobile telephony, cable television and Internet services over a given period as a percentage of the initial number of customers for such services as of the beginning of the applicable measurement period. Because most of our mobile telephony services are provided under the Personal brand, historical average monthly churn rates for mobile telephony services customers, included in this Annual Report for comparative purposes, reflect Telecom’s operations prior to the consummation of the Merger.

CNV (Comisión Nacional de Valores): The Argentine National Securities Commission.

CONATEL: National Communications Commission of Paraguay.

COSO: Committee of Sponsoring Organizations of the Treadway Commission.

CPI: Consumer Price Index.

Customer / Subscriber / Access: a client of any of the services we provide. A single subscriber may contract for multiple services, and we believe that it is more useful to count the number of accesses a subscriber has contracted for, than to merely count the number of our subscribers. For example, a subscriber that has fixed line telephony service and broadband service is counted as two subscribers rather than as one subscriber.

CVH: Cablevisión Holding S.A.

D-AMPS (Digital-Advanced Mobile Phone Service): It is a digital version of AMPS (Advanced Mobile Phone Service), the original Analog standard for mobile telephone service in the United States.

DFI: Derivative financial instrument

Digital: A mode of representing a physical variable such as speech using digits 0 and 1 only. The digits are transmitted in binary form as a series of pulses. Digital networks are rapidly replacing the older Analog ones. Digital networks allow for higher capacity and higher flexibility through the use of computer-related technology for the transmission and manipulation of telephone calls. Digital systems offer lower noise interference and can incorporate encryption as a protection from external interference.

DWDM (Dense Wavelength Division Multiplexing): Technology for multiplying and transmitting different wavelengths along a single optical fiber contemporaneously.

ENACOM (Ente Nacional de Comunicaciones) or the Regulatory Authority: Argentine Communications Body within the scope of the Ministerio de Modernización, acting as regulatory authority as of the date of this Annual Report. The ENACOM absorbed the functions of the Autoridad Federal de Tecnologías de la Información y de las Comunicaciones (“AFTIC”).

ENTel (Empresa Nacional de Telecomunicaciones): National Telecommunications Company which operated the telecommunications system in Argentina prior to the Transfer Date.

Fiber Optic: Thin glass, silica or plastic wires, building the infrastructure base for data transmission. A Fiber Optic cable contains several individual fibers, and each of them is capable of driving a signal (light impulse) at unlimited bandwidth. Fiber Optics are usually employed for long-distance communication: it can transfer “heavy” data loads, and the signal reaches the recipient, protected from possible disturbances along the way. The driving capacity of Fiber Optics is higher than the traditional copper cable ones.

Fintech: Fintech Telecom LLC.

Fixed assets: Includes PP&E, Intangible assets, Goodwill and Rights of use assets.

GLOSSARY OF TERMS TELECOM ARGENTINA S.A.

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FTTC (Fiber to the Curb or Fiber to the Cabinet): In the case of FTTC the fiber connection reaches the equipment (distribution cabinet) located on the pavement, from where copper connections are run to the customer.

FTTH (Fiber to the Home): In the case of FTTH the fiber connection terminates inside the customer premises.

GCL: General Corporations Law.

GDP: Gross Domestic Product.

GPON: Gigabit-capable Passive Optical Network. A flexible optical fiber access network capable of supporting the bandwidth requirements of business and residential services. GPON systems are characterized, in general, by an optical line termination (“OLT”) system and an optical network unit (ONU) or optical network termination (“ONT”) with a passive optical distribution network interconnecting them. There is, in general, a one-to-many relationship between the OLT and the ONU/ONTs, respectively.

GPRS (General Packet Radio Service): An enhanced second-generation mobile technology used to transmit data over mobile networks. GPRS transmits and receives packets of data in bursts instead of using continuous open radio channels, and it is used to add faster data transmission speed to GSM networks. GPRS is packet-based rather than circuit-based technology.

GSM (Global System for Mobile Communications): A standard for digital mobile technology used worldwide, which works on 900 MHz and 1,800 MHz band.

HFC (Hybrid Fiber-Coaxial): Network that incorporates both optical fiber and coaxial cable to create a broadband network.

IASB: International Accounting Standards Board.

ICT (Information and Communication Technology): Broad area concerned with information technology, telecommunications networking and services and other aspects of managing and processing information, especially in large organizations.

ICT services (Information and Communication Technology services): Services to transport and distribute signals or data, such as voice, text, video and images, provided or requested by third-party users, through telecommunications networks.

IFC: International Finance Corporation.

IFRS: International Financial Reporting Standards as issued by the International Accounting Standards Board.

IGJ (Inspección General de Justicia): General Board of Corporations.

IMF: International Monetary Fund.

INDEC (Instituto Nacional de Estadísticas y Censos): The Argentine National Statistics and Census Institute.

IoT: Internet of Things.

IP (Internet Protocol): A set of communications protocols for exchanging data over the Internet.

ISP: Internet Service Providers.

IRU: Indefeasible Rights of Use.

IT: Information Technology.

LAD (Ley Argentina Digital): Law No. 27,078, Argentina’s Digital Law.

GLOSSARY OF TERMS TELECOM ARGENTINA S.A.

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Law No. 26,831 (Ley de Mercado de Capitales): Argentine Capital Markets Law.

List of Conditions: The Privatization Regulations, including the Pliego de Bases y Condiciones, was approved by Decree No. 62/90, as amended. Pursuant to the List of Conditions, Telecom Argentina was required to comply with rate regulations and meet certain minimum annual standards regarding the expansion of its telephone system and improvements in the quality of its service to maintain and extend the exclusivity of its non-expiring license to provide fixed-line public telecommunications services and Basic Telephone Services in the Northern Region of Argentina. After the market was opened to competition, the outstanding obligations that are in force were the rate regulations and those related to the quality of service; the obligations related to the expansion of the network are no longer in force.

Merger: Merger between Telecom Argentina and Cablevisión, effective as of January 1, 2018.

M2M: Machine to Machine, information exchange between two remote machines.

MBOU: Mb per user per month.

MMS (Mobile Multimedia Services): Represent an evolution of the SMS and the Enhanced Messaging Service (“EMS”) using various mono-medial elements (text, design, photos, video-clips and audio), which are synchronized and combined allowing them to be packed together and sent to GSM-GPRS platforms.

Mobile service: A mobile telephone service provided by means of a network of interconnected low-powered base stations, each of which covers one small geographic cell within the total cellular system service area.

Modem: Modulator/Demodulator. A device that modulates digital data to allow their transmission on Analog channels, generally consisting of telephone lines.

Multimedia: A service involving two or more communications media (e.g., voice, video, text, etc.) and hybrid products created through their interaction.

NDF (Non Deliverable Forward) Agreement: A generic term for a set of derivatives that covers national currency transactions including foreign exchange forward swaps, cross currency swaps and coupon swaps in nonconvertible or highly restricted currencies. The common characteristics of these contracts are that they involve no exchange of principal, are fixed at a predetermined price and are typically settled in U.S. dollars (or sometimes in Euros) at the prevailing spot exchange rate taken from an agreed source, time, and future date.

Network: An interconnected collection of elements. In a telephone network, these consist of switches connected to each other and to customer equipment. The transmission equipment may be based on fiber optic or metallic cable or point-to-point radio connectors.

Node: Topological network junction, commonly a switching center or station.

Nortel: Nortel Inversora S.A., the direct parent company of Telecom Argentina S.A. until November 30, 2017, when it was absorbed by Telecom Argentina pursuant to the Reorganization.

Northern Region: the Argentine government’s privatization program as set forth in the State Reform Law approved in August 1989 and subsequent decrees, the “Privatization Regulations” provided for the division of the Argentine telecommunications network operated by ENTel into two regions, the northern region (the “Northern Region”) and the southern region (the “Southern Region”) of Argentina. Additionally, these two regions are set forth in Decree No. 1,461/93, which ratified the Resolution No. 575/93 which approved the list of conditions for the public offer for the provision of mobile telecommunication services.

OTT (Over the Top): Over the Top applications or services are those services that bypass traditional network distribution approaches and run over, or on top of, internet networks. OTT refers, in general, to content from a third-party that is delivered to an end-user over the internet that is not provided directly by end-user Internet Service Provider.

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Packs: Packages integrated by SMS and minutes that can be purchased or added to those plans that recharge credit.

PBU (Prestación Básica Universal Obligatoria): Compulsory universal telecommunication service established by Decree No. 690/20 and regulated by ENACOM Resolution No. 1,467/20.

PCS (Personal Communications Service): A mobile communications service with systems that operate in a manner similar to cellular systems.

PEN (Poder Ejecutivo Nacional): The executive branch of the Argentine government.

Penetration: The measurement of the take-up of services. As of any date, the penetration is calculated by dividing the number of subscribers by the population to which the service is available and expressed as a percentage.

Personal: Telecom Personal S.A. Until November 30, 2017, Telecom Argentina owned 100% of Personal. Commencing December 1, 2017, pursuant to the Reorganization, mobile services provided by Personal have been provided by Telecom Argentina.

Personal Envíos: Personal Envíos S.A.

Platform: The total input, including hardware, software, operating equipment and procedures, for producing (production platform) or managing (Management platform) a particular service (service platform).

PP&E: Property, plant and equipment.

Privatization Regulations: The Argentine government’s privatization program as set forth in the State Reform Law approved in August 1989 and subsequent decrees.

Pulse: Unit on which the rate structure of the regulated fixed line services is based.

Quadruple play: Means the integration of fixed and mobile telecommunication services as well as pay television and Internet services.

RECPAM (Resultado por exposición a los cambios en el poder adquisitivo de la moneda): Restatement Adjustment Gain (Loss).

Regulatory Bodies: Collectively or individually, the ENACOM, the AFTIC, the SC and the Comisión Nacional de Comunicaciones (“CNC”).

Reorganization: Corporate reorganization pursuant to which Telecom Argentina absorbed Sofora, Nortel and Telecom Personal.

Roaming: A function that enables mobile subscribers to use the service on networks of operators other than the one with which they signed their initial contract. The roaming service is active when a mobile device is used in a foreign country (included in the GSM network).

Satellite: Satellites are used, among other things, for links with countries that cannot be reached by cable to provide an alternative to cable and to form closed user networks.

SBA: Stand-By Arrangement between Argentina and the IMF, approved by the IMF’s Executive Board on June 20, 2018.

SC (Secretaría de Comunicaciones): The Argentine Secretary of Communications, which was replaced by the AFTIC and subsequently by the ENACOM.

SCMA (Servicio de Comunicaciones Móviles Avanzadas): Mobile Advanced Communications Service.

SEC: The Securities and Exchange Commission of the United States of America.

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Service Provider: The party that provides end users and content providers with a range of services, including a proprietary, exclusive or third-party service center.

SMS (Short Message Service): Short text messages that can be received and sent through GSM-network connected mobile phones. The maximum text length is 160 alpha-numerical characters.

Sofora: Sofora Telecomunicaciones S.A., the indirect parent company of Telecom Argentina S.A. through its participation in Nortel until November 30, 2017, when it was absorbed by Telecom Argentina pursuant to the Reorganization.

Southern Region: See “Northern Region”.

SRMC (Servicios de Radiocomunicaciones Móviles Celular): Cellular Mobile Radiocommunications Service.

STM (Servicio Telefónico Móvil): Mobile Telephone Service.

TDMA (Time Division Multiple Accesses): A technology for digital transmission of radio signals between, for example, a mobile handset and a radio base station. TDMA breaks signals into sequential pieces of defined length, places each piece into an information conduit at specific intervals and then reconstructs the pieces at the end of the conduit.

Telecom Argentina USA: Telecom Argentina USA, Inc., a corporation organized under the laws of the State of Delaware.

Telefónica: Telefónica de Argentina S.A.

Telintar: Telecomunicaciones Internacionales de Argentina Telintar S.A.

Terms and Conditions: See “Auction Terms and Conditions”.

TLRD (Terminación Llamada Red Destino): Termination charges from third parties’ mobile networks.

TMF Administration Trust / TMF Trust Company: Administration Trust – Telecom Argentina’s refinancing plan agreed with TMF Trust Co.

Transfer Date: November 8, 1990, the date on which Telecom Argentina commenced operations upon the transfer from the Argentine government of the telecommunications system in the Northern Region of Argentina that was previously owned and operated by ENTel.

Tuves Paraguay: Tuves Paraguay S.A.

UMTS (Universal Mobile Telecommunications System): Third-generation mobile communication standard.

Universal Service: The availability of Basic Telephone Service, or access to the public telephone network via different alternatives, at an affordable price to all persons within a country or specified area.

URSEC (Unidad Reguladora de Servicios de Comunicaciones): Uruguayan Regulatory Authority.

UVA (Unidad de Valor Adquistivo): Purchasing Value Unit.

Value Added Services (VAS): Services that provide a higher level of functionality than the basic transmission services offered by a telecommunications network such as video streaming, “Personal Video,” “Nube Personal��� (Cloud services), M2M (Machine to Machine communication), social networks, “Personal Messenger,” content and entertainment (SMS subscriptions and content, games, music, etc.), MMS and voice mail.

VLG Argentina: VLG S.A.U., an Argentine corporation that is a shareholder of Telecom Argentina and controlled by CVH. (formerly known as VLG Argentina, LLC).

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PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.    KEY INFORMATION

Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

Risk Factors

This section is intended to be a summary of more detailed discussions contained elsewhere in this Annual Report. The risks described below are not the only ones that we face. Additional risks that we do not presently consider material, or of which we are not currently aware, may also affect us. Our business, results of operations, financial condition and cash flows could be materially and adversely affected if any of these risks materialize and, as a result, the market price of our shares and our ADSs could decline. You should carefully consider these risks with respect to an investment in Telecom Argentina. This section is divided in two sub-sections: the “Risk Factors Summary”, which provides a brief summary of our Risk Factors and “Detailed Risk Factors”, providing detailed information in relation to each Risk Factor identified.

✓ Risk Factors Summary

The following summarizes the main risks to which we are subject. You should carefully consider all of the information discussed below in “Item 3. Key Information—Detailed Risk Factors” in this annual report for a comprehensive description of these and other risks.

Risks Relating to Argentina

● Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends.

● Economic and political developments in Argentina, and future policies of the Argentine government may affect the economy as well as the operations of the telecommunications industry, including Telecom Argentina.

● Inflation could accelerate, causing adverse effects on the economy and negatively impacting Telecom’s margins and/or ratios.

● The Argentine government may exercise greater intervention in private sector companies, including Telecom Argentina.

● Although Argentina’s economy grew during 2021, it has experienced contractions in 2020, 2019 and 2018 and may contract in the future due to international and domestic conditions which may adversely affect our operations.

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● The coronavirus and the measures taken or to be implemented by the Argentine government in response to the coronavirus have had and could continue to have a significant adverse effect on our business operations.

● Argentina’s ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth.

● The Argentine banking system may be subject to instability which may affect our operations.

● We are subject to Argentine and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business, financial condition and results of operations.

Risks Relating to Telecom and its operations

● We may become subject to burdensome regulations, ordinances and laws affecting the services we offer which could adversely affect our operations.

● We face substantial and increasing competition in the Argentine fixed and mobile telephony, cable television and Internet businesses.

● Our revenues may vary depending  upon the condition of the Argentine economy.

● The regulation of rates may adversely affect Telecom Argentina’s revenues.

● Technological advances and replacement of our equipment may require us to make significant expenditures to maintain and improve the competitiveness of the services we offer.

● The media industry is a dynamic and evolving industry, and if it does not develop and expand as we currently expect, our results and operations relating to our cable television and Internet businesses may suffer.

● We may not be able to renew programming contracts on favorable terms.

● We may not be able to renew some leases of the facilities for the installation of our fixed and mobile telephony, cable television and Internet systems.

● Our revenues may be adversely affected by an increase in churn rates, with respect to mobile telephony, cable television and Internet services, or reductions in fixed telephony lines in service, with respect to fixed telephony services.

● Our revenues relating to our cable television services are subject to uncertainty due to, and may be adversely affected by, the formula set forth in Resolution No. 50/10 to estimate monthly fees paid by cable television subscribers.

● Actual or perceived health risks or other problems relating to mobile handsets or transmission masts could lead to litigation or decreased mobile communications usage.

● Our operations and financial condition could be affected by future union negotiations, Argentine labor regulations and governmental measures requiring private companies to increase salaries or otherwise provide workers with additional benefits.

● We are or may be involved in legal and regulatory proceedings that could result in unfavorable decisions and financial penalties for us.

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● The enforcement of the Law for the Promotion of Registered Labor and Prevention of Labor Fraud may have a material adverse effect on us.

● A cyberattack, could adversely affect our business, balance sheet, results of operations and cash flow.

● Environmental risks, climate change legislation or regulations restricting emissions of greenhouse gasses (“GHGs”) and legal frameworks promoting an increase in the participation of energies from renewable sources could significantly impact our business and result in increased operating costs.

● We and/or our administrators are subject to environmental and safety regulations whose non-compliance could result in increased costs and/or penalties for our administrators.

● Operational risks could adversely affect our reputation and our profitability.

● Any failure by a strategic supplier to comply with its legal and contractual obligations could adversely affect our operations and any action or restriction by a foreign government against a strategic supplier could adversely affect our reputation.

● Restrictive covenants in Telecom’s outstanding indebtedness may restrict its ability to pursue its business strategies.

● We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined or fluctuations in interest rates.

● We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their current terms, which would have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to Telecom Argentina’s Shares and ADSs

● The New York Stock Exchange (“NYSE”) and/or the Buenos Aires Stock Exchange (by delegated authority of BYMA) may suspend trading and/or delist Telecom’s ADSs and Class B common shares, respectively, upon occurrence of certain events relating to Telecom’s financial situation.

● Under Argentine corporate law, shareholder rights may be fewer or less well defined than in other jurisdictions.

● Changes in Argentine tax laws may adversely affect the tax treatment of our Shares and/or the ADSs.

● Our shareholders may be subject to liability under Argentine law for certain votes of their securities.

● The price of our Class B Shares and the ADSs may fluctuate substantially, and your investment may decline in value.

● Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of the Class B Shares underlying the ADSs.

● Trading of Telecom Argentina’s Class B Shares in the Argentine securities markets is limited and could experience further illiquidity and price volatility.

● Holders of ADSs may be adversely affected by currency devaluations and foreign exchange fluctuations.

● The relative volatility and illiquidity of the Argentine securities markets may substantially limit your ability to sell the Class B Shares underlying the ADSs on the BYMA at the price and time desired by the shareholder.

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● We are traded on more than one market and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets.

● As a foreign private issuer, we will not be subject to U.S. proxy rules and will be exempt from filing certain reports under the Securities Exchange Act of 1934.

● If we do not file or maintain a registration statement and no exemption from the Securities Act of 1933 (“Securities Act”) registration is available, U.S. holders of ADSs may be unable to exercise preemptive rights granted to our holders of Class B Shares underlying ADSs.

● Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE, which may limit the protections afforded to investors.

● We are organized under the laws of Argentina and holders of the ADSs may find it difficult to enforce civil liability claims against us, our directors, officers and certain experts.

● Cablevisión Holding S.A. (“CVH”), and through CVH, GC Dominio S.A. (“GC Dominio”), have the ability to determine the outcome of any shareholder decision relating to significant matters affecting us.

● The existence and outcome of any public tender offer for our Class B Shares and/or ADSs could affect the price of our Class B shares and ADSs.

✓ Detailed Risk Factors

Risks Relating to Argentina

Overview

A substantial majority of our property, operations and customers are located in Argentina, and a portion of our assets and liabilities are denominated in foreign currencies. Accordingly, our financial condition, results of operations and cash flows depend to a significant extent on economic and political conditions prevailing in Argentina and on the exchange rates between the Argentine Peso and foreign currencies. In the recent past, Argentina has experienced severe recessions, political crises, periods of high inflation and significant currency devaluation. The Argentine economy has been volatile since 2011, with years of economic growth and others with recession. For example, Argentina’s economy grew in 2017 and 2021, but contracted in 2018, 2019 and 2020. Several factors have impacted negatively the Argentine economy in the recent past, and may continue to impact it in the future, including among others, inflation rates, exchange rates, commodity prices, level of BCRA reserves, public debt, tax pressures, trade and fiscal balances, government policy, the international context and further developments of the COVID-19 pandemic.

Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends.

Since we generate a substantial portion of our revenues in Argentine Pesos (functional currency of Telecom), any devaluation may negatively affect the U.S. dollar value of our earnings while increasing, in Peso terms, our expenses and capital expenditures denominated in foreign currency. The Argentine Peso has been subject to significant devaluation against the U.S. dollar in the past and may be subject to fluctuations in the future. The value of the peso compared to other currencies is dependent, among other factors, on the level of international reserves maintained by the BCRA, which have also shown significant fluctuations in recent years. The Argentine macroeconomic environment, in which we operate, was affected by the continued devaluation of the peso, which in turn had and could continue to have a direct impact on our financial and economic position.

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The value of the peso has fluctuated significantly in the past. In 2021, the Argentine Peso continued to depreciate against the U.S. dollar and other major foreign currencies. According to Communication “A” 3500 of the BCRA, the peso/dollar exchange rate stood at Ps. 102.75 per US$ 1.00 as of December 31, 2021, evidencing a devaluation of the peso of approximately 22.1% from its value of 84.15 Pesos per dollar at December 31, 2020 (compared to 40.5%, 58.9% and 102.2% in the years ended December 31, 2020, 2019 and 2018, respectively). As a result of the Argentine Peso’s increased volatility, the Argentine government and the BCRA implemented several measures to stabilize its value, including, among others, stronger exchange regulations, an increase in short term interest rates and the sale of foreign currency reserves made by the BCRA. The continued devaluation of the Argentine Peso during the past years has had and continues to have a negative impact on the payment of foreign currency denominated debts by local private sector debtors to unrelated foreign entities, and has also led to an increase in inflation, which in turn has a direct impact on real wages. The devaluation has also negatively impacted businesses whose success is dependent on domestic market demand, and adversely affected the Argentine government’s ability to honor its foreign debt commitments. Any further depreciation of the Argentine Peso or our inability to acquire foreign currency could have a material adverse effect on our financial condition and results of operations. We cannot predict whether and to what extent the value of the peso could depreciate against the U.S. dollar and the way in which any such fluctuations could affect our business. Furthermore, no assurance can be given that, in the future, no additional currency or foreign exchange restrictions or controls will be imposed. Existing and future measures may negatively affect Argentina’s international competitiveness, discouraging foreign investments and lending by foreign investors or increasing foreign capital outflow which could have an adverse effect on economic activity in Argentina, and which in turn could adversely affect our business and results of operations. We cannot predict how these conditions will affect the consumption of services provided by Telecom or our ability to meet our liabilities denominated in currencies other than the Argentine Peso. Any restrictions on transferring funds abroad imposed by the government could undermine our ability to pay dividends on our ADSs or make payments (of principal or interest) under our outstanding indebtedness in U.S. dollars, as well as to comply with any other obligation denominated in foreign currency. See “Item 10—Additional Information—Foreign Investment and Exchange Controls in Argentina”.

A depreciation of the Argentine Peso against major foreign currencies may also have an adverse impact on our capital expenditure program and increase the Argentine Peso amount of our trade liabilities and financial debt denominated in foreign currencies. As of December 31, 2021, approximately P$233,985 million of our liabilities were denominated in foreign currencies. Telecom seeks to manage the risk of devaluation of the Argentine Peso, by entering from time to time into certain DFI agreements and futures contracts in order to hedge some of its exposure to foreign currency fluctuations. However, Telecom remains highly exposed to risks associated with the fluctuation of the Argentine Peso.

In September 2019, in light of the economic instability and the significant devaluation that followed the primary elections as described below, the Argentine government and the BCRA adopted a series of measures reinstating foreign exchange controls, which among other things, significantly curtailed access to the official foreign exchange market (the “FX Market”) by individuals and entities. Higher restrictions to access the official FX markets were imposed during 2020, with a view to reducing the loss of international reserves generated by a greater demand of US dollars by individuals and companies. Pursuant to Communication “A” 7106 (as amended and supplemented from time to time), the BCRA established certain requirements to access the local exchange market for purposes of repayment of cross-border financial debts, in particular, for the payment of principal outstanding amounts in loans and securities having amortization payments scheduled between October 15, 2020 and December 31, 2021 for principal amounts exceeding US$2,000,000 by the non-financial private sector and financial entities. Particularly, the payment of principal amounts pertaining to loans and securities subject to the regulation should be part of a refinancing plan that must be previously filed with the BCRA, which must provide that (i) only 40% of the principal amount owed and payable shall be paid through the local foreign exchange market on or prior to March 31, 2021; and (ii) the remaining 60% must be refinanced so the average life of the debt is increased for a minimum of two years. Pursuant to Communication “A” 7416, the BCRA requirements set forth by Communication “A” 7106 are also applicable to amortization payments of principal outstanding amounts in loans and securities scheduled between January 1, 2022 and June 30, 2022. It is not possible to guarantee that the period covered by Communication “A” 7416 will not be extended or reinstated in the future by the BCRA or that other regulations with similar effects will be issued that would require the Company to refinance its obligations, which in turn could have a negative impact on the Company, and in particular, in the Company's ability to meet its debt obligations. See “—Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of the Class B Shares underlying the ADSs and “Item 10—Foreign Investment and Exchange Controls in Argentina—External financial indebtedness”

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Economic and political developments in Argentina, and future policies of the Argentine government may affect the economy as well as the operations of the telecommunications industry, including Telecom Argentina.

The Argentine government has historically exercised significant influence over the economy, and telecommunications companies in particular have operated in a highly regulated environment. The Argentine government may promulgate numerous, far-reaching regulations affecting the economy and telecommunications companies in particular.

In October 2019, Alberto Fernández was elected president of Argentina and took office on December 10, 2019. Fernández announced and implemented a wide range of economic and policy reforms. In March 2020, in response to the COVID-19 outbreak, the Argentine government enforced the ASPO, which caused significant disruption to social, operative, economic and market activities. The Argentine government also introduced emergency measures in the telecommunications sector in order to alleviate the financial burden of the pandemic on individuals and companies. Decree No. 311/20 issued by PEN on March 24, 2020 determined that services related to fixed and mobile telephony, Internet and cable TV would not be interrupted for defaults in payment by a certain group of customers defined therein (See “—The coronavirus and the measures taken or to be implemented by the Argentine government in response to the coronavirus have had and could continue to have a significant adverse effect on our business operations”). In August 2020, Decree No. 690/20 declared ICT services as an essential public service and imposed tariff regulations on such services. Decree No. 690/20 has been subject to several legal proceedings challenging its constitutionality and, as of the date of this Annual Report, the federal judiciary has suspended its effects until April 21, 2022. For further information about Decree No. 690/20, its related regulation and the related legal proceedings, see “Item 4 —Regulatory Authorities and Framework— Amendment to Law No. 27,078 – Argentine Digital Law” and “Item 3—Risks Relating to Telecom and its operations— The regulation of rates may adversely affect Telecom Argentina’s revenues”.

On March 13, 2020, the Minister of Economy addressed a letter to the Paris Club members expressing Argentina’s decision to postpone until May 5, 2021 the US$2.1 billion payment originally due on May 5, 2020, in accordance with the terms of the settlement agreement the Republic had reached with the Paris Club members on May 29, 2014 (the “Paris Club 2014 Settlement Agreement”). In addition, on April 7, 2020, the Minister of Economy sent the Paris Club members a proposal to modify the existing terms of the Paris Club 2014 Settlement Agreement, seeking mainly an extension of the maturity dates and a significant reduction in the interest rate.

On June 22, 2021, the Minister of Economy announced that the Republic had obtained a “time bridge” within the framework of the Paris Club negotiations, consequently avoiding default. The understanding provides that the Republic will have until March 31, 2022 to reach a restructuring agreement with the Paris Club members, while it continues with its efforts to reach an agreement with the IMF for the refinancing of the debt incurred under the Stand-By Arrangement ("SBA") announced in June 2018. The Minister of Economy indicated that during the eight-month time bridge, instead of having to repay approximately US$2.4 billion as originally scheduled, the Republic is expected to make payments totaling approximately US$430 million.

On August 18, 2020, Argentina offered holders of its foreign currency bonds governed by Argentine law to exchange such bonds for new bonds, on terms that were equitable to the terms of the invitation made to holders of foreign law-governed bonds. On September 18, 2020, Argentina announced that holders representing 99.4% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the local exchange offer had participated. As a result of the exchange offer, the average interest rate paid by Argentina’s foreign currency bonds governed by Argentine law was lowered to 2.4%, compared to an average interest rate of 7.6% prior to the exchange. In addition, the exchange offer extended the average maturity of such bonds.

During 2021, Argentina sought to preserve the normal functioning of the local capital market for debt denominated in Pesos, which it considers a key factor for the development of the domestic capital market. In addition, the Treasury expanded its menu of financing instruments to obtain the funds needed to cover its 2021 financial needs.

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As of the date of this Annual Report, the Argentine government is under negotiations with the IMF in order to renegotiate the principal maturities of the US$ 44.1 billion disbursed between 2018 and 2019 under a SBA, originally planned for the years 2021, 2022 and 2023. On January 28, 2022, the IMF and the Argentine authorities reached an understanding on key policies as part of their ongoing discussions on an IMF-supported program. On March 4, 2022, the Argentine Government reached a staff-level agreement with the International Monetary Fund and a bill was sent to the Argentine Congress. On March 11, 2022, the lower house of the Argentine Congress passed and sent to the Senate the bill that supports the agreement between Argentina and the International Monetary Fund. On March 17, 2022, the Senate approved the agreement. We cannot assure whether the Argentine government will be successful in future negotiations with that agency, which could affect its ability to implement reforms and public policies and boost economic growth, nor the impact of the result that renegotiation will have in Argentina’s ability to access international capital markets (and indirectly in our ability to access those markets). Moreover, the long-term impact of these measures and any future measures taken by the government on the Argentine economy, as a whole and in the telecommunication sector in particular, remains uncertain. It is possible that such reforms could be disruptive to the economy and adversely affect the Argentine economy and the telecommunications industry, and consequently, our business, results of operations and financial condition. We are also unable to predict the measures that the Argentine government may adopt in the future, and how they will impact on the Argentine economy and our results of operations and financial condition.

In the event of any economic, social or political crisis, companies operating in Argentina may face the risk of strikes, expropriation, nationalization, mandatory amendment of existing contracts, and changes in taxation policies including tax increases and retroactive tax claims. In addition, Argentine courts have sanctioned modifications on rules related to labor matters, requiring companies to assume greater responsibility for the assumption of costs and risks associated with sub-contracted labor and the calculation of salaries, severance payments and social security contributions. Since we operate in a context in which the governing law and applicable regulations change frequently, also as a result of changes in government administrations, it is difficult to predict if and how our activities will be affected by such changes.

We cannot assure you that future economic, regulatory, social and political developments in Argentina will not adversely affect our business, financial condition or results of operations, or cause the decrease of the market value of our securities.

Inflation could accelerate, causing adverse effects on the economy and negatively impacting Telecom’s margins and/or ratios.

Argentina has experienced repeatedly, including in recent years, periods of high inflation. Inflation has increased since 2005 and has remained relatively high since then. There can be no assurance that inflation rates will not be higher in the future. Furthermore, the INDEC experienced in the past periods of political interventionism that raised serious concerns about the reliability of the data published by that agency. Future political intervention in the INDEC could jeopardize the agency’s autonomy and therefore affect the reliability of the statistics it publishes.

The National CPI variation was 50.9% in 2021 and 36.1% in 2020. Efforts made by the Argentine government to contain and reduce inflation have not achieved the desired results and inflation remains a significant problem for the Argentine economy. If the value of the Argentine Peso cannot be stabilized through fiscal and monetary policies, an increase in inflation rates could be expected. For additional information, see Note 1.e) to our Consolidated Financial Statements.

Because the majority of our revenues are denominated in Pesos, any further increase in the rate of inflation not accompanied by a parallel increase in our prices would decrease our revenues in real terms and adversely affect our results of operations (See also “—Risks Relating to Telecom and its operations—The regulation of rates may adversely affect Telecom Argentina’s revenues”). Further, higher inflation rates generally lead to a reduction in the purchasing power, thus increasing the likelihood of a lower level of demand for our fixed and mobile telecommunications, cable television and Internet services in Argentina.

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The Argentine government may exercise greater intervention in private sector companies, including Telecom Argentina.

In November 2008, Argentina nationalized its private pension and retirement system, which had been previously administered by the AFJPs, and appointed ANSES as its administrator. Argentina’s nationalization of its pension and retirement system constituted a significant change in the Argentine government’s approach towards Argentina’s main publicly traded companies. A significant portion of the public float of certain Argentine publicly traded companies is currently owned by the Argentine government through ANSES-FGS, including Telecom. See “Item 7—Major Shareholders and Related Party Transactions”. The Argentine government exercised in the past, and may exercise in the future, influence over corporate governance decisions of companies in which it owns shares by combining its ability to exercise its shareholder voting rights to designate board and supervisory committee members with its ability to dictate tax and regulatory matters. Additionally, since the AFJPs were significant institutional investors and active market traders in Argentina, the nationalization of the private pension and retirement system affected the access to financing in capital markets for publicly traded companies as well as the liquidity of their securities within the market.

The Argentine government exercised in the past, and may exercise in the future, decisions to intervene private companies in financial distress. We cannot predict whether the current administration or future administrations will take similar or further measures, including nationalization, expropriation and/or increased Argentine governmental intervention in companies. Government intervention in the industries in which we operate could create uncertainties for investors in public companies in Argentina, including Telecom Argentina, as well as have a material adverse effect on our business, financial condition and results of operations. See “—Economic and political developments in Argentina, and future policies of the Argentine government may affect the economy as well as the operations of the telecommunications industry, including Telecom Argentina”.

Although Argentina’s economy grew during 2021, it has experienced contractions in 2020, 2019 and 2018 and may contract in the future due to international and domestic conditions which may adversely affect our operations

The Argentine economy has experienced significant volatility in the past few years and recent decades, characterized by periods of low or negative GDP growth, high and variable levels of inflation and currency devaluation. Argentina’s economy grew during 2021, but it has contracted during 2020, 2019 and 2018 and the country’s economy remains unstable notwithstanding the efforts by the Argentine government to address inflation and the constraints on the country’s foreign exchange reserves and related pressure on the value of the peso. Substantially all of our operations, properties and customers are located in Argentina, and, as a result, our business is, to a large extent, dependent upon economic and legal conditions prevailing in Argentina. If economic conditions in Argentina were to further deteriorate, they could have an adverse effect on our results of operations, financial condition and cash flows.

Global economic and financial crises, and the general weakness of the global economy due to the COVID-19 pandemic negatively affected emerging economies like Argentina’s economy. Global financial instability, any further economic global downturn due to COVID-19 and any future increases in the interest of the United States and other developed countries may impact the Argentine economy and prevent Argentina to be put back on track to growth or could aggravate the current recession with consequences in the trade and fiscal balances and in the unemployment rate.

Although Argentina’s economy has recovered substantially during 2021, Argentina’s economic growth was severely impacted as a consequence of the COVID-19 pandemic. It might also be negatively affected in the future by several domestic factors such as an appreciation of the real exchange rate which could affect its competitiveness, reductions and even reversion of a positive trade balance, which, combined with capital outflows could reduce the levels of consumption and investment resulting in greater exchange rate pressure. Additionally, abrupt changes in monetary and fiscal policies or foreign exchange regime could rapidly affect local economic output, while lack of appropriate levels of investment in certain economy sectors could reduce long-term growth. Access to the international financial markets could be limited. Consequently, an increase in public spending not correlated with an increase in public revenues could affect the Argentina’s fiscal results and generate uncertainties that might affect the economy’s growth level.

In addition to the severe social and market disruption at a global scale during 2020 caused by the COVID 19 outbreak, in recent years, several trading partners of Argentina (such as Brazil, Europe and China) have experienced significant slowdowns or recession periods in their economies. These slowdowns intensified during 2020. While the vast majority of economies recovered during 2021, if such slowdowns or recessions were to recur, this may impact the demand for products coming from Argentina and hence affect its economy. Additionally, there is uncertainty as to how the trade relationship between the Mercosur member States will unfold, in particular between Argentina and Brazil. We cannot predict the effect on the Argentine economy and our operations if trade disputes arise between Argentina and Brazil, or in case either country decided to exit the Mercosur.

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In addition, the global macroeconomic environment is facing challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa and over the conflicts involving Iran, Ukraine, Syria and North Korea. Moreover, political and social crises arose in several countries of Latin America during 2019, as the economy in much of the region has slowed down after almost a decade of sustained growth, among other factors. There have also been concerns on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes, and the possibility of a trade war between the United States and China. In addition, United Kingdom exited the European Union (“Brexit”) on January 31, 2020. The medium and long term implications of Brexit could adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets.

Furthermore, in February 2022, Russian troops invaded Ukraine. Although the severity and duration of the ongoing military action are highly unpredictable, the conflict in Ukraine, Russia’s prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions being levied by the United States, the European Union and other countries against Russia, with additional potential sanctions threatened and/or proposed. Russia’s military incursion and the market volatility could adversely affect the global economy and financial markets and thus could affect our business, financial condition or results of operations. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this Annual Report and may result in compliance and operational challenges for the Company.  In particular, we maintain telecommunications agreements with certain international carriers that may deliver traffic between the Company’s networks, Russia and Ukraine, including potentially certain sanctioned territories within Ukraine. Although U.S. sanctions authorize the receipt or transmission of telecommunications with such sanctioned territories, to the extent that any activities involving those international carriers are outside the scope of such authorization, or sanctions relating to Russia and Ukraine are expanded, such activity may potentially result in regulatory or enforcement actions against the Company.

If international and domestic conditions for Argentina were to worsen due to the aforementioned factors, the Argentine economy could be negatively affected as a result of lower international demand and lower prices for its products and services, higher international interest rates, lower capital inflows and higher risk aversion, which may also adversely affect our business, results of operations, financial condition and cash flows.

The coronavirus and the measures taken or to be implemented by the Argentine government in response to the coronavirus have had and could continue to have a significant adverse effect on our business operations.

In late December 2019, COVID-19, originating from Wuhan, Hubei province, was reported to the World Health Organization, with cases soon confirmed in multiple provinces in China, as well as in other countries. On March 11, 2020, the World Health Organization categorized COVID-19 as a pandemic. Several measures have been undertaken by the Argentine Government and other governments around the globe, including the use of quarantine, screenings at airports and other transports hub, travel restrictions, suspension of visas, nation-wide lockdowns, closing of public and private institutions, suspension of sport events, restrictions to museums and tourist attractions and extension of holidays, among many others. However, the virus continues to spread globally and, as of the date of this Annual Report, has affected most countries and territories around the world, including Argentina, Uruguay, Paraguay and the United States. To date, the outbreak of COVID-19 has caused significant social, operational, economic and market disruption. The long-term impact on the global economy and financial markets is still uncertain, but is expected to be significant.

On March 20, 2020 the Argentine government imposed a series of measures aimed at reducing the movement of the population, ordering the ASPO, which only allowed the movement of individuals involved in activities considered essential by the Argentine government. Since then, the Argentine government has announced and implemented several stimulus measures to limit the effects of the COVID-19 pandemic on the economy, which include, but are not limited to, the prohibition of the disconnection of electric energy, natural gas, running water, fixed telephony, mobile telephony, internet and cable television services due to non-payment; the price freezes for certain essential goods such as food, personal care, medicines and medical products; the imposition of maximum prices on goods and services acquired by the federal government to address the emergency, and the adoption of a debt regularization regime was established which will allow self-employed persons, single-taxpayers and companies to access a payment plan for tax and social security debts, and the suspension of rent increases, extension of lease contract expiration dates and suspension of evictions due to non-payment of leases until March 31, 2021 (see “Item 4 —Significant 2021 Events— Impact of Covid-19 in Argentina and in our operations.”).

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While the Argentine government has determined that the provision of fixed and mobile telephony, internet and digital services constitutes an essential service, we have implemented a home-office policy for a substantial portion of our employees in accordance with the recommendations of the authorities.

The long-term effects of the pandemic on the global economy and the Company are difficult to assess or predict. Although we have devoted considerable resources to preventative measures in order to reduce the potential impacts of the COVID-19 pandemic on our employees, business, service and operations, there can be no assurance that these measures will be effective or that the pandemic will not have an adverse effect on our business, financial situation and results of operations, which could result in a further decline in the market prices of our Class B Shares and ADSs. Due to the investments in infrastructure we made during the last years, our equipment, systems and networks have been working efficiently and met the increased use of the services we provide during the ASPO, both through fixed and mobile connectivity. However, the quality and reliability of our network could be affected in the event that the use of our networks continues to increase due to new governmental measures. In addition, the uncertain evolution of the COVID-19 pandemic might affect employees’ health and safety, generate risks for the deployment of our services (including by limiting our customer support and domiciliary service repairs and installations, among others effects resulting from government measures), result in reduced sales in certain geographic locations, affect the Company’s revenues and result in an economic contraction in the countries in which we operate, which could have an adverse effect on the demand of our products and consequently in the results of our operations.

Furthermore, Argentine Decree No. 311/2020 declared the temporary suspension on disconnection of services deemed essential for the development of daily life in cases of delay or default in payments, including fixed and mobile telephony, Internet and television subscriptions. The Decree also established that certain customers of our fixed and mobile telephony, Internet and cable television services would have reduced services in cases of delay or default in payments.

In addition, we entered into an agreement with the ENACOM, which suspended, among other things, any increases in the prices of mobile and fixed telephony, Internet and cable television services, as well as employee layoffs until August 31,2020. Finally, on August 22, 2020, under Decree No. 690/20, the Argentine Digital Law was amended to suspend any increase in prices or changes from the ICT licensees from July 31, 2020 to December 31, 2020, specifically mentioning broadcasting service subscriptions by physical and/or radio-electric link and fixed or mobile telephony services. The Decree has been ratified by Congress and is regulated by ENACOM Resolutions Nos. 1,466/20 and 1,467/20. Nevertheless, during 2021, Decree No. 690/20 has been subject to several legal proceedings challenging its constitutionality in a variety of jurisdictions. In many of those proceedings, courts have ordered its suspension. Regarding Telecom, the Federal Administrative Litigation Chamber - Chamber II ruled in favor of the company and issued a precautionary measure suspending the validity of Decree No. 690/20 until April 21,2022. For more information, see “—Risks Relating to Telecom and its operations— The regulation of rates may adversely affect Telecom Argentina’s revenues”.

Any prolonged restrictive measures put in place in order to control a new outbreak of contagious disease or other adverse public health development in any of our targeted markets may have a material and adverse effect on our business operations. Moreover, considering that some of our strategic suppliers are located in countries affected by the outbreak of COVID-19, the delivery of equipment and fixed assets that are material to us may be impacted, which would have an adverse effect on our business operations. We may also be affected by a decline in the demand of our products as a result of the economic contraction. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term. Additionally, we cannot predict how the disease will evolve (and potentially, spread) in Argentina during 2022 due to new outbreaks and new strains of the virus that have appeared practically simultaneously with the advance of the vaccination campaign, nor anticipate what additional restrictions governments of those countries or other countries may impose. To the extent COVID-19 adversely affects our business and financial results, it may also exacerbate many of the other risks described in this “Risk Factors” section.

Notwithstanding the foregoing, the outbreak of any novel strain of coronavirus and its impact on the demand of our products and the financial markets, among other factors, will be key issues to determine the duration and depth of the economic crisis in Argentina and worldwide, as well as on our strategy, financial situation and results of our operations.

For further information related to the impact of the COVID-19 pandemic on the Company, as well as to the internal or external measures we promoted during the sanitary emergency, see Note 29 of our Consolidated Financial Statements.

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Argentina’s ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth.

After Argentina’s default on certain debt payments in 2001, the government successfully restructured 92% of the debt through two debt exchange offers in 2005 and 2010. Nevertheless, holdout creditors filed numerous lawsuits against Argentina in several jurisdictions, including the United States, Italy, Germany and Japan, asserting that Argentina failed to make timely payments of interest and/or principal on their bonds, and seeking judgments for the face value of and/or accrued interest on those bonds. Judgments were issued in numerous proceedings in the United States, Germany and Japan. Although creditors with favorable judgments did not succeed, with a few minor exceptions, in enforcing on those judgments, as a result of decisions adopted by the New York courts in support of those creditors in 2014, Argentina was enjoined from making payments on its bonds issued in the 2005 and 2010 exchange offers unless it satisfied amounts due to the holders of defaulted bonds. The Argentine government took a number of steps intended to continue servicing the bonds issued in the 2005 and 2010 exchange offers, which had limited success. Holdout creditors continued to litigate and succeeded in preventing the Argentine government from regaining market access.

Between February and April 2016, the Argentine government entered into agreements in principle with certain holders of defaulted debt and put forward a proposal to other holders of defaulted debt, including those with pending claims in U.S. courts, which resulted in the settlement of substantially all remaining disputes and closure to 15 years of litigation. On April 22, 2016, Argentina issued bonds for US$16.5 billion, and applied US$9.3 billion of the proceeds to satisfy payments under the settlement agreements reached with holders of defaulted debt. Since then, substantially all of the remaining claims under defaulted bonds have been settled.

As of the date of this Annual Report, although litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions, the size of the claims involved has decreased significantly.

In addition, since 2001 foreign shareholders of some Argentine companies initiated claims for substantial amounts before the International Centre for Settlement of Investment Disputes (“ICSID”) against Argentina, pursuant to the arbitration rules of the United Nations Commission on International Trade Law. Claimants allege that certain measures of the Argentine government issued during the economic crisis of 2001 and 2002 were inconsistent with the norms or standards set forth in several bilateral investment treaties by which Argentina was bound at the time. To date, several of these disputes have been settled, and a significant number of cases are in process or have been temporarily suspended by the agreement of the parties.

Between 2016 and early 2018, Argentina regained access to the market and incurred in additional debt. However, as a result of various external and domestic factors, during the first half of 2018, access to the market became increasingly onerous. On May 8, 2018, the Macri administration announced that the Argentine government would initiate negotiations with the IMF with a view to entering into a stand-by credit facility that would give Argentina access to financing by the IMF. On June 7, 2018, the Argentine government and the IMF staff reached an understanding on the terms of the SBA for disbursements totaling approximately US$50 billion, which was approved by the IMF’s Executive Board on June 20, 2018. The SBA was intended to provide support to the Macri administration’s economic program, helping build confidence, reduce uncertainties and strengthen Argentina’s economic prospects. On June 22, 2018 the Argentine government made a first drawing of approximately US$15 billion under the SBA. Argentina has received disbursements under the SBA for US$44 billion. Notwithstanding the foregoing, the Argentine government has publicly announced that they will refrain from requesting additional disbursements under the agreement, and instead vowed to renegotiate its terms and conditions in good faith. On July 13, 2021, the Argentine government and representatives of the IMF met in Venice to continue discussions on a new program that will address the terms of the debt incurred under the existing SBA. Such discussions reflected progress on matters that are key for the Republic’s economic program, such as economic recovery based on employment generation, value-added growth and lasting macroeconomic stability. On September 22, 2021, Argentina repaid the first principal installment under the SBA of US$1.9 billion to the IMF.

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Following the execution of the SBA, in August 2018, Argentina faced an unexpected bout of volatility affecting emerging markets generally. In September 2018, the Macri administration discussed with the IMF staff further measures of support in the face of renewed financial volatility and a challenging economic environment. On October 26, 2018, in light of the adjustments to fiscal and monetary policies announced by the Argentine government and the BCRA, the IMF’s Executive Board allowed the Argentine government to draw the equivalent of US$5.7 billion, bringing total disbursements since June 2018 to approximately US$20.6 billion, approved an augmentation of the SBA increasing total assets to approximately US$57.1 billion for the duration of the program through 2021 and the front loading of the disbursements. Under the revised SBA, IMF resources for Argentina in 2018-19 increased by US$18.9 billion. IMF disbursements for the remainder of 2018 more than doubled compared to the original IMF-supported program, to a total of US$13.4 billion (in addition to the US$15 billion disbursed in June 2018). Disbursements in 2019 were also nearly doubled, to US$22.8 billion, with US$5.9 billion planned for 2020-2021.

On August 28, 2019, the Macri administration issued a decree deferring the scheduled payment date for 85% of the amounts due on short-term notes maturing in the fourth quarter of 2019, governed by Argentine law and held by institutional investors. Of the deferred amounts, 30% would be repaid 90 days after the original payment date and the remaining 70% would be repaid 180 days after the original payment date, except for payments under Lecaps due 2020 held domestically, which would be repaid entirely 90 days after the original payment date. Amounts due on short-term notes held by individual investors would be paid as originally scheduled.

Moreover, in December 2019, the Argentina government further extended by decree payments of a series of short term Argentine-law governed treasury notes denominated in U.S. dollars held by institutional investors through August 2020. Additionally, on February 11, 2020, the Argentine government decreed the extension of maturity to September 30, 2020 of a dollar-linked treasury note governed by Argentine law, which had been originally subscribed to a large extent with U.S. dollar remittances, to avoid a payment with Argentine Pesos that would have required significant sterilization efforts by the monetary authority.

On February 12, 2020, the Argentine Congress enacted Law No. 27,544 for the Sustainable Restoration of Foreign-Law Governed Public Debt which granted the Ministry of Economy the power to restructure the Argentine government’s external public debt. On March 10, 2020, Decree No. 250/20 issued by the Argentine government established the maximum nominal amount of liability management transactions and/or exchanges and/or restructurings of the Republic of Argentina’s outstanding public securities issued under foreign law as of February 12, 2020 at the nominal value of US$68,842 million, or its equivalent in other currencies. However, due to the COVID-19 pandemic, the timeline initially published by the Ministry of Economy for the restructuring of the public external debt that provided, among other steps, the launch of an exchange offer of such public securities issued under foreign law, was postponed.

On April 21, 2020, Argentina invited holders of approximately US$ 66.5 billion aggregate principal amount of its foreign currency external bonds to exchange such bonds for new bonds. The invitation contemplated the use of collective action clauses included in the terms and conditions of such bonds, whereby the decision by certain majorities would bind holders that do not tender into the exchange offer. On August 31, 2020 it announced that it had obtained bondholder consents required to exchange and or modify 99.01% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the exchange offer. The restructuring settled on September 4, 2020. As a result of the invitation, the average interest rate paid by Argentina’s foreign currency external bonds was lowered to 3.07%, with a maximum rate of 5.0%, compared to an average interest rate of 7.0% and maximum rate of 8.28% prior to the invitation. In addition, the aggregate amount outstanding of Argentina’s foreign currency external bonds was reduced by 1.9% and the average maturity of such bonds was extended.

On April 5, 2020, the Argentine government enacted Decree No. 346/20 (i) deferring the payments of principal and interest on certain of its foreign currency bonds governed by Argentine law until December 31, 2020, or until such earlier date as the Ministry of Economy may determine, considering the progress made in the process designed to restore the sustainability of Argentina’s public debt, and (ii) authorizing the Ministry of Economy to conduct liability management transactions or exchange offers, or to implement restructuring measures affecting foreign currency bonds governed by Argentine law which payments have been deferred pursuant to such decree.

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On August 18, 2020, Argentina offered holders of its foreign currency bonds governed by Argentine law to exchange such bonds for new bonds, on terms that were equitable to the terms of the invitation made to holders of foreign law-governed bonds. On September 18, 2020, Argentina announced that holders representing 99.4% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the local exchange offer had participated. As a result of the exchange offer, the average interest rate paid by Argentina’s foreign currency bonds governed by Argentine law was lowered to 2.4%, compared to an average interest rate of 7.6% prior to the exchange. In addition, the exchange offer extended the average maturity of such bonds.

As of the date of this Annual Report, the Argentine government has initiated and still carries on negotiations with the IMF in order to renegotiate the principal maturities of the US$ 44.1 billion disbursed between 2018 and 2019 under a SBA, originally planned for the years 2021, 2022 and 2023. We cannot assure whether the Argentine government will be successful in the negotiations with that agency, which could affect its ability to implement reforms and public policies and boost economic growth, nor the impact of the result that renegotiation will have in Argentina's ability to access international capital markets (and indirectly in our ability to access those markets), in the Argentine economy or in our economic and financial situation or in our capacity to extend the maturity dates of our debt or other conditions that could affect our results and operations or businesses. Lack of access to international or domestic financial markets could affect the projected capital expenditures for our operations in Argentina, which, in turn, may have an adverse effect on our financial condition or the results of our operations.

Without renewed access to the financial market the Argentine government may not have the financial resources to implement reforms and boost growth, which could have a significant adverse effect on the country’s economy and, consequently, on our activities. Likewise, Argentina’s inability to obtain credit in international markets could have a direct impact on our ability to access those markets to finance our operations and our growth, including the financing of capital investments, which would negatively affect our financial condition, results of operations and cash flows. In addition, we cannot predict the outcome of any future restructuring of Argentine sovereign debt. We have investments in Argentine sovereign bonds amounting to P$10,702 million as of December 31, 2021. Any new event of default by the Argentine government could negatively affect their valuation and repayment terms, as well as have a material adverse effect on the Argentine economy and, consequently, our business and results of operations.

The Argentine banking system may be subject to instability which may affect our operations.

In recent years, the Argentine financial system grew significantly with a marked increase in loans and private deposits, showing a recovery of credit activity. Such recovery has been severely impacted by the COVID-19 pandemic. In spite of the fact that the financial system’s deposits continue to grow in nominal terms, they are mostly short-term deposits and the sources of medium and long-term funding for financial institutions are currently limited. In 2021, nominal private deposits in Pesos increased 59.2% year-over-year (fueled by the growth of savings and current accounts with a 62.9 % increase) and nominal time deposits increased 55.9% year-over-year. During the same period, loans in foreign currency (composed mainly of corporate loans) evidenced a decrease of  25.2% at the end of 2021. In 2021, private deposits in U.S. dollars declined by 1.1%.

Financial institutions are particularly subject to significant regulation from multiple regulatory authorities, all of which may, among other things, establish limits on commissions and impose sanctions on the financial institutions. The lack of a stable regulatory framework, or changes to such regulatory framework by the government, could impose significant limitations on the activities of the financial institutions and could induce uncertainty with respect to the financial system stability.

The persistence of the current economic crisis or the instability of one or more of the larger banks, public or private, could have a material adverse effect on the prospects for economic growth and political stability in Argentina, resulting in a loss of consumer confidence, lower disposable income and fewer financing alternatives for consumers. These conditions would have a material adverse effect on us by resulting in lower usage of our services, lower sales of devices and the possibility of a higher level of uncollectible accounts or increase the credit risk of the counterparties regarding the Company investments in local financial institutions.

Exchange controls and restrictions on transfers abroad and capital inflows limit the availability of international credit.

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We are subject to Argentine and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business, financial condition and results of operations.

The United States Foreign Corrupt Practices Act of 1977, the Organization for Economic Co-Operation and Development Anti-Bribery Convention, the Argentine Anti-Money Laundering Law (Ley de Prevención del Lavado de Activos), the Argentine Corporate Criminal Liability Law (Ley de Responsabilidad Penal Empresaria) and other applicable anti-corruption laws prohibit companies and their intermediaries from offering or making improper payments (or giving anything of value) to government officials and/or persons in the private sector for the purpose of influencing them or obtaining or retaining business and require companies to keep accurate books and records and maintain appropriate internal controls. In particular, the Argentine Corporate Criminal Liability Law provides for the criminal liability of corporate entities for criminal offences against public administration and transnational bribery committed by, among others, its attorneys-in-fact, directors, managers, employees, or representatives. In this sense, a company may be held liable and subject to fines and/or suspension of its activities if such offences were committed, directly or indirectly, in its name, behalf or interest, the company obtained or may have obtained a benefit therefrom, and the offence resulted from a company’s ineffective control.

It may be possible that, in the future, there may emerge in the press allegations of instances of misbehavior on the part of former agents, current or former employees or others acting on our behalf or on the part of public officials or other third parties doing or considering business with us. We will endeavor to monitor such press reports and investigate matters that we believe warrant an investigation in keeping with the requirements of compliance programs and, if necessary, make disclosure and notify the relevant authorities. However, any adverse publicity that such allegations attract may have a negative impact on our reputation and lead to increased regulatory scrutiny of our business practices.

If we or individuals or entities that are or were related to us are found to be liable for violations of applicable anti-corruption laws (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we or other individuals or entities could face civil and criminal penalties or other sanctions, which in turn could have a material adverse impact on our reputation, business, financial condition and results of operations.

Risks Relating to Telecom and its operations

We may become subject to burdensome regulations, ordinances and laws affecting the services we offer which could adversely affect our operations.

Activities in the fixed and mobile telephony, cable television and Internet businesses are subject to risks associated with the adoption and implementation of laws and governmental regulations that reflect changing governmental policies over time. The Argentine government has historically exercised significant influence over the economy, and telecommunications companies in particular have operated in a highly regulated environment. In the past, the Argentine government promulgated numerous, far-reaching regulations affecting the economy and telecommunications companies in particular. Existing regulations could further increase penalties that may be imposed by the regulatory authorities. In addition, local municipalities in the regions where we operate have also introduced regulations and proposed various taxes and fees for the installation of infrastructure, equipment and expansion of fixed line and mobile networks. For example, municipalities usually restrict areas where antennas may be deployed, negatively impacting our mobile service coverage, which in turn affects the quality of our services. Municipal and provincial tax authorities have also brought an increasing number of claims against us, which we are replying. If changes to existing laws and regulations lead to negative consequences for the Company, our business, financial condition, results of operations and cash flows may be adversely affected.

After the deregulation of Argentina’s telecommunications and media industries, the Broadcasting Law (as defined below), the LAD and their implementing regulations have been amended on a number of occasions, modifying requirements to hold or transfer broadcasting licenses. In addition, we are subject to the regulations of certain other governmental entities, including the SCI, which has issued resolutions requiring Argentine cable television operators to apply a formula to calculate their customers’ monthly subscription prices.

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In March 2020, in response to the COVID-19 outbreak, the Argentine government introduced emergency measures in the telecommunications sector in order to alleviate the financial burden of the pandemic on individuals and companies. Decree No. 311/20 issued by PEN on March 24, 2020 determined that services related to fixed and mobile telephony, Internet and cable TV would not be interrupted for defaults in payment by a certain group of customers defined therein (See “—The coronavirus and the measures taken or to be implemented by the Argentine government in response to the coronavirus have had and could continue to have a significant adverse effect on our business operations”). In August 2020, Decree No. 690/20 declared ICT services as an essential public service and imposed tariff regulations on such services (See “—Risks Relating to Telecom and its operations— The regulation of rates may adversely affect Telecom Argentina’s revenues”).

We can offer no assurances that we will not be subject to similar regulations in the future, which could force us to modify the prices of subscription services and have a material adverse effect on our revenues.

The regulatory authorities have imposed increasing burdens and new regulations on companies that could increase the penalties they can impose for breaches of the regulatory framework.

In certain municipalities, regulations have been adopted requiring us to upgrade and/or modify our cable television systems. We will seek to continue to upgrade our existing cable systems, including any network upgrades or modifications required by regulatory or local authorities if we have sufficient cash flow and financing is available at commercially attractive rates. Although currently applicable local ordinances provide that certain penalties may be imposed, including the suspension of the right to use the air space, municipalities have generally not imposed penalties on non-compliant cable systems operators. As of the date of this Annual Report, no fines have been imposed to us in relation to this matter.

The Auction Terms and Conditions approved by Resolution SC No. 38/14 established strict coverage and network deployment commitments that will require significant capital expenditures from Telecom. Additionally, many municipal governments have issued regulations that, in our view, exceed their authority, which frequently limit, hinder or restrict the installation of the infrastructure required to comply with such commitments. Therefore, such legislation negatively impacts the obligations that we and our competitors assumed in the mobile telephony business pursuant to the requirements set out in the Regulation for the Quality of Telecommunications Services.

We may also be subject to additional and unexpected governmental regulations in the future. For more information on the regulatory framework, see “Item 4—Information on the Company—Regulatory Authorities and Framework.”

We face substantial and increasing competition in the Argentine fixed and mobile telephony, cable television and Internet businesses.

The fixed and mobile telephony, cable television and Internet businesses in Argentina are competitive. Our competitors may consummate transactions that result in a further consolidation and convergence. Therefore, we may lose a portion of our market share which may create additional risks and adversely impact our financial condition and results of operations. See “—We may become subject to burdensome government regulations, ordinances and laws affecting the services we offer which could adversely affect our operations”.

We compete with other cable television operators that have built networks in the areas in which we operate, providers of other pay television services, including direct broadcasting, direct-to-home satellite and multi-channel multi-point distribution system services, licensed suppliers of basic telephone services and cooperative entities providing utility services and also with free broadcasting services which are currently available to the Argentine population in certain areas from four privately-owned television networks (including one owned by Grupo Clarín) and their local affiliates and one state-owned national public television network. We expect competition to increase in the future due to a number of factors, including the development of new technologies.

In relation to mobile services, we anticipate that we will have to devote significant resources to the refurbishment and maintenance of our existing network infrastructure to comply with regulatory obligations and to remain competitive with respect to the quality of our services. In addition, we must comply with the obligations arising from the acquisition of the 4G spectrum. We also expect to continue to devote resources to customer retention and loyalty in such services.

Technological innovation relating to fixed and mobile telephony, cable television and Internet transmission increases the level of competition that we face and requires us to make frequent investments to develop new and innovative programming services and

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products to attract and retain fixed and mobile telephony, cable television and Internet customers. We cannot assure you that we will be able to make the investments necessary to remain competitive, or that we will be able to attract new and retain our current customers. A substantial loss of customers to competitors would have a material adverse effect on our business and results of operations.

Additionally, our ability to successfully invest in, and implement, new technologies, coverage and our wireless network may be impaired if we fail to obtain certain municipal authorizations, as well as by an adverse macroeconomic condition in Argentina. If we are not successful in making such investments, the growth of our business and quality of our services would be adversely affected. Further, if we are unable to make these capital expenditures, or if our competitors are able to invest in their businesses to a greater degree and/or faster than we are, our competitive position will be adversely impacted.

We also face competition from other cable television and Internet service providers. Certain competitors of the cable television and Internet business have well-established name recognition, larger customer bases, and significant financial, technical and marketing resources. This may allow them to devote significant resources to the development and promotion of their business. These competitors may also engage in more extensive research and development, adopt more aggressive pricing policies and make more attractive offers to advertisers. Competitors may develop products and services that are equal or superior to our offers or that achieve greater market acceptance. As a result, competition may have a material adverse effect on our operations.

Moreover, the products and services that we offer may fail to generate revenues or attract and retain customers. If our competitors present similar or better responsiveness, functionality, services, speed, plans or features, our customer base and our revenues may be materially affected.

Competitiveness is and will continue to be affected by the business strategies and alliances deployed by our competitors. We may face additional pressure on the prices that we charge for our services or experience a loss of market share in the services we provide. In addition, the general business and economic climate in Argentina may affect us and our competitors differently; thus our ability to compete in the market could be adversely affected.

Additionally, if in the future licensees of ICT services are allowed to register and provide subscription broadcasting service by satellite link, it will ease the entry of new competitors into the market. As a result, we may face additional pressure with respect to prices we charge for our services or experience a loss of participation in the subscription broadcasting market.

Given the range of regulatory, business and economic uncertainties we face, it is difficult to predict with precision and accuracy our future market share in relevant geographic areas and customer segments, or to anticipate a decrease in demand for the products we offer that could result in a reduction of our revenues and market share, or the speed with which such change in our market share or prevailing prices for services may occur or the effects of competition. Those effects could be material and adverse to our overall financial condition, results of operations and cash flows.

Our revenues may vary depending upon the condition of the Argentine economy.

Revenues generated by our fixed and mobile telephony, cable television and Internet operations have in the past been impacted by Argentina’s unstable macroeconomic environment and have proven to be dependent on the general economic conditions in Argentina. In the past, a general economic downturn in Argentina has had, and would be expected to have in the future, a negative effect on our revenues and a material adverse effect on our results of operations. Historically, for example, increases in losses of cable television subscribers have corresponded with general economic downturns and regional and local economic recessions. In particular, the 2001-2002 Argentine economic crisis had a material adverse effect on our revenues.

The regulation of rates may adversely affect Telecom Argentina’s revenues.

The LAD established that licensees of ICT services may freely set their prices which shall be fair and reasonable, to offset the costs of exploitation and to tend to the efficient supply and reasonable margin of operation.

However, on August 22, 2020, the PEN issued Decree No. 690/20 amending the LAD. Decree No. 690/20 declared ICT services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks

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for and between licensees as “essential and strategic competition public services”, and empowered ENACOM to ensure accessibility. Decree No. 690/20 further established that (i) the prices of the Essential and Strategic Competition Public ICT Services, (ii) the prices of those services provided in accordance with the Universal Service, and (iii) the prices of those services determined by ENACOM for public interest reasons, shall be regulated by ENACOM. Moreover, Decree No. 690/20 established that ENACOM is the agency responsible for the enactment of any regulation related to the ICT’s PBU, and also suspended any price increases or changes set or announced by the ICT’s licensees from July 31, 2020 to December 31, 2020. Decree No. 690/20 has been ratified by the Argentine Congress under Law No. 26,122 and has been regulated through ENACOM Resolutions Nos. 1,466/20 and 1,467/20.

Resolution No. 1,466/20, among other things, allows ICT licensees providing Internet access services, subscription broadcasting services through physical, radio-electric or satellite link, fixed telephony services and mobile telecommunications services to increase retail prices for services up to 5% during January 2021. In order to establish the percentages approved, licensees must consider the prices effective as of July 31, 2020 as the price of reference. Such Resolution also provides that ICT Services Licensees may request a higher increase, on an exceptional basis in accordance with the provisions of Section 48 of the LAD.

Resolution No. 1,467/20 regulated the PBU provided by Decree No. 690/20 for the different services provided by ICT licensees, establishing the price and the characteristics of each service plan. The Resolution also defines the beneficiaries of this PBU, among other matters.

The Company began to implement an increase in prices as from January 2021, in order to match the increase in its costs due to the inflation. Nevertheless, it failed to transfer to the price of its services the inflation accumulated in the period March-December 2020, as a result of different measures provided by the PEN. Additionally, the Company initiated legal proceedings before the Federal Court of Appeals on Administrative Litigation Matters challenging the constitutionality of Decree No. 690/20 and the aforementioned ENACOM Resolutions, which was notified to the PEN on October 7, 2021.

In this context, the Company sought to obtain a precautionary measure suspending the application of the aforementioned ENACOM regulations and Decree No. 690/20. On January 29, 2021, the Company’s petition was denied and the precautionary measure rejected. The Company appealed such decision and, on April 30, 2021, the Chamber of the Federal Court of Appeals on Administrative Litigation Matters decided by majority to accept the Company’s appeal, revoke the first instance court’s decision and, consequently, grant the preliminary injunction requested by the Company, ordering the suspension of the effects of Sections 1, 2, 3, 4, 5 and 6 of Decree No. 690/20 and of ENACOM resolutions provided as a consequence and their non-applicability to the Company. This preliminary injunction was initially granted for a period of six months and then extended for an additional six-month period until April 21, 2022. As supported by the preliminary injunction granted, the Company increased the prices of its services in June, September and December 2021.

The PEN and ENACOM filed appeals against the aforementioned decision of the Federal Court of Appeals on Administrative Litigation Matters, which were denied on June 18, 2021.

On June 29, 2021, the PEN and ENACOM filed an appeal before the Argentine Supreme Court of Justice. As of the date of this Annual Report, a decision on these proceedings remains pending.

If the ENACOM imposes further restrictions on our prices, our operating margins may be adversely affected. Our ability to comply with the conditions in our license, as well as the relevant provisions in applicable regulations and laws, may be affected by events or circumstances outside of our control, and therefore we cannot predict whether such events or circumstances result in an adverse effect on our financial condition, our operations and cash flows. The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights. See “Item 4 —Regulatory Authorities and Framework— Amendment to Law No. 27,078 – Argentine Digital Law”.

Technological advances and replacement of our equipment may require us to make significant expenditures to maintain and improve the competitiveness of the services we offer.

Our industries are subject to significant changes in technology and the introduction of new products and services. We cannot predict the effect of technological changes on our business. New services and technological advances related to the telecommunications, cable television and Internet industries are likely to offer additional opportunities to compete against us on the basis of cost, quality or

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functionality. It may not be practicable or cost-effective for us to replace or upgrade our installed technologies in response to our competitors’ actions. Responding to such change may require us to devote substantial capital to the development, procurement or implementation of new technologies, and may depend on the final cost in local currency of imported technology and our ability to obtain additional financing. No assurance can be given that we will have the funds to make the capital expenditures to improve our systems, compete with others in the market or replace equipment used in connection with our businesses.

Moreover, Internet, cable television and mobile telephony services, which we expect to account for an increasing percentage of our revenues in the future, are characterized by rapidly changing technology, evolving industry standards, changes in customer preferences and the frequent introduction of new services and products. To remain competitive, we must invest in network, constantly upgrade our access technology and software for the internet service market, improve the commercial offers and the user experience and continue to enhance our mobile networks by expanding our network. See “Item 4 —Information on the Company—The Business”. Future technological developments may result in decreased customer demand for certain of our services or even render them obsolete. In addition, as new technologies develop, equipment may need to be replaced or upgraded or network facilities (in particular, mobile and Internet network facilities) may need to be rebuilt in whole or in part, at substantial cost, to remain competitive. These enhancements and the implementation of new technologies will continue requiring increased capital expenditures.

The media industry is a dynamic and evolving industry, and if it does not develop and expand as we currently expect, our results and operations relating to our cable television and Internet businesses may suffer.

We expect to derive an increasing amount of revenues from our activities in the cable television and Internet industries, but we may not do so if these non-traditional media operations do not develop and expand as we currently expect. The role of cable television in Argentina became increasingly important in the past. More recently, non-traditional technologies, including “Over-The-Top” services (which are services provided by a telecommunications provider through Internet Protocol (“IP”) networks not necessarily owned by the provider, including communications, content and cloud-based offerings), such as technologies used by Netflix or other IP operators, have come to play a larger role in the Argentine telecommunications industry. These companies take advantage of the deregulation of the sector to bring their services through third-party networks without paying any fee or right to use it. These technology and new services areas are in the early stages of development, and growth may be inhibited for a number of reasons, including:

● the cost of connectivity;

● concerns about security, reliability, and privacy;

● unexpected changes in the regulatory framework;

● the appearance of technological innovations;

● the ease of use; and

● the quality of service.

Our business, financial condition and results of operations will be materially and adversely affected if these markets do not continue to grow or grow more slowly than we anticipate.

In addition, unlike the Argentine cable television industry, which has traditionally been dominated by companies located in Argentina, competitors in the other services we provide may be based outside of Argentina and enjoy certain competitive advantages such as scale and access to financial resources on terms that are better than those available to us.

We may not be able to renew programming contracts on favorable terms.

We purchase basic and premium programming from approximately 52 programming suppliers. Several programming suppliers agreed to offer volume discount pricing structures because of the growth and market share shown by our cable television operations.

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Participants in the cable television industry negotiate the terms of a majority of the respective programming contracts that had originally been denominated in U.S. dollars to provide for Peso-denominated pricing formulas generally linked to the number of subscribers and without minimum purchase requirements. As a consequence, contract terms are generally shortened and pricing provisions are adjusted in order to transfer the benefit of increases in the monthly fee for basic cable television services to the programming companies. The new contracts also provide for automatic termination upon the occurrence of major macroeconomic disruptions. We cannot assure you that we will be able to regularly negotiate renewals of our programming contracts at current cost levels, particularly since many of our suppliers have U.S. dollar-based costs. Additionally, suppliers are expected to seek price increases as a reflection of economic conditions in Argentina. There can similarly be no assurances that we will be able to obtain volume discounts in the future.

We may not be able to renew some leases of the facilities for the installation of our fixed and mobile telephony, cable television and Internet systems.

Our fixed and mobile telephony services, cable television services and Internet services are distributed through networks installed in facilities leased from third parties, either through the lease of space on roofs or on utility poles. We regularly renegotiate the renewal of short-term lease contracts for the use of poles in different areas of the country in the ordinary course of our business. If we are not able to renew some of those lease contracts, our operations in such areas may be suspended if alternative third-party facilities are not promptly obtained on a cost-efficient basis. Underground distribution of our wire network would require additional governmental authorizations and significant capital expenditures that we may not be able to afford or that we may be restricted from making pursuant to the terms and conditions of our indebtedness and our existing covenants. There can be no assurance that such renewals of lease contracts will be granted.

Our revenues may be adversely affected by an increase in churn rates, with respect to mobile telephony, cable television and Internet services, or reductions in fixed telephony lines in service, with respect to fixed telephony services.

Our revenues depend significantly on our ability to retain customers by limiting churn rates, with respect to mobile telephony, cable television and Internet services, or net reductions in fixed telephony lines in service, with respect to fixed telephony services. Any substantial increase in churn rates, with respect to mobile telephony, cable television and Internet services, or reductions in lines in service, with respect to fixed telephony services, may have a material adverse effect on our revenues and results of operations. For further information about churn rates see “Item 4—Management of Churn” and “Item 5—Operating and Financial Review and Prospects—Consolidated Results of Operations—(A.1) 2021 Compared to 2020”.

Our revenues relating to our cable television services are subject to uncertainty due to, and may be adversely affected by, the formula set forth in Resolution No. 50/10 to estimate monthly fees paid by cable television subscribers.

SCI Resolution No. 50/10 approved certain rules governing pay television services. These rules provide that cable television operators must apply a formula to calculate their monthly subscription prices. The price arising from the application of the formula was to be informed to the Office of Business Loyalty (“Dirección de Lealtad Comercial”), requiring cable television operators to adjust such amount semi-annually and inform the result of such adjustment to that Office. The Company challenged Resolution No. 50/10 and requested the suspension of its effects and its nullity.

A decision issued on August 1, 2011 in re “LA CAPITAL CABLE S.A. v. Ministerio de Economía-Secretaría de Comercio Interior de la Nación”, by the Federal Court of Appeals of the City of Mar del Plata ordered the SCI to suspend the application of Resolution No. 50/10 with respect to all cable television licensees represented by ATVC, including us. The injunction was notified to the SCI and the Ministry of Economy on September 12, 2011 and became fully effective. The PEN filed an appeal against the decision issued by the Court of Appeals of Mar del Plata. Such appeal was dismissed, for which the PEN filed a direct appeal to the Supreme Court, which was also dismissed.

Notwithstanding the foregoing, between March 2011 and October 2014 certain resolutions were adopted based on Resolution No. 50/10 regulating the prices that Cablevision should charge for such months to its customers. These resolutions were challenged and suspended as a result of the aforementioned injunction. However, each Resolution had a valid period of three to six months, with the last one expiring in October 2014.

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In September 2014, a decision was rendered in a case brought by the Municipality of Berazategui against Cablevisión ordering the submission of all cases relating to these resolutions to the jurisdiction of the Federal Courts of Mar del Plata, which had issued the decision on the class action in favor of ATVC.

In April 2019, La Capital Cable S.A. was served with notice of the resolution issued by the Federal Court of First Instance No. 2 of Mar del Plata declaring the unconstitutionality of certain sections of a law on which the SCI had found the legal basis for the issuance of Resolution No. 50/10 and the successive resolutions. The declaration of unconstitutionality implied that these resolutions are not applicable to the companies grouped by ATVC, including Telecom. However, the PEN filed an appeal against that resolution.

On December 26, 2019, the Federal Court of Appeals of Mar del Plata rejected the grievances of the Argentine government and confirmed the decision rendered by the Court of Mar del Plata which declared the unconstitutionality of the sections of the law on which the SCI issued Resolution No. 50/10 and the subsequent resolutions were based. The National Government filed an extraordinary appeal, which was granted on March 1, 2021.

The Company’s Management, with the assistance of its legal advisors, is analyzing the potential impact related to this new appeal and considers that it has strong arguments for its defense. However, an adverse outcome in the above mentioned cases, which we cannot exclude, would have an adverse effect on our results of operations and financial condition.

Actual or perceived health risks or other problems relating to mobile handsets or transmission masts could lead to litigation or decreased mobile communications usage.

The effects of, and any damage caused by, exposure to an electromagnetic field were and are the subject of careful evaluations by the international scientific community, but until now there is no scientific evidence of harmful effects on health. We cannot rule out that exposure to electromagnetic fields or other emissions originating from wireless handsets will not be identified as a health risk in the future.

Telecom complies with the international security standards established by the World Health Organization and Argentine regulations -which are similar and mandatory for all Argentine mobile operators. Our mobile business may be harmed as a result of any future alleged health risk. For example, the perception of these health risks could result in a lower number of customers, reduced usage per customer or potential consumer liability, all of which could have a material adverse effect on our financial condition and results of operations.

Our operations and financial condition could be affected by future union negotiations, Argentine labor regulations and governmental measures requiring private companies to increase salaries or otherwise provide workers with additional benefits.

In Argentina, labor organizations have substantial support and considerable political influence. In recent years, the demands of our labor organizations have increased mainly as a result of the increase in the cost of living, which was affected by increased inflation, higher tax pressure over salaries and the consequent decline in the population’s purchasing power.

In addition, in the absence of a union agreement concerning convergent services, if we are unable to reach an agreement with the unions on work conditions, or in case of a lack of recognition among union associations, we may be adversely affected by individual labor claims, class actions, higher union contributions expenses, impacts to our operations, impairment of services due to inefficient processes, union conflicts, direct action measures and social impacts which may also affect the quality and continuity of our services to our customers and our reputation.

Certain labor and telecommunication unions have initiated claims against the Company alleging non-compliance of certain conditions provided for in the collective bargaining agreements that could allow them to negotiate the inclusion of some suppliers’ employees in their collective bargaining agreements. See Note 19 to our Consolidated Financial Statements. If labor organization claims continue or are sustained, this could result in increased costs, greater conflict in the negotiation process and strikes (including general strikes and strikes by the Company’s employees and the contractors and subcontractors’ employees) that may adversely affect our operations. See “Item 6—Directors, Senior Management and Employees—Employees and Labor Relations”.

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Moreover, the Argentine government has enacted laws and regulations requiring private sector companies to maintain certain salary levels and provide their employees with additional benefits. On December 13, 2019, the Argentine government declared a labor emergency for a 180-day term. In this context, the Argentine government doubled the amount of the statutory severance payments payable to employees hired before December 13, 2019 and dismissed between December 13 2019 and June 13, 2020. The layoff prohibition was extended pursuant to Decree No. 528/20 and Decree No. 961/20. Decree No. 39/21, in effect until April 27, 2021, extended the prohibition of dismissals without just cause or based on lack or reduction of work and force majeure, as well as the prohibitions to suspensions for economic reasons, except for suspensions made under the terms of Section 223 bis of the Labor Contract Law (agreements between employers and employees later approved by the Ministry of Labor, made either individually or collectively with the purpose of suspending employment for lack or reduction of work due to no fault from the employer), which were not affected by the prohibition.

Likewise, Decree No. 39/21 extended the occupational emergency until December 31, 2021 in cases of dismissals without a just cause and granted the affected worker the right to receive a double severance payment, which may not exceed P$500,000 with a cap of P$500,000 in excess of what would have been the regular single severance payment . The occupational emergency was further extended by Decree No. 886/21 through June 30, 2022. Decree 886/21 also provides that double severance payments will be progressively reduced until they are effectively finalized in June 2022.

However, under the provisions of Section 5 of Decrees No. 624/20, 761/20 and 891/20, contracts entered into after the entry into force of Decree No. 34/19, are not affected by the aforementioned provisions.

The Argentine government may adopt new measures that determine salary increases or additional benefits for workers, and workers and their unions may pressure employers to comply with such measures. Any salary increase or additional benefit could result in an increase in costs and a decrease in the results of the operations of Argentine companies, including those of Telecom. Further, future extensions of the prohibition of layoffs and dismissals due to force majeure or lack of or decreased work or the duplication of the statutory severance payments to dismissed employees may affect the efficiency of our employees and therefore our costs and results of operations.

We are or may be involved in legal and regulatory proceedings that could result in unfavorable decisions and financial penalties for us.

We are party to a number of legal and regulatory proceedings, some of which have been pending for several years. We cannot be certain that these claims will be resolved in our favor. Responding to the demands of litigation claims and responding to, or initiating proceedings against, regulatory bodies may divert management’s time attention and financial resources.

For example, Argentine law incentivizes individuals to pursue employment-related litigation and certain judicial rulings have created a negative precedent in these matters and could increase our labor costs. The Company is also exposed to employment-related claims of employees of suppliers, contractors and commercial agents claiming direct or indirect responsibility of Telecom based on a broad interpretation of the rules of labor law.

Further, customers and consumers’ trade unions have in the past initiated different claims against us regarding alleged improperly billed charges. See Note 19 to our Consolidated Financial Statements. Although we have taken certain actions to reduce risks in connection with these claims, we cannot assure that new claims will not be filed against us in the future.

The Company has in the past been subject to technical sanctions from regulatory bodies, mainly related to the delay in repairing defective lines, installing new lines and/or service failures. Although sanctions are appealed in the administrative stage, if the appeals are not resolved in our favor in administrative or judicial stage or if they are resolved for amounts larger than those recorded, these proceedings could have an adverse effect on our financial condition, results of our operations and cash flows.

As of December 31, 2021, we recorded provisions that we estimate are sufficient to cover contingencies considered probable. However, we may face increased risk of employment, commercial, regulatory, tax, consumer trade union and customers’ proceedings, among others. If this occurs, we cannot guarantee that those proceedings will not have an adverse effect on our results of operations and financial condition. See Note 19 to our Consolidated Financial Statements.

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The enforcement of the Law for the Promotion of Registered Labor and Prevention of Labor Fraud may have a material adverse effect on us.

The Law for the Promotion of Registered Labor and Prevention of Labor Fraud (Ley de Promoción del Trabajo Registrado y Prevención del Fraude Laboral), among other things, establishes a Public Record of Employers subject to Labor Sanctions (“Repsal”) and defines a series of labor and social security infringements as a result of which an employer shall be included in the Repsal.

The employers included in the Repsal are subject to sanctions, such as: the inability to access public programs, benefits, subsidies or credit from state-owned banks, the inability to enter into contracts and licenses of property owned by the Argentine government, or the inability to participate in the awarding of concessions of public services and licenses. Employers that commit the same infringement for which they were added to the Repsal within a 3-year period after the final first decision imposing sanctions cannot deduct from the Income Tax the expenses related to their employees while such employer continues to be included in the Repsal. This new regulation applies to both Telecom and its contractors and subcontractors, whose employees could initiate claims to Telecom for direct or indirect responsibility.

As of the date of this Annual Report, Telecom has no sanctions registered in the Repsal. However, if sanctions are applied in the future they could have a significant impact on Telecom’s financial position, result of operations and cash flows.

A cyberattack, could adversely affect our business, balance sheet, results of operations and cash flow.

In general, information security risks have increased in recent years as a result of the proliferation of new and more sophisticated technologies and also due to cyberattack activities. As part of our development and initiatives, more equipment and systems have been connected to the Internet. We also rely on digital technology including information systems to process financial and operational information. Due to the nature of our business and the greater accessibility allowed through the Internet connection, we could face an increased risk of cyberattacks. In the event of a cyberattack, we could experience an interruption of our commercial operations, material damage and loss of customer information; a substantial loss of income, suffering response costs and other economic losses; and it could subject us to more regulation and litigation, affecting our reputation. As a result, a cyberattack could adversely affect our business, results of operations and financial condition.

Also, during 2020, the new working methodology and the exponential growth of the digital collection channels resulting from the COVID-19 isolation, required the implementation of several measures in order to grant security in virtual operations, which were all implemented successfully. Although Telecom has adopted, and continues to adopt, all required measures to ensure the proper functioning of its operating systems, as well as to ensure our customers’ information, no assurance can be given that we will not be subject to any cyberattacks that could adversely affect our business and result of operations.

As of the date of this Annual Report, our insurance policy does not cover damages caused by cyberattacks and other similar events.

Environmental risks, climate change legislation or regulations restricting emissions of greenhouse gases (“GHGs”) and legal frameworks promoting an increase in the participation of energies from renewable sources could significantly impact our business and result in increased operating costs.

In December 1993, Argentina approved the United Nations Framework Convention on Climate Change (“UNFCCC”) through Law No. 24,295. The UNFCCC, which entered into force on March 21, 1994, deals with the stabilization of the GHGs concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

On February 16, 2005, the Kyoto Protocol to the UNFCCC (“Protocol”) entered into force. This Protocol, which deals with the reduction of certain GHGs (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride) in the atmosphere, was in force until 2020 as a consequence of the ratification of the Doha Amendment to the Protocol.

Argentina approved the Protocol through Law No. 25,438 on June 20, 2001, and the Doha Amendment through Law No. 27,137 on April 29, 2015.

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The 2015 United Nations Climate Change Conference adopted by consensus the Paris Agreement, which is known to be the successor of the Protocol. The agreement deals with GHG emission reduction measures, targets to limit global temperature increases and requires countries to review and “represent a progression” in their intended nationally determined contributions. Countries agreed they will aim to achieve the long term goal to limit global warming to well below 2°C above pre-industrial levels, and pursue efforts to further limit the temperature increase to 1.5°C. On October 5, 2016, the threshold for entry into force of the Paris Agreement was achieved. International treaties together with increased public awareness related to climate change may result in increased regulation to reduce or mitigate GHG emissions. Under Federal Law No. 27,270, dated September 1, 2016, Argentina approved the Paris Agreement.

Furthermore, Argentine Law No. 26,190, as amended and complemented by Law No. 27,191 and its implementing decrees, established a legal framework which promotes an increase in the participation of energies from renewable sources in Argentina’s electricity market.

Under Law No. 27,191, by December 31, 2017, 8% of the electric energy consumed must come from renewable sources, reaching 20% by December 31, 2025. It sets five stages to achieve the final goal: (i) 8% by December 31, 2017; (ii) 12% by December 31, 2019; (iii) 16% by December 31, 2021; (iv) 18% by December 31, 2023; and (v) 20% by December 31, 2025. It is within this framework that the Argentine government launched the RenovAr programs. As of December 31, 2018, 2019 and 2020, electric energy originated from renewable sources represented 4.6%, 8.2% and 9.7% of the total demand, respectively, according to the data released by the Argentine Government.

Compliance with legal and regulatory changes relating to climate change, including those resulting from the implementation of international treaties, may in the future increase our costs to operate and maintain our facilities, install new emission controls on our facilities and administer and manage any GHG emissions program. More stringent environmental regulations can result in the imposition of costs associated with GHG emissions, either through environmental agency requirements relating to mitigation initiatives or through other regulatory measures such as GHG emissions taxation and market creation of limitations on GHG emissions that have the potential to increase our operating costs. Revenue generation and strategic growth opportunities may also be adversely affected. Any long-term material adverse effect on the telecommunications industry could adversely affect the financial and operational aspects of our business, which we cannot predict with certainty as of the date of Annual Report.

We and/or our administrators are subject to environmental and safety regulations whose non-compliance could result in increased costs and/or penalties for our administrators.

Some of the goods and facilities used in our operation are subject to federal, state and municipal environmental and safety regulations. If such rules are not adequately complied, they could result in fines, potential delays or inability to obtain authorization for our facilities and operations which could have an adverse effect in our business, but also could result in penalties for the Company’s administrators. In addition, according with global trends, new and stricter standards may be issued, or authorities may enforce or construe existing laws and regulations in a more restrictive manner, which may force us to make expenditures or incur increased costs to comply with such new rules.

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Operational risks could adversely affect our reputation and our profitability.

Telecom faces operational risks inherent from its business, including those resulting from inadequate internal processes; fraud; employee errors or misconduct; failure to comply with applicable laws and regulations the loss, security or improper use of confidential information; improper access to corporate systems; lack of sufficient skilled resources to support the evolutions of the business; failure to document transactions properly; systems failures (including our systems, the implementation of corporate systems as identified in “Item 4—Information Technology strategy”); errors or failures not foreseen in the foundational projects that the Company is carrying out for updating its core systems such as turnoff legacy delays and stabilizations of deployments; inadequate management of goods and materials in disuse that could become hazardous waste; failure to preserve the secrecy and content of telecommunications required by law; weaknesses in datacenters’ energy scheme; excessive dependence on certain providers with which a large number of operations are concentrated due to the exclusivity of the technology or service they provide, economic convenience or for strategic reasons; among others. Moreover, certain assets of the Company could be damaged by acts of vandalism or theft of components or by works of third parties on public thoroughfare that damage infrastructure that do not have a second safety path to provide the service. These events could result in direct or indirect losses, inaccurate information for decision making, adverse legal and regulatory proceedings, technical failures in the Company’s ability to provide its services, damages to third parties, and harm our reputation and operational effectiveness, among others.

Telecom maintains insurance policies to cover its main assets, particularly its properties. If economic and financial conditions in Argentina were to deteriorate (i.e. devaluation, inflation, etc.), the insurance coverage may not be representative of the market value of the properties which could result in losses for the Company.

Telecom’s suppliers of goods and services are contractually obliged to comply with laws and regulations (including tax, labor, social security, anti-corruption, money laundering standards, etc.). Additionally, our suppliers shall comply with a set of conduct standards, such as the Code of Ethics and Conduct, established by Telecom, and must require similar compliance by their employees and subcontractors. Despite these legal safeguards and monitoring efforts made by Telecom in relation to its suppliers, we cannot assure you that they will comply with all applicable regulations. As a result, Telecom could be adversely affected despite our contractual rights to claim for compensations for damages that they could cause to us.

Telecom has risk management practices at the highest levels including a Risk Management Committee designed to detect, manage and monitor the evolution of risks. However, the Company can give no assurances that these measures will be successful for effectively mitigating the operational risks that Telecom faces and such failures could have a material adverse effect on its results of operations and could harm its reputation.

Any failure by a strategic supplier to comply with its legal and contractual obligations could adversely affect our operations and any action or restriction by a foreign government against a strategic supplier could adversely affect our reputation.

We rely on strategic suppliers of equipment and materials to provide us with equipment and materials that we need in order to expand and to operate our business. As a result, we are exposed to risks associated with these suppliers, including restrictions of production capacity for equipment and materials, availability of equipment and materials, delays in delivery of equipment, materials or services, and price increases. If these suppliers or vendors fail to provide equipment, materials or services to us on a timely basis or otherwise in compliance with the terms of our contracts with these suppliers, we could experience disruptions or declines in the quality of our services, which could have an adverse effect on our revenues and results of operations.

Telecom’s suppliers of goods and services are contractually obliged to comply with applicable laws and regulations (including tax, labor, social security, anti-corruption, money laundering standards, etc.). Despite these legal safeguards, as well as monitoring efforts by Telecom, we cannot ensure that our suppliers will comply with all applicable standards. As a result, our financial condition and reputation could be adversely affected.

The U.S. Congress and certain regulatory agencies have raised concerns about American companies purchasing equipment and software from Chinese telecommunications companies such as Huawei, one of our strategic suppliers, including concerns relating to alleged violations of intellectual property rights and potential security risks. The U.S. Government is likewise urging other countries to avoid the operations of Chinese companies in their territory, citing concerns regarding potential use of the equipment for espionage. Our reputation could be adversely affected if such actions or restrictions were imposed on Huawei or if the equipment and materials we purchase from Huawei is thought to pose a security risk for our network.

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We cannot predict whether additional restrictions targeting Huawei, including restrictions that would prevent us from acquiring supplies from Huawei in the future, will be adopted directly or the impact that such restrictions might have on our operations.

Restrictive covenants in Telecom’s outstanding indebtedness may restrict its ability to pursue its business strategies.

Telecom has outstanding financial debt that contain a number of restrictive covenants that impose significant operating and financial restrictions on it and may limit Telecom’s ability to engage in acts that may be in its long-term best interests. These agreements governing its indebtedness include covenants restricting, among other things, Telecom’s ability to:

● incur or guarantee additional debt;

● enter into sale and leaseback transactions;

● create liens on its assets to secure debt; and

● merge or consolidate with another person or sell or otherwise dispose of all or substantially all of its assets.

A breach of any covenant contained in the indentures governing Telecom’s notes or the agreements governing any of its other indebtedness could result in a default under those agreements. If any such default occurs, the holders of such indebtedness may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding amounts, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. If any of Telecom’s debt, including its notes, were to be accelerated, its assets may not be sufficient to repay in full that debt or any other debt that may become due as a result of that acceleration.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined or fluctuations in interest rates.

In 2017, the United Kingdom Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), announced its intention to phase out LIBOR by the end of 2021. On March 5, 2021, the FCA announced that all LIBOR tenors, will cease to be published or will no longer be representative after June 30, 2023. The FCA’s announcement coincides with the announcement of LIBOR’s administrator, the ICE Benchmark Administration Limited (the “ IBA”) on March 5, 2021, indicating that as a result of not having access to input data necessary to calculate LIBOR tenors on a representative basis after June 30, 2023, IBA would have to cease publication of such LIBOR tenors after June 30, 2023. These announcements imply that any of our LIBOR-based borrowings that extend beyond June 30, 2023 will need to be converted to a replacement rate. In the United States, the Alternative Reference Rates Committee (the “ARRC”), a committee of private sector entities with ex-officio official sector members convened by the Federal Reserve Board and the Federal Reserve Bank of New York, recommended the Secured Overnight Financing Rate (“SOFR”) plus a recommended spread adjustment as LIBOR’s replacement. There are significant differences between LIBOR and SOFR, such as (i) LIBOR being an unsecured lending rate and SOFR a secured lending rate, and (ii) SOFR being an overnight rate while LIBOR reflects term rates at different maturities. A transition away from and/or changes to the LIBOR benchmark interest rate could adversely affect our business, financial condition and results of operations. If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in interest costs that are higher than if LIBOR remained available, which could have a material adverse effect on our operating results. Although SOFR is the ARRC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in other ways that would result in higher interest costs for us. It is not yet possible to predict the magnitude of LIBOR’s end on our borrowing costs given the remaining uncertainty about which rates will replace LIBOR. Any of these proposals or consequences could have a material adverse effect on our financing costs.

As of December 31, 2021, P$90,828 million of our outstanding debt was indexed to the LIBOR, and is set to mature after June 30, 2023, the proposed LIBOR cessation date. While certain of our debt agreement do contain language for the determination of interest rates in the event the LIBOR rate is not available, in the event of the continued or permanent unavailability of LIBOR we may need to enter into negotiations with certain of our creditors to agree to an alternative interest rate or an alternative basis for determining the interest rate in our credit facilities.

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Additionally, we are exposed to the fluctuations of the interest rates applicable to our indebtedness indexed to variable interest rates. We may also incur additional variable-rate debt in the future. Increases in interest rates on variable-rate debt would increase the Company’s interest expense, which would negatively affect our financial costs.

We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their current terms, which would have a material adverse effect on our business, financial condition and results of operations.

In 2021, the Company refinanced some portion of its outstanding financial debt maturing in 2022 and 2023. For more information see “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources —Financial Debt Developments during 2021”.

However, there is no assurance that we will be able to extend the maturity or otherwise refinance our outstanding indebtedness, or that we may be required to agree to refinancing terms that may be materially less favorable than the terms of our current loans and notes. Any amendment to or refinancing of our indebtedness could result in higher interest rates and may require us to comply with more burdensome restrictive covenants, which may have a material adverse effect on our business, ability to meet our payment obligations, financial condition, and results of operations.

If we are unable to refinance our debt in favorable terms, we may be forced to reduce or delay capital expenditures or research and development expenditures, seek additional equity capital, restructure our debt, curtail or eliminate our cash dividend to stockholders, or sell assets. Non-payment of our obligations or any other default under any of our debt instruments could, in turn, result in a default and acceleration of our other outstanding debt obligations, which would have a further material adverse effect on our business, ability to meet our payment obligations, financial condition, and results of operations. See “—Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay divide” and Notes 13 and 26 to our Consolidated Financial Statements.

Risks Relating to Telecom Argentina’s Shares and ADSs

The New York Stock Exchange (“NYSE”) and/or the Buenos Aires Stock Exchange (by delegated authority of BYMA) may suspend trading and/or delist Telecom’s ADSs and Class B common shares, respectively, upon occurrence of certain events relating to Telecom’s financial situation.

The NYSE and/or the BYMA may suspend and/or cancel the listing of Telecom’s ADSs and Class B common shares, respectively, in certain circumstances, including upon the occurrence of certain events relating to Telecom’s financial situation. For example, the NYSE may decide such suspension or cancellation if Telecom’s equity becomes negative.

The NYSE may in its sole discretion determine on an individual basis the suitability for continued listing of an issuer in the light of all pertinent facts. Some of the factors mentioned in the NYSE Listed Company Manual, which may subject a company to suspension and delisting procedures, include: “unsatisfactory financial conditions and/or operating results,” “inability to meet current debt obligations or to adequately finance operations,” and “any other event or condition which may exist or occur that makes further dealings or listing of the securities on the NYSE inadvisable or unwarranted in the opinion of NYSE”.

We cannot assure you that the NYSE and/or BYMA will not commence any suspension or delisting procedures in light of Telecom’s financial situation, including if Telecom’s equity becomes negative. A delisting or suspension of trading of Telecom’s ADSs or Class B common shares by the NYSE and/or BYMA, respectively, could adversely affect Telecom’s results of operations and financial conditions and cause the market value of Telecom’s ADSs and Class B common shares to decline.

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Under Argentine corporate law, shareholder rights may be fewer or less well defined than in other jurisdictions.

Our corporate affairs are governed by our bylaws and by Argentine corporate law, which differ from the corporate regulatory framework that would apply if we were incorporated in a jurisdiction in the United States (such as Delaware or New York), or in other jurisdictions outside Argentina. Thus, your rights under Argentine corporate law to protect shareholders’ interests relating to actions by our Board of Directors may be fewer and less well defined than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets may not be as highly regulated or supervised as the U.S. securities markets or markets in some of the other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well defined and enforced in Argentina than in the United States, or other jurisdictions outside Argentina, putting holders of our Shares and ADSs at a potential disadvantage.

Changes in Argentine tax laws may adversely affect the tax treatment of our Shares and/or the ADSs.

In September 2013, the Argentine income tax law was amended by the passage of Law No. 26,893 (the “Argentine Income Tax Law”). The Argentine Income Tax Law establishes that the sale, exchange or other transfer of shares and other securities is subject to a capital gain tax at a rate of 15% for Argentine resident individuals and foreign beneficiaries. In addition, Pursuant to Law No. 26,893, capital gains obtained by non-Argentine residents from the sale, exchange or other disposition of shares and other equity interests, bonds and other securities of Argentine companies were subject to capital gains tax until December 30, 2017, even if those transactions were entered into between nonresidents.

Until the enactment of Law No. 27,430, in force since fiscal year 2018, there was an exemption for Argentine resident individuals if certain requirements were met. However, there was no such exemption for non-Argentine residents. For transactions made until December 31, 2017, many aspects of the Argentine Income Tax Law as they apply to the holding and sale of ADSs still remain unclear and they were subject to further regulation and interpretation which may adversely affect the tax treatment of our Shares underlying ADSs and/or ADSs. The income tax treatment of income derived from the sale of ADSs or exchanges of shares from the ADS facility may not be uniform under the revised Argentine Income Tax Law. The possibly varying treatment of the source of income could impact both Argentine resident holders as well as non-Argentine resident holders.

Law No. 27,430 requires the capital gains tax to be paid for transactions carried out between September 2013 (when taxation on the sale of shares for nonresidents was introduced) and the effective date of the tax reform, providing that no tax, however, will be due for stock exchange transactions as long as the tax has not yet been paid due to the lack of regulations for the withholding or collection by the stock exchange agents or intermediaries.

Consequently, holders of our Class B Shares, including in the form of ADSs, are encouraged to consult their tax advisors as to the particular Argentine income tax consequences of owning our Shares or the ADSs.

Our shareholders may be subject to liability under Argentine law for certain votes of their securities.

Under Argentine law, a shareholder’s liability for losses of a company is limited to the value of his or her shareholdings in the company. However, shareholders who have a conflict of interest with us and who do not abstain from voting at the respective shareholders’ meeting may be liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is subsequently declared void by a court as contrary to the law or our bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

The price of our Class B Shares and the ADSs may fluctuate substantially, and your investment may decline in value.

The trading price of our Class B Shares is likely to be highly volatile and may be subject to wide fluctuations in response to factors, many of which are beyond our control. The market price of our ADSs declined by 22%, 42% and 27% in 2021 and 2020 and 2019, respectively. This decrease in value has been largely attributed to Argentina’s most recent macroeconomic crisis and the impact of COVID 19. Other factors include:

● fluctuations in our periodic operating results;

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● changes in financial estimates, recommendations or projections by securities analysts;

● changes in conditions or trends in our industry;

● events affecting equities markets in the countries in which we operate;

● legal or regulatory measures affecting our financial conditions;

● departures of management and key personnel; or

● potential litigation or the adverse resolution of pending litigation against us or our subsidiaries.

The stock markets in general have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the companies involved. We cannot assure you that trading prices and valuations will be sustained. These broad market and industry factors may materially adversely affect the market price of our Shares and the ADSs, regardless of our operating performance. Market fluctuations, as well as general political and economic conditions in the markets in which we operate, such as recession or currency exchange rate fluctuations, may also adversely affect the market price of our Shares and the ADSs, also affecting our estimates of recoverability of our long live assets. In particular, currency fluctuations could impact the value of an investment in Telecom Argentina. Although Telecom Argentina’s ADSs listed on the New York Stock Exchange are U.S. dollar-denominated securities, they do not eliminate the currency risk associated with an investment in an Argentine company.

Future sales of substantial amounts of Telecom Argentina Class B Shares and ADSs, or the perception that such future sales may occur, may depress the price of Telecom Argentina Class B Shares and ADSs.

Following periods of volatility in the market price of a company’s securities, that company may often be subject to securities class-action litigation. This kind of litigation may result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial condition.

Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of the Class B Shares underlying the ADSs.

On September 1, 2019, the Argentine government issued Executive Decree No. 609/19 (as amended) which, inter alia, reinstated certain foreign currency exchange restrictions, most of which had been progressively repealed as from 2015. Decree No. 609/19 was further regulated, amended and complemented by several regulations issued by the BCRA (included, but not limited to, Communication “A” 6844, as further amended, supplemented and restated). Since then, the Argentine government implemented monetary and foreign exchange control measures that included restrictions on the transfer of funds abroad, including dividends, without prior approval by the BCRA or fulfillment of certain requirements.

In line with the restrictions that were in place in the past, the BCRA issued new regulations setting forth certain limitations on the flow of foreign currency into and from the Argentine foreign exchange market, aimed both at generating economic stability and supporting the country’s economic recovery.

On April 30, 2020, the BCRA issued Communication “A” 7001 (as amended by Communication “A” 7030 and Communication “A” 7042 and as further amended and supplemented from time to time) Communication “A” 7001 setting forth certain limitations on the transfer of securities into and from Argentina. Pursuant to Communication “A” 7001 access to the Argentine foreign exchange market for the purchase or transfer of foreign currency abroad (for any purpose) shall be subject to BCRA’s prior approval, if the individual or entity seeking access to the Argentine foreign exchange market has sold securities which settled in foreign currency or transferred any such securities to foreign depositaries during the immediately preceding 90 calendar days. Further, Communication “A” 7001 sets forth that the individual or entity must undertake not to perform any such sale or transfer during the succeeding 90 days after such access. In these cases, the Depositary for the ADSs may hold ADS holders’ Argentine Pesos and may cannot convert them into foreign currency.

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In addition, Communication “A” 7106 placed certain restrictions on foreign exchange transactions carried out by individuals, specifically with regards to payments with credit cards in foreign currency or with debit cards made abroad. Under Communication “A” 7106, it was also established that non-residents are not allowed to sell securities executed abroad in the local stock market in exchange for foreign currency.

We cannot predict how the current restrictions on foreign transfers of funds may change after the date hereof and whether they may impede our ability to fulfill our commitments in general and, in particular, our obligations underlying the ADSs. In addition, any future adoption by the Argentine government of restrictions to the movement of capital out of Argentina may affect the ability of our foreign shareholders and holders of ADSs to obtain the full value of their Class B Shares and ADSs, and may adversely affect the market value of the ADSs.

Trading of Telecom Argentina’s Class B Shares in the Argentine securities markets is limited and could experience further illiquidity and price volatility.

Argentine securities markets are substantially smaller, less liquid and more volatile than major securities markets in the U.S. In addition, Argentine securities markets may be materially affected by developments in other emerging markets, particularly other countries in Latin America. Our Class B Shares underlying ADSs are less actively traded than securities in more developed countries and, consequently, an ADS holder may have a limited ability to sell the Class B Shares underlying ADSs upon withdrawal from the ADSs facility in the amount and at the price and time that it may desire. This limited trading market may also increase the price volatility of the Class B Shares underlying the ADSs.

Holders of ADSs may be adversely affected by currency devaluations and foreign exchange fluctuations.

If the Peso exchange rate falls relative to the U.S. dollar, the value of the ADSs and any distributions made thereon from the depositary could be adversely affected. Cash distributions made in respect of the ADSs may be received by the depositary (represented by the custodian bank in Argentina) in Pesos, which will be converted into U.S. dollars and distributed by the depositary to the holders of the American Depositary Receipts (“ADRs”) evidencing those ADSs if in the judgment of the depositary such amounts may be converted on a reasonable basis into U.S. dollars and transferred to the United States on a reasonable basis, subject to such distribution being impermissible or impracticable with respect to certain ADR holders. In addition, the depositary will incur foreign currency conversion costs (to be borne by the holders of the ADRs) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to the ADSs.

The relative volatility and illiquidity of the Argentine securities markets may substantially limit your ability to sell the Class B Shares underlying the ADSs on the BYMA at the price and time desired by the shareholder.

Investing in securities that trade in emerging markets, such as Argentina, often involves greater risk than investing in securities of issuers in the United States, and such investments are generally considered to be more speculative in nature. The Argentine securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States, and is not as highly regulated or supervised as some of these other markets. There is also significantly greater concentration in the Argentine securities market than in major securities markets in the United States. The ten largest companies in terms of market capitalization represented approximately 62% of the aggregate market capitalization of the BYMA as of December 31, 2021. Accordingly, although shareholders are entitled to withdraw the Class B Shares underlying the ADSs from the depositary at any time, the ability to sell such shares on the BYMA at a price and time shareholders might want may be substantially limited.

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We are traded on more than one market and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets.

Trading in the Class B Shares underlying ADSs or ADSs in the United States and Argentina, respectively, will use different currencies (U.S. dollars on the NYSE and Pesos on the BYMA), and take place at different times (resulting from different trading platforms, different time zones, different trading days and different public holidays in the United States and Argentina). The trading prices of the Class B Shares underlying ADSs on these two markets may differ due to these and other factors. Any decrease in the price of the Class B Shares underlying ADSs on the BYMA could cause a decrease in the trading price of the ADSs on the NYSE. Investors could seek to sell or buy the Class B Shares underlying ADSs to take advantage of any price differences between the markets through a practice referred to as “arbitrage”. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the ADSs available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and withdraw the underlying Class B Shares for trading on the other market without effecting necessary procedures with the depositary. This could result in time delays and additional cost for holders of ADSs.

As a foreign private issuer, we will not be subject to U.S. proxy rules and will be exempt from filing certain reports under the Securities Exchange Act of 1934.

As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act of 1934 (the “Exchange Act”) related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act, and we are generally exempt from filing quarterly reports with the SEC under the Exchange Act.

In addition, if a majority of our directors or executive officers are U.S. citizens or residents, we will lose our foreign private issuer status and we will fail to meet additional requirements necessary to avoid such loss. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory for us. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher for us. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We will have to present our financial statements under US GAAP and may also be required to modify certain of our policies to comply with corporate governance practices applicable to U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

If we do not file or maintain a registration statement and no exemption from the Securities Act of 1933 (“Securities Act”) registration is available, U.S. holders of ADSs may be unable to exercise preemptive rights granted to our holders of Class B Shares underlying ADSs.

Under the GCL, if we issue new shares as part of a capital increase, our shareholders may have the right to maintain their existing ownership percentage in the Company through the subscription of a proportional number of shares of the same class in case the capital increase is made in shares of all four of our classes of shares in their respective proportions, or through the subscription of a proportional number of the shares of the class being issued if the relative proportion among the four classes is not respected. Rights to subscribe for shares in these circumstances are known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata basis, known as accretion rights.

According to our Bylaws, in the case of a capital increase through the issuance of all four of our classes of common stock (Class A ordinary shares, Class B shares, Class C ordinary shares and Class D ordinary shares), accretion rights of the holders of each class shall be limited to the shares of the same class for which there has been no subscription. Also if, after accretion rights have been exercised within the Class B and Class C shares, there are any unsubscribed shares, such unsubscribed Class B or Class C shares may be subscribed by the shareholders of the rest of our classes of common stock, with no distinction, in proportion to the shares of common stock for which such shareholder has subscribed on such occasion.

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Upon the occurrence of any future increase in our Class B Shares, U.S. persons (as defined in Regulation S under the Securities Act) holding our Class B Shares underlying ADSs or ADSs may be unable to exercise preemptive and accretion rights granted to our holders of Class B Shares underlying ADSs in connection with any future issuance of our Class B Shares underlying ADSs unless a registration statement under the Securities Act is effective with respect to both the preemptive rights and the new Class B Shares underlying ADSs, or an exemption from the registration requirements of the Securities Act is available.

We are not obligated to file or maintain a registration statement relating to any preemptive rights offerings with respect to Telecom Argentina’s Class B Shares underlying ADSs, and we cannot assure that we will file or maintain any such registration statement or that an exemption from registration will be available. Unless those Class B Shares underlying ADSs or ADSs are registered or an exemption from registration applies, a U.S. holder of Telecom Argentina’s Class B Shares underlying ADSs or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be assigned by the ADS depositary. If the rights cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of shares or ADSs located in the U.S. may be diluted proportionately upon future capital increases.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE, which may limit the protections afforded to investors.

We are a “foreign private issuer” within the meaning of the NYSE corporate governance standards. Under NYSE rules, a foreign private issuer may elect to comply with the practices of its home country and not comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the exchange. We currently follow certain Argentine practices concerning corporate governance and intend to continue to do so. For example, according to Argentine securities law, our audit committee, unlike the audit committee of a U.S. issuer, will only have an “advisory” and/or “supervisory” role, such as assisting our board of directors with the evaluation, the performance and independence of the external auditors and exercising the function of our internal control. Accordingly, holders of our ADSs will not have the same protections afforded to shareholders of U.S. companies that are subject to all of the NYSE corporate governance requirements.

We are organized under the laws of Argentina and holders of the ADSs may find it difficult to enforce civil liability claims against us, our directors, officers and certain experts.

We are organized under the laws of Argentina. A significant portion of our and our subsidiaries’ assets are located outside the U.S. Furthermore, almost all of our directors and officers and some advisors named in this Annual Report reside in Argentina. Investors may not be able to effect service of process within the U.S. upon such persons or to enforce against them or us in U.S. courts judgments predicated upon the civil liability provisions of the federal securities laws of the U.S. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the U.S., including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to bring an original action in an Argentine court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons.

In addition, a portion of our assets is not subject to attachment or foreclosure, as they are used for the performance of the public service we provide. In accordance with Argentine law, as interpreted by the Argentine courts, assets which are necessary for the provision for an essential public service may not be attached, whether preliminarily or in aid of execution.

Prior to any enforcement in Argentina, a judgment issued by a U.S. court will be subject to the requirements of 517 through 519 of the Argentine Federal Civil and Commercial Procedure Code if enforcement is sought before federal courts or courts with jurisdiction in commercial matters of the Autonomous City of Buenos Aires. Those requirements are: (1) the judgment, which must be valid and final in the jurisdiction where rendered, was issued by a competent court in accordance with the Argentine principles regarding international jurisdiction and resulted from a personal action, or an in rem action with respect to personal property which was transferred to Argentine territory during or after the prosecution of the foreign action; (2) the defendant against whom enforcement of the judgment is sought was personally served with the summons and, in accordance with due process of law, was given an opportunity to defend against foreign action; (3) the judgment must be valid in the jurisdiction where rendered, and its authenticity must be established in accordance with the requirements of Argentine law; (4) the judgment does not violate the principles of public policy of Argentine law; and (5) the judgment is not contrary to a prior or simultaneous judgment of an Argentine court. Any document in a language other than Spanish, including, without limitation, the foreign judgment and other documents related thereto, requires filing with the relevant court of a duly legalized translation by a sworn public translator into the Spanish language.

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Cablevisión Holding S.A. (“CVH”), and through CVH, GC Dominio S.A. (“GC Dominio”), have the ability to determine the outcome of any shareholder decision relating to significant matters affecting us.

CVH owns Class D Shares representing 28.16% of Telecom Argentina’s total capital stock —directly and indirectly through its wholly owned subsidiary VLG. GC Dominio owns 26.44% of the total capital stock of CVH, which represents 64.24% of the voting stock and votes of CVH. Fintech Telecom LLC (Fintech or FTL) owns Class A Shares representing 20.83% of the total capital stock of Telecom Argentina, and additionally owns Class B Shares in the form of ADSs representing 9.2% of total stock of Telecom Argentina.

On April 15, 2019, FTL, CVH and VLG entered into the Voting Trust Agreement (as defined below) pursuant to which FTL and VLG contributed certain shares to the Voting Trust (as defined below). Except in respect of certain veto matters, the co-trustee appointed by CVH must vote all the shares contributed to the Voting Trust on all matters presented for vote generally to Telecom Argentina stockholders, in the same manner that CVH votes its shares in Telecom Argentina or as instructed by CVH. For more information about the Voting Trust, see “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders—Telecom Shareholders’ Agreement”.

Through its ownership of Telecom Argentina Class D Shares and pursuant to the arrangements resulting from the Telecom Shareholders’ Agreement and the Voting Trust, CVH, as a general matter, has the ability to determine the outcome of any action requiring our shareholders’ approval (except for veto matters). In addition, our bylaws provide Class A and Class D Shares, and the directors appointed by Class A and D Shares, with veto powers, with respect to certain matters relating to us. See “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders—Telecom Shareholders’ Agreement”.

We conducted transactions with the shareholders of Nortel and/or Sofora, including Fintech and its affiliates in the past, and with CVH and its affiliates as from January 1, 2018. Certain decisions concerning our operations or financial structure may present conflicts between our interests and those of our shareholders.

Nevertheless, all of our related-party transactions are made on an arm’s-length basis. Related-party transactions involving Telecom Argentina that exceed 1% of its shareholders’ equity are subject to a prior approval process established by Law No. 26,831, Telecom’s Bylaws and the Rules of the Executive Committee to verify that the agreement could reasonably be considered to be in accordance with normal and habitual market practice. See “Item 7—Major Shareholders and Related Party Transactions—Related Party Transactions”.

The existence and outcome of any public tender offer for our Class B Shares and/or ADSs could affect the price of our Class B shares and ADSs.

On June 21, 2018, CVH informed the Company that it was promoting and formulating a mandatory public tender offer for all Class B Shares issued by Telecom Argentina due to the acquisition of control in Telecom Argentina. The mandatory public tender offer has been suspended by Argentine courts. See “Item 4—Information on the Company— Introduction—Public Tender Offer due to change of control”. The existence and outcome of any tender offer for our shares and/or ADSs would have an impact over the prices of our Class B shares and ADSs, which could result in a decline in the value of your investment.

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ITEM 4.   INFORMATION ON THE COMPANY

INTRODUCTION

The Company

Telecom Argentina was created by Decree No. 60/90 of the PEN dated January 5, 1990, and incorporated as “Sociedad Licenciataria Norte S.A.” on April 23, 1990. In November 1990, its legal name was changed to “Telecom Argentina STET-France Telecom S.A.” and on February 18, 2004, it was changed to “Telecom Argentina S.A.”

Telecom Argentina is organized as a corporation (sociedad anónima) under Argentine law. The duration of Telecom Argentina is 99 years from the date of registration with the IGJ (July 13, 1990). Telecom Argentina conducts business under the commercial name “Telecom”.

On January 1, 2018, the transfer of Cablevisión’s operations to Telecom Argentina took place. As a result, the Merger between Telecom Argentina and Cablevisión became effective, and on that date Telecom assumed Calevisión’s then existing operations.

We are one of the largest private-sector companies in Argentina in terms of revenues, net income, capital expenditures and number of employees. In terms of subscribers, we are one of the largest telecommunications, cable television and data transmission service providers in Argentina and one of the largest cable television services providers across Latin America. Additionally, we are an important Multiple Systems Operator (“MSO”, a company that owns multiple cable systems in different locations under the control and management of a single, common organization) in Argentina in terms of subscribers.

We offer our customers “quadruple play” services, combining mobile telephony services, cable television services, Internet services and fixed telephony services. We also provide other telephone-related services such as international long-distance and wholesale services, data transmission and IT solutions outsourcing and we install, operate and develop cable television and data transmission services. We provide our services in Argentina (mobile, cable television, Internet and fixed and data services), Paraguay (mobile, Internet and satellite TV services), Uruguay (cable television services) and the United States (fixed wholesale services).

As of December 31, 2021, (i) our mobile telephony business had approximately 20,129 thousand subscribers in Argentina and approximately 2,414 thousand subscribers in Paraguay, (ii) our Internet business reached approximately 4,248 thousand accesses, (iii) our cable television business had approximately 3,563 thousand subscribers and (iv) we had approximately 2,417 thousand fixed telephony lines in service.

In 2021, our revenues amounted to P$425,493 million, our net income amounted to P$9,940 million, our Adjusted EBITDA (see the purpose of use of Adjusted EBITDA and reconciliation of net income to Adjusted EBITDA in “Item 5—Operating and Financial Review and Prospects—(A) Consolidated Results of Operations—Adjusted EBITDA”) amounted to P$132,767 million and we had total assets of P$1,079,114 million.

The Securities and Exchange Commission maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. Telecom Argentina’s telephone number is 54-11-4968-4000, and its principal executive offices are located in Gral. Hornos 690, (C1272) Buenos Aires, Argentina. Our internet address is https://institucional.telecom.com.ar. The contents of our website and other websites referred to herein are not part of this Annual Report.

Our authorized agent in the United States for SEC reporting purposes is Puglisi & Associates, 850 Library Avenue, Suite 204, P.O. Box 885, Newark, Delaware 19711.

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Subsidiaries

As of December 31, 2021, Telecom Argentina’s subsidiaries were Núcleo S.A.E, PEM S.A.U, Cable Imagen S.R.L., Televisión Dirigida S.A., Adesol S.A., AVC Continente Audiovisual S.A., Inter Radios S.A.U., Telecom Argentina USA Inc, Personal Smarthome S.A., Micro Sistemas S.A.U. and Opalker S.A. For further information on our subsidiaries, see Exhibit 8.1 to this Annual Report.

Public Tender Offer due to change of control

On June 21, 2018, CVH informed the Company that it was promoting and formulating a mandatory public tender offer due to a change of control (“PTO”) for all Class B Shares issued by Telecom Argentina listed on BYMA (including outstanding Class C Shares of Telecom Argentina that might be converted into Class B Shares before the expiration deadline) (the “PTO Shares”) at a price of P$110.85 per PTO Share (previously deducting the items detailed in the PTO announcement).

Pursuant to public releases published by CVH, as part of the administrative process to authorize the PTO, the CNV expressed its disagreement with the price announced by CVH, and took the position that the price per PTO Share should be US$4.8658 payable in Argentine Pesos at the foreign exchange rate in effect on the business day immediate prior to the settlement of the PTO. CVH considered the CNV’s position unfounded and initiated the legal proceeding “Cablevisión Holding S.A. c/ Comisión Nacional de Valores s/ Medidas Cautelares” (File. No. 7998/18) in the Federal Civil and Commercial Court No. 3. On November 1, 2018, the Federal Civil and Commercial Court No. 3 confirmed a preliminary injunction obtained by CVH and ordered the CNV to abstain for six months from issuing any decision with respect to the authorization of the PTO promoted by CVH on June 21, 2018.

On June 10, 2019 CVH informed Telecom that on such date CVH was served with notice of a preliminary injunction rendered on May 9, 2019 in the case “Burgueño Daniel v. Executive Branch - CNV on (Autonomous) Preliminary Injunction” (File No. 89537/18) pending before the Court of Appeals on Administrative Litigation Matters No. 1, Secretariat No. 1, suspending the process relating to the PTO until the CNV resolves on the applicability of Resolution No. 779/18 or the expiration of the term contemplated in section 5 of Law No. 26,854 governing injunctions. This preliminary injunction was extended by several succeeding court decisions, being the last one the court decision rendered on May 15, 2020, which extended the mentioned preliminary injunction for six months.

On July 6, 2020 CVH informed Telecom that on such date CVH was served with notice of a decision rendered on July 3, 2020 by the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters in re “Burgueño Daniel v. Executive Branch - CNV on (Autonomous) Preliminary Injunction” (File No. 89537/18), whereby said Court decided to interrupt the judicial recess period only to consider the appeal filed by the CNV on May 26, 2020, dismiss such appeal and, consequently, confirm the extension of the preliminary injunction granted thereunder.

On the other hand, on July 19, 2019, CVH was served with notice of a resolution rendered on the same date by the Chamber I of the Federal Civil and Commercial Court of Appeals in re “Cablevisión Holding S.A. v. Argentine Securities Commission on Injunctions” (File No. 7998/18), lifting the preliminary injunction granted to CVH whereby the CNV was ordered to abstain from issuing any decision with respect to the authorization of the PTO. The resolution also provided that an appeal by CVH of the CNV’s decision with respect to the PTO would have a suspensive effect. CVH filed an extraordinary appeal against the Federal Civil and Commercial Court of Appeals’ decision, which was dismissed on December 26, 2019. However, as explained above, the PTO remained at the time subject to the preliminary injunction obtained by a shareholder of CVH – Daniel Burgueño – in the separate legal proceedings mentioned in the previous paragraphs.

On November 26, 2019, CVH was served with a notice of a proceeding initiated by a shareholder of CVH, Mr. Daniel Burgueño, in re “Burgueño, Daniel Fernando v. EN-CNV s/ Proceso de Conocimiento” (File No. 33763/19), pending before the National First Instance Court on Federal Administrative Litigation Matters No. 1, Secretariat No. 1. Mr. Burgueño seeks the court to rule that CVH is not required to conduct the PTO as a result of the change of control in Telecom in light of paragraph k) of Section 32 of Resolution CNV No. 779/18, regulating Law No. 26,831 (as amended by Law No. 27,440).

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On December 27, 2019, CVH informed Telecom that on such date CVH was served with notice of the first instance court’s decision in re “Burgueño, Daniel Fernando v. EN-CNV s/ Proceso de Conocimiento” (File No. 33763/19) ruling in favor of the complaint brought by Mr. Burgueño, confirming that CVH does not have the obligation to conduct a PTO according to Resolution CNV No. 779/18, specifically Section 32, paragraph k), and ordering the CNV to deem the proceedings initiated in connection with the PTO concluded, and also ordered CVH to cease with the PTO.

On September 8, 2020 CVH informed Telecom that on such date CVH was served with notice of a decision rendered by the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters in re “Burgueño, Daniel Fernando v. EN - CNV s/ Proceso de Conocimiento” (File. No. 33763/19), rejecting the appeal filed by the CNV of the decision rendered by the court of first instance mentioned in the prior paragraph.

Finally, on October 29, 2020, CVH informed Telecom that on such date CVH was served with notice of the judgment rendered by the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters in re “Burgueño, Daniel Fernando v. EN - CNV s/ Proceso de Conocimiento” (File. No. 33763/19) dismissing the extraordinary appeal filed by the CNV against the first instance judgment rendered on September 8, 2020 mentioned in the prior paragraph.

On February 17, 2022, the Supreme Court of Justice dismissed the direct appeal filed by the CNV, not admitting the extraordinary appeal filed by the CNV against the resolution rendered by Chamber V of the Federal Court of Appeals on Administrative Litigation Matters. The resolution of the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters (the “Resolution”) had confirmed the ruling issued by the Court of First Instance in favor of the complaint brought by a shareholder of CVH, Mr. Daniel Fernando Burgueño. The Resolution confirmed that CVH’s obligation to conduct a tender offer to acquire the PTO Shares as a result of the change of control in Telecom terminated upon the issuance by the CNV of Resolution No. 779/2018 regulating Law No. 26,831, specifically Article 32, paragraph k) thereof; ordered the CNV to deem the proceedings initiated by CVH with the CNV in connection with the tender offer concluded; and informed CVH that it must cease the proceedings it had initiated in connection with the tender offer. CVH has indicated that it will adopt all measures aimed at complying with the abovementioned judgment (including taking all corporate action as may be necessary in furtherance of the termination of the PTO) in due course.

Significant 2021 Events

Rates regulation

On August 22, 2020, the PEN issued Decree No. 690/20, amending the LAD. Decree No. 690/20 declared ICT services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks for and between licensees as “Essential and Strategic Competition Public Services”, and empowered ENACOM to ensure accessibility. Decree No. 690/20 further established that (i) the prices of the Essential and Strategic Competition Public ICT Services, (ii) the prices of those services provided in accordance with the Universal Service, and (iii) the prices of those services determined by ENACOM for public interest reasons, shall be regulated by ENACOM. Moreover, Decree No. 690/20 established that ENACOM is the agency responsible for the enactment any regulation related to the ICT’s PBU, and also suspended any prices increases or changes set or announced by the ICT’s licensees from July 31, 2020 to December 31, 2020. Decree No. 690/20 has been ratified by the Argentine Congress under Law No. 26,122 and has been regulated through ENACOM Resolutions Nos. 1,466/20 and 1,467/20.

Resolution No. 1,466/20, among others, allowed ICT licensees providing Internet access services, subscription broadcasting services through physical, radio-electric or satellite link, fixed telephony services and mobile telecommunications services to increase retail prices for services up to 5% during January 2021. In order to establish the percentages approved, licensees must consider the prices effective as of July 31, 2020 as the price of reference. Such Resolution also provides that ICT Services Licensees may request a higher increase on an exceptional basis in accordance with the provisions of Section 48 of the LAD.

Resolution No. 1,467/20 regulated the PBU provided by Decree No. 690/20 for the different services provided by ICT licensees, establishing the price and the characteristics of each service plan. The Resolution also defines the beneficiaries of this PBU, among other matters.

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The Company has initiated legal proceedings before the Federal Court of Appeals on Administrative Litigation Matters challenging the constitutionality of Decree No. 690/20 and the aforementioned ENACOM Resolutions and requesting a preliminary injunction that would suspend its application.

For further information about Decree No. 690/20, its related regulation and the related legal proceedings, see “Item 4 —Regulatory Authorities and Framework— Amendment to Law No. 27,078 – Argentine Digital Law”.

Impact of COVID-19 in Argentina and in our operations

During 2021, the Argentine government continued adopting several measures to address the adverse effects of the COVID-19 pandemic and to prevent the spread of the virus. By the end of 2020, Argentina launched a nation-wide vaccination plan supervised by national and provincial authorities aimed at immunizing Argentina’s population. During the first quarter of 2021 the national vaccination plan aimed at immunizing the elder population, as well as health care and education personnel. During the second and third quarter of 2021, the national vaccination plan extended its scope of application to the remaining adult population. Since October 2021, the vaccination plan extended its target population to children over 3 years of age, prioritizing those with pre-existing comorbidities. Currently, more than 80% of the Argentine population has been vaccinated with one dose and about 65% with two doses.

Aiming at increasing the population’s immunity to new COVID-19 variants continue to spread around the world (such as Delta and Omicron, among others), the Argentine government began vaccinating with a third booster shot to people that have received two doses of the vaccine. Like the rest of the world, Argentina does not escape the exponential rise in infections that, since the end of 2021 and early 2022, has been strongly affecting all age groups.

During 2021, together with the progress of the vaccination schedule, the Argentine government took several measures in response to how the situation concerning COVID-19 evolved, both during the COVID-19 new outbreak stages and during the slowdown stages of the spread of the virus. The measures implemented by the Argentine government did not directly affect our operations because telecommunication services were, and are still, deemed essential.

We provide valuable services to society, by connecting people, homes, companies and governments remain connected. Our services also allow small, medium and large companies to remain in business, and therefore contribute to sustain our country’s economy. Moreover, since the beginning of the COVID-19 outbreak our services have allowed people to stay connected and entertained, as well as to work from home and remain informed. Initially during the COVID-19 pandemic, our operations became slower and more complex due to certain difficulties such as the increase in Internet data traffic, the increase in mobile voice service, the decrease in collections, and mainly limitations on our ability to conduct  repairs and installations inside customers’ homes, among others. However, our operations continued and we expect them to continue despite such difficulties, as the pandemic did not have significant impact on our financial condition or results of operations.

For further information, related to the impact of COVID-19 and the internal or external measures we promoted during the sanitary emergency, see “Item 3—Risk Factors— Risks Relating to Argentina—The coronavirus and the measures taken or to be implemented by the Argentine government in response to the coronavirus have had and could continue to have a significant adverse effect on our business operations” and Note 29 of our Consolidated Financial Statements.

Re branding

During 2021, the Company has carried out a transformation and integration process of its business. The goal of this process was to consolidate a new institutional visual identity, as well as to simplify the brand portfolio: Flow, Personal and Telecom.

The new identity reflects the transformation towards a digital service platform and new businesses based on technological innovation, showcasing integral connectivity as a differential value through Personal.

In addition, as a meeting point for entertainment led by Flow, we focused on the content experience of both mobile and at home platforms.

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Through the Telecom brand, we continue to bring digital solutions to the corporate and government segment contributing to their development and growth.

For further information see below Item 4— The Business — Main Products and Services.

Debt renegotiation

On December 15, 2021, the Company has refinanced the loans duly disbursed under the following loan agreements entered into between:

● Telecom Personal S.A. (company absorbed by the Telecom Argentina) and the International Finance Corporation (“IFC”) on October 5, 2016, for a total amount up to US$ 400 million.

● The Company and the Inter-American Investment Corporation, acting on its own behalf and as agent of the Inter-American Development Bank (i) loan agreement dated April 7, 2017, for a total amount of up to US$100 million, and (ii) loan agreement dated May 29, 2019, for a total amount of up to US$300 million.

These loans were amended to extend the terms with respect to most of the principal maturities foreseen for 2022 and 2023, resulting in new maturity schedules that will end in 2024 and 2027 for each Loan, respectively, and essentially maintaining the rest of the original terms and conditions.

For further information, see Note 13 of our Consolidated Financial Statements and Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Liquidity and Capital Resources —Financial Debt Developments during 2021.

Recent Developments

Loans for purchase of equipment - Export Development Canada (EDC)

On January 3, 2022, the Company submitted a proposal for an export credit line for a total amount of up to US$23.4 million to the following entities: (i) JPMorgan Chase Bank, N.A., London Branch, as agent of the facility, initial lender and residual risk guarantor, and (ii) JPMorgan Chase Bank, N.A., Buenos Aires branch as onshore custody agent,, and (iii) JPMorgan Chase Bank, NA and EDC as lead co-organizers, which was accepted on the same date.

The line of credit is guaranteed by EDC, the official export credit agency of Canada.

The funds received will be used to finance up to 85% of the value of certain imported goods and services, up to 50% of the value of certain national goods and services and the total payment of the EDC surplus equivalent to 14.41% of the total amount committed by the lenders under the line of credit.

As of the date of this Annual Report, the Company has not received any disbursement related to the aforementioned credit line.

Offers for Irrevocable Call Option on the minority Shares of Open Pass S.A.

On December 29, 2021, our subsidiary Micro Sistemas received from two shareholders of Open Pass S.A. (a company that provides IT services related to software development and maintenance, with which Micro Sistemas has a contract for the use and development of the electronic wallet platform) offers for irrevocable call options for a total of 6,999,580 shares (representing 15% of total Open Pass S.A. capital stock). On January 4, 2022, Micro Sistemas accepted the offers by paying US$700,000 as consideration for the granting of said purchase options.

The call options could be exercised by Micro Sistemas, at its sole discretion, during a period of twelve (12) months from the date of acceptance.

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The call options include, together with the shares, the assignment and transfer of all the economic and political rights inherent therein. If the options are exercised, the price to be paid for the shares has been determined at US$7,500,000.

Global Programs for the issuance of Notes

In connection with the Notes Global Program for a maximum outstanding amount of US$3,000 million or its equivalent in other currencies, we announced the issuance of new series of notes. On March 9, 2022, we issued notes for a nominal amount of US$27.7 million, at an annual fixed interest rate of 1.00%, which principal will be fully amortized in a single installment on the maturity date, on March 9, 2027. On March 9, 2022, we issued notes for a nominal amount of P$2,347,500,000, at a variable interest rate equivalent to Badlar plus an applicable margin of 1.5% annual nominal amount, which principal will be fully amortized in a single installment on the maturity date, on September 9, 2023.

Banco Santander Río Loan

On March 9, 2022, the Company entered into a loan agreement with Santander Río Bank S.A. for a total amount of P$3,500, maturing on March 9, 2023 and bearing interest at a fixed rate of 44.50%. The principal amount will be fully amortized in a single installment on the maturity date.

THE BUSINESS

The Executive Committee and the CEO have a strategic and operational vision of Telecom as a single business unit in Argentina that is consistent with the current regulatory context of the converged ICT services industry. The Executive Committee and the CEO receive periodic economic and financial information of Telecom and its subsidiaries treating all operations as a single segment. On the basis of this information, they assess the evolution of business as a single unit of generation of results, managing resources accordingly to achieve the objectives. Under applicable accounting principles (provided by IFRS 8), it was defined that the Company has a single segment of operations in Argentina.

Also, Telecom carries out activities abroad (Paraguay, Uruguay and the United States). These operations are not analyzed as separate segments by the Executive Committee and the CEO, who analyze the consolidated information of Telecom and its subsidiaries in Argentina and abroad, taking into account that activities of foreign companies are not significant for Telecom. For a breakdown of total revenues by category of activity, please see “Item 5 – Operating and Financial Review and Prospects”. For more information, see Note 1.c) of our Consolidated Financial Statements.

Main Products and Services

As of December 31, 2021 we offered our customers a diverse range of services, including:

● Mobile Telephony Services: Services offered under the brand “Personal,” including voice communications and high-speed mobile Internet, among others; and sale of mobile communication devices (handsets, modems MiFi and wingles), which we have the ability to finance through alliances with certain financial entities. The services are supported in the different technologies of the mobile network (3G/4G);

● Internet Services: High-speed cable modem, Fibert to the Home and ADSL Internet services offered under “Personal” brand. During 2021, the Company carried out a brand simplification process, pursuant to which the services previously provided under the brand “Fibertel” brand are now part of the “Personal” brand, aiming at consolidating “Personal” as the central brand related to connectivity. Such services provide speeds for up to 1,000 MB;

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● Cable Television Services: Cable television services involve the operation of cable television networks installed in different locations in Argentina and Uruguay. In the context of the brand simplification process, we have unified our television services under the “Flow” brand. Through Flow, the company seeks to consolidate itself as an “entertainment meeting point”, offering the possibility of accessing a platform with live content. Flow also integrates OTT services allowing the client to have direct access to other content providers such as Netflix, Amazon, Disney +, Star + and HBO Max. In addition, we offer other traditional services such as “Clásico”, our basic analog cable television product; “Digital” provided through a digital decoder that gives subscribers access to radio and music channels, among others, and “HD”, provided through a high-definition decoder. On the other hand, through Tuves, we have a license for the provision of DATDH (Distribution of Audio Signals and Direct Television to the Home) services in Paraguay; and

● Fixed and Data Services: voice communications, supplementary services, interconnection with other operators, data services (mainly virtual private networks, dedicated transit, signal transport signals), and IT solution outsourcing, among others.

Mobile Telecommunications Services

Overview

Our mobile telecommunications service offerings in Argentina under the brand “Personal” include voice communications, high-speed mobile Internet content and applications download and online streaming, among others, as well as the sale of mobile communication devices (handsets, Modems MiFi and wingles, smart watches).

As of December 31, 2021, we had approximately 20,129 thousand mobile subscribers in Argentina.

Through Personal, we provide mobile services on 850 MHz in the Northern Region and AMBA, 1,900 MHz, 700 Mhz and AWS (paired frequencies in 1,700 MHz and 2,100MHz) in the whole country and 900 Mhz and 2,600 Mhz assigned by localities.

Residential and Corporate Services

We offer mobile telecommunication services to residential and corporate subscribers through a variety of flexible options. These options include prepaid, post-paid and “Abono Fijo” (mixed) plans.

● Prepaid Plans. Under prepaid plans, subscribers pay in advance for services, using prepaid credit. Since there are no monthly bills, prepaid plans allow subscribers to communicate with maximum flexibility while maintaining control over their consumption. Prepaid credit can be purchased through prepaid cards or virtual credit on our website, by phone, at ATMs and drugstores, or through authorized agents. Our mobile telecommunication subscribers may browse the Internet, make and receive local, national and international calls and buy multimedia content. We offer a variety of “packs” which enable customers to use the abovementioned services at lower prices. These packs may include a fixed amount of minutes to make national or international calls, SMSs, and a quota of megabytes to access the Internet, among other services.

● Post-Paid Plans. Under post-paid plans, subscribers pay a monthly fee for a particular plan, plus charges for additional services not included in that plan. Most of the plans we offer include a quota of megabytes for browsing the Internet and unlimited airtime for on-network calls and SMS. Depending on the price, some plans include an amount of free seconds or unlimited airtime for off-network calls. Once the included seconds have been used, subscribers can continue using the mobile service at a set price per second. Subscribers can also buy packs of additional megabytes to continue browsing the Internet after they have used the megabytes included in their monthly plan. The charges for additional airtime, megabytes or multimedia content, are added to the following month’s bill. Under post-paid plans, we also offer M2M plans, based on the IoT concept, which refers to the digital interconnection of everyday objects with the Internet, and are specially focused on business customers. These plans include solutions such as geolocation and fleet monitoring, refrigeration control, information security solutions, sales management solutions, and cloud solutions for information storage and protection.

● Abono Fijo. Under the “Abono Fijo” plans, a subscriber pays a set monthly bill. As in post-paid plans, most of these plans include a quota of megabytes for browsing the Internet, unlimited airtime for on-net and off-net calls, SMS and a fixed amount of credit that can be used to buy packs or multimedia contents. Once the prepaid seconds have been used or the Internet quota has been met, the subscriber can obtain additional credit by recharging its line through the prepaid system.

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Our strategy during 2021 focused on further promoting the consumption of high-speed services by providing upgrades and improving the experiences of certain customers, and more generally addressing the needs of small, medium and large customers.

The main developments in our residential and corporate services during 2021 were the following:

● our offer of mobile services ranged from prepaid plans to postpaid plans, and between 3 Gigas and 25 Gigas;

● we focused on the development of convergent offers for our customers, offering additional bonuses upon the purchase of various services, to increase customer loyalty. We extended the initiative to corporate customers, seeking to increase services convergence;

● we continued to develop our service “Mi Negocio Personal” (My Personal Business), an e-commerce platform that allows micro-entrepreneurs to digitize the commercial experience of their business and sell to its customers in a personalized way through social networks chosen and with integrated payment methods;

● we launched “Personal Pay”, the digital wallet of Personal, that aspires to become the main transactional means for payments and collections from Telecom clients and the largest wallet in Argentina; and

● as our customers’ internet consumption evolved, we worked in international services while focusing on increasing the efficiency of international traffic management, minimizing the cost of the service to sustain the simplification and evolution of the roaming offer and achieve a higher perceived quality. We added higher national and international roaming data quotas for America and Europe to our mobile plans.

Wholesale Services

Our mobile telecommunications infrastructure also enables us to provide the wholesale services summarized below.

● International Business. . During 2021, the National Government maintained the restrictions on international flights due to the COVID-19 pandemic, limiting both the use of roaming by foreigners in Argentina and by our Customers that use the international coverage we provide abroad. We stayed focused on maximizing the profitability of the international roaming business by streamlining costs and maximizing the capture of traffic of roaming partners generated in Telecom's network. In this regard, we continued with the launch of the new 3G, 4G/LTE, CAMEL (“Customized applications for mobile network enhanced logic”) services with a focus on Telecom’s network in order to increase consumption. We also continued offering services to Personal’s customers, providing the best user experience to our customers. Both the generation of new agreements and the negotiation of renewals with all our Roaming Partners include the needs of Personal Paraguay, thus promoting joint efficiencies and synergies.

In addition, by the end of 2021, we upgraded the firewall service (security/system layer, designed to block unauthorized access) which safeguards our network, providing full protection to our customers, and enabling us to optimize the monetization of the national and international A2P messaging business (Application to Person Messaging). We also updated the agreements executed with national A2P aggregators allowing for International A2P Messaging.

● Domestic Business. The revenues and costs of Telecom’s wholesale businesses with domestic operators are mainly related to interconnection traffic charges (call origination/termination, long distance transport and transit, both on the mobile network and on the fixed network); sale of interconnection service resources, sale of infrastructure to Large Groups (Datacenter Services, Mobile Backhaul, Links, etc.), national roaming, and lease of conventional and non-conventional infrastructure sites.

In order to meet the 4G coverage deployment requirements provided by regulations, the industry agreed on a new active network infrastructure sharing form called RAN Sharing. It allows us to optimize deployment times and the investments required to provide 4G coverage to a larger number of locations and roads in Argentina.

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During 2021, Telecom continued to consolidate the joint and coordinated work between the three mobile operators in Argentina for enabling sites under this modality.

Network and Equipment

In terms of infrastructure, during 2021 we improved the services we provide by deploying the 4G / LTE network, together with the technological reconversion of our 2G / 3G networks, and the deployment of fiber optics to connect all homes with broadband, which also had an impact on fixed and data network. This allowed us to stand out from our competitors, significantly improving the NPS of our clients.

During 2021, service providers in Argentina continued to make significant capital expenditures in new network infrastructure for the enhancement and deployment 4G technology, which allows higher transmission speeds needed for data transfer, video calling and Internet browsing to also improve coverage.

The deployment of 4G / LTE reached a coverage of 96% of urban population, in 1,947 localities as of December 31, 2021. Additionally, we reached a coverage of 98% of the population of major cities of Argentina, as of that date. In addition, the deployment of 4G + services continued to advance throughout the country, thanks to the solution of Carrier Aggregation 4G (using two simultaneous frequency bands). Our customers with access to our 4G network perceive a better service experience, primarily with faster speeds that reach 300 Mbps, with capacity to reach speeds of 1,000 Mbps. On the other hand, approximately 33% of the calls are made by Volte, a technology that allows making and receiving voice calls over the 4G Network with substantial improvements in audio and video quality.

Additionally, we continued to deploy the mobile sites connectivity in order to achieve better quality and capacity, replacing radio links with high capacity fiber optics connections.

Finally, a plan for the deployment of mobile sites with satellite backhaul was started (a network that connects mobile access sites with stations through satellite links) in order to reach remote areas with low population density to provide them with connectivity.

In February 2021, we set-up the first 5G network in Argentina, putting into operation 10 mobile antennas in the cities of Buenos Aires and Rosario to use with suitable devices. We used Dynamic Spectrum Sharing (“DSS”), a technology leveraged on the current 4G network, that allows to turn on 5G accesses dynamically and on demand. The 5G network will allow speeds of 10Gbps, and provides greater capacity for connected devices, coverage and features than 4G and 4.5G networks.

At the beginning of 2022, Telecom announced the expansion of its 5G network over Personal's mobile network in Mar del Plata, Pinamar and Cariló. In this way, we continue to promote the evolution of the industry to offer our customers the latest technology in mobile connectivity.

Competition

The market for residential, corporate and wholesale mobile telecommunications services in Argentina is characterized by intense competition. Operators are free from regulation to determine the pricing of services, except that the ENACOM sets prices for wholesale local interconnection services. There are currently three mobile operators offering nationwide service. Telecom, Telefónica Móviles Argentina and América Móvil.

Ø Internet Services

Overview

We provide broadband Internet services in Argentina. Broadband Internet access, often shortened to “broadband,” is high data rate Internet access. Broadband can be delivered through four technologies: cable modem (HFC), ADSL, optic fiber (FTTC and FTTH) and wireless; being cable Modem and ADSL the most widely used. We market our services through ADSL, HFC and FTTH technologies under the name “Personal” brand, which replaces the “Fibertel” brand, in the context of the trademark simplification process.

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During 2021, we continued promoting broadband offers, providing greater speed to customers that have technical availability to use it.

With respect to access networks, our strategy aims to satisfy the rising broadband demand, mainly for downloading videos and multimedia content from the Internet. In this respect, we intend to continue the expansion of our access fiber optics infrastructure, using different modalities and technologies, which have been optimized based on demand of services provided and different geographic locations.

During 2021, we continued deploying our FTTH network both in greenfield areas (an area where we have not deployed any of our technology networks: Copper, HFC or FTTH) and in the reconversion of brownfield areas (an area where we have network deployment), granting more customers access to ultra-high internet velocity with speeds of 1000MB and also upgrading the customer base average speed by migrating customers to our HFC and FTTH network (i.e., technologies that replace copper with fiber optics in different points of the transmission network). As of December 31, 2021, the number of customers with access FTTH technology grew 103% compared to December 31, 2020. Internet dial-up service represents a marginal percentage of our revenues. We continue to provide this service to a small market where broadband service is not available.

Residential and Business

As of December 31, 2021, we had approximately 4,248 thousand Internet subscribers.

We believe that Personal is the broadband service that offers the best selection of speeds in the Argentine retail and corporate market and at competitive prices. During 2021, we continued to improve the capacity and the speed of our service, boosting customer experience. Through the Personal brand, we provide high-speed Internet services in the AMBA, Córdoba, Rosario, Campana, Río Cuarto, Posadas, Salta, Olavarría, Pergamino, Mar del Plata, Bahía Blanca and Santa Fe, among other cities in Argentina.

The internet connectivity products we provide through the Personal brand are specially tailored to the needs of each residential or corporate user, and include specific solutions such as virtual private network services, traditional Internet protocol (“IP”) links and corporate products that offer additional services.

We offer Internet products ranging from 25 to 1,000 MB.

Customers with a service of 25 MB or more represent 76% and 68% of the total customer base as of December 31, 2021 and 2020, respectively. Within this range, customers have contracted service plans of 100 MB, 300 MB and 1,000 MB which, as of December 31, 2021 amount to 1,074,020, 175,464 and 9,170, respectively, positioning our “Personal” brand as the technological benchmark brand of the industry.

Finally, we offer international IP access through well-known global backbone providers.

Network and Equipment

In order to continue bringing fiber optic to customers, we consolidated the deployment of the different fiber optic architectures (mainly FTTH), substantially improving the possibility of offering high speed services. This deployment encompassed residential and corporate customers, new neighborhoods, gated communities, high-rises and shopping centers. With respect to the FTTH networks, their deployment allowed us to expand coverage.

With respect to HFC, the reduction of the service areas and the increase in upstream capacity resulted in better service for users. On the other hand, we began to build a new overlapping FTTH network on the HFC network seeking to connect the new customer to this new network. Thus, we expect to ease the traffic in the HFC network and provide better services to our customers.

The renewal of the access network, together with the transformation process of the transport network, allows sites to be connected at maximum speed with each other and with the stations, and with the rest of the world. Based on these improvements in the transport network by bringing fiber optics to home, we continue to focus on offering customers the option of increasing access speed, moreover considering the growing popularization of the of home office modality in 2020 and 2021, as a consequence of the lockdown restrictions imposed as a result of the COVID-19 pandemic.

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Additionally, we launched the new Internet Gateway to connect the network to the Internet.

Competition

We face nationwide competition in the Internet service market in Argentina from Telefónica, AMX Argentina (commercially known as Claro), Gigared and Telecentro (providing a triple-play offer), among others. During 2021, Telefónica and AMX accelerated their investments for the construction of their fixed FTTH networks, increasing their penetration and ability to serve households in different areas of the country. This presents a new challenge for us with respect to the competitive scenarios of prior years, as new players with international support are aggressively entering the market. Our data services business faces competition from Telefónica, AMX Argentina and from several providers of niche data services such as Level 3 Argentina, IPlan and others.

Ø Cable Television Services

Overview

We deliver a two-way network with a bandwidth capacity of more than 1 GHz to approximately 81% of the homes passed through our cable network (87% in AMBA). Through these networks, we offer additional revenue-generating services and products, such as premium services and pay-per-view.

As of December 31, 2021, we had approximately 3,338 thousand cable television subscribers in Argentina.

Our Cable Television Networks and Operating Regions

As of December 31, 2021, our principal cable networks were located in AMBA. We also operated cable networks in other cities within the provinces of Buenos Aires, Santa Fe, Entre Ríos, Córdoba, Corrientes, Formosa, Misiones, Salta, Chaco, Neuquén and Río Negro. As of December 31, 2021, Telecom’s cable network covered approximately 70,000 kilometers, and its interurban fiber optic network passed through approximately 30,000 kilometers.

Retail and Corporate Programming and Other Cable Television Services

In 2021, we continued investing significant resources to expand the variety of programming options in order to appeal to potential new subscribers and meet their needs. Our cable television services revenues are derived primarily from monthly subscription fees for cable service. To a lesser extent, our cable television services revenues also derived from connection fees and advertising and fees for premium and pay-per-view programming services, digital packages, Flow, HD packages, and video-on-demand services (VOD).

We purchase basic and premium programming from more than 50 signal providers. Programming arrangements are primarily denominated in Argentine Pesos. Fees paid to signal providers under these arrangements are linked to the growth of our cable television subscriber base and the fees charged.

Basic Digital Service

We offer the digital service in AMBA and other cities of Argentina (such as Córdoba, Rosario, Santa Fe, among others). This service gives subscribers the option to increase the number of channels offered and includes an onscreen programming guide.

HD Services

We offer high definition versions of our Basic HD and our Premium HD Packages, in locations where the required technology to broadcast this format has been deployed. This programming package includes a large variety of genres such as sports, movies, series, documentaries and music, with high resolution and better image quality. This offer also includes open air channels under an HD format.

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The Flow STB service (which provides all of its programming in HD) offers our clients the option to pause, rewind, start from the beginning and record contents. On the other hand, during 2021 we continued incorporating the option to access different apps such as Star+, Paramount, Amazon and Disney +.

Premium Services

Our customers are given the option to acquire premium additional packages not included in the basic package by paying an additional fee. These packages and services include channels in addition to those included in the basic package, provide exclusive content, and divide such content by movie genres, adult programs and sports, or a combination of these categories. Premium subscribers receive a free digital box that enables them to access this service and gives them the option to choose pay-per-view programs.

Flow and OTT Services

In order to enhance our customers’ experience while accessing our content offer, we offer a digital platform branded “Flow” that integrates television channels with On demand content. Through Flow, which uses the fastest fiber optic network in the country, our customers are able to watch television at any time and place and from any device (such as tablets, smartphones and smart TVs, among others). Flow allows us to distribute contents through an IP structure coupled with digital television quadrature amplitude modulation, which includes adequate security measures. Flow enabled our customers to use new modern functions such as lineal streaming, reverse electronic program guide, the possibility to “start over” a program, access to “video on demand”, contents and “cloud DVR” (which allows subscribers to save content in the provider’s database instead of the subscribers digital recorder). In 2021 we continued develop “Flow Now”, a box-less experience for our broadband customers. Flow also offers of our customers a single platform through which they can access different OTT services, like Netflix, Disney+, Star+, Amazon Prime Video and Paramount+, as long as they are subscribed to each one of them.

Competition

With respect to cable television transmission, we face competition from other cable television operators and providers of other television services, including direct broadcasting, satellite and wireless transmission services. As a result of the non-exclusive nature of our licenses, our cable systems frequently have been overbuilt by one or more competing cable networks, in addition to the satellite television service that is also available. Free broadcasting services are currently available in Argentina. In the AMBA Region, these services primarily include four privately-owned channels and their local affiliates, and one state-owned national public television network. In addition, the Argentine government has distributed digital boxes to certain sectors of the population that provide free access to certain channels in connection with the Argentine Terrestrial Digital Television System.

Paid television industry is highly fragmented, and our largest competitors are Telecentro S.A., which is focused in the AMBA Region, and DirecTV Argentina S.A. (“DirecTV”) (satellite television), present throughout the entire country. In addition, Telefónica and AMX consolidated their offer of video products together with fixed broadband, in the context of the development of their fixed network. Telecom also considers OTT Internet video system providers such as Netflix, Disney+, Prime Video and On Video as competitors.

Among paid television systems, competition is driven primarily byprice, programming services offered, customer satisfaction; and quality of the system.

Network and Equipment

Our network’s trunk or backbone portion in AMBA consists entirely of fiber optic cable. We built a fiber optic cable ring around the City of Buenos Aires that provides network redundancy (which helps ensure network availability in the event of a network device or path failure resulting in unavailability) and improves overall network reliability. We have deployed a similar fiber optic network architecture in other major cities.

In addition, cable television service is also provided through FTTH networks with IP technology, combining state-of-the-art networks to provide high-capacity Internet with video services through the same physical link.

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Ø Fixed and Data Services

Overview

We own and operate a fixed local line telephone network, public long-distance telephone transmission facilities and a data transmission network in the Northern Region. Following the opening of the entire Argentine market to competition in 2000, we expanded our footprint to the Southern Region of Argentina, to provide nationwide coverage. Fixed and Data Services are comprised of the following:

Residential and Corporate Telephony Services

● Basic Telephone Services. We provide Basic Telephone Services, including local, domestic and international long-distance telephone services and public telephone services. As of December 31, 2021, we had approximately 2,417 thousand fixed telephony lines in service.

● Other telephone services. We provide our customers other related supplementary services such as call waiting, call forwarding, conference calls, caller ID, voice mail, itemized billing and maintenance services.

During 2021 we continued to strengthen our TOIP (fixed telephony service over IP) services and position through the evolution of the portfolio of security services solutions, together with a communication and dissemination campaign throughout the year, aiming to bring our wide range of services closer to corporate customers.

Wholesale Services

During 2021, we remained one of the leading providers of wholesale telecommunications solutions for the different providers and operators in the market, including cable operators, ISPs cooperatives and other service providers. Wholesale services include:

● Infrastructure services. Infrastructure services primarily refer to:

Video Transport. Transport of video signals in standard and high definition, audio and video streaming

Interconnection services. Interconnection services include, among others, traffic and interconnection resources, dedicated Internet access services, transport of video signals in standard definition and high definition (which allows our customers to play multimedia content via Internet without the need of download), streaming audio and video, dedicated links, backhaul links for mobile operators, data center hosting/housing services (storage), dedicated links, layer 2 (Lan To Lan) and layer 3 (Internet Protocol Virtual Private Network) transport networks, video links, and value-added services, among others.

Internet services. Internet services mainly include the IP transit service. During 2021, Telecom focused most of its business on IP transit service, demanded by ISP providers to provide Internet connectivity to their customers through different market segments. This led to a significant increase in local and international bandwidth consumption.

Value Added services: IoT, Security, or other additional services.

International Long-Distance Service. We hold a non-expiring license to provide international telecommunications services in Argentina, including voice, data services, housing and international point-to-point leased circuits. Revenues are mainly derived from connectivity to the Argentine telephone network, bandwidth capacity under IRU, international point to point lease circuits, housing in the datacenter located in Argentina and data and IP transit services. We are connected to international telecommunications networks, mainly through various submarine fiber optic cables.

Services provided in the United States: During 2021, we continued developing commercial actions aimed at increasing the profitability of wholesale products, among which are the services for OTTs. Our presence in the United States, through our subsidiary Telecom USA, has enabled us to develop links with major North American cloud content and service providers.

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Corporate Data Services

The data services business includes nationwide data transmission services, virtual private networks, symmetric Internet access, national and international signal transport and videoconferencing services. These services are provided mainly to corporations and governmental agencies. We also provide certain value added services, including electronic standard documents telecommunication software exchange and fax storage and delivery service. Our corporate data services business also includes the lease of networks to other providers, telecommunications consulting services, operation and maintenance of telecommunications systems, supply of telecommunications equipment and provision of related services. The corporate data transmission services we provide are mainly Ethernet and IP services.

We serve leading companies in the Argentine market as well as the national government, provincial governments and municipalities. These large customers demand cutting-edge technology and solutions tailored to their needs, including voice, data, Internet and Value Added Services.

In response to the constant changes demanded by the market, we maintained our strategy to position ourselves as an integrated service provider for large customers by offering convergent ICT solutions, including fixed and mobile voice, data, Internet, multimedia, datacenter and application services through sales, consulting, management and specialized and targeted post-sale customer services.

The main solutions offered to large customers in recent years —that also continued during the year ended December 31, 2021— included, among others, the expansion of the truncated digital communications system for various agencies of the Autonomous City of Buenos Aires; the provision of 911 systems for public safety management, datacenter solutions to optimize operations for a supply chain management company and the implementation of unified communications, networking, collaboration and firewall solutions, with CISCO technology, for an insurance company.

In relation to IoT solutions, we provide the necessary technology for customers to connect to their data, applying intelligence for better and faster decision-making, helping them develop and improve the efficiency of their business. During 2020, we developed a new solution to add to the agriculture solutions portfolio, the “Remote monitoring of grains”.

During 2021, we maintained our focus on ICT solutions and the sale of data services and dedicated Internet accesses. This strategy is supported by the world class multi-site network of datacenters focused on communications, with over 7,000 square meters used to keep computer technology services throughout Argentina. Through this infrastructure, we offer a broad services portfolio including dedicated hosting and housing, connectivity, cloud services which enable our customers to optimize their costs by increasing the security of their information and avoiding hardware and software obsolescence issues. All the services are provided with support, security, connectivity and the ability to engage further management, professional, monitoring, storage and backup services.

In addition, we continued investing in our major datacenter in the city of Pacheco, province of Buenos Aires consolidating its position as leader in the market and enhancing the level of services supplied. These investments are intended to support business growth in the next few years with the highest market standards.

Network and equipment

Our network strategy, for the medium- and long-term, focuses on satisfying the demand of the services we provide, improving our customers’ experience and promoting technology evolution.

With respect to the “core” network, we seek to continuously increase the capacities and availability of the services offered to our customers. In addition, we continued implementing the standardization of protocols and network architectures, to enhance the efficiency of our operation and maintenance, with cost reductions on those activities.

We also continue with the unification of the trunk networks, consolidating network buildings, achieving not only operational efficiency but also reducing costs, such as energy and maintenance.

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Competition

As of the date of this Annual Report, the main licensees providing local and/or fixed long-distance telephone service are Telmex, AMX Argentina (commercially known as Claro), Level 3 Argentina (commercially known as “Level 3 Communication” formerly “Global Crossing”), IPlan, Telecentro, Telefónica (principally in the Southern Region) and Telecom (principally in the Northern Region). Telefónica has the dominant market share for provision of telecommunications service to retail customers in the Southern Region. If our competitors increase their presence in the Northern Region, we expect that we will face additional pricing pressure and experience a slight loss in market share in the Northern Region.

Regarding data services, our main competitors are Centurylink and Edgeconnex (an international datacenter specialized company that increased its market presence during 2021).

Finally, and regarding wholesale services, the main competitors in Argentina for connectivity services are Centurylink (formerly “Level 3 Communication” and “Global Crossing”), Telefónica, ARSAT (a Government owned company) and Silica (Datco Group). This competition causes permanent pricing pressure and forces Telecom to deploy commercial strategies to mitigate the impact of those initiatives on its market share. On the other hand, and in relation with local interconnection traffic, the ENACOM sets prices for this service.

Ø Subsidiary- Micro Sistemas

Through our subsidiary Micro Sistemas, whose main activity is the provision and administration of services related to the use of electronic means of payment, transfers and/or electronic use of money, through telecommunications networks and equipment, we have developed a necessary platform for the operation of an electronic wallet.

During 2021, we launched a new digital wallet service, Personal Pay, initially in Beta version. Personal Pay is Personal’s new virtual wallet, through which people can pay, send, save and manage their money the way they want. With Personal Pay it is possible to (i) make fast and free transfers from any bank or virtual wallet through a Uniform Virtual Account (or CVU in Spanish); (ii) ask for a VISA Personal Pay prepaid card; (iii) recharge cell phone lines; (iv) pay for services; (v) recharge transport cards; (vi) enjoy many discounts and benefits to continue saving; and (vii) set savings goals.

Our objective is to continue promoting financial inclusion through the Fintech industry in Argentina. During 2022, Micro Sistemas will seek to incorporate new functionalities and solutions that continue to expanded financial inclusion, bringing financial solutions to segments of the population that are currently excluded of accessing such solutions.

Ø Subsidiaries in Paraguay and Uruguay

Paraguay

We provide nationwide mobile telecommunications services in Paraguay through our subsidiary Núcleo, under the “Personal” brand. Núcleo obtained licenses to provide commercial mobile services, Internet access, and videoconferencing and data transmission services in Paraguay.

As of December 31, 2021 Núcleo had approximately 2.2 million mobile subscribers.

In terms of Internet access services, during 2021 Núcleo continued to offer services through a combination of fiber optic Internet and Flow service, enhancing their value and aiming to promote Personal Family Combos.

In regards to postpaid mobile services, during 2021 Núcleo maintained its strategy of attracting customers through aggressive offers with 50% discounts on plans. Likewise, different campaigns continued to be carried out to build loyalty and retain postpaid customers. As for prepaid mobile services, Núcleo continued to offer packs that included data usage benefits, as well as unlimited calls to all operators.

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Núcleo is the holding company of Tuves. The principal activity of Tuves is the distribution of audio and television signals via satellite to customers’ homes. Núcleo is also the holding company of Personal Envíos. The principal activity of Personal Envíos is the provision of mobile financial services.

Network and Equipment

In 2021, Núcleo continued with the deployment of the fixed network, reaching 530 thousand homes, which allowed us to improve the country’s connectivity and economic convenience for our customers and to consolidate as the Company with the largest fiber optic coverage in the country.

Competition

There are currently four participants in the mobile telecommunications services market in Paraguay. The operators provide services using 2G, 3G and 4G technology. The Paraguayan market is highly competitive. As of December 31, 2021, Núcleo’s main competitor was Tigo (a subsidiary of Millicom International Cellular). Tigo has a significant market share in terms of revenues.

In relation to Flow services, there are two other operators offering similar services in the Paraguayan market, Tigo and Claro, with Tigo being the main competitor with its "OneTV" service.

Uruguay

Telecom provides management and administration services to companies that render cable TV services in Uruguay under the brand Cablevisión through Telemás S.A., one of the Adesol’s subsidiaries. Cablevisión in Uruguay provides basic, HD or Premium Television Services.

As of December 31, 2021, Adesol had approximately 135,269 subscribers in Uruguay, providing them with cable television services under different technological platforms, DTH, cable and MMDS (Multichannel Multipoint Distribution System).

On the other hand, Cablevisión Flow service continued to be promoted, offering our customers the possibility of watching television programs and On Demand content, from any device, through a modern platform to which new functions were introduced during 2021.

Network and Equipment

During 2021 Adesol offered services through DTH (Direct To Home) Platform in Montevideo and the metropolitan area comprising Ciudad del Plata and different locations in the department of Canelones and in rural areas of northern of Uruguay. Adesol also offered services through cable TV in the capital cities of Artigas, Salto, Paysandú, Rivera, Tacuarembó and also in Paso de los Toros.

Competition

The television market in Uruguay has approximately 640 thousand subscribers, where Cablevisión holds a 22% share, after DirecTV, that holds a 32%. Then, the rest is divided among different local distributors. Only DirecTV can sell its services across the whole country, while Cablevision and the rest of the cable television operators have only territorial licenses. In Montevideo, Cablevisión leads the market with a 23% share, followed by DirecTV with a 22% share.

Although Cablevision maintained its market share throughout the last years and even increased during 2021, the exponential growth of DirecTV led to the detriment of the rest of the operators.

The market continues showing a downward trend, marked by the increase of online entertainment alternatives, mainly Netflix, which continues increasing its customers base. During 2021 we incorporated Disney+, Paramount+ and Star+ into the Flow plataform, seeking to turn Flow into a comprehensive platform attractive for our customers due to its content offering and its differential functionalities.

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INFORMATION TECHNOLOGY STRATEGY

In 2021, we advanced rapidly in the digital transformation of our operations and in the comprehensive experiences offered to our customers, attaining relevant milestones in spite of the COVID 19 pandemic and the ASPO.

The digital transformation of our operations seeks to integrate all operations and to develop an integrated system of platforms that are leveraged on connectivity and allow us to manage and improve the products and services we offer, and focus on the digital and convergent experience of our customers.

Among the highlights of 2021, we can mention:

Business Support Systems Transformation (the “#FAN Program”):

The #FAN Program is a comprehensive renewal program of the platforms managing the customer relationships (CRM), including the provision, charge, invoice and collection of our services. The main challenge faced by the #FAN Program during 2021 was the completion of the development of NPlay MVP 2 (the unification of the fixed and mobile code) and the beginning of the migration and amplification of services for the exhibit of #Fan functionalities.

During 2021, we migrated to the #FAN Program a total of 19 million of our mobile subscribers and we modified the main sales and after-sales functionalities and changed the initial view of the customer (products and services are grouped by address).

SWITCH - Digital experiences:

This program helps us maintain a common strategy in our digital sales channels (e-commerce) and after-sales (self-management), to provide our customers with a convergent and omnichannel experience. We launched the New E-Commerce and Convergent Self-Management APP, which allowed us to accelerate our digital experience through greater functionalities, permanent evolution, service transformation and personalized value content. In addition, we carry out the adaptation of the brand unification.

Dataphoenix Project:

We launched the Dataphoenix Program during the 1Q of the year. Our objective is to enable a data platform that is available when required by our teams. It evolves the different Telecom data repositories by integrating them into a cleaner, more functional and consistent one.

Enabling Platform

Pursuant to our business strategy, we focus on building task-oriented teams capable of working autonomously through a self-service platform with built-in security.

During 2021, we developed “CloudValley”, our collaborative self-service portal that allows to manage infrastructure and services through a single catalog, supplementing our enabling platforms with a self-service portal that enhances the experience of our developers and all infrastructure users.

At the beginning of 2021, we made available the first version of CloudValley allowing users to start self-managing infrastructure items such as virtual machines across all of our private data centers, improving their experience and minimizing time to market.

Under our simplified and open digital architecture strategy, we have made progress in the implementation of our APIfication model, initiating the availability of services embedded in APIs that allow their reuse, accelerating our developments and delivering value to our customers. Through the Mulesoft platform as our first APIfication platform, we have developed more than 12 APIs that are currently being used by our new CRM, Self-Management and E-Commerce APP, which has allowed us to accelerate the time to market of various solutions.

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IT and Datacenter Operations

Datacenter 4 Program (“DC4 Program”) develops a convergent infrastructure model with the aim of having a shared and convergent view of the services, processes and operations of our infrastructure. Two of the fundamental pillars of DC4 are “efficiency” and “optimization”, deploying flexible models for the future and “cultural change”, acquiring the knowledge and experiences to accompany our transformation as a provider of digital services.

This new on-premise convergent model, which already has a help desk, consists of a team of 28 people working under a DevOps culture, which means that the software development and everything that has to do with infrastructure and security.

All of our services have been migrated from the business-to-business ("B2B") segment of own use, as well as the new equipment at Edificio Hornos and new sites at San Lorenzo.

Multicloud at scale is an example of what we seek to build as practice with a 360 vision, decentralizing the generation of infrastructure, building knowledge and capabilities.

More than 25 applications were implemented on AWS, a self-service portal, jointly implementing the FinOps practice for better management of resources.

In addition, we have managed to secure this infrastructure model via dedicated links, ensuring the services concerned.

With platform in scaling mode, we deliver value to our customers with the applications implemented so far allowing us to evaluate scalability, time, cost, and effectiveness. This enabling platform is consolidated into 7 cells with more than 130 people working on them.

On the other hand, more than 170 people were trained in these technologies, not only with AWS but also with Google.

These developments allow us to continue to accelerate our adoption of a sustainable hybrid multicloud strategy, as a key enabler for the evolution of the business, managing to adapt quickly and with scalability in order to change the mindset and develop 100% digital businesses.

Cybersecurity

We have developed a cybersecurity policy based on the guidelines and criteria contemplated by the international standards ISO 27001 and ISO 27002, as well as control mechanisms, technologies, processes and procedures developed on the basis of guidelines and criteria addressed by Law No. 25,326 on personal data protection and the Payment Card Industry Data Security Standard. Additionally, we make regular security assessments, which allow us to complement and improve ongoing initiatives and our cybersecurity strategic plan.

As cyberattacks evolve and become more sophisticated, we seek to constantly strengthen our prevention and monitorization efforts. As part of such efforts, we routinely review, reinforce and test our security processes and procedures through simulation exercises in the area of cybersecurity. The outcome of such exercises is an important part of a feedback process designed to improve  our cybersecurity strategies.

For more information regarding cybersecurity risk, see “Item 3—Key Information—Risk Factors— Risks Relating to Telecom and its operations—A cyberattack, could adversely affect our business, balance sheet, results of operations and cash flow.”

MARKETING AND CUSTOMER CARE

Sales and Marketing

Telecom’s marketing strategy focuses on cross-selling the full range of services to its subscribers, to offer innovative services to its existing customers, and to upgrade existing broadband customers to higher speeds. An increase in the number of subscribers who receive all of Telecom’s fixed and mobile telecommunications, cable television and Internet services, together with an increase in the numbers of services provided to its existing subscribers is expected to result in an increased ARPU.

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Telecom’s marketing activities included:

● advertising on television, radio, newspapers, billboards on the streets and local programming channels offered to customers;

● personal visits to current and potential customers;

● telemarketing directed to potential and former customers, as well as current customers who have not subscribed to any premium services;

● mailing information and special promotional material to current and potential customers; and

● special events for Telecom’s customers, some of which are sponsored jointly with programming providers.

Customer Support

Telecom’s customer service operations related to cable television services and Internet services are provided through a unified center (the “Contact Center”) available 24 hours a day and 365 days a year. Telecom’s cable television services and Internet services customers can contact the Contact Center by phone, e-mail and chat through its website, as well as through social media such as Twitter and Facebook. Accessibility through social media is particularly important in Latin American countries and especially in Argentina, which has a high degree of social media penetration.

Telecom’s customer service operations related to fixed and mobile telephony services, Internet and cable television services include specialized call centers and approximately 6,100 customer service representatives consisting of in-house and third-party personnel. By calling the customer service hotline, mobile telephony customers can make inquiries about their accounts. Our model of care includes a special telephone channel for high-value customers (“Black” and “Business” accounts). In line with current market demands, we also provide the option for account self-management through special online portals, therefore simplifying the procedure and providing our customers with alternatives.  Access to these online portals includes processes for validating customer identities and analyzing behavioral patterns to anticipate their needs.

Telecom has special customer service programs specifically tailored to the convergent solutions we provide. We implemented and unified in a single contact center platform the different client-to-provider contact channels (including telephone, face-to-face contacts, social networks (Twitter, Facebook) and Multimedia (chat, email). We implemented a real-time decision platform to deliver personalized customer service.

In addition, Telecom also offers a paperless option for invoices and other customer service processes, replacing them with free digital invoices.

From the outset of the ASPO, the Company focused on using and promoting the use by customers of all digital communication channels for commercial purposes. In order to respond to the new demand created by the Isolation requirements, we enhanced digital support by implementing special microsites identified as “I pay from home”.

In 2021, Telecom’s customer satisfaction indexes have been remained above its goal of 87.5%, based on top two box methods, confirming the excellence of the services we provide. Telecom believes that its attention to customer service differentiates it from its competitors and is rewarded with customer loyalty.

SUSTAINABILITY

At Telecom, sustainability is a management model embedded in our corporate policy that allows us to carry out our operations focusing on the generation of value in our economic, social and environmental performance.

Since 2004, Telecom has adhered to the United Nations Global Compact and complied with the 10 principles on human rights, quality of employment, environmental care and the fight against corruption. The Company's commitment to comply with such principles is ratified every year and is part of its sustainability model. This model is based on the Company's Code of Ethics and Conduct which incorporates, through declarations of principles and values, moral and ethical foundations within the organization.

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We are leaders in an industry that is one of the pillars for the social and economic development of the country. Under our sustainability strategy, we seek to play an active role in the community with programs that use technology as a tool for social inclusion and education, to promote the value of diversity, and to generate climate-positive actions that reduce the impact of our operations on the environment.

Our 2021 Sustainability Plan promoted good practices aimed at all our stakeholders - community, employees, suppliers, environment, customers, and investors - seeking to enhance the contribution of Telecom's social and environmental performance.

Telecom has developed a social investment plan aimed at the community that is focused on the promotion of the use of technology as a tool for the community's progress and growth. The plan currently comprises three initiatives:

● Digit@lers: free programming courses aimed at young people interested in developing their future in the technology industry;

● Chicas digit@lers (Digit@lers Girls): free courses aimed at young women aged 13-17 to introduce them to the world of technology and thus reduce the gender gap in the tech industry; and

● Nuestro Lugar (Our Place): a program that promotes the responsible, safe and creative use of technology among children and teenagers, through cyber-citizenship and educational workshops at schools. It also includes teacher training for the use of technologies in the classroom.

Regarding our environmental strategy, we seek to build a business model that minimizes the environmental footprint of the services we provide. This commitment entails the responsible use of natural resources and materials, favoring a circular economy and the management of products and materials at the end of their life cycle.

We work on different lines of action, such as the identification of energy efficiency opportunities, the responsible waste management, the minimization of environmental risks, the development of an internal environmental culture based on awareness, and the inclusion of sustainability principles in our products and services, and in our value chain.

We disseminate all these initiatives among our stakeholders through our Sustainability Report, a document we have been publishing for 14 years. It summarizes our progress and the challenges in building a sustainable management, with a focus on the creation of value for our audiences and for society in general.

In 2021, we published our first Integrated Report in which we report on our environmental, social and governance (ESG) impacts through financial and non-financial information included in a single document. The Integrated Report complies with the international sustainability guidelines issued by the Global Reporting Initiative (GRI). It details our contribution to the United Nations Sustainable Development Goals (SDG) and its 2030  Agenda and to the 10 principles of the United Nations Global Compact, as well as our compliance with International Standard ISO 26.000:2010 and with the standards established by the Sustainability Accounting Standards Board (SASB). In addition, since 2011, we have submitted the Company's indicators to an external assurance review. This report is also our Communication on Progress of the United Nations Global Compact Principles, to which we have adhered in 2004.

MANAGEMENT OF CHURN

Churn refers to the termination of a mobile telephony, cable television or Internet services customer’s account. The churn rate is determined by calculating the total number of disconnected customers of each of our mobile telephony, cable television and Internet services over a given period as a percentage of the initial number of customers for such services as of the beginning of the applicable measurement period. Reductions in fixed telephony lines in service refers to the reductions of fixed telephony lines in service that form part of the public telephone network, or are connected to such network, as of the end of two relevant measurement periods. We seek to enforce a strict disconnection policy, which provides for the disconnection of cable television services, Internet services and mobile telephony services after a 95-day period of non-payment and delivery of a notice of disconnection. Because most of our mobile telephony services are provided under the Personal brand, historical average monthly churn rates for mobile telephony services customers, included in this Annual Report for comparative purposes, reflect Telecom’s operations prior to the consummation of the Merger.

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REGULATORY AUTHORITIES AND FRAMEWORK

Our activities are affected by, and will continue to be affected by, among others, rules and regulations applicable in Argentina, Paraguay, Uruguay and United States, which we describe below.

REGULATORY AUTHORITIES

The regulatory authorities described below are primarily responsible for regulating the services we provide. Other authorities also have jurisdiction over different aspects of our operations, including, without limitation, antitrust authorities, the CNV, the public registry of commerce and tax authorities.

Argentina

The ENACOM is the principal regulatory body responsible for the regulation, control and supervision of the ICT sector. The ENACOM is an autonomous federal agency within the purview of the Secretary of Public Innovation (which, in turn, is under the supervision of the Cabinet of Ministers).

Our subsidiary Micro Sistemas is registered as a PSP (Payment Service Providers that offer payment accounts) and is under the oversight of the BCRA. In that regard, during fiscal years 2020 and 2021, the BCRA issued several Communications, whereby, among other things, it established the same rules for legal entities that, without being financial entities, serve at least one function in the provision of payment services, and therefore, compete. The most important provisions of the effective legislation are related to (i) the offering of accounts and funds management; (ii) Oversight and Reporting Regime; and (iii) transparency.

In addition, our subsidiary is subject to the terms of "Financial Information Unit" (Unidad de Información Financiera or "UIF") regulations for this type of operations. For further information, please refer to "Note 2.f) of our consolidated financial statements.

Paraguay

Our mobile telecommunications services in Paraguay are subject to the authority of the CONATEL. Our subsidiary Personal Envíos (which received authorization to operate as an Electronic Payment Company) is supervised by the Central Bank of Paraguay.

Uruguay

Our subsidiary Adesol is a related party of Bersabel S.A. and Satélite Visión S.A., entities that own licenses to provide subscription broadcasting services in Uruguay and are subject to the authority of the URSEC.

United States

Our fixed wholesale telecommunications operations in the United States are subject to the authority of the Federal Communications Commission (the "FCC").

REGULATORY FRAMEWORK

Argentina

In Argentina, the provision of fixed and mobile telecommunications services, Internet services and cable television services (subscription broadcasting services) are highly regulated, and the regulatory framework is continuously evolving. The regulatory framework applicable to our business includes:

● Law No. 27,078 - Argentine Digital Law or the “LAD” and its amendments;

● Law No. 19,798 (to the extent it does not conflict with the LAD);

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● the Transfer Agreement and the List of Conditions;

● the licenses for providing telecommunication services granted to Telecom and the List of Conditions and their respective regulations.

The Argentine Digital Law

The LAD provides for a single country-wide license and individual registration for information and communication technologies services (Licencia Única Argentina Digital). Pursuant to the LAD, licensees of ICT Services are required to set prices that (i) are fair and reasonable, (ii) cover the exploitation costs and (iii) tend to maximize the efficiency of the supply of these services while maintaining a reasonable operating margin. The LAD also amended the Universal Service (see “—Universal Service”), includes a declaration of public interest of the development of ICT and its associated resources in order to ensure complete neutrality of ICT networks and grant all users the right to access, use, send, receive or offer any content, application, service or protocol through Internet without any restrictions or discrimination. The LAD allows licensees of ICT Services to provide subscription broadcasting services through physical or radio-electric link, including this service within its regulatory scope.

In the past few years, the regulatory framework applicable to services provided by Telecom in Argentina went through a significant number of changes allowing, as of January 1, 2018, the joint provision of fixed and mobile telecommunications services, cable television services and Internet services, known as “quadruple play”.

For more information about the LAD, see Note 2.c) to our Consolidated Financial Statements.

Decree No. 690/20 - Amendment to the LAD - Controversy

On August 22, 2020, the PEN issued Decree No. 690/20 amending the LAD. Decree No. 690/20 declared ICT Services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks for and between licensees as “essential and strategic competition public services”, and empowered ENACOM to ensure accessibility.

Decree No. 690/20 further established that the prices of: (i) of the essential and strategic competition public ICT Services, (ii) the prices of those services provided in accordance with the Universal Service and (iii) the prices of those services determined by ENACOM for public interest reasons, shall be regulated by ENACOM.

Moreover, Decree No. 690/20 established that ENACOM is the agency responsible for the enactment of any regulation related to the ICT’s PBU. Finally, Decree No. 690/20 suspended any price increases or changes set or announced by the ICT’s licensees from July 31, 2020 to December 31, 2020.

Decree No. 690/20 was ratified by the Argentine Congress under Law No. 26,122 and was regulated through ENACOM Resolutions No. 1,466/20 and 1,467/20.

Resolution No. 1,466/20 allowed ICT licensees providing Internet access services, subscription broadcasting services through physical, radio-electric or satellite link, fixed telephony services and mobile telecommunications services -in all cases in their different and respective modalities- to increase retail prices for services up to 5% during January 2021. Licensees must consider the prices effective as of July 31, 2020 as the price of reference. Such Resolution also provided that ICT Services Licensees may request a higher increase on an exceptional basis in accordance with the provisions of Section 48 of the LAD.

Resolution No. 1,467/20 regulated the PBU provided by Decree No. 690/20 for the different services provided by ICT licensees , establishing the price and the characteristics of each service plan, namely:

● PBU-SBT: Compulsory Universal Provision of Basic Fixed Telephony Service;

● PBU-SCM: Compulsory Universal Provision of Basic Mobile Communication Service;

● PBU-I: Compulsory Universal Provision of Basic Internet Access Value Added Service;

● PBU-TP: Compulsory Universal Basic Provision of subscription television services by physical or radio electric or satellite link.

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The Company began to implement an increase in prices as from January 2021, in order to match the increase in its costs due to the inflation. Nevertheless, it failed to transfer to the price of its services the inflation accumulated in the period March-December 2020, as a result of different measures provided by the PEN. Additionally, the Company initiated legal proceedings before the Federal Court of Appeals on Administrative Litigation Matters challenging the constitutionality of Decree No. 690/20 and the aforementioned ENACOM Resolutions, which was notified to the PEN on October 7, 2021.

In this context, the Company sought to obtain a precautionary measure suspending the application of the aforementioned ENACOM regulations and Decree No. 690/20. On January 29, 2021, the Company´s petition was denied and the precautionary measure rejected . The Company appealed such decision and, on April 30, 2021, the Chamber of the Federal Court of Appeals on Administrative Litigation Matters decided by majority to accept the Company's appeal, revoke the first instance court's decision and, consequently, grant the preliminary injunction requested by the Company, ordering the suspension of the effects of Sections 1, 2, 3, 4, 5 and 6 of Decree No. 690/20 and of ENACOM resolutions provided as a consequence and their non-applicability to the Company. This preliminary injunction was initially granted for a period of six months and then extended for an additional six-month period until April 21, 2022. As supported by the preliminary injunction granted, the Company increased the prices of its services in June, September and December 2021.

In reaching its decision, the Court considered, that the "configuration of circumstances prima facie lead to serious and founded questioning of Decree 690/2020's reasonability standard and legitimacy and of ENACOM's resolutions adopted as a consequence, due to the direct adverse effects they have on Telecom Argentina's property rights, which derive from Information and Communication Technology services provision, under a free competition system, ruled, authorized and granted (depending on the case), by the National State itself".

The PEN and ENACOM filed appeals against the aforementioned decision of the Federal Court of Appeals on Administrative Litigation Matters, which were denied on June 18, 2021.

On June 29, 2021, the PEN and ENACOM filed an appeal before the Argentine Supreme Court of Justice.As of the date of this Annual Report, a decision on these proceedings remains pending.

The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights. The Company’s Management and its legal advisors, consider that the Company has solid legal arguments to support its position and that there is a reasonable likelihood that this matter will result in a favorable outcome for the Company, notwithstanding the fact that at this stage it is not possible to predict the final outcome of the claim.

Preliminary injunction requested by"Asociación Civil de Usuarios Bancarios Argentinos" (" ACUBA")

On January 27, 2021, the Company was served with notice of a preliminary injunction granted by the Civil and Commercial Court No. 10 of Mar del Plata obtained by ACUBA in the aforementioned case, which ordered the Company to roll back the tariffs of broadcasting services subscriptions, Internet access services, fixed telephony services and mobile telecommunications services to those of December 2020, which could only be increased up to 5% as authorized by ENACOM, and maintain such tariffs until any modification is resolved. Telecom challenged the preliminary injunction for lack of jurisdiction, and requested that the resolution granting the preliminary injunction be declared nulled. The Company argued that a preliminary injunction obtained by a representative of the industry of the Province of Córdoba from the federal courts of the province expressly suspended the application of Decree No. 690/20, Decree No. 311/20 and prohibited ENACOM from issuing any subsequent resolutions.

On December 6, 2021, the Court ordered the joinder of the file with the one in re "Asociación de Consumidores de Argentina UCA v. AMX Argentina and other on Proceeding leading to a declaratory judgment", pending before the Federal Court on Administrative Litigation Matters No. 6 of the City of Buenos Aires.

The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights.

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Preliminary injunction requested by a representative of the industry of the Province of Córdoba

On February 2, 2021, the Company was informed by the Asociación Argentina de Televisión por Cable ("ATVC"), that a preliminary injunction requested by a representative of the cable television industry was granted by a Federal Court of the Province of Córdoba, ordering the suspension of Decree No. 690/20, of Decree No. 311/20 and of all measures adopted as a result of those decrees. The court also ordered the PEN and the ENACOM to abstain from issuing or pursuing any subsequent measures based on such decrees, until a final court decision is rendered.

ATVC also informed that, pursuant to the court’s indications, the regulatory authority should refrain from issuing regulations related to Decree No. 690/20 or enforcing the regulations previously issued, which are generally suspended.

Preliminary injunction requested by "Catrie Televisora Color S.R.L. v. Estado Nacional re. Acción meramente declarativa de inconstitucionalidad"

On March 31, 2021, the Company was informed by ATVC, that a preliminary injunction requested by a representative of the cable television industry in the case Catrie Televisora Color S.R.L. v. Estado Nacional re. Acción meramente declarativa de inconstitucionalidad" (File No. 858/21), pending before the Federal Court of Córdoba No. 1, ATVC requested joint litigation, under the terms of Art. 90 inc. 2 of the National Civil and Commercial Procedure Code, requiring collective legitimacy, on behalf of the associated companies, and required the extension of the preliminary injunction issued in such case.

Likewise, on that date ATVC was notified of the resolution of the Federal Court of Córdoba No. 1 of March 30, 2021, which provided, in File. No. 858/21, the following summary: 1) grant the request for intervention of a third party made by ATVC; 2) direct the process as a collective process; 3) delimit the class affected to the cable and ICT services industries that are associated with ATVC; and 4) order the National Government the suspension of Decree No. 690/20, as well as all measures adopted as a result of that decree. The court also ordered the PEN and the ENACOM to abstain from issuing or pursuing any subsequent measures based on such decree, until a final court decision is rendered, in relation to all the certified class companies of this process.

Telecom’s License

According to the LAD, Telecom holds a non-expiring Unique Argentine Digital License (Licencia Única Argentina Digital), which allows Telecom to provide a wide range of fixed and mobile telecommunications services, Internet access, subscription broadcasting services (by physical and/or radio electric link) and radio electric service of concentration of links.

For more information about the Unique Argentine Digital License, see Note 2.b) to our Consolidated Financial Statements.

UNIVERSAL SERVICE

The licensees of ICT Services are required to make contributions to the Universal Service Fiduciary Fund equivalent to 1% of the total accrued revenues from the provision of ICT Services, net of taxes and charges.

On July 3, 2020, ENACOM issued Resolution No. 721/20, which replaces the General Regulation of Universal Service approved by ENACOM Resolution No. 2,642/16. Although several modifications were introduced, the new Universal Service Regulation maintains the contributions to the Universal Service Fiduciary Fund of licensees at the level of 1% of ICT’ total accrued revenues, as provided by the previous Regulation.

For further information on the most relevant matters of the new Universal Service Regulation and other Universal Service matters, see Note 2.d) to our Consolidated Financial Statements.

SPECTRUM

Through Resolution SC No. 79/14 and Resolutions SC No. 80/14, 81/14, 82/14 and 83/14, Personal was awarded Lots 2, 5, 6 and 8 and the remaining frequencies of the Personal Communication Services (PCS) and the SRMC, as well as those of the new spectrum for the SCMA, which were offered through a Public auction process approved by SC Resolution No. 38/14. In addition, through SC Resolution No. 25/15 issued on June 11, 2015, Personal was awarded with the remaining Frequency Bands which formed Lot No. 8, and thus completed said Lot.

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The Auction Terms and Conditions authorized the use of the auctioned frequency bands for a period of 15 years as from the effective migration verification. Upon expiration, the regulatory authority could extend the terms of use upon formal request of the awarded operator (which price and conditions would be set forth by such authority).

Subsequently, Decree No. 1,340/16 provides that the term of authorizations for the use of frequencies of the SCMA, as well as the corresponding deployment obligations, will be computed from the actual migration of the services currently operating in such bands in the AMBA. On August 30, 2018, the Resolution No. 528/18 was issued, in which it was stated that on February 27, 2018, the effective migration of such services had been verified.

Spectrum incorporated to the Company under the corporate reorganizations of Telecom and the merger with Cablevisión

In December 2017, the Company was served with ENACOM Resolution No. 5,644-E/2017, whereby that agency decided, among other things, to authorize the transfer in favor of Telecom Argentina of the authorizations and permits to use frequencies and allocations of numbering and sign-posting resources to provide the services held by Cablevisión, pursuant to effective regulations, and the agreement executed by Nextel Communications Argentina S.R.L. on April 12, 2017 (IF-2017-08818737-APN-ENACOM#MCO), whereby Telecom Argentina, in its capacity as absorbing company of Cablevisión, shall, within a term of two years as from the date on which the merger was approved by the CNDC and the ENACOM, return the radio-electric spectrum that exceeds the limit set under Section 5 of Resolution No. 171-E/17 issued by the Ministry of Communications.

Telecom Argentina proceeded with a partial return of the radio-electric spectrum that exceeds the limit set during 2019 (40 Mhz) and completed it in March 2022 (40 Mhz). On March 11, 2022, the ENACOM issued Resolution No. 419/2022 through which it accepted the return of spectrum by Telecom Argentina under the terms of ENACOM Resolution No. 5644-E/2017.

OTHER MATERIAL REGULATIONS

Telecom is also subject to other material regulations in Argentina, such as the Regulation of ICT Services, the General Rules Governing ICT Service Customers, the Number Portability Regulation, General Rules Governing Interconnection and Access, Quality Rules for ICT Services, National Rules for Contingencies, International Roaming Agreement between Chile and Argentina, Infrastructure Sharing Regulation and Subscription Television Services Regulation, Regulatory Authority's Penalty, among others.

Regulatory Authority's Penalty Activities

On March 3, 2021, the "Sanctions Regime applicable to ICT Services" was approved through ENACOM Resolution No. 221/21. The mentioned Resolution, among others, provides that: (i) the penalty reference unit shall be PBU-SBT, whose value will be determined as of the date of payment, (ii) there is a cap of 50,000 PBU-SBT on the imposition penalty and a minimum of 50 PBU-SBT, (iii) the penalties imposed shall be published in the media and/or ENACOM's institutional website; and (iv) the penalties can be imposed on a daily basis as long as the lack of compliance with the regulation remains. The Resolution was ratified by the ENACOM Board of Directors on April 28, 2021.

For more information on other material regulations, see Note 2.f) to our Consolidated Financial Statements.

Paraguay

In Paraguay, Núcleo has a license to provide mobile telecommunication services (STM and PCS) and a license for the installation and provision of Internet and data services throughout the country. These licenses have been granted for renewable five-year periods. Personal Envíos is authorized by the Central Bank of Paraguay to operate as an Electronic Payment Company (EMPE), and its corporate purpose is restricted to such service. Tuves Paraguay has a license for the provision of telecommunications services and also the distribution of digital audio and television signals to homes (DATDH). This license has been granted for renewable five-year periods.

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Uruguay

In Uruguay, Adesol has contractual relationships with several licensees that provide subscription television services through various systems in such country.

For more information in relation to the Regulatory Framework to which our operations are subject in Paraguay and Uruguay, also see Note 2 to our Consolidated Financial Statements.

DISCLOSURE PURSUANT TO SECTION 219 OF THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT OF 2012 (ITRSHRA)

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act, which requires a 34’ Exchange Act registrant to disclose in its annual or quarterly reports filed with the SEC whether the issuer or any of its affiliates has knowingly engaged in certain activities, transactions or dealings with the government of Iran, relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction during the period covered by the annual or quarterly report. Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and even when such activities were conducted in compliance with applicable law.

In accordance with our Code of Ethics and Conduct, we seek to comply with all applicable laws.

Activities relating to Iran

Commercial Agreements with International Carriers (fixed services):

During 2021 we have provided international telecommunications services agreements with international carriers (fixed services), which cover delivery of traffic to Iran through non-Iranian carriers.

We maintain commercial agreements with international carriers located in countries other than Iran, which permit those carriers to deliver traffic from Iran to our networks and from our networks to Iran.

Our total expenses under commercial agreements with international carriers regarding delivery of traffic to Iran were approximately P$0.012 thousand (P$0.014 thousand in current currency as of December 31, 2021).

During 2021, and regarding outgoing traffic, we have sent traffic to Iran mainly through Verizon Communications Inc. (United States), Telecom Argentina USA (United States) and Telecom Italia Sparkle S.p.A (Italy).

Regarding incoming traffic, we charge the relevant international carrier for traffic ending in our network. Consequently, we do not know the country of origin of such traffic.

Accordingly, our total payables and receivables from international carriers include balances arising from traffic related to Iran but it is not possible to segregate them.

The outbound costs are wholly immaterial with respect to the Company’s consolidated operating expenses for the period presented.

Roaming agreements (mobile services)

Until February 1, 2019, we had a roaming agreement (mobile services) with Mobile Company of Iran (MCI) (formerly TCI), which allows our mobile customers to use their mobile device on a network outside their subscriber’s home network (see “Glossary of Terms—Roaming”).

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As of December 31, 2021, receivables and payables generated under the roaming agreement with the MCI were as follows:

	December 31, 2021
	(In thousands of P$)
Roaming agreements (mobile services)	Receivables		Payables
Iran		22		29
Total		22		29
% of respective consolidated total amounts		(a)		(a)

(a)Less than 0.001%.

Activities relating to the Designated Countries – Cuba, North Korea and Syria

In addition to the mandatory disclosure pursuant to ITRSHRA described above, our activities that directly or indirectly relate to the “Designated Countries” (countries designated by the U.S. Department of State as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls), during 2021, were the following:

i. Roaming agreements (mobile services)

During 2021 we maintained Roaming agreements with ETECSA Cuba. The Roaming agreement with MTN Syria was terminated on February 1, 2019, through a notarial certificate stating the termination at a technical level of such service. Finally, we do not maintain any commercial relationship with North Korea.

As of December 31, 2021, revenues, expenses, receivables and payables related to roaming agreements with the Designated Countries were as follows:

	December 31, 2021
	(In thousands of P$)
Roaming agreements (mobile services)	Revenues		Expenses		Receivables		Payables
Syria		n/a		n/a		n/a		40
Cuba		8		368		441		6,957
Total		8		368		441		6,997
% of respective consolidated total amounts		(a)		(a)		(a)		(a)

(a)Less than 0.001%.

	December 31, 2021
	(In thousands of P$ in current currency)
Roaming agreements (mobile services)	Revenues		Expenses		Receivables		Payables
Syria		n/a		n/a		n/a		40
Cuba		10		443		441		6,957
Total		10		443		441		6,997
% of respective consolidated total amounts		(a)		(a)		(a)		(a)

(a)Less than 0.001%.

ii. Commercial Agreements with International Carriers (fixed services):

We also maintain commercial agreements with international carriers from countries other than the Designated Countries which permit those carriers to deliver traffic from the Designated Countries to our networks and from our networks to such countries. We do not maintain any commercial relationship involving North Korea.

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Regarding outgoing traffic, during 2021, Telecom has sent traffic to the Designated Countries mainly through Telefónica Perú (Perú), Telecom Argentina USA (United States), and ETECSA (Cuba).

As of December 31, 2021, revenues, expenses and payables from commercial agreements with the Designated Countries were as follows:

	December 31, 2021
	(In thousands of U$S)
Commercial Agreements with International Carriers (fixed services)	Revenues		Expenses		Payables
Syria		n/a		1		n/a
Cuba		61		258		—
Total		61		259		—
% of respective consolidated total amounts		(a)		(a)		(a)

(a)Less than 0.001%.

Regarding incoming traffic, Telecom Argentina charges the relevant international carrier for traffic ending in Telecom’s network. Consequently, Telecom Argentina does not know the country of origin of such traffic, except for incoming traffic with ETECSA, which comes directly from Cuba.

Accordingly, our total payables and receivables from international carriers include balances arising from traffic related to the Designated Countries but it is not possible to segregate them, except for those balances with ETECSA, which are only related to Cuba.

The outbound costs described in the table above are wholly immaterial with respect to the Company’s consolidated operating expenses for the period presented.

CAPITAL EXPENDITURES AND RIGHTS OF USE ASSETS

The following table sets forth our capital expenditures for each of the years ended December 31, 2021, 2020 and 2019:

	Year ended December 31,
	2021		2020		2019
	(P$ million)
Real estate		13		9		44
Switching equipment		629		657		711
Mobile network access, external wiring & transmission		12,896		14,734		14,940
Computer equipment and software		5,518		4,133		1,829
Other		63,212		61,133		113,710
Subtotal tangible capital expenditures		82,268		80,666		131,234
Licenses		292		—		29
Subscribers acquisition costs		2,342		2,663		3,309
Other		648		795		2
Subtotal intangible capital expenditures		3,282		3,458		3,340
Total capital expenditures in PP&E and intangible assets		85,550		84,124		134,574
Right of use assets		18,154		16,631		11,049
Total capital expenditures in PP&E and intangible assets and Right of use assets		103,704		100,755		145,623

Our capital expenditures were approximately US$ 752 million in 2021, US$ 680 million in 2020 and US$1,086 million in 2019, and represented 20%, 18.6% and 27.6% of our consolidated revenues, respectively. We estimate that our capital expenditures in 2022 will be approximately US$589.5 million. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures”.

We expect to finance these expenditures through cash flows generated by our operations and financing provided by third parties.

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PP&E

As detailed below, our principal physical properties consist of transmission equipment, access facilities, outside plant (external wiring) and switching equipment. These assets are, at present, mainly located throughout AMBA and the Northern Region. Some of our assets are located in areas that may be subject to natural disasters and severe weather, and which may be adversely affected in the future by climate change.

We believe that our assets are, and for the foreseeable future will be, adequate and suitable for their respective uses. The table below shows the carrying the amount of PP&E:

	As of December 31, 2021
	Services rendered
	in Argentina		Other abroad		Total
	(P$ million)
Real estate		60,571		822		61,393
Switching equipment		6,100		1,641		7,741
Mobile network access, external wiring & transmission		190,349		8,456		198,805
Computer equipment and software		44,645		2,200		46,845
Materials		44,157		1,531		45,688
Others		90,476		6,570		97,046
Total PP&E, net carrying value		436,298		21,220		457,518	(1)

(1) Excluding valuation allowance for obsolescence and impairment of materials for P$4,724 million and impairment of PP&E for P$1,620 million.

All the above-mentioned assets were used to provide service to our customers.

As of December 31, 2021, we have entered into purchase commitments relating to PP&E totaling P$26,758 million. Our current major suppliers of PP&E are Sagemcom BroadBand Sas, Huawei International Co. Limited, Huawei Tech Investment Co. LTD Argentina, Nokia Argentina S.A., Corning Optical Communications LLC, IBM Argentina S.R.L., Arris Solutions Inc., Cisco Systems, and Nokia Solution and Networks Argentina.

ITEM 4A.           UNRESOLVED STAFF COMMENTS

None.

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ITEM 5.              OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion in conjunction with the rest of this Annual Report, in particular, the sections “Presentation of Financial Information,” “Item 4 —Information on the Company” and the Consolidated Financial Statements, including the notes to those financial statements, which appear elsewhere in this Annual Report. Our Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB. The following discussion and analysis are presented by the Management of our company and provide a view of our financial condition, operating performance and prospects from Management’s perspective. The strategies and expectations referred to in this discussion are considered forward-looking statements and may be strongly influenced or changed by shifts in market conditions, new initiatives that we implement and other factors. Since much of this discussion is forward-looking, you are urged to review carefully the factors referenced elsewhere in this Annual Report that may have a significant influence on the outcome of such forward-looking statements. We cannot provide assurance that the strategies and expectations referred to in this discussion will come to fruition. Forward-looking statements are based on current plans, estimates and projections, and therefore, you should not rely solely on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statements in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. Please refer to “Forward-Looking Statements,” “Item 3—Key Information—Risk Factors” and “—Trend Information” below for descriptions of some of the factors relevant to this discussion and other forward-looking statements in this Annual Report.

Management Overview

The ASPO ordered by the National Government due to the COVID-19 outbreak - which began in March 2020 and continued during in 2021 - generated an expansion of the digital ecosystem: social and commercial relationships, education, relations with institutions, and the economy were able to continue functioning remotely. Telecom played a key role in making this possible. Through its services, the Company is not only present in the heart of its customers' homes, but also in the operation of companies and in people's everyday lives.

In addition to the challenges that the continuity of operations represented for Telecom the ASPO context, we added the reinforcement of networks and systems to guarantee a service according to the high consumption demand of our customers.

The consequences of the pandemic proved that the ICT industry represents the growth engine of the digital economy. Maintaining and fostering competition, with the ability to establish trade policies, is the best way to ensure that users can continue to access further and better services. In addition, a strong commitment of all sectors of society and greater public-private articulation are required to promote sustained growth in private employment and production.

This way, we have accelerated our own digital and cultural transformation, focusing on developing a new hybrid work model,  that constitutes a more dynamic and collaborative experience, with a mix of face-to-face and remote work schedules. We have transformed the main administrative buildings of the Company into “Experience Centers” (a new work experience focused on the balance between professional, family and personal life, including a mix of work modality options, depending on the needs of the different projects and types of task: full homeworking, face-to-face and the combination of both modalities), with the aim of promoting spaces for co-working, meeting, sharing, and collaborating. This allows us to further strengthen an agile culture of digital teamwork with collaborative leadership, which promotes co-creation, innovation and diversity. In addition, we have made headway with the modernization of our systems and infrastructure, in order to improve our customers’ satisfaction and strengthen our relationship.

As an expression of such developments in our services, we have renewed our institution and brand’s visual identity. From now on, Personal enables our customers to have full connectivity, with the best service experience, thanks to our fixed and mobile networks. Flow is a true meeting point for all entertainment, integrating content from the most important platforms on the market. In addition, under the Telecom brand, we continue to bring digital solutions to corporate and government segments, further contributing to their development and growth.

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Consolidated revenues in 2021 amounted to P$425,493 million as compared to P$455,234 million in 2020 and P$487,067 in 2019. The decrease of P$29,741 million in 2021 (a 6.5% decrease) was mainly due to lower services revenue, partially offset by higher equipment revenues. The decrease of P$31,833 million in 2020 (a 6.5% decrease) was mainly due to lower fixed and data services revenues, Internet services revenues, Cable Television service revenues and equipment sales, partially offset by higher Mobile services revenues.

Net income in 2021 amounted to P$9,940 million as compared to a net loss of P$7,704 million and net loss of P$7,989 million in 2020 and 2019, respectively. Net income attributable to Telecom Argentina amounted to P$8,665 million in 2021. Net income for 2021 increased by P$17,644 million as compared to 2020. Net loss attributable to Telecom Argentina amounted to P$8,626 million in 2020. Net loss for 2020 decreased by P$285 million as compared to 2019. Net loss attributable to Telecom Argentina amounted to P$9,034 million in 2019.

For a detailed analysis of our results of operations for fiscal year 2021, see “—Years ended December 31, 2021, 2020 and 2019” below. For a discussion of the factors that may affect our results of operations see “Item 3—Key Information—Risk Factors” and “—Years ended December 31, 2021, 2020 and 2019—Factors Affecting Results of Operations” and “—Trend Information” below.

Non-IFRS Measures

The following discussion and analysis summarizes relevant measures of results of operations presenting items by nature. The Company believes that the presentation of the measure “adjusted EBITDA” provides investors and financial analysts with appropriate information that is relevant to understanding the Company’s past and present performance as well as our projections of future performance (see the purpose of use of adjusted EBITDA and reconciliation of net income to adjusted EBITDA in section “Adjusted EBITDA”). Moreover, adjusted EBITDA is one of the key performance measures used by Management for monitoring the Company’s profitability and financial position, at consolidated levels.

Years ended December 31, 2021, 2020 and 2019

For purposes of these sections, the fiscal years ended December 31, 2021, 2020 and 2019 are referred to as “2021,” “2020” and “2019,” respectively.

Our results of operations are determined in accordance with IFRS as issued by the IASB. Telecom provides customers with a broad range of telecommunication services. To fulfill its purpose, Telecom conducts different activities that are distributed among the companies in the Group. For further information about our main products and services, see “Item 4—The Business—Main Products and Services”.

Factors Affecting Results of Operations

Described below are certain factors that may be helpful in understanding our operating results. These factors are based on the information currently available to our Management and may not represent all of the factors that are relevant to an understanding of our current or future results of operations. See also “Item 3—Key Information—Risk Factors”. Additional information regarding trends expected to influence our results of operations is analyzed below under “—Trend Information”.

The Argentine Economy

Although a significant portion of our financial liabilities are denominated in foreign currencies, a substantial majority of our assets, operations and customers are located in Argentina. Accordingly, our financial condition, results of operations and cash flows depend to a significant extent on economic and political conditions prevailing in Argentina. The Argentine government has exercised and continues to exercise significant influence over many aspects of the Argentine economy. Accordingly, Argentine governmental actions concerning the economy could significantly affect private sector entities in general and our operations in particular, as well as affect market conditions, prices and returns on Argentine securities, including our outstanding securities and our shares. Our operating results, financial condition and cash flows have been and will be affected by fluctuations in the Argentine economy. For more information on these macroeconomic and political conditions, see “Item 3—Key Information—Risk Factors—Risks Relating to Argentina”.

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During 2020, aggregate economic activity was mainly affected by the COVID-19 pandemic. That year, Argentina experienced the sharpest year-on-year GDP decline in its economic history since 2002.

During the first quarter of 2021, the economy started to recover, even though it remained 3.3% below pre-pandemic levels. A new wave of COVID-19 stalled the economy's recovery in the second quarter of 2021. During the second half of the year, the economic activity continued its recovery, mainly driven by the impact of a successful nationwide vaccination plan and the ease of restrictive measures that had a negative impact on the economy. In 2021, GDP experienced a growth of approximately 9,7% as compared to 2020. However, this growth did not compensate the decrease recorded in 2020. New variants of COVID-19 continue to emerge and the development of novel strains could eventually jeopardize the favorable epidemiological evolution.

Although in 2021 there was a decrease in public spending and higher tax revenues compared to 2020, the fiscal deficit persisted. As of December 31, 2021, the peso depreciated by 22.1% against the US dollar, while inflation increased in the year-on-year comparison reaching 50.9% at the end of December 2021.

During 2021, exports approached the record achieved in 2011 for the first time in 10 years, allowing the accumulation of international reserves during the first half of the year. However, the financial demand for foreign currency increased significantly during the second half of the year, mainly driven by Argentina's reliance on money issuance and a drop in the demand for Argentine pesos. Moreover, Central Bank reacted to the consequent loss of international reserves by reinforcing foreign exchange controls for individuals and companies.

Regarding external debt, the restructuring of Argentina's foreign-currency denominated debt in 2020 (including foreign-law governed debt and bonds governed by Argentine law), the Argentine government continues to negotiate with the IMF seeking to agree on a new program addressing the term of the debt incurred under the existing SBA. As of December 31, 2021, Argentina´s country risk stood at 1,688 points. On January 28, 2022, the IMF and the Argentine Government reached an understanding on certain key policies as part of their ongoing discussions on an IMF-supported program. On March 4, 2022, the Argentine Government reached a staff-level agreement with the International Monetary Fund and a bill was sent to the Argentine Congress. On March 11, 2022, the lower house of the congress passed and sent to the Senate the bill that supports the agreement between Argentina and the International Monetary Fund. On March 17, 2022, the Senate approved the agreement.

Effect of Inflation

Pursuant to International Accounting Standards (“IAS”) 29 (Financial Reporting in Hyperinflationary Economies), the financial statements of entities whose functional currency is that of a hyperinflationary economy must be restated. IAS 29 does not prescribe when hyperinflation arises, but includes several factors of hyperinflation. Since July 1, 2018, Argentina has been categorized as a hyperinflationary country, since certain macroeconomic indicators and events during 2018 evidenced that the qualitative and quantitative factors identified in IAS 29 (the quantitative factor being when the country’s projected three-year cumulative inflation rate exceeds 100%) were satisfied. Therefore, we have restated our Consolidated Financial Statements and the financial information in constant Argentine Pesos as of December 31, 2021, for all the periods reported in this Annual Report based on certain price indexes to take into account the effect of inflation in Argentina. See “Item 3—Key Information—Risk Factors—Risks Relating to Argentina—Inflation could accelerate, causing adverse effects on the economy and negatively impacting Telecom’s margins and/or ratios,” and Note 1.e) to our Consolidated Financial Statements.

The CPI index has registered an increase of 50.9% and 36.1% on a year-over-year comparison for 2021 and 2020, respectively.

The financial information issued for comparative purposes must also be presented in the current currency as of December 31, 2021 and must be restated using the annual index of the current year.

As a result of applying the comprehensive inflation restatement, the Company will record an increase in the value of non-monetary items, such as PP&E, Intangible Assets (including Goodwill) with an impact on deferred taxes and an increase in the Company's equity, including shareholders’ contributions.

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Income Tax Inflation Adjustment

Law No. 27,430, as amended by Law No. 27,468, provides that, effective as from the fiscal year beginning on or after January 1, 2018, the inflation adjustment procedure set out in the income tax law shall be applicable to any fiscal year in which the variation of the IPC price index, accumulated over the 36 months immediately preceding the end of the relevant fiscal year, exceeds 100%.

In the first, second and third year as from its effectiveness, this procedure shall be applicable as long as the variation of the IPC, calculated from the beginning to the end of each of these years exceeds 55%, 30% and 15%, respectively. In order to calculate income tax inflation adjustments, since the amendment of Law No. 27,541, one-sixth of the income tax inflation adjustment shall be computed in each fiscal year, and the remaining five-sixths shall be computed in equal parts, in the five immediately following fiscal years. The income tax inflation adjustment corresponding to fiscal years beginning on or after January 1, 2021, is fully charged to the fiscal year.

During the years ended December 31, 2019, 2020 and 2021 the variation of the IPC exceeded the threshold set for the application of the income tax inflation adjustment for tax purposes for these years. Accordingly, and pursuant to a comprehensive interpretation of applicable regulations, the Company recognized the corresponding accounting impact, that amounted to a loss of P$41,919 million as of December 31, 2021.

Effects of Fluctuations in Exchange Rates between the Argentine Peso and the U.S. dollar and other major foreign currencies

In 2021, the Argentine Peso continued its devaluation against major foreign currencies, particularly the U.S. dollar. According to exchange rate information published by the Banco de la Nación Argentina, the Argentine Peso depreciated by 22.1% against the U.S. dollar during the year ended December 31, 2021 (compared to 40.5%, 58.9% in the years ended December 31, 2020 and 2019, respectively).

Also, since September 2019, following the economic instability and the significant devaluation of the Peso that took place after the primary elections, foreign exchange controls and restrictions to the transfer of currency abroad were reinstated. The Fernández administration sought to future prevent additional demand for foreign currency by maintaining and reinforcing exchange controls (i.e., the imposition of higher taxes on the acquisition of foreign currency, among others). In response to these measures, several parallel U.S. dollar trading markets developed in which the Argentine peso-U.S. dollar exchange rate differ substantially from the official Argentine peso-U.S. dollar exchange rate. See “Item 10—Additional Information—Foreign Investment and Exchange Controls in Argentina.” and “Item 3—Key Information—Risk Factors—Risks Relating to Argentina—Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends”.

The majority of our revenues are in Pesos whereas a portion of the costs regarding materials and supplies related to the construction and maintenance of our networks and services are incurred in foreign currencies. Also, the high level of competition limited our ability to transfer to our customers the fluctuations in the exchange rates between the Peso and the U.S. dollar and other major foreign currencies. In addition, any devaluation of the Peso against foreign currencies may increase operating costs (partially offset by the increase of revenues in foreign currencies), capital expenditures and the cost of debt, which will adversely affect our results of operations, considering the net effect on revenues and costs. Additionally, any significant devaluation of the Peso, will result in an increase in the cost of servicing our debt and, therefore, may have a material adverse effect on our results of operations. See “Item 3—Key Information—Risk Factors—Risks Relating to Argentina— Devaluation of the Argentine Peso and foreign exchange controls may adversely affect our results of operations, our capital expenditures and our ability to service our liabilities and pay dividends”.

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The following tables show, for the periods indicated, certain information regarding the exchange rates for U.S. dollars, expressed in nominal Pesos per dollar (ask price published by Banco de la Nación Argentina). See "Item 10-Additional Information-Foreign Investment and Exchange Controls in Argentina".

	Average(1)		End of Period
Year Ended December 31, 2019		49.31		59.89
Year Ended December 31, 2020		71.61		84.15
Year Ended December 31, 2021		95.81		102.72
March 2022 (through March 17, 2022)		—		109.51

(1)Yearly data reflect average of month-end rates.

Sources: Banco de la Nación Argentina

Internal Growth

We have focused on increasing our broadband Internet penetration by providing and offering bandwidth connectivity to our existing cable television subscribers, telephony customers and new customers.

Total monthly ARPU for mobile telephony services in Argentina was P$617.0 in December 2021 as compared to P$658.4 in December 2020. Total monthly ARPU for Internet services in Argentina was P$1,727.1 in December 2021 as compared to P$1,918.5 in December 2020. Total monthly ARPU for our cable television services of Telecom Argentina was P$1,883.2 in December 2021 as compared to P$2,086.3 in December 2020.

Total monthly ARBU in our fixed telephony services in Argentina was P$777.2 in December 2021 as compared to P$866.9 in December 2020.

The following table shows certain information regarding calculation of ARPU and ARBU as of the dates specified:

			��
	2021		2020		2019
Number of fixed telephony services lines (thousands)(1)		2,417		2,821		3,183
ARBU (in P$/month) (national + international) (5)		777.2		866.9		908.7
Number IP fixed telephony services lines (thousands)		721		347		121
Internet access (thousands)		4,248		4,158		4,123
ARPU Internet (in P$/month) (5)		1,727.1		1,918.5		2,175.8
Personal Mobile telephony services lines (thousands)		20,129		18,433		18,932
ARPU Personal (in P$/month) (5)		617		658.4		651.6
MBOU Personal (in Mb per user/month) (2)		4,317.1		3,984.7		3,411.4
Núcleo’s customers (thousands)(3)		2,414		2,351		2,373
ARPU Núcleo (in P$/month) (6)		636.5		680.0		713.0
MBOU Núcleo (in Mb per user/month) (2)		8,860.7		7,433.6		6,754.4
Cable TV subscribers (thousands)		3,563		3,546		3,517
ARPU Cable TV (in P$/month) (5)		1,883.2		2,086.3		2,394.8
Headcount (4)		22,587		23,254		23,728

(1) Includes lines customers, own usage, public telephony and Integrated Services Digital Network (“ISDN”) channels.

(2) Correspond to customers with consumption higher than 10Mb.

(3) Including Wi-Max Internet customers.

(4) Including temporary employees, if any.

(5) Includes restatement in current currency as of December 31, 2021 in accordance to IAS 29, for further information please see “—Years ended December 31, 2021, 2020 and 2019-Consolidated Results of Operations below”

(6) Includes P$107.3, P$297.0 and P$432.3 related to the restatement in current currency as of December 31, 2021 in accordance to IAS 29 as of December 31, 2021, 2020 and 2019, respectively.

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Price of services

The LAD established that licensees of ICT services may freely set their prices provided such prices are fair and reasonable, to offset the costs of operation and to tend to the efficient supply and reasonable margin of operation. However, the ENACOM is entitled to observe the prices we set if it understands that they do not comply with the provisions of Section 48 of the LAD. If prices were observed and we are forced to reduce them, our operating margins may be negatively affected.

Moreover, on August 22, 2020, the PEN issued Decree No. 690/20 amending the LAD. Decree No. 690/20 declared ICT services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks for and between licensees as “Essential and Strategic Competition Public Services”, and empowered ENACOM to ensure accessibility. Decree No. 690/20 further established that (i) the prices of the Essential and Strategic Competition Public ICT Services, (ii) the prices of those services provided in accordance with the Universal Service, and (iii) the prices of those services determined by ENACOM for public interest reasons, shall be regulated by ENACOM . Decree No. 690/20 further established that ENACOM is the agency responsible for the enactment of any regulation related to the ICT’s PBU, and also suspended any price increases or changes set or announced by the ICT’s licensees from July 31, 2020 to December 31, 2020. The Decree has been ratified by the Argentine Congress under Law No. 26,122 and has been regulated through ENACOM Resolutions Nos. 1,466/20 and 1,467/20. For more information on Decree No. 690/20 and its regulating resolutions, see “Item 4 —Regulatory Authorities and Framework— Amendment to Law No. 27,078 – Argentine Digital Law”.

The impact of the service price adjustments on our results of operations is particularly relevant as a result of inflationary pressures on our costs structure. If we are unable to adjust the prices of the services we provide based on inflation rates, our results of operations will be adversely affected.

Competition

The fixed and mobile telephony, cable television and Internet businesses in Argentina are competitive. We need to make significant investments to refurbish and maintain our existing network infrastructure to comply with regulatory obligations and to remain competitive with respect to the quality of our services.

With respect to cable television services, we compete with DirecTV, Telecentro, Supercanal, Movistar and Claro that have built networks in the areas in which we operate, providers of other pay television services, including direct broadcasting, direct-to-home satellite and multi-channel multi-point distribution system services, licensed suppliers of basic telephone services and cooperative entities providing utility services, as well as with free broadcasting services which are currently available to the Argentine population in certain areas from four privately-owned television networks and one state-owned national public television network. We also consider Over-The-Top media services, such as Netflix, Disney+, Prime Video and On Video, as competitors. Among cable television services competition, is driven primarily by price, programming services offered, customer satisfaction and quality of the system.

Regarding mobile services, we compete with other two operators that offer nationwide services, Telefónica Móviles Argentina and América Móvil. The market of residential, corporate and wholesale mobile telecommunication services distinguishes due to the fact that operators are free from regulation to determine the pricing of services, except that the ENACOM sets prices for wholesale local interconnection services.

With respect to Internet services, Movistar, Telecentro, Claro have well-established name recognition, larger customer bases and significant financial, technical and marketing resources. Well-known competitors continue to increase their penetration and ability to serve household in different areas of the country. For more information, see “Item 3— Key Information—Risk Factors— We face substantial and increasing competition in the Argentine fixed and mobile telephony, cable television and Internet businesses”.

Technology Developments and Capital Expenditures

Improvements in technology influence our customers’ demand for services and equipment. For example, demand for fixed-line telecommunications services has been affected by continued significant growth in mobile business. Growth in the telephony as well as cable television services businesses at present is being affected by the expansion of broadband for individuals and corporations and our continuous updating of commercial and support systems. The increase in broadband adoption has also proven to be a critical factor in facilitating the offering of Value Added Services to customers and the combination of product made available to customers.

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In Internet services, we must constantly upgrade our access technology and software, embrace emerging transmission technologies and improve the responsiveness, functionality, coverage and features of our services.

In the mobile business, to provide subscribers with new and better services, Telecom must enhance its mobile networks extending 3G and 4G/4G+ technology and bandwidth for mobile data transmission Moreover, Telecom is developing an LTE infrastructure expeditiously, in response to regulatory requirements and development in the market for the mobile services. We will also begin with the deployment of 5G technology that will allow us to expand our product portfolio and meet market demands in the future.

In addition, as new technologies develop, equipment may need to be replaced or upgraded, and network facilities (in particular, mobile and Internet network facilities) may need to be rebuilt in whole or in part, at substantial cost, to remain competitive. These enhancements and the implementation of new technologies will continue requiring increased capital expenditures. See “Item 4—Information on the Company—Capital Expenditures” and “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures”.

Tax pressures and litigation

Local municipalities in the regions where we operate have introduced regulations and proposed various taxes and fees for the installation of infrastructure, equipment and expansion of fixed-line and mobile networks. Local and federal tax authorities have brought an increasing number of claims against us. We disagree with these proceedings and are generally contesting them. Also, jurisprudential changes in labor and pension matters have generated higher claims from employees and former employees and also increased claims from employees of a contractor or subcontractor alleging joint liability. We cannot assure you that current laws and regulations applicable to the economy generally or specifically to the telecommunications industry will not become more burdensome, that the claims will be resolved in our favor, or that any changes to the existing laws and regulations will not adversely affect our business, financial condition, results of operations and cash flows as well.

(A) Consolidated Results of Operations

The consolidated financial statements and the related information included in this Annual Report have been presented on the basis of the current currency as of December 31, 2021 to take into account the effect of inflation in Argentina in accordance with the requirements of IAS 29.

The Company restated all the non-monetary items in order to present them in current currency as of December 31, 2021. The main non-monetary items subject to restatement include Property, Plant and Equipment, Intangible assets (including Goodwill), Rights of Use, Inventories, certain Investments in subsidiaries and the Equity items. The treatment of non-monetary assets impacts the determination of deferred tax assets/liabilities, with the exception of Equity items. All items were restated since the date of the initial recognition or since the last revaluation. Monetary items have not been restated because they are stated in terms of the measuring unit current as of December 31, 2021.

Additionally, pursuant to IAS 29 our Income Statement was restated in current currency as of December 31, 2021.

The items of the Consolidated Statement of Cash Flows must also be restated in current currency as of December 31, 2021. The restatement effect has an impact on the Income Statement and must be eliminated from the Statement of Cash Flows because it is not considered cash or cash equivalent.

All comparative figures have also been presented in the current currency of December 31, 2021.

The effect of inflation on the monetary position is included in the Income Statement under Other financial results, amounted to P$17,163 million, P$8,450 million and P$15,615 million as of December 31, 2021, 2020 and 2019, respectively.

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According to FACPCE Resolution No. 539/18, the general price index must be determined by reference to the Internal Wholesale Price Index (IWPI) through 2016, considering for the months of November and December 2015 the average variation of the Consumer Price Index (CPI) of the City of Buenos Aires, due to the fact that during those two months no IWPI measurements were published at national level. Since January 2017, changes in the general price index must be determined by reference to the National Consumer Price Index (National CPI). The tables below present the evolution of these indexes in the last five years according to official statistics (INDEC) following the guidelines described in Resolution No. 539/18:

	As of December		As of December		As of December		As of December		As of December
Variation in Prices	31, 2017		31, 2018		31, 2019		31, 2020		31, 2021
Annual	24.7	%	47.6	%	53.8	%	36.1	%	50.9	%
Accumulated 3 years	96.6	%	147.8	%	183.2	%	209.2	%	216.1	%

For further information see Note 1.e) to our Consolidated Financial Statements and see “Item 3 — Risk factors—Risk Related to Argentina—Inflation could accelerate, causing adverse effects on the economy and negatively impacting Telecom’s margins and/or ratios.”

For 2021, we reported  net income of P$9,940 million as compared to 2020 net loss of P$7,704 million, and  net loss of P$7,989 million in 2019. Net income attributable to Telecom Argentina totaled P$8,665 million in 2021. Net income for 2021 increased by P$17,644 million as compared to 2020. Net loss attributable to Telecom Argentina totaled P$8,626 million in 2020. Net loss for 2020 decreased by P$285 million as compared to 2019. Net loss attributable to Telecom Argentina amounted to P$9,034 million in 2019.

Consolidated revenues in 2021 amounted to P$425,493 million as compared to P$455,234 million in 2020. The decrease of P$29,741 million in 2021 (a 6.5% decrease) was mainly due to lower services revenue, partially offset by higher equipment revenues. The decrease of P$31,833 million in 2020 (a 6.5% decrease) was mainly due to lower fixed and data services revenues, Internet services revenues, Cable Television service revenues and equipment sales, partially offset by higher Mobile services revenues.

In 2021, operating costs (including depreciation, amortization and impairment of fixed assets) amounted to P$428,280 million, representing an increase of P$3,678 million, or 0.9% as compared to 2020. The increase in operating costs in 2021 was mainly due to the Company's investment plan. In 2020, operating costs (including depreciation, amortization and impairment of fixed assets) amounted to P$424,602 million, representing a decrease of P$30,008 million, or 6.6% as compared to 2019. The decrease in operating costs in 2020 was consistent with the overall reduction of operating costs, except for interconnection and transmission costs and bad debt expenses.

Telecom carries out its activities in Argentina and abroad (Paraguay, Uruguay and the United States). These operations are not analyzed as a separate segment by the Executive Committee and the CEO, who analyze the consolidated information of companies in Argentina and abroad, taking into account that the activities of foreign companies are not significant for Telecom. The operations that Telecom carries out abroad do not meet the aggregation criteria established by the standard to be grouped within the “Services rendered in Argentina” segment, and considering that they do not exceed any of the quantitative thresholds identified in the standard to qualify as reportable segments, they are grouped within the category “Other abroad segments” according to the requirements of the IFRS 8.

However, since operations abroad are not material, the explanations set forth below reflect mainly developments and information attributable to our operations in Argentina.

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(A.1) 2021 Compared to 2020

	Year ended
	December 31,
	2021	2020	Total Change
	(P$ million)		%	(P$ million)
Revenues	425,493	455,234	(6.5)	(29,741)
Operating costs (without depreciation, amortization and impairment of fixed assets)	(292,726)	(299,933)	(2.4)	7,207
Adjusted EBITDA(1)	132,767	155,301	(14.5)	(22,534)
Depreciation, amortization and impairment of fixed assets	(135,554)	(124,669)	8.7	(10,885)
Operating (loss) income	(2,787)	30,632	n/a	(33,419)
Earnings (losses) from associates	395	749	(47.3)	(354)
Debt financial expenses	28,700	(37,280)	n/a	65,980
Other financial results, net	16,949	10,649	59.2	6,300
Income tax expense	(33,317)	(12,454)	167.5	(20,863)
Net income (loss)	9,940	(7,704)	n/a	17,644
Net income (loss) attributable to:
Telecom Argentina (Controlling Company)	8,665	(8,626)	n/a	17,291
Non-controlling interest	1,275	922	38.3	353

(1) Adjusted EBITDA is a non-GAAP measure. See the purpose of use of adjusted EBITDA and reconciliation of net income to adjusted EBITDA in section “Adjusted EBITDA.”

In 2021, Adjusted EBITDA totaled P$132,767 million, representing 31.2% of consolidated revenues. However, as a result of the Company’s investment plan, depreciation and amortization totaled P$135,554 million. Consequently, the operating loss for 2021 amounted to P$2,787 million.

In 2021, net income amounted to P$9,940 million. Additionally, financial results, net amounted to P$45,649 million and income tax expenses amounted to P$33,317 million, mainly as a consequence of tax rate variation effects pursuant to Law No. 27,430.

Revenues

	Year ended
	December 31,
	2021	2020	Total Change
	(P$ million)		%	(P$ million)
Mobile Services	161,131	171,089	(5.8)	(9,958)
Internet Services	90,768	96,954	(6.4)	(6,186)
Cable Television Services	82,550	89,934	(8.2)	(7,384)
Fixed and Data Services	58,930	68,825	(14.4)	(9,895)
Other services revenues	2,318	1,863	24.4	455
Services Revenues	395,697	428,665	(7.7)	(32,968)
Equipment revenues	29,796	26,569	12.1	3,227
Revenues	425,493	455,234	(6.5)	(29,741)

During 2021, total consolidated revenues decreased by 6.5% amounting to P$425,493 million as compared to P$ 455,234 million in 2020. This decrease was mainly due to lower services revenues, partially offset by higher equipment revenues.

The decrease in total consolidated revenues occurs albeit the greater demand for services, the significant improvements in churn of mobile services and the stability in churn of other services. While the rate of inflation for 2021 was 50.9%, the range of measures introduced by the Argentine government relating to the prices of our services prevented us from fully transferring inflation to customers.

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Services revenues amounted to P$395,697 million in 2021, decreasing 7.7% as compared to P$428,665 million in 2020 and represented 93% of consolidated revenues. Equipment revenues amounted to P$29,796 million in 2021 as compared to P$26,569 million in 2020, and represented 7% of consolidated revenues.

The effect generated by the restatement in current currency as of December 31, 2021 increased consolidated revenues to P$68,145 million and P$197,953 million in 2021 and 2020, respectively.

Consolidated revenues for 2021 and 2020 are comprised as follows:

Mobile Services

Mobile services revenues in 2021 amounted to P$161,131 million (a decrease of P$9,958 million or 5.8% as compared to 2020), being the principal contributor to our total services revenues for 2021 (40.7% of consolidated services revenues in 2021 as compared to 39.9% in 2020).

The effect generated by the restatement in current currency as of December 31, 2021 included in Mobile services revenues amounted to P$25,685 million and P$74,258 million in 2021 and 2020, respectively.

Mobile services revenues in Argentina amounted to P$144,423 million (a decrease of P$7,193 million as compared to 2020), due to a decrease in the ARPU, partially offset by an increase of 9.2% in the number of customers.

Personal's mobile customers amount to 20.1 million and 18.4 million as of December 31, 2021 and 2020, respectively. The main ratios related to the services provided to these customers were:

● 59% of total are prepaid customers and 41% consist of postpaid customers as of December 31, 2021, compared to 58% and 42% respectively, as of December 31, 2020.

● Mobile internet services revenues represent 75% of Personal’s customer total services revenues.

● The ARPU amounted to P$617.0 as of December 31, 2021 (vs. P$658.4 as of December 31, 2020), representing a 6.3% decrease. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounted to P$96.4 and P$285.4 as of December 2021 and 2020, respectively.

● The average churn rate per month amounted to 1.1% in December 2021 (vs. 2.2% average in December 2020).

Regarding infrastructure, the Company continued to enhance the mobile Internet experience of its customers through the deployment of its 4G and 4G+ network throughout the country, reaching more than 14.3 million customers with 4G devices throughout the country. The traffic carried by 4G technologies during 2021 corresponds to 92% of the total traffic.

Likewise, the number and variety of mobile offers with more data services to improve the connectivity of our customers were deepened, expanding the benefits of the plans to increase performance and their use. In this scenario, the WiFi Pass service was launched, which allows customers who are also subscribed to Internet service to activate free of charge gigabytes for exclusive use to share Internet from their handsets with any other device, without consuming data from their original plan.

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ARPU of Mobile Services in Argentina

A monthly operational measure used in the mobile services is ARPU, which we calculate by dividing adjusted total service revenues -excluding out collect wholesale roaming, cell site rental and reconnection fee revenues and others- (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Personal's ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of mobile services. The following table shows the reconciliation of total service revenues to such revenues included in the ARPU calculations of 2021:

	Year ended December 31,
	2021
	(P$ million)
Total Mobile service revenues	144,423
Components of service revenues not included in the ARPU calculation: Outcollect wholesale roaming, cell sites rental, Reconnection fees and others	(2,146)
Adjusted total service revenues included in the ARPU calculation	142,277
Average number of subscribers during the year (thousands)	19,216

Mobile services revenues generated in Paraguay amounted to P$16,708 million in 2021 (vs. P$19,473 million in 2020, representing a 14.2% decrease). The decrease was mainly due to the decrease in ARPU and the customer base, partially offset by the appreciation of the Guaraní against the Argentine Peso. The main ratios related to mobile services in Paraguay as of December 31, 2021 were:

● Núcleo’s subscriber base reached 2.2 million customers as of December 31, 2021;

● approximately 82% of the total of customers consisted of prepaid customers, and 18% consist of postpaid customers, as of December 31, 2021; while approximately 83% of the total of customers consisted of prepaid customers, and 17% consisted of postpaid customers, as of December 31, 2020;

● ARPU amounted to P$636.5 as of December 31, 2021 (vs. P$680.0  as of December 31, 2020), representing a 6.4% decrease; and

● the churn rate per month amounted to 3.3% in 2021 (vs. 3.5% in 2020).

Internet Services

Internet services revenues amounted to P$90,768 million in 2021 (equivalent to 21.3% of total consolidated revenues), decreasing P$6,186 million or 6.4% as compared to P$96,954 million in 2020, mainly due to the decrease in the Internet ARPU in Argentina of 10.0%, which reached P$1,727.1 in 2021 as compared to P$1,918.5 in 2020. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounted to P$274.7 and P$840.9 as of December 31, 2021 and 2020, respectively.

Customers with service of 20 Mb or higher represented 79% and 72% of the total customer base as of December 31, 2021 and 2020, respectively. Within this range there are customers who have plans of 100 Mb, 300 Mb and 1,000 Mb, that as of December 31, 2021 amounted to 1,074,420, 175,464 and 9,170, respectively.

Internet services churn rate per month amounted to 1.5% and 1.3% as of December 31, 2021 and 2020, respectively, increasing a 2.2% the subscriber base in 2021, which amounted to 4.2 million.

The effect generated by the restatement in current currency as of December 31, 2021 included in internet services revenues amounted to P$14,420 million and P$42,402 million in 2021 and 2020, respectively.

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ARPU of Internet Services in Argentina

A monthly operational measure used in the internet services is ARPU, which we calculate by dividing adjusted total service revenues - excluding connection and rehabilitation fees revenues and others - (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Internet’s ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of Internet services. The following table shows the reconciliation of total service revenues to such revenues included in the ARPU calculations of 2021:

	Year ended December 31,
	2021
	(P$ million)
Total Internet service revenues	87,341
Components of service revenues not included in the ARPU calculation	74
Adjusted total service revenues included in the ARPU calculation	87,415
Average number of subscribers during the year (thousands)	4,214

Cable Television Services

Cable television service revenues amounted to P$82,550 million in 2021 (equivalent to 19.4% of total consolidated revenues), decreasing P$7,384 million or 8.2% as compared to revenues as of December 31, 2020. The decrease was mainly due to lower ARPU, which amounted to P$1,883.2 as of December 31, 2021, decreasing 9.7% as compared to an ARPU of P$2,086.3 as of December 31, 2020. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounts to P$306.7 and P$910.6 as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, the subscriber base in Argentina increased and amounted to 3.3 million customers, of which 1.1 million are subscribed to Flow. The monthly average churn amounted to 1.1% and 1.0% as of December 2021 and 2020, respectively.

In November 2020 we incorporated Disney+ to the Flow platform and, during 2021, the platform evolved with new facilities, innovative and quality content based on alliances with renowned national and international production companies. We incorporate Paramount+ and Star+, in addition to Netflix and Amazon Prime Video, making Flow one of Argentina’s leading entertainment comprehensive platforms. The services provided by Flow include TV, series, films and documentaries on demand and exclusive co-productions, as well as music and gaming. In addition, the consolidation of Esports as a locally consumed entertainment platform continued and will continue to grow as customer needs evolve.

The effect generated by the restatement in current currency as of December 31, 2021 included in cable television services revenues amounted to P$13,368 million and P$39,263 million in 2021 and 2020, respectively.

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ARPU of Cable Television Services of Telecom Argentina

An important monthly operational measure used in the Cable Television services is ARPU, which we calculate by dividing adjusted total service revenues - excluding connection and administration fees, advertising services and others - (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Cable Television’s ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of cable television services. The following table shows the reconciliation of total cable television service revenues to such revenues included in the ARPU calculations of 2021:

	Year ended December 31,
	2021
	(P$ million)
Total Cable television service revenues	75,153
Components of service revenues not included in the ARPU calculation: Connection and Reconnection fees and others	(294)
Adjusted total service revenues included in the ARPU calculation	74,859
Average number of subscribers during the year (thousands)	3,313

Fixed and Data Services

Revenues generated by fixed and data services amounted to P$58,930 million in 2021 (equivalent to 13.8% of total consolidated revenues) decreasing P$9,895 million or 14.4% as compared to P$68,825 million in 2020. The effect generated by the restatement in current currency as of December 31, 2021 included in fixed and data services revenues amounted to P$9,609 million and P$29,961 million in 2021 and 2020, respectively.

The average monthly revenue billed per user ("ARBU") of fixed telephony services in Argentina decreased to P$777.2 in 2021 from P$866.9 in 2020. The effect generated by the restatement in current currency as of December 31, 2021 included in ARBU amounts to P$131.0 and P$378.7 as of December 31, 2021 and 2020, respectively.

The B2B segment developed new solutions to help companies to boost their business and continue to evolve digital transformation in this new context.

In line with this, Telecom announced a strategic alliance with the IBM Cloud business unit with the aim of further deepening access to hybrid cloud solutions and continuing to add information technology products to its portfolio.

Additionally, the new security solution "Strengthening users" has been developed, which aims to reduce the risks of cybersecurity attacks on companies. This solution is intended to raise awareness of computer security, while measuring and analyzing the results to reduce the risks to which network users are exposed.

Equipment

Equipment revenues amounted to P$29,796 million in 2021 (an increase of P$3,227 million or 12.1% as compared to 2020). The increase was mainly due to higher handsets sold as compared to 2020 (38)%, and approximately 31% increase in handsets sale price as compared to 2020.

The Company continued to promote the updating of handsets with financed offers and special discounts highlighting the convergence of services.

The effect generated by the restatement in current currency as of December 31, 2021 included in equipment revenues amounted to P$4,787 million and P$11,333 million in 2021 and 2020, respectively.

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Operating costs (without depreciation, amortization and impairment of fixed assets)

Total operating costs (without depreciation, amortization and impairment of fixed assets) decreased P$7,207 million in 2021, amounting to P$292,726 million, representing a 2.4% decrease as compared to 2020. These lower costs are related with the decrease in bad debt expenses, taxes and fees with the Regulatory Authority, interconnection and transmission costs, commissions and advertising and programming and content costs; partially offset by an increase in employee benefit expenses and severance payments and cost of equipment and handsets.

The effect generated by the restatement in current currency as of December 31, 2021 included in Operating costs (without depreciation, amortization and impairment of fixed assets) amounted to P$49,341 million and P$130,840 million in 2021 and 2020, respectively.

	Year ended
	December 31,
	2021	2020	Total Change
	(P$ million)		%	(P$ million)
Employee benefit expenses and severance payments	(91,823)	(88,265)	4.0	(3,558)
Interconnection and transmission costs	(15,262)	(16,987)	(10.2)	1,725
Fees for services, maintenance, materials and supplies	(49,431)	(49,829)	(0.8)	398
Taxes and fees with the Regulatory Authority	(32,743)	(34,747)	(5.8)	2,004
Commissions and advertising	(24,392)	(26,040)	(6.3)	1,648
Cost of equipment and handsets	(20,961)	(16,803)	24.7	(4,158)
Programming and content costs	(28,949)	(30,443)	(4.9)	1,494
Bad debt expenses	(7,983)	(16,309)	(51.1)	8,326
Other operating expenses	(21,182)	(20,510)	3.3	(672)
Total operating costs (without depreciation, amortization and impairment of fixed assets)	(292,726)	(299,933)	(2.4)	7,207

Employee benefit expenses and severance payments

Employee benefit expenses and severance payments increased P$3,558 million to P$91,823 million in 2021 as compared to P$88,265 million in 2020. The increase was mainly due to increases in salaries agreed by the Company with several trade unions for unionized employees, and also for non-unionized employees, together with related social security charges, and higher severance payments, partially offset by a decrease in net payroll of 3%, amounting to 22,587 employees as of December 31, 2021.

The effect generated by the restatement in current currency as of December 31, 2021 included in Employee benefit expenses and severance payments amounted to P$13,994 million and P$38,087 million in 2021 and 2020, respectively.

Interconnection and transmission costs

Interconnection and transmission costs (including charges for TLRD, Roaming and cost of international outbound calls and lease of circuits) decreased P$1,725 million, amounting to P$15,262 million in 2021 as compared to P$16,987 million in 2020, respectively. The increase was mainly due to the new dynamics of the business that implies an optimization of links and sites, partially offset by increases in the exchange rate in relation to services set in US$.

The effect generated by the restatement in current currency as of December 31, 2021 included in Interconnection and transmission costs amounted to P$2,491 million and P$7,324 million in 2021 and 2020, respectively.

Fees for services, maintenance, materials and supplies

Fees for services, maintenance, materials and supplies decreased P$398 million, or 0.8%, amounting to P$49,431 million in 2021 as compared to P$49,829 million in 2020. Fees for services decreased in 2021 P$497 million, while maintenance, materials and supplies increased P$99 million, compared to 2020.

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The effect generated by the restatement in current currency as of December 31, 2021 included in Fees for services, maintenance, materials and supplies amounted to P$8,995 million and P$22,100 million in 2021 and 2020, respectively.

Taxes and fees with the Regulatory Authority

Taxes and fees with the Regulatory Authority, including turnover tax, municipal taxes and other taxes, decreased P$2,004 million or 5.8%, amounting to P$32,743 million in 2021 as compared to P$34,747 million in 2020. The decrease was mainly to the effect of the decrease in sales in 2021.

The effect generated by the restatement in current currency as of December 31, 2021 included in Taxes and fees with the Regulatory Authority amounted to P$5,269 million and P$15,091 million in 2021 and 2020, respectively.

Commissions and advertising

Commissions (including commissions paid to agents, collection commissions and others) and advertising, decreased P$1,648 million or 6.3%, amounting to P$24,392 million in 2021, as compared to P$26,040 million in 2020. The decrease was due to lower charges in advertising, partially offset by an increase for agent commissions.

The effect generated by the restatement in current currency as of December 31, 2021 included in Commissions and advertising amounted to P$3,808 million and P$11,243 million in 2021 and 2020, respectively.

Cost of equipment and handsets

Cost of equipment and handsets sold increased P$4,158 million, amounting to P$20,961 million in 2021 as compared to P$16,803 million for 2020. Thereby, P$20,003 million of this amount correspond to cost of handsets sold in Argentina, which increased 29.2% mainly due to higher handsets sold and the increase in the purchase prices of handsets, compared to 2020.

The effect generated by the restatement in current currency as of December 31, 2021 included in Cost of equipment and handsets amounted to P$4,873 million and P$7,783 million in 2021 and 2020, respectively.

Programming and content costs

Programming and content costs decreased by P$1,494 million amounting to P$28,949 million in 2021 as compared to P$30,443 million in 2020. The decrease was mainly due to commercial efficiency, partially offset by prices increases in almost all signals and higher costs related to local soccer programming considering that the activity was suspended between April and October 2020 as a result of the pandemic.

The effect generated by the restatement in current currency as of December 31, 2021 included in Programming and content costs amounted to P$4,748 million and P$13,243 million in 2021 and 2020, respectively.

Bad debt expenses

Bad debt expenses decreased P$8,326 million, amounting to P$7,983 million for 2021, representing approximately 1.9% and 3.6% of the consolidated revenues in 2021 and 2020, respectively. This decrease was mainly due to the various actions undertaken by the Company in retail defaulted-payment management as of the end of 2020 that had an impact in 2021. Through several campaigns and promotions, bad debt receivables are recovered from clients who, in many cases, had suffered a degradation of their services or were in a situation of disconnection, as a result of the pandemic and the country's general economic situation. Regarding corporate segment customers, collection procedures were carried, which resulted in the recovery of important receivables.

The effect generated by the restatement in current currency as of December 31, 2021 included in Bad debt expenses amounted to P$1,236 million and P$7,178 million in 2021 and 2020, respectively.

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Other operating expenses

Other operating expenses (which include provisions, energy and other public services, insurance, leases and internet capacity, among others) increased P$672 million to P$21,182 million in 2021 as compared to P$20,510 million in 2020. The increase is mainly due to higher provisions, partially offset by lower rentals and internet capacity charges and lower energy costs.

The effect generated by the restatement in current currency as of December 31, 2021 included in Other operating expenses amounts to P$3,927 million and P$8,791 million in 2021 and 2020, respectively.

Adjusted EBITDA

An important operational performance measure used by the Company's Chief Operating Decision Maker (as this term is defined in IFRS 8) is Adjusted EBITDA. Adjusted EBITDA is defined as our net (loss) income less income taxes, financial results, Earnings (losses) from associates, depreciation, amortization and impairment of fixed assets. We believe Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures, taxation and the useful lives and book depreciation and amortization of PP&E and intangible assets, which may vary for different companies for reasons unrelated to operating performance. Although Adjusted EBITDA is not a measure defined in accordance with IFRS (a non-GAAP measure), our Management believes that this measure facilitates operating performance comparisons from period to period and provides useful information to investors, financial analysts and the public in their evaluation of our operating performance. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies.

The following table shows the reconciliation of Net income (loss) to Adjusted EBITDA:

	Year ended December 31,
	2021	2020	Total Change
	(P$ million)		%	(P$ million)
Net income (loss)	9,940	(7,704)	(229.0)	17,644
Income tax expense	33,317	12,454	167.5	20,863
Other financial results, net	(16,949)	(10,649)	59.2	(6,300)
Debt financial expenses	(28,700)	37,280	177.0	(65,980)
Earnings from associates	(395)	(749)	47.3	354
Operating (loss) income	(2,787)	30,632	(109.1)	(33,419)
Depreciation, amortization and impairment of fixed assets	135,554	124,669	8.7	10,885
Adjusted EBITDA	132,767	155,301	(14.5)	(22,534)

Our consolidated Adjusted EBITDA amounted to P$132,767 million in 2021, representing a decrease of P$22,534 million or 14.5% as compared to P$155,301 million in 2020. Adjusted EBITDA represented 31.2% and 34.1% of our total consolidated revenues in 2021 and 2020, respectively. The decrease can be largely attributed to a decrease in revenues, partially offset by a decrease in almost all operating costs.

Depreciation, Amortization and Impairment of fixed assets

Depreciation, amortization and impairment of fixed assets increased P$10,885 million, amounting to P$135,554 million in 2021 as compared to P$124,669 million in 2020. The increase was mainly due to the amortization of capital expenditures incurred after December 2020 as consequence of the Company´s investment plan.

The effect generated by the restatement in current currency as of December 31, 2021 included in Depreciation, amortization and impairment of fixed assets amounted to P$84,758 million and P$88,461 million in 2021 and 2020, respectively.

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Operating (loss) income

In 2021, our consolidated operating loss amounted to P$2,787 million, representing a decrease of P$33,419 million or 109.1% as compared to 2020. Operating (loss)/income represented (0.7)% and 6.7% of consolidated revenues in 2021 and 2020, respectively.

	Year ended December 31,		% of Change
	2021	2020	2021-2020
			Increase/
	(P$ million / %)		(Decrease)
Adjusted EBITDA (1)	132,767	155,301	(14.5)
As % of revenues	31.2	34.1
Depreciation, amortization and impairment of fixed assets	(135,554)	(124,669)	8.7
As % of revenues	(31.9)	(27.4)
Operating (loss) income	(2,787)	30,632	(109.1)
As % of revenues	(0.7)	6.7

(1) Adjusted EBITDA is a non-GAAP measure. See the purpose of use of adjusted EBITDA and reconciliation of net loss to adjusted EBITDA in section "Adjusted EBITDA".

Financial Results, net

We incurred in financial income, net of P$45,649 million in 2021, as compared to a financial loss, net of P$26,631 million in 2020. Financial Results, net in 2021 mainly include gain generated by (i) foreign exchange differences measured in real terms of P$53,740 million as a result of a 22.1% devaluation of the Argentine peso against the US dollar vs. a 50.9% inflation (vs. a loss of P$2,943 million in 2020), (ii) the effect generated by the restatement in current currency, which amounted to a gain of P$17,163 million (vs. P$8,450 million in 2020), and (iii) operations with notes and bonds of P$1,411 million (vs. P$1,420 million in 2020). These gains were partially offset by a losses generated by (i) interest on financial debt measured in real terms of P$15,941 million (vs. P$21,687 million in 2020), (ii) financial debt renegotiation results of P$2,152 million, as a consequence of the partial refinancing of our financial debt (vs. P$5,198 million in 2020 - see Note 13 to our Consolidated Financial Statements), and (iv) other financial results of P$8,581 million.

Income tax expense

The Company's income tax charge includes the following effects: (i) the current tax payable for the year pursuant to tax legislation applicable to each of Telecom Argentina and its subsidiaries; (ii) the effect of applying the deferred tax method on temporary differences arising out of the asset and liability valuation according to tax versus financial accounting criteria and; (iii) the income tax inflation adjustment in accordance with the provisions of Law No. 27,430, as amended by Law No. 27,468. For more information on income tax, see Note 3 and Note 15 to our Consolidated Financial Statements.

Income tax expense amounted to a loss of P$33,317 million in 2021 as compared to a loss of P$12,454 million in 2020. It includes mainly the following effects: (i) tax rate variation pursuant to Law No. 27,430, which replaced the tax rate of 25% with a scale of increasing rates based on the taxable income of each taxpayer that reaches 35% as of fiscal year 2021, (ii) regarding current tax expenses, Telecom's generated tax expense in fiscal years 2021 and 2020, amounting to P$18,630 million and P$364 million, respectively, and (iii) regarding the deferred tax, in 2021 and 2020, Telecom recorded a deferred tax loss of P$14,687 million and P$12,090 million, respectively.

Net Income

Telecom Argentina recorded a net income of P$9,940 million in 2021 as compared to a net loss of P$7,704 million for 2020 and represents 2.3% of consolidated revenues as compared to 1.7% in 2020. The gain was mainly due to the financial results, net amounting to P$45,649 million, partially offset by an operating loss amounting to P$2,787 million and the income tax expense amounting to P$33,317 million.

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Net income attributable to controlling shareholders amounted to P$8,665 million in 2021 as compared to a net loss of P$8,626 million in 2020.

(A.2) 2020 Compared to 2019

	Year ended
	December 31,
	2020	2019	Total Change
	(P$ million)		%	(P$ million)
Revenues	455,234	487,067	(6.5)	(31,833)
Operating costs (without depreciation, amortization and impairment of fixed assets)	(299,933)	(328,666)	(8.7)	28,733
Adjusted EBITDA(1)	155,301	158,401	(2.0)	(3,100)
Depreciation, amortization and impairment of fixed assets	(124,669)	(125,944)	(1.0)	1,275
Operating income	30,632	32,457	(5.6)	(1,825)
Earnings (losses) from associates	749	(385)	n/a	1,134
Debt financial expenses	(37,280)	(34,229)	8.9	(3,051)
Other financial results, net	10,649	23,284	(54.3)	(12,635)
Income tax expense	(12,454)	(29,116)	(57.2)	16,662
Net loss	(7,704)	(7,989)	(3.6)	285
Net (loss) income attributable to:
Telecom Argentina (Controlling Company)	(8,626)	(9,034)	(4.5)	408
Non-controlling interest	922	1,045	(11.7)	(123)

(1) Adjusted EBITDA is a non-GAAP measure. See the purpose of use of adjusted EBITDA and reconciliation of net income to adjusted EBITDA in section "Adjusted EBITDA."

In 2020, Adjusted EBITDA totaled P$155,301 million, representing 34.1% of consolidated revenues, operating income totaled P$30,632 million, representing 6.7% of consolidated revenues. However, because financial losses, net, totaled P$26,631 million and we incurred income tax expenses of P$12,454 million, we incurred a net loss in 2020 of P$7,704 million.

Revenues

	Year Ended
	December 31,
	2020	2019	Total Change
	(P$million)		%	(P$million)
Mobile Services	171,089	168,905	1.3	2,184
Internet Services	96,954	108,190	(10.4)	(11,236)
Cable Television Services	89,934	101,526	(11.4)	(11,592)
Fixed and Data Services	68,825	77,187	(10.8)	(8,362)
Other services revenues	1,863	1,590	17.2	273
Services Revenues	428,665	457,398	(6.3)	(28,733)
Equipment revenues	26,569	29,669	(10.4)	(3,100)
Revenues	455,234	487,067	(6.5)	(31,833)

During 2020, total consolidated revenues decreased 6.5% amounting to P$455,234 million as compared to P$487,067 million in 2019. The decrease in 2020 is mainly a consequence of lower Internet, cable television and fixed and data services revenues, and equipment revenues, partially offset by higher mobile services revenues.

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The decrease in total consolidated revenues occurs albeit the greater demand for services, due to the ASPO adopted as a response to the COVID-19 pandemic (see Note 29 to our Consolidated Financial Statements), with a slight growth in the Internet and cable television customer base, accompanied by a decrease in churn. While rate of inflation for 2020 was 36%, the range of measures introduced by the Argentine government relating to the prices of our services prevented us from fully transferring inflation to customers.

Consolidated revenues were mainly fueled by services revenues.

Services revenues amounted to P$428,665 million in 2020, decreasing 6.3% as compared to P$457,398 million in 2019 and represented 94.2% of consolidated revenues. Equipment revenues amounted to P$26,569 million in 2020 as compared to P$29,669 million in 2019, and represented 5.8% of consolidated revenues.

The effect generated by the restatement in current currency as of December 31, 2021 increased consolidated revenues to P$197,953 million and P$292,886 million in 2020 and 2019, respectively.

Consolidated revenues for 2020 and 2019 are comprised as follows:

Mobile Services

Mobile services revenues in 2020 amounted to P$171,089 million (an increase of P$2,184 million or 1.3% as compared to 2019), being the principal contributor to our total services revenues for 2020 (39.9% of consolidated service revenues in 2020 as compared to 36.9% in 2019). The increase in 2020 is mainly due to higher revenues in Argentina, which amounted to P$151,616 million (an increase of P$5,586 million or 3.8% compared to 2019).

The effect generated by the restatement in current currency as of December 31, 2021 included in Mobile services revenues amounted to P$74,258 million and P$101,467 million in 2020 and 2019, respectively.

Personal's mobile customers amount to 18.4 million and 18.9 million as of December 31, 2020 and 2019, respectively, of which 7.7 million correspond to postpaid customers in both years. The main ratios related to the services provided to these customers were:

● 58% of total are prepaid customers and 42% consist of postpaid customers as of December 31, 2020, compared to 59% and 41% respectively, as of December 31, 2019.

● Mobile internet services revenues represent 75% of Personal’s customer total services revenues.

● The ARPU amounted to P$658.4 as of December 31, 2020 (vs. P$651.6 as of December 31, 2019), representing a 1.0% increase. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounted to P$285.4 and P$395.2 as of December 2020 and 2019, respectively.

● The average churn rate per month amounted to 2.2% in December 2020 (vs. 2.9% average in December 2019).

Regarding infrastructure, the Company continued to enhance the mobile Internet experience of its customers through the deployment of its 4G and 4G+ network throughout the country, reaching more than 13.9 million customers with 4G devices throughout the country.

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ARPU of Mobile Services in Argentina

A monthly operational measure used in the mobile services is ARPU, which we calculate by dividing adjusted total service revenues —excluding outcollect wholesale roaming, cell site rental and reconnection fee revenues and others— (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Personal’s ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of mobile services. The following table shows the reconciliation of total service revenues to such revenues included in the ARPU calculations of 2020:

	Year ended December 31,
	2020
	(P$million)
Total Mobile service revenues		151,616
Components of service revenues not included in the ARPU calculation: Outcollect wholesale roaming, cell sites rental, Reconnection fees and others		(3,183)
Adjusted total service revenues included in the ARPU calculation		148,433
Average number of subscribers during the year (thousands)		18,786

Mobile services revenues generated in Paraguay amounted to P$19,473 million in 2020 (vs. P$22,875 million in 2019, representing a 14.9% decrease). The decrease was mainly due to the decrease in ARPU and the customer base, partially offset by the appreciation of the Guaraní against the Argentine Peso. The main ratios related to mobile services in Paraguay as of December 31, 2020 were:

● Núcleo’s subscriber base decreased 4.7% , reaching 2.2 million customers as of December 31, 2020;

● approximately 83% of the total of customers consisted of prepaid customers, and 17% consist of postpaid customers, as of December 31, 2020 and 2019;

● ARPU amounted to P$680 as of December 31, 2020 (vs. P$713 as of December 31, 2019), representing a 4.7% decrease; and

● the churn rate per month amounted to 3.5% in 2020 (vs. 3.2% in 2019).

Internet Services

Internet services revenues amounted to P$96,954 million in 2020 (equivalent to 21.3% of total consolidated revenues), decreasing P$11,236 million or 10.4% as compared to P$108,190 million in 2019,mainly due to the decrease in the Internet ARPU in Argentina of 11.8%, which reached P$1,918.0 in 2020 as compared to P$2,175.8 in 2019. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounted to P$840.9 and P$1,305.6 as of December 31, 2020 and 2019, respectively.

Customers with service of 20Mb or higher represented 71.5% and 62.4% of the total customer base as of December 31, 2020 and 2019, respectively. Within this range there are customers who have plans of 100 Mb, 300 Mb and 1,000 Mb, that as of December 31, 20 amounted to 551,455, 97,433 and 2,279, respectively.

Internet services churn rate per month amounted to 1.3% and 1.5% as of December 31, 2020 and 2019, respectively, increasing a 0.6% the subscriber base in 2020, which amounted to 4.1 million.

The effect generated by the restatement in current currency as of December 31, 2021 included in internet services revenues amounted to P$42,402 million and P$65,127 million in 2020 and 2019, respectively.

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ARPU of Internet Services in Argentina

A monthly operational measure used in the internet services is ARPU, which we calculate by dividing adjusted total service revenues - excluding connection and rehabilitation fees revenues and others - (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Internet’s ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of Internet services. The following table shows the reconciliation of total service revenues to such revenues included in the ARPU calculations of 2020:

	Year ended December 31,
	2020
	(P$million)
Total Internet service revenues		94,781
Components of service revenues not included in the ARPU calculation		—
Adjusted total service revenues included in the ARPU calculation		94,781
Average number of subscribers during the year (thousands)		4,117

Cable Television Services

Cable television service revenues amounted to P$89,934 million in 2020 (equivalent to 19.8% of total consolidated revenues), decreasing P$11,592 million or 11.4% as compared to revenues as of December 31, 2019. The decrease was mainly due to lower ARPU, which amounted to P$2,086.3 as of December 31, 2020, decreasing 12.9% as compared to an ARPU of P$2,394.8 as of December 31, 2019. The effect generated by the restatement in current currency as of December 31, 2021 included in ARPU amounts to P$910.6 and P$1,434.7 as of December 31, 2020 and 2019, respectively.

It should be noted that between April and October, 2020 we recorded no revenues related to domestic soccer transmissions given that soccer tournaments were suspended due to the COVID-19 pandemic. The lack of revenues impacted ARPU.

The monthly average churn amounted to 1.0% and 1.3% as of December 2020 and 2019, respectively.

The effect generated by the restatement in current currency as of December 31, 2021 included in cable television services revenues amounted to P$39,263 million and P$61,108 million in 2020 and 2019, respectively.

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ARPU of Cable Television Services of Telecom Argentina

An important monthly operational measure used in the Cable Television services is ARPU, which we calculate by dividing adjusted total service revenues - excluding connection and administration fees, advertising services and others - (divided by 12 months) by the average number of subscribers during the period. ARPU is not a measure calculated in accordance with IFRS and our measure of ARPU may not be calculated in the same manner as similarly titled measures used by other companies. In particular, certain components of service revenues are excluded from Cable Television’s ARPU calculations presented in this Annual Report. Management believes that this measure is helpful in assessing the development of the subscriber base of cable television services. The following table shows the reconciliation of total cable television service revenues to such revenues included in the ARPU calculations of 2020:

	Year Ended December 31,
	2020
	(P$million)
Total Cable television service revenues	82,680
Components of service revenues not included in the ARPU calculation: Connection and Reconnection fees and others	(201)
Adjusted total service revenues included in the ARPU calculation	82,479
Average number of subscribers during the year (thousands)	3,294

Fixed and Data Services

Revenues generated by fixed and data services amounted to P$68,825 million in 2020 (equivalent to 15.1% of total consolidated revenues) decreasing P$8,362 million or 10.8% as compared to P$77,187 million in 2019. The effect generated by the restatement in current currency as of December 31, 2021 included in fixed and data services revenues amounted to P$29,961 million and P$46,288 million in 2020 and 2019, respectively.

The average monthly revenue billed per user (“ARBU”) of fixed telephony services in Argentina decreased to P$866.9 in 2020 from P$908.7 in 2019. The effect generated by the restatement in current currency as of December 31, 2021 included in ARBU amounts to P$378.7 and P$551.1 as of December 31, 2020 and 2019, respectively.

Equipment

Equipment revenues amounted to P$26,569 million in 2020 (a decrease of P$3,100 million or 10.4% as compared to 2019). The decrease was mainly due to lower handsets sold as compared to 2019 (28%), partially offset by an approximately 70% increase in handset sale as compared to 2019.

The Company continued to promote the updating of handsets with financed offers and special discounts highlighting the convergence of services.

The effect generated by the restatement in current currency as of December 31, 2021 included in equipment revenues amounted to P$11,333 million and P$17,948 million in 2020 and 2019, respectively.

Operating costs (without depreciation, amortization and impairment of fixed assets)

Total operating costs (without depreciation, amortization and impairment of fixed assets) decreased P$28,733 million in 2020, amounting to P$299,933 million, representing a 8.7% decrease as compared to 2019. These lower costs are related with the decrease in all operating costs, except for interconnection and transmission costs and bad debt expenses.

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The effect generated by the restatement in current currency as of December 31, 2021 included in Operating costs (without depreciation, amortization and impairment of fixed assets) amounted to P$130,840 million and P$199,021 million in 2020 and 2019, respectively.

	Year Ended December 31,
		2020	2019	Total Change
	(P$million)			%		(P$million)
Employee benefit expenses and severance payments		(88,265)	(95,618)		(7.7)		7,353
Interconnection and transmission costs		(16,987)	(15,453)		9.9		(1,534)
Fees for services, maintenance, materials and supplies		(49,829)	(54,676)		(8.9)		4,847
Taxes and fees with the Regulatory Authority		(34,747)	(37,779)		(8.0)		3,032
Commissions and advertising		(26,040)	(30,027)		(13.3)		3,987
Cost of equipment and handsets		(16,803)	(22,089)		(23.9)		5,286
Programming and content costs		(30,443)	(37,053)		(17.8)		6,610
Bad debt expenses		(16,309)	(13,010)		25.4		(3,299)
Other operating expenses		(20,510)	(22,961)		(10.7)		2,451
Total operating costs (without depreciation, amortization and impairment of fixed assets)		(299,933)	(328,666)		(8.7)		(28,733)

Employee benefit expenses and severance payments

Employee benefit expenses and severance payments decreased P$7,353 million to P$88,265 million in 2020 as compared to P$95,618 million in 2019. The decrease was mainly due to a reduction in headcount to 23,254 employees as of December 31, 2020, and lower severance payments, partially offset by increases in salaries agreed by the Company with several trade unions for unionized employees, and also for non-unionized employees, together with related social security charges.

The effect generated by the restatement in current currency as of December 31, 2021 included in Employee benefit expenses and severance payments amounted to P$38,087 million and P$57,297 million in 2020 and 2019, respectively.

Interconnection and transmission costs

Interconnection and transmission costs (including charges for TLRD, Roaming and cost of international outbound calls and lease of circuits) increased P$1,534 million, amounting to P$16,987 million in 2020 as compared to P$15,453 million in 2019, respectively. The increase was mainly due to increases in the exchange rate in relation to services set in US$ and the increase in TLRD services.

The effect generated by the restatement in current currency as of December 31, 2021 included in Interconnection and transmission costs amounted to P$7,324 million and P$9,298 million in 2020 and 2019, respectively.

Fees for services, maintenance, materials and supplies

Fees for services, maintenance, materials and supplies decreased P$4,847 million, or 8.9%, amounting to P$49,829 million in 2020 as compared to P$54,676 million in 2019. Fees for services decreased in 2020 mainly due to the optimization of consumption of materials and to the effect of lower activity as a result of the ASPO, partially offset by increases in supplier’s services prices related to the maintenance of our networks and systems and home connections and disconnections of customers, among others.

The effect generated by the restatement in current currency as of December 31, 2021 included in Fees for services, maintenance, materials and supplies amounted to P$22,100 million and P$33,277 million in 2020 and 2019, respectively.

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Taxes and fees with the Regulatory Authority

Taxes and fees with the Regulatory Authority, including turnover tax, municipal taxes and other taxes, decreased P$3,032 million or 8.0%, amounting to P$34,747 million in 2020 as compared to P$37,779 million in 2019. The decrease was mainly to the effect of the decrease in sales in 2020.

The effect generated by the restatement in current currency as of December 31, 2021 included in Taxes and fees with the Regulatory Authority amounted to P$15,091 million and P$22,748 million in 2020 and 2019, respectively.

Commissions and advertising

Commissions (including commissions paid to agents, collection commissions and others) and advertising, decreased P$3,987 million or 13.3%, amounting to P$26,040 million in 2020, as compared to P$30,027 million in 2019. The decrease was due to lower charges for agent commissions, lower equipment sales and a decrease in advertising of those equipment due to the lower activity caused by the ASPO.

Since the first day of the ASPO, we launched a campaign promoting all digital communication channels and encouraging customers to use those channels for commercial purposes. In order to handle that new demand, we enhanced digital support by implementing special microsites identified as “I pay from home”. On the other hand, we maintained our media presence promoting our new services and solutions, such as “Convergent Offer” and “Mi Negocio Personal”, as well as promoting Flow.

The effect generated by the restatement in current currency as of December 31, 2021 included in Commissions and advertising amounted to P$11,243 million and P$18,002 million in 2020 and 2019, respectively.

Cost of equipment and handsets

Cost of equipment and handsets sold decreased P$5,286 million, amounting to P$16,803 million in 2020 as compared to P$22,089 million for 2019. Thereby, P$15,484 million of this amount correspond to cost of handsets sold in Argentina, which decreased 25.7% mainly due to lower handsets sold as compared to 2019 (-28%), partially offset by the increase in the purchase prices of handsets.

The effect generated by the restatement in current currency as of December 31, 2021 included in Cost of equipment and handsets amounted to P$7,783 million and P$14,352 million in 2020 and 2019, respectively.

Programming and content costs

Programming and content costs decreased by P$6,610 million, amounting to P$30,443 million in 2020 as compared to P$37,053 million in 2019. The decrease was mainly due to operating efficiencies and the impact generated by the lower cost of some sport signals, partially offset by the increase in the price of almost all the signals.

It should be noted that between April and October 2020 no revenues related to domestic soccer transmissions were recorded, considering that the activity was suspended as a consequence of the COVID-19 pandemic.

The effect generated by the restatement in current currency as of December 31, 2021 included in Programming and content costs amounted to P$13,243 million and P$22,294 million in 2020 and 2019, respectively.

Bad debt expenses

Bad debt expenses increased P$3,299 million, amounting to P$16,309 million for 2020, representing approximately 3.6% and 2.7% of the consolidated revenues in 2020 and 2019, respectively. This increase was mainly due to the deterioration of the economic situation of the country, including the temporary suspension on disconnection of services in cases of delay or default in payments provided by Decree No, 311/20, as disclosed in Note 29 to our Consolidated Financial Statements.

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The effect generated by the restatement in current currency as of December 31, 2021 included in Bad debt expenses amounted to P$7,178 million and P$7,857 million in 2020 and 2019, respectively.

Other operating expenses

Other operating expenses (which include provisions, energy and other public services, insurance, leases and internet capacity, among others) decreased P$2,451 million to P$20,510 million in 2020 as compared to P$22,961 million in 2019. The decrease is mainly due to lower rentals and internet capacity charges, lower energy costs and other public charges and other diverse charges, partially offset by higher provisions.

The effect generated by the restatement in current currency as of December 31, 2021 included in Other operating expenses amounts to P$8,791 million and P$13,896 million in 2020 and 2019, respectively.

Adjusted EBITDA

An important operational performance measure used by the Company’s Chief Operating Decision Maker (as this term is defined in IFRS 8) is Adjusted EBITDA. Adjusted EBITDA is defined as our net (loss) income less income taxes, financial results, Earnings (losses) from associates, depreciation, amortization and impairment of fixed assets. We believe Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures, taxation and the useful lives and book depreciation and amortization of PP&E and intangible assets, which may vary for different companies for reasons unrelated to operating performance. Although Adjusted EBITDA is not a measure defined in accordance with IFRS (a non-GAAP measure), our Management believes that this measure facilitates operating performance comparisons from period to period and provides useful information to investors, financial analysts and the public in their evaluation of our operating performance. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies.

The following table shows the reconciliation of Net loss to Adjusted EBITDA:

	Year ended December 31,
	2020		2019		Total Change
		(P$million)			%
Net loss		(7,704)		(7,989)		(3.6)	285
Income tax expense		12,454		29,116		(57.2)	(16,662)
Other financial results, net		(10,649)		(23,284)		(54.3)	12,635
Debt financial expenses		37,280		34,229		8.9	3,051
(Earnings) losses from associates		(749)		385		n/a	(1,134)
Operating income		30,632		32,457		(5.6)	(1,825)
Depreciation, amortization and impairment of fixed assets		124,669		125,944		(1.0)	(1,275)
Adjusted EBITDA		155,301		158,401		(2.0)	(3,100)

Our consolidated Adjusted EBITDA amounted to P$155,301 million in 2020, representing a decrease of P$3,100 million or 2.0% as compared to P$158,401 million in 2019. Adjusted EBITDA represented 34,1% and 32.5% of our total consolidated revenues in 2020 and 2019, respectively. The decrease can be largely attributed to a decrease in revenues, partially offset by a decrease in almost all operating costs.

Depreciation, Amortization and Impairment of fixed assets

Depreciation, amortization and impairment of fixed assets decreased P$1,275 million, amounting to P$124,669 million in 2020 as compared to P$125,944 million in 2019. The decrease was mainly due to the spectrum impairment of P$4,403 million recognized as a result of the Merger in 2019, partially offset by the amortization of capital expenditures incurred in 2020.

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The effect generated by the restatement in current currency as of December 31, 2021 included in Depreciation, amortization and impairment of fixed assets amounted to P$88,461 million and P$97,051 million in 2020 and 2019, respectively.

Operating income

In 2020, our consolidated operating income amounted to P$30,632 million, representing a decrease of P$1,825 million or 5.6% as compared to 2019. Operating income represented 6.7% of consolidated revenues in 2020 and 2019, respectively.

	Year Ended December 31,				% of Change
	2020		2019		2020-2019
	(P$million / %)				Increase/(Decrease)
Adjusted EBITDA (1)		155,301		158,401		(2.0)
As % of revenues		34.1		32.5
Depreciation, amortization and impairment of fixed assets		(124,669)		(125,944)		(1.0)
As % of revenues		(27.4)		(25.9)
Operating income		30,632		32,457		(5.6)
As % of revenues		6.7		6.7

(1)Adjusted EBITDA is a non-GAAP measure. See the purpose of use of adjusted EBITDA and reconciliation of net loss to adjusted EBITDA in section “Adjusted EBITDA”.

Financial Results, net

We incurred financial losses, net of P$26,631 million in 2020, as compared to a financial loss, net of P$10,945 million in 2019. Financial Results, net in 2020 mainly include losses generated by (i) interest on financial debt measured in real terms of P$21,687 million (vs. P$22,080 million in 2019), (ii) financial debt renegotiation results of P$5,198 million, as a consequence of the partial refinancing of our financial debt (see Note 13 to our Consolidated Financial Statements), (iii) foreign exchange differences measured in real terms of P$2,943 million as a result of a 40.5% devaluation of the Argentine peso against the US dollar vs. a 36.1% inflation (vs. a gain of P$2,849 million in 2019), and (iv) other interests, net and other investments results measured in real terms of P$2,187 million (vs. a gain of P$2,767 million in 2019). These losses were partially offset by a gain on operations with notes and bonds of P$1,411 million (vs. a loss of P$5,353 million in 2019) and the effect generated by the restatement in current currency, which amounted to a gain of P$8,450 million (vs. P$15,615 million in 2019).

Income tax expense

The Company’s income tax charge includes the following effects: (i) the current tax payable for the year pursuant to tax legislation applicable to each of Telecom Argentina and its subsidiaries; (ii) the effect of applying the deferred tax method on temporary differences arising out of the asset and liability valuation according to tax versus financial accounting criteria and; (iii) the income tax inflation adjustment in accordance with the provisions of Law No. 27,430, as amended by Law No. 27,468. For more information on income tax, see Note 3 and Note 15 to our Consolidated Financial Statements.

Income tax expense amounted to a loss of P$12,454 million in 2020 as compared to a loss of P$29,116 million in 2019. It includes the following effects: (i) regarding current tax expenses, Telecom’s generated tax expense in fiscal years 2020 and 2019, amounting to P$364 million and P$329 million, respectively, (ii) regarding the deferred tax, in 2020 and 2019, Telecom recorded a deferred tax loss of  P$12,090 million and P$28,787 million, respectively, which includes the income tax inflation adjustment of P$22,403 million and P$31,222 million in 2020 and 2019, respectively. See “—Factors Affecting Results of Operations—Income Tax Inflation Adjustment”.

Net Loss

Telecom Argentina recorded a net loss of P$7,704 million in 2020 as compared to a net loss of P$7,989 million for 2019 and represents (1.7)% of consolidated revenues as compared to (1.6)% in 2019. The variation was mainly due to the financial losses, net amounting to P$26,631 million and the income tax expense amounting to P$12,454 million, partially offset by an operating income amounting to P$30,632 million.

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Net loss attributable to controlling shareholders amounted to P$8,626 million in 2020 as compared to a net loss of P$9,034 million in 2019.

Liquidity and Capital Resources

Sources and Uses of Funds

We expect the main sources of Telecom Argentina’s liquidity in the near term to be cash flows from Telecom Argentina’s operations and cash flows from financing from third parties, which may include accessing to domestic and international capital markets and obtaining financing from financial institutions. Telecom Argentina’s principal uses of cash flows are expected to be capital expenditures, operating expenses, dividend payments to its shareholders, payments of financial debt and for general corporate purposes. Telecom Argentina expects working capital, funds generated from operations, dividend payments from its subsidiaries and financing from third parties to be sufficient. Telecom Argentina assumes that it will be able to access the domestic and international capital markets in 2022 to refinance its outstanding debt, if necessary. However, this remains uncertain as of the date of this Annual Report. See “Item 3—Key Information—Risk Factors— We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their current terms, which would have a material adverse effect on our business, financial condition and results of operations.

Financial Debt Developments during 2021

The most relevant financial debt developments in 2021 were the following:

● On January 20, 2021, Telecom Argentina successfully completed the issuance of Class 8 Notes for a total principal amount of P$8,708 million;

● On March 10, 2021, Núcleo (Paraguay) successfully completed the issuance of Series IV and Series V Notes for a total principal amount of Guarani. 130,000 million and Guarani. 120,000 million, respectively;

● On June 7, 2021, Telecom Argentina successfully completed the issuance of Class 9 Notes for a total principal amount of US$91.8 million;

● On December 10, 2021, Telecom Argentina successfully completed the issuance of Class 10 Notes for a total principal amount of P$12,000 million;

● On December 10, 2021, Telecom Argentina successfully completed the issuance of Class 11 Notes for a total principal amount of P$2,000 million;

● On December 15, 2021, Telecom Argentina refinanced the loan duly disbursed under the loan agreement entered into between Telecom Personal S.A. (company absorbed by Telecom Argentina) and the IFC on October 5, 2016, for a total amount up to US$400,000,000, by which an extension of the term with respect to most of the principal maturities foreseen for 2022 and 2023 was agreed, resulting in a new maturity schedule that will end in 2027 and essentially maintaining the rest of the original terms and conditions; and

● On December 15, 2021, Telecom Argentina refinanced the loans duly disbursed under the following loan agreements entered into between the Company and the Inter-American Investment Corporation, acting on its own behalf and as agent of the Inter-American Development Bank (i) loan agreement dated April 7, 2017, for a total amount of up to US$100,000,000, and (ii) loan agreement dated May 29, 2019, for a total amount of up to US$300,000,000, by virtue of which it was agreed an extension of the term with respect to most of the principal maturities foreseen for 2022 and 2023, resulting in new maturity schedules that will end in 2024 and 2027 for each loan, respectively, and essentially maintaining the rest of the original terms and conditions.

For more information about Telecom’s financing facilities (including currency, maturity, interest rate structure and amortization schedule), see Notes 13 and 26 to our Consolidated Financial Statements.

Derivate Financial Instrument

From time to time, in the ordinary course of business, Telecom enters into derivative contracts to hedge the fluctuation of, mainly, exchange and interest rates. For more information about Telecom’s derivative contract, see Note 22 and 26 to our Consolidated Financial Statements.

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Cash Flow

The table below summarizes, for the years ended December 31, 2021, 2020 and 2019, Telecom’s consolidated cash flows:

	Year ended December 31,
	2021		2020		2019
	(P$million)
Cash flows provided by operating activities		130,035		150,869		168,361
Cash flows used in investing activities		(115,118)		(123,422)		(91,913)
Cash flows used in financing activities		(20,296)		(54,058)		(51,584)
Net foreign exchange differences and RECPAM on cash and cash equivalents		(2,737)		2,008		5,920
(Decrease)/ Increase in cash and cash equivalents		(8,116)		(24,603)		30,784
Cash and cash equivalents at the beginning of the year		27,965		52,568		21,784
Cash and cash equivalents at the end of the year		19,849		27,965		52,568

As of December 31, 2021, 2020 and 2019, we had P$19,849 million, P$27,965 million and P$52,568 million in cash and cash equivalents, respectively.

Cash flows provided by operating activities were P$130,035 million, P$150,869 million and P$168,361 million in 2021, 2020 and 2019, respectively.

The decrease in 2021 was mainly due to lower revenues partially offset by higher collections and the decrease in operating cost (without depreciation, amortization and impairment of fixed assets).

The decrease in 2020 was mainly due to lower revenues and collections of services provided to our customers as a consequence of the pandemic, partially offset by lower operating costs payments. The increase in 2019 was mainly driven by higher collections of services provided to our customers, partially offset by higher payments of trade, social and fiscal debts.

Cash flows used in investing activities were P$115,118 million, P$123,422 million and P$91,913 million in 2021, 2020 and 2019, respectively.

In 2021, cash flows used in investing activities included payments for acquisitions of PP&E and Intangible assets for P$76,126 million and investment not considered as cash and cash equivalents for P$39,383 million.

The increase in 2020 was mainly due to an increase in investment not considered as cash and cash equivalents, partially offset by a decrease in payments of PP&E acquisitions. The increase in 2019 was mainly due to a decrease in investment not considered as cash and cash equivalents, while payments of PP&E acquisitions remained stable.

Cash flows used in financing activities were P$ 20,296 million, P$54,058 million and P$51,584 million in 2021, 2020 and 2019, respectively.

In 2021, cash flows used in financing activities included payments for financial debt, interest and related expenses and leases liabilities for P$83,709 million (including payments for partial refinancing of our financial debt) and cash dividend payments for P$744 million partially offset by proceeds from financial debt for P$64,216 million.

The variation in 2020 was explained by lower cash dividend payments, partially offset by higher payment of financial debt, interest and related expenses and a decrease in proceeds from financial debt. The variation in 2019 was explained by lower dividend payments and higher financial debt payments, partially offset by higher proceeds from financial debt.

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Liquidity

The liquidity position of Telecom Argentina is and will be significantly dependent on its operating performance, its indebtedness, capital expenditure programs and collection of dividends, from its subsidiaries, if any.

Telecom’s working capital breakdown and its main variations are disclosed below:

	2021			2020			Variation
	(P$million)
Trade receivables		22,554			28,612			(6,058)
Other receivables (not considering financial DFI)		6,931			8,323			(1,392)
Inventories		3,115			5,618			(2,503)
Current liabilities (not considering financial debt)		(100,714)			(97,279)			(3,435)
Operating working capital- negative		(68,114)			(54,726)			(13,388)
As % of Revenues		16	%		12	%
Cash and cash equivalents		19,849			27,965			(8,116)
Financial DFI		—			3			(3)
Other receivables		1,915			2,071			(156)
Investments		10,786			7,804			2,982
Current financial debt		(64,869)			(62,795)			(2,074)
Net Current financial (liability) asset		(32,319)			(24,952)			(7,367)
Negative operating working capital (current assets — current liabilities)		(100,433)			(79,678)			(20,755)
Liquidity rate		0.4			0.5			(0.1)

Telecom and its subsidiaries have a typical working capital structure corresponding to a company with intensive capital that obtains spontaneous financing from its suppliers (especially PP&E) for longer terms than those it provides to its customers. According to this, the negative working capital amounted to P$100,433 million as of December 31, 2021 (increasing P$20,755 million vs. December 31, 2020).

Telecom has an excellent credit rating. The Company has several financing sources and several offers from first-class international institutions to diversify its current funding structure, which includes accessing to domestic and international capital market and obtaining competitive bank loans in what relates to terms and financial costs.

Telecom manages its cash and cash equivalents and its financial assets trying to match the term of investments with those of its obligations. Its cash and cash equivalent position is invested in highly liquid short-term instruments.

To protect itself from changes in market conditions that could constrain its access to funding under certain circumstances, Telecom maintains certain minimum cash and liquid assets balances in its normal course of business. Telecom had consolidated cash and cash equivalents amounting to P$19,849 million (US$193 million) and P$27,965 million (US$220 million) as of December 31, 2021 and 2020, respectively. During years ended December 31, 2021 and 2020, Telecom continued obtaining funds to the financial market used to pay its investments, operative working capital, and other corporative expenses and refinancing part of its financial debts within the framework of its permanent policy of optimizing the term, rate and structure of its financial debts. For further information, see Note 13 to our Consolidated Financial Statements.

For further information on our breakdown of financial liabilities into relevant maturity groups based on the remaining period at the date of the consolidated statement of financial position to the contractual maturity date, please see Note 26 to our Consolidated Financial Statements.

Also, the Company has future obligations related to various purchase commitments that is presented in Note 20 to our Consolidated Financial Statements.

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Dividend payments

Telecom Argentina’s General Extraordinary Shareholders’ Meeting held on August 11, 2021, resolved to distribute non- cash assets dividends as follows:

1) Global Bonds of the Argentine Republic amortizable in U.S. dollars maturing on July 9, 2030 for a nominal value of US$370,386,472 and Global Bonds of the Argentine Republic amortizable in U.S. dollars maturing on July 9, 2035 for a nominal value of US$186,621,565.

2) Following the aforementioned distribution of dividends, the valuation of non- cash dividends was established at $ 35,068,340,043 Argentine pesos ($40,020 in current currency as of December 31, 2021), and partially withdraw the “Voluntary reserve to maintain the Company’s level of investments in capital assets and the current level of solvency” for such amount.

Our ability to generate sufficient cash from our operations in order to satisfy our indebtedness and capital expenditure needs may be affected by macroeconomic factors influencing our business, including, without limitation, the rate at which Argentine Pesos can be exchanged for U.S. dollars and rates of inflation, among others. These factors are not within our control. Certain statements expressed in this section constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties, including those described in this Annual Report in “Item 3—Key Information—Risk Factors”. Actual results may differ materially from our expectations described above as a result of various factors.

Capital Expenditures

We estimate that our capital expenditures in 2022 will be approximately US$589.5 million, as compared to US$752 million in 2021 (which represented 20% of our consolidated revenues).

With respect to mobile services, investments were oriented mainly to the deployment of 4G technology, to achieve increasing coverage and capacity in various cities of Argentina. This objective was reached through the settlement in new sites, together with replacement and modernization of existing sites.

With respect to fixed access network, in 2021 we reaffirmed our decision to focus our investments in technologies and solutions to substantially increase broadband offered to users, mainly with GPON (FTTH) technology deployed in different regions of Argentina. Our work plans allows to satisfy the service requirements for business, large buildings, and urban developments.

With respect to transport networks, continuing with plans carried out in previous years, investments were completed for the deployment of new interurban paths of optical fiber, the increase Backbone IP capacity, the set-up of new contents POPs, the increase of capacity and availability of DWDM network, as well as the network transformation plan to converge to a single high-capacity network. New equipment was also installed for the Metro Ethernet network and for the development and extension of the regional transport networks, mainly in PTN (Packet Transport Network).

See “Item 3—Key Information—Risk Factors—Risks relating to Telecom and its Operations—We face substantial and increasing competition in the Argentine fixed and mobile telephony, cable television and Internet businesses”. We expect to finance our capital expenditures through cash generated from our operations, cash on hand and financing from third parties; therefore, our ability to fund these expenditures is dependent on, among other factors, our ability to generate sufficient funds from operations. Telecom’s ability to generate sufficient funds for capital expenditures is also dependent on its ability to increase its service prices, the increase of its operating costs due to inflation and the increase of the cost of imported materials in Peso terms as a result of the devaluation of the Peso/U.S. dollar and higher inflation.

Research and Development, Patents and Licenses, etc.

None.

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Trend Information

The COVID-19 outbreak and its consequences continue presenting challenges all around the world. Although the pandemic’s effects dimmed during 2021, as a result of the health policy developments and the expansion of large-scale vaccination plans, the pandemic’s continuity through the outbreak of new virus variants, together with the worsening of the health emergency in Europe provoked by these new variants, perpetuates the existence of a worldwide complex scenario.

In our country, which was already experiencing difficulties prior to the beginning of the pandemic, the impact of the epidemiological situation on the world’s macro-economy was aggravated by the recessive effects generated by the economic paralysis as a result of the social isolation, that only during the last months of 2021 began to reverse. In order to promote sustained growth in production and private employment, a high level of commitment from all sectors of society and greater public-private coordination will continue to be necessary.

Telecom’s economic-financial results, as those of other companies operating in the country, reflect the impact of the inflationary processes and exchange rate fluctuations, especially considering that our main source of income is in pesos, while our industry requires intensive dollarized investments for the deployment of infrastructure and development of systems.

In this sense, the economic and regulatory scenarios have forced our management to be strongly focused on achieving operational efficiencies to maintain growth levels in line with the investments undertaken, not only to grow but also to maintain the quality of service provided to our over 29 million customers. Despite the challenges we confront in Argentina (for more information, see “Item 3—Key Information—Risk Factors—Risks Relating to Argentina”), we continue to deploy a solid and continuous investment plan, US$ 5,000 million have been invested  in the 2016-2021 period.

Further, there is greater uncertainty for ICT services companies arising from the issuance of Decree No. 690/20, whereby the PEN declared that ICT services are considered public services provided on a competitive basis.

Over the last months, different courts have analyzed the aforementioned Decree, which proposed an untimely, arbitrary and unnecessary change in the sector’s regulation, ordering the suspension of Decree No. 690/20 and subsequent resolutions.  The preliminary injunctions repeated in various parts of the country cover virtually the entire ICT industry, including both large operators and SMEs.

In our case, the Chamber of the Federal Court of Appeals on Administrative Litigation Matters decided by majority to accept the Company’s appeal and granted the precautionary measure that had been requested. By the end of October 2021, we were notified of a resolution issued by the Federal Court on Administrative Litigation Matters No. 8 that provided for the extension of the precautionary measure for another six-month period, until the underlying issue is resolved.

In this way, courts have ratified that the entire ICT industry shall have the capacity to set its trade policies and prices. Maintaining and encouraging competition instead of setting artificial barriers is the best and only way for users to continue accessing more and better services.

In Telecom, we maintain our objective of continuing to consolidate ourselves as an ecosystem of digital services, leveraged on connectivity and supported by a digital and cultural transformation process focused on the experience of our customers, to which we have given an extraordinary boost during the pandemic.

We were and continue to be part of that change, accompanying and enhancing Argentines’ lives and promoting the country’s digital economy. Our evolution does not stop. Therefore, we have renewed our institutional visual identity and our commercial brands, which express the technological evolution we are carrying out to facilitate the digital development of our customers, of society and, ultimately, of the country.

Through Personal, we offer our clients comprehensive connectivity, thanks to our fixed and mobile networks, inside and outside their homes; Flow is positioned as a meeting point for entertainment; and through the Telecom brand, we provide an ecosystem of solutions and businesses for the corporate and government segments.

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We are building an attractive brand for new digital talents, aware that our path of evolution from a network company to a platform and systems company requires strengthening and deploying the skills of our collaborators, in tune with the realities of our business ecosystem. We are using agile methodologies and promoting a collaborative leadership model, which allows us to generate a change of mindset that fits the company we are building, and that is also reflected in the new digital business products and services, with IoT, smarthome and Fintech solutions at the forefront.

As the COVID-19 progresses, we are committed to adapt new measures in the transition towards, the new normality. In this vein, we developed a new work experience for our employees, with a hybrid scheme of in-person and virtual schedules, focusing on their well-being and improving their life-work balance. We are opening Experience Centers throughout the country, with more welcoming and sustainable spaces.

These initiatives aim to the construction of an increasingly attractive employer brand to add talent from the ICT industry, fundamental in the development of services linked to the digital economy.

In 2021, we issued new notes in the local markets for a nominal value of US$31,408 and refinanced several loan agreements. These financial activities were possible due to the confidence of the national and international markets in the company’s credit strength and business strategy. In addition, we canceled the remaining balance of the Series “A” Notes for US$106 million and Series “3”,“4” and “6” Notes, maturing during this year. Further, our subsidiary in Paraguay, Núcleo, also entered the financial market by issuing two series of notes maturing in 2028 and 2031 for a total Guaranies 250,000 million (approximately P$3,406 million). These issuances have allowed us to considerably improve our capital structure.

Finally, on August 11, 2021, Telecom Argentina’s General Extraordinary Shareholders’ Meeting resolved to distribute non- cash asset dividends as follows: (i) Global Bonds of the Argentine Republic amortizable in U.S. dollars maturing on July 9, 2030, for a nominal value of US$370 million, and (ii) Global Bonds of the Argentine Republic amortizable in U.S. dollars maturing on July 9, 2035 for a nominal value of US$186.6 million, whose total valuation in pesos was established at approximately $35,068 million.

In the next year, we expect to continue our transformation process, consolidate our operating model and reaching new milestones towards the full digitalization, become more efficient, continue boosting the growth of the digital economy in our country and generate value for our customers.

Safe Harbor

See the discussion at the beginning of this Item 5 and “Forward-Looking Statements” in the introduction of this Annual Report, for forward-looking statement safe harbor provisions.

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ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

The Board of Directors

The direction and management of Telecom Argentina is vested in the Board of Directors and its executive officers. Telecom Argentina’s bylaws were amended at the Ordinary and Extraordinary Shareholders’ Meeting held on August 31, 2017 providing for a Board of Directors consisting of (i) no fewer than eleven and no more than seventeen directors and (ii) the same or a lesser number of alternate members. This amendment was recorded with the IGJ on August 30, 2018.

As of the date of this Annual Report, Telecom Argentina has eleven directors and eleven alternate directors. Three of the directors and two of the alternate directors qualify as independent directors under SEC regulations. Four of the directors and three of the alternate directors also qualify as independent directors under CNV rules. According to Telecom Argentina’s bylaws, the Board of Directors has all of the required authority to manage the corporation, including authority for which the law requires special powers. The Board of Directors operates when there is a quorum of the absolute majority of its members and resolves issues by simple majority of votes present, provided that in respect of certain matters (the “Supermajority Matters”) the favorable vote of at least one Director proposed for designation by the Class A and one Director proposed for designation by the Class D is required to pass a resolution. According to Telecom Argentina’s bylaws, the chairman of the Board of Directors (the “Chairman”) has a double vote in the case of a tie, except in respect of Supermajority Matters. Under CNV regulation, in order to be independent, a director must neither be employed by, nor affiliated with, Telecom Argentina, CVH or Fintech. Directors and alternate directors are normally elected at annual ordinary general meetings of shareholders (“Annual Ordinary Shareholders’ Meetings”) and serve a renewable three-year term. The term of the current directors will expire on December 31, 2023. Nevertheless, according to Section 257 of Argentine Corporations Law, they will remain in their functions until they are replaced. None of Telecom Argentina’s directors have services contracts with Telecom Argentina (or any subsidiary) providing for benefits upon termination of employment as a director.

On January 31, 2018 the Board of Directors approved the internal rules of the Executive Committee, —the Rules of the Executive Committee (“Reglamento de Facultades y Funcionamiento”)— provided for in Section 13 of our Bylaws. The Executive Committee is in charge of the approval, inter alia, of matters in the ordinary course of business, but without executive responsibilities which shall be in charge of the managers of the Company, the preliminary approval of significant plans, approval of the Business Plan and Annual Budget of the Company and also certain other duties. The Executive Committee is comprised of five members, all of which must be members of the Board of Directors of our Company. The Executive Committee takes all of its resolutions by the unanimous vote of all its members, and in case such consent is not obtained in respect of any matter, such matter is posted for approval of the Board of Directors.

As established in the Telecom Shareholders’ Agreement between CVH and Fintech, for so long as CVH holds a certain percentage of Telecom Argentina shares, CVH shall be entitled to designate the majority of the directors, alternate directors, members of the Supervisory Committee, Executive Committee members, Audit Committee members, the CEO and any other Key Employees (other than the CFO and the Internal Auditor, who shall be designated by Fintech). CVH shall also be entitled to nominate the Chairman of the Board and Fintech to nominate de Vice Chairman of the Board. In the absence of a director, the corresponding alternate director may attend and vote at meetings of the Board of Directors.

See “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders—Telecom Shareholders’ Agreement” for a description of certain agreements relating to the appointment of members of the Board of Directors.

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The following table lists our directors and alternate directors as of December 31, 2021 and as of the date of this Annual Report:

		Date Director joined
Name	Position on the Board of Directors	the Board of Directors
Carlos Alberto Moltini	Chairman of the Board of Directors	January 1, 2020
Mariano Marcelo Ibáñez	Vice Chairman of the Board of Directors	March 8, 2016
Alejandro Alberto Urricelqui	Director	January 1, 2018
Sebastián Bardengo	Director	January 1, 2018
Damián Fabio Cassino	Director	January 1, 2018
Carlos Alejandro Harrison	Director	March 8, 2016
Martín Héctor D´Ambrosio	Director	March 8, 2016
Germán Horacio Vidal	Director	January 1, 2018
Luca Luciani	Director	January 31, 2018
Baruki Luis Alberto González	Director	April 8, 2016
Eduardo Enrique de Pedro	Director	June 4, 2020
María Lucila Romero	Alternate Director	January 1, 2018
Sebastián Ricardo Frabosqui Diaz	Alternate Director	January 1, 2018

		Date Director joined
Name	Position on the Board of Directors	the Board of Directors
Claudia Irene Ostergaard	Alternate Director	January 31, 2018
Ignacio José María Sáenz Valiente	Alternate Director	January 1, 2020
José Carlos Cura	Alternate Director	April 27, 2017
Miguel Angel Graña	Alternate Director	January 1, 2018
Facundo Martín Goslino	Alternate Director	January 31, 2018
Lucrecia María Delfina Moreira Savino	Alternate Director	January 31, 2018
María Constanza Martella	Alternate Director	April 28, 2021
Carolina Susana Curzi	Alternate Director	January 31, 2018
Juan Santiago Fraschina	Alternate Director	June 4, 2020

Executive Committee

The following table lists the members of our Executive Committee as of December 31, 2021:

Carlos Alberto Moltini

Alejandro Alberto Urricelqui

Mariano Marcelo Ibáñez

Sebastián Bardengo

Germán Horacio Vidal

Carlos Alberto Moltini is an accountant with a degree from the Universidad de Buenos Aires. He was appointed CEO of the Company in November 2017. On January 1, 2020 he ceased his function as CEO and became a member of the Board of Directors of Telecom and a member of its Executive Committee. Until the merger, Mr. Moltini had been a member of the Board of Directors of Cablevisión since October 2006 and General Manager of Cablevision from November 2006 to November 2017. Before that, Mr. Moltini was the General Manager of Multicanal S.A. and, before that, he was the CFO of Arte Radiotelevisivo Argentino S.A. (“Artear”) for seven years, a leading broadcasting channel in the Ciudad Autónoma de Buenos Aires, owned by Grupo Clarín. Previously, Mr. Moltini worked for Bagley Argentina S.A. and other broadcasting companies. He was born on November 16, 1960.

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Mariano Marcelo Ibáñez is a lawyer with a degree from the Universidad de Buenos Aires. He was the Chairman of the Board of Directors of the Company from March 2016 until January 1, 2018. He is currently the Vice Chairman and member of the Executive Committee. Previously, he was Director of Cablecom and as Chairman and acting CEO of Cablevisión. He was a Director of Multimedios América (Cablevisión, Radio América, Radio del Plata, El Cronista and América TV). He was born on August 25, 1959.

Alejandro Alberto Urricelqui is an Accountant with a degree from the Universidad de Buenos Aires, and has a Master Degree in Finance. He was Chairman of the Board of Directors of the Company from January 1^st, 2018 until May 21, 2020. He is a member of the Executive Committee. He was the Chairman of Cablevisión until it was merged into the Company. Mr. Urricelqui joined Grupo Clarín in 1990. As Chief Financial Officer, he participated in the business expansion and integration of Grupo Clarín’s media and telecommunications, including the acquisition of Cablevision in 2006 and its merger with Multicanal S.A., and in Grupo Clarín’s initial public offering in 2007. He was born on October 16, 1959.

Sebastian Bardengo graduated from the Universidad de Buenos Aires with a degree in Business Administration and has a specialization in Administration and Management from Harvard University. He has been member of the Board of Directors of the Company and a member of the Executive Committee since January 2018. He has been director of Cablevisión Holding S.A. since 2017. He is currently chairman of the board of directors of Cablevisión Holding S.A. He has been Manager of Corporate Business at Grupo Clarín and member of the Board of Directors of Grupo Clarín and several of its subsidiaries. Previously, he worked for more than 20 years in investment and commercial banking, including the following positions: (i) director at Bank Boston Capital, a private equity fund with investments in Argentina, Uruguay and Chile; (b) executive Director at Bozano Simonsen Latinamerica S.A., a leading Brazilian investment bank; (c) founding partner of Buenos Aires Advisors, a financial advisory and mergers and Acquisitions advisory firm. In addition, Mr. Bardengo was appointed as financial expert in international arbitration courts such as CIADI (Centro Internacional de Arreglo de Diferencias relativas a Inversiones) and CNUDMI (Comisión de las Naciones Unidas para el Derecho Mercantil Internacional). He was born on May 15, 1966.

Damián F. Cassino is a lawyer with a degree from the Universidad de Buenos Aires. He is a partner at the Argentine law firm Saénz Valiente & Asociados. Mr. Cassino specializes in complex litigation and antitrust law. He currently is a director of Telecom and, until December 31, 2019, he was a member of its Executive Committee. He is also a member of the board of directors of various companies, including GC Dominio S.A. He was born on January 16, 1969.

Carlos Alejandro Harrison is a Business Administrator with a degree from the Universidad de Buenos Aires and completed postgraduate studies at IAE Business School. He has been a member of the Board of Directors since March 2016 and is a member of the Company’s Audit Committee. Previously, he was President of Producciones YAQ S.A. and President of Business Development for AMC Networks International. Before that, he was the General Manager of Chello Latin America and Pramer SCA (both controlled by Liberty Global plc). Mr. Harrison also worked for Grupo Clarín S.A. as a Business Development Manager and was the Director of for International Operations at Multicanal S.A. He was born on January 19, 1963.

Martín Héctor D’Ambrosio is a lawyer with a degree from the Universidad de Buenos Aires. He has been a member of the Board of Directors since March 2016 and he is also a member of the Company’s Audit Committee. He currently is Managing Partner at GS1 S.R.L. and legal advisor to several companies. Previously, he worked with the legal firm Dellepiane & Asociados, and for many years, he was in charge of the legal area of US Equities Realty. He was born on March 9, 1974.

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Germán Horacio Vidal is an industrial engineer with a degree from the Pontificia Universidad Católica Argentina. He has been a member of the Board of Directors since January 2018 and is a member of the Company’s Audit Committee and Executive Committee. He was the CEO of Grupo Telecom Argentina from May 2016 until November 2017. Between 1987 and 1997, he worked in different management positions at IBM in Argentina and Europe. From 1997 to 2004, he worked at MetroRED first as Marketing and Sales Director and then as General Manager of the Argentine branch, and Vice Chairman and General Manager of the operations in Argentina, Brazil, and Mexico. In 2003, with CoInvest as the main shareholder, he was appointed CEO of said company and participated on the Board of Directors of CTI. Afterwards, upon the sale of MetroRED, he was appointed Director of Marketing, Products, Customer Care and Data Center in Telmex Argentina. From 2005 to 2016, he worked at Korn Ferry consultants as a Senior Client Partner, General Director and Chairman. He was born on December 27, 1963.

Luca Luciani has a degree in Economics and Trade from LUISS University (Rome). He has been a member of the Board of Directors since January 31, 2018. Luca Luciani was the Managing Director and CEO of Value Partners, a multinational Italian consultancy firm operating through a network of 250 professionals around the world, until November 2018. During 15 years, since 1999, he built a comprehensive experience as manager of telecommunications businesses, among others: CEO of Tim Brazil, General Manager of Telecom Italia domestic business, Group controller and CFO of Tim, Vice President Marketing and Sales of TI Group and CTO of Mobile. Previously, Mr. Luciani has more than10 years of experience in different sectors and positions, such as Group Controller of Enel, Manager of Procter & Gamble and consultant in Bain&Company network. He was born on November 2, 1967.

Baruki L.A. González is a lawyer with a degree from the Universidad de Buenos Aires. Mr. González joined the Board of Directors of Sofora, Nortel, Telecom Argentina and Personal in April 2016 (Sofora, Personal and Nortel were merged into Telecom Argentina). Mr. González is a founding member of the Argentine law firm Errecondo, González & Funes that provides services as legal counsel to the Company. Between 1995 and 1996, he worked as an international associate at the United States law firm White & Case LLP. He is a member of the Public Bar Association of the City of Buenos Aires (Colegio Público de Abogados de la Capital Federal) and of the Buenos Aires City Bar (Colegio de Abogados de la Ciudad de Buenos Aires). He was born on July 29, 1967.

Eduardo Enrique de Pedro is a lawyer with a degree from the Universidad de Buenos Aires. He has been member of the Telecom Argentina’s Board of Directors since June 4, 2020, designated at the proposal of ANSES —FGS. He was born on November 11, 1976.

María Lucila Romero is a lawyer with a degree from the Pontificia Universidad Católica Argentina. She is a partner at the Argentine law firm Saénz Valiente & Asociados. She specializes in corporate law, particularly mergers and acquisitions. She has been a member of the board of directors in various companies. Mss. Romero currently serves as director of GC Dominio S.A. and as alternate director of Telecom. She was born on August 12, 1967.

Sebastián Ricardo Frabosqui Díaz is a lawyer with a degree from the Pontificia Universidad Católica Argentina, has a Master’s Degree in Law and Economics at Universidad Torcuato Di Tella and a Master in Laws (LL.M) degree at Northwestern University. He has been an alternate director since January 2018. He is a partner at the law firm Sáenz Valiente & Asociados. He specializes in Mergers & Acquisitions, general corporate consultancy, debt restructuring and capital markets. Between 2009 and 2010, he worked as foreign associate in the firms Fox, Horan & Camerini and Arnold & Porter at their respective offices in New York and Washington D.C. He was born on February 14, 1978.

Claudia I. Ostergaard is a lawyer with a degree from Universidad del Salvador. She is a partner at the Argentine law firm Saénz Valiente & Asociados. She specializes in civil, commercial and administrative law, particularly, damage liability in litigation cases. She has been a member of the board of directors of various companies. She was born on May 29, 1974.

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Ignacio José María Sáenz Valiente is a lawyer with a degree from the Pontificia Universidad Católica Argentina and partner at the Argentine law firm Saénz Valiente & Asociados that provides services as legal counsel to the Company. Mr. Sáenz Valiente specializes in corporate law, particularly local and international acquisitions and wealth management. He currently is a member of the board of directors of various companies, including GC Dominio S.A., Cablevisión Holding S.A., Geisha Bienes Raíces S.A., Purity Polo S.A., Grupo A1 SRL, ENVO Biogas Tonder As/p, Envo Biogas AAbenraa As/p and, since January 1, 2020, he is an alternate director of Telecom. He was born on December 21, 1975.

José Carlos Cura is an economist graduated from the Universidad de Buenos Aires and holds a degree in Administration from the IAE Business School of Universidad Austral. He has been an alternate director since April 2017. He currently works as an independent financial and real estate advisor. He started his carrier in the financial business at Lloyds Bank, where he worked for different departments, including the Treasury Department. He was born on September 25, 1962.

Miguel Angel Graña is a Certified Public Accountant who graduated from the Universidad de Buenos Aires with post-graduate studies at Harvard University. He has been an alternate director since January 2018 and was a director of Telecom Personal (merged into Telecom Argentina) from March 2016 to November 2017. He is the Chairman of Compañía de Inversiones y Mandatos S.A. and Managing Partner at Megraso SRL. Previously, he was Managing Director at J. P. Morgan in charge of M&A at the Buenos Aires office and Chairman at the Nokia distributor in Argentina. He was born on December 15, 1957.

Facundo Goslino is a lawyer from the Pontificia Universidad Católica Argentina and has a Master of Laws degree (LL.M.) from Cornell Law School, New York. He is an alternate director of Telecom since January 31, 2018. He is a partner at “EGFA Abogados” law firm. He also is a member of the supervisory committee of other Argentine companies, mainly in the energy and gas distribution sectors. Mr. Goslino worked at Cleary Gottlieb Steen & Hamilton in 2006 as international associate. He is a member of the Public Bar Association of the Ciudad Autónoma de Buenos Aires (Colegio Público de Abogados de la Capital Federal). He was born on January 19, 1975.

Lucrecia María Delfina Moreira Savino is a lawyer with a degree from the Pontificia Universidad Católica Argentina. She has been an alternate director since January 2018. Ms. Moreira Savino is an associate of the law firm “EGFA Abogados”. She is also currently an alternate member of the supervisory committee of other Argentine companies, mainly in the energy and gas distribution sectors. She was born on March 2, 1974.

María Constanza Martella is a lawyer with a degree from the Universidad de Buenos Aires. She is an alternate director of Telecom since April 28, 2021. She is a senior associate at “EGFA Abogados” law firm. She is also a member of the board of directors and the supervisory committee of other Argentine companies, mainly in the energy sector. She is a member of the Public Bar Association of the City of Buenos Aires (Colegio Público de Abogados de la Capital Federal). She was born on June 18, 1982.

Carolina Susana Curzi is a lawyer with a degree from the Universidad de Buenos Aires. She is an alternate director of Telecom since January 31, 2018. She is a partner at “EGFA - Abogados” law firm. She also is a member of the supervisory committee of other Argentine companies, mainly in the energy and gas distribution sectors. She is a member of the Public Bar Association of the City of Buenos Aires (Colegio Público de Abogados de la Capital Federal). She was born on March 14, 1976.

Juan Santiago Fraschina is an economist graduated from the Universidad de Buenos Aires. He has been an alternate member of the Telecom Argentina’s Board of Directors since June 4, 2020, designated at the proposal of ANSES —FGS. He was born on January 14, 1977.

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Senior Management

As of December 31, 2021, Telecom’s senior Management team includes the individuals listed below. Unless otherwise noted, these individuals are members of Telecom’s senior Management as of the date of this Annual Report.

Name	Position (1)	Date of Designation
Roberto D. Nobile	Chief Executive Officer (“CEO”)	January 1, 2020
Gabriel P. Blasi	Chief Financial Officer (“CFO”)	September 27, 2017
Hernán P. Verdaguer	Director of Regulatory Matters	November 16, 2017
Pedro L. López Matheu	Director of External Communications, Sustainability and Media	June 14, 2016
Pablo C. Casey	Director of Legal and Institutional	November 16, 2017
Sebastián Palla	Chief of Procurement officer (“CPO”)	August 8, 2016
Sergio D. Faraudo	Director of Human Capital	November 16, 2017
Gonzalo Hita	Chief Operation Officer (“COO”)	November 16, 2017
Miguel A. Fernandez	Chief Technology Officer (“CTO”)	November 16, 2017
Alejandro Miralles	Chief Audit & Compliance Officer	November 16, 2017
Pablo Esses	Chief Information Officer (“CIO”)	May 23, 2018
Gerardo H. Maurer	Director of Security	November 27, 2014
Fernando Cravero	Director of International Operations	March 1,2018
Maximiliano A. Olivera	Sr. Manager of Partners and National Market Alliances	November 1, 2021

(1) The designation of Director does not imply that the officers mentioned in this table are members of the Board of Directors of Telecom Argentina, which is composed of the persons stated in “—Directors, Senior Management and Employees—The Board of Directors” above. The term of officer of Telecom’s Senior Management is contractual in nature. Such contracts do not include a specified expiration date.

Roberto D. Nobile is a Certified Public Accountant with a degree from the Universidad de Buenos Aires and an AMP (Advanced Management Program) at Harvard Business School. He was appointed as General Sub - Director of the Company on November 27, 2017. Previously, he had been COO of the Company since May 2016 in charge of Marketing, Sales and Operations. Mr. Nobile has many years of experience in the telecommunications and media sector. In October 2006, he joined Cablevisión, where he worked for 10 years, as COO and Deputy Managing Director. He joined Arthur Andersen in 1989. Subsequently, he worked at Honeywell as South Regional Controller (Brazil, Argentina and Chile). In 1997, he was CFO of Arte Gráfico Editorial Argentino S.A. He was born on September 27, 1967.

Gabriel P. Blasi holds a degree in Business Administration and took post-graduate programs in Finance at Universidad del CEMA-Centro de Estudios Macroeconómicos Argentinos and at IAE (Universidad Austral). He held several managerial positions in Investment Banking and Capital Markets at Citibank and Banco Río (BSCH). He was the CFO of Grupo Carrefour in Argentina and Goyaique S.A.C.I.F. y A. (Grupo Pérez Companc). Until 2011, he was the CFO of IRSA Inversiones y Representaciones Sociedad Anónima (IRS), Cresud S.A.C.I.F. y A. (CRESY) and Alto Palermo S.A. (IRSCP) and held several board positions in Argentina, Brazil, New Zealand, Uruguay and USA. He joined Telecom Argentina on September 2017, where he holds the position of Chief Financial Officer. He was born on November 22, 1960.

Hernán P. Verdaguer is a lawyer specialized in Corporate Law. He did a Postgraduate Program on Communications Law Update (Facultad de Derecho - Universidad de Buenos Aires) and a Postgraduate Program on Business Management (Universidad Argentina de la Empresa, UADE). He was appointed Director of Regulatory Affairs of the Company on November 16, 2017. He joined Diario Clarín in 1994 and then with the creation of Grupo Clarín, he held several positions until becoming Manager of Regulatory Affairs. He held such position until November 2017, when he joined Telecom Argentina. He was born on May 16, 1968.

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Pedro Lopez Matheu is a lawyer with a degree from the Universidad Católica Argentina. Mr. Lopez Matheu has 20 years of experience in the institutional relations in first-line multinational and national companies. From 1996 to 2006 worked at Grupo Clarín as Public Affairs Manager. He was Chairman of the Newspaper Publisher Association of the City of Buenos Aires, and of the Press Freedom Commission of ADEPA (Asociación de Entidades Periodísticas Argentinas), Vice Chairman of the Association of Argentine Private Radios, and of other national and multinational entities of that sector. From 2006 to 2014 he was Corporate and Government Affairs at Kraft Foods and Mondelez, leading company of food and, for Argentina, Chile, Uruguay and Paraguay. Also, since 2014, he had been Corporate Affairs Director at AXION Energy until he joined the Company. He was born on May 23, 1966.

Pablo C. Casey is a lawyer with a degree from Universidad de Buenos Aires and holds a Master’s Degree in Law and Economics from Universidad Torcuato Di Tella. He was appointed Director of Legal and Institutional Affairs of Telecom Argentina on November 16, 2017. Previously, he was a member of the Board of Directors of Cablevisión since October 2006. He worked at Grupo Clarín directly and indirectly since 1986 as Manager of Institutional Affairs. Mr. Casey also worked at Estudio Sáenz Valiente y Asociados until 1997, where he worked directly with Grupo Clarín. Between 1997 and 2005, he was the Manager of Legal Affairs of Multicanal. Mr. Casey was also a member of the Board of Directors of Grupo Clarín. He was born on June 20, 1967.

Sebastian Palla is an economist with a degree from the Universidad Torcuato Di Tella. He is Chief of Procurement officer of Telecom Argentina since August 8, 2016. From 2009 to 2016 he worked at Macro Bank as an advisor of the Chairman first, later in the Investment Banking Management area and finally in the Government Banking Management area. From 2006 to 2009, he was in charge of the union of AFJP, first as Executive Director, and later as a Chairman. From 2002 to 2005, he was Chief of Advisor to the Ministry of Finance and then Sub-secretary of Finance of the Ministry of Economy and Public Finance. Mr. Palla was honored as a member of the Young Global Leaders Forum in 2005 (created by the World Economic Forum), also a member of the Eisenhower Fellowship in 2008; and was identified as one of the most influential people of 2007, in Luciana Vazquez’ s book “The Education of Those Who Influence”. He was born on June 12, 1974.

Sergio D. Faraudo is a lawyer from Universidad Nacional de La Plata and holds a Master’s Degree in Economics and Political Science from ESEADE. He has been the Director of Human Capital of Telecom Argentina since November 2017. Between 2015 and 2017, he was the Corporate Director of Human Resources of Grupo Clarín. Between 2001 and 2015, he held managerial positions in Human Resources Areas at PSA Peugeot Citroën in Argentina, Spain, France and Brazil, including two years as Industrial Director of the local subsidiary. Between 1991 and 1995, he held a position in the Human Resources Management area at Telecom Argentina. Between 1987 and 1989, he was granted two scholarships from the French Government to study Law, New Technologies and Government Modernization. He was born on January 7, 1964.

Gonzalo Hita holds a degree in Marketing from the Universidad Argentina de la Empresa (UADE). He also took several specialization courses and programs for upper management at institutions such as IAE Business School (PAD), ESADE Business & Law School, and Universidad del CEMA. He was appointed COO of the Company on November 16, 2017. At Cablevisión, he held, among others, the position of COO and, previously, he had been the Commercial Director since 2000. Mr. Gonzalo Hita was born on June 28, 1970.

Miguel Angel Fernández is an Electronic Engineer from the Universidad de Bahía Blanca and also holds an EMBA Program from IAE (2000 — 2001). He was appointed CTO (Chief Technical Officer) of Telecom Argentina on November 16, 2017. He hold the same position at Cablevisión since 2007. Between 1994 and 2006, he was the Technical Manager of Multicanal. Between 1990 and 1994, he was the Field Engineer at Western Atlas Petroleum Service Co. He was born on June 10, 1963.

Alejandro Miralles is an economist with a degree from the Universidad de Buenos Aires. He was appointed as Chief Audit & Compliance Officer in November 2017. He was Director of Human Capital of Telecom Argentina since June 6, 2016. Before that, he was Client Partner for more than five years at Korn Ferry, the leader global people and organizational advisory firm. He has also worked as Chief Financial Officer at Cablevision for seven years and Chief Executive Officer at Teledigital Cable. Prior to that, he was Investment Officer at CEI Citicorp Holdings and he worked at Citibank N.A. and at Manufacturers Hannover Trust. He was born on December 29, 1963.

Pablo Esses has a Bachelor´s Degree in Business Administration, graduated from the Universidad de Buenos Aires. He participated in many specialization courses in management, technology and leadership at international scope in United States and Europe. He was appointed as CIO of Telecom Argentina on May 2018. He has more than 25-years of experience in Business Consulting at Coopers & Lybrand, PricewaterhouseCoopers and IBM in Latin America. He was born on February 22, 1967.

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Gerardo Maurer is an engineer with a degree from the Universidad de Buenos Aires. He joined Telecom Argentina in August 2006 and since then he held various positions within Internal Audit and Corporate Security.  In November 2014, he was appointed as Corporate Security Director. Previously, he worked at United Nations Conference on Trade and Development (UNCTAD) in Geneve, Venezuela and Central America. He returned to Argentina in 1996 and joined the Audit Unit at La Caja de Ahorro y Seguro S.A. He was born on May 11, 1959.

Fernando Cravero holds an undergraduate degree in Marketing, an MBA (Master in Business Administration) and a PAD (Program for Top Management) from the IAE Business School (Universidad Austral). He has also attended courses at ESADE Business & Law School. In March 2018, he was appointed as Telecom Argentina’s Director of International Operations. Previously, he held the position of Operations Manager at Cablevision for seven years, and he had also been appointed Regional Manager of Operations at Multicanal in 2000. He founded a CATV company, which was sold in 1997, and has also held several positions in the financial sector. He was born on March 14, 1973.

Maximiliano Olivera holds a Bachelor’s degree in Business Administration, Senior Management Program from ESADE Business & Law School, and a  Management Development Program’s degree from UADE. In March 2019, he was appointed Sr. Manager of Partnerships and Alliances of the National Market of Telecom Argentina. Previously, he held the position of Regional Operations Manager in Cablevisión S.A. for eight years. In 1999, he joined Multicanal S.A. and served as Technical Chief, Commercial Chief, and Regional Chief. He started in the telecommunications industry in 1992, working on the setting up of a CATV company (Cabletotal SA), which was sold in 1995 to VCC (Video Cable Comunicación SA) where he worked at its technical department until it was sold in 1998. He was born on February 27, 1973.

Supervisory Committee

Argentine law requires any corporation with share capital in excess of P$50,000,000 or which provides a public service or which is listed on any stock exchange or is controlled by a corporation that fulfills any of the aforementioned requirements, to have a Supervisory Committee. The Supervisory Committee is responsible for overseeing Telecom Argentina’s compliance with its bylaws and Argentine law and, without prejudice of the role of external auditors, is required to present a report on the accuracy of the financial information presented to the shareholders by the Board of Directors at the Annual Ordinary Shareholders’ Meeting. The members of the Supervisory Committee are also authorized:

●to call ordinary or extraordinary Shareholders’ Meetings;

●to place items on the agenda for meetings of shareholders;

●to attend meetings of shareholders; and

●generally to monitor the affairs of Telecom Argentina.

Telecom Argentina’s bylaws provide that the Supervisory Committee is to be formed by (i) five members and (ii) three or five alternate members, elected by the majority vote of all shareholders. Members of the Supervisory Committee are elected to serve one year terms and may be reelected.

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The following table lists the members and alternate members of the Supervisory Committee as of December 31, 2021 and as of the date of this Annual Report:

Name	Position on the Supervisory Committee	Profession
Pablo Andrés Buey Fernández	Member	Lawyer
Pablo Gabriel San Martín	Member	Accountant
María Ximena Digón	Member	Lawyer
Alejandro Héctor Massa	Member	Accountant
Saturnino Jorge Funes	Member	Lawyer
Javier Alegría	Alternate Member	Lawyer
Rubén Suárez	Alternate Member	Accountant
Matías Alejandro Fredriks	Alternate Member	Lawyer
Ona Celia Dimnik	Alternate Member	Lawyer
Delfina Lynch	Alternate Member	Lawyer

Pablo Andrés Buey Fernández is a lawyer from the Universidad de Buenos Aires and has Master of Laws from Harvard University Law School. He has been a member of the Supervisory Committee of the Company since April 2016. He is Managing Partner at the law firm Alegría, Buey Fernández, Fissore and Montemerlo. Mr. Buey Fernández was an associate foreign lawyer at the firm Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey. He is a member of several professional associations. He was a professor at Master’s Degrees programs, post-graduate courses and seminars at Escuela Superior de Economía y Administración de Empresas, at the Facultad de Derecho and the Facultad de Ciencias Económicas de la Universidad de Buenos Aires, and at the Facultad de Derecho of Universidad del Salvador. He was born on August 8, 1957.

Pablo Gabriel San Martín has been a member of the Supervisory Committee since April 2018. He is the President of SMS Latinoamerica and Partner Director of SMS — San Martin, Suarez y Asociados. Mr. San Martín serves as Chairman of the Audit Committee of the Transnational Auditors Committee of IFAC (International Federation of Accountants.) He served as auditor at the firm Pistrelli, Díaz y Asociados (Arthur Andersen). He is a member of several professional associations and of the steering committee of several binational business chambers and professional organizations. He was a professor at the School of Economic Sciences of Universidad de Buenos Aires and Universidad del Salvador. He wrote articles on subjects within his field of expertise and is regularly invited as lecturer and guest speaker at Argentine and foreign universities.  He is a Certified Public Accountant graduated from Universidad de Buenos Aires. He was born on May 1, 1963.

María Ximena Digón is a lawyer graduated with an Honor Diploma from the Pontificia Universidad Católica Argentina. She has been a member of Telecom´s supervisory committee since 2017. She is a partner at “EGFA - Abogados” law firm. She also is a member of the Board of Directors and of the supervisory committee of other Argentine companies, mainly in the energy and gas distribution sectors. She is a member of the Public Bar Association of the City of Buenos Aires (Colegio Público de Abogados de la Capital Federal). She was born on June 11, 1975.

Alejandro Héctor Massa has been a member of the Supervisory Committee since April 2018. He was a partner of Deloitte & Co SRL from 1999 to 2017, after Morgan Benedit y Asociados became a member of Deloitte. He is a member of the Argentine Fiscal Association and was a member of the International Fiscal Association. He was a professor at courses and graduate studies in the School of Economic Sciences of Universidad de Buenos Aires, at graduate studies in Universidad Austral located in Rosario, and he served as author and speaker about subjects within his field of expertise. He is a Certified Public Accountant graduated from Universidad de Buenos Aires. He was born on November 3, 1954.

Saturnino Jorge Funes is a lawyer with a degree from the Universidad del Salvador and a Master’s degree in business law from the Universidad Austral, with honors. He is a founding partner of the law firm “EGFA Abogados”. He worked at Shearman & Sterling LLP between 2000 and 2001 as an international associate. He is professor of corporate law at the Universidad del Salvador Law School in Buenos Aires, and a professor at the Masters in Finance and Masters in Law and Economics, both at the Universidad Torcuato Di Tella in Buenos Aires. He is a member of the Public Bar Association of the City of Buenos Aires (Colegio Público de Abogados de la Capital Federal) and of the Buenos Aires City Bar (Colegio de Abogados de la Ciudad de Buenos Aires). He was born on August 6, 1968.

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Javier Alegria is a lawyer with a degree from the Pontificia Universidad Católica Argentina. He is also a partner at the law firm Estudio Alegria, Buey Fernández, Fissore & Montemerlo. He received a Master of Law from Northwestern University and a certificate in Business Administration from the Kellogg School of Management at Northwestern University. He acted as an international lawyer with Cleary, Gottlieb, Steen & Hamilton LLP law firm from 2003 to 2004. Mr. Alegria is a member of the Public Bar Association of the City of Buenos Aires. He is a professor at the Universidad de Buenos Aires Law School and Universidad del CEMA. He was born on August 7, 1974.

Rubén Suárez has been an alternate member of the Supervisory Committee since April 2018. He is a Director at SMS Latinoamerica and a founding partner of SMS — San Martin, Suarez y Asociados. He was a professor at the School of Economic Sciences of Universidad de Buenos Aires and Universidad del Salvador. Permanent and alternate statutory auditor and member of the Supervisory Committee of other Argentine companies. He served as auditor at the firm Pistrelli, Díaz y Asociados (Arthur Andersen). He is a Certified Public Accountant graduated from Universidad de Buenos Aires. He was born on January 14, 1961.

Matías Alejandro Fredriks has been an alternate member of the Supervisory Committee since April 2018. He is a partner of the firm Sáenz Valiente & Asociados. Mr. Fredriks is a lawyer graduated from Universidad Nacional de La Plata and holds a Postgraduate Degree in Administrative Law from Instituto de Estudios Judiciales de la Suprema Corte de Justicia de la Provincia de Buenos Aires and a Master’s Degree in Human Resources Management from Instituto de Empresa 1991/1992-Madrid-Spain. Before joining the firm Sáenz Valiente in 1994, Mr. Fredriks worked as a lawyer in the Corporate and Legal Advisory division of the firm “Price Waterhouse & Co.,” as an advisor of “Unión de Industriales de Quilmes,” of “Instituto de Previsión Social de la Provincia de Corrientes,” and of “Dirección Provincial de Personas Jurídicas de la Provincia de Buenos Aires”. He worked on takeovers and transfers in several privatizations such as “Yacimientos Carboníferos de Río Turbio” and “Centrales Térmicas de Generación de Energía Eléctrica del Noreste Argentino”. In addition, he worked as Director of Labor Affairs of the Liquidation Commission of Empresa Nacional de Telecomunicaciones. Since he joined the firm Sáenz Valiente, he has worked in several litigation areas, being responsible for the department in charge of labor, trade associations and trade unions matters. Mr. Fredriks has served as director and member of the Supervisory Committee at several companies before being appointed as an alternate member of the Supervisory Committee of Telecom. He was born on August 27, 1964.

Ona Celia Dimnik has been an alternate member of the Supervisory Committee since April 2020. She is an associate of the law firm “EGFA Abogados”. Miss Dimnik graduated as a lawyer from the Pontificia Universidad Católica Argentina. She was born on November 8, 1995.

Delfina Lynch is an associate of the law firm “EGFA Abogados”. She is also an alternate member of the supervisory committee of other Argentine companies. Mrs. Lynch graduated as a lawyer with honors from the Pontificia Universidad Católica Argentina. She is a member of the Bar Association of the City of Buenos Aires. She was born on April 21, 1991.

Compensation

The compensation of the members of the Board of Directors and the Supervisory Committee is established for each fiscal year at the Annual Ordinary Shareholders’ Meeting.

The aggregate compensation paid through December 31, 2021 by Telecom to the members of the Board of Directors and the Supervisory Committee, acting since April 28, 2021, and the executive officers described under “—Senior Management” above, for services in all capacities to Telecom and its subsidiaries during 2021 was approximately P$1,281 million.

As of December 31, 2021, the compensation accrued by the members of the Board of Directors and Supervisory Committee, for services in all capacities to Telecom and its subsidiaries during 2021 performed from  January 1, 2021 until December 31 2021 was approximately P$418 million and P$30 million, respectively. Such accrued compensation is subject to approval by the Annual Ordinary Shareholders’ Meeting of 2022.

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As of December 31, 2021 compensation paid as advance payments to members of the Board of Directors and Supervisory Committee for services in all capacities to Telecom and its subsidiaries from January 1, 2021 until December 31 2021 was P$418 million and P$30 million, respectively. Those advance payments were authorized by the Annual Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2021 and will be deducted from the final compensation determined by the Annual Ordinary Shareholders’ Meeting of 2022, based on the amount proposed by the Board of Directors to the shareholders, with the prior opinion of the Audit Committee of Telecom Argentina (the “Audit Committee”).

As of December 31, 2021, compensation accrued by the executive officers described under “—Senior Management” above, for services in all capacities to Telecom and its subsidiaries during 2021 amounted to approximately P$1,184 million (including fixed and variable compensation, retention plan benefits and, in some cases, severance payments), of which approximately P$832 million were paid as of December 31, 2021.

The Company’s managers (including Senior Management) receive fixed and variable compensation. A manager’s fixed compensation corresponds with the level of responsibility required for his or her position and the market rate for similar positions. Variable compensation is tied to annual performance goals. Certain managers are beneficiaries of retention plan benefits.

Amounts detailed above are determined in terms of the currency of the transactions dates.

During the year ended December 31, 2021, Telecom Argentina was not required to set aside or accrue any amounts to provide pension, retirement or similar benefits.

Telecom Argentina has no stock option plans for its personnel, or for its members of the Board of Directors or the Supervisory Committee.

Board Practices

Under Argentine law, directors have the obligation to perform their duties with loyalty and the diligence of a prudent business person. Directors are jointly and severally liable to Telecom Argentina, our shareholders and third-parties for the improper performance of their duties, for violations of law, our bylaws or regulations and for any damage caused by fraud, abuse of authority or gross negligence. Under Argentine law, specific duties may be assigned to a director by the bylaws or regulations or by resolution of the shareholders’ meeting. In these cases, a director’s liability will be determined based on the performance of these duties, provided that certain recording requirements are met. Under Argentine law, directors are prohibited from engaging in activities in competition with Telecom Argentina without express authorization of a shareholders’ meeting. Certain transactions between directors and Telecom Argentina are subject to ratification procedures established by Argentine law.

The Supervisory Committee is responsible for overseeing our compliance with our bylaws and Argentine law and, without prejudice to the role of external auditors, is required to present to the shareholders at the Annual Ordinary General Shareholders’ Meeting a report on the accuracy of the financial information presented to the shareholders by the Board of Directors. See “—Supervisory Committee” for further information regarding the Supervisory Committee.

On May 22, 2001 the Argentine government issued Decree No. 677/01, entitled “Regulation of Transparency of the Public Offering,” or the “Transparency Decree” (replaced since January 28, 2013) by equivalent Sections included in Law No. 26,831. The intention of this decree, which is also stated within Law No. 26,831, was to move towards the creation of an adequate legal framework that may strengthen the level of protection of investors in the market. The main objectives of the Transparency Decree were to promote the development, liquidity, stability, solvency and transparency of the market, generating procedures to guarantee the efficient reallocation from savings to investments and good practices in the administration of corporations.

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On May 11, 2018, Productive Financing Law No. 27,440 was published in the Official Gazette. This law amended the Capital Markets Law No. 26,831 regarding the extent of the powers of the CNV; the exercise of preemptive rights on shares offered through public offering in the case of capital increases; private placements; public tender offers; and the jurisdiction of the federal commercial courts of appeals to review the resolutions issued or sanctions imposed by the CNV.

On December 28, 2018 CNV Resolution No. 779/18 was published in the Official Gazette through which the CNV Rules were modified in relation to public tender offers, introducing the definition of public tender offer, both mandatory and voluntary, changes to the procedure for delisting and cancellation from the public offering regime, a launch notice template, and changes to the Prospectus template. The Resolution also eliminates the mandatory partial tender offer in the event of an acquisition of a “significant participation” in the capital stock of a listed company that does not imply an acquisition of a controlling interest in the target listed company.

With regard to public tender offers, under Transparency Decree, the offer or was required to formulate a “fair” price to be determined by weighing the results of different company valuation methods, with a minimum floor related to the average market price for the six-month period immediately preceding the date of the agreement. Pursuant to the amendments introduced by the Productive Financing Law and CNV Resolution No. 779/18, the pricing of a tender offer is based on an objective formula which consists of the higher of two existing prices.

Capital Markets Law No. 26,831 vests in members of the Board of Directors:

● the duty to disclose certain events, such as any fact or situation capable of affecting the value of the securities or the course of negotiation;

● the duty of loyalty and diligence;

● the duty of confidentiality; and

● the duty to consider the general interests of all shareholders over the interest of the controlling shareholder.

A director will not be liable if, notwithstanding his or her presence at a meeting at which a resolution was adopted or his or her knowledge of the resolution, a written record exists of his opposition thereto and he or she reports his opposition to the Supervisory Committee before any complaint against him or her is brought before the Board of Directors, the Supervisory Committee, the Annual Ordinary Shareholders’ Meeting, the competent governmental agency or the courts. Any liability of a director vis-à-vis Telecom Argentina terminates upon approval of the directors’ performance by the shareholders at a Shareholders’ Meeting, provided that shareholders representing at least 5% of our capital stock do not object and provided that this liability does not result from a violation of the Telecom Argentina’s bylaws, the Argentine law or regulations.

Additionally, Capital Markets Law No. 26,831 provides that those who infringe upon the provisions set forth therein shall be subject, in addition to civil and criminal liability (as applicable), to certain sanctions including warnings, fines, disqualification, suspension or prohibition from acting under the public offering regime.

Telecom Argentina maintains an officers’ and directors’ insurance policy covering claims brought against the officers and/or directors relating to the performance of their duties. As of the date of this Annual Report, the total amount covered by this insurance is US$67.5 million.

Executive Committee

Telecom Argentina’s bylaws grant the Board of Directors the power to appoint an Executive Committee formed by some of its members and be in charge of Telecom Argentina’s day-to-day affairs, in each case under the supervision of the Board of Directors.

The Board of Directors decided to appoint an Executive Committee on January 1, 2018. On January 31, 2018 the Board of Directors approved the Rules of the Executive Committee (“Reglamento de Facultades y Funcionamiento”) and on that date the Executive Committee started functions. The Executive Committee members as of December 31, 2021 and as of the date of this Annual Report are: Carlos Alberto Moltini, Alejandro Alberto Urricelqui, Sebastián Bardengo, Mariano Marcelo Ibáñez y Germán Horacio Vidal.

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Audit Committee

Capital Markets Law No. 26,831 provides that companies with publicly-listed shares must appoint an Audit Committee to be formed by three or more members of the Board of Directors. Under CNV rules, the majority of the members of the Audit Committee must be independent. In order to qualify as independent, the director must be independent with respect to the company, any controlling shareholders or any shareholders that are significant participants in the company and cannot carry out executive duties for the company. A member of the Board of Directors cannot qualify as an independent director if he or she is a relative of a person who would not qualify as an independent director if such relative were appointed as a member of the Board of Directors.

In case of resignation, dismissal, death or lack of capacity of any of the members of the Audit Committee, the Board of Directors shall immediately appoint a replacement, who shall remain in office until the following Annual Shareholders Meeting.

According to Capital Markets Law No. 26,831 the duties of the Audit Committee are:

● providing the market with complete information on transactions in which there might be a conflict of interest with the members of the corporate bodies or controlling shareholders;

● giving an opinion on the fulfillment of legal requirements and reasonableness of the conditions for the issuance of shares or securities convertible into shares, in the case of capital increases where preemptive rights have been excluded or limited;

● giving an opinion regarding transactions with related parties in certain cases;

● supervising internal control systems and verifying the fulfillment of norms of conduct; and

● giving an opinion regarding the Board of Directors’ proposal to designate external auditors and evaluating their independence, among others.

Additionally, according to the Regulation for the Implementation of the Audit Committee, the Audit Committee also reviews the plans of internal auditors, supervising and evaluating their performance.

On April 28, 2021 Telecom Argentina´s Board of Directors appointed Mr. Carlos Alejandro Harrison, Mr. Germán Horacio Vidal and Mr. Martín Hector D’ Ambrosio as members of Telecom Argentina´s Audit Committee. Furthermore, the Board of Directors determined that Mr. Harrison qualifies as the audit committee financial expert under SEC guidelines.

Under SEC, NYSE and CNV regulations, Mr. Carlos Alejandro Harrison, Mr. Martín Hector D’Ambrosio and Mr. Germán Horacio Vidal qualify as independent directors.

As of the date of this Annual Report, the Board of Directors’ meeting for the appointment of the Audit Committee members for the fiscal year 2022 has not yet been held. Therefore, as of the date of this Annual Report, the following members of Telecom Argentina’s Audit Committee are still in office: Mr. Carlos Alejandro Harrison, Mr. Martín Hector D’Ambrosio and Mr. Germán Horacio Vidal.

Pursuant to Capital Markets Law No. 26,831, the Audit Committee may seek the advice of lawyers and other outside professionals at Telecom Argentina’s expense, so long as the shareholders have approved expenditures for the services of such professionals. For fiscal year 2021, a budget of P$ 10.8 million was approved for Audit Committee expenditures. As of the date of this Annual Report, the Annual Shareholders’ Meeting approving the Audit Committee expenditures for year 2022 has not yet been held.

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Risk Management Committee

In 2012, the Board of Directors of Telecom Argentina approved the implementation of an Enterprise Risk Management Process at Telecom, and the creation of a Risk Management Committee. The Committee is chaired by the CEO, and is composed by the Chief Audit & Compliance Officer, led and coordinated by the CFO. The Board of Directors of Telecom Argentina also approved the creation of the Risk Management function (at the managerial level), whose responsible person also serves as Secretary of the Risk Management Committee and reports to the CFO.

The duties of this committee include reviewing and implementing policies, mechanisms and procedures to identify, to measure and to mitigate risks for Telecom Argentina, and also recommend any steps or adjustments it deems necessary to reduce the risk profile of the organization.

The Company follows the guidelines provided under the Enterprise Risk Management — Integrated Framework 2004 issued by COSO, in order to carry on its Enterprise Risk Management process. Financial reporting risks are reviewed and certified under Section 404 of the Sarbanes Oxley Act.

The main risks faced by the Company are those affecting its capital, those related to consumers, internal processes and technology matters, and those related to geopolitical, macroeconomic, regulatory, labor, environmental, security, social, digital security, compliance and legal matters within external context, among others.

Telecom Argentina has established different action plans that endeavor to mitigate, in whole or in part, high and medium risks which are not fully controlled. However, it cannot be assured that such plans are totally effective, or other events, unforeseen at the date of this Annual Report, could arise and affect the performance of Telecom Argentina.

Employees and Labor Relations

Our employees are represented by different trade unions and labor organizations, including FATEL (Argentine Federation of Telecommunications) and FOEESITRA (Argentine Federation of Workers, Specialists and Employees of the Telecommunications Industry and Services), both federations are comprised of different trade unions, UPJET (Union representing the Senior Staff of Telecommunication Companies), FOMMTRA (Argentine Federation of Unions representing the Technical and Supervisory Staff of Telephone Companies) and CEPETEL (Union of Telecommunications Professionals), associations that represent senior and professional staff and SATSAID (Argentine Union of Television, Audiovisual, Interactive and Data Services), a single union that represents both workers and the senior staff, as well as unions representing trade employees, traveling salespeople, announcers and press workers.

In addition, Telecom actively promotes communication with all trade unions and with the different stakeholders involved, creating formal and informal communication channels, at national and local levels, with union leaders and internal committees. Telecom encourages and fosters working in shared spaces with all trade unions, convening joint and ongoing work meetings to address the following agenda: Occupational Health and Safety, Environment, Training, Diversity and Occupational Guidance and Work Organization. All the union representations attended and actively participated in those meetings.

In recent years we have conducted wage negotiations with all trade unions aiming to increase salaries in Argentine Pesos as a response to high inflation rates in Argentina. Wage negotiations were conducted in a cooperative environment and we were the object of just one strike and a few direct action measures, both of which took place during salary negotiations. Collective bargaining agreements were executed with the Argentine Association of Cable Television for the employees represented by SATSAID and SALCo, and directly with the Trade Union Unity that groups the different telephone trade unions (FATEL, FOEESITRA, FOPPSTA, CEPETEL), UPJET and press worker unions.

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As of December 31, 2021, the total number of Telecom employees was 22,587, as compared to 23,254 employees as of December 31, 2020 and 23,728 employees as of December 31, 2019. As of December 31, 2021, 21,997 employees were located in Argentina, 433 employees were located in Paraguay, 155 employees were located in Uruguay and 2 employees were located in the United States. As of December 31, 2020, 22,659 employees were located in Argentina, 431 employees were located in Paraguay, 162 employees were located in Uruguay and 2 employees were located in the United States. As of December 31, 2019, 23,122 employees were located in Argentina, 433 employees were located in Paraguay, 171 employees were located in Uruguay and 2 employees were located in the United States.

Share Ownership

Share Ownership by directors, executive officers, and Supervisory Committee members

Capital stock of Telecom Argentina held by members of the Board of Directors and Supervisory Committee is as follows:

● Alejandro A. Urricelqui: 113,814 Class B shares and 69,200 ADRs;

● Mariano M. Ibáñez: 4,370 ADRs;

● Baruki L.A. González: 188,500 Class B Shares;

● Saturnino J. Funes: 31,277 Class B shares; and

● Pablo G. San Martín: 740 Class B shares.

Capital stock of Telecom Argentina held by the Senior Management is as follows:

● Mr. Roberto Nobile: 7,000 Class B shares;

● Mr. Gabriel Blasi: 3,500 ADRs;

● Mr. Fernando Cravero: 15,000 Class B shares and 3,000 ADRs;

● Mr. Pablo Esses: 1,600 ADRs

No other member of Telecom Argentina’s senior management holds capital stock of Telecom Argentina.

Share Ownership Plan

We do not have any arrangements currently in force involving our employees, directors or senior management regarding the capital stock or notes of the company.

At the time of the privatization of ENTel in 1990, the Argentine government created a Share Ownership Plan (“SOP”), for the employees of ENTel and CAT, which were acquired by Telecom Argentina, Telintar and Startel. Pursuant to the Privatization Regulations, 10% of Telecom Argentina’s then-outstanding shares, consisting of 98,438,098 Class C Shares, were transferred by the Argentine government to Telecom Argentina, Telintar, and Startel employees previously employed by ENTel and CAT. This transfer was made through a general transfer agreement signed on December 29, 1992. Our Class C Shares consist exclusively of shares originally sold in connection with the SOP. Most of Class C Shares were converted into Class B Shares from time to time. As of the date of this Annual Report, the outstanding number of Class C Shares is 106,734.

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ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Ownership of Telecom Argentina Common Stock

The following table sets forth, as of December 31, 2021, each beneficial owner of 5% or more of each class of Telecom Argentina’s shares.

				Percent of
	Number of Shares	Percent of		Total Capital
	Owned	Class		Stock (1)
Class A Ordinary Shares:
Fintech Telecom LLC	448,679,250	65.61	%	20.83	%
Voting Trust (3)	235,177,350	34.39	%	10.92	%
Total Class A Ordinary Shares	683,856,600	100	%	31.75	%
Class B Ordinary Shares (listed in BCBA):
ANSES - FGS	246,018,839	39.17	%	11.42	%
Others (2)	382,039,180	60.83	%	17.74	%
Total Class B Ordinary Shares	628,058,019	100	%	29.16	%
Class C Ordinary Shares:
Others	106,734	100	%	0.01	%
Total Class C Ordinary Shares	106,734	100	%	0.01	%
Class D Ordinary Shares:
Cablevisión Holding S.A.	406,757,183	48.33	%	18.89	%
VLG S.A.U.	199,732,125	23.73	%	9.27	%
Voting Trust (3)	235,177,350	27.94	%	10.92	%
Total Class D Ordinary Shares	841,666,658	100	%	39.08	%
Total Capital Stock	2,153,688,011	—		100.00	%

(1) Represents the respective percentage over the total of Telecom Argentina’s ordinary shares, regardless of their class.

(2) Includes 198,085,167 Class B Shares in the form of ADSs owned by Fintech representing 31.54% of total Class B Common Shares and 9.2% of Telecom Argentina’s total capital stock

(3) Trust created under the Voting Trust Agreement of April 15, 2019, composed of 50% of Class A shares and 50% of Class D shares. Trustees: Héctor Horacio Magnetto and David Martínez Guzmán. See “Telecom Shareholders’ Agreement” below.

As of December 31, 2021, there were approximately 69.87 million American Depositary Shares outstanding (representing rights to 349.36 million Class B Shares or 55.6% of total Class B Shares). Further, as of December 31, 2021, there were approximately 71 registered holders of American Depositary Shares in the United States and approximately 20,500 holders of Class B Shares in Argentina.

Because some Class B Shares are held by representatives, the number and domicile of registered shareholders may not exactly reflect the number and domicile of beneficial shareholders.

All shares have equal voting rights. Class A Shares and Class D Shares have certain veto rights, as described in “—The Telecom Shareholders’ Agreement”. and the Company’s bylaws.

The Ordinary and Extraordinary General Meeting and the Special Meeting of Class “C” shares, held on December 15, 2011, approved the power for the additional conversion of up to 4,593,274 Class “C” shares into the same amount of Class “B” shares in one or more tranches. As of December 31, 2021, 4,486,540 Class “C” shares were converted into Class "B” shares in 13 tranches. As of the date of this Annual Report, 106,734 Class “C” shares are still pending to be converted into Class “B” shares.

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Major Shareholders

Cablevision Holding S.A. is the direct and indirect holder of 28.16% of Telecom Argentina’s total capital stock (in the form of Class D Shares). As a result of the Merger and the arrangements resulting from the Telecom Shareholders Agreement, CVH has been considered to have acquired control over Telecom since January 1, 2018.

Cablevisión Holding S.A. is an Argentine corporation and its primary purpose is to hold capital stock in corporations whose object and purpose is to provide Information and Communication Technology Services (ICT Services) and to provide Audiovisual Communication Services (ICT Services). Its controlling shareholder, in turn, is GC Dominio S.A, another Argentine corporation.

On June 21, 2018, CVH informed the Company that it was promoting and formulating a mandatory public tender offer for all Class B Shares issued by Telecom Argentina due to the acquisition of control in Telecom Argentina. The mandatory public tender offer has been suspended by Argentine courts. See “Item 4—Information on the Company— Introduction— The Company —Public Tender Offer due to change of control”.

Fintech Telecom LLC is the direct holder of 30.03% of Telecom Argentina’s total capital stock (Class A Shares and ADS representing Class B Shares). Until December 31, 2017 Fintech was Telecom Argentina´s controlling shareholder.

Fintech Telecom LLC is a Delaware (United States) limited liability company, and is a wholly-owned direct subsidiary of Fintech Holdings Inc. Its primary purpose is to hold, directly and indirectly, the securities of Telecom Argentina. Fintech Holdings Inc., a Delaware (United States) corporation, is directly controlled by Mr. David Martínez.

Telecom Shareholders’ Agreement

On July 7, 2017, Fintech Telecom, LLC (“FTL”), certain of its affiliates and CVH entered into a shareholders’ agreement (“Telecom Shareholders Agreement”), which regulates certain matters as to the corporate governance of Telecom Argentina which became effective upon completion of the Merger, while other provisions became effective simultaneously upon execution of the Telecom Shareholders’ Agreement.

The Telecom Shareholders’ Agreement provides, among other matters, the following:

● Any shareholders party to the Telecom Shareholders’ Agreement (any such shareholder, a “SHA Party”) are subject to restrictions on the transfer of all their Telecom Argentina shares including (i) the right of first refusal to purchase such shares from a selling SHA Party, (ii) certain tag-along rights of each other SHA Party and (iii) so long as a SHA Party holds at least a certain minimum amount of shares, such SHA Party will be entitled to certain drag-along rights pursuant to which it will be able to require the other SHA Parties to sell, together with the dragging SHA Party, a number of shares that represents in the aggregate at least fifty-one percent (51%) of our shares;

● FTL and CVH undertook to execute a voting trust agreement (the “Voting Trust Agreement”), which was formalized on April 15, 2019, pursuant to which FTL and VLG contributed 235,177,350 Class A shares and 235,177,350 Class D shares of Telecom, respectively, to a voting trust (the “Voting Trust”) which, when added to the shares that CVH holds (directly and indirectly) in Telecom, exceed fifty percent (50%) of the outstanding shares, and (ii) CVH and Fintech Telecom LLC each appointed a co-trustee. The shares contributed to the Voting Trust will be voted by the co-trustee of CVH in accordance with the vote of CVH or following the instructions of CVH, except in respect of certain matters subject to veto under the Telecom Shareholders’ Agreement, in which case such shares will be voted by the co-trustee of Fintech Telecom LLC in accordance with the vote of Fintech Telecom LLC or following the instructions of Fintech Telecom LLC;

● The Board of Directors of Telecom Argentina will consist of an odd number of members between 11 to 17. Each of FTL, CVH and the Voting Trust will vote or cause to be voted, their shares, whether held directly or indirectly, in favor of the election of directors designated by FTL and CVH, a majority of which will be designated by CVH, subject to CVH and FTL satisfying certain ownership thresholds of the shares;

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● Subject to CVH and FTL satisfying certain ownership thresholds of the shares, CVH will be entitled to designate the Chief Executive Officer and all key employees of Telecom and its subsidiaries other than the CFO and the Internal Auditor, including the Chief Operating Officer, Chief Technical Officer, Director of Supply, Legal Director, Human Resources Director, Regulatory Affairs Director, Institutional Relationship Director, Chief of Compliance, any other officer or employee having a direct line of reporting to the CEO or a joint line of reporting to the CEO and the Vice Chairman of the Board or the Deputy CEO and any other officer or employee holding commensurate responsibilities. FTL will be entitled to designate the Chief Financial Officer and the Internal Auditor;

● An executive committee of Telecom will be established consisting of five members, of which three will be designated by CVH and two will be designated by FTL, in each case subject to the SHA Party maintaining certain ownership thresholds. In addition, CVH will be entitled to designate two members of our Audit Committee and three members of our Supervisory Committee (comisión fiscalizadora) and FTL will be entitled to designate one member of the Audit Committee and two members of the Supervisory Committee;

● Prior to each of our shareholder meetings or any other meeting upon which certain veto matters will be decided, CVH and FTL agree to hold meetings at which their representatives will determine how CVH and FTL, and the Voting Trust, if in effect, will vote their shares at such meeting in accordance with the provisions of the TEO Shareholders Agreement;

● We are required to maintain a listing of the Class B Shares and the ADSs representing the Class B Shares on the BYMA and the New York Stock Exchange, respectively;

● Each SHA Party and its respective affiliates is prohibited from acquiring any of our capital stock from a third party without (i) proper notice to the other SHA Parties and (ii) the right for such other SHA Parties to purchase fifty percent (50%) of the shares to be purchased from the third-party; provided that CVH may acquire an additional two percent (2%) of our shares without complying with the foregoing obligations;

● In the event that a tender offer (oferta pública de adquisición) was required in connection with the Merger, CVH would launch such tender offer to acquire Class B Shares, and FTL would be jointly and severally liable for payment for, and would receive following the closing of such tender offer, fifty percent (50%) of any of our Class B shares tendered in such tender offer; subject to the right of CVH to acquire 100% of the shares tendered until it acquired shares (including any Telecom shares acquired (other than from FTL and its affiliates) since the Merger Effective Date) representing up to 2% of Telecom’s total capital stock, see “Item 4—Information on the Company— Introduction— The Company —Public tender offer due to change of control”;

● Subject to satisfying certain ownership thresholds, each of FTL and CVH, and certain other shareholders that subsequently become a SHA Party, will have certain veto rights over our corporate governance matters;

● The SHA Parties agree to cause us to declare and pay dividends if our consolidated operating cash flows exceed a certain threshold, after taking into consideration certain adjustments; and

● Each SHA Party will have certain registration rights with respect to our Class B Shares subject to the SHA Party satisfying certain ownership thresholds.

A copy of the Telecom Shareholders Agreement has been filed with the SEC and can be found as Exhibit 99.3 incorporated by reference into the Schedule 13D filed on January 2, 2018. As a result of the Merger and the arrangements resulting from the Telecom Shareholders Agreement, CVH has been considered to have acquired control of us.

Related Party Transactions

We have been involved in a number of transactions with our related parties since the Transfer Date.

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Our policy is to make transactions with related parties on arm’s-length basis.

In addition, Section 72 of Capital Markets Law No. 26,831 provides that before a publicly-listed company may enter into an act or contract involving a “relevant amount” with a related party or parties, the publicly-listed company must obtain approval from its Board of Directors and obtain a valuation report from its Audit Committee or two independent valuation firms that demonstrates that the terms of the transaction are consistent with those that could be obtained at an arm’s-length basis. If the Audit Committee or two independent valuation firms do not find that the terms of the contract are consistent with those that could be obtained on an arm’s-length basis, approval must be obtained from the shareholders. “Relevant amount” means an amount which exceeds 1% of the issuers’ equity as contained in the latest approved financial statements.

Related-party transactions involving Telecom Argentina that exceed 1% of its shareholders’ equity are subject to a prior approval process established by Capital Markets Law No. 26,831, Telecom’s Bylaws and the Rules of the Executive Committee to verify that the agreement could reasonably be considered to be in accordance with normal and habitual market practice.

Transactions with related parties of Grupo Clarín for the year ended December 31, 2021 resulted in income for telecommunication services rendered by us of approximately P$317 million and expenses for services received of approximately P$6,359 million.

Transactions with other related parties resulted in income for services rendered of P$52 million as of December 31, 2021. Additionally, transactions with other related parties resulted in expenses of P$90 million as of December 31, 2021.

As of December 31, 2021, we had no loans outstanding to the executive officers of Telecom Argentina.

For further information on our related party transactions and our outstanding balances with related parties, please see Note 27 to our Consolidated Financial Statements, are incorporated herein by reference.

Interests of Experts and Counsel

Not applicable.

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ITEM 8.FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

See Item 18 for Telecom Argentina’s Consolidated Financial Statements. For a description of events that have occurred since the date of the Company’s Financial Statements, see “Item 4—Information on the Company—Introduction—Recent Developments”.

Legal Proceedings

The descriptions of the legal proceedings, including labor claims, general proceedings and consumer trade union proceedings in Note 19 to our Consolidated Financial Statements are incorporated herein by reference.

Dividend Policy

The declaration, amount and payment of dividends are determined by a majority vote at a shareholders’ ordinary meeting of Telecom Argentina’s capital stock. Under the GCL, dividends may only be declared out of liquid and realized profits determined based on non-consolidated financial statements prepared in accordance with GAAP effective in Argentina (IFRS in the case of listed companies as Telecom Argentina) and other applicable regulations issued by the CNV and other regulatory bodies. Furthermore, liquid and realized profits can only be distributed when all accumulated losses from past periods have been absorbed and the legal reserve has been constituted or reconstituted. In addition, the Telecom Shareholders Agreement includes certain provisions with respect to the payment of dividends under certain circumstances (See “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders— Telecom Shareholders’ Agreement”).

According to the rules of the CNV (as approved by General Resolution No. 622/13 and amended and supplemented, the “CNV Rules”), Shareholders’ Meetings that approve financial statements in which retained earnings are positive must make a specific determination on the use of such earnings in accordance with the GCL and, as a result, must resolve on its distribution as cash dividends, capitalization with issuance of paid-in shares, use to create reserves other than statutory reserves, or a combination of such alternatives. As a result of this rule the balance of retained earnings after the allocation approved by the Annual Shareholders’ Meeting should be zero.

Furthermore, CNV Resolution No. 777/18 established that “earnings distributions shall be considered in the currency as of the Shareholders´ Meeting date using the price index corresponding to the previous month of said Meeting”.

In preparing the Annual Report in compliance with Argentine requirements, at the end of each fiscal year, the Board of Directors analyzes Telecom Argentina’s economic and financial position and its compliance with the abovementioned restrictions. The Board of Directors also takes into account the funds needed for operative purposes for the following fiscal year. The Board of Directors then proposes a course of action with respect to retained earnings, which may or may not include a dividend distribution. The decision with regards to the proposal of the Board of Directors is made by Telecom Argentina’s shareholders at the Shareholders’ Meeting.

Significant Changes

Except as identified in this Annual Report, no undisclosed significant changes have occurred since the date of the Consolidated Financial Statements. See “Item 3—Key Information—Risk Factors” and “Item 5—Operating and Financial Review and Prospects—Years ended December 31, 2021, 2020 and 2019—Factors Affecting Results of Operations”.

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ITEM 9.    THE OFFER AND LISTING

The number of shares as of December 31, 2021, was as follows:

	Outstanding
Class of shares (*)	Shares
Class A Shares	683,856,600
Class B Shares	628,058,019
Class C Shares	106,734
Class D Shares	841,666,658
Total	2,153,688,011

(*) Ordinary share (nominal value P$1 each) with 1 vote each

The Class B Shares are currently listed on the BYMA under the symbol “TECO2”. The ADSs are currently listed on the NYSE under the symbol “TEO”. Each ADS issued by the Depositary represents rights to five Class B Shares.

The ADSs by the Depositary under the Deposit Agreement dated as of May 7, 2021, among Telecom Argentina, the Depositary and the registered holders from time to time of the ADSs issued thereunder (the “Deposit Agreement”) trade on the NYSE. Each ADS represents rights to five Class B Shares.

The BYMA is the largest stock market in Argentina. Trading on the BYMA is conducted by continuous open auction, from 11:00 a.m. to 5:00 p.m. each business day. The BYMA also operates a continuous electronic market system each business day, on which privately arranged trades are registered and made public.

Certain historical information regarding the BYMA is set forth in the table below.

8
	2021	2020	2019
	(3)
Market capitalization (P$ billions) (1)	4,287	9,433	10,560
As percent of GDP (2)	10	38	52
Volume (P$ million) (1)	57,837,432	30,504,788	10,654,580
Average daily trading volume (P$ million) (1)	232,278	126,576	43,666
Number of traded companies (including Cedears)	325	283	240

(1) End-of-period figures for trading on the BYMA (includes domestic and non-domestic public companies).

(2) According to INDEC revised figures of GDP at current prices for the selected period, published as of December 2021. The amount of 2021 is based on the last information available as of the filing date.

(3) Information as of the third quarter of 2021

Source: Instituto Argentino de Mercado de Capitales

Plan of Distribution

Not applicable.

Selling Shareholders

Not applicable.

Dilution

Not applicable.

Expenses of the Issue

Not applicable.

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ITEM 10.ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

Register

Telecom Argentina’s bylaws were registered before the IGJ on July 13, 1990, under number 4,570, book 108, volume “A” of Corporations. General Extraordinary Shareholders’ Meeting and Class “A” and Class “D” Shares Special Shareholders’ Meetings held on October 10, 2019 approved the amendment of Sections 4th, 5th and 6th of the Bylaws, so that Class “A” and “D” shares may be certified shares in accordance with applicable law or book-entry shares, as decided by Class “A” and Class “D” Shares Special Shareholders’ Meetings, respectively. Afterwards, General Extraordinary Shareholders’ Meeting and Class “A” and Class “D” Shares Special Shareholders’ Meetings held on December 11, 2020 approved the amendment of Section 10^th of the Company´s Bylaws so as to establish a minimum prior notice for any call to Board Meetings of 5 calendar days, except in the event of urgency, in which case the Meeting may be called with a prior notice of 1 day, and to establish new means of notification of calls for said Meetings. The registration of these amendments before IGJ was notified to Telecom on April 14, 2021.

Telecom Argentina's bylaws with all subsequent amendments were registered before the IGJ on August 31, 2021, under number 13595, book 104 of Corporations.

Object and Purpose

Telecom Argentina’s object and purpose is to provide, directly or through third parties, or in association with third parties, ICT Services, whether these ICT services are fixed, mobile, wired, wireless, national or international, with or without its own infrastructure, and to provide Audiovisual Communication Services (“AC Services”).

Pursuant to its object and purpose, Telecom Argentina may supply, lease, sell and market in any manner, all kinds of equipment, infrastructure, goods and services related to or supplementary with ICT Services and AC Services. Telecom Argentina may undertake works and provide all kinds of services, including advisory and safety services, in connection with ICT Services and AC Services.

To fulfill its object and purpose, Telecom Argentina has full legal capacity to acquire rights, undertake obligations and take any action that is not forbidden by law and by its bylaws, including the capacity to borrow funds, publicly or privately, through the issue of debentures and negotiable obligations. Telecom Argentina may constitute companies, acquire equity interests in other companies and enter into any kinds of association agreements.

Any amendment to the corporate object and purpose shall be in compliance with the respective legal regulations in force.

Telecom Argentina’s capital stock

The following is a summary of the rights of the holders of Telecom Argentina shares. These rights are set out in Telecom Argentina’s estatutos sociales (bylaws) or are provided for by applicable Argentine law. These rights may differ from those typically provided to shareholders of U.S. companies under the corporation laws of some states of the United States.

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Limited liability of shareholders

Under Argentine law, a shareholder’s liability for losses of a company is generally limited to the value of his or her shareholdings in the company. Under Argentine law, however, a shareholder who votes in favor of a resolution that is subsequently declared void by a court as contrary to Argentine law or a company’s bylaws (or regulations, if any) may be held jointly and severally liable for damages to such company, to other shareholders or to third parties resulting from such resolution. In connection with recommending certain actions for approval by shareholders, the Board of Directors of Telecom Argentina occasionally obtained opinions of internal and/or external counsel concerning the compliance of the actions with Argentine law and our bylaws (or regulations, if any). We currently intend to obtain similar opinions in the future as the circumstances require it. Although the issue is not free from doubt, based on advice of counsel, we believe that a court in Argentina in which a case has been properly filed would hold that a non-controlling shareholder voting in good faith and without a conflict of interest in favor of such a resolution based on the advice of counsel that such resolution is not contrary to Argentine law or our bylaws or regulations, would not be liable under this provision.

Voting Rights

Pursuant Telecom Argentina’s bylaws, each share entitles the holder thereof to one vote at the shareholders’ meetings. All of Telecom Argentina’s directors are appointed jointly by shareholders in an Ordinary General Shareholders’ Meeting.

Under Argentine law, shareholders are entitled to cumulative voting rights for the election of up to one-third of the vacancies to be filled on the Board of Directors and the Supervisory Committee. If any shareholder notifies the company of its decision to exercise its cumulative voting rights not later than three business days prior to the date of the Shareholders’ Meeting, all shareholders are entitled, but not required, to exercise their cumulative voting rights as well.

Through the exercise of cumulative voting rights, the aggregate number of votes that a shareholder may cast is multiplied by the number of vacancies to be filled in the election, and each shareholder may allocate the total number of its votes among a number of candidates not exceeding one-third of the number of vacancies to be filled. Shareholders not exercising cumulative voting rights are entitled to cast the number of votes represented by their shares for each candidate. The candidates receiving the most votes are elected to the vacancies filled by cumulative and non-cumulative voting. In case of tie between the candidates voted under the same system, the two candidates that received the most votes will participate in a run-off election, and the candidate receiving the most votes in the run-off election will be deemed elected.

In addition, any person who enters into a voting agreement with other shareholders in a public company must inform the CNV of that voting agreement and must file a copy of that voting agreement before the CNV.

Shareholders’ Meetings

Shareholders’ Meetings may be ordinary meetings or extraordinary meetings. Telecom Argentina is required to hold an Annual Ordinary Shareholders’ Meeting in each fiscal year to consider the matters outlined in Section 234 of the GCL, Section 71 of Law No. 26,831 and CNV rules, including but not limited to:

● approval of Telecom Argentina’s financial statements and general performance of the directors and members of the Supervisory Committee for the preceding fiscal year;

● election, removal and remuneration of directors and members of the Supervisory Committee;

● allocation of profits; and

● appointment of external auditors.

Matters which may be considered at these or other ordinary meetings include, but are not limited to:

● consideration of the responsibility of directors and members of the Supervisory Committee; and

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● capital increases and the issuance of notes.

Extraordinary Shareholders’ Meetings may be called at any time to consider matters beyond the scope of the ordinary shareholder’s meetings, including amendments to the bylaws, issuances of certain securities that permit profit sharing, anticipated dissolution, merger and transformation from one type of company to another, etc.

Shareholders’ Meetings may be convened by the Board of Directors or the members of the Supervisory Committee. The Board of Directors or the members of the Supervisory Committee are also required to convene shareholders’ meetings upon the request of any shareholder or group of shareholders holding at least 5% in the aggregate capital stock of Telecom Argentina. If the Board of Directors or the members of the Supervisory Committee fail to do so, the meeting may be called by the CNV or by the Argentine courts.

Notice of the Shareholders’ Meeting must be published in the Official Gazette and in a widely circulated newspaper in Argentina, at least twenty days before the shareholder’s meeting. In order to attend a meeting, shareholders must submit proper evidence of their ownership of shares via book-entry account held at the Caja de Valores S.A. in the case of Class B and Class C shares, and via book-entry account held by the Company of Class A and Class D shares. Entitled to attend the meeting, a shareholder may be represented by proxy.

Holders of ADSs are not entitled to attend or vote at a shareholders’ meeting but its Deposit Agreement provides for certain procedures to instruct the Depositary to vote deposited Class B Shares in accordance with instructions provided by the holders of the ADSs. For voting instructions to be valid, the depositary must receive them on or before the date indicated in the relevant notice. There is no guarantee that an ADS holder will receive voting materials in time to instruct the depositary to vote.

The quorum for Ordinary Shareholders’ Meetings consists of a majority of the capital stock entitled to vote. In Ordinary Shareholders’ Meetings, resolutions may be adopted by the affirmative vote of a majority of the shareholders present that have issued a valid vote, without counting voluntary abstentions. If there is no quorum at the meeting, a second Ordinary Shareholders’ Meeting may be called. The meeting in a second call can be held whatever the number of the shareholders at the meeting, and resolutions may be adopted by a majority of the shareholders present.

The quorum for Extraordinary Shareholders’ Meetings is 60% of the capital stock entitled to vote. If there is no quorum at the extraordinary shareholders’ meeting, a second extraordinary shareholders’ meeting may be called. The quorum for extraordinary shareholders’ meeting in a second call is the 30% of the present capital stock. In both cases, decisions are adopted by a majority of valid votes, except for certain fundamental matters, including:

● mergers and spin-offs, when Telecom Argentina is not the surviving entity;

● anticipated liquidation;

● change of Telecom Argentina’s domicile to a domicile outside Argentina;

● total or partial repayment of capital; or

● a substantial change in the corporate object and purpose.

Each of these actions requires a favorable vote of more than 50% of all the capital stock entitled to vote.

In some of these cases, a dissenting shareholder is entitled to appraisal rights.

Any resolution adopted by the shareholders at Ordinary or Extraordinary Shareholders’ Meetings that affects the rights of one particular class of capital stock must also be approved or ratified by a special meeting of that class of shareholders. The special meeting will be governed by the rules for Ordinary Shareholders’ Meetings.

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In addition, and pursuant to the amendment to the bylaws approved on August 31, 2017, a favorable resolution by a special meeting of the Class A and/ or the Class D will be required in order to approve any Supermajority Matter. That special meeting will be required to the extent the Class A or the Class D represent more than 15% of the capital stock, respectively, or 20% of the capital stock if the decision involves the approval of the Business Plan or the Annual Budget.

Dividends

Dividends can be lawfully paid and declared only out of our realized and liquid profit.

For these purposes, the Board of Directors must submit our financial statements for the previous fiscal year, together with a report thereon by the Board of Directors, to the shareholders for their approval at an Ordinary Shareholders’ Meeting.

Upon the approval of the financial statements, the shareholders determine the allocation of Telecom Argentina’s net profits (if any). Under CNV rules, a Shareholders’ Meeting convened to approve the financial statements in which retained earnings are positive must make a specific decision on the use of such earnings in accordance with the GCL. The Shareholders’ Meeting must resolve on its distribution as cash dividends, capitalization with issuance of paid-in shares, use to create reserves other than statutory reserves, or a combination of such alternatives. In addition, the GCL requires Argentine companies to allocate 5% of any net profits to a legal reserve, until the amount of this reserve equals 20% of our capital stock. The legal reserve is not available for distribution. The remainder of net profits may be paid as dividends on common stock or retained as a voluntary reserve or other account, or a combination thereof, all as determined by the shareholders. As provided by CNV Resolution No. 609/12, positive retained earnings generated by the mandatory adoption of IFRS as from January 1, 2012, should be assigned to a special reserve that can only be utilized for its capitalization or to absorb negative retained earnings.

Dividends may not be paid if the legal reserve has been impaired, nor until it has been fully replenished. Shareholders’ rights to collect dividends expire three years after the distribution date pursuant to Section 17 of Telecom Argentina’s bylaws.

Argentine law permits the Board of Directors of certain companies, such as Telecom Argentina, to approve the distribution of anticipated dividends on the basis of financial statements especially prepared for the purpose of paying such dividends, provided that both the external auditors and the Supervisory Committee have issued an opinion report. The actual payment of these dividends is made on an interim basis, and they are paid on account of the dividends to be determined in the Annual Ordinary Shareholders’ Meeting on the basis of the financial statements for the year.

See Note 28 to our Consolidated Financial Statements regarding restrictions on distributions of profits and dividends.

Capital increase and reduction

Telecom Argentina may increase its capital upon authorization of an Ordinary Shareholders’ Meeting. All capital increases must be confirmed by the CNV, published in the Official Gazette and recorded with the IGJ. Capital reductions may be voluntary or mandatory. Shares issued in connection with any capital increase must be divided among the various classes in proportion to the number of shares of each class outstanding at the date of the issuance, provided that the number of shares of each class actually issued may vary based on the exercise of preemptive rights and additional accretion rights in accordance with the procedure described under “—Preemptive Rights” below.

A voluntary capital reduction must be approved by an Extraordinary Shareholders’ meeting and may take place only after notice thereof is published and creditors are given an opportunity to obtain payment or collateralization of their claims, or attachment, except in redemption cases (with liquid and realized profits).

In accordance with Section 206 of the GCL, reduction of a company’s capital stock is mandatory when losses have exceeded reserves and at least 50% of the stated capital (capital stock plus inflation adjustment).

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Preemptive Rights

Under Argentine law, holders of a company’s common shares of any given class have preferential or preemptive rights, proportional to the number of shares owned by each shareholder, to subscribe for any shares of capital stock of the same class as the shares owned by the shareholder or for any securities convertible into such shares issued by the company.

In the event of a capital increase, shareholders of Telecom Argentina of any given class have a preemptive right to purchase any issue of shares of such class in an amount sufficient to maintain their proportionate ownership of Telecom Argentina’s capital stock. For any shares of a class not preempted by any holder of that class, the remaining holders of the class will assume pro rata the preemptive rights of those shareholders that are not exercising their preemptive rights. Pursuant to Telecom Argentina’s bylaws, if any Class B or Class C Shares are not preempted by the existing shareholders of each such class, the other classes may preempt such class. However, if any shares of the other Classes of Shares are not preempted by the existing holders of such class, holders of Class B or Class C Shares shall have no preemptive rights with respect to such shares.

A notice to the shareholders of their opportunity to preempt the capital increase must be published for three days in the Official Gazette and a widely circulated newspaper in Argentina. The period for the exercise of preemptive rights is 30 days following the last day of publication and may be reduced to 10 days by resolution of an extraordinary shareholders’ meeting. Pursuant to the Capital Markets Law, as amended by the Productive Financing Law No. 27,440, in the case of any capital increase by means of a public offer, the preemptive rights will be exercised by the shareholders exclusively through the subscription and allocation procedures determined in the offering memorandum, and the 30-day period will not apply; subject to the condition that the bylaws of the company expressly provide it and to the approval of the shareholders’ meeting.

Pursuant to the GCL, preemptive rights may only be restricted or suspended in certain particular and exceptional cases by a resolution of an Extraordinary Shareholders’ Meeting when required by the interest of the company.

Conflicts of Interest

A shareholder that votes on a business transaction in which its interest conflicts with that of Telecom Argentina may be liable for damages under Argentine law, but only if the transaction would not have been approved without his or her vote. See “Item 3—Key Information—Risk Factors—Risks Relating to Argentina—Our Shareholders may be subject to liability under Argentine law for certain votes of their securities”. See also “—Powers of the Directors” below for a description of conflict of interest regarding Directors.

Redemption or Repurchase

Telecom Argentina’s stock is subject to redemption in connection with a reduction of capital by a majority vote of shareholders at an Extraordinary Shareholders’ Meeting. Pursuant to the GCL, Telecom Argentina may repurchase the stock with liquid and realized profits or available reserves, upon a determination of the Board of Directors that the repurchase is necessary in order to avoid severe damage to our business (subject to shareholder consideration) or in connection with a merger or acquisition. In addition, Telecom Argentina can purchase up to 10% of its capital stock in the BCBA pursuant to Law No. 26,831, complying with the requirements and procedures stated therein. If the purchase is made pursuant to Law No. 26,831, Telecom Argentina must resell the repurchased shares within three years and its shareholders will have preemptive rights to purchase the shares, except in case of an employee compensation program or plan, or in case the shares are distributed among all the shareholders proportionately or regarding the sale of an amount of shares that in any period of 12 months does not exceed 1% of the Telecom Argentina’s capital stock. In such cases, the three-year period can be extended with the previous approval by a Shareholders’ Meeting.

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Appraisal Rights

Whenever certain extraordinary resolutions are adopted at an Extraordinary Shareholders’ meeting, such as a merger of Telecom Argentina into another entity, a change of corporate object and purpose, transformation from one type of corporate form to another, or the voluntary withdrawal from the public offering regime or listing of Telecom Argentina’s shares , any shareholder dissenting from the adoption of any resolution may withdraw from Telecom Argentina and receive the book value of his or her shares determined on the basis of Telecom Argentina’s annual financial statements (as approved by the Annual Ordinary Shareholders’ Meeting), provided that the dissenting shareholder exercises its appraisal rights within five days following the Shareholders’ Meeting at which the resolution was adopted. This right may be exercised within 15 days following the meeting if the dissenting shareholder was absent and provided he or she can prove that he or she was a shareholder on the day of the Shareholders’ Meeting at which the resolution was adopted. In the case of a merger of Telecom Argentina or a spin-off of Telecom Argentina, no appraisal rights may be exercised if Telecom Argentina is the surviving company or if the shares that Telecom shareholders would receive as a result of such merger or spin-off would also be admitted to the public offering regime or listed in Argentina.

Appraisal rights are extinguished if the resolution is subsequently overturned at another Shareholders’ Meeting held within sixty days of the expiration of the time period during which absent shareholders may exercise their appraisal rights.

Payment on the appraisal rights must be made within one year of the date of the Shareholders’ Meeting at which the resolution was adopted. In the case of voluntary withdrawal from the public offering regime or listing of Telecom Argentina’s shares, the payment period is reduced to sixty days from the date of the approval of the voluntary withdrawal.

Notwithstanding the foregoing, should Telecom Argentina decide to voluntarily withdraw its shares from the public offering regime or listing in Argentina, pursuant to Section 97 of Law No. 26,831, a tender offer by Telecom Argentina at a fair price (precio equitativo) to be determined in accordance with certain parameters must be conducted before such withdrawal.

Liquidation

Upon liquidation of Telecom Argentina, one or more liquidators may be appointed to wind up its affairs. All outstanding shares of common stock will be entitled to participate equally in any distribution upon liquidation.

In the event of liquidation, the assets of Telecom Argentina shall be applied to satisfy its debts and liabilities. If any surplus remains, it shall be distributed to the holders of shares in proportion to their holdings.

Acquisitions of 5% or more of the voting stock of a public company

Under Argentine law, any person acquiring 5% or more of the voting stock of a public company must inform the CNV in writing of the acquisition of such voting stock. Additionally, such person must inform the CNV in writing of each additional acquisition of the voting stock of that particular company, until such person acquires control of that company, in which case the person shall be subject to a different ownership disclosure regime.

Powers of the Directors

The bylaws of Telecom Argentina do not contain any provision regarding the ability to vote on a proposal, arrangement or contract where a director is an interested party. Under Argentine law, a director may sign contracts with the company related to the company’s activities so long as the conditions are on an arm’s-length basis. If such contract does not meet such conditions, the agreement may only be subscribed with the prior approval of the Board of Directors or, in absence of quorum, with the approval of the Supervisory Committee.

Such transactions must be dealt with at the following Shareholders’ Meeting, and if such meeting does not approve them, the Board of Directors or the Supervisory Committee (as the case may be) are jointly responsible for any damages caused to the company. Argentine law also requires that if a director has a personal interest contrary to Telecom Argentina’s, he or she must notify the Board of Directors and to the Supervisory Committee. The director must refrain from participating in any deliberations or he or she may be held jointly and severally liable for all damages caused to Telecom Argentina as a result of the conflict of interests.

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Additionally, Law No. 26,831 dictates that the contracts between a company and a director (that qualifies as a “related party”) when they exceed 1% of the shareholders’ equity of the company, it must be submitted to prior approval of the Audit Committee or of two independent evaluation firms to ensure that the transaction is in accordance with market conditions. Such transactions must also be approved by the Board of Directors and reported to the CNV and the exchanges on which the shares of the company are listed. If the Audit Committee or the independent evaluation firms have not determined the terms of the transaction to be “according to market conditions,” then the contract in question must be submitted for consideration at a Shareholders’ Meeting.

Section 10 of the bylaws of Telecom Argentina establishes that the remuneration of the members of the Board of Directors is to be determined by the shareholders at their Annual Ordinary Shareholders’ Meeting. The Audit Committee is to issue a prior opinion on the reasonability of the proposed remuneration, which the Board of Directors submits for approval to the shareholders. Directors cannot vote on the resolution concerning their compensation or the compensation of any other director.

The bylaws of Telecom Argentina do not contain any provision regarding the possibility of granting loans to members of the Board of Directors or to the company executives.

Members of the Board of Directors of Telecom Argentina or its subsidiaries or parent company cannot be appointed as members of the Supervisory Committee.

The bylaws of Telecom Argentina do not establish a maximum age to be member of the Board of Directors.

Neither the bylaws of Telecom Argentina nor any Argentine law require the members of the Board of Directors to be shareholders.

Limitations on foreign investment in Argentina

Under the Argentine Foreign Investment Law, as amended (the “FIL”), the purchase of stock by an individual or legal entity domiciled abroad or by a local company of foreign capital (as defined in the FIL) constitutes a foreign investment subject to the FIL. Foreign investments generally are unrestricted. However, foreign investments in certain industries, such as broadcasting, are restricted as to percentage. No approval is necessary to purchase Class B Shares. The FIL does not limit the right of non-resident or foreign owners to hold or vote the Class B Shares, and there are no restrictions in Telecom Argentina’s bylaws limiting the rights of non-residents or non-Argentines to hold or to vote on Telecom Argentina’s Class B Shares. Notwithstanding the foregoing, regulations implemented by the CNV require that all shareholders that are foreign companies who are registered to participate at a Shareholders’ Meeting should bear adequate proxy representation according to argentine law. To acquire participation in a company in Argentina, non-Argentine companies are required to comply with the share ownership registration requirements with the Argentine Registry of Commerce as provided for under Section 123 of the GCL.

Change of Control

There are no provisions in the bylaws of Telecom Argentina which may have the effect of delaying, deferring or preventing a change in control of Telecom Argentina and that would only operate with respect to a merger, acquisition or corporate restructuring involving Telecom Argentina or any of its subsidiaries, except in case of merger (Section 10. VI of the Bylaws).

Under Law No. 26,831, modified by Law N° 27,440, a party which has individually or through “actuación concertada” (concerted action) attained control in a publicly traded corporation must offer a fair price (precio equitativo) as defined in Law No. 26,831, as amended, to acquire all shares of such corporation.

Under Decree No. 764/00, as amended by Decree No. 267/15, the loss of control of a licensee company such as Telecom Argentina is subject to the approval of the ENACOM.

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MATERIAL CONTRACTS

For information regarding our material contracts, see “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources” and “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders— Telecom Shareholders’ Agreement”. We are not a party to the Telecom Shareholders’ Agreement.

FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN ARGENTINA

On September 1, 2019, the Argentine government issued Decree No. 609/19 (the “FX Decree”) by which foreign exchange controls were temporarily reinstated until December 31, 2019, which were subsequently extended, not providing for a specific expiration date. The FX Decree: (i) reinstated exporters’ obligation to repatriate proceeds from exports of goods and services in the terms and conditions set forth by the BCRA and liquidate such foreign currency-denominated proceeds to Pesos through the foreign exchange market (the “FX Market”); and (ii) authorized the BCRA to (a) regulate the access to the FX Market for the purchase of foreign currency and outward remittances; and (b) establish regulations to prevent practices and/or transactions aimed to bypass the measures adopted on the FX Decree.

A consolidated text of the currently applicable exchange control regulations can be found in Communication “A” 6844/19, as amended by subsequent BCRA Communications, issued by the BCRA on December 6, 2019. Below is a description of the main exchange control measures in effect as of the date of this Annual Report, that apply to the Company and its operations:

Reporting Regime

On December 28, 2017, the BCRA replaced the reporting regimes set forth on Communications “A” 3602 and “A” 4237 with Communication “A” 6401 (and supplemental Communication “A” 6795, and as further amended and supplemented), a unified regime applicable from December 31, 2017 (the “External Assets and Liabilities Reporting Regime”). Under such regime, (i) all Argentine residents (both legal entities or natural persons) with external liabilities at the end of any quarter, or residents who have cancelled any of its external liabilities during such period, must file the report within 45 calendar days from the end of the quarter, and (ii) residents whose foreign assets or debts flow or balance equal to or in excess of the equivalent of US$50 million in Pesos at the end of each calendar year, are required to file within 180 calendar days from December 31, an annual report where supplements, amendments or confirmation of information contained in previously quarterly filings can be included.

The report distinguishes five categories of foreign holdings: (i) equity participations and investment funds; (ii) non-negotiable debt instruments; (iii) negotiable debt instruments; (iv) financial derivatives; and (iv) real estate.

Access to the FX Market for repayment of external financial indebtedness and other transactions are conditioned to the debtor’s compliance with the External Assets and Liabilities Reporting Regime.

Specific provisions for inward remittances

Exports of services

Pursuant to Section 2.2 of Communication “A” 6844, exporters shall repatriate and settle in the FX Market, the proceeds from exports of services within 5 business days following either the perception of funds in the country or abroad, or their accreditation in foreign accounts.

Subject to certain requirements, the proceeds may be applied to the payment of principal and interest under foreign financial debt or registered domestic debt securities, or to the repatriation of foreign investments.

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Sale of non-financial non-produced assets

Pursuant to Section 2.3 of Communication “A” 6844, the proceeds in foreign currency of the sale of non-financial non-produced assets must be repatriated and settled in Pesos in the FX Market within 5 business days following either the perception of funds in the country or abroad, or their accreditation in foreign accounts.

External financial indebtedness

Servicing of foreign financial debt (disbursed after September 1, 2019) with access to the FX Market for the payment of principal and interest thereunder, is subject to prior compliance with the requirement that the proceeds of such foreign financial debt must be transferred to the Argentine financial system and liquidated through the FX Market.

Duly registered securities that are denominated and payable in foreign currency in Argentina

The proceeds from the issuance of duly registered debt securities by Argentine residents, denominated and payable in foreign currency in Argentina, must be settled for Pesos in the FX Market as a condition for the access to the FX Market for the payment of principal and interest thereunder.

Exceptions

The settlement requirement will not apply in any of the above cases to the extent all of the following conditions are met: (a) funds are credited to foreign-denominated accounts in the name of the resident, opened at local banks; (b) proceeds are repatriated to Argentina within the applicable time period established by the BCRA; (c) funds are simultaneously applied to conduct payments for which regulations allow access to the FX Market, subject to applicable limitations; (d) if funds are proceeds of new foreign financial indebtedness and are applied to prepay foreign currency-denominated debt with local financial entities, such new foreign financial indebtedness must have a weighted average life greater than the prepaid local indebtedness, and (e) the application of this exception mechanism is tax-neutral.

Specific provisions for outflow of funds through the FX Market

Payment of services provided by non-residents

Pursuant to Section 3.2 of Communication “A” 6488, residents may access the FX Market for payment of services provided by non-residents to the extent there is sufficient evidence to prove the existence of the rendered service. Access to the FX Market for the payment of commercial debt shall be granted as of the debt’s due date, upon verification that it has been registered in the most recent External Assets and Liabilities Reporting Regime report; prior access is conditioned to BCRA’s authorization.

Subject to certain exceptions, prior authorization from the BCRA is required to access the FX Market for the payment of services provided by non-resident related parties.

Payment of dividends and corporate profits

In accordance with Section 3.4 of Communication “A” 6844, access is granted to the local FX Market to pay dividends to non-resident shareholders, subject to the following conditions:

●Maximum amounts: The total amount of transfers executed through the FX Market as of January 17, 2020 for payment of dividends to non-resident shareholders may not exceed 30% of the total value of the new capital contributions made in the local company that had been entered and settled through the FX Market as of the abovementioned date. The total amount paid to non-resident shareholders shall not exceed the corresponding amount denominated in Argentine Pesos that was determined by the shareholders' meeting.

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●Minimum period: Access to the FX Market will only be granted after a period of not less than thirty (30) calendar days has elapsed as of the date of the settlement of the last capital contribution that is considered for determining the aforementioned 30% cap.

●Documentation requirements: Dividends must result from closed and audited balance sheets. When requesting access to the FX Market for this purpose, evidence of the definitive capitalization of the capital contribution must be provided or, in lack thereof, evidence of the initiation of the process of registration of the capital contribution before the IGJ shall be provided. In this case, evidence of the definitive capitalization shall be provided within 365 calendar days from the date of the initial filing with the Public Registry of Commerce. Also, it must be verified that the operation has been declared, if applicable, in the most recent External Assets and Liabilities Reporting Regime report.

Payment of principal and interest under external financial indebtedness

Foreign financial debt and securities which are registered with a foreign public registry may be serviced with access to the FX Market, if the following conditions are met:

●evidence of the settlement of foreign currency in the FX Market in an amount equal to the amount of the relevant debt;

●such loan must have been reported to the BCRA in the in the most recent External Assets and Liabilities Reporting Regime report;

●access is being carried out no earlier than three business days prior to the scheduled payment date;

●in case the lender is a related party, prior authorization from the BCRA for the access to the FX Market for the payment of financial debt, which is required until June 30, 2022, shall not be necessary provided (i) the proceeds have been settled for Pesos in the FX Market as of October 2, 2020, and (ii) the indebtedness has an average life of at least two years; and

●if any principal payment date takes place before June 30, 2022, the borrower must comply with the presentation of a Refinancing Plan, as described below.

If such remittance is used to make a prepayment more than three (3) business days prior to the scheduled payment date, then:

(1)if the prepayment is made simultaneously with the disbursement of a new foreign financial indebtedness: (a) the prepayment shall be made simultaneously with the transfer to Argentina and settlement for Argentine Pesos of the proceeds from a new financial debt, (b) the average life of such new debt shall be longer than the average life of the debt that is being prepaid, and (c) the accumulated amount of the principal maturities of the new debt shall not exceed at any time the amount that would have accumulated the principal maturities of the debt being prepaid;

(2)if the prepayment is made within the process of a securities exchange: (a) the prepayment shall be made as part of an exchange of securities issued by the client, (b) the prepaid amount correspond to the accrued interest on the securities as of the exchange closing date, (c) the average life of such new securities shall be longer than the average life of the securities being exchanged, and (d) the accumulated amount of the principal maturities of the new securities shall not exceed at any time the amount that would have accumulated the principal maturities of the securities being prepaid; and

(3)if the prepayment is made in the context of a refinancing plan (as described below): (a) the refinancing plan shall comply with the requirements set forth in the BCRA rules, (b) access to the FX Market shall take place no more than 45 days prior to the scheduled payment date, (c) the amount of  interest paid shall not exceed the amount of accrued interest on the refinanced debt as of the date of the closing of the refinancing, and (d) the accumulated amount of the principal maturities of the new debt shall not exceed at any time the amount that would have accumulated the principal maturities of the debt being prepaid.

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Access may also be granted when (i) the purchased funds are deposited in the client’s foreign currency accounts in local financial entities, (ii) access takes place no more than 5 business days prior to the applicable time period, (iii) amount purchased daily does not exceed 20% of the total amount to be paid on the scheduled payment date, and (iv) the intervening financial entity has verified that the debt being serviced is in compliance with the FX regulations. The remaining funds that are not used for the payment shall be settled in the FX Market within 5 business days following the payment date.

Duly registered securities that are denominated and payable in foreign currency in Argentina between residents

In accordance with Section 3.6 of Communication “A” 6844, access to the FX Market for the payment of foreign currency denominated obligations between Argentine residents executed as of September 1, 2019 is prohibited, except the principal and interest payments of (i) loans in foreign currency granted by local financial entities (including payments of credit cards); (ii) the issuance of debt securities for the refinancing of the debt transactions entered into as of September 1, 2019 that result in an increase in the average life of the debt; (iii) the issuance of debt securities with public registry in Argentina as of November 29, 2019, denominated, subscribed and payable in foreign currency, to the extent the proceeds have been settled through the FX Market; (iv) the issuance of debt securities with public registry in Argentina as of November 29, 2019, denominated in foreign currency and payable in foreign currency outside of Argentina or in Argentina, to the extent their average is of at least two years and their delivery to holders has permitted the issuer to comply with the limits of the refinancing plan; and (v) the issuance of debt securities with public registry in Argentina as of January 7, 2021, denominated and payable in foreign currency in Argentina, to the extent they were issued to refinance preexisting debts with an increase in the average life, when applicable, to the amount of refinanced capital, the interests accrued up to the date of refinancing, and, if the new debt securities do not register principal maturities in the first two years, an amount equivalent to the interest that would accrue in the first two years for the debt that is refinanced prior to maturity and/or for the postponement of the refinanced principal and/or for the interest that would accrue on the amounts thus refinanced.

Additionally, the prohibition does not apply to obligations in foreign currency between residents executed through public deeds or public registries on or before August 30, 2019, and to foreign currency loans granted by local financial entities that were outstanding as of August 30, 2019.

Access to the FX Market before the scheduled payment date shall be subject to prior authorization by the BCRA, except in certain situations and to the extent the relevant conditions are met, including, without limitation:

1)in the case of loans granted by local financial entities, the prepayment is made simultaneously with the settled proceeds of a new foreign financial debt, the average life of the new debts exceeds the remaining average life of the debt being prepaid, and the accumulated amount of the principal maturities of the new debt shall not exceed at any time the amount that would have accumulated the principal maturities of the debt being prepaid;

2)if the prepayment is made within the process of a securities exchange, see item 2 under “Payment of principal and interest under external financial indebtedness” above; and

3)if the prepayment is made in the context of a refinancing plan (as described below), see item 3 under “Payment of principal and interest under external financial indebtedness” above.

Access to the FX Market by local trusts for principal and interest payments

Pursuant to Section 3.7 of Communication “A” 6844, local trusts created to guarantee principal and interest payments by resident debtors may access the FX Market in order to make such payments at their scheduled maturity, to the extent that, pursuant to the current applicable regulations, the debtor would have had access to the FX MARKET to make such payments directly.

Mandatory Refinancing Plan

By means of Communication “A” 7,106 (as amended and supplemented), the BCRA established the requirement, for those private sector companies and financial institutions with scheduled principal maturities on any external financial debt (other than intercompany debt) and dollar-denominated local securities between October 15, 2020 and March 31, 2021 (subsequently extended to June 30, 2022), of filing a refinancing plan with the BCRA to be based on the following standards:  

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a) access to the FX Market shall be granted to purchase foreign currency to make payments of services of principal for up to 40% of the principal amount due on such period only; and

b) at least 60% of the principal amount due on such period shall be refinanced with a new external indebtedness with an average life of at least 2 years.

The 40% limit may be increased to the same extent as the debtor’s settlements on the FX Market as of October 9, 2020 for foreign financial debts or debt securities with public registry abroad or in Argentina denominated in foreign currency (in the latter case, provided that they meet the relevant requirements described above).

This mandatory refinancing shall not apply to: (a) indebtedness with international organizations or their associated agencies or guaranteed by them; (b) indebtedness granted by official credit agencies or guaranteed by them; (c) indebtedness incurred as from January 1, 2020, which proceeds have been repatriated and settled in the FX Market; (d) new indebtedness, incurred as from January 1, 2020, which allowed prior refinancing plans to be achieved; (e) holdouts of refinanced indebtedness that met the requirements set forth in Communication “A” 7106; and (f) payments of principal for an amount no exceeding US$ 2,000,000 per month.

Derivatives transactions

Section 3.12 of Communication “A” 6844 provides that derivative transactions, including payment of premium, constitution of guarantees and settlement of futures, forwards, options and other derivatives, that settle in Argentina, shall be made in Pesos.

Likewise, access to the FX Market may be granted for the payment of premiums, creation of collaterals and settlements in connection with interest rate hedge agreements for foreign debt declared and validated, if applicable, in the External Assets and Liabilities Reporting Regime, as long as such agreements do not cover higher risks than external liabilities of the recorded debtor’s interest rate risk being covered.

An entity authorized to operate in the FX Market must be designated by the debtor to track the operation and an affidavit in which the debtor undertakes to repatriate and settled the funds into Pesos that are in favor of the local client as a result of such operation, or as a result of the release of the funds of the constituted as collateral, must be provided within the following 5 business days.

Additional information requirements

In addition, access to the FX Market for the purchase of foreign currency in all of the aforementioned circumstances is also subject to the compliance by the client of the following information requirements:

(A) the “Anticipo de operaciones cambiarias” regime, pursuant to which the client must disclose to the intervening financial entity any purchase of foreign currency that equals or exceeds a daily threshold of US$10,000, two business days in advance;

(B) the Foreign Liquid Assets Holdings affidavit (Communication No. 7030, as amended), stating that (1) all of the foreign currency that the client holds in Argentina is deposited in local bank accounts and that it does not have more than US$100,000 in available foreign liquid assets (excluding funds deposited abroad that cannot be used because they are reserve funds or guarantee funds set up in accordance with the requirements of foreign indebtedness agreements or funds set up to guarantee foreign derivative transactions); and, at the beginning of the day in which it requests access to the FX Market, subject to certain exceptions, and (2) the client undertakes to settle in Pesos through the FX Market, within five business days of its availability, those foreign proceeds resulting from the collection of loans granted to third parties, the collection of a term deposit or the sale of any type of asset, when the asset has been acquired, the deposit constituted or the loan granted after May 28, 2020. Such amount may be exceeded provided the amount in excess (a) was used on the same date to make payments that would have had access to the local exchange market; (b) was transferred in favor of the client to a correspondent account of a local entity that holds a foreign exchange authorization; (c) consists in funds deposited in foreign bank accounts that result from collections of exports of goods and/or services or advances, pre-financing or post-financing of exports of goods granted by non-residents, or the sale of non-produced non-financial assets; for which the 5-working day period has not elapsed; or (d) consists in funds deposited in foreign bank accounts resulting from foreign financial indebtedness and its amount does not exceed the equivalent to be paid for principal and interests in the next 365 calendar days; and

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(C) the Transactions with Public Securities affidavit (Communication No. 7001, as amended), where the client must acknowledge that it has not sold or exchanged Argentine-issued securities for foreign currency or external assets, transferred them to a securities account outside of Argentina, or acquired in Argentina securities issued by non-residents with settlement in Pesos, during a 90-day term prior to the date thereof, and that it will refrain from entering into any of those transactions for 90-day term therefrom. Additionally, when the client is an entity, the affidavit must include (i) the details of persons that directly control the entity, and (ii) the declaration that, at the time of the access to the FX Market and the 90 days prior to such request, it has not delivered foreign currency nor local liquid assets (except for funds deposited in local financial entities), in Argentina, to any person that directly controls it, outside of normal operations of acquisition of goods and services between residents.

Furthermore, by means of Communication “A” 7348, the BCRA included the possibility for clients who register settlements of new foreign financial indebtedness and have a certification issued by an entity stating that such indebtedness (i) has an average life of not less than 2 (two) years and shows no principal maturities until at least 3 (three) months after its settlement in the foreign exchange market;  and (ii) the amount of the certifications issued by the entity under such indebtedness does not exceed the amount entered and settled by the foreign exchange market as of August 27, 2021, shall be exempted from the requirement of prior approval by the BCRA to access the foreign exchange market for the payment as from the maturity of the principal of commercial debts for the import of goods and services outstanding as of June 30, 2021, under the provisions of FX Regulations Sections 10.11. and 3.2., respectively. The certification may be used within 5 (five) working days of the settlement of the funds of the new foreign financial indebtedness and the issuing entity must deliver it to the entities through which the client wishes to access the foreign exchange market.

In addition, the entity must have a sworn statement from the client declaring that: (i) it has not made use of this mechanism for an amount exceeding the equivalent of US$10 million including the certification requested; and (ii) the new foreign financial indebtedness shall not be included in the provisions of Sections 3.5.3.1., 3.6.4.2., 3.17.3., 7.9. and 7.10. of the FX Regulations.

Repayment of principal and interest of imports of goods and services.

Pursuant to Section 3.3 of Communication “A” 6844, access to the FX Market for the repayment of principal and interest of imports of goods and services shall be granted, provided that the operation has been declared, if applicable, in the last overdue presentation of the External Assets and Liabilities Reporting.

BCRA’s prior approval will be required to access the FX Market for the repayment of debts for imports of goods and services prior to the scheduled maturity of such indebtedness.

The BCRA sets forth different requirements depending on whether it relates to the payment of imports of goods with customs clearance or the payments of import of goods pending customs clearance. As mentioned below, the imports and import payments monitoring system (SEPAIMPO) has been reinstated, setting forth rules governing such monitoring process and exceptions thereof.

In that sense, the local importer must designate a local financial entity to act as a monitoring bank, which will be responsible for verifying compliance with the applicable regulations, including, among others, the liquidation of import financing and the entry of imported goods.

For the complete set of regulations regarding payment of imports of goods and services, see Section 10 of BCRA’s FX regulations.

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TAXATION

Argentine taxes

The following summary of certain Argentine tax matters is based upon the tax laws of Argentina and regulations thereunder as of the date of this Annual Report and is subject to any subsequent changes in Argentine laws and regulations which may come into effect after such date. This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of such securities. No assurance can be given that the courts or tax authorities responsible for the administration of the laws and regulations described in this Annual Report will agree with this interpretation. Holders should carefully read “Item 3—Key Information—Risk Factors—Risks Relating to Telecom Argentina’s Shares and ADSs—Changes in Argentine tax laws may adversely affect the tax treatment of our Shares or ADSs” in this Annual Report and consult their tax advisors regarding the tax treatment of the Class B Shares underlying ADSs and ADSs.

Taxation of Dividends

Dividends to be distributed out of earnings accrued in fiscal years starting on or after January 1, 2018, are subject to the tax treatment, based on the enactment of a comprehensive tax reform -Law No. 27,430-, published in the Official Gazette on December 29, 2017, and generally effective since January 1, 2018.

Pursuant to Law No. 27,430, amended by Law No. 27,541, published in the Official Gazette on December 23, 2019, dividends and other profits paid in cash or in non-cash assets —except for stock dividends—by companies and other entities incorporated in Argentina referred to in the Argentine Income Tax Law (the “Income Tax Law”), Sections 73 (O.T 2019) (a)(1), (2), (3), (6), (7) and (8), and Section 73(b) out of retained earnings accumulated in fiscal years starting on or after January 1, 2018, would be subject to withholding tax at a 7% rate (on profits accrued during fiscal years starting January 1, 2018 to December 31 2020), and at a 13% rate (on profits accrued in fiscal years starting January 1, 2021 and onwards), provided that they are distributed to Argentine resident individuals and foreign shareholders .  On June 16, 2021, Law No. 27,630 was published in the Official Gazette, whereby amendments were introduced to the corporate Income Tax.  Pursuant to this law, dividends will be taxed at 7%, also on  profits accrued in fiscal years starting January 1, 2021 and onwards.

No dividend withholding tax applies if dividends are distributed to the aforementioned Argentine corporate entities required to assess the dividend withholding tax.

Income Tax - Capital gains

The results derived from the transfer of shares and other equity interests, bonds and other securities of Argentine companies are subject to Argentine capital gains tax, regardless of the type of beneficiary who realizes the gains.

a.    Argentine corporate´s capital gains tax

Capital gains obtained by Argentine corporate taxpayers (in general, entities organized or incorporated under Argentine law and local branches of non-Argentine entities) derived from the sale, exchange or other disposition of shares are subject to income tax at the corporate rate on net income.

b.    Individual resident’s capital gains tax

Law No. 27,430 established that as from January 1, 2018, gains realized by Argentine resident individuals (except for sole companies or commission agents) from the sale, transfer or disposition of shares, securities representing shares and certificates of deposit of shares are exempt from capital gains tax in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares were traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV. For periods prior to 2018, it is currently under discussion the extent of the exemption (established by Law No. 26,893 and its implementing Decree No. 2,334/13) applicable to the sale of shares and other securities through a stock exchange market, so as to determine whether it applies only sales of securities made in stock exchanges duly authorized by the CNV or in any stock exchanges.

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Pursuant Income Tax Regulatory Decree (O.T 2019), the conversion process by which individual residents change ADRs by excepted shares, will be considered a levied transaction at its value market price.

c.    Nonresident’s capital gains tax

Pursuant to Law No. 26,893, capital gains obtained by non-Argentine residents from the sale, exchange or other disposition of shares and other equity interests, bonds and other securities of Argentine companies were subject to capital gains tax until December 30, 2017, even if those transactions were entered into between nonresidents.

Law No. 27,430 provides that the capital gains tax applicable to nonresidents for transactions entered into between September 23, 2013 (when Law No. 26,893 became effective) and December 30, 2017, is still due and subsequent regulations stated the mechanism to have it paid. However, no taxes will be claimed to nonresidents with respect to past sales of Argentine shares or other securities traded in CNV’s authorized markets (such as ADSs) as long as the cause of the non-payment was the absence of regulations stating the mechanism of tax collection at the time the transaction was closed. AFIP General Resolution No. 4,227, which came into effect on April 26, 2018, stipulates that the income tax should be paid to the AFIP under the following procedures: (i) in case the securities were sold through an Argentine stock exchange market, and the withholding has been made, then the withholder must pay the tax, (ii) in case the securities were sold but not through an Argentine stock exchange market and there is an Argentine buyer involved, then the Argentine buyer should pay the income tax; and (iii) when both the seller and the buyer were foreign beneficiaries and the sale was not performed through an Argentine stock exchange market, the person liable for the tax is the buyer and the payment shall be made through an international bank via wire transfer to the AFIP. The payment of capital gains tax applicable for transactions entered into before December 30, 2017 was due on June 11, 2018.

In turn, Law No. 27,430 and the income tax regulatory Decree (O.T 2019), maintain the 15% capital gains tax (calculated on the actual net gain or a presumed net gain equal to 90% of the sale price) on the disposal of shares or securities by nonresidents. However, nonresidents are exempt from the capital gains tax on gains realized from the sale of (a) Argentine shares in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares were traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV; and (b) depositary shares or depositary receipts issued abroad, when the underlying securities are shares (i) issued by Argentine companies, and (ii) with authorization of public offering. The exemptions will only apply to the extent the foreign beneficiaries reside in, or the funds used for the investment proceed from, jurisdictions considered as cooperating for purposes of the exchange of tax information.

In addition, it is clarified that, from 2018 onward, gains from the sale of ADSs will be treated as from Argentine source.

In case the exemption is not applicable and, to the extent foreign beneficiaries do not reside in, or the funds do not arise from, jurisdictions not considered as cooperative for purposes of fiscal transparency, the gain realized from the disposition of shares would be subject to Argentine income tax at a 15% rate on the net capital gain or at a 13.5% effective rate on the gross price. In case such foreign beneficiaries reside in, or the funds arise from, jurisdictions not considered as cooperative for purposes of fiscal transparency, a 35% tax rate on the net capital gain or at a 31.5% effective rate on the gross price should apply. On December 9, 2019, the official list of "non-cooperating" jurisdictions for tax purposes was published by means of Decree No. 682/19. Argentine tax authorities are required to report any news to the Ministry of Finance to modify this list

1. Bosnia and Herzegovina

2. Brecqhou

3. Burkina Faso

4. State of Eritrea

5. Vatican City State

6. State of Libya

7. Independent State of Papua New Guinea

8. Plurinational State of Bolivia

9. British Overseas Territories Saint Helena, Ascension and Tristan da Cunha

10. Sark Island

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12. Solomon Islands

13. Federated States of Micronesia

14. Mongolia

15. Montenegro

16. Kingdom of Bhutan

17. Kingdom of Cambodia

18. Kingdom of Lesotho

19. Kingdom of Eswatini (Swaziland)

20. Kingdom of Thailand

21. Kingdom of Tonga

22. Hashemite Kingdom of Jordan

23. Kyrgyz Republic

24. Arab Republic of Egypt

25. Syrian Arab Republic

26. People´s Democratic Republic of Algeria

27. Central African Republic

28. Cooperative Republic of Guyana

29. Republic of Angola

30. Republic of Belarus

31. Republic of Botswana

32. Republic of Burundi

33. Republic of Cabo Verde

34. Republic of Côte d'Ivoire

35. Republic of Cuba

36. Republic of the Philippines

37. Republic of Fiji

38. Republic of The Gambia

39. Republic of Guinea

40. Republic of Equatorial Guinea

41. Republic of Guinea-Bissau

42. Republic of Haiti

43. Republic of Honduras

44. Republic of Iraq

45. Republic of Kenya

46. Republic of Kiribati

47. Republic of the Union of Myanmar

48. Republic of Liberia

49. Republic of Madagascar

50. Republic of Malawi

51. Republic of Maldives

52. Republic of Mali

53. Republic of Mozambique

54. Republic of Namibia

55. Republic of Nicaragua

56. Republic of Palau

57. Republic of Rwanda

58. Republic of Sierra Leone

59. Republic of South Sudan

60. Republic of Suriname

61. Republic of Tajikistan

62. Republic of Trinidad and Tobago

63. Republic of Uzbekistan

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64. Republic of Yemen

65. Republic of Djibouti

66. Republic of Zambia

67. Republic of Zimbabwe

68. Republic of Chad

69. Republic of the Niger

70. Republic of Paraguay

71. Republic of the Sudan

72. Democratic Republic of São Tomé and Príncipe

73. Democratic Republic of Timor-Leste

74. Republic of the Congo

75. Democratic Republic of the Congo

76. Federal Democratic Republic of Ethiopia

77. Lao People's Democratic Republic

78. Democratic Socialist Republic of Sri Lanka

79. Federal Republic of Somalia

80. Federal Democratic Republic of Nepal

81. Gabonese Republic

82. Islamic Republic of Afghanistan

83. Islamic Republic of Iran

84. Islamic Republic of Mauritania

85. People's Republic of Bangladesh

86. Republic of Benin

87. Democratic People's Republic of Korea

88. Socialist Republic of Vietnam

89. Togolese Republic

90. United Republic of Tanzania

91. Sultanate of Oman

92. British Overseas Territory Pitcairn, Henderson, Ducie and Oeno Islands

94. Tuvalu

95. Union of the Comoros

In such scenarios, according to AFIP General Resolution No. 4,227, the income tax should be withheld and paid to the AFIP under the following procedures: (i) in case the securities were sold by a foreign beneficiary, through an Argentine stock exchange market, the custodian entity should withhold and pay the tax if it is involved in the payment process; if it is not involved in the payment process but there is an Argentine buyer involved, the Argentine buyer should withhold the income tax (ii) in case the securities were sold by a foreign beneficiary, but not through an Argentine stock exchange market and there is an Argentine buyer involved, the Argentine buyer should withhold the income tax; and (iii) when both the seller and the buyer are foreign beneficiaries and the sale is not performed through an Argentine stock exchange market, the person liable for the tax shall be the legal representative of the seller of the shares or securities being transferred or directly by the seller, in the event that there was no local legal representative. In this case, the payment shall be made through an international bank via wire transfer to the AFIP.

Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from the holding and disposing of ADSs or Class B Shares.

Personal assets tax

Argentine companies, such as us, have to assess and pay the personal assets tax corresponding to their shareholders that are Argentine individuals and non-Argentine resident persons.

Pursuant to Law No. 27,541, as of December 31, 2021, 2020 and 2019, the tax rate is 0.50%, which is to be assessed on the proportional net worth value (valor patrimonial proporcional), of the shares as per the Argentine entity’s last financial statements

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prepared under Argentine GAAP without considering the effect arising from the changes in the purchasing power of the currency. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine domiciled individuals and/or foreign domiciled shareholders.

Extraordinary tax on wealth

On December 18, 2020,  Law No. 27,605 was published in the Official Gazette, which creates an extraordinary and one-time tax on wealth (also known as “Aporte Extraordinario y Solidario Para Ayudar a Morigerar los Efectos de la Pandemia'”) in order to face the effects of the coronavirus pandemic.

The extraordinary tax on wealth applies to individuals and undivided estates with assets of P$200 million or more as of the date of entry into force of the law, valued according to the rules of  the Personal Assets Tax law, regardless the treatment those assets have on that tax, with no deduction of non-taxable minimum amounts.

Individuals and undivided estates (entities are excluded), residents of Argentina, are taxed on their assets located in Argentina and abroad.

Argentine nationals with domicile or residence in non-cooperating or  low or non-taxation jurisdictions are considered as residents for purposes of  the extraordinary tax on wealth.

For resident taxpayers, the taxable assets also include all contributions to trusts or private interest foundations and other similar structures, participation in companies or other entities of any type -without tax personality and direct or indirect participation in companies, or other entities of any type-, existing as of the date of entry into force of the law.

Non-resident individuals and undivided estates are taxed only on their assets located in Argentina.

Residency of taxpayers is determined according to the legal criteria established in Sections 116 to 123 of Income Tax Law as of December 31, 2019.

The law provides that, when variations in assets subject to the tax during the 180 days immediately preceding the enactment of the law may lead to presume an intent to evade or avoid the tax, AFIP may, except evidence to the contrary, include those assets in the tax base.

The law provides for tax rates ranging from 2% up to 3.5% for assets located in Argentina, and  3% and 5.25% for foreign assets. Therefore, the payable tax may start at P$4 million. The special tax rates related to foreign assets will not apply in case of repatriation to Argentina of (i) cash, and (ii) the taxpayer’s financial assets or their proceeds, which represent at least 30% of such assets, within 60 days from the date of entry into force of the law.

On January 29, 2021, Decree No. 42/21 was published in the Official Gazette, regulating new extraordinary tax on wealth. Decree No. 42/21 allows taxpayers to value their local companies shares (governed by GCL) to be included on the taxable base under one of two options:

1) Consider the difference between assets and liabilities as of December 18, 2020, according to the financial statement prepared as of that date and only for this purpose, or

2) Consider the Company’s equity for the last financial year ended prior to December 18, 2020.

Option 1) should be used if option 2) does not generate an amount to be paid, and if the percentage of the shares has varied between the closing date of the last financial year ended prior December 18, 2020 and that date. The chosen option will apply to all shares held in different entities. Local entities in which taxpayers hold shares must provide information on the valuation of the shares.

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On February 8, 2021, AFIP Resolution No. 4,930/21 was published in the Official Gazette. AFIP Resolution No. 4,930/21 governs certain aspects of the aforementioned extraordinary tax on wealth, in addition to the provisions of Decree No. 42/21. AFIP Resolution No. 4,930/21.  modified by Resolutions No. 4,954/21 compels taxpayers assess and pay the tax on wealth before April, 16, 2021. On May 26, 2021 Resolution No. 4997/2021 was published in the Official Gazette General, through which the AFIP implemented a new payment facilities regime for the cancelation of the Wealth Tax, provided that the taxpayers have not previously accessed to a payment plan.

Taxpayers or responsible subjects may apply to the Regime up to September 30, 2021, and the debt, interests and fines may be regularized in up to two consecutive monthly installments, with an interest equivalent to the compensatory interest rate, and by making a payment on account of 30% of the consolidated debt.

In addition, AFIP implemented a new regime that analyzes variations in net worth that may have occurred within 180 days prior to the entry into force of Law No. 27,605, with a view to avoiding any evasive schemes derived from such variations. The following taxpayers must report their assets as of March 20, 2020:

a) Taxpayers of extraordinary tax on wealth;

b) Taxpayers not included in a), whose assets as of December 31, 2019 were valued -according to the Personal Assets Tax’s affidavit of such fiscal period- in an amount equal to or above P$130,000,000; and

c) Taxpayers not included in a), whose assets as of December 31, 2018 were valued -according to the Personal Assets Tax’s affidavit of such fiscal period- in an amount equal to or above P$80,000,000.

Both taxpayers included in b) and c) above must report their assets as of December 18, 2020.

Their informative affidavits must be submitted online between March 22, 2021 and April 30, 2021.

Value added tax

The sale, exchange or other disposition of Telecom Argentina shares and ADSs, and the distribution of dividends in connection therewith are exempted from the value added tax.

Tax on deposits to and withdrawals from bank accounts

Law No. 25,413, as amended, provided for the creation of a tax on deposits to and withdrawals from bank accounts to be levied on: (i) credits and debits in accounts held in financial institutions located in Argentina; (ii) the credits and debits referred to in (i) in which no bank accounts with Argentine financial institutions are used, whatever their denomination, the mechanisms used to carry out such transactions (including cash) and/or legal instrument involved; and (iii) other transactions or transfers and deliveries of funds regardless of the individual or entity that performs them and the mechanism used.

Law 27,541 provided that the debits generated by cash withdrawals in any form shall be deemed taxable transactions, except for those made from accounts whose holders are physical or legal persons that qualify as micro and small-sized enterprises and provide evidence thereof under the terms of Article 2 of Law No. 24,467.

Pursuant to Decree No. 380/01 (as amended), the following transactions shall be subject to Law No. 25,413: (i) certain transactions carried out by financial institutions in which open accounts are not used; and (ii) any movement or delivery of funds, even in cash, that any person, including Argentine financial institutions, makes in its own name or on behalf of a third party, whatever the means used for its execution. Resolution No. 2,111/06 (AFIP) provides that “movements or deliveries of funds” are those made through organized payment systems replacing the use of bank accounts.

Pursuant to Decree No. 409/18 (published in the Official Gazette on May 7, 2018), bank account holders subject to the general 0.6% tax rate levied on each bank debit and credit may consider 33% of the tax paid as a tax credit. Bank account holders subject to the 1.2% tax rate may consider 33% of the tax paid as a tax credit. In both cases, those amounts may be creditable against income tax or the special contribution on the capital of cooperatives. In the case of small and medium-sized enterprises, the percentage that may be creditable against income tax may be higher. The exceeding amount may not be offset against other taxes or transferred in favor of third parties, but it may be carried forward, until fully offset, to future fiscal periods.

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Article 10, subsection (s) of Decree No. 380, as amended, provides that movements recorded in special current accounts (Communication “A” 3250 of the Central Bank) shall not be subject to this tax if the holders of such accounts are foreign legal entities and the accounts are exclusively used in connection with financial investments in Argentina.

Article 10, subsection (a) of Decree No. 380, as amended, also provides for another exemption for certain transactions, including debit and credit transactions relating to accounts used exclusively for the transactions inherent to their specific activity and the drafts and transfers of which they are originators for the same purpose in the markets authorized by the CNV and their respective agents, stock exchanges that do not have organized stock markets, securities clearing houses, and settlement and clearing entities authorized by the CNV.

Turnover tax

Gross turnover tax could be applicable to Argentine residents on the transfer of shares and on the collection of dividends by our shareholders to the extent such activity is conducted on a regular basis within an Argentine province or within the City of Buenos Aires. However, under the Tax Code of the City of Buenos Aires, any transactions with shares, as well as the perception of dividends are exempt from gross turnover tax. Holders of the Class A, B, C and D Shares or ADSs are encouraged to consult a tax advisor as to the particular Argentine gross turnover tax consequences derived from holding and disposing of the Class A, B, C and D Shares or ADSs or ADSs.

Stamp taxes

Stamp tax is a provincial tax that is levied based on the formal execution of public or private instruments. Documents subject to stamp tax include, among others, all types of contracts, notarial deeds and promissory notes. Each Argentine province and the City of Buenos Aires have its own stamp tax legislation. Stamp tax rates vary according to the jurisdiction and type of agreement involved.

Other Taxes

There are no Argentine federal inheritances or succession taxes applicable to the ownership, transfer or disposition of Class A, B, C and D Shares.

Tax treaties

Argentina has signed tax treaties for the avoidance of double taxation with several countries, although there is currently no tax treaty or convention in effect between Argentina and the United States. On December 23, 2016, Argentina and the United States signed an agreement for the exchange of information relating to taxes, which entered into force on November 13, 2017, so the first fiscal period with respect to which information could be exchanged is 2018.

United States federal income taxes

The following discussion is a summary of certain U.S. federal income tax consequences for a U.S. holder (as defined below) of the acquisition, ownership and disposition of our ADSs or Class B Shares underlying ADSs, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of such securities, including alternative minimum tax and Medicare contribution tax on net investment income. This summary applies only to U.S. holders that hold ADSs or Class B Shares underlying ADSs as capital assets for U.S. federal income tax purposes and does not address investors that are members of a class of holders subject to special rules, such as:

● financial institutions;

● dealers in securities or currencies;

● dealers or traders in securities who use a mark-to-market method of tax accounting;

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● life insurance companies;

● persons that hold ADSs or Class B Shares underlying ADSs that are a hedge or that are hedged against interest rate or currency risks;

● persons that hold ADSs or Class B Shares underlying ADSs as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the ADSs or Class B Shares underlying ADSs;

● persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

● tax-exempt entities;

● persons that own or are deemed to own 10% or more of our stock, measured by voting power or value;

● persons who acquired ADSs or Class B Shares underlying ADSs pursuant to the exercise of an employee stock option or otherwise as compensation; or

● persons holding ADSs or Class B Shares underlying ADSs in connection with a trade or business conducted outside of the United States.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds ADSs or Class B Shares underlying ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding ADSs or Class B Shares underlying ADSs and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of the ADSs or Class B Shares underlying ADSs.

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change, possibly on a retroactive basis. In addition, this summary assumes the deposit agreement, and all other related agreements, will be performed in accordance with their terms. As mentioned above, there is currently no income tax treaty or convention in effect between Argentina and the United States.

U.S. holders should consult their tax advisors regarding the U.S., Argentine or other tax consequences of the acquisition, ownership and disposition of ADSs or Class B Shares underlying ADSs in their particular circumstances, including the effect of any state or local tax laws.

As used herein, the term “U.S. holder” means a holder that, for U.S. federal income tax purposes, is a beneficial owner of ADSs or Class B Shares underlying ADSs and is:

● a citizen or individual resident of the United States;

● a U.S. domestic corporation; or

● otherwise subject to U.S. federal income tax on a net income basis with respect to income from the ADSs or Class B Shares.

In general, for U.S. federal income tax purposes, holders of ADSs will be treated as the owners of the underlying Class B Shares represented by those ADSs. Accordingly, no gain or loss will be recognized if such holder exchanges ADSs for the underlying Class B Shares represented by those ADSs.

These statements assume that we are not, and will not become, a Passive Foreign Investment Company (PFIC), as described below.

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Distributions

To the extent paid out of our current or accumulated earnings and profits (as determined in accordance with U.S. federal income tax principles), the gross amount of distributions of cash or property made with respect to ADSs or Class B Shares underlying ADSs will generally be included in the income of a U.S. holder as ordinary dividend income. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, U.S. holders should expect that a distribution will generally be treated as a dividend. Dividends will not be eligible for the “dividends-received deduction” generally allowed to U.S. corporations under the Code. Dividends will be included in a U.S. holder’s income on the date of the U.S. holder’s (or in the case of ADSs, the depositary’s) receipt of the dividend.

In the event of a distribution of bonds or other property, U.S. holders of ADSs or Class B Shares should consult their tax advisors regarding the tax consequences to them of receipt of such bonds or other property (or, in the case of a holder of ADSs, the receipt of the proceeds of the sale or other disposition by the depositary of such bonds or other property).

In the event of a distribution of Pesos, the amount of the distribution will equal the U.S. dollar value of the Pesos received (including amounts withheld in respect of Argentine taxes), calculated by reference to the exchange rate in effect on the date such distribution is received (which, for holders of ADSs, will be the date such distribution is received by the depositary), whether or not the depositary or U.S. holder in fact converts any Pesos received into U.S. dollars. If the distribution is converted into U.S. dollars on the date of receipt, U.S. holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. Any gains or losses resulting from the conversion of Pesos into U.S. dollars after the date on which the distribution is received will be treated as ordinary income or loss of the U.S. holder and will be U.S.-source income or loss for foreign tax credit purposes.

Subject to certain exceptions for short-term (60 days or less) and hedged positions, the U.S. dollar amount of dividends paid to certain individuals or other non-corporate U.S. holders will be taxable at the preferential rates if the dividends are “qualified dividends”. Dividends paid on the ADSs are generally treated as “qualified dividends” if (1) the ADSs are readily tradable on an stablished securities market in the United States (such as the NYSE, where our ADSs are currently traded) and (2) we were not, in the year prior to the year in which the dividend was paid, and are not in the year in which the dividend is paid, a PFIC. Based on our consolidated financial statements and relevant market data, we believe that we were not a PFIC for U.S. federal income tax purposes with respect to our 2020 and 2021 taxable years. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market data, we do not anticipate becoming a PFIC for our 2022 taxable year or the foreseeable future, although there can be no assurance in this regard. If we were a passive foreign investment company for U.S. federal income tax purposes for any taxable year, U.S. holders of our ADSs could be subject to adverse U.S. federal income tax consequences. Based on existing guidance, it is not entirely clear whether dividends received with respect to the Class B Shares underlying ADSs will be treated as qualified dividends, because the Class B Shares underlying ADSs are not themselves listed on a U.S. exchange. U.S. holders should consult their tax advisors regarding the availability of the preferential dividend tax rates in light of their particular circumstances.

Distributions of additional shares in respect of ADSs or Class B Shares underlying ADSs that are made as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Sale or other disposition

Gain or loss realized by a U.S. holder on the sale or other disposition of ADSs or Class B Shares underlying ADSs will be subject to U.S. federal income tax as U.S.-source capital gain or loss, and will be long-term capital gain or loss if the U.S. holder has held the ADSs or Class B Shares underlying ADSs for more than one year. The amount of the gain or loss will be equal to the difference between the U.S. holder’s tax basis in those ADSs or Class B Shares and the amount realized on the disposition, in each case as determined in U.S. dollars. Long-term capital gains recognized by non-corporate taxpayers are subject to reduced tax rates. The deductibility of capital losses is subject to limitations. If an Argentine tax is withheld, or otherwise paid, on the sale or disposition of ADSs or Class B Shares underlying ADSs, a U.S. holder’s amount realized will include the gross amount of the proceeds of the sale or disposition before deduction of the Argentine tax. See “—Argentine Taxes—Income Tax-Capital gains” for a description of when a disposition may be subject to taxation by Argentina.

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Foreign tax credit considerations

Dividend distributions with respect to ADSs or Class B shares generally will be treated as “passive category” income from sources outside the United States for purposes of determining a U.S. holder’s U.S. foreign tax credit limitation. Subject to the limitations and conditions provided in the Code and the applicable U.S. Treasury Regulations, a U.S. holder may be able to claim a foreign tax credit against its U.S. federal income tax liability in respect of any Argentine income taxes withheld at the appropriate rate applicable to the U.S. holder from a dividend paid to such U.S. holder if the tax is treated for U.S. federal income tax purposes as imposed on the U.S. holder. Alternatively, the U.S. holder may be able to deduct such Argentine income taxes from its U.S. federal taxable income, provided that the U.S. holder elects to deduct rather than credit all foreign income taxes for the relevant taxable year. The rules with respect to foreign tax credits are complex and involve the application of rules that depend on a U.S. holder’s particular circumstances. Accordingly, U.S. holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Capital gains realized by a U.S. holder on the sale or other disposition of ADSs or Class B Shares underlying ADSs are generally exempt from tax under current Argentine law. However, if such tax is imposed in the future, it is possible that U.S. holders would be eligible to claim foreign tax credits in respect of such tax, subject to generally applicable restrictions under U.S. law. However, any gain realized on the sale or other disposition of ADSs or Class B Shares underlying ADSs will be treated as U.S. source income. Accordingly, even if foreign tax credits otherwise are available, an investor generally would not be able to use the foreign tax credit arising from any Argentine tax imposed on such disposition unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources.

In addition, amounts paid on account of the personal assets tax (as described in “—Argentine Taxes—Personal assets tax”) generally will not be treated as an income tax for U.S. federal income tax purposes and will consequently not be eligible for credit against a U.S. holder’s federal income tax liability. The rules governing foreign tax credits are complex, and U.S. holders should consult their tax advisors regarding the creditability and deductibility of foreign taxes in their particular circumstances.

Foreign financial asset reporting

Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders that fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or in part. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.

Information reporting and backup withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless the U.S. holder (1) provides a correct taxpayer identification number and certifies that it is not subject to backup withholding or (2) otherwise establishes an exemption from backup withholding. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

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DOCUMENTS ON DISPLAY

You may request a copy of these filings by writing or telephoning the offices of Telecom Argentina at General Hornos 690, (C1272AAB) Buenos Aires, Argentina. Telecom Argentina’s telephone number is 54-11-4968-4000. Our internet address is https://institucional.telecom.com.ar.

Telecom Argentina maintains a website at https://institucional.telecom.com.ar. The contents of the website are not part of this Annual Report.

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ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Summarized below are the financial instruments we held as of December 31, 2021, that are sensitive to changes in foreign exchange rates, market prices and interest rate, if any. As a matter of policy, we may enter into forward exchange contracts, foreign currency swaps or other derivatives to manage the exposure attributed to foreign exchange rate and interest rate fluctuations associated with the principal amount of our liabilities in foreign currencies. We use these instruments to reduce risk by creating offsetting market exposures. The instruments we hold are not held for financial trading purposes. No foreign exchange forward or other derivatives for speculative purposes were outstanding during the reporting periods covered by this Annual Report.

We do not have any other material market risk exposure.

a)       Foreign Exchange Rate Risk

Foreign exchange exposure arises from our funding operations and, to a lesser extent, our capital expenditures and expenses denominated in foreign currencies. The Peso/U.S. dollar exchange rate is determined by a free market with certain controls. See “Item 10—Additional Information—Foreign Investment and Exchange Controls in Argentina”.

Our results of operations are sensitive to changes in the Peso/dollar exchange rates because our primary assets are in Argentina and most of our revenues are denominated in Pesos (our functional currency) while some part of our liabilities are denominated in foreign currencies. However, Telecom Argentina and Núcleo had commercial debt nominated in U.S. dollars and other currencies. In addition, Núcleo maintains Guaraní denominated financial debt and accrues interest at a fixed rate. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Sources and Uses of Funds”.

Additionally, the Company has cash and cash equivalents, and investments denominated in U.S. dollars and other currencies that are also sensitive to changes in Peso/U.S. dollar exchange rates and contribute to reduce the exposure to commercial and financial obligations in foreign currency.

Actions taken by the Argentine government could cause future exchange rates to vary significantly from current or historical exchange rates. Fluctuations in exchange rates may adversely affect the value, translated or converted into U.S. dollars, of our net assets, earnings and any declared dividends. We cannot give any assurance that any future movements in the exchange rate of the Peso against the U.S. dollar and other foreign currencies will not adversely affect our results of operations, financial condition and cash flows. However, we believe that a significant depreciation in the Peso against major foreign currencies may have a material adverse impact on our capital expenditure program and in our operating expenses denominated in foreign currencies.  

Sensitivity to Exchange Rates Risk

Net liability position in foreign currency of Telecom amounted to P$214,016 million as of December 31, 2021. In order to reduce the net liability position in foreign currency, Telecom has DFI as of December 31, 2021 amounting to US$89 million, therefore, the net liability not hedged amounts to US$1,994 million as of that date.

Based on the composition of the consolidated statement of financial position as of December 31, 2021, which is a not hedged net liability position in foreign currency of US$1,994 million, Management estimates that an increase in the U.S. dollar exchange rate of 20% as described in the previous paragraph, plus or minus, would result in a variation of approximately P$40,964 million of the consolidated financial position in foreign currency.

b)       Sensitivity to Interest Rate Risk

Within its structure of financial debt, Telecom and its subsidiaries have bank overdrafts denominated in Argentine Pesos accruing interest at rates that are reset at maturity, notes and other financial entities’ loans denominated in Argentine pesos, U.S. dollar, RMB and Guaraníes that bear interest at fixed and variable rates.

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The Company has financial debts at variable rate, which amounts approximately to P$104,919 million as of December 31, 2021.In order to reduce the effect of changes in interest rates, Telecom has DFI that amounts to P$11,299  million as of December 31, 2021, that convert variable rates into fixed rates. Therefore, the net financial debt not hedged amounts to P$93,620 million as of December 31, 2021. Management believes that any variation of 100 bps in the agreed interest rates would  result in P$936 million gain / loss.

c)       Sensitivity Price Risk

The Company's investments in financial assets at fair value through profit or loss are subject to the risk of changes in market prices arising from fluctuations in the future value of these assets. The Company conducts an ongoing monitoring of the evolution of these assets' prices.

As of December 31, 2021, the total value of investments with changes in fair value recognized in net income amounted to P$10,786 million.

Management estimates that any 10% variation in the market price would result in P$1,079 million gain / loss.

This sensitivity analysis provides only a limited, point-in-time view of the market risk sensitivity of certain of the financial instruments. The actual impact of market foreign exchange rate changes on the financial instruments may differ significantly from the impact shown in the sensitivity analysis.

See Note 26 to our Consolidated Financial Statements for a description of financial risk management.

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ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

American Depositary Shares

The ADSs are issued by the Depositary under the Deposit Agreement dated as of May 7, 2021, among Telecom Argentina S.A., JPMorgan Chase Bank, N.A., as depositary, and the registered holders from time to time of the ADSs issued thereunder. The address of the Depositary’s principal executive office is 383 Madison Avenue, Floor 11, New York, New York 10179. Each ADS represents rights to five Class B Shares.

Depositary Fees and Charges

The Depositary collects its fees for delivery directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal. The Depositary also collects taxes and governmental charges from the holders of ADSs. The Depositary collects these fees and charges by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees (after attempting by reasonable means to notify the holder prior to such sale).

Persons depositing or withdrawing shares must pay: (1) US$5.00 for each 100 ADSs or portion thereof for issuances of ADSs, including issuances resulting from a distribution, sale or exercise of shares or rights or other property. Investors depositing shares or holders withdrawing deposited securities are charged fees and expenses in connection with stock transfers, taxes and other governmental charges, cable, telex and facsimile transmission and delivery charges imposed at such person’s request, transfer or registration fees for the registration of transfer of ADSs on any applicable register in connection with the deposit or withdrawal of ADSs and the Depositary’s expenses in connection with the conversion of foreign currency (2) a fee of US$0.05 or less per ADS held for any cash distribution made, or for any elective cash/stock dividend offered, pursuant to the Deposit Agreement, or a fee for the distribution or sale of securities, such fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities, but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to holders (3) an aggregate fee of US$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions) (4) a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary and/or any of its agents in connection with the servicing of the Shares or other deposited securities, the holding of foreign currency, the sale of securities (including, without limitation, Deposited Securities), the delivery of Deposited Securities or otherwise in connection with the Depositary's or its custodian's compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions).

The Depositary reimburses Telecom Argentina for certain expenses we incur in connection with the American depositary receipt program (the “ADR program”), subject to the agreement between us and the Depositary from time to time. These reimbursable expenses currently certain expenses incurred by the Company that are related to the establishment and maintenance of the ADR program upon such terms and conditions as the Company and the Depositary may agree from time to time. The Depositary may make available to the Company a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as the Company and the Depositary may agree from time to time. The Depositary may also agree to reduce or waive certain fees described above, that would normally be charged on ADSs issued to or at the direction of, or otherwise held by, the Company and/or certain shareholders of the Company. For the year ended December 31, 2021, the Depositary reimbursed Telecom Argentina approximately US$278,294.00 in connection with the ADR program.

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PART II

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

As of the date of this Annual Report, none of Telecom Argentina and its subsidiaries are in default on any outstanding indebtedness.

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.    CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Telecom’s Management, with the participation of our chief executive and financial officers, evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2021 (the “Evaluation Date”). Based upon that evaluation, our chief executive and financial officers have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Telecom’s Management is responsible for establishing and maintaining adequate internal control over financial reporting for Telecom as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Our internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. Internal control over financial reporting includes those policies and procedures that:

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Telecom;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures of Telecom are being made only in accordance with authorizations of Management and directors of Telecom; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Telecom’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Telecom’s Management conducted an evaluation of the effectiveness of Telecom’s internal control over financial reporting based on the framework in Internal Control—Integrated Framework 2013 issued by the COSO. Based on this evaluation, Telecom’s Management concluded that Telecom’s internal control over financial reporting was effective as of December 31, 2021. The effectiveness of Telecom’s internal control over financial reporting as of December 31, 2021 has been audited by PriceWaterhouse & Co. S.R.L., an independent registered public accounting firm, as stated in their report which is included herein.

Changes in Internal Control Over Financial Reporting

There were no other changes in our internal controls over financial reporting that occurred during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT

On April 28, 2021, the Board of Directors of Telecom Argentina appointed the members of the Audit Committee acting until this year´s Annual Shareholders´ Meeting and determined that Carlos Alejandro Harrison qualifies as Audit Committee financial expert. In conducting this evaluation, the Board of Directors took into account Mr. Harrison’s professional background and educational training.

As of the date of this Annual Report, the Board of Directors’ meeting for the appointment of the Audit Committee members for the fiscal year 2022 has not yet been held. Therefore, as of the date of this Annual Report, Carlos Alejandro Harrison, Martín Hector D’Ambrosio and Germán Horacio Vidal remain members of the Audit Committee. See “Item 6—Directors, Senior Management and Employees—The Board of Directors”.

ITEM 16B.    CODE OF ETHICS

This document provides the ethical principles to which Telecom Argentina and all members of the Board of Directors, the Supervisory Committee, the CEO, Managers and in general all those who work in the Company must abide.

Adjustments made to regulations in recent years and in matters of corporate governance, organization and implementation of preventive measures aimed at reducing the risk of conflict of interest and corrupt practices, and that are applicable to Telecom Argentina as a company subject to regime of public offering both in Argentina and the United States, have been taken into account for the formulation and approval of the Code of Ethics and Conduct.

No waivers, express or implicit, have been granted to any senior officer or member of the Board of Directors of Telecom Argentina with respect to any provision of the Code of Ethics and Conduct.

The Code of Ethics and Conduct is available on our website at https://institucional.telecom.com.ar/grupotelecom.html#en and the latest update was filed with the SEC on Form 6-K on August 11, 2021.

ITEM 16C.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table provides information on the aggregate fees for services rendered by our principal accountants (in millions of Pesos) for the years ended December 31, 2021 and 2020. Figures are not restated for inflation.

Services Rendered	2021	2020
Audit fees (1)	170.1	120.4
Audit related fees (2)	2.3	3.4
Tax fees (3)	8.2	7.1
All other fees (4)	1.3	38.3
Total	181.9	169.2

(1) Includes fees related to the integrated audit of the Consolidated Financial Statements as of December 31, 2021 and 2020, limited reviews of interim financial statements presented during 2021 and 2020, SEC filing reviews and other attestation services.

(2) Includes fees billed for professional services rendered by the principal accountant and not included under the prior category, mainly in connection with assurance services over non-financial information.

(3) Includes fees for permitted tax compliance and tax advisory services.

(4) Includes fees billed for products and services provided by the principal accountant, other than Audit Fees, Audit-Related Fees and Tax Fees. In 2021, all other fees include primarily includes fees paid for consulting services provided in connection with the implementation of the software for human capital management, subscription to business publications and other non-audit related permitted services. In 2020, all other fees include primarily includes fees billed for assistance in the framework of

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Processes and the review on technical and methodological issues regarding the S4 HANA SAP and fees for consulting services provided in connection with the implementation of the software for human capital management.

Audit Committee Pre-approval Policies and Procedures

On March 22, 2004, Telecom Argentina’s Board of Directors approved policies and procedures relating to the pre-approval of auditors’ services and other permitted services (collectively, “Pre-Approval Procedures”) for the engagement of any service provided by external auditors to Telecom Argentina and its subsidiaries. Telecom Argentina’s Board of Directors performed Pre-Approval Procedures until April 2004. As of April 2004, the date on which the Audit Committee came into effect, Pre-Approval Procedures were performed by the Audit Committee. Consequently, since that date, all auditors’ services were pre-approved by the Audit Committee.

The Pre-Approval Procedures provide for services that require:

● specific pre-approval—to be approved on a case-by-case basis; and

● general pre-approval—any category or general kind of service that come within the guidelines established to safeguard auditor independence and come within the maximum amounts set by the Audit Committee.

The Pre-Approval Procedures also provide for the following categorization of services:

“Prohibited services” are those services that external auditors are not allowed to provide based on prohibitions contained in the statutory rules of Argentina and the United States (i.e., bookkeeping; financial information system design and implementation; appraisal or valuation services, fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions; broker/dealer, investment adviser, or investment banking services; or expert services unrelated to the audit).

“Permitted Services” include (i) audit services; (ii) audit-related services; (iii) tax services; and (iv) other services such as permitted internal control advice. Moreover, the services included in each category were also detailed, and, where appropriate, any limits imposed on the provision thereof to ensure external auditors’ independence.

The Pre-Approval Procedures also require pre-approval for the following services:

● Annual audit and quarterly reviews of Telecom Argentina’s financial statements: the Audit Committee is required to approve the terms for the engagement and remuneration of such services.

● Other “Audit Services”: the Audit Committee is required to define the services that will be subject to general pre-approval on an annual basis, setting the annual service fee amount, or the annual amount allocated to each individual service category, or to each service, within which fee caps the provision shall receive general pre-approval.

● “Audit-related Services” and “Tax Services”: the Audit Committee is required to define the categories or types of services that will receive general pre-approval, provided that they fall within the annual fee cap set for that service and establish the guidelines for prior engagement of these services.

● Other Permitted Services: are not subject to general pre-approval, and any other services require specific pre-approval by the Audit Committee for each service.

● Delegation: the Audit Committee may solely delegate the specific pre-approval of services with any of its members that qualify as an independent director. An independent director must immediately report to the Audit Committee after engaging any service by delegation. Under no circumstances may the authority to either approve or pre-approve services be delegated to the Management.

● Disclosure of overall billed fees: external auditors shall include in their audit reports the information about the relationship between the overall fees paid in respect of Audit Services and in respect of services other than Audit Services. In addition, the Audit Committee shall, on a yearly basis, prepare a report to the Board of Directors, which will be included in this Annual

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Report, providing a detailed account of all fees invoiced by external auditors to Telecom Argentina and to its subsidiaries, grouped into four categories, namely: audit fees, audit related fees, tax consultation fees and all other fees.

● Additional requirements: the Audit Committee is required to adopt additional measures to fulfill its supervisory obligations related to external auditors’ duties, in order to ensure the independence from the Company, such as the review of a formal written statement by the external auditors outlining all relations existing between them and Telecom Argentina, in accordance with Rule No. 1 of the Independence Standards Board, and discussions with the external auditors and the methods and procedures that have been designed to ensure their independence.

● Amendments: the Audit Committee has authority to amend the Pre-Approval Procedures, rendering an account of any such amendment to the Board of Directors during the first meeting of the Board of Directors held after making the amendments.

If Telecom Argentina’s external auditors are to provide any service, the service must either be granted as general pre-approval or specific pre-approval under the Pre-Approval Procedures. The Pre-Approval Procedures require the Audit Committee to consider whether the services to be provided are consistent with the legal and professional rules in effect in Argentina and the United States relating to external auditors’ independence.

ITEM 16D.    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.    PURCHASES OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED PURCHASERS

Not applicable.

ITEM 16F.    CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.    CORPORATE GOVERNANCE

Telecom Argentina’s corporate governance practices differ from corporate governance practices of U.S. companies. Telecom Argentina maintains a detailed description of the significant differences in corporate governance practices on its website at https://institucional.telecom.com.ar/inversores/gobiernocorporativo.html, last updated February 2020.

The following is a summary of the material aspects in which Telecom Argentina’s corporate governance policies differ from those followed by U.S. companies under NYSE listing standards.

● Composition of the Board of Directors: The NYSE requires each Board of Directors to be composed of a majority of independent directors. Although this is not required under Argentine law, as of the date of this Annual Report, the eleven-member Board of Directors of Telecom Argentina has three regular directors and two alternate directors who qualify as “independent” according to SEC Rules.

● Annual Self-Evaluation of the Board of Directors: The NYSE requires the Boards of Directors of listed companies to conduct a self-evaluation at least annually, and report thereon, informing whether it and its committees are functioning effectively. Under Argentine law, the Board of Directors’ performance is evaluated at the Annual Ordinary Shareholders Meeting.

● Nominating/Corporate Governance Committee: NYSE listed companies are required to have a nominating/corporate governance committee. Neither Argentine law nor Telecom Argentina’s Bylaws require the creation of a nominating/corporate governance committee. In Argentina, it is unusual (though possible) for the Board of Directors to nominate new directors and the Board of Directors of Telecom Argentina refrains from making such proposals. Under Argentine law, the right to nominate

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and appoint directors is granted to shareholders. On certain occasions, the GCL delegates the right to designate directors to the Supervisory Committee.

● Compensation committee: NYSE listed companies are required to have a compensation committee composed entirely of independent directors. Neither Argentine law nor Telecom Argentina’s Bylaws require the creation of a Compensation committee. Telecom Argentina’s executive compensation matters are undertaken by Executive Committee and the Board of Directors. The compensation of the members of Telecom Argentina’s Board of Directors is determined by the shareholders at the Annual Ordinary Shareholders’ Meeting.

● Audit Committee hiring policies: The NYSE requires listed companies to have an Audit Committee which sets clear hiring policies for employees or former employees of the independent auditors. There is no such provision regarding the hiring of external auditors’ employees contained in Argentine law or Telecom Argentina’s bylaws.

According to the provisions of CNV Resolution No. 797/19, Telecom Argentina prepares and submits to the CNV, on an annual basis, a report which indicates and details the CNV’s recommended corporate governance practices as set forth in the CNV public offer regime, explains the practices followed by Telecom Argentina, and the reasons for any variation from practices recommended by the CNV. Telecom Argentina’s 2021 Corporate Governance Report was submitted to the CNV as part of the Statutory Annual Report dated March 9, 2022. Telecom Argentina’s Corporate Governance Reports submitted to the CNV can be accessed through the CNV’s website, www.cnv.gob.ar and Telecom Argentina’s website, https://institucional.telecom.com.ar.

ITEM 16H.    MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 17.    FINANCIAL STATEMENTS

The Registrant has responded to Item 18 in lieu of responding to this Item.

ITEM 18.    FINANCIAL STATEMENTS

Reference is made to pages F-1 through F-113.

The following financial statements are filed as part of this Annual Report:

	Page
Telecom Argentina S.A.:
Report of Independent Registered Public Accounting Firm (PCAOB ID 1349)	F-2
Consolidated Statements of Financial Position	F-7
Consolidated Income Statements	F-8
Consolidated Statements of Comprehensive Income	F-9
Consolidated Statements of Changes in Equity	F-10
Consolidated Statements of Cash Flows	F-12
Glossary of Terms	F-13
Notes to the Consolidated Financial Statements	F-15

ITEM 19.    EXHIBITS

Exhibits:

1.1	Estatutos Sociales (Bylaws) of Telecom Argentina, as amended and restated (English translation) (incorporated by reference to Telecom’s report on Form 6-K filed on October 19, 2021).
2.1	Amended and Restated Deposit Agreement among Telecom Argentina S.A., JPMorgan Chase Bank, N.A., as depositary , and all holders from time to time of ADRs issued thereunder, including the form of American Depositary Receipt, dated May 7, 2021 (incorporated by reference to Telecom’s registration statement on Form F-6 (No. 333-255672)).
2.2	Amended and Restated Indenture between Cablevisión S.A. as issuer, and Deutsche Bank Trust Company Americas, as trustee, paying agent, registrar and transfer agent, dated December 11, 2017 (included as Exhibit 4.3 of the Form 20-F filed by Telecom Argentina on March 26, 2019 and incorporated by reference herein).
2.3	Supplemental Indenture to the Amended and Restated Indenture between Telecom Argentina S.A. (as successor to Cablevisión S.A.) as issuer, Deutsche Bank Trust Company Americas, as trustee, paying agent, registrar and transfer agent and Banco Comafi S.A. (as successor to Deutsche Bank S.A.), as Argentine registrar and transfer agent, Argentine paying agent and representative of the trustee in Argentina, dated July 12, 2018 (included as Exhibit 4.4 of the Form 20-F filed by Telecom Argentina on March 26, 2019 and incorporated by reference herein).
2.4	Indenture between Telecom Argentina S.A., as issuer, Citibank, N.A. as trustee, paying agent, registrar and transfer agent and Citibank, N.A. as Argentine registrar and transfer agent and representative of the trustee in Argentina, dated July 18, 2019 (included as Exhibit 2.5 of the Form 20-F filed by Telecom Argentina on March 18, 2020 and incorporated by reference herein).

PART III TELECOM ARGENTINA S.A.

158

2.5	Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (included as Exhibit 2.6 of the Form 20-F filed by Telecom Argentina on March 18, 2020 and incorporated by reference herein.
3.1	Voting Trust Agreement between Cablevisión Holding S.A., VLG S.A.U., Fintech Telecom LLC, Fintech Advisory, Inc., Mr. Héctor Horacio Magnetto, Mr. José Antonio Aranda, Mr. Lucio Rafael Pagliaro and Mr. David Manuel Martínez Guzmán, dated April 15, 2019 (previously filed as Exhibit 99.9 to Telecom’s Schedule 13D filed on April 16, 2019 and incorporated by reference herein).
4.1	Telecom Shareholders’ Agreement among VLG Argentina LLC, CVH, Fintech Telecom, LLC, Fintech Media, LLC and Fintech Advisory Inc., dated July 7, 2017 (previously filed as Exhibit 32 to Telecom’s Schedule 13D filed on July 10, 2017 and incorporated by reference herein).
4.2	Preliminary Reorganization Agreement among Telecom, Nortel, Sofora and Personal, dated March 31, 2017 (included as Annex A of the registration statement on Form F-4 filed by Telecom on May 17, 2017 and incorporated by reference herein).
4.3	Preliminary Merger Agreement between Telecom and Cablevisión, dated June 30, 2017, and the related exhibits thereto (previously furnished on Form 6-K (File No. 001-13464) on August 28, 2017 and incorporated by reference herein).
4.4	Syndicated Loan Agreement between Telecom Argentina and Citibank, N.A., HSBC México S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander, S.A., as lenders, Citibank N.A., HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander S.A., as joint bookrunners and lead arrangers, Citibank N.A., as administrative agent and the Branch of Citibank N.A., established in the Republic of Argentina, as onshore custody agent, dated October 8, 2018 (included as Exhibit 15.6 of the Form 20-F filed by Telecom Argentina on March 26, 2019 and incorporated by reference herein).
4.5	Amendment Agreement to the Syndicated Loan Agreement between Telecom Argentina and Citibank, N.A., HSBC México S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander, S.A., as lenders, Citibank N.A., HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander S.A., as joint bookrunners and lead arrangers, Citibank N.A., as administrative agent and the Branch of Citibank N.A., established in the Republic of Argentina, as onshore custody agent, dated February 11, 2019 (included as Exhibit 15.7 of the Form 20-F filed by Telecom Argentina on March 26, 2019 and incorporated by reference herein).
4.6	Loan Agreement between Telecom Argentina and International Finance Corporation, dated March 4, 2019 (included as Exhibit 15.10 of the Form 20-F filed by Telecom Argentina on March 26, 2019 and incorporated by reference herein).
4.7	Amended and Restated Common Terms Agreement between Telecom Argentina and Inter-American Investment Corporation, dated February 4, 2020 (included as Exhibit 4.9 of the Form 20-F filed by Telecom Argentina on March 18, 2020 and incorporated by reference herein).
4.8	Amended and Restated IDB Invest Loan Agreement between Telecom Argentina and Inter-American Investment Corporation, dated February 4, 2020 (included as Exhibit 4.10 of the Form 20-F filed by Telecom Argentina on March 18, 2020 and incorporated by reference herein).

PART III TELECOM ARGENTINA S.A.

159

4.9	Amended IDB Invest Loan Agreement between Telecom Argentina and Inter-American Investment Corporation, dated December 15, 2021.
4.10	Amended Common Terms Agreement between Telecom Argentina and Inter-American Investment Corporation, dated December 15, 2021.
4.11	Amended IFC Loan Agreement between Telecom Argentina and International Finance Corporation, dated December 15, 2021.
8.1	List of Subsidiaries.
12.1	Certification of Roberto D. Nobile of Telecom Argentina S.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2	Certification of Gabriel Blasi of Telecom Argentina S.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1	Certification of  Roberto D. Nobile and Gabriel Blasi pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

PART III TELECOM ARGENTINA S.A.

160

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

	Telecom Argentina S.A.
	By:	/s/ GABRIEL BLASI
		Name:	Gabriel Blasi
		Title:	Chief Financial Officer
Date: March 22, 2022

161

TELECOM ARGENTINA S.A.

TELECOM ARGENTINA S.A.

Consolidated Financial Statements as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019

General Hornos 690

(1272) Ciudad Autónoma de Buenos Aires

Argentina

$: Argentine peso

US$: US dollar

$102.72 = US$1 as of December 31, 2021

F-1

TELECOM ARGENTINA S.A.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Telecom Argentina S.A.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Telecom Argentina S.A. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

F-2

TELECOM ARGENTINA S.A.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment – CGU in Argentina

As described in Notes 3.l), 3.v), 3.v.1) and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $ 379,220 million as of December 31, 2021, and the goodwill associated with the Argentinian business operations (“the Cash Generating Unit (CGU) in Argentina”) was $ 378,863 million as of December 31, 2021. Management conducts an impairment test as of December 31 of each year, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. Potential impairment is identified by comparing the recoverable value of the CGU in Argentina, which includes goodwill balance, to its carrying value. Recoverable value of the CGU is determined as the higher value between its fair value less costs of disposal and its value in use. Fair value less cost of disposal is calculated by management using the Company’s market capitalization value and value in use is estimated using a discounted cash flow model. The assessment of the recoverable value of the CGU in Argentina included significant judgments by management. As of December 31, 2021, the recoverable value of the CGU in Argentina was determined by management through the fair value less costs of disposal. To determine the fair value of the CGU in Argentina, the market capitalization value of the Company was adjusted for (i) the estimated fair value of other CGUs, (ii) the effect of the net liabilities not subject to this impairment test at their estimated fair value (iii) an estimated control premium and (iv) estimated disposal costs in an orderly transaction.

The principal consideration for our determination that performing procedures relating to the goodwill impairment assessment of the CGU in Argentina is a critical audit matter is that there was significant judgment applied by management when developing the assessment of the recoverable value of the CGU in Argentina, which was determined using fair value less costs of disposal. This, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to assess the fair value less costs of disposal of the CGU in Argentina and to evaluate adjustments made by management to the Company’s market capitalization value, including the estimated fair value of other CGUs, the effect of the net liabilities not subject to the impairment test at their estimated fair value and the estimated control premium. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

F-3

TELECOM ARGENTINA S.A.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the determination of the fair value less cost of disposal for the CGU in Argentina. These procedures also included, among others, evaluating the appropriateness of the fair value less costs of disposal determination for the CGU in Argentina; testing the completeness, accuracy, and relevance of underlying data used in the estimate; and evaluating the adjustments to the Company’s market capitalization value made by management, including (i)the estimated fair value of other CGUs (ii) the estimated fair value for the net liabilities not subject to the impairment test and (iii) the estimated control premium. Evaluating management’ adjustments to Company’s market capitalization value to determine the fair value less costs of disposal of the CGU in Argentina involved evaluating whether the assumptions used by management were reasonable considering the consistency with: (i) valuation techniques generally used to determine fair values, (ii) external market data and (iii) evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the methodology used by management to determine the fair value less costs of disposal and the reasonableness of the adjustments to the Company’s market capitalization value made by management.

Regulatory Disputes – Decree No 690/20 and Resolution No. 50/10

As described in Note 2 (c), the “Decree No. 690/20” (hereinafter as “DNU”) declared information and communication technology services as “Essential and Strategic Competition Public Services” and determined that the prices of those services shall be regulated by ENACOM. In response to this regulation, the Company initiated legal proceedings before the Federal Court on Administrative Litigation Matters challenging the constitutionality of DNU and the ENACOM Resolutions. In addition, as described in Note 19 2) h), Resolution No. 50/10 and subsequent ones of the Secretariat of Domestic Trade determined that cable television operators must apply a formula to calculate their monthly subscription prices. In response to these resolutions, the Company filed an administrative appeal requesting the suspension of Secretariat of Domestic Trade resolutions’ effects and their nullification. Management recognizes liabilities in the consolidated financial statements for the resolution of pending litigation when management determines that a loss is probable and the amount of the loss can be reasonably estimated. No liability for an estimated loss is accrued in the consolidated financial statements for unfavorable outcomes when, after assessing the information available, (i) management concludes that it is not probable that a loss has been incurred in any of the pending litigation; or (ii) management is unable to estimate the loss or range of loss for any of the pending matters. The Company also discloses the contingency in circumstances where management concludes no loss is probable or reasonably estimable but it is reasonably possible that a loss may be incurred. As disclosed by management, the company and its legal counsels consider that solid arguments exist in its favor that have a high probability of prevalence in court, notwithstanding which, it is, as also disclosed by management, not possible to ensure in this instance the definite result of the controversy.

The principal considerations for our determination that performing procedures relating to Regulatory Disputes – Decree No 690/20 and Resolution No. 50/10 is a critical audit matter are the significant judgment applied by management when assessing the possible impacts of these disputes over the consolidated financial statements, which in turn led to a high degree of auditor judgment and effort in evaluating management’s assessment of the possible impacts of these disputes over the consolidated financial statements. Also, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

F-4

TELECOM ARGENTINA S.A.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s evaluation of litigation claims, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures. These procedures also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel, evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency of the Company’s regulatory disputes disclosures. Professionals with specialized skill and knowledge were used to assist in the evaluation of the reasonableness of the arguments put forward by management in its defense as part of these regulatory disputes.

/s/ PRICE WATERHOUSE & CO. S.R.L.
		(Partner)
	/s/ Alejandro Javier Rosa

Autonomous City of Buenos Aires, Argentina

March 22^th, 2022

We have served as the Company’s auditor since 2003.

F-5

TELECOM ARGENTINA S.A.

CONTENTS

	Page
Consolidated Statements of Financial Position	F-7
Consolidated Income Statements	F-8
Consolidated Statements of Comprehensive Income	F-9
Consolidated Statements of Changes in Equity	F-10
Consolidated Statements of Cash Flows	F-12
Glossary of terms	F-13
Note 1 – Description of business and basis of preparation of the consolidated financial statements	F-15
Note 2 – Regulatory framework	F-20
Note 3 – Significant accounting policies	F-33
Note 4 – Cash and cash equivalents and Investments. Additional information on the consolidated statements of cash flows	F-55
Note 5 – Trade receivables	F-59
Note 6 – Other receivables	F-59
Note 7 – Inventories	F-60
Note 8 – Goodwill	F-60
Note 9 – Property, plant and equipment	F-60
Note 10 – Intangible assets	F-62
Note 11 – Rights of use assets	F-64
Note 12 – Trade payables	F-65
Note 13 – Financial debt	F-65
Note 14 – Salaries and social security payables	F-77
Note 15 – Income tax payable and Deferred income tax assets/liabilities	F-77
Note 16 – Other taxes payables	F-80
Note 17 – Leases liabilities	F-80
Note 18 – Other liabilities	F-81
Note 19 – Provisions	F-81
Note 20 – Purchase commitments	F-90
Note 21 – Equity	F-90
Note 22 – Financial instruments	F-94
Note 23 – Revenues	F-98
Note 24 – Operating expenses	F-99
Note 25 – Financial results, net	F-101
Note 26 – Financial risk management	F-101
Note 27 – Balances and transactions with Companies under Section 33 - Law No. 19,550 and Related Parties	F-105
Note 28 – Restrictions on distribution of profits	F-109
Note 29 – Impact of Coronavirus in Telecom	F-109
Note 30 – Subsequent events to December 31, 2021	F-111

F-6

TELECOM ARGENTINA S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Argentine pesos in current currency - Note 1.e)

		As of December 31,
ASSETS	Note	2021	2020
Current Assets
Cash and cash equivalents	4	19,849	27,965
Investments	4	10,786	7,804
Trade receivables	5	22,554	28,612
Other receivables	6	8,846	10,397
Inventories	7	3,115	5,618
Total current assets		65,150	80,396
Non-Current Assets
Trade receivables	5	72	89
Other receivables	6	2,085	2,414
Deferred income tax assets	15	658	622
Investments	4	3,226	3,248
Goodwill	8	379,220	380,234
Property, plant and equipment	9	451,174	484,316
Intangible assets	10	144,114	157,019
Right of use assets	11	33,415	26,825
Total non-current assets		1,013,964	1,054,767
TOTAL ASSETS		1,079,114	1,135,163
LIABILITIES
Current Liabilities
Trade payables	12	49,231	59,408
Financial debt	13	64,869	62,795
Salaries and social security payables	14	22,263	21,639
Income tax payables	15	13,927	100
Other taxes payables	16	3,962	5,544
Leases liabilities	17	6,130	5,035
Other liabilities	18	3,055	3,112
Provisions	19	2,146	2,441
Total current liabilities		165,583	160,074
Non-Current Liabilities
Trade payables	12	1,096	3,695
Financial debt	13	202,052	239,390
Salaries and social security payables	14	1,546	1,268
Deferred income tax liabilities	15	135,232	120,261
Other taxes payables	16	—	8
Leases liabilities	17	12,786	10,515
Other liabilities	18	1,250	1,745
Provisions	19	9,574	11,263
Total non-current liabilities		363,536	388,145
TOTAL LIABILITIES		529,119	548,219
EQUITY
Equity attributable to Controlling Company		541,423	577,285
Equity attributable to non-controlling interest		8,572	9,659
TOTAL EQUITY(See Consolidated Statements of Changes in Equity)	21	549,995	586,944
TOTAL LIABILITIES AND EQUITY		1,079,114	1,135,163

The accompanying notes are an integral part of these consolidated financial statements

F-7

TELECOM ARGENTINA S.A.

CONSOLIDATED INCOME STATEMENTS

(In millions of Argentine pesos in current currency, except per share data in Argentine pesos in current currency - Note 1.e)

		For the years ended December 31,
	Note	2021	2020	2019
Revenues	23	425,493	455,234	487,067
Employee benefit expenses and severance payments	24	(91,823)	(88,265)	(95,618)
Interconnection and transmission costs		(15,262)	(16,987)	(15,453)
Fees for services, maintenance, materials and supplies	24	(49,431)	(49,829)	(54,676)
Taxes and fees with the Regulatory Authority	24	(32,743)	(34,747)	(37,779)
Commissions and advertising		(24,392)	(26,040)	(30,027)
Cost of equipment and handsets	24	(20,961)	(16,803)	(22,089)
Programming and content costs		(28,949)	(30,443)	(37,053)
Bad debt expenses		(7,983)	(16,309)	(13,010)
Other operating expenses	24	(21,182)	(20,510)	(22,961)
Depreciation, amortization and impairment of fixed assets	24	(135,554)	(124,669)	(125,944)
Operating (loss) income		(2,787)	30,632	32,457
Earnings (losses) from associates	4	395	749	(385)
Debt financial expenses	25	28,700	(37,280)	(34,229)
Other financial results, net	25	16,949	10,649	23,284
Income before income tax expense		43,257	4,750	21,127
Income tax expense	15	(33,317)	(12,454)	(29,116)
Net income (loss) for the year		9,940	(7,704)	(7,989)
Attributable to:
Controlling Company		8,665	(8,626)	(9,034)
Non-controlling interest		1,275	922	1,045
		9,940	(7,704)	(7,989)
Earnings (Loss) per share attributable to Controlling Company - Basic and diluted	3.u	4.02	(4.01)	(4.19)

See Note 24 for additional information on operating expenses per function.

The accompanying notes are an integral part of these consolidated financial statements.

F-8

TELECOM ARGENTINA S.A.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Argentine pesos in current currency - Note 1.e)

	For the years ended December 31,
	2021	2020	2019
Net income (loss) for the year	9,940	(7,704)	(7,989)
Other components of the Statements of Comprehensive Income
Will be reclassified subsequently to profit or loss
Currency translation adjustments (no effect on Income Tax)	(6,390)	(2,513)	(3,995)
DFI effects classified as hedges	342	(411)	(689)
Income Tax effects on DFI classified as hedges and others	(128)	32	199
Will not be reclassified subsequently to profit or loss
Actuarial results	(35)	204	97
Income Tax effects	12	(62)	(30)
Other components of the comprehensive (loss), net of tax	(6,199)	(2,750)	(4,418)
Total comprehensive income / (loss) for the year	3,741	(10,454)	(12,407)
Attributable to:
Controlling Company	3,970	(10,868)	(12,737)
Non-controlling interest	(229)	414	330
	3,741	(10,454)	(12,407)

The accompanying notes are an integral part of these consolidated financial statements.

F-9

TELECOM ARGENTINA S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Argentine pesos in current currency - Note 1.e)

	Owners contribution
	Outstanding	Treasury			Reserves
	shares	shares		Treasury							Voluntary			Equity	Equity
	Capital	Capital		shares				Special	Voluntary		reserve for			attributable	attributable
	nominal	nominal		acquisition				reserve for	reserve for		future	Other		to	to non-
	value	value	Inflation	cost		Contri-buted		IFRS	capital	Facultative	dividends	compre-hensive	Retained	controlling	controlling	Total
	(1)	(1)	adjust-ment	(1)		Surplus	Legal	implemen-tation	invest-ments	(2)	payments	results	earnings	company	interest	Equity
Balances as of January 1, 2019	2,154	15	141,572	(5,674)		402,563	7,161	3,084	10,433	35,821	34,720	(3,506)	85,095	713,438	10,201	723,639
Resolutions of the Ordinary and Extraordinary Shareholders’ Meeting held on April 24, 2019:
- Reserves constitution	—	—	—	—		—	841	—	—	46,532	19,914	—	(67,287)	—	—	—
- Dividends	—	—	—	—		—	—	—	—	—	(17,126)	—	(17,808)	(34,934)	—	(34,934)
Dividends to non-controlling shareholders (3)	—	—	—	—		—	—	—	—	—	—	—	—	—	(537)	(537)
Capital reduction	—	(15)	(1,976)	5,674		—	—	—	—	—	—	—	(3,683)	—	—	—
Irrevocable Call and Put Option on the shares of AVC Continente Audiovisual (4)	—	—	—	—		—	—	—	—	—	—	(234)	—	(234)	—	(234)
Increase in Tuves shareholding (5)	—	—	—	—		—	—	—	—	—	—	71	—	71	(193)	(122)
Resolutions of the Ordinary Shareholders’ Meeting held on October 10, 2019:
- Dividends (6)	—	—	—	—		—	—	—	—	(4,349)	(34,297)	—	—	(38,646)	—	(38,646)
Adesol dividends	—	—	—	—		—	—	—	—	—	—	(48)	—	(48)	—	(48)
Comprehensive income:
Net (loss) income for the year	—	—	—	—		—	—	—	—	—	—	—	(9,034)	(9,034)	1,045	(7,989)
Other comprehensive loss	—	—	—	—		—	—	—	—	—	—	(3,703)	—	(3,703)	(715)	(4,418)
Total Comprehensive (loss) income	—	—	—	—		—	—	—	—	—	—	(3,703)	(9,034)	(12,737)	330	(12,407)
Balances as of December 31, 2019	2,154	—	139,596	—		402,563	8,002	3,084	10,433	78,004	3,211	(7,420)	(12,717)	626,910	9,801	636,711
Resolutions of the General Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2020:
- Absorption of negative Retained earnings	—	—	—	—		—	—	—	(3,681)	(8,965)	—	—	12,646	—	—	—
- Reserves reallocation	—	—	—	—		(20,756)	—	—	(6,752)	20,756	6,752	—	—	—	—	—
Dividends to non-controlling shareholders (3)	—	—	—	—		—	—	—	—	—	—	—	—	—	(556)	(556)
Irrevocable Call and Put Option on the shares of AVC Continente Audiovisual valuation adjustment (4)	—	—	—	—		—	—	—	—	—	—	52	—	52	—	52
Resolutions of the General Extraordinary Shareholders’ Meeting held on November 13, 2020:
- Dividends (6)	—	—	—	—		—	—	—	—	(28,846)	(9,963)	—	—	(38,809)	—	(38,809)
Comprehensive income:
Net (loss) income for the year	—	—	—	—		—	—	—	—	—	—	—	(8,626)	(8,626)	922	(7,704)
Other comprehensive loss	—	—	—	—		—	—	—	—	—	—	(2,242)	—	(2,242)	(508)	(2,750)
Total Comprehensive (loss) income	—	—	—	—		—	—	—	—	—	—	(2,242)	(8,626)	(10,868)	414	(10,454)
Balances as of December 31, 2020	2,154	—	139,596	—		381,807	8,002	3,084	—	60,949	—	(9,610)	(8,697)	577,285	9,659	586,944

(1) As of December 31, 2019 and December 31, 2020 total shares, were issued and fully paid.

(2) Corresponds to the Facultative Reserve to maintain the capital investments level and the current level of solvency.

(3) Corresponds to non-controlling shareholders of Núcleo.

(4) See Note 3.d.1.b).

(5) See Note 3.d.1.a).

(6) See Note 4.b)

The accompanying notes are an integral part of these consolidated financial statements.

F-10

TELECOM ARGENTINA S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT.)

(In millions of Argentine pesos in current currency - Note 1.e)

	Owners contribution
	Outstanding		Reserves
	shares
	Capital				Special				Equity	Equity
	nominal				reserve for		Other		attributable to	attributable to
	value	Inflation	Contributed		IFRS	Facultative	compre-hensive	Retained	controlling	non-controlling
	(1)	adjustment	Surplus	Legal	implemen-tation	(2)	results	earnings	company	interest	Total Equity
Balances as of January 1, 2021	2,154	139,596	381,807	8,002	3,084	60,949	(9,610)	(8,697)	577,285	9,659	586,944
Resolutions of the General Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2021:
- Absorption of negative Retained earnings	—	—	—	—	—	(8,626)	—	8,626	—	—	—
- Reserves reallocation	—	—	(17,688)	—	—	17,688	—	—	—	—	—
Dividends to non-controlling shareholders (3)	—	—	—	—	—	—	—	—	—	(834)	(834)
Resolutions of the General Extraordinary Shareholders’ Meeting held on August 11, 2021:
- Dividends (4)	—	—	—	—	—	(40,020)	—	—	(40,020)	—	(40,020)
Exercise Irrevocable Call and Put Option on the shares of AVC Continente Audiovisual valuation adjustment (5)	—	—	—	—	—	—	188	—	188	(24)	164
Comprehensive income:
Net income for the year	—	—	—	—	—	—	—	8,665	8,665	1,275	9,940
Other comprehensive loss	—	—	—	—	—	—	(4,695)	—	(4,695)	(1,504)	(6,199)
Total Comprehensive (loss) income	—	—	—	—	—	—	(4,695)	8,665	3,970	(229)	3,741
Balances as of December 31, 2021	2,154	139,596	364,119	8,002	3,084	29,991	(14,117)	8,594	541,423	8,572	549,995

(1) As of December 31, 2021 total shares, were issued and fully paid.

(2) Corresponds to the Facultative Reserve to maintain the capital investments level and the current level of solvency.

(3) Correspond to non-controlling shareholders of Núcleo.

(4) See Note 4.b).

(5) See Note 3.d.1.b).

The accompanying notes are an integral part of these consolidated financial statements.

F-11

TELECOM ARGENTINA S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Argentine pesos in current currency – Note 1.e)

		For the years ended December 31,
	Note	2021	2020	2019
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income (loss) for the year		9,940	(7,704)	(7,989)
Adjustments to reconcile net income to net cash flows provided by operating activities
Allowances deducted from assets		9,452	19,403	20,474
Depreciation of property, plant and equipment	24	108,382	99,185	96,535
Amortization of intangible assets	24	15,558	16,056	16,991
Amortization of rights of use assets	24	10,330	8,860	7,149
(Earnings) losses from associates	4.a	(395)	(749)	385
Disposals of fixed assets and consumption of materials		2,726	984	854
Financial results and others		(47,885)	18,143	23,493
Income tax expense	15	33,317	12,454	29,116
Income tax paid (*)		(2,270)	(2,866)	(3,583)
Net increase in assets	4.b	(18,561)	(28,025)	(20,512)
Net increase in liabilities	4.b	9,441	15,128	5,448
Total cash flows provided by operating activities		130,035	150,869	168,361
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Property, plant and equipment acquisitions		(73,586)	(78,924)	(101,040)
Intangible asset acquisitions		(2,540)	(3,128)	(3,345)
Proceeds from dividends	4.b	234	121	380
Proceeds from the sale of property, plant and equipment and intangible assets		157	80	210
Investments not considered as cash and cash equivalents		(39,383)	(41,571)	11,882
Total cash flows used in investing activities		(115,118)	(123,422)	(91,913)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from financial debt	4.b	64,216	84,570	120,228
Payment of financial debt	4.b	(50,296)	(98,705)	(75,010)
Payment of interests and related expenses	4.b	(26,817)	(31,473)	(16,220)
Payments of leases liabilities		(6,596)	(7,896)	(7,450)
Acquisition in shareholdings		(59)	—	(125)
Payment of dividends	4.b	(744)	(554)	(73,007)
Total cash flows used in financing activities		(20,296)	(54,058)	(51,584)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(5,379)	(26,611)	24,864
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR		27,965	52,568	21,784
NET FOREIGN EXCHANGE DIFFERENCES AND RECPAM ON CASH AND CASH EQUIVALENTS		(2,737)	2,008	5,920
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR		19,849	27,965	52,568

(*)	Years ended December 31,
	2021	2020	2019
Corresponding to Controlling Company tax withholdings / advances	(1,912)	(2,564)	(3,463)
Corresponding to subsidiaries	(358)	(302)	(120)
	(2,270)	(2,866)	(3,583)

See Note 4.b for additional information on the consolidated statements of cash flows.

The accompanying notes are an integral part of these consolidated financial statements.

F-12

TELECOM ARGENTINA S.A.

Glossary of terms

The following explanations are not technical definitions, but to assist to understand certain terms as used in these consolidated financial statements.

“Abono fijo”: Under the “Abono fijo” plans, a subscriber pays a set monthly bill and, once the contract minutes per month have been used, the subscriber can obtain additional credit by recharging the phone card through the prepaid system.

AFIP (Administración Federal de Ingresos Públicos): The Argentine federal tax authority.

AMBA (Área Metropolitana de Buenos Aires): The Metropolitan Area of Buenos Aires.

ADS: Telecom Argentina’s American Depositary Share, listed on the New York Stock Exchange, each representing 5 Class B Shares.

BYMA (Bolsas y Mercados Argentinos): Buenos Aires Stock Exchange.

BCRA (Banco Central de la República Argentina): The Central Bank of Argentina.

Cablevisión: Company absorbed by Telecom since January 1, 2018, whose activities are continued by Telecom.

CAPEX: Capital expenditures.

CNC (Comisión Nacional de Comunicaciones): The Argentine National Communications Commission.

CNDC (Comisión Nacional de Defensa de la Competencia): The Argentine Antitrust Commission.

CNV (Comisión Nacional de Valores): The Argentine National Securities Commission.

Company/Telecom Argentina: Telecom Argentina S.A.

CONATEL (Comisión Nacional de Telecomunicaciones del Paraguay): The Regulatory Authority of Paraguay.

CPCECABA (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires): The Professional Council of Economic Sciences of the City of Buenos Aires.

CPP: Calling Party Pays.

CVH: Cablevisión Holding S.A., controlling company of Telecom since January 1, 2018 (Note 27.a).

DFI: Derivate Financial Instruments.

D&A: Depreciation and amortization.

ENACOM (Ente Nacional de Telecomunicaciones): The Telecommunications Regulatory Authority of Argentina.

ENTel (Empresa Nacional de Telecomunicaciones): Argentine State Telecommunication Company, which was privatized in November 1990.

FACPCE (Federación Argentina de Consejos Profesionales en Ciencias Económicas): Argentine Federation of Professional Councils of Economic Sciences.

FFSU or SU Fund (Fondo Fiduciario del Servicio Universal): Universal Service Fiduciary Fund.

Fintech: Fintech Telecom LCC, a Telecom shareholder.

Fixed assets: Includes PP&E, Intangible assets, Goodwill and Rights of use assets.

IAS: International Accounting Standards.

IASB: International Accounting Standards Board.

ICT services (Information and Communication Technology services): Services to transport and distribute signals or data, such as voice, text, video and images, provided or requested by third-party users, through telecommunications networks.

IDEN: Integrated Digital Enhanced Network

IFRS: International Financial Reporting Standards, as issued by the International Accounting Standards Board.

IGJ (Inspección General de Justicia): General Board of Corporations.

LAD (Ley Argentina Digital): Argentine Digital Law No. 27,078.

LGS (Ley de General de Sociedades): Argentine Corporations Law No. 19,550 as amended. Since the enforcement of the new Civil and Commercial Code its name was changed to “General Corporations Law”.

NYSE: New York Stock Exchange.

OCI: Other Comprehensive Income.

PCS (Personal Communications Service): A mobile communications service with systems that operate in a similar manner to cellular systems.

PEN (Poder Ejecutivo Nacional): National Executive Power.

PPP (Programa de Propiedad Participada): Share Ownership plan.

PP&E: Property, plant and equipment.

PSP: Payment Service Providers

RECPAM (Resultado por exposición a los cambios en el poder adquisitivo de la moneda): Inflation Adjustment Gain (Loss)

Regulatory Authority: Previously, the SC and the CNC. Since the issuance of the Decree of Need and Urgency No. 267/15, the Regulatory Authority is the National Communications Agency (ENACOM).

RMB: Official currency of Popular Republic of China.

F-13

TELECOM ARGENTINA S.A.

Roaming: a function that enables mobile subscribers to use the service on networks of operators other than the one with which they signed their initial contract. The roaming service is active when a mobile device is used in a foreign country (included in the GSM network).

RT: Technical resolutions issued by the FACPCE.

RT 26: Technical resolution No. 26 issued by the FACPCE, amended by RT29 and RT43.

SBT (Servicio básico telefónico): Basic telephone service.

SC (Secretaría de Comunicaciones): The Argentine Secretary of Communications.

SCMA (Servicio de Comunicaciones Móviles Avanzadas): Mobile Advanced Communications Service.

SEC: Securities and Exchange Commission of the United States of America.

SRCE (Servicio Radioeléctrico de Concentración de Enlaces): Radio-electric Service of Concentration of Links.

SRMC (Servicio de Radiocomunicaciones Móvil Celular): Cellular Mobile Radiocommunications Service.

SRS (Servicio de Radiodifusión por Suscripción por vínculo físico y/o radioeléctrico): Subscription Broadcasting Service by physical and / or radio-electric link.

SMS: Short message systems.

STM (Servicio de Telefonía Móvil): Mobile Telephone Service.

SU: The availability of Basic telephone service, or access to the public telephone network via different alternatives, at an affordable price to people within a country or specified area.

Telecom: Telecom Argentina and its consolidated subsidiaries.

Micro Sistemas/Pem/Cable Imagen/AVC Continente Audiovisual/Inter Radios/Personal Smarthome/ Ultima Millla/CV Berazategui: Names corresponding to limited companies or limited responsibility companies that are directly or indirectly controlled according to the definition of the General Corporations Law, or were controlled by the Company, directly or indirectly: Micro Sistemas S.A.U., Pem S.A., Cable Imagen S.R.L., AVC Continente Audiovisual S.A., Inter Radios S.A.U., Personal Smarthome S.A., Ultima Milla S.A., CV Berazategui S.A.

Telecom USA/Núcleo/Personal Envíos/Tuves Paraguay/Televisión Dirigida/Adesol/Opalker: Names corresponding to foreign companies Telecom Argentina USA, Inc., Núcleo S.A., Personal Envíos S.A., Tuves Paraguay S.A., Televisión Dirigida S.A., Adesol S.A. and Opalker S.A., respectively, companies that are directly or indirectly controlled according to the definition of the General Corporations Law.

La Capital Cable/Ver TV/TSMA: Names corresponding to limited companies La Capital Cable S.A., Ver T.V. S.A. and Teledifusora San Miguel Arcángel S.A., respectively, companies that are directly or indirectly associates according to the definition of the General Corporations Law.

SEFyC (Superintendencia de Entidades Financieras y Cambiarias): Superintendency of Financial and Exchange Entities.

Telefónica: Telefónica de Argentina S.A.

TMF Administration Trust / TMF Trust: Administration Trust – Telecom Argentina’s refinancing plan agreed with TMF Trust Co.

UVA (Unidad de Valor Adquistivo): Purchasing Value Unit.

FIU: Financial Information Unit.

VAS (Value-Added Services): Services that provide additional functionality to the basic transmission services offered by a telecommunications network such as SMS, Video streaming, Personal Video, Personal Cloud, M2M (Communication Machine to Machine), Social networks, Personal Messenger, Contents and Entertainment (content and text subscriptions, games, music ringtones, wallpaper, screensavers, etc.), MMS (Mobile Multimedia Services) and Voice Mail, among others.

VAT: Value-Added Tax.

VLG: VLG S.A.U. (formerly VLG Argentina LLC), a company that is a shareholder of the Company and controlled by CVH.

In these Consolidated Financial Statements, unless otherwise stated, Argentine peso amounts are stated in millions.

F-14

TELECOM ARGENTINA S.A.

NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

a)   The Company and its Operations

Telecom Argentina was created through the privatization of ENTel, the state-owned company that provided telecommunication services in Argentina.

Telecom Argentina’s license, as originally granted, was exclusive to provide telephone services in the northern region of Argentina since November 8, 1990 through October 10, 1999. As from such date, the Company also began providing telephone services in all the country.

In November 2017, the Company merged between Telecom Personal, so, since that date, it provides directly mobile telecommunications services. Additionally, as a consequence of the merger with Cablevisión (accounted for as a reverse acquisition), since January 1, 2018, the operations that Cablevisión developed as of December 31, 2017, which mainly consisted in the provision of cable television services through networks installed in different localities in Argentina and Uruguay, are developed by the Company.

Therefore, the Company mainly provides fixed and mobile telephony services, cable television services, data and Internet services in Argentina. Additionally, through its subsidiaries, it also provides diverse ICT Services in Uruguay, Paraguay, and in the United States of America (“USA”).

Information on Telecom’s licenses and on the regulatory framework is described under Note 2 to these consolidated financial statements.

As of December 31, 2021, the following are the subsidiaries included in the consolidation process and the respective equity interest owned by Telecom Argentina:

			Telecom Argentina's
			direct/indirect interest
			in capital stock and
Company	Main Activity	Country	votes
Núcleo	Mobile telecommunications Services	Paraguay	67.50	%
Personal Envíos	Mobile financial services	Paraguay	67.50	%
Tuves Paraguay	Distribution of television and audio signals direct to home services	Paraguay	67.50	%
Micro Sistemas	Services related to the use of electronic payment media	Argentina	100.00	%
Pem	Investment	Argentina	100.00	%
Cable Imagen	Closed-circuit television	Argentina	100.00	%
Televisión Dirigida	Cable television services	Paraguay	100.00	%
Adesol (a)	Holding	Uruguay	100.00	%
AVC Continente Audiovisual (b)	Broadcasting services	Argentina	100.00	%
Inter Radios	Broadcasting services	Argentina	100.00	%
Telecom USA	Telecommunication services	USA	100.00	%
Personal Smarthome S.A. (c)	Security solutions and services	Argentina	100.00	%
Opalker S.A. (d)	Cybersecurity and related services	Uruguay	100.00	%

(a) Includes the 100% interest in Telemas S.A., which holds interests in the following special-purpose entities: Audomar S.A., Bersabel S.A., Dolfycor S.A., Reiford S.A., Space Energy S.A., Tracel S.A. and Visión Satelital S.A. (See Note 3 d.4) to these consolidated financial statements).

(b) On October 27, 2021, Telecom acquired the remaining 40% of AVC Continente Audiovisual's capital stock. For further information, see Note 3.d.1.b) to these consolidated financial statements.

(c) Company started on December 30, 2020 and registered in the IGJ on June 9, 2021 As of December 31, 2021 is a dormant entity.

(d) Company acquired on July 27, 2021. For further information, see Note 3.d.1.f) to these consolidated financial statements.

On July 15, 2020 the Company entered into a trust agreement with TMF Trust Company (100% interest in capital stock) until November 5, 2020, date in which its term was finalized. As a result, consolidated operations of the Company for the year ended December 31, 2020 includes those operations carried out by the Trust during its term. For further information, see Note 13 to these consolidated financial statements.

F-15

TELECOM ARGENTINA S.A.

b)   Segment information

An operating segment is defined as a component of an entity that may earn revenues and incur expenses, and whose financial information is available, held separately, and evaluated regularly by the chief operating decision maker. In the case of the Company, the Executive Committee and the Chief Executive Officer (“CEO”) are responsible for controlling recourses and for the economic and financial performance of Telecom.

The Executive Committee and the CEO have a strategic and operational vision of Telecom as a single business unit in Argentina, according to the current regulatory context of the converged ICT services industry (adding to the same segment both the activities related to the mobile services, internet services, cable television and fixed telephony services, services governed by the same regulatory framework of ICT services). To exercise its functions, both the Executive Committee and the CEO receive periodically the economic-financial information of Telecom Argentina and its subsidiaries (in current currency as of the date of each transaction), that is prepared as a single segment and evaluate the evolution of business as a unit of generation of results, administrating the resources in a unique way to achieve the objectives. Regarding to costs, they are not specifically appropriate to a type of service, considering that the Company has a single payroll and operating expenses that affect all services in general (non-specific). On the other hand, decisions on CAPEX affect all the types of services provided by Telecom in Argentina and not specifically to one of them. Based on what was previously described and under the accounting principles (provided by IFRS as issued by the IASB), it was defined that the Company has a single segment of operations in Argentina.

Telecom carries out activities abroad (Paraguay, United States of America and Uruguay). These operations are not analyzed as a separate segment by the Executive Committee and the CEO, who analyze the consolidated information of companies in Argentina and abroad (in current currency as of the date of each transaction), considering that the activities of foreign companies are not significant for Telecom. Operations carried out abroad by Telecom do not meet the aggregation criteria established by the standard to be grouped within the "Services rendered in Argentina" segment, and considering that they do not exceed any of the quantitative thresholds identified in the standard to qualify as reportable segments, they are grouped within the category "Other abroad segments".

The Executive Committee and the CEO evaluate the profitability for each reportable segment based on the measure of the Adjusted EBITDA. Adjusted EBITDA is defined as our net (loss) income less income taxes, financial results, Earnings (losses) from associates, depreciation, amortization and impairment of fixed assets.

Presented below is the Segment financial information as it is analyzed by the Executive Committee and the CEO for the years ended December 31, 2021, 2020 and 2019.

◻ Consolidated Income Statement as of December 31, 2021

		Services	Services		Other
		rendered in	rendered in		abroad	Other abroad
	Services	Argentina –	Argentina	Other	segments –	segments
	rendered in	Inflation	restated for	abroad	Inflation	restated for
	Argentina	restatement	inflation	segments	restatement	inflation	Eliminations	Total
Revenues	332,816	63,403	396,219	26,215	5,067	31,282	(2,008)	425,493
Operating costs without depreciation, amortization and impairment of fixed assets	(229,554)	(46,552)	(276,106)	(15,514)	(3,114)	(18,628)	2,008	(292,726)
Adjusted EBITDA	103,262	16,851	120,113	10,701	1,953	12,654	—	132,767
Depreciation, amortization and impairment of fixed assets								(135,554)
Operating loss								(2,787)
Earnings from associates								395
Debt financial expenses								28,700
Other financial results, net								16,949
Income before income tax expense								43,257
Income tax expense								(33,317)
Net Income								9,940
Attributable to:
Controlling Company								8,665
Non-controlling interest								1,275
								9,940

F-16

TELECOM ARGENTINA S.A.

◻ Consolidated Income Statement as of December 31, 2020

		Services	Services		Other
		rendered in	rendered in		abroad	Other abroad
	Services	Argentina –	Argentina	Other	segments –	segments
	rendered in	Inflation	restated for	abroad	Inflation	restated for
	Argentina	restatement	inflation	segments	restatement	inflation	Eliminations	Total
Revenues	240,325	185,042	425,367	18,183	13,811	31,994	(2,127)	455,234
Operating costs without depreciation, amortization and impairment of fixed assets	(158,901)	(123,028)	(281,929)	(11,419)	(8,712)	(20,131)	2,127	(299,933)
Adjusted EBITDA	81,424	62,014	143,438	6,764	5,099	11,863	—	155,301
Depreciation, amortization and impairment of fixed assets								(124,669)
Operating Income								30,632
Earnings from associates								749
Debt financial expenses								(37,280)
Other financial results, net								10,649
Income before income tax expense								4,750
Income tax expense								(12,454)
Net loss								(7,704)
Attributable to:
Controlling Company								(8,626)
Non-controlling interest								922
								(7,704)

◻ Consolidated Income Statement as of December 31, 2019

		Services	Services		Other
		rendered in	rendered in		abroad	Other abroad
	Services	Argentina –	Argentina	Other	segments –	segments
	rendered in	Inflation	restated for	abroad	Inflation	restated for
	Argentina	restatement	inflation	segments	restatement	inflation	Eliminations	Total
Revenues	182,233	274,494	456,727	12,931	19,924	32,855	(2,515)	487,067
Operating costs without depreciation, amortization and impairment of fixed assets	(121,682)	(186,711)	(308,393)	(8,946)	(13,842)	(22,788)	2,515	(328,666)
Adjusted EBITDA	60,551	87,783	148,334	3,985	6,082	10,067	—	158,401
Depreciation, amortization and impairment of fixed assets								(125,944)
Operating Income								32,457
Losses from associates								(385)
Debt financial expenses								(34,229)
Other financial results, net								23,284
Income before income tax expense								21,127
Income tax benefit								(29,116)
Net loss								(7,989)
Attributable to:
Controlling Company								(9,034)
Non-controlling interest								1,045
								(7,989)

Additional information per geographical area required under IFRS 8 (Operating Segments) is disclosed below:

	As of December 31
	2021	2020	2019
Sales revenues from customers located in Argentina	394,781	423,580	454,269
Sales revenues from foreign customers	30,712	31,654	32,798
CAPEX corresponding to the segment “Services rendered in Argentina	78,593	75,599	124,088
CAPEX corresponding to the segment “Other abroad segments”	6,957	8,525	10,486
Fixed assets corresponding to the segment “Services rendered in Argentina”	974,315	1,008,512	1,034,134
Fixed assets corresponding to the segment “Other abroad segments”	33,608	39,882	40,985
Financial Debt corresponding to the segment “Services rendered in Argentina”	259,403	293,562	303,919
Financial Debt corresponding to the segment “Other abroad segments”	7,518	8,623	8,421

F-17

TELECOM ARGENTINA S.A.

c)   Basis of Presentation

As required by the CNV, these consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. IFRS also includes the International Accounting Standards or “IAS”; the International Financial Reporting Interpretations Committee or “IFRIC”, the Standard Interpretations Committee or “SIC” and the conceptual framework.

The preparation of these consolidated financial statements in conformity with IFRS requires that the Company's Management make estimates that affect the figures disclosed in the financial statements or its supplementary information. Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where estimates are significant are disclosed under Note 3.v) to these consolidated financial statements.

These consolidated financial statements (except for the statement of cash flows) are prepared in current currency as of December 31, 2021 (see item e) and on an accrual basis of accounting (except for the consolidated statement of cash flows). Under this basis, the effects of transactions are recognized when they occur. Therefore, income and expenses are initially recognized at fair value on an accrual basis regardless of when they are received or paid. When significant, the difference between the fair value and the nominal amount of income and expenses is recognized as finance income or expense using the effective interest method.

The figures as of  December 31, 2020 and for the years ended December 31, 2020 and 2019, which are disclosed in these consolidated financial statements for comparative purposes, are a result of restating the financial statements as of such dates to values in constant currency as of December 31, 2021. This is as consequence of the restatement process of the financial information described in point e). When applicable, certain reclassifications were made for comparative purposes.

These consolidated financial statements as of December 31, 2021, were approved by resolution of the Board of Directors’ meeting held on March 9, 2022.

d)   Consolidated Financial Statement Formats

The financial statement formats adopted are consistent with IAS 1. In particular:

● the consolidated statements of financial position have been prepared by classifying assets and liabilities according to the “current and non-current” criterion. Current assets and liabilities are those that are expected to be realized/settled within twelve months after the year-end;

● the consolidated income statements have been prepared by classifying operating expenses by nature of expense as this form of presentation represents the way that the business is monitored by the Executive Committee and the CEO and, additionally, are in line with the usual presentation of expenses in the ICT services industry;

● the consolidated statements of comprehensive income include the profit (or loss) for the year as shown in the consolidated income statement and all components of other comprehensive income;

● the consolidated statements of changes in equity have been prepared showing separately (i) income (loss) for the year, (ii) other comprehensive income (loss) for the year, and (iii) transactions with shareholders (owners and non-controlling interest), if applicable;

● the consolidated statements of cash flows have been prepared by presenting cash flows from operating activities according to the “indirect method”, as permitted by IAS 7.

These consolidated financial statements contain all disclosures required under IFRS. Some additional disclosures required by the LGS and/or by the CNV have been also included.

e)   Financial reporting in hyperinflationary economies

IAS 29 establishes the conditions under which an entity shall state its financial statements in terms of the measuring unit current at the closing date of the latest reporting period if it operates in an economic environment considered “hyperinflationary”.

To determine the existence of a highly inflationary economy under the terms of IAS 29, the standard details a series of factors to consider, including a cumulative inflation rate over three years that is close to or exceeds 100%.

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TELECOM ARGENTINA S.A.

The macroeconomic events that have taken place in the country during 2018 and the three-year accumulated inflation rate as of December 31, 2018, that reached 147.8%, showed the compliance with the qualitative and quantitative factors provided for in IAS 29 to consider Argentina as a highly inflationary economy for accounting purposes. On the other hand, FACPCE issued Resolution No. 539/18 on September 29, 2018 which defined the need to restate the financial statements of Argentine companies for reporting periods ended after July 1, 2018, establishing specific issues in relation to the restatement for inflation such as, for example, the indexes to be used (resolution approved on October 10, 2018, by the CPCECABA through Resolution No. 107/18).

In addition, Law No. 27,468 amended Section 10 of Law No. 23,928, as amended, providing that the repeal of all the laws and regulations that establish or authorize price indexation, currency restatement, cost variance and any other form of restatement of debts, taxes, prices or fees related to property, works or services does not apply to financial statements, which remain subject to Section 62 of the General Associations Law, as amended. In addition, it repealed Decree No. 1,269/02, as amended, and delegated on the PEN, through its oversight agencies, the power to set the date as from which those regulations will come into effect in relation to the financial statements that are presented to them. Therefore, through Resolution No. 777/18, CNV established the method to restate financial statements in current currency in accordance with IAS 29 for years/periods ended since December 31, 2018. According to this, these consolidated financial statements are restated in terms of current currency as of December 31, 2021.

In relation to the inflation index to be used, according to Resolution No. 539/18, it was determined according to the Internal Wholesale Price Index (IWPI) until the year 2016, considering for the months of November and December 2015 the average variation of the Consumer Price Index (CPI) of the City of Buenos Aires. Then, from January 2017, the National Consumer Price Index (National CPI) was considered.

The table below show the evolution of the National CPI in the last three years according to official statistics (INDEC) and following the guidelines provided by Resolution No. 539/18, as well as the devaluation of the argentine peso against the US dollar for the same years:

	As of December 31,		As of December 31,		As of December 31,
	2019		2020		2021
National Consumer Price Index (December 2016=100)	284.44		385.88		582.46
Variation in Prices
Annual	53.8	%	36.1	%	50.9	%
Accumulated 3 years	183.2	%	209.2	%	216.1	%
Banco Nación US$/$ exchange rate	59.89		84.15		102.72
Variation in the exchange rate
Annual	58.9	%	40.5	%	22.1	%
Accumulated 3 years	276.9	%	351.2	%	172.5	%

Below is a summary of the effect of applying IAS 29:

Restatement of the Statement of Financial Position and the Statement of Changes in Equity

The Company restated all the non-monetary items in order to reflect the impact of the inflation restatement reporting in terms of the measuring unit current as of December 31, 2019. Consequently, the main items restated were PP&E, Intangible assets, Rights of Use Assets, Goodwill, Inventories, certain Investments in associates and the Equity items. Each item must be restated since the date of the initial recognition in the Company's Equity or since the last revaluation. Monetary items have not been restated because they are stated in terms of the measuring unit current as of December 31, 2021.

Restatement of the Income Statement and the Statement of Cash Flows

In the Income Statement, items must be restated from the dates when the items of income and expense were originally recorded. The Company shall apply the variations in monthly general price index.

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TELECOM ARGENTINA S.A.

Financial results related to foreign currency exchange and accrued interest are determined in real terms, excluding the inflationary effect contained therein.

The effect of inflation on the monetary position is included in the Income Statement under Other financial results, net.

The items of the Statement of Cash Flows must also be restated in terms of the measuring unit current at the closing date. IAS 29 para 33 states that all items in the statement of cash flows are expressed in terms of the measuring unit current at the end of the reporting period. The restatement effect has an impact on the Income Statement and must be eliminated from the Statement of Cash Flows because it is not considered cash or cash equivalent.

Investments in Foreign Companies

The subsidiaries, associates and companies under common control that use functional currencies other than the Argentine peso (mainly foreign companies with economies that are not considered to be hyperinflationary), must not restate for inflation their financial statements, in accordance with IAS 29.

Notwithstanding, and only for reporting and consolidation purposes, the comparative figures presented in Argentine pesos in the Income Statement corresponding to the current year and the previous year must be stated using the exchange rates at the transaction date. In addition, the initial items of the Statement of Changes in Equity must be reported at the closing rate without modifying its total amount due to the fact that it is translated into the closing exchange rate, which implies that a translation adjustment is recognized against Retained Earnings and Other Comprehensive Results.

NOTE 2 – Regulatory framework

a) Regulatory Authority

The activities of the Company that provides Information and Communication Technologies Services (“ICT”) are regulated by a set of rules and regulations that comprise the regulatory framework of the telecommunication sector.

The Regulatory Authority for ICT services in Argentina is ENACOM which is currently under the jurisdiction of the Secretariat of Public Innovation under the Cabinet of Ministers.

Núcleo, with operations in the Republic of Paraguay, is under the oversight of the CONATEL (such as TUVES), and Personal Envíos is under the oversight of the Central Bank of the Republic of Paraguay.

Telecom USA, which operates in the United States of America, is under the oversight of the Federal Communications Commission (“FCC”).

Adesol, a company incorporated in Uruguay, has contractual relationships with several licensees that provide subscription television services in such country through various systems, which are under the oversight of the Communication Services Regulatory Agency (“URSEC”, for its Spanish acronym).

Finally, Micro Sistemas is registered as a PSP and is under the oversight of the BCRA and the FIU regulations for this type of operations.

b) Licenses

✓ Under the Licencia Única Argentina Digital, the Company currently provides the following services:

● Local fixed telephony,

● Public telephony,

● Domestic and international long-distance telephony,

● Domestic and international point-to-point link services,

● Value added, data transmission, videoconferencing, transportation of broadcasting signals, and Internet access,

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TELECOM ARGENTINA S.A.

● STM, SRMC, PCS and SCMA, also called mobile communications services ("SCM", for its Spanish acronym),

● SRS and

● SRCE

The licenses for rendering SCM services were originally granted to Personal and were subsequently transferred to Telecom under the reorganization with Personal pursuant to ENACOM Resolution No. 4,545-E/17. Such licenses were granted for the provision of STM in the Northern Region of Argentina, of SRMC in the AMBA area, and of PCS and SCMA throughout the country.

In relation to the merger with Cablevisión pursuant to ENACOM Resolution No. 5,644-E/17, the Company also acquired licenses and authorizations to render SRCE services and the Registration to render Physical and Radio-Electric Link Subscription Broadcasting Services and the corresponding authorizations.

✓ Licenses held by subsidiaries in Paraguay

Núcleo holds a license to provide mobile telecommunication services - STMC and PCS throughout Paraguay. In addition, Núcleo holds a license for the installation and exploitation of Internet and data services throughout Paraguay. All these licenses were granted for renewable five-year periods.

Personal Envíos is authorized by the Central Bank of the Republic of Paraguay to operate as an Electronic Payment Company (“EMPE”, for its Spanish acronym) through Resolution No. 6 issued on March 30, 2015, and its corporate purpose is restricted to such service.

Tuves Paraguay has a license for the provision of direct-to-home subscription audio and television services ("DATDH"). This license has been granted for renewable five-year periods.

c) Regulatory framework of the services provided by the Company

Among the main regulations that govern the services rendered by the Company, the following stand out:

● Law No. 27,078 – LAD and its amendments.

● Law No. 19,798 to the extent it does not contradict the LAD.

● The Privatization Regulations, which regulated that process.

● The Transfer Agreement.

● The licenses for providing telecommunication services granted to the Company and the Bidding Terms and Conditions and their respective general rules.

On the other hand, the exploitation of physical and/or radio-electric link subscription broadcasting services held by the Company, originally granted under Law No. 22,285, are currently governed by the LAD since Decree No. 267/15 was issued.

✓ Law No. 27,078 – Argentine Digital Law

Enacted in December 2014, the LAD maintained the single country-wide license scheme and the individual registration of the services to be rendered but replaced the name telecommunication services with ICT Services, and included several amendments to the regulatory services of these services.

The LAD, passed on December 19, 2014, incorporated several changes to the telecommunication services regulatory framework.

Law No. 19,798, the Telecommunications Act (passed in 1,972), as amended, continues in effect only with respect to those provisions that do not contradict the provisions of the LAD (among them, for example, Section 39 of Law No. 19,798 regarding the exemption from all taxes on the use of soil, subsoil and airspace for telecommunications services).

The LAD also revoked Decree No. 764/00, as amended, but provisions of the decree that do not contradict the LAD will remain in effect during the time it takes the Regulatory Authority to issue new licensing, interconnection services, SU and spectrum regulations (see item f) - “Other Rules” to this Note).

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TELECOM ARGENTINA S.A.

✓ Decree No. 267/15 – Amendments to the LAD

On January 4, 2016, Decree No. 267/15 was published in the Official Gazette, which amended Law No. 26,522 (“the Audiovisual Communication Services”) and Law No. 27,078 (LAD), and created the ENACOM as the Enforcement Authority for these laws. On April 8, 2016, the House of Representatives voted in favor of the validity of Decree No. 267/15. Thus, such Decree acquired the status of Law.

Among the main amendments to the LAD related to the Subscription Broadcasting Service, the following stand out:

● The incorporation of Subscription Broadcasting Services (physical or radio-electric link, such as cable TV) as an ICT Service within the scope of the LAD, and excluding it from Law No. 26,522. Satellite subscription television services (known as satellite TV) shall remain within the scope of Law No. 26,522. Furthermore, Decree No. 267/15 states that the ownership of a satellite subscription television license is incompatible with having any other kind of audiovisual communication or ICT Service license.

● Any subscription broadcasting license (such as cable television), granted before the application of Decree No. 267/15 will be considered, for all purposes, a Licencia Única Argentina Digital, with a registration for such service. Furthermore, the Decree provides for a  10-year extension counted as from January 1, 2016 for the use of spectrum frequencies by radio-electric link subscription broadcasting services licensees.

● Decree No. 267/15 replaced the LAD’s Section 95 of the LAD and provides several obligations for fixed telephony licensees granted by Decree No. 264/98 and mobile service providers with licenses granted by Decree No.1,461/93, which choose to provide subscription broadcasting services.

It should be noted that pursuant to Section 21 of Decree No. 267/15 and until the enactment of a law that will unify the fee regime provided under the LSCA (Law of Audiovisual Communications Services) and the LAD, the physical link and radio-electric link subscription broadcasting services will continue to be subject only to the fee regime provided under LSCA. Therefore, they shall not be subject to the SU investment contribution or the payment of the Control, Oversight and Verification Fee provided under Sections 22 and 49 of the LAD.

✓ Decree No. 1,340/16 - Amendments to Decree No. 267/15

Decree No. 1,340/16 issued by PEN and published in the Official Gazette on January 2, 2017 provides the rules for achieving a greater convergence of networks and services under competitive conditions, promoting the deployment of next generation networks and the penetration of Broadband Internet access throughout the national territory, in accordance with the provisions of the LSCA and the LAD.

Among the most relevant provisions, it establishes:

● That a 15-year-term, as from the publication of the Decree, be fixed as differential condition pursuant to Section 45 of the LAD, for the protection of last-mile fixed new generation networks deployed by ICT licensees for Broadband regarding the regulations of open access to Broadband and infrastructure to be issued, notwithstanding the provisions of Section 56 of the LAD.

● That the Ministry of Communications or the ENACOM, as appropriate, shall establish the rules for the administration, management, and control of the radio spectrum.

● That ICT licensees and Satellite Link Subscription Broadcasting licensees that as of December 29, 2016 simultaneously provided both services, may retain ownership of both types of licenses.

This Decree also sets out some principles on interconnection matters contemplated in the Interconnection regulations, approved through Resolution No. 286/18 (see item f) - “Other Rules” to this Note).

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TELECOM ARGENTINA S.A.

✓Decree No. 690/20 - Amendment to the LAD - Controversy

On August 22, 2020, the PEN issued Decree No. 690/20 (“Decree N° 690/20”) amending the LAD. Decree No. 690/20 declared ICT services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks for and between licensees as “essential and strategic competition public services”, and empowered the ENACOM to ensure accessibility.

Decree No. 690/20 further established that the prices of: (i) the essential and strategic competition public ICT services, (ii) the prices of those services provided in accordance with the Universal Service and (iii)the prices of those services determined by the ENACOM for public interest reasons, shall be regulated by ENACOM.

Moreover, Decree No. 690/20 established that ENACOM is the agency responsible for the enactment of any regulation related to the ICT’s PBU.

Finally, Decree No. 690/20 suspended any price increases or changes set or announced by the ICT’s licensees from July 31, 2020 to December 31, 2020.

Decree No. 690/20 has been ratified by the Argentine Congress under Law No. 26,122 and has been regulated through ENACOM Resolutions No. 1,466/20 and 1,467/20.

Resolution No. 1,466/20 allowed ICT licensees providing Internet access services, subscription broadcasting services through physical, radio-electric or satellite link, fixed telephony services and mobile telecommunications services -in all cases in their different and respective modalities- to increase retail prices for services up to 5% during January 2021. In order to establish the percentages approved, licensees must consider the prices effective as of July 31, 2020 as the price of reference. Such Resolution also provides that ICT Services Licensees may request a higher increase on an exceptional basis in accordance with the provisions of Section 48 of the LAD.

Resolution No. 1,467/20 regulated the Compulsory Universal Telecommunication Service (“PBU”) provided by Decree No. 690/20 for the different services provided by ICT licensees, establishing the price and the characteristics of each service plan, namely:

●PBU-SBT: Compulsory Universal Provision of Basic Fixed Telephony Service;

●PBU-SCM: Compulsory Universal Provision of Basic Mobile Communication Service;

●PBU-I: Compulsory Universal Provision of Basic Internet Access Value Added Service;

●PBU-TP: Compulsory Universal Basic Provision of subscription television services by physical or radio-electric or satellite link.

The Company began to implement an increase in prices as from January 2021, in order to match the increase in its costs due to the inflation. Nevertheless, it failed to transfer to the price of its services the inflation accumulated in the period March-December 2020, as a result of different measures provided by the PEN. Additionally, the Company initiated legal proceedings before the Federal Court of Appeals on Administrative Litigation Matters challenging the constitutionality of Decree No. 690/20 and the aforementioned ENACOM Resolutions, which was notified to the PEN on October 7, 2021.

In this context, the Company sought to obtain a precautionary measure suspending the application of the aforementioned ENACOM regulations and Decree No. 690/20. On January 29, 2021, the Company´s petition was denied and the precautionary measure rejected. The Company appealed such decision and, on April 30, 2021, the Chamber of the Federal Court of Appeals on Administrative Litigation Matters decided by majority to accept the Company’s appeal, revoke the first instance court’s decision and, consequently, grant the preliminary injunction requested by the Company, ordering the suspension of the effects of sections 1, 2, 3, 4, 5 and 6 of Decree No. 690/20 and of ENACOM resolutions provided as a consequence and their non-applicability to the Company. This preliminary injunction was initially granted for a period of six months and then extended for an additional six-month period until April 21, 2022. As supported by the preliminary injunction granted, the Company increased the prices of its services in June, September and December 2021.

In reaching its decision, the Court considered, that the “configuration of circumstances prima facie lead to serious and founded questioning of Decree 690/2020's reasonability standard and legitimacy and of ENACOM's resolutions adopted as a consequence, due to the direct adverse effects they have on Telecom Argentina's property rights, which derive from Information and Communication Technology services provision, under a free competition system, ruled, authorized and granted (depending on the case), by the National State itself”.

The PEN and ENACOM filed appeals against the aforementioned decision of the Federal Court of Appeals on Administrative Litigation Matters, which were denied on June 18, 2021.

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TELECOM ARGENTINA S.A.

On June 29, 2021, the PEN and ENACOM filed an appeal before the Argentine Supreme Court of Justice. As of the date of these consolidated financial statements, a decision on these legal proceedings remains is pending.

The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights. The Company’s Management and its legal advisors, consider that the Company has solid legal arguments to support its position and that there is a reasonable likelihood that this matter will result in a favorable outcome for the Company, notwithstanding the fact that at this stage it is not possible to predict the final outcome of the claim.

Preliminary injunction requested by “Asociación Civil de Usuarios Bancarios Argentinos” (“ACUBA”)

On January 27, 2021, the Company was served with notice of a preliminary injunction granted by the Civil and Commercial Court No. 10 of Mar del Plata obtained by ACUBA in the aforementioned case, which ordered the Company to roll back the tariffs of broadcasting services subscriptions, Internet access services, fixed telephony services and mobile telecommunications services to those of December 2020, which could only be increased up to 5% as authorized by the ENACOM, and maintain such tariffs until any modification is resolved. Telecom challenged the preliminary injunction for lack of jurisdiction, and requested that the resolution granting the preliminary injunction be declared null. The Company argued that a preliminary injunction obtained by a representative of the industry of the Province of Córdoba from the federal courts of the province expressly suspended the application of Decree No. 690/20, Decree No. 311/20 and prohibited the ENACOM from issuing any subsequent resolutions.

On December 6, 2021, the Court ordered the joinder of the file with the one in re “Asociación de Consumidores de Argentina UCA v. AMX Argentina and other on Proceeding leading to a declaratory judgment”, pending before Federal Court on Administrative Litigation Matters No. 6 of the Autonomous City of Buenos Aires.

The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights.

Preliminary injunction requested by a representative of the industry of the Province of Córdoba

On February 2, 2021, the Company was informed by “Asociación Argentina de Televisión por Cable” (“ATVC”), that a preliminary injunction requested by a representative of the cable television industry of the Province of Córdoba was granted ordering the suspension of Decree N° 690/20, of Decree N° 311/20 and of all measures adopted as a result of those decrees. The court also ordered the PEN and the ENACOM to refrain from issuing or pursuing any subsequent measures based on such decrees, until a final court decision is rendered.

ATVC also informed that, pursuant to the court’s indications, the regulatory authority should refrain from issuing regulations related to Decree No. 690/20 or enforcing the regulations previously issued, which are generally suspended.

Preliminary injunction requested by “Catrie Televisora Color S.R.L. v./ Estado Nacional re./ Acción meramente declarativa de inconstitucionalidad”

On March 31, 2021, the Company was informed by ATVC, that a preliminary injunction requested by a representative of the cable television industry in the case Catrie Televisora Color S.R.L. v./ Estado Nacional re./ Acción meramente declarativa de inconstitucionalidad” (File No. 858/21), pending before the Federal Court of Córdoba No. 1, ATVC requested joint litigation, under the terms of Art. 90 inc. 2 of the National Civil and Commercial Procedure Code, requiring collective legitimacy, on behalf of the associated companies, and required the extension of the preliminary injunction issued in such case.

Likewise, on that date ATVC was notified of the resolution of the Federal Court of Córdoba No. 1 of March 30, 2021, which provided, in File. No. 858/21, the following summary: 1) grant the request for intervention of a third party made by ATVC; 2) direct the process as a collective process; 3) delimit the class affected to the cable and ICT services industries that are associated with ATVC; and 4) order the National Government the suspension of Decree No. 690/20, as well as all measures adopted as a result of that decree. The court also ordered the PEN and the ENACOM to refrain from issuing or pursuing any subsequent measures based on such decree, until a final court decision is rendered, in relation to all the certified class companies of this process.

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TELECOM ARGENTINA S.A.

d) Universal Service Regulation

● Decree No. 764/00

Annex III of Decree No. 764/00 required providers of telecommunications services to contribute 1% of their total accrued revenues, net of applicable taxes and charges, to the FFSU. The regulation adopted a “pay or play” mechanism for compliance with the mandatory contribution to the SU Fund. The regulation also established the exemption to contribute to the FSU in the following events: (i) for local services provided in areas with teledensity lower than 15%, and ii) when certain conditions exist in connection with a formula which combines the foregone revenues and the market share of other operators than Telecom Argentina and Telefónica who provide local telephony. Likewise, the regulation created a committee responsible for the administration of the SU Fund and the development of specific SU programs.

Resolution No. 80/07, issued by the SC, provided that until the SU Fund was effectively implemented, telecommunication service providers were required to open an account at Banco de la Nación Argentina to deposit the corresponding amounts on a monthly basis. In August 2007, Resolution No. 2,713 of the former CNC was published, which provided details regarding the concepts that have been achieved and those that are offset for the purpose of calculating the contribution obligation to the FFSU.

● Amendments to the General Regulation of the Universal Service

After several decrees and laws which approved and amended the General Regulation of the Universal Service (“RGSU”, for its Spanish acronym), replacing Annex III of Decree No. 764/00, the ENACOM approved a new RGSU through Resolution No. 721/20, which replaced the RGSU that had been approved by ENACOM Resolution No. 2,642/16.

The new Regulation maintains the obligation to contribute 1% of total revenues, as provided in the previous Resolution. Among the most relevant matters, the new Regulation provides:

(i) That the ENACOM may consider that the monthly obligation of the Contributors has been partially settled for up to 30% of their contributions, based on the reporting of computable investments made in projects approved by the ENACOM;

(ii) That the licensees may submit projects to the ENACOM for their review and assessment;

(iii) That the deployment of last mile fixed NGNs (Next Generation Network) for the provision of broadband Internet services of the Projects shall not fall within the scope of the protection described in section 3 of Decree No. 1,340/16.

In addition, within the framework of the new RGSU, SU Programs have been approved providing for the deployment of fixed broadband, deployment of access networks to mobile communications services and services to public institutions, among others.

● SU Fund - Impact on the Company with respect to its original license to provide SBT

According to the provisions of SC Resolution No. 80/07, No. 154/10 and CNC Resolution No. 2,713/07, Telecom filed its affidavits including the offset amounts related to the services that should be considered as SU services.

However, several years after the market’s liberalization and the effectiveness of the SU regulations, which were replaced with Decree No. 558/08 and the LAD, incumbent operators have still not received any offsets for providing services with the characteristics set forth under the SU regime.

As of the date of these consolidated financial statements, the Company has filed its monthly SU affidavits related to the services associated with its original license to render SBT, which resulted in a receivable of approximately $18,069 (unaudited amount). The programs and the valuation methodology used to estimate this receivable are pending of approval by the Regulatory Authority. This receivable has not yet been recorded in these consolidated financial statements as of December 31, 2021 since it is subject to the approval of the SU Programs and the review of those affidavits by the Regulatory Authority and the confirmation of the existence of enough contributions to the SU Trust so as to compensate the incumbent operators.

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TELECOM ARGENTINA S.A.

On April 8, 2011, the SC issued Resolution No. 43/11, through which it notified the Company that investments associated with “High-Cost Areas” did not qualify as an Initial Indicative Program (which amounted to approximately $18,739, included in the mentioned receivable).

Additionally, through SC Resolutions No. 53, 54, 59, 60, 61, 62, 69 and 70/12, the Company was notified that: the “Special Information Service 110”, the “Discounts for Retired People, Pensioners and Low Consumption Households”, the services of “Social Public Telephony and Loss-Making Public Telephony”, the “Services and Discounts relating to the Information Society Program argentin@internet.todos”, the “Services for Deaf-Mute People”, the “Free Access to Special Emergency Services and Special Community Services”, the “Value Added Service 0611 and 0612” and the “Long Distance Semipublic Service (SSPLD)” (which amounted to approximately $1,682, included in the mentioned receivable), respectively, did not qualify as Initial SU Programs, pursuant to the terms of Section 26 of Annex III of Decree No. 764/00, and that, they did not constitute different services involving a SU provision, and therefore, cannot be financed with SU Funds, pursuant to the terms of Section 2 of Decree No. 558/08.

The Company’s Management, with the advice of its legal counsel, has filed appeals against the above mentioned resolutions, presenting the legal arguments based on which such resolutions should be revoked.

On September 13, 2012, the CNC ordered the Company to deposit approximately $208. The Company has filed a recourse refusing the CNC’s order on the grounds that the appeals against the SC Resolutions are still pending of resolution.

On November 28, 2019, the ENACOM notified Telecom that the appeals filed by the Company against the above-mentioned resolutions had been rejected, taking them to superior body for substantiation. As of the date of these consolidated financial statements, the appeal review body has not yet issued a decision.

Although it cannot be assured that these issues will be favorably resolved at the administrative stage, the Company’s Management, with the assistance of its legal advisors, considers that has solid legal and de facto arguments to support the position of Telecom Argentina.

● FFSU - Impact on the Company with respect to the SCM originally provided by Personal

In compliance with SC Resolution No. 80/07 and No. 154/10 and CNC Resolution No. 2,713/07, Personal has filed its affidavits since July 2007 and deposited the corresponding contributions.

On January 26, 2011, the SC issued Resolution No. 9/11 establishing the “Infrastructure and Facilities Program.” The Resolution provided that telecommunication service providers could only allocate to investment projects under this program the amounts corresponding to outstanding investment contribution obligations arising from Annex III of Decree No. 764/00 before the effective date of Decree No. 558/08.

On July 5, 2012, the SC issued Resolution No. 50/12 pursuant to which it notified that the services declared by the SCM Providers as High Cost Areas or services provided in non-profitable areas, services provided to clients with physical limitations (deaf-mute and blind people), rural schools, and requests relating to the installation of radio-bases and/or investment in infrastructure development in various localities, did not constitute items that could be discounted from the amount of SU contributions pursuant to the last part of Section 3 of Resolution No. 80/07, or Section 2 of Decree No. 558/08. It also provided that certain amounts already deducted could be used for investment projects within the framework of the Program created under SC Resolution No. 9/11, or deposited in the SU Fund, as applicable.

Personal filed an administrative appeal against SC Resolution No. 50/12 requesting its nullity. As of the date of these consolidated financial statements, this appeal is still pending of resolution.

On October 1, 2012, in response to the order issued by the SC, Personal deposited under protest the amount corresponding to the assessment of the SU services provided by Personal since the effectiveness of Decree No. 558/08, reserving its right to take all actions it may deem appropriate to claim its reimbursement, as informed to the SC and the CNC on October 15, 2012. Since August 2012, Personal is paying under protest of those concepts in its monthly affidavits.

The Company’s Management cannot assure that this issue will be resolved in its favor at the administrative stage.

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TELECOM ARGENTINA S.A.

● FFSU - Impact on the Company with respect to the services originally provided by Cablevisión

Cablevisión has complied with its investment contribution obligations. The Regulatory Authority has not yet approved the Project filed by Cablevisión on June 21, 2011, within the framework of SC Resolution No. 9/11, in order to fulfill the SU contribution obligation for the amounts accrued since January 2001 until the effectiveness of Decree No. 558/08.

e)Spectrum

Trough Resolution SC N° 79/14 and Resolutions SC N °80/14, 81/14, 82/14 and 83/14, Personal was awarded Lots 2, 5, 6 and 8 and the remaining frequencies of the Personal Communication Services (PCS) and the SRMC, as well as those of the new spectrum for the SCMA, which were offered through a Public auction process approved by SC Resolution No. 38/14. In addition, through SC Resolution No. 25/15, issued on June 11, 2015, Personal was awarded with the remaining Frequency Bands which formed Lot No. 8, and thus completed said Lot.

The Auction Terms and Conditions authorized the use of the auctioned frequency bands for a period of 15 years as from the award of said frequencies. Upon expiration, the regulatory authority could extend the terms of use upon formal request of the awarded operator (which price and conditions would be set forth by such authority).

Subsequently, pursuant to Decree No. 1,340/16, the Ministry of Communications provided that the term of the authorizations for the use of frequencies of the SCMA, as well as the corresponding deployment obligations, shall be counted as from the effective migration of the services currently operating in these bands within Area II (AMBA). On August 30, 2018, the Ministry of Modernization issued Resolution No. 528/18, whereby it stated that the effective migration of those services had been verified on February 27, 2018.

f) Other relevant regulatory matters

✓ Regulatory situation in Uruguay

● Uruguayan Audiovisual Communication Services Law

Law No. 19,307 was published in the Official Gazette of the Republic of Uruguay on January 14, 2015. This Law governs radio, television, and other audiovisual communication services (hereinafter, the “Audiovisual Communications Law”). Section 202 of this law provides that the National Executive Branch shall issue its implementing regulations within a 120-day term, counted as from the day following publication of the Audiovisual Communications Law in the Official Gazette. As of the date of these consolidated financial statements, Decrees No. 45/015 and No. 160/19 has been issued. Decree No. 45/015 provides that the concession for the use and allocation of the radio-electric spectrum for non-satellite audiovisual communication services shall be granted for a term of 15 years, while Decree No. 160/19 regulates several provisions of the Audiovisual Communications Services Law.

Section 54 of the Audiovisual Communications Law provides that an individual or legal entity cannot be allocated the full or partial ownership of more than 6 authorizations or licenses to render television services to subscribers throughout the national territory of Uruguay. Such limit is reduced to 3 if one of the authorizations or licenses includes the department of Montevideo. Section 189 of this law provides that in the cases where such limits were exceeded as of the entry into force of the Law, the owners of those audiovisual communication services shall transfer the necessary authorizations or licenses so as not to exceed the limits mentioned above within a term of 4 years as from the date of entry into force of the Audiovisual Communications Law, therefore, this term expired in January 2019.

Adesol is analyzing the possible impact on its business that could be derived from the change in the regulatory framework and any possible legal actions that can be taken in order to protect its rights and its shareholders’ rights. That company is also monitoring the different unconstitutionality claims filed by other companies against certain sections of the above-mentioned law to consider whether the decisions to be rendered by the Supreme Court of Uruguay in those proceedings may be favorable to the position of Adesol in the future. As of the date of these consolidated financial statements, the Supreme Court provided the unconstitutionality of Sections 39 sub-section 3, 55, 56 sub-section 1, article 60-point C, 98 sub-section 2, 117 literal F°, sub-section 2, 143 and 149 sub-section 2 of Law No. 19,307, and furthermore, other decisions rendered in this respect by the Supreme Court dismissed the unconstitutionality claim filed by the claimant with respect to Section 54 of that Law.

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It is noteworthy that within the framework of the resolution of the unconstitutionality claim against Section 54 and 189 of Law 19,307, filed on November 22, 2019 by the permit holders Audomar S.A., Dolfycor S.A., Reiford S.A., Space Energy TECH S.A., Tracel S.A., Bersabel S.A., and Vision Satelital S.A., together with the majority shareholder of those companies, on October, 2020, the Supreme Court provided the lack of passive legitimation of the Legislative Body and rejected the mentioned unconstitutionality claim, arguing that the aforementioned Section 54 does not apply to permit holders since they are legitimized by the number of authorizations or licenses they have "as a whole" when the rule establishes limitations on natural or legal persons considered individually.

On the other hand, in April 2020 the Executive Branch of Uruguay forwarded to the Uruguayan Congress an audiovisual communications bill, which, if approved, would abolish the current Audiovisual Communications Law (Law No. 19,307) and its regulating decrees would also lapse. As of the date of these consolidated financial statements, the mentioned audiovisual communications bill is still under review of the Uruguayan Congress.

✓Other relevant regulations

● General Rules Governing ICT Service Licenses

On January 2, 2018, the Ministry of Modernization issued Resolution No. 697/17, whereby it approved the new General Rules Governing ICT Service Licenses. This Resolution repealed the General Rules approved pursuant to Annex I of Decree No. 764/00, as from the date the resolution became effective (February 1, 2018), and it also repealed ENACOM Resolutions No. 2,483/16 and No. 1,394/16 (except for Section 12 of its Annex I, which will remain in effect). The Company has filed an appeal against some aspects of such Resolution, which, to date, is pending of resolution.

● General Rules Governing ICT Service Customers

On January 4, 2018, the Ministry of Modernization issued Resolution No. 733/17, whereby it approved the new General Rules Governing ICT Service Customers. This Resolution became effective on March 5, 2018, repealing SC Resolutions No. 490/1997, and Annexes I and III of SC Resolution No. 10,059/1999 and its supplementing regulations. Annex II of SC Resolution No. 10,059/1999 shall remain in effect, to the extent applicable, until the enactment of the penalty regime provided under Sections 63 of the LAD. Such New General Rules repealed the general rules governing mobile and basic telephony service customers, thus becoming the only general rules that govern ICT Service customers, including Internet access services and subscription broadcasting services.

The Company made a filing with the Ministry of Modernization regarding some regulations that infringe its right to sell its services (such as the 180-day prepaid credit; Section 56, which provides for compensation in favor of the customer, and Section 79, which establishes the obligation to replace any channels eliminated from the programming grid with other channels of similar quality.)

Through Resolution No. 363/18, published in the Official Gazette on June 27, 2018, the Ministry of Modernization provided for amendments to the General Rules. Some of those amendments were related to the provisions challenged by Telecom in its filing. As of the date of these consolidated financial statements, this appeal is still pending of resolution. Subsequently, through Resolutions Nos. 1,150/19 and 1,522/19, the Secretariat of Modernization introduced amendments, among which, the most relevant is the term of 30 business days to report in advance material changes in the services rendered to customers.

● Number Portability Regulation

On April 4, 2018, the Ministry of Modernization issued Resolution No. E-203/18, whereby it approved the new Number Portability Regulation, including the portability of fixed telephony service lines. Through such Resolution, such Ministry also approved the implementation schedule for the portability of these services and revoked SC Resolutions Nos. 98/10, 67/11 and 21/13 and Resolution No. E-170/17 issued by the Ministry of Communications and its supplementary regulations. Through Resolution No. 401/18, published on July 11, 2018, the Ministry of Modernization decided that the ENACOM shall determine the way in which the number portability committee will be constituted and implemented.

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Through Resolution No. 4,950 issued on August 14, 2018, the Board of the ENACOM delegated on the head of the first operational level of the National Administration of Planning and Convergence the powers to: (i) approve the Processes and Operational and Technical Specifications of Number Portability, (ii) approve the Bidding Terms for the selection of the Database Administrator for the contract to be executed between the Portable Services Providers and the Database Administrator and propose any relevant changes to the Number Portability Committee, and (iii) intervene on a binding basis in the procedure to procure the services of the Database Administrator.

Through such Resolution, the ENACOM also set out that the Number Portability Committee shall be composed of 2 representatives, 1 permanent and 1 alternate, and approved the work schedule in order to properly implement the Number Portability.

On December 31, 2020, the ENACOM issued Resolution No. 1,509/20, whereby it replaced the work schedule for the implementation of Number Portability that had been approved as an Annex to Resolution No. 4,950/18. In addition, the ENACOM approved the new model of the Bidding Terms and Conditions for the selection of the centralized Number Portability Database Administrator for the Mobile Communication Service and the Fixed Telephony Service, and also approved the Network Technical Specifications. This Resolution was ratified by the ENACOM Resolution No. 185/2021.

Through Resolution No. 32/2022 issued on January 25, 2022, the Board of the ENACOM decided to postpone the initial operations and startup of the Number Portability of fixed telephony service lines for 120 days, in order to carry out its correct implementation.

● General Rules Governing Interconnection and Access

On May 18, 2018, Ministry of Modernization Resolution No. 286/18 was published in the Official Gazette. Such Resolution approves the new General Rules Governing Interconnection and Access, effective as from July 3, 2018, repealing the General Rules that had been approved under Decree No. 764/00.

Pursuant to the new General Rules, the interconnection and access terms, conditions and prices may be freely established by mutual agreement between the parties. The ENACOM will set provisional interconnection charges, as established under Decree No. 1,340/16.

In addition, the providers of ICT Services will have the obligation to provide interconnection at the request of another provider of ICT Services, on no less favorable technical and economic conditions than those applied by the requested ICT Service provider to itself or to third parties, granting the quality of services, the transparency in compensation and must refrain from charging the requesting ICT Service Providers for functions or services that are not needed to render their services.

On August 14, 2018, the ENACOM issued Resolution No. 4,952/18, establishing a provisional charge equivalent to US$0.0108 per minute of communication, without considering the different taxes and charges that may be applicable for the origination services or local termination in the mobile communications service networks. Likewise, it is established that for the purposes of applying the fixed charge, the unit of measurement will be the second. Through ENACOM Resolution No. 1,161/18 dated November 27, 2018, the ENACOM set the same charge for SRCE network termination.

On that same date, Resolution No. 1,160/18 was also published in the Official Gazette. Pursuant to such Resolution, the ENACOM set: (i) a provisional charge equivalent to forty-five ten-thousandths US dollars (US$ 0.0045) for local origination or termination services over fixed telephony service networks per minute of communication (ii) a provisional charge equivalent to ten ten-thousandths US dollars (US$ 0.0010) for local transit service per minute of communication (iii) a provisional charge equivalent to twenty-seven ten-thousandths US dollars (US$ 0.0027) for long distance transport service per minute of communication (iv) the second as the measuring unit for the purposes of applying the charges set under this Resolution.

Telecom filed an appeal with the ENACOM challenging those charges with the respective legal grounds to request the review of the above-mentioned Resolution by that agency. As of the date of these consolidated financial statements, this appeal is still pending of resolution.

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Pursuant to Resolution No. 4,266/19, published in the Official Gazette on October 8, 2019, the ENACOM decided, on a provisional and exceptional basis, that the reference exchange rate applicable to the interconnection charges in effect established under ENACOM Resolutions Nos. 4,952/18, 1,160/18 and 1,161/18, for calls made as from August 1, 2019, will be of forty-five pesos and twenty-five cents ($45.25) per US dollar. In subsequent months, the exchange rate to be applied may not exceed six percent (6%) of the exchange rate established for the previous month and in no case may it exceed the selling exchange rate set by Banco de la Nación Argentina on the last business day of the month in which the services are rendered. This Resolution was applicable to services provided up to and including December 31, 2019.

Pursuant to Resolution No. 1,510/20, published in the Official Gazette on December 29, 2020, the ENACOM decided, on a provisional and exceptional basis, that the reference exchange rate applicable to the interconnection charges for calls made as from January 1, 2021, will be of eighty-three pesos and thirty-six cents ($83.36) per US dollar. This Resolution was applicable to services provided up to and including June 30, 2021 and was subject to the approval of the ENACOM's Board. This Resolution was ratified by ENACOM Resolution No. 181/2021.

● Quality Rules for ICT Services

Through Resolution No. 580/2018, published in the Official Gazette on September 6, 2018, the Ministry of Modernization approved the Quality Rules for ICT Services, which came into effect on January 4, 2019.

The ENACOM was instructed to issue the implementing regulations within a term of 90 calendar days. Although the term has already expired, as of the date of these consolidated financial statements, the implementing regulations have not been issued.

● National Rules for Contingencies

Through Resolution No. 51/18, published in the Official Gazette on November 6, 2018, the Secretariat of Modernization approved the National Rules for Contingencies and ordered the ENACOM to issue the implementing procedures or Contingency Plan (for emergency situations) within a term of 90 calendar days as from its publication in the Official Gazette.

Even though the term has expired, as of the date of these consolidated financial statements, such procedure has not been issued yet.

● International Roaming Regulations between Argentina and Chile

On August 31, 2020, ENACOM Resolution No. 927/20 was published in the Official Gazette. In such resolution, the International Roaming Regulations between Chile and Argentina was approved. Under that Regulation, it was established, among other things, that Argentina's mobile communications service providers, including Virtual Mobile Operators, shall offer customers who use international Roaming services with Chile the same prices that they offer in their own country for voice communications, messaging and mobile data while they stay in that country.

● Infrastructure Sharing Regulation

On December 16, 2020, the Chief of the Cabinet of Ministers - Secretariat of Public Innovation issued Resolution No. 105/20, whereby it approved the Passive Infrastructure Sharing Regulation and established the terms and procedures regarding the access, availability and shared use of passive infrastructure owned by, controlled by or otherwise available to an ICT Services Licensee.

Among the most relevant provisions of the Regulation is the obligation to grant access to other ICT Services Licensees to available passive infrastructure; to reserve capacity in the installation of new ducts and shelters for providing access to other ICT Services Licensees; the prohibition to agree on exclusive use; among other obligations.

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● Subscription Television Services Regulation

On December 24, 2020, ENACOM Resolution No. 1,491/20 was published in the Official Gazette, whereby said agency approved the “General Regulation of Subscription Television Services by Physical and/or Radio-electric and Satellite Link”. Among other aspects, it provides for the arrangement of signals in programming grids so that the signals that correspond to the same genre are arranged consecutively; the obligation to submit an annual affidavit describing the programming grid, the inclusion of signals of broadcast television Licensees; the list of mandatory signals, and, in case of disagreement to include mandatory signals in the programming grid, be it broadcast television signals or those included in the Public Registry of Signals, any of the parties may make a filing with the ENACOM. In addition, said Resolution provides that the commercialization of one or several signals may not be conditional on the acquisition of other signals. In the event licensees offer a package of signals, they must include a breakdown of the price of each of them. The Company made a spontaneous appearance before the ENACOM to state its full adherence to the appeal filed by the Argentine Cable Television Association (ATVC, for its Spanish acronym) against the provisions of such resolution on the grounds that it is illegitimate and should therefore be revoked.

● Sanctions Regime applicable to ICT Services

On March 3, 2021, the “Sanctions Regime applicable to ICT Services” was approved through ENACOM Resolution No. 221/21. The mentioned Resolution No. 221/21, among others, provides that: (i) the penalty reference unit shall be PBU-SBT, which value will be determined as of the date of payment, (ii) there is a cap of 50,000 PBU-SBT on the imposition penalty, and a minimum of 50 PBU-SBT, (iii) the penalties imposed shall be published in the media and/or the ENACOM´s institutional website; and (iv) the penalties can be imposed on a daily basis as long as the lack of compliance with the regulation remains. The resolution was ratified by the ENACOM Board of Directors on April 28, 2021.

As of the date of these consolidated financial statements, the Company is analyzing the impact of this new regulation.

✓ Compre Argentino (Buy Argentine Act)

Pursuant to Law No. 27,437, Telecom Argentina- in its capacity as public fixed telephony service licensee-, and its respective direct subcontractors, in the procurement of provisions and public works and services, shall give preference to the acquisition or lease of goods of national origin, under the terms of such law.

The law provides that the preference established shall be given to goods of national origin when the price of identical or similar goods, under cash payment conditions, is equal to or lower than the price of foreign goods increased by 15% when the offerors qualify as micro, small and medium-sized enterprises – (MSMEs), and by 8% for any other companies. In the comparison, the price of foreign goods shall contemplate applicable import duties and all the taxes and expenses required for their nationalization.

The law sets out that a good is considered to be of national origin when it has been produced or extracted in the Argentine territory, provided that the cost of nationalized imported raw materials, inputs or supplies does not exceed 40% of its gross production value.

The procurement of services is subject to Law No. 18,875, which sets out the obligation to contract exclusively the services of domestic companies, consulting firms and professionals, as defined in such law. Any exception shall have to be previously approved by the competent ministry.

Through Resolution No. 2,350/04, the former CNC approved the “Procedure for the fulfillment of the Buy Argentine Act”, which includes the obligation to file semi-annual affidavits regarding the fulfillment of these rules.

The rules provide for economic, administrative and criminal sanctions for failure to fulfill the obligations established under the Compre Argentino regime.

It is worth mentioning that this Act provides to Telecom Argentina less operational flexibility related to, among other matters, authorizations management prior to acquisitions, investment of time in the assembly of the required presentations with respect to the obligation to inform the semiannual affidavits of compliance of the Buy Argentine Act and associated administrative expenses.

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✓ REGULATORY SITUATION OF MICRO SISTEMAS AS PAYMENT SERVICE PROVIDER (PSP)

● Communications issued by the Central Bank of Argentina (BCRA)

In January 2020, the BCRA issued Communication “A” 6,859 and Communication “A” 6,885, whereby it established the rules for the operation of the payment accounts offered by PSPs. Among other obligations, it was provided that PSPs must be registered in the “Registry of Payment Service Providers that Offer Payment Accounts” managed by the Superintendency of Financial and Exchange Institutions (SEFyC, for its Spanish acronym).

In addition, pursuant to said regulations, PSPs must comply with the reporting regime established by the BCRA.

In that regard, during fiscal years 2020 and 2021, the Central Bank of Argentina issued several Communications, whereby, among other things, it established the same rules for legal entities that, without being financial entities, serve at least one function in the provision of payment services, and therefore, compete.

The most important provisions of the effective legislation are detailed below:

a) Offering of Accounts and Funds Management: PSPs can offer the necessary accounts for debits and credits within the payment scheme. The accounts offered by PSPs are called payment accounts. Payment accounts are unrestricted accounts offered by PSPs to their customers to order and/or receive payments. Customer funds credited to the payment accounts offered by PSPs must be available at all times (immediately upon demand by the customer) for an amount at least equivalent to that credited to the payment account. To this end, the systems implemented by PSPs must be able to identify and individualize the funds of each customer.

100% of the customers’ funds must be deposited (at all times) in checking accounts in pesos held with Argentine financial institutions. Notwithstanding the foregoing, at the express request of the customer, the funds credited to payment accounts can be applied to investments in ‘mutual funds’ in Argentina. Such funds shall be debited from the relevant payment account, in which case the amounts invested in mutual funds must be reported separately from the balance of the payment account.

For transactions on their own account (payment to suppliers, payment of salaries, etc.), PSPs must use an ‘operational’ bank account (unrestricted) separate from the bank account in which the PSP customers’ funds are deposited.

b) Oversight and Reporting Regime: PSPs shall comply with the reporting regime provided for in different communications issued by the BCRA and give access to their facilities and documentation to SEFyC's personnel designated for this purpose, and make available to the BCRA tools for real-time inquiries and reporting that the Deputy General Manager of Payment Methods may determine for each type of supplier according to its volume of operations.

c) Transparency Advertisements made through any media and any documentation issued by PSPs must clearly and expressly state that: a) they only offer payment services and are not authorized by the BCRA to operate as financial entities, and b) funds deposited in payment accounts do not constitute deposits in a financial institution, nor do they have any of the guarantees that such deposits may enjoy in accordance with applicable laws and regulations regarding deposits in financial institutions.

d) Transfers of funds sent and received in payment accounts: PSPs must comply with the obligations set out in the “National Payment System - Transfers Rules.” and “National Payment System – Transfers – Supplementary Rules”

● Law No. 25,246 and Resolution No. 76/2019 FIU

Micro Sistemas falls within the scope of the terms of Article 20 of Law No. 25,246 (as amended), which provides for the persons obliged to report to the FIU.

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In addition, Micro Sistemas is subject to the terms of FIU Resolution No. 76/2019 which sets out the guidelines for asset laundering and terrorist financing risk management and minimum compliance standards to be complied with by purchase and credit card operators and issuers of traveler checks, which shall adopt and apply to manage, in accordance with their policies, procedures and controls, the risk of being used by third parties for criminal purposes of asset laundering and terrorist financing.

In addition, it is subject to several FIU standards that have a general scope. Among them, FIU Resolution No. 134/2018 (as amended) which provides for a list of politically exposed persons (PEPs) and establishes the special operations control actions to be applied to this type of customers, and FIU Resolution No. 112/2021, which amended the system for the identification and verification of the ultimate beneficiaries of customers that are artificial persons or other legal entities.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared by applying the criteria for the restatement of financial statements set forth in IAS 29. For more information, see Note 1.e).

a)   Going Concern

The consolidated financial statements as of December 31, 2021, 2020 and 2019 have been prepared on a going concern basis as there is a reasonable expectation that Telecom Argentina and its subsidiaries will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve months).

b)   Foreign Currency Translation

Items included in the financial statements of each of Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Argentine pesos, which is the functional currency of all Company’s subsidiaries located in Argentina. The functional currency for the Company’s foreign subsidiaries is the respective legal currency of each country.

The assets and liabilities of the Company’s foreign subsidiaries are translated using the exchange rates in effect at the reporting date, while income and expenses are translated at the average exchange rates for the year. Translation differences resulting from the application of this method are recognized under Other Comprehensive Income. The cash flows of foreign consolidated subsidiaries expressed in foreign currencies included in the consolidated financial statements are translated at the average exchange rates for each year.

c)   Foreign Currency Transactions

Transactions in foreign currencies are translated into the functional currency using the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate prevailing at the reporting date. Exchange differences are recognized in the consolidated income statement and are included in the items related to Financial results, net.

d)   Consolidation

These consolidated financial statements include the consolidation of the assets, liabilities, results and cash flows of Telecom Argentina and its subsidiaries (controlled companies, please see item d.1), as well as the consolidation in its financial statements of the assets, liabilities and results under joint control, according to the percentage of its interest in the agreements and joint ventures (please see item d.2)) jointly controlled by it; and, the interest owned by the Company in associates is recognized in one item (companies in which it exercises significant influence, please see item d.3)). These consolidated financial statements include the consolidation of Telecom and its subsidiaries on a line-by-line basis and the structured entities with the specifications mentioned in item d.4).

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d.1) Control

Control exists when the investor has substantive power over the investee; has exposure or rights to variable returns from its involvement with the investee and has the ability to use its power to affect the amount of the returns. Subsidiaries are fully consolidated as from the date on which control is transferred to the controlling company and shall be deconsolidated from the date that control ceases.

In the preparation of these consolidated financial statements, assets, liabilities, revenues and expenses of the subsidiaries are consolidated on a line-by-line basis. Non-controlling interests in the equity and in the profit (loss) for the year are disclosed separately under appropriate captions, respectively, in the consolidated statement of financial position, in the consolidated income statement and in the consolidated statement of comprehensive income.

All accounts and transactions between Telecom and its subsidiaries have been eliminated in the preparation of these consolidated financial statements.

The subsidiaries’ financial statements cover the same periods and are prepared as of the same closing date and in accordance with the same accounting policies as those of the Parent.

Note 1.a) details the consolidated subsidiaries, together with the interest percentages held directly or indirectly in each subsidiary’s capital stock and votes, main activity and country of origin as of December 31, 2021.

The Company considers any transactions executed with non-controlling shareholders that do not result in a loss of control, as transactions among shareholders. A change in the equity interests held by the Company is considered as an adjustment in the book value of controlling interests and non-controlling interests to reflect the changes in its relative interests. The differences between the amount for which non-controlling interests are adjusted and the fair value of the consideration paid or received and attributed to the shareholders of the controlling company will be directly recognized in “Other comprehensive income” in the equity attributed to the parent company.

d.1.a) Accounting treatment of the acquisition of the remaining equity interest (30%) in the controlled company Tuves

On September 4, 2019, Núcleo acquired the 30% remaining equity interest in Tuves Paraguay, which previously belonged to TU VES Chile.

This operation represents a transaction between controlling and non-controlling shareholders in the consolidated financial statements. Therefore, the Company recorded a $193 adjustment to the non-controlling interest balance as of December 31, 2019 and the difference arising from the purchase price, which amounted to $71, was recorded in “Other comprehensive income” under Equity attributable to controlling shareholders as of that date, as provided under IFRS 10.

d.1.b) Offer for Irrevocable Call and Put Option on the Shares of AVC Continente Audiovisual

On September 25, 2019, Telecom Argentina and the non-controlling shareholders of AVC Continente Audiovisual (the “Assignors”) executed an Offer for an Irrevocable Call and Put Option on all the shares of AVC Continente Audiovisual held by the Assignors (497,479 common shares, representing 40% of the capital stock). The call option could be exercised by Telecom Argentina or the Assignors, since October 1, 2019 until September 30, 2024. The call and put options include, together with the shares, the assignment and transfer of all the equity and political rights inherent to them.

On October 27, 2021, Telecom Argentina exercised the call option on 497,479 common shares of $1 nominal value each and entitled to 1 (1) vote per share representing 40% of total ACV Continente Audiovisual capital stock and votes, as the Assignors exercised the put option on such shares, cancelling the remaining balance.

This operation represents a transaction between controlling and non-controlling shareholders in the consolidated financial statements. Therefore, the Company recorded a $24 adjustment to the non-controlling interest balance as of December 31, 2021 and the difference arising from the total purchase price of $164 was recorded in “Other comprehensive income” under Equity attributable to controlling shareholders as of that date, as provided under IFRS 10.

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Additionally, for the acquisition of the additional 40% interest, the Company has recognized goodwill for a total of $122.

d.1.c) Purchase of a share of PEM. Merger between Telecom, Última Milla, CV Berazategui and the split away assets of PEM

On June 27, 2019, the Company acquired a registered non-endorsable common share, with nominal value of $1 and entitled to 1 vote per share, representing 0.00000738% of the capital stock and votes of PEM for a total amount of $10,000 (ten thousand Argentine pesos). Upon this acquisition, Telecom became the direct holder of 100% of the capital stock of PEM.

On October 1, 2019, the Company merged between Última Milla and CV Berazategui (the “Absorbed Companies”) and the split away assets of PEM (the “Corporate Reorganization”), thus generating the corresponding operating, accounting and tax effects, unifying the operations of the mentioned companies and Telecom Argentina, enhancing efficiency, synergy and streamlining costs and optimizing the use of the companies’ technical, administrative and financial structures.

The Absorbed Companies were dissolved without liquidation and PEM split away a portion of its assets and its capital stock was reduced pro rata as of October 1, 2019.

Such Corporate Reorganization was carried out in accordance with the provisions of Sections 82 and 83 of the General Associations Law, with the provisions of Section 77 and related Sections of Income Tax Law No. 20,628, as amended and supplemented, with CNV Rules, with the Listing Rules and other provisions issued by the BYMA, with IGJ Rules and with other applicable laws and regulations. The Corporate Reorganization was approved by the shareholders at the General Extraordinary Shareholders’ Meeting and the Special Shareholders’ Meetings of Class “A” and Class “D” shares of Telecom Argentina held on October 24, 2019 and the respective Shareholders’ Meetings of Última Milla, CV Berazategui and PEM held on the same date.

As a result of the Corporate Reorganization, as of October 1, 2019, Telecom Argentina assumed all the existing activities, receivables, property and all the rights and obligations of Última Milla, CV Berazategui and the split away assets of PEM, as well as any that may come into existence or arise due to prior or subsequent acts or activities. On November 25, 2019, the Final Merger Agreement was subscribed and on November 29, 2019, the CNV was requested for administrative authorization, which was provided by resolution issued on February 19, 2020.

d.1.d) Irrevocable contribution in cash to Micro Sistemas

On November 10, 2020, Telecom made an irrevocable contribution in cash for the future subscription of shares of Micro Sistemas, for a total amount of $60 ($94 in current currency as of December 31, 2021). The General Extraordinary Shareholders’ Meeting of Micro Sistemas held on December 21, 2020 decided to increase the capital stock by $60 through the capitalization of such irrevocable contributions paid in cash by Telecom and issue, representing such increase, a total of 60,000,000 non-endorsable, registered common shares, with nominal value of $1 Argentine peso each and entitled to 1 vote per share, to be delivered to Telecom.

On January 11, 2021, Telecom Argentina made an irrevocable contribution in cash for the future subscription of shares of Micro Sistemas, for a total amount of $62 ($90 in current currency as of December 31, 2021), which were capitalized by Micro Sistemas by resolution of the General Extraordinary Shareholders’ Meeting held on January 19, 2021.

On September 22, 2021, Telecom Argentina made a new irrevocable contribution in cash for the future subscription of shares of Micro Sistemas, for a total amount of $260 ($287 in current currency as of December 31, 2021), which were capitalized by Micro Sistemas by resolution of the General Extraordinary Shareholders’ Meeting held on November 16, 2021.

d.1.e) Incorporation of Personal Smarthome S.A.

On December 30, 2020, Telecom and PEM incorporated a new company, Personal Smarthome S.A, holding a 90% and 10% interest in its capital stock, respectively. Telecom and PEM subscribed 90,000 and 10,000 registered common shares with nominal value of $1 Argentine each and entitled to 5 (5) votes per share. Finally, on that date, the shareholders paid in cash 25% of their respective subscriptions.

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TELECOM ARGENTINA S.A.

Personal Smarthome S.A. provides services, solutions and/or goods that allow and/or contribute to automation, monitoring, security, digital interconnection and home automation (IoT) for the integration of technology in the design of homes, buildings, cities and/or public or private entities.

As of the date of these consolidated financial statements, Smarthome S.A. is a dormant entity.

d.1.f) Acquisition of Opalker S.A.

On July 27, 2021, Telecom Argentina acquired all the shares representing the total subscribed capital stock of the Uruguayan company Opalker S.A.. The intention of Telecom Argentina is to commercialize cybersecurity products and services and/or related services through this company.

As of the date of these consolidated financial statements, Opalker S.A. is a dormant entity.

d.2) Interests in Joint Operations

A joint operation is a contractual arrangement whereby two or more companies undertake an economic activity that is subject to joint control, i.e., when the financial strategy and the operating decisions related to the company’s activities require the unanimous consent of the parties sharing control.

In the cases of joint business arrangements executed through Uniones Transitorias de Empresas ("UTE"), considered joint operations under IFRS 11, the Company recognizes in its financial statements on a line-by-line basis the assets, liabilities and net income subject to joint control in proportion to its share in such arrangements.

Telecom holds a 50% share in the UTE Ertach – Telecom Argentina, which is engaged in the provision of data transmission services and the order channels required to integrate the public administration agencies of the Province of Buenos Aires and the municipal agencies in a single provincial data communication network.

The UTE had an agreement in effect with the Ministry of the Cabinet Chief of the Province of Buenos Aires, which was approved pursuant to Decree No. 2017-166-E-GDEBA-GPBA, which was in the “termination of services phase”, situation that involved the continuity of the UTE’s operations until the Government of the Province of Buenos Aires provides for a new service supplier.

Given the technical impossibility for a new supplier to provide the service immediately and being the UTE the only one capable of providing it under current conditions, the Ministry of the Cabinet Chief of the Province of Buenos Aires, through Resolution No. 3,046/2021, approved the direct engagement of the UTE for continuing to provide services for a twelve months’ period from July 29, 2021 - date of approval of the corresponding administrative act - renewables for another twelve months if requested by the mentioned Ministry.

d.3) Investments in Associates

An associate is an entity over which the Company has significant influence, without exercising control, generally accompanied by equity holdings of between 20% and 50% of voting rights.

The associates’ assets and liabilities and net income are disclosed in the consolidated financial statements using the equity method. Under the equity method, the investment in an associate is to be initially recorded at cost and the book value will be increased or decreased to recognize the investor’s share in the statement of income for the year or in other comprehensive income obtained by the associate, after the acquisition date. The distribution of dividends received from the associate will also reduce the book value of the investment.

The Company's investment in associates includes the goodwill identified at the time of the acquisition, net of any impairment losses. For more information on impairment of fixed assets, see item l) to this Note.

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Unrealized gains or losses on transactions between the Company (and its subsidiaries) and associates are eliminated considering the Company’s interest in the associates.

The associates’ financial statements cover the same periods and are prepared as of the same closing date as those of the Company’s. Adjustments were made, where necessary, to the associates’ financial statements so that their accounting policies are in line with those used by the Company.

d.4) Consolidation of structured entities

The Company, through one of its subsidiaries located in Uruguay, has executed certain agreements with other companies for the purpose of rendering on behalf of and by order of such companies’ certain installation services, collections, administration of subscribers, marketing and technical assistance, financial and general business advising, with respect to cable television services in Uruguay. In accordance with IFRS 10 “Consolidated Financial Statements”, these consolidated financial statements include the assets, liabilities and results of these companies. Since the Company does not hold an equity interest in these companies, the offsetting entry of the net effect of the consolidation of the assets, liabilities and results of these companies is disclosed under the line items “Equity attributable to non-controlling interests” and “Net Income attributable to non-controlling interests”.

d.5) Business Combinations

The Company applies the acquisition method of accounting for business combinations. The consideration for each acquisition is measured at fair value of the assets given (acquisition cost).

The identifiable assets and the liabilities assumed of the acquired company that meet the conditions for recognition under IFRS 3 are recognized at fair value at the acquisition date, except for certain particular cases provided by such standard.

Any excess between: a) the sum of the consideration transferred, plus non-controlling interests (valued at fair value or at their proportional participation on identifiable net assets), plus acquisition‑date fair value of the acquirer’s previously held equity interest in the acquire (if any) and b) the net of the acquisition‑date amounts of the identifiable assets acquired and the liabilities assumed determined on the acquisition date, is recognized as goodwill. Otherwise, the gain is immediately recognized in the income statement.

Acquisition direct cost are recognized in the Income Statements when they are incurred.

e)   Revenues

Revenues are recognized (net of discounts and returns) to the extent the sales agreement has commercial substance, provided it is considered probable that economic benefits will flow to the Company and their amount can be measured reliably.

The Company discloses its revenues into two large groups: services and equipment (which mainly includes handsets sales). Revenues from sales of services are recognized at the time services are rendered to the customers. Revenues from sales of equipment are recognized at the point in time when the control is transferred and the performance obligation is performed.

Revenues from transactions that include more than one item have been recognized separately to the extent they have commercial substance on their own. In those cases, in which payment is deferred in time, such as construction contracts, the effect of the time value of money must be accounted for. Non-refundable up-front connection fees (one-time revenues), generated at the beginning of the relationship with the customers, are deferred and charged to income over the term of the contract or, in the case of indefinite period contracts, over the average period of the customer relationship.

Monthly fees paid in advance are disclosed net of trade receivables until the service is rendered.

Revenues on construction contracts are recognized based on the stage of completion (percentage of completion method). Such method provides an accurate representation of the transfer of goods in construction contracts because revenues are recognized based on the progress of the construction. When the outcome of a construction contract can be estimated reliably, the revenues and costs associated with the construction contract are recognized as revenues and expenses respectively by reference to the stage of completion of the

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contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenues, the expected losses are immediately recognized as expenses.

In relation to revenues from construction contracts, as of December 31, 2021, the Company recognized revenues from construction contracts in the amount of $687.

The main performance obligations of Telecom and its subsidiaries are:

- Mobile Services

Telecom provides mobile services in Argentina and Paraguay. Service revenues mainly consist of monthly basic fees, revenues on prepaid calling cards, airtime usage charges, roaming and interconnection charges, VAS charges, and other services.

- Internet Services

Internet service revenues mainly consist of fixed monthly fees received from residential and corporate customers for data transmission (including private networks, dedicated lines, broadcasting signal transport and videoconferencing services) and Internet connectivity services (mainly high-speed subscriptions - broadband-).

- Cable Television Services

The cable television services provided by Telecom comprise the operation of television networks installed in different locations of Argentina and Uruguay. In addition, Tuves holds a license for the provision of DATDH services in Paraguay. Cable television services mainly consist of monthly fees and certain variable consumption fees related to on demand services.

- Fixed Telephony and Data Services

Mainly consist of voice services monthly fees, measured service and monthly fees for additional services (among them, call waiting, itemized billing and voicemail), interconnection services, capacity leases and data services, among others.

- Other Services Revenues

Other services revenues include mainly, revenues from billing remuneration and claim’s management retribution, administrative revenues, revenues from financial services and revenues from the sale of advertising space.

f)   Financial Instruments

At initial recognition, the group measures financial assets and liabilities at its fair value plus or less, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to its acquisition or issuance.

f.1) Financial Assets

In accordance with IFRS 9, financial assets, after their initial recognition, are measured at amortized cost (initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount), fair value through other comprehensive income or fair value through profit or loss (fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction, in the principal or most advantageous market), on the basis of:

(a) the Company’s business model for managing the financial assets; and

(b) the contractual cash flow characteristics of the financial asset.

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Financial assets include:

Cash and Cash Equivalents

Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not exceed three months.

Cash and cash equivalents are recorded according to their nature, at fair value or amortized cost (for example, short-term investments at amortized cost, investments in mutual funds at fair value with an impact on Other Financial Results, net).

Trade and Other Receivables

Trade and other receivables classified as either current or non-current assets, except for guarantee of financial operations are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowances for doubtful accounts.

Sometimes, mobile telephony customer pays for the handset the price net of the discount. Such discount is allocated between handset sale revenues and service revenues, generating, initially, the recognition of a contractual asset. Contractual assets, either current or non-current, are initially recognized at fair value and subsequently measured at amortized cost, less allowances for bad debts, if any.

Guarantee of financial operations are recognized at fair value with impact on Other Financial Results.

Investments

Governments bonds include the Bonds issued by National, Provincial and Municipal Governments. Depending on the business model adopted by Management, Securities and Bonds may be valued at amortized cost or at fair value and its results are recognized under Other financial results, net.

Investments in mutual funds are carried at fair value. Results are included in Other financial results, net.

The share in the trust “2003 Telecommunications Fund” was recognized at fair value.

Other investments are valued at their amortized cost.

Impairment of Financial Assets

At the time of initial recognition of financial assets (and at each closing), the Company estimates the expected losses, with an early recognition of a provision, pursuant to IFRS 9.

Regarding trade receivables, and using the simplified approach provided by such standard, the Company measures the allowance for doubtful accounts for an amount equal to the lifetime expected credit losses.

The expected losses to be recognized are calculated based on a percentage of un-collectability per maturity ranges of each financial asset. For such purposes, the Company analyzes the performance of the financial assets grouped by type of market. Such historical percentage must contemplate the future collectability expectations regarding those financial assets and, therefore, those estimated changes in performance.

Derecognition of Financial Assets

The Company derecognizes a financial asset when the contractual rights to the cash flows of such assets expire or when it transfers the financial asset and, therefore, all the risks and benefits inherent to the ownership of the financial asset are transferred to another entity.

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f.2) Financial Liabilities

Financial liabilities comprise trade payables (excluding Derivatives, if applicable), financial debts, dividends payable and certain liabilities included in Other Liabilities.

Financial liabilities are initially recognized at fair value and subsequently measured, generally, at amortized cost.

In case of loan renegotiations, in which the exchange between an existing borrower and lender of debt instruments were under substantially different terms or in cases of a substantial modification of the conditions of an existing financial liability, considering both quantitative and qualitative factors, we have to recognize a cancellation of the original liability and recognition of the new liability. Otherwise, the original liability does not have to be repaid, but was considered refinanced, modifying its valuation in relation to the new terms and conditions.

It should be noted that the funds to be paid to clients that are disclosed within "Accounts payable" correspond to the amounts owed to users held by the subsidiary Micro Sistemas based on what is described in Note 2 f). Funds, net of any amounts owed to the subsidiary by the user, are held in the user's checking account until the user requests withdrawal.

Derecognition of Financial Liabilities

The Company derecognize a financial liability (or part of it) when it has been extinguished, i.e., when the obligation specified in the corresponding agreement is discharged, repaid or expires.

f.3) Derivatives

Derivatives are used by Telecom and its subsidiaries to manage their exposure to exchange rate and interest rate risks and to diversify the parameters of debt so that costs and volatility can be reduced to pre-established operational limits.

All derivative financial instruments are measured at fair value in accordance with IFRS 9. Derivative financial instruments qualify for hedge accounting if and only if all of the following conditions are met:

a)  The hedging relation consists only of hedging instruments and eligible hedged items;

b)  The hedging relation and the risk management strategy and purpose are formally designated and documented since its inception; and

c)  The hedge is expected to fulfill the efficacy requirements described under Note 22.c – Hedge Accounting.

When a derivative financial instrument is designated as a cash flow hedge, the effective portion of any gain or loss on the derivative financial instrument is recognized directly in Other Comprehensive Income. The cumulative gain or loss is removed from OCI and recognized in the consolidated income statement at the same time as the hedged transaction affects the consolidated income statement. The gain or loss associated with the ineffective portion of a hedge is immediately recognized in the consolidated income statement. If the hedged transaction is no longer probable, the cumulative gains or losses included in OCI are immediately recognized in the consolidated income statement.

If the hedged item is a prospective transaction that results in the recognition of a non-financial asset or liability or a firm commitment, the cumulative gain or loss that was initially recognized in OCI is reclassified to the carrying amount of such asset or liability.

If hedge accounting is not appropriate, gains or losses arising from the fair value measurement of derivative financial instruments are immediately recognized in the consolidated income statement.

For additional information about derivatives instruments, see Note 22 to these consolidated financial statements.

f.4) Receivables and payables valued at amortized cost

Receivables and payables valued at amortized cost are initially recorded at their fair value, which is generally determined by using a discounted cash flow valuation method. The fair value under this method is estimated as the present value of all future cash flows

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discounted using an estimated discount rate, especially for long term receivables and payables. The discount rates of receivables denominated in Guaraníes were of 8.22% and 12.4% for the years 2021 and 2020, respectively.

Measurement of the fair value of certain financial instruments: If there is a quoted market price available for an instrument in an active market, the fair value is calculated based on that price.

If there is not a quoted market price available for a financial instrument, its fair value is estimated based on the price established in recent transactions involving the same or similar instruments and, if not, based on valuation techniques regularly used in financial markets. The Company uses its judgment to select a variety of methods and makes assumptions based on market conditions at closing. For more information on the determination of those values, see Note 22 to these consolidated financial statements.

g)   Inventories

Inventories are measured at the lower of the restated for inflation cost and net realizable value. The cost is determined under the weighted average price method. The net realizable value represents the estimated selling price in the ordinary course of business less the applicable variable sale costs. In addition, the Company estimates and records allowances for obsolete and slow-moving inventories.

The value of inventories does not exceed its recoverable value at the end of the year.

h)   PP&E

PP&E is measured at acquisition or construction cost , plus every cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by Management, all restated for inflation less accumulated depreciation and impairment losses, if any. Subsequent expenditures are capitalized only when they represent an improvement, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

The other subsequent expenditures are recognized as expenses for the period in which they were incurred. When PP&E comprises major components having different useful lives, these components are accounted for as separate items if they are significant.

Depreciation of PP&E owned is calculated on a straight-line basis over the ranges of estimated useful lives of each class of assets. The ranges of the estimated useful lives of the main classes of PP&E are the following:

	Estimated Useful Life (in years)
Real Estate	5 - 50
Fixed Network and Transportation	4 - 20
Mobile Network Access	3 – 7
Tower and Pole	10 – 20
Switching Equipment	2 – 7
Computer Equipment	3 – 5
Vehicles	5
Goods lent to customers at no cost	2 – 4
Power Equipment and Installations	2 – 12
Machinery, diverse equipment and tools	5 – 10

The depreciation rates are reviewed annually and revised if the current estimated useful life is different from that estimated previously taking into account, among others, technological obsolescence, maintenance and condition of the assets and different intended use from previous estimates. The effect of such changes is recognized prospectively in the income statement in the corresponding period.

i)   Intangible Assets

Intangible assets are recognized if and only if the asset is separately identifiable, it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.

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Intangible assets are valued at their restated for inflation cost, less accumulated amortization (in the case of intangible assets with a finite useful life) and impairment losses, if any.

Intangible assets comprise the following:

- Incremental Costs from the Acquisition of Contracts

Certain direct incremental costs incurred for the acquisition of new subscribers are capitalized as intangible assets to the extent the conditions for the recognition of an intangible asset are met, pursuant to IFRS 15, i.e. provided the Company expects to recover those costs and provided they are costs that the Company would not have incurred if the contract had not been successfully obtained.

Subsequently, such assets will be amortized under the straight-line method over the contractual relationship of the related transferred service. Those costs are amortized over a term of two years.

- 3G/4G licenses

It includes 3G and 4G frequencies awarded by the SC to Personal in November 2014 and June 2015, and the licenses that had been previously awarded to Nextel.

The Company's management has concluded that the licenses have a finite useful life and, therefore, they are amortized under the straight-line method over  180 months.

- PCS and SRCE licenses (Argentina)

The Company’s Management, based on an analysis of the relevant characteristics of these licenses, has considered that the licenses have an indefinite useful life because there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Company. Therefore, these licenses are subject to a recoverability assessment, at least on an annual basis.

- Núcleo Licenses

The renewals of PCS licenses are amortized under the straight-line method over 60 months.

The 700 MHz- band spectrum licenses are amortized over a term of 10 years.

The Internet and data transmission licenses are amortized over a term of 5 years.

- Customer Portfolio

Customer portfolio comprises mainly contracts with Telecom’s customers that were incorporated as a result of the merger between Telecom and Cablevisión. They are amortized over the estimated term of the relationship with the acquired customers. For fixed-telephony customers such term was estimated at 10 years. For mobile telephony customers in Argentina, it was estimated at 6 years and for mobile telephony customers in Paraguay, it was estimated at 5 years.

- Brands

It includes the brands Telecom and Personal, which were recognized as a result of the merger between Telecom and Cablevisión, which are not amortized because they are considered to have an indefinite useful life. Also, it includes the brand Flow, which is fully amortized.

- Other

“Other" includes exclusivity rights and software rights of use, among others. The average useful life is estimated at 2-28 years.

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j)   Rights of use assets and liabilities

IFRS 16 provides that the lessee recognizes a right of use asset and a liability at present value of the unpaid lease installments at such date, with respect to those contracts that meet the definition of leases. Accordingly, the rights of use assets must include in their initial cost payments made for such leases, initial costs and assets retirement obligation costs. According to the standard, a lease is a contract that provides the right to control the use of an identified asset for a specified time period. For a company to have control of use of an identified asset it:

a) Must have the right to obtain substantially all the economic benefits of the identified assets and

b) Must have the right to direct the use of the identified asset.

Telecom maintains several contracts that fall under the definition of leases in accordance with IFRS 16, which can be summarized as follows: a) sites leases (for antenna placement); b) real estate leases (for commercial offices and others); c) poles leases (for wiring layout); d) dark fiber rights of use (for data transmission) and e) space leases (for localization of antennas).

The average useful life is estimated at 1-6 years and the depreciation of the right-of-use assets is calculated on a straight-line basis over the lease term of each agreement, except in those cases where the Company will exercise a call option, which will be depreciated according to the useful life of the asset.

k)   Goodwill

Goodwill is recognized when the fair value of the consideration paid and the amount of the non-controlling interest and the fair value of the previous interest, if any, exceed the fair value of the net assets identified in each business combination. Goodwill has indefinite useful life and its recoverable value must be assessed at least once a year.

l)   Impairment of fixed assets

The Company assesses whether there are any indicators of impairment in the value of the assets that are subject to amortization, contemplating both internal and external factors. Internal factors include, among others, obsolescence or physical damage of the asset, and significant changes in the extent to which, or manner in which, an asset is used or expected to be used and internal reports that may indicate that the economic performance of the asset is, or will be, worse than expected. External sources include, among others, the market value of the asset, significant changes in the legal, economic, technological or market environment, increases in market interest rates and the cost of capital used to evaluate investments, and an excess of the carrying amount of the net assets of the Company over market capitalization.

Intangible assets with an indefinite useful life and goodwill are not subject to amortization and are tested for impairment at least annually, at closing date of every year, or more frequently if events or circumstances indicate that they might be impaired.

The carrying value of an asset is considered impaired by the Company when it is higher than its recoverable value, which is the higher of the fair value (less direct selling costs) and its value in use. In this case, a loss shall be immediately recognized in the consolidated statement of income.

To assess impairment losses, the Company groups the assets into cash-generating units, which represent the smallest group of assets that generates independent cash inflows of the cash flows derived from other assets or groups of assets. The Company has defined, according to the characteristics of the services provided and its fixed assets that the Argentinian operations comprise a single cash-generating unit (CGU) and each of the Company’s foreign operations represent a separate CGU. According to this, the net book value of a CGU includes goodwill, intangible assets with an indefinite useful life and assets with a defined useful life (PP&E, intangible assets and rights of use assets).

During 2019, an impairment of spectrum was registered for $4,403, incorporated to the Company as a result of the merger between Telecom Argentina and Cablevisión, and other fixed assets were impaired for $866. During 2020, an impairment for minor assets was registered for $568.

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During 2021, Telecom recorded an impairment of the brands Cablevisión and Fibertel for a total amount of $448 as a result of the Company's decision to discontinue the use of those brands, unifying all the customers of those services under the brands Flow and Personal in order to simplify the brand portfolio and to consolidate a new visual identity as an institution itself and of its products and services. In addition, Telecom recorded an impairment of goodwill allocated to one Argentinian subsidiary and one Uruguayan subsidiary for a total amount of $89 and $578, respectively, and other minor assets, net of reversals for $169.

Except for the above mentioned, no other significant impairments have been identified as a result of the evaluation realized.

The possible reversal of PP&E, intangible assets and rights of use assets impairment losses is reviewed for the issuance of all consolidated financial statements. The net effects of the constitution and recovery of the above-mentioned impairments are recorded under “Impairment of fixed assets”, which is described in Note 24 to these consolidated financial statements.

For further information on recoverability of goodwill analysis, see item v.1) - "Recoverability of Goodwill" to this Note.

m)   Other Liabilities

Pension Benefits

Pension benefits shown under Other liabilities represent accrued benefits under collective bargaining agreements for employees who retire upon reaching normal retirement age, or earlier due to disability in Telecom Argentina. Benefits consist of the payment of a single lump sum equal to the salary of one month for each five years of service at the time of retirement due to retirement age or disability. The collective bargaining agreements do not provide for other post-retirement benefits such as life insurance, health care, and other welfare benefits.

The net periodic pension costs are recognized in the income statement, segregating the financial component, as employees render the services necessary to earn pension benefits. However, actuarial gains and losses should be presented in the statements of comprehensive income. Actuarial assumptions and demographic data, as applicable, were used to measure the benefit obligation as required by IAS 19, as amended. The Company does not make plan contributions or maintain separate assets to fund the benefits at retirement.

The actuarial assumptions used are based on market interest rates, experience and the best estimate made by the Company’s Management of the future economic conditions. Changes in these assumptions may impact future benefit costs and obligations. The main assumptions used in determining expense and benefit obligations are the following:

	2021		2020		2019
Discount Rate (1)	6.1% - 11.8	%	6.3% - 12.7	%	6.4% - 15.0	%
Projected increase rate in compensation	23.0% - 51.8	%	22.1% - 50.9	%	10.0% - 48.3	%

1) Represents real discount rates.

Additional information on pension benefits is provided in Note 18 to these consolidated financial statements.

Deferred revenues on prepaid credit

Revenues from unused traffic and data packs for unexpired prepaid credits are deferred and recognized as revenue when the minutes and the data are used by customers or when such credit expires, whichever happens first.

Deferred revenues on connection fees

Non-refundable up-front connection or installation fees for fixed telephony, data, cable and Internet services are deferred over the term of the contract, or in the case of indefinite period contracts, over the average period of customer relationship.

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Deferred Revenues related to Customer Loyalty Programs

The fair value of the rewards regarding the Company’s customer loyalty program is accounted for as deferred revenue and recognized as revenue until the rewards are redeemed or expire, whichever occurs first.

Deferred Revenues on International Capacity Leases

Under certain network capacity purchase agreements, the Company sells excess purchased capacity to other carriers. Revenues are deferred and recognized as services are provided.

Government grants for the acquisition of PP&E

Government grants for the acquisition of PP&E must be recognized on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. In accordance with IAS 20 the government grants related to assets can be presented either as deferred income or as a reduction of the carrying amount of related asset. The Company elected as an accounting policy the first alternative provided by the standard considering that recognition as deferred income adequately reflects the business purpose of the transaction. Therefore, the related assets are recognized at the cost incurred in the construction of the engaged infrastructure and the government grant was accounted for as deferred income in Other liabilities and recognized in profit or loss starting at the time the infrastructure becomes operative and throughout its useful life.

n)   Salaries and Social Security Payables

These include unpaid salaries, vacation and bonuses and their related social security contributions, as well as termination benefits, and are valued at amortized cost.

Termination benefits represent severance indemnities that are payable when employment is terminated in accordance with labor regulations and current practices, or whenever an employee accepts voluntary redundancy in exchange for these benefits. In the case of severance compensations resulting from agreements with employees leaving the Company upon acceptance of voluntary redundancy, the compensation is usually comprised of a special cash bonus paid upon signing the severance agreement, and in certain cases may include a deferred compensation, which is payable in monthly installments calculated as a percentage of the prevailing wage at the date of each payment (“prejubilaciones”). The employee’s right to receive the monthly installments mentioned above starts on the date they leave the Company and ends either when they reach the legal mandatory retirement age or upon the decease of the beneficiary, whichever occurs first.

The Company and its subsidiaries do not have stock option plans for their employees.

o)   Taxes Payable

The main taxes that have an impact on net income for the Company are the following:

Income Tax

The Company and its subsidiaries record income taxes in accordance with IAS 12.

Income tax is recognized in the consolidated income statement, except to the extent that they relate to items recognized in Other comprehensive income or in equity, in which case they will also be recognized under such items. The income tax expense for the year comprises current and deferred tax.

In addition, if the income tax payments and withholdings in Argentina exceed the amount payable for the current tax, the excess shall be recognized as a tax credit, only if it is recoverable.

Both for tax law effective in Argentina and in the rest of the countries in which Telecom operates through its subsidiaries, income taxes payables are computed on a separate return basis, i.e., the Company is not allowed to prepare a consolidated income tax return.

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Deferred taxes are recognized using the liability method, which provides for the assessment of net deferred tax assets or liabilities based on temporary differences. Temporary differences arise when the tax base of an asset or liability differs from its carrying amount in the statement of financial position and its reversal in the future will have an impact on taxable income. The deferred tax asset / liability is disclosed under a separate item of the consolidated financial statements.

Deferred tax assets relating to unused tax loss carry forwards are recognized to the extent that it is probable that future taxable income will be available against which they can be utilized. Tax loss carryforwards may be computed against future taxable income for a maximum of 5 years. Deferred tax assets that may arise from investment in subsidiaries are recognized when it is probable that the temporary differences will be reversed in the foreseeable future and when future taxable income would be enough to apply those temporary differences.

A deferred tax asset shall be subjected to a recoverability test at the end of every reporting period. The company shall reduce the carrying amount of the deferred tax asset if it is probable that future taxable income will not be available before its prescription that allows applying the tax deductions of the deferred tax asset. This reduction could be reversed in future periods, to the extent that the Company recovers the expectation of enough future taxable income to apply these deductions.

Pursuant to Law No. 27,430, as amended by Law No. 27,541, the statutory income tax rate in Argentina for fiscal years 2019 and 2020 was 30%, while for fiscal years beginning since January 1, 2021, the statutory income tax rate would be 25%.

However, on June 16, 2021, Law No. 27,630 was published in the Official Gazette, and replaced the 25% statutory income tax rate by an increasing rate scale related to the taxable income of each taxpayer: (i) 25% for annual taxable income of up to $5 million, (ii) 30% for the exceeding annual taxable income between $5 million and $50 million, and (iii) 35% for annual taxable income exceeding $50 million. The annual taxable income scale will be adjusted annually starting in fiscal year 2022 according to the CPI of October of the prior year to the adjustment, with respect to the same month of the previous year. The Company has recognized the increase in the statutory income tax rate effects in the “Income tax expense” item of the consolidated income statement as of December 31, 2021.

In addition, Law No. 27,430, amended by Law No. 27,541, establishes a withholding tax regime on distributed dividends at a rate of 7% for distributions of profits generated during fiscal years beginning on or after January 1, 2018 up to and including December 31, 2020, and at a rate of 13% for profits generated during fiscal years beginning on or after January 1, 2021. Law No. 27, 630 also amended the last mentioned withholding tax rate, replacing it by 7% for fiscal years beginning on or after January 1, 2021. The new withholding tax regime applies to shareholders who are Argentine resident individuals and to nonresident shareholders.

Cash dividends received from a foreign subsidiary are computed on the statutory income tax rate under the application of the “world rate” principle. However, as per Argentinian Tax Law, income taxes paid abroad may be recognized as tax credits, both the income tax paid abroad by the subsidiary and the withholding tax on cash dividends.

The statutory income tax rate in Uruguay was 25% for all years presented.

The statutory income tax rate in Paraguay was 10% for all years presented. Pursuant to Law No. 125/91, until December 31, 2019, dividends paid were computed with an additional income tax rate of 5%, representing an effective tax rate of 14.5%. Pursuant to the tax reform provided under Law No. 6,380/19 and effective as from January 1, 2020, the additional rate is revoked and an 8% tax rate is established on dividends and earnings when the recipient of the profits is an individual or legal entity resident in Paraguay, and 15% when the beneficiary of these profits is a nonresident. Transitorily, dividends distributed during 2020 were subject to a 5% rate for residents and 10% for non-residents. Telecom Argentina recognized a deferred tax liability arising from the effect of the difference in the income tax rates between Argentina and Paraguay on the accumulated profits because it is probable that these accumulated profits will flow in the form of dividends subject to income tax.

In the United States of America, since January 1, 2018, a new Income Tax Law is applicable, which modifies the federal flat rate to 21%. Likewise, the statutory tax rate for the State of Florida was reduced from 5.5% to 4.458% for fiscal years 2019 to 2021, and for fiscal year 2022, this rate returns to be 5.5%.

Therefore, for fiscal years 2019, 2020 and 2021 the total legal statutory tax rate is 25.458%.

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Income Tax Inflation Adjustment

Laws No. 27,430, 27,468 and 27,541 introduced several amendments to the income tax inflation adjustments provided by the Income Tax Law.

According to these provisions, and effective as from fiscal years beginning on or after January 1, 2018, the inflation adjustment procedure set out in Title VI of the income tax law shall be applicable in fiscal years in which the variation of IPC price index, accumulated in the 36 months immediately preceding the end of the relevant fiscal year, is higher than 100%.

In the first, second and third year as from its effectiveness, this procedure was applicable as long as the variation of the IPC, calculated from the beginning to the end of each year, was higher than 55%, 30% and 15%, for the first, second and third year of application, respectively.

According to the above mentioned, the Company applies the income tax inflation adjustment set out in Title VI of the income tax law since fiscal year 2019, as since that year the variation of the IPC required was verified.

Likewise, it was provided that in order to calculate income tax inflation adjustments corresponding to the first and second fiscal year beginning as from January 1, 2019, one-sixth of the income tax inflation adjustment shall be computed in that fiscal year, and the remaining five-sixths shall be computed in equal parts, in the five immediately following fiscal years. The income tax inflation adjustment corresponding to fiscal years beginning on or after January 1, 2021, is fully charged to the fiscal year.

Notwithstanding the aforementioned, it was established, in general, the update of the cost of several assets -in case of disposal- and the update of computable depreciation of fixed assets, to all acquisitions or investments made in fiscal years beginning on January 1, 2018 based on changes in the CPI.

Other National Taxes

Tax on assets

In Argentina, the tax on assets (impuesto a la ganancia mínima presunta), effective until the fiscal year ended December 31, 2018, was supplementary to income tax. The Company assessed this tax at the effective rate of 1% on the taxable assets at year-end. The Company’s tax liability for each year was equal to the higher of the tax on assets assessment or the income tax liability assessed at the legally effective rate on the estimated taxable income for the year. However, if the tax on assets exceeded the income tax liability in any given fiscal year, the excess could be creditable against any excess of income tax liability over the tax on assets in any of the following ten fiscal years.

In 2018, Telecom was subject to the Tax on assets because has recognized accounting profits and tax losses.

The tax on assets balance has been capitalized in the consolidated financial statements since we estimate that the amounts paid for this tax will be recoverable within the statute of limitations, based on the current business plans.

Personal Assets, Shares and Equity Interests

Argentine companies shall remit the taxes applicable to their shareholders who are Argentine individuals and non-resident individuals. Such tax is calculated under the equity method on the shares according to the last financial statements of the Argentine entity prepared in accordance with effective local professional accounting standards and without considering the effect arising from the changes in the purchasing power of the currency.

In accordance with the Law, Argentine companies are entitled to request the refund of such tax paid to their shareholders.

Pursuant to Law No. 27,260, Argentine companies that have properly fulfilled their tax obligations during the two fiscal year periods prior to the 2016 fiscal year and comply with other requirements may qualify for an exemption from the personal assets tax for the 2016, 2017 and 2018 fiscal years. The request for this tax exemption should be filed before March 31, 2017. Telecom Argentina and

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Cablevisión have already filed this request related to the payment of personal assets tax as substitute taxpayer. Notwithstanding the above, it cannot be assured that in the future the companies will satisfy such requirements and maintain the referred exemption.

Pursuant to Law No. 27,541, the rate applicable as from fiscal year 2019 for this tax is 0.50%.

Tax on Bank Credits and Debits

Law No. 25,413, as amended, provided for the creation of a tax on deposits to and withdrawals from bank accounts to be levied on: (i) credits and debits in accounts held in financial institutions located in Argentina; (ii) the credits and debits referred to in (i) in which no bank accounts with Argentine financial institutions are used, whatever their denomination, the mechanisms used to carry out such transactions (including cash) and/or legal instrument involved; and (iii) other transactions or transfers and deliveries of funds regardless of the individual or entity that performs them and the mechanism used.

Law No. 27,541 provided that the debits generated by cash withdrawals in any form shall be deemed taxable transactions, except for those made from accounts whose holders are physical or legal persons that qualify as micro and small-sized enterprises and provide evidence thereof under the terms of Article 2 of Law No. 24,467.

Pursuant to Decree No. 380/01 (as amended), the following transactions shall be subject to Law No. 25,413: (i) certain transactions carried out by financial institutions in which open accounts are not used; and (ii) any movement or delivery of funds, even in cash, that any person, including Argentine financial institutions, makes in its own name or on behalf of a third party, whatever the means used for its execution. Resolution No. 2,111/06 (AFIP) provides that “movements or deliveries of funds” are those made through organized payment systems replacing the use of bank accounts.

In addition, pursuant to Decree No. 311/21, with regard to movements of funds in payment accounts, Payment Service Providers or companies engaged in electronic payment services and/or collections by account and order of third parties, as appropriate, will act as collection-at-source and paying agents, and the account holders shall bear the applicable taxes.

On May 7, 2018, Decree No. 409/18 was issued, which provided that, for transactions subject to the general tax rate, up to 33% of the taxes payable arising from both credited and debited amounts and the other taxable events subject to this tax may be creditable against income tax. In the case of transactions subject to a lower rate, only 20% may be creditable against income tax.

Internal Taxes

Pursuant Law No. 27,430 the effective internal tax rate applicable to mobile telephony services is 5.26%.

In addition, pursuant to Decree No. 979/17, as from November 15, 2017, for fiscal year 2018, the effective internal tax rate on the sale of imported mobile phones and other wireless network equipment was reduced from 20.48% to 11.73%. Such rate, pursuant to Law No. 27,430, would decrease gradually until its complete phase out as from January 1, 2024 (for 2019 the rate was 9.89% and for 2020 the rate is 7.53%.) In the case of goods manufactured in the province of Tierra del Fuego, the rate is set at 0% as from November 15, 2017. Notwithstanding the foregoing, the National Budget Law for the year 2021 (Law No. 27,591), effective as from January 1, 2021, revoked the gradual decrease of tax rates established under Law No. 27,430 and the provisions of Decree No. 979/17, and sets up an effective tax rate of 20.48% on the sale of imported mobile phones and other wireless network equipment. In the case of goods manufactured in the province of Tierra del Fuego, the rate was set at 7.009% as from January 1, 2021. This tax shall be applicable until December 31, 2025.

Export Duties

The National Budget Law for fiscal year 2019 (Law No. 27,467, published in the Official Gazette on December 4, 2018) granted the Executive Branch, until December 31, 2020, the power to apply export duties on services rendered in Argentina that are effectively used or exploited abroad, with a rate of up to 30% of the value of those services.

Decree No. 1,201/18 provided that such services are subject to an export duty of 12% with a cap of $4 Argentine pesos for each dollar of the taxable value of the above-mentioned transaction.

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Law No. 27,541 amended the foregoing and granted the Executive Branch, until December 31, 2021, the power to apply export duties on services rendered in Argentina that are effectively used or exploited abroad, with a rate of up to 5% of the value of those services. Decree No. 99/19 published on December 28, 2019 establishes, effective as from January 1, 2020, an export duty of 5% on the above-mentioned services.

From 2022, since the Decree was not extended, the aforementioned export rights are not in force.

Social Security

Law No. 27,430 gradually reduces the percentage of employers’ social security contributions paid by large companies from 21% to 19.5% by 2022. In addition, the law establishes an incremental amount of the non-taxable base that shall be restated for inflation annually in accordance with the consumer price index. However, Law No. 27,541 set the percentage of employers’ social security contributions paid by large companies at 20.4% and the non-taxable base at $7,003.68.

In addition, the National Budget Law for the year 2019 (Law No. 27,467) provides that entities that provide broadcast television or physical link and/or radio-electric link subscription television services, audio broadcasting, cable television signals, newspaper, magazine or periodical publishing companies or companies engaged in digital journalism, and the distributors of those publishing companies, may all allocate employer’s contributions on the payroll for the personnel engaged in such activities as a tax credit on VAT. These contributions must have been accrued in the fiscal period and effectively paid at the moment of submitting the VAT return. As provided above, where the salaries that give rise to the employer’s contributions which may be allocated as a tax credit on VAT are indistinctly related to other activities outside the scope of this benefit, they will be subject to the apportionment procedure.

VAT and Internal Taxes - Preliminary Injunction

On June 10, 2020, the Company brought a claim before the National Court of First Instance on Federal Administrative Matters No. 11 of the City of Buenos Aires to request a preliminary injunction ordering the suspension of the payment of VAT and Consumption Internal Taxes on all those services billed to the users that fall within the scope of Decree No. 311/20 (see Note 29 to these consolidated financial statements), and related regulations, until those bills have been effectively settled in whole or in part by the customers, provided those amounts have not been effectively paid to the National Tax Authority in order to avoid any distorting consequences arising from the intrinsic complexities of taxes settlement. On July 15, 2020, the National Court of First Instance on Federal Administrative Matters No. 11 of the City of Buenos Aires denied the request for the preliminary injunction filed by the Company, who filed an appeal before Chamber I of the Court of Appeals on Federal Administrative Matters against such decision. On December 23, 2020, said Court of Appeals revoked the first instance judgment and granted the preliminary injunction requested by the Company for 6 months or until the exceptional legal grounds that gave rise to the request for injunction have ceased, whichever occurs first.

As the preliminary injunction was granted to the Company on December 23, 2020 and the provisions of Decree No. 311/20 were in force until December 31, 2020, the Company did not apply the preliminary injunction provisions.

Provincial Taxes

Turnover Tax

This tax is levied on companies based in Argentina for the activities carried out in each province of the country. Rates differ depending on the jurisdiction where business is carried out and on the nature of such business (for example, sale of services or equipment).

Regarding this tax, on January 2, 2018, Law No. 27,429 - “Tax Consensus” was published in the Official Gazette. Such Law approves the Tax Consensus signed between the National Executive Branch and the representatives of the Provinces and the Autonomous City of Buenos Aires, which provides that the rates shall not exceed certain limits, among other issues. For the communications sector, the maximum rate effective for 2019 is 4% and 6.5% for mobile telephony. Cable television activities are exempt in some jurisdictions. However, on December 17, 2019, a new fiscal consensus was signed and approved by Law No. 27,542, published in the Official Gazette on February 12, 2020, whereby the gradual reduction of the rates provided under Law No. 27,429 was suspended until December 31, 2020. Likewise, on December 4, 2020 a new fiscal consensus was signed, which established again the suspension until December 31, 2021 of the gradual rates reduction provided by Law No. 27,429.

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In this sense, on December 28, 2021, the National Government signed the 2022 Fiscal Consensus with the representatives of all the provinces, except for the Autonomous City of Buenos Aires. This new Consensus provides for the release of the obligations previously assumed on provincial tax matters that had been imposed under prior fiscal consensuses, and for the enforceability of only those obligations that had been fulfilled as of the date the 2022 consensus was signed.

Other Taxes and Charges

Since the beginning of 2001, telecommunication service companies have been required to make a SU contribution to fund SU requirements. For more information, see Note 2.d – Universal Service Regulation).

Audiovisual Communication Services Law No. 26,522 established a tax on audiovisual communication services. According to the law, the holders of those services must pay a tax proportional to the amount of gross revenues from the sale of traditional and non-traditional advertising, programs, signals, contents, subscriptions and any other item that arises from the exploitation. In the case of cable operators, the tax rate varies between 2% and 5% based on the number of inhabitants in the area where the service is rendered. In the case of licensees, permit holders, authorized entities and owners of the registered title of signals who are registered VAT payers and are also subject to the tax established by Law No. 26,522, 100% of the amounts effectively paid under the tax established by the new law may be creditable against VAT.

In addition, the Company pays for copyrights to several institutions such as AADI-CAPIF, SADAIC, ARGENTORES. Those rights are calculated on similar bases as those indicated in the previous paragraph and the rates range between 0.1% and 1%.

p)   Provisions

The Company records provisions when it has a present, legal or constructive obligation, to a third party, as a result of a past event, when it is probable that an outflow of resources will be required to satisfy the obligation and when the amount of the obligation can be estimated reliably.

If the effect of the time value of money is material, and the payment date of the obligations can be reasonably estimated, provisions to be accrued are the present value of the expected cash flows, considering the risks associated with the obligation. The increase in the provision due to the passage of time is recognized as finance expenses. For more information, see Note 19 to these consolidated financial statements.

Provisions also include the expected costs of dismantling assets and restoring the corresponding site if a legal or constructive obligation exists. The accounting estimates for dismantling costs, including discount rates, and the dates on which such costs are expected to be incurred are reviewed annually, at each financial year-end.

q)   Dividends

Dividends payable are reported as a change in equity in the year in which they are approved by the Shareholders’ Meeting.

For non-cash assets dividends, dividends payable must be valued at the fair value of the assets to be delivered.

r)   Debt Financial Costs and Other Financial Results, net

Debt Financial costs and Other financial results, net, are recorded as incurred and may include:

● Interest accrued on the related financial assets and liabilities using the effective interest rate method;

● Financial discounts on assets and debt;

● Changes in fair value of derivatives and other financial instruments measured at fair value through profit or loss;

● Results from Notes and bonds;

● Risk of doubtful government bonds results;

● Financial debt renegotiation results;

● Gains and losses on foreign exchange and financial instruments;

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● Interest on provisions;

● Financial expenses on pension benefits;

● Bank taxes and related expenses; and

● RECPAM.

s)   Acquisition of Treasury Shares

In connection with the Treasury Shares Acquisition Process the guidance set forth in IAS 32 must by applied, which provides, consistently with the CNV Regulations, that any instruments of its own equity acquired by the Company must be recorded at the acquisition cost and must be deducted from Equity under the caption “Treasury shares acquisition cost”. No profit or loss resulting from holding such instruments of own equity shall be recognized in the income statement.

t)   Merger Surplus

Due to the merger between Telecom Argentina (surviving entity and accounting acquired) and Cablevisión (absorbed entity), a merger surplus was generated, which mainly reflects the difference between the fair value of the consideration transferred and the book value of the equity of Telecom Argentina as of the effective date of the merger, which took place on January 1^st, 2018.

u)   Net Earnings per Share

Basic earnings per share are calculated by dividing the net income (loss) attributable to owners of the Parent by the weighted average number of ordinary shares outstanding during the year. On the other hand, diluted earnings per share is computed by dividing the net income (loss) for the year by the weighted average number of common shares issued and dilutive potential common shares at the closing of the year. Since the Company has no dilutive potential common stock outstanding, diluted earnings per share and basic earnings per share are the same.

For the years ended December 31, 2021 and 2020 the weighted average number of shares outstanding amounted to 2,153,688,011.

v)   Use of Estimates

The preparation of consolidated financial statements and related disclosures in conformity with IFRS requires the Company’s Management to make estimates and assumptions based also on subjective judgments, experience and hypotheses considered reasonable and realistic in relation to the information known at the time of the estimate.

Such estimates have an effect on the measurement of assets and liabilities and disclosure of contingent assets and liabilities at the date of these consolidated financial statements as well as the measurement of revenues and costs during the year. Actual results could differ, even significantly, from those estimates because of possible changes in the factors considered in the determination of such estimates. Estimates are reviewed periodically.

The most important accounting estimates which require significant subjectivity, that could affect the valuation of assets and liabilities, are addressed below:

v.1)   Recoverability of Goodwill

As indicated in section l) of this Note, the Company monitors goodwill assigned to the cash generating unit (CGU) of Argentina and determines its recoverable value using the higher value between its fair value less costs of disposal and its value in use. The table below shows the book value of fixed assets allocated to the Argentina CGU subject to the impairment testing:

CGU of Argentina	Goodwill	PP&E	Intangible Assets	Right of use assets	Total
Balances as of December 31, 2021	378,863	430,028	134,644	31,277	974,812
Balances as of December 31, 2020	379,022	458,536	146,889	24,893	1,009,340

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For fiscal year 2021, the recoverable value of the CGU of Argentina, which includes goodwill, amounted to $995,945 million and was determined using the fair value less the costs of disposal.

In order to calculate such value, the Company's Management has considered the market capitalization value based on an average share market price of $214.52 (calculated based on market prices in BYMA weighed by the volume of the transactions corresponding to the three-month period prior to year-end, which qualifies as level 2 of fair value hierarchy in accordance with IFRS 13).

In order to determine the fair value of the CGU of Argentina, the above-mentioned market capitalization value was adjusted by (i) the estimated fair value of other CGUs; (ii) the effect of the net liabilities not subject to this impairment test, calculated at their estimated fair value; (iii) the effect of a 28.6% control premium (determined by the Company with the assistance of independent advisors, using the values observed in the transaction for the period May 2015 to June 2021 for the ICT services industry); and (iv) estimated disposal costs for an orderly transaction, which include costs such as legal and advisory fees that could be directly associated with the sale of the CGU. Therefore, it qualifies as level 2 of fair value hierarchy in accordance with IFRS 13.

The Company’s Management has used this valuation method because the share market price is volatile and subject to wide fluctuations, mainly due to the difficult macroeconomic environment in general- which began to recover slightly without being able to recover pre-pandemic levels - and the political conditions prevailing in Argentina, which were intensified during the year 2021, together with high inflation rates and fluctuations in the foreign exchange rate. In addition, the Argentine stock market is limited, highly concentrated and with low liquidity, which contributes to the aforementioned high volatility on the share price. Additionally, as of December 31, 2021, the National Government was in full negotiations with the IMF to renegotiate the capital maturities of the sovereign debt and only at the end of January 2022 the parties reached an understanding on key policies such as part of their discussions about a new program. This uncertain scenario had a negative impact on the Argentine economy in general and on the stock market in particular as of December 31, 2021.

As a result of the calculation mentioned above, the fair value less the costs of disposal exceed the carrying amount of the CGU of Argentina by approximately 2.2%.

The Company has considered the following sensitivity analysis of the recoverability test, evaluating reasonably possible changes in the key assumptions:

a) considering a decrease of 3.5% of Telecom average share price, and keeping the rest of the assumptions stable, the fair value less disposal costs would equalize the Book Value of the CGU;

b) considering any change on the interest rate or the market price of our debts that decrease the fair value of the net liabilities in 5.2%, and keeping the rest of the assumptions stable, the fair value less disposal costs would equalize the Book Value of the CGU;

c) considering a decrease of 4.5 percentage points in the control premium, and keeping the rest of the assumptions stable, the fair value less disposal costs would equalize the Book Value of the CGU.

For fiscal year 2020, the recoverable value of the Argentinian CGU, which includes goodwill, was determined using fair value less costs of disposal. As of December 31, 2020, the capitalization value of the Company was based on the share price of $196.65 (the source of the share price is BYMA 12/30/2020, level 1 in the fair value hierarchy in accordance with IFRS 13).

To determine the fair value of the Argentinean CGU, the capitalization value was adjusted for (i) the estimated fair value of other CGUs, (ii) the effect of the net liabilities not subject to this impairment test at their estimated fair value, and (iii) estimated disposal costs in an orderly transaction, which include costs such as legal and advisory fees that could be directly associated with the sale of the CGU. Therefore, it qualifies as level 2 of fair value hierarchy in accordance with IFRS 13.

As a result of the initial above-mentioned calculation, fair value less cost of disposal, calculated as of the filing date of December 2020 Financial Statements, exceeds book value of the CGU of Argentina by approximately 4%. Consequently, management did not perform for that year the adjustments related to the incorporation of the effect of a control premium over the share market price, which would have increased even more the margin between the fair value and the book value of the CGU of Argentina.

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The Company has considered the following sensitivity analysis of the recoverability test evaluating reasonably possible changes in the key assumptions: considering a decrease of 6.3% of Telecom share price and keeping the rest of the assumptions stable, the fair value less disposal costs would equalize the Book Value of the CGU.

For the years presented in these consolidated financial statements, the test results were satisfactory. Therefore, no recoverability problems were observed and, accordingly, no impairment has been recorded for the assets detailed above, except for those specifically identified in Note 3.l) to this Note.

v.2)   Useful lives and residual value (non-amortizable) of PP&E and Intangible assets

PP&E and intangible assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives. The determination of the depreciable amount of the assets and their useful lives involves significant judgment. The Company periodically reviews, at least at each financial year-end, the estimated useful lives and the residual value of its PP&E and amortizable intangible assets.

v.3)   Income Tax recoverability assessment of deferred tax assets and other tax receivables

Income taxes (current and deferred) are calculated in Telecom and its subsidiaries according to a reasonable interpretation of the tax laws in effect in each jurisdiction where the companies operate. The recoverability assessment of deferred tax assets sometimes involves complex estimates to determine taxable income and deductible and taxable temporary differences between the carrying amounts and the taxable amounts. In particular, deferred tax assets are recognized to the extent that future taxable income will be available against which they can be utilized. The measurement of the recoverability of deferred tax assets takes into account the estimate of future taxable income based on the Company’s projections and on conservative tax planning.

On the other hand, the recoverability assessment of the tax receivable related to the actions of recourse filed by the Company in connection with income tax inflation adjustment (Note 15 to these consolidated financial statements), is based on the existing legal arguments and future behavior of Tax Courts and the National Tax Authority in revising the claims filed by the Company.

For the measurement of deferred tax, the fiscal year of future reversals of temporary differences that originate deferred asset/liability has been estimated applying the income tax rate of each reversal period. The actual moment of the future taxable revenues and deductions may differ from those estimated, and may produce an impact on future income.

v.4)   Provisions

● Provisions for lawsuits and other contingencies: The Company is subject to proceedings, lawsuits and other claims related to labor, civil, tax, regulatory and commercial. In order to determine the proper level of provisions, Management assesses the likelihood of any adverse judgments or outcomes related to these matters as well as the range of probable losses that may result from the potential outcomes. Internal and external legal counsels are consulted on these matters. A determination of the amount of provisions required, if any, is made after analysis of each individual issue. The determination of the required provisions may change in the future due to new developments in each matter, changes in jurisprudential precedents and court decisions or changes in its method of resolving such matters, such as changes in settlement strategy.

● Allowance for Bad Debts: The recoverability of trade receivables is measured by considering the aging of the accounts receivable balances, un-subscription of customers, historical write-offs, public sector and corporate customer creditworthiness and changes in the customer payment terms, as well as the estimates regarding future performance, assessing the expected credit loss in accordance with IFRS 9. If the financial condition of the customers were to deteriorate, the actual write-offs could be different from expected.

In the absence of an accounting Standard or Interpretation that specifically applies to a particular transaction, the Company’s Management considers the IFRS framework and valuation techniques generally applied in the telecommunication industry and uses its judgment to evaluate the accounting methods to adopt in order to provide financial statements that faithfully represent the financial position, the results of operations and the cash flows of Telecom and its subsidiaries, reflect the economic substance of the transactions, are neutral, are prepared on a prudent basis and are complete in all aspects.

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w)   New Standards and Interpretations issued by the IASB

a.New Standards and Interpretations issued by the IASB applied by the Company

The Company has applied the following new standards and amendments for the first time from January 1, 2021:

Standards and amendments	Description	Mandatory application date for years beginning on or after
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	Interest rate benchmark reform (Phase II)	January 1, 2021

The application of the detailed amendment did not generate any impact on the results of operations or the financial situation of the Company.

b.New Standards and Interpretations issued by the IASB not in force

As of the date to prepare these consolidated financial statements, the Company has not applied the following new standards and amendments to the existing ones which application is mandatory for periods beginning after December 31, 2021.

Standards and amendments	Description	Mandatory application date for years beginning on or after
Amendments to IAS 37	Onerous contracts – Cost of fulfilling a contract	January 1, 2022
Amendments to IFRS 3	Reference to the Conceptual Framework	January 1, 2022
Amendments to IAS 16	Property, plant and equipment – Proceeds before intended use	January 1, 2022
Amendments to IFRS 9 and IFRS 16	Annual Improvements – 2018 to 2020 Cycle	January 1, 2022
Amendments to IAS 1	Classification of liabilities as current or non-current	January 1, 2023
Amendments to IAS 1	Information relating to material accounting policies	January 1, 2023
Amendments to IAS 8	Definition of accounting estimate	January 1, 2023
Amendments to IAS 12	Deferred tax – recognition of assets and liabilities arising from a single transaction	January 1, 2023

Although Management is analyzing the potential impacts of such standards, and according to the preliminary analysis performed, the mentioned standards will have no significant impact in the Company’s consolidated financial statements.

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NOTE 4 – CASH AND CASH EQUIVALENTS AND INVESTMENTS. ADDITIONAL INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS

a)   Cash and cash equivalents and Investments

	As of December 31,
Cash and cash equivalents	2021	2020
Cash and Banks	13,161	7,012
Time deposits	3,582	5,352
Mutual funds	3,106	13,278
Government bonds at fair value	—	2,323
Total cash and cash equivalents	19,849	27,965
Investments
Current
Government bonds at fair value	10,702	7,628
Government bonds at amortized cost	—	190
Mutual funds	84	106
Allowance for credit risk (a)	—	(120)
	10,786	7,804
Non- current
Government bonds at amortized cost	—	516
Investments in associates (b)	3,225	3,058
2003 Telecommunications Fund	1	2
Allowance for credit risk (a)	—	(328)
	3,226	3,248
Total investments	14,012	11,052

(a) Constituted following the expected credit losses parameters provided by IFRS 9 as a consequence of a significant increase in these financial instruments’ credit risk.

(b) Information on Investments in associates is detailed below:

Financial position information:

			Percentage
			of capital
			stock owned
			and	Valuation as	Valuation as
Companies	Main activity	Country	voting rights	of 12.31.2021	of 12.31.2020
Ver TV. (1)	Cable television station	Argentina	49.00	2,010	1,840
TSMA (1) (2) (3)	Cable television station	Argentina	50.10	684	685
La Capital Cable (1) (2)	Closed-circuit television	Argentina	50.00	531	525
Other minor investments in associates at equity method				—	8
Total				3,225	3,058

(1) Data about the issuer arise from extra-accounting information.

(2) Direct and indirect interest.

(3) Despite owning a percentage higher than a 50% of interest, the Company does not have the control in accordance with the requirements of IFRS.

Earnings (losses) information:

	Years ended December 31,
	2021	2020	2019
Ver TV	312	562	(337)
TSMA	77	166	(89)
La Capital Cable	6	21	41
Total	395	749	(385)

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Movements in the allowance of current credit risk are as follows:

	December 31,
	2021	2020
At the beginning of the fiscal year	(120)	(131)
Additions – Exchange differences	(12)	(75)
Additions – Risk of doubtful government bonds results	—	(24)
Reclassifications	(75)	(759)
Uses (includes RECPAM)	207	869
At the end of the year	—	(120)

Movements in the allowance of non-current credit risk are as follows:

	December 31,
	2021	2020
At the beginning of the fiscal year	(328)	(2,012)
Additions – Exchange differences	(25)	(332)
Additions – Risk of doubtful government bonds results	—	(63)
Reclassifications	75	759
Uses (includes RECPAM)	278	1,320
At the end of the year	—	(328)

b)   Additional information on the consolidated statements of cash flows

The Company applies the indirect method to reconcile the net income for the year with the cash flows generated by its operations.

For purposes of the consolidated statements of cash flows, cash and cash equivalents comprise cash, bank current accounts and short-term highly liquid investments (with a maturity of three months or less from the date of acquisition). Bank overdrafts are disclosed in the consolidated statement of financial position as financial debts and its flows in the cash flow statements as proceed and payment of financial debt, because they are part of the short-term financial structure of Telecom and its subsidiaries.

Changes in assets/liabilities components:

	December 31,
Net (increase) decrease in assets	2021	2020	2019
Trade receivables	(12,854)	(20,075)	(12,149)
Other receivables	(5,316)	(6,007)	(6,392)
Inventories	(391)	(1,943)	(1,971)
	(18,561)	(28,025)	(20,512)
Net increase (decrease) in liabilities
Trade payables	6,640	8,887	(8,364)
Salaries and social security payables	10,002	6,545	9,392
Other taxes payables	(2,656)	3,467	4,509
Other liabilities and provisions	(4,545)	(3,771)	(89)
	9,441	15,128	5,448

F-56

TELECOM ARGENTINA S.A.

Main Financing activities components

The following table presents the main financing activities components:

	December 31,
	2021	2020	2019
Bank overdrafts	10,156	—	16,490
Notes	41,524	42,377	46,279
Bank and other financial entities loans	11,060	37,478	55,430
Loans for purchase of equipment	1,476	4,715	2,029
Total financial debt proceeds	64,216	84,570	120,228
Bank overdrafts	—	(10,427)	(1)
Notes	(19,722)	(14,522)	(6,282)
Bank and other financial entities loans	(27,003)	(70,374)	(68,727)
Loans for purchase of equipment	(3,571)	(3,382)	—
Total payment of debt	(50,296)	(98,705)	(75,010)
Bank overdrafts	(3,198)	(5,988)	(1,993)
Notes	(10,601)	(8,605)	(2,320)
Bank and other financial entities loans	(10,280)	(13,642)	(14,640)
By DFI, purchase of equipment and others	(2,738)	(3,238)	2,733
Total payment of interest and related expenses	(26,817)	(31,473)	(16,220)

Main non-cash operating transactions

Main non-cash operating transactions and that were eliminated from the consolidated statement of cash flows are the following:

	December 31,
	2021	2020	2019
PP&E and intangible assets acquisition financed with accounts payable	20,609	29,663	31,580
Dividends payment with investments not considered as cash and cash equivalents	40,020	38,809	—
Accounts payable payment with CDB loan proceeds	8,138	376	—
Trade receivables offset with government bonds	2,355	706	—
Social security payables offset with government bonds	1,316	—	—
Other receivables offset with income tax liabilities	73	39	—

Cash dividends collected

Brief information on cash dividends collected by the Company is provided below:

		Cash Dividends Collected
			Current currency
		Currency of the	as of December 31,
Year	Company	transaction date	2021
2021	Ver TV	109	153
	TSMA	57	81
		166	(*) 234
2020	Ver TV	50	86
	TSMA	21	35
		71	121
2019	Ver TV	97	260
	TSMA	41	108
	La Capital Cable	5	12
		143	380

F-57

TELECOM ARGENTINA S.A.

(*) includes 14 corresponding to dividends distributed in 2020.

Cash and non-cash assets dividends from the Company and its subsidiaries

Non-cash assets dividends

Telecom Argentina’s General Extraordinary Shareholders’ Meeting held on August 11, 2021 resolved to distribute non- cash assets dividends as follows: i) Global Bonds of the Argentine Republic amortizable in US dollars maturing on July 9, 2030 (the “2030 Global Bonds”), for a nominal value of US$370,386,472, and ii) Global Bonds of the Argentine Republic amortizable in US dollars maturing on July 9, 2035 (the “2035 Global Bonds”) for a nominal value of US$186,621,565.

Consequently, and considering that the valuation of the mentioned non-cash assets dividends was $35,068,340,043 Argentine pesos ($40,020 in current currency as of December 31, 2021), the “Voluntary Reserve to maintain the Company’s level of investments in capital assets and the current level of solvency” was partially withdraw for that amount.

Telecom Argentina’s General Extraordinary Shareholders’ Meeting held on November 13, 2020 resolved to distribute non- cash assets dividends as follows: i) Global Bonds of the Argentine Republic amortizable in US dollars maturing on July 9, 2030 (the “2030 Global Bonds”), for a nominal value of US$157,642,897, and ii) Global Bonds of the Argentine Republic amortizable in US dollars maturing on July 9, 2035 (the “2035 Global Bonds”) for a nominal value of US$271,896,177.

Consequently, and considering that the valuation of the mentioned non-cash assets dividends was $24,723,374,678 Argentine pesos ($38,809 in current currency as of December 31, 2021), the “Voluntary Reserve for Future Cash Dividends” amounting to $9,963 in current currency as of December 31, 2021 was fully withdraw and the “Voluntary Reserve to maintain the Company’s level of investments in capital assets and the current level of solvency” was partially withdraw in $28,846 in current currency as of December 31, 2021.

Cash dividends

Brief information on cash dividends of the Company and its subsidiaries is provided below:

			Distributed amount			Amount paid in
				Current currency		current currency
			Currency of the	as of December 31,		as of December
Year	Company	Distribution month	transaction date	2021	Payment month	31, 2021
2021	Núcleo	April 2021	650	834	May 2021/ Oct 2021	744
				834		744
2020	Núcleo	April 2020	295	556	May 2020/ Oct 2020	554
				556		554
2019	Telecom	April 2019	6,300	17,808	May 2019	16,712
	Telecom	August 2019	7,045	17,126	August 2019	17,126
	Telecom	October 2019	17,387	38,646	October 2019	38,646
	Núcleo	April 2019	197	537	May 2019	523
				74,117		73,007

F-58

TELECOM ARGENTINA S.A.

NOTE 5 – TRADE RECEIVABLES

	As of December 31,
Current Trade receivables	2021	2020
Ordinary receivables	32,163	43,524
Contractual asset IFRS 15	4	69
Companies under section 33 - Law No. 19,550 and related parties (Note 27.c)	182	249
Allowance for doubtful accounts	(9,795)	(15,230)
	22,554	28,612
Non-current trade receivables
Ordinary receivables	66	80
Contractual asset IFRS 15	6	9
	72	89
Total trade receivables, net	22,626	28,701

Movements in the allowance for current doubtful accounts are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the fiscal year	(15,230)	(9,863)
Additions - Bad debt expenses	(7,983)	(16,309)
Uses and Currency translation adjustments (includes RECPAM) (1)	13,418	10,942
At the end of the year	(9,795)	(15,230)

(1) Includes uses for $8,250 and $6,522 in 2021 and 2020, respectively.

NOTE 6 – OTHER RECEIVABLES

	As of December 31,
Current other receivables	2021	2020
Prepaid expenses	5,105	2,332
Guarantee of financial operations	1,915	2,071
Tax credits	849	4,184
Companies under section 33 - Law No. 19,550 and related parties (Note 27.c)	228	226
Receivables from sale of customer relationship	19	43
Financial DFI(Note 22)	—	3
Other	1,099	2,041
Allowance for current other receivables	(369)	(503)
	8,846	10,397
Non-current other receivables
Prepaid expenses	1,671	251
Receivables from sale of customer relationship	21	62
Tax credits	2	1,297
Other	391	804
	2,085	2,414
Total other receivables, net	10,931	12,811

Movements in the allowance for current other receivables are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the year	(503)	(77)
Increases	—	(448)
Decreases (includes RECPAM)	134	22
At the end of the year	(369)	(503)

F-59

TELECOM ARGENTINA S.A.

NOTE 7 – INVENTORIES

	As of December 31,
	2021	2020
Mobile handsets and others	2,539	4,107
Inventories for construction projects	899	1,894
Subtotal	3,438	6,001
Allowance for obsolescence of inventories	(323)	(383)
Total inventories	3,115	5,618

Movements in the allowance for obsolescence of inventories are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the year	(383)	(478)
Additions	(47)	(26)
Decreases (includes RECPAM)	107	121
At the end of the year	(323)	(383)

NOTE 8 – GOODWILL

	As of December 31,
	2021	2020
Argentina(1)	378,347	378,322
Abroad (2)	873	1,912
Total goodwill	379,220	380,234

(1) The variation with respect to the balance as of December 31, 2020 corresponds to the acquisition of shareholdings (Note 3.d.1.b) and results from the impairment of fixed assets.

(2) The decrease with respect to the balance as of December 31, 2020 corresponds to the effects of currency translation and results from impairment of fixed assets (Note 3.l).

NOTE 9 – PROPERTY, PLANT AND EQUIPMENT

	As of December 31,
	2021	2020
PP&E before allowances and impairment	457,518	489,472
Valuation allowance for obsolescence and impairment of materials	(4,724)	(3,930)
Impairment of PP&E	(1,620)	(1,226)
	451,174	484,316

F-60

TELECOM ARGENTINA S.A.

Details on the nature and movements of PP&E as of December 31, 2021 are as follows:

	Gross					Gross
	value as					value as
	of		Currency			of
	December 31,		translation	Transfers and		December 31,
	2020	CAPEX	adjustments	reclassifications	Decreases	2021
Real estate	76,109	13	(529)	1,865	(3,453)	74,005
Switching equipment	18,478	629	(1,706)	5,381	(62)	22,720
Fixed network and transportation	320,677	12,876	(2,862)	22,192	(18,487)	334,396
Mobile network access	65,860	20	(2,092)	6,171	(546)	69,413
Tower and pole	18,877	—	(588)	1,209	(191)	19,307
Power equipment and Installations	24,824	578	(716)	1,495	(7)	26,174
Computer equipment	90,514	5,518	(2,598)	20,426	(132)	113,728
Goods lent to customers at no cost	43,944	2,543	(807)	12,633	(17,553)	40,760
Vehicles	9,903	130	(60)	23	(155)	9,841
Machinery, diverse equipment and tools	14,092	77	(226)	95	(4)	14,034
Other	3,088	133	(85)	1,299	—	4,435
Construction in progress	58,451	22,353	(286)	(40,954)	(397)	39,167
Materials	40,591	37,398	(459)	(31,835)	(7)	45,688
Total	785,408	82,268	(13,014)	—	(40,994)	813,668

	Accumulated				Accumulated
	depreciation				depreciation	Net carrying
	as of		Currency	Decrease	as of	value as of
	December 31,		translation	and	December 31,	December 31,
	2020	Depreciation	adjustments	reclassifica-tions	2021	2021
Real estate	(12,869)	(3,245)	340	3,162	(12,612)	61,393
Switching equipment	(11,862)	(4,569)	1,391	61	(14,979)	7,741
Fixed network and transportation	(142,373)	(43,923)	1,816	18,226	(166,254)	168,142
Mobile network access	(28,928)	(11,458)	1,242	394	(38,750)	30,663
Tower and pole	(6,690)	(1,451)	308	62	(7,771)	11,536
Power equipment and Installations	(10,429)	(3,115)	370	5	(13,169)	13,005
Computer equipment	(50,827)	(18,305)	2,117	132	(66,883)	46,845
Goods lent to customers at no cost	(12,022)	(20,116)	587	17,552	(13,999)	26,761
Vehicles	(7,162)	(944)	40	136	(7,930)	1,911
Machinery, diverse equipment and tools	(11,088)	(727)	130	23	(11,662)	2,372
Other	(1,686)	(529)	74	—	(2,141)	2,294
Construction in progress	—	—	—	—	—	39,167
Materials	—	—	—	—	—	45,688
Total	(295,936)	(108,382)	8,415	39,753	(356,150)	457,518

Details on the nature and movements of PP&E as of December 31, 2020 are as follows:

	Gross					Gross
	value as					value as
	of		Currency			of
	December 31,		translation	Transfers and		December 31,
	2019	CAPEX	adjustments	reclassifications	Decreases	2020
Real estate	73,948	9	(288)	2,762	(322)	76,109
Switching equipment	17,787	657	(1,211)	1,260	(15)	18,478
Fixed network and transportation	292,502	14,732	(1,724)	24,080	(8,913)	320,677
Mobile network access	63,868	2	(692)	2,792	(110)	65,860
Tower and pole	18,664	—	(331)	645	(101)	18,877
Power equipment and Installations	23,077	445	(340)	1,642	—	24,824
Computer equipment	71,626	4,133	(1,866)	16,859	(238)	90,514
Goods lent to customers at no cost	32,223	8,272	(495)	17,393	(13,449)	43,944
Vehicles	9,888	74	(36)	—	(23)	9,903
Machinery, diverse equipment and tools	12,613	854	(77)	702	—	14,092
Other	2,503	199	(53)	439	—	3,088
Construction in progress	73,377	20,907	(140)	(35,396)	(297)	58,451
Materials	43,548	30,382	(161)	(33,178)	—	40,591
Total	735,624	80,666	(7,414)	—	(23,468)	785,408

F-61

TELECOM ARGENTINA S.A.

	Accumulated				Accumulated
	depreciation				depreciation	Net carrying
	as of		Currency	Decrease	as of	value as of
	December 31,		translation	and	December 31,	December 31,
	2019	Depreciation	adjustments	reclassifica-tions	2020	2020
Real estate	(10,006)	(3,274)	236	175	(12,869)	63,240
Switching equipment	(9,296)	(3,698)	1,121	11	(11,862)	6,616
Fixed network and transportation	(107,581)	(44,389)	746	8,851	(142,373)	178,304
Mobile network access	(21,224)	(8,735)	971	60	(28,928)	36,932
Tower and pole	(5,371)	(1,601)	235	47	(6,690)	12,187
Power equipment and Installations	(7,358)	(3,327)	256	—	(10,429)	14,395
Computer equipment	(37,926)	(14,800)	1,695	204	(50,827)	39,687
Goods lent to customers at no cost	(9,023)	(16,875)	427	13,449	(12,022)	31,922
Vehicles	(6,057)	(1,147)	28	14	(7,162)	2,741
Machinery, diverse equipment and tools	(10,222)	(913)	47	—	(11,088)	3,004
Other	(1,312)	(426)	49	3	(1,686)	1,402
Construction in progress	—	—	—	—	—	58,451
Materials	—	—	—	—	—	40,591
Total	(225,376)	(99,185)	5,811	22,814	(295,936)	489,472

Movements in the valuation allowance for obsolescence and impairment of materials are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the year	(3,930)	(3,093)
Additions	(816)	(848)
Currency translation adjustments	22	11
At the end of the year	(4,724)	(3,930)

Movements in the impairment of PP&E are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the year	(1,226)	(1,648)
Additions	(394)	(1,360)
Uses	—	1,782
At the end of the year	(1,620)	(1,226)

NOTE 10 – INTANGIBLE ASSETS

	As of December 31,
	2021	2020
Intangible assets	153,739	166,432
Impairment	(9,625)	(9,413)
	144,114	157,019

F-62

TELECOM ARGENTINA S.A.

Details on the nature and movements of intangible assets as of December 31, 2021 are as follows:

	Gross value as of				Gross value as of
	December 31,		Currency translation		December 31,
	2020	CAPEX	adjustments	Decreases	2021
3G/4G licenses	70,284	—	—	—	70,284
PCS and SRCE licenses (Argentina)	33,313	—	—	—	33,313
Núcleo´s licenses	8,053	292	(298)	—	8,047
Customer relationship	44,461	—	(70)	(39)	44,352
Brands	41,978	—	—	—	41,978
Incremental Cost from the acquisitions of contracts	7,898	2,342	(39)	(5,133)	5,068
Content activation	—	135	—	—	135
Other	5,847	513	(7)	—	6,353
Total	211,834	3,282	(414)	(5,172)	209,530

	Accumulated				Accumulated	Net
	amortization				amortization	carrying
	as of		Currency		as of	value as of
	December 31,		translation		December 31,	December 31,
	2020	Amortization	adjustments	Decreases	2021	2021
3G/4G licenses	(13,616)	(4,804)	—	—	(18,420)	51,864
PCS and SRCE licenses (Argentina)	—	—	—	—	—	33,313
Núcleo´s licenses	(829)	(520)	4	—	(1,345)	6,702
Customer relationship	(21,375)	(6,915)	—	39	(28,251)	16,101
Brands	(326)	(13)	—	—	(339)	41,639
Incremental Cost from the acquisitions of contracts	(5,366)	(2,659)	—	5,133	(2,892)	2,176
Content activation	—	(72)	—	—	(72)	63
Other	(3,890)	(575)	(7)	—	(4,472)	1,881
Total	(45,402)	(15,558)	(3)	5,172	(55,791)	153,739

Details on the nature and movements of intangible assets as of December 31, 2020 are as follows:

	Gross value as of		Currency		Gross value as
	December 31,		translation		of December 31,
	2019	CAPEX	adjustments	Decreases	2020
3G/4G licenses	70,284	—	—	—	70,284
PCS and SRCE licenses (Argentina)	33,313	—	—	—	33,313
Núcleo´s licenses	8,170	—	(117)	—	8,053
Customer relationship	44,523	—	(30)	(32)	44,461
Brands	41,978	—	—	—	41,978
Incremental Cost from the acquisitions of contracts	7,579	2,663	(23)	(2,321)	7,898
Other	5,058	795	(6)	—	5,847
Total	210,905	3,458	(176)	(2,353)	211,834

	Accumulated				Accumulated	Net carrying
	amortization as of		Currency		amortization as of	value as of
	December 31,		translation		December 31,	December 31,
	2019	Amortization	adjustments	Decreases	2020	2020
3G/4G licenses	(8,812)	(4,804)	—	—	(13,616)	56,668
PCS and SRCE licenses (Argentina)	—	—	—	—	—	33,313
Núcleo´s licenses	(574)	(264)	9	—	(829)	7,224
Customer relationship	(14,354)	(7,059)	6	32	(21,375)	23,086
Brands	(312)	(14)	—	—	(326)	41,652
Incremental Cost from the acquisitions of contracts	(4,346)	(3,346)	5	2,321	(5,366)	2,532
Other	(3,333)	(569)	12	—	(3,890)	1,957
Total	(31,731)	(16,056)	32	2,353	(45,402)	166,432

Movements in the impairment of Intangible assets are as follows:

	Years ended December 31,
	2021	2020
At the beginning of the year	(9,413)	(9,537)
Additions	(212)	(325)
Decreases	—	449
At the end of the year	(9,625)	(9,413)

F-63

TELECOM ARGENTINA S.A.

NOTE 11 – RIGHT OF USE ASSETS

Details on the nature and movements of Right of use assets as of December 31, 2021 are as follows:

	Gross value as of
	December 31,		Currency translation		Gross value as of
	2020	Increases	adjustments	Decreases	December 31, 2021
Leases rights of use (a)
- Sites	25,182	14,140	(614)	(5,206)	33,502
- Real estate and others	7,737	2,264	(82)	(1,614)	8,305
- Poles	3,911	1,013	(46)	(897)	3,981
Indefeasible right of use	1,796	133	(40)	-	1,889
Asset Retirement Obligation	3,998	604	(11)	(44)	4,547
Total	42,624	18,154	(793)	(7,761)	52,224

(a)For the determination of the previously informed amounts, real discount rates were used amounting to 11.25% (average in Argentine pesos), 8.22% (in Guaraníes) and 6.4% (in US dollars)

	Accumulated				Accumulated	Net carrying
	amortization as of		Currency		amortization as	value as of
	December 31,		translation		of December 31,	December 31,
	2020	Amortization	adjustments	Decreases	2021	2021
Leases rights of use
- Sites	(9,938)	(6,457)	273	4,573	(11,549)	21,953
- Real estate and others	(3,219)	(2,234)	64	1,428	(3,961)	4,344
- Poles	(1,792)	(1,209)	7	896	(2,098)	1,883
Indefeasible right of use	(661)	(195)	27	—	(829)	1,060
Asset Retirement Obligation	(189)	(235)	8	44	(372)	4,175
Total	(15,799)	(10,330)	379	6,941	(18,809)	33,415

Details on the nature and movements of Right of use assets as of December 31, 2020 are as follows:

	Gross value as of
	December 31,		Currency translation		Gross value as of
	2019	Increases	adjustments	Decreases	December 31, 2020
Leases rights of use (b)
- Sites	18,077	7,689	(121)	(463)	25,182
- Real estate and others	5,197	2,708	(29)	(139)	7,737
- Poles	1,226	2,712	(27)	—	3,911
Indefeasible right of use	1,701	109	(14)	—	1,796
Asset Retirement Obligation	687	3,413	2	(104)	3,998
Total	26,888	16,631	(189)	(706)	42,624

(b)For the determination of the previously informed amounts, real discount rates were used amounting to 11% (average in Argentine pesos), 8.22% (in Guaraníes) and 6.4% (in US dollars)

	Accumulated				Accumulated	Net carrying
	amortization as of				amortization as	value as of
	December 31,		Currency translation		of December 31,	December 31,
	2019	Amortization	adjustments	Decreases	2020	2020
Leases rights of use
- Sites	(4,486)	(5,695)	33	210	(9,938)	15,244
- Real estate and others	(1,454)	(1,861)	8	88	(3,219)	4,518
- Poles	(780)	(1,016)	4	—	(1,792)	2,119
Indefeasible right of use	(475)	(193)	7	—	(661)	1,135
Asset Retirement Obligation	(174)	(95)	2	78	(189)	3,809
Total	(7,369)	(8,860)	54	376	(15,799)	26,825

F-64

TELECOM ARGENTINA S.A.

NOTE 12 – TRADE PAYABLES

	As of December 31,
Current	2021	2020
Suppliers and commercial accruals	48,015	58,030
Funds to be paid to clients	5	—
Companies under sect. 33 - Law No. 19,550 and Related Parties (Note 27.c)	1,211	1,378
	49,231	59,408
Non-current
Suppliers and commercial accruals	1,096	3,695
	1,096	3,695
Total trade payables	50,327	63,103

NOTE 13 – FINANCIAL DEBT

	As of December 31,
Current	2021	2020
Bank overdrafts - principal	12,184	5,967
Bank and other financial entities loans – principal	32,577	11,499
Notes – principal	—	20,813
DFI (Note 22)	185	779
Loans for purchase of equipment	3,595	3,707
Accrued interest and related expenses	16,328	20,030
	64,869	62,795
Non-current
Notes – principal	111,364	85,331
Bank and other financial entities loans – principal	57,745	110,858
DFI (Note 22)	—	17
Loans for purchase of equipment	3,916	6,279
Accrued interest and related expenses	29,027	36,905
	202,052	239,390
Total financial debt	266,921	302,185

Details on the nature and movements of financial debt are as follows:

				Exchange
	Balances			differences,
	at the			currency	Balances
	beginning			translation	as of
	of the	Cash	Accrued	adjustments	December
	period	Flows	interest	and others	31, 2021
Bank overdrafts	5,967	10,156	—	(3,939)	12,184
Bank and other financial entities loans – principal	122,357	(15,943)	—	(16,092)	90,322
Notes – principal	106,144	21,802	—	(16,582)	111,364
DFI	796	(2,959)	—	2,348	185
Loans for purchase of equipment	9,986	(2,095)	—	(380)	7,511
Accrued interest and related expenses	56,935	(24,473)	15,563	(2,670)	45,355
Total as of December 31, 2021	302,185	(13,512)	15,563	(*)    (37,315)	266,921
Total as of December 31, 2020	312,340	(45,872)	21,093	(**)    14,624	302,185

(*) Includes $6,992 in Bank and other financial entities loans – principal, and $1,446 in Loans for purchase of equipment that do not represent cash movement.

(**) Includes $376 for Loans for purchase of equipment that do not represent cash movement.

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TELECOM ARGENTINA S.A.

Most of the bank and other financing entities loans subscribed by the Company contain compliance ratios which are usual for this kind of agreements. As of December 31, 2021, Telecom has complied with them.

As of December 31, 2021, the Company maintains US LIBOR-based loans as detailed below in this note, that is set to mature after June 30, 2023, the proposed LIBOR cessation date. While certain of our debt agreement do contain language for the determination of interest rates in the event the LIBOR rate is not available, in the event of the continued or permanent unavailability of LIBOR we may need to enter into negotiations with certain of our creditors to agree to an alternative interest rate or an alternative basis for determining the interest rate in our credit facilities.

The main bank and other financing entities loans agreements, which are effective as of the date of these consolidated financial statements, are detailed below:

Telecom Argentina

Global Programs for the issuance of Notes

On December 28, 2017, Telecom Argentina held an Ordinary Shareholders’ Meeting that approved a Notes Global Program for a maximum outstanding amount of US$3,000 million or its equivalent in other currencies. The delegation of powers in the Board of Directors was also approved to determine and modify the terms and conditions of the Program as well as to establish the issuance opportunities. On April 19, 2018, the CNV approved the mentioned Program, through Resolution No. 19,481.

Within the mentioned Program, Telecom Argentina issued several series of Notes, which are described below:

● Series I in US dollars

In July 2019, the Company informed CNV about the renewal of the period of placement of Notes for an amount of nominal value of US$300 million, that can be increased to US$500 million, whose funds were used to the refinancing of liabilities, including the use of up to US$250 million to refinance Series “A” Notes maturing in 2021 (See “Series 5 Notes – Foreign currency financial debt renegotiation”).

The amount of the Notes finally issued and its main characteristics are detailed below:

Issuance date: July 18, 2019.

Amount involved: US$400 million (approximately $17,148 as of the date of issuance).

Maturity Date: July 18, 2026.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest semiannually from its issuance date until its maturity date at a fixed annual rate of 8.00%.

Interest Payment Date: Interest will be paid semiannually since issuance date. The last interest payment date will be the maturity date.

The Company received a disbursement for a total amount of US$392.36 million (since US$2.4 million corresponding to debt issuance expenses and US$5.24 million that corresponded to issuance under par were deducted from the initial disbursement) equivalent to $16,820 as of the date of the disbursement collection. From this disbursement, the Company used US$34.2 million to repurchase Series “A” Notes maturing in 2021 (See “Series 5 Notes – Foreign currency financial debt renegotiation”) and US$100 million to the partial prepayment of the Term Loan, which were paid in July 25, 2019.

As of December 31, 2021, an amount of US$408 million of the mentioned Notes remained unpaid (equivalent to $41,901).

● Series 3 and 4 in Argentine Pesos

On January 23, 2020, the Company informed CNV about the renewal of the period of placement of Notes in two series for a total amount of nominal value of $1,500, that can be increased to $5,000. The amount of the Notes finally issued and its main characteristics are detailed below:

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TELECOM ARGENTINA S.A.

✓ Series 3

Issuance date: January 31, 2020.

Amount involved: $3,196,524,154 Argentine pesos.

Maturity Date: January 31, 2021.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable in a quarterly basis from its issuance date until its maturity date at a variable annual rate (Badlar plus spread of 4.75%). The last interest payment date will be on maturity date.

✓ Series 4

Issuance date: January 31, 2020.

Amount involved: $1,200,229,180 Argentine pesos.

Maturity Date: July 31, 2021.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable on a quarterly basis from its issuance date until its maturity date at a variable annual rate (Badlar plus spread of 5.25%). The last interest payment date will be on maturity date.

The Company received a disbursement for a total amount of $4,374, since $23 corresponding to debt issuance expenses were deducted from the initial disbursement (amounts in currency of the transaction date).

During 2020, the Company repurchased approximately $86 (principal nominal value) and on January 2021 repurchased approximately $150 (principal nominal value). These operations were carried out at the market value of each repurchase date, which did not significantly differ from their accounting valuation on that date.

On maturity date of Series 3 Notes, the Company paid $3,249 of Series “3” Notes ($2,961 of principal and $288 of interest).

On maturity date, the Company repaid the remaining balance of Series “4” Notes for a total amount of $1,322 ($1,200 of principal and $122 of interest).

● Series 5 Notes – Foreign currency financial debt renegotiation

Within the framework of continuous optimization of terms, rates and structure of its financial debt, on August 6, 2020, the Company has refinanced part of its financial debt through the issuance of Series 5 Notes, which main characteristics are detailed below:

a) Series 5 Notes

Issuance date: August 6, 2020.

Amount involved: US$388.9 million (approximately $28,273 as of the date of issuance), of which US$253.5 million correspond to instruments to be subscribed in kind through the exchange of Series “A” Notes as described in item b) below and US$135.4 million correspond to instruments to be integrated in cash.

Maturity Date: August 6, 2025.

Amortization: Principal will be settled as follows: 3% on February 6, 2023, 30% on August 6, 2023, 33% on August 6, 2024 and 34% on August 6, 2025.

Interest rate and Payment Date: Interest is payable on a semiannually basis from its issuance date until the maturity date, at an annual fixed rate of 8.50%. The last interest payment date will be on maturity date.

Integration Options: Series 5 Notes may be integrated, at the investor's choice, in cash (US$) or in non - cash assets through the exchange of Series “A” Notes with maturity date in 2021. Net cash proceeds of Series 5 Notes were applied to the cancellation of the loan with Deutsche Bank AG, London Branch, mentioned in item c) below. Series “A” Notes delivered for the non – cash assets subscription of Series 5 Notes have been settled by the Company.

As of December 31, 2021, an amount of US$411 million of the mentioned Notes remained unpaid (equivalent to $42,169).

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TELECOM ARGENTINA S.A.

b) Outstanding Series “A” Notes at fixed annual rate maturing in 2021

On April 20, 2016, at the Annual General Ordinary and Extraordinary Shareholders’ Meeting of Cablevisión, the shareholders of Cablevisión approved, among other matters, the extension of the authorization of the Global Program for the Issuance of Notes, which had been granted at the Annual General Ordinary and Extraordinary Shareholders’ Meeting of Cablevisión on April 28, 2014, increasing the maximum amount of the outstanding Notes that may be issued under this Program from a nominal value outstanding at any time of US$500 million (or its equivalent in other currencies) to US$1,000 million (or its equivalent in other currencies), delegating broad powers to the Board of Directors.

On June 1, 2016, the Board of Directors of Cablevisión authorized the issuance of Series “A” Notes for a nominal value of US$500 million at fixed annual nominal interest rate of 6.50%, interest payable semi-annually, maturing in June 2021.

As a result of the merger between Telecom Argentina and Cablevisión, Series “A” Notes were assumed by the Company on January 1, 2018.

For this purpose, Telecom Argentina, as successor of Cablevisión, the Deutsche Bank Trust Company Americas, as Trustee and Banco Comafi S.A., as trustee representative in Argentina, signed a supplement to the Trust Agreement formalizing the absorption of the Series “A” Notes by Telecom Argentina.

On July 10, 2019, Telecom made an offer to repurchase Series “A” Notes for an amount of up to US$200 million, under certain terms and conditions. Total consideration offered for each US$1,000 of nominal value in accordance with the offer amounted to US$997.50 plus accrued interest. The purchase offer ended on August 9, 2019. As a result of the offer, Telecom repaid a total amount of US$34.2 million of Series “A” Notes (US$30.4 million on July 25, 2019 and US$3.8 million on August 14, 2019).

Additionally, and until December 31, 2019, the Company repurchased approximately US$0.5 million (nominal value) of the Series “A” Notes. These transactions were executed at the quoted market price prevailing on each repurchase date, which did not significantly differ from the book value as of that date.

On July 7, 2020, the Company started the public offering placement process of Series 5 Notes, with the purpose of refinancing Series “A” Notes and the loan with Deutsche Bank AG, London Branch mentioned in point c) below, jointly with a request for consent for the amendment of certain terms and conditions of Series “A” Notes. Series “A” Notes holders’, who chose to deliver these Notes for the subscription in kind of Series 5 Notes, received for each US$1,000 of Series “A” Notes delivered to the Company: i) US$700 of principal of Series 5 Notes; and ii) US$320 in cash (see “Agreement with the TMF Trust Company” to this Note). According to the offer, the nominal value of Series “A” Notes delivered to the Company for the integration in non – cash assets of Series 5 Notes amounted to US$362.2 million, representing approximately 77.74% of total outstanding Series “A” Notes, which were settled and retired.

On June 15, 2021, the Company repaid the outstanding Series “A” Notes for a total amount of US$106.6 million (US$103.2 million of principal and US$3.4 million of interest).

c)Deutsche Bank Loan

On November 8, 2018, the Company acknowledged the acceptance by Deutsche Bank AG, London Branch, as organizer of a syndicate of banks, of a loan facility for an amount of up to US$200 million (which might be increased up to US$300 million). On November 14, 2018 the Company acknowledged the acceptance of the extension of the loan offer by Deutsche Bank AG, London Branch, for US$100 million.

The Deutsche Bank Loan has a term of 42 months counted from the date of the initial borrowing and will accrue compensatory interest at an initial rate per annum equivalent to LIBO plus 4.5% that will be payable quarterly, in arrears. The principal will be payable in 6 consecutive semi-annual equal installments equivalent to 12.5% of the disbursed amount with a final payment on the maturity date equivalent to 25% of the initial borrowing.

The proceeds from the Deutsche Bank Loan were used by the Company only to partially prepay the Syndicated Loan.

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TELECOM ARGENTINA S.A.

On August 6, 2020, the Company fully settled the bank loan with Deutsche Bank AG, London Branch, which it total outstanding principal amounted to US$187.5 million, including interest accrued at that date and related expenses, with cash obtained from the subscription of Series 5 Notes previously mentioned and the payment in cash made by the Trust (see “Agreement with the TMF Trust Company” to this Note).

As a result of this financial debt renegotiation, the Company recorded during 2020 a loss of $4,029, that is included in “Financial debt renegotiation results” item, included in financial results, net.

● Series 6 and 7 in Argentine Pesos

On December 2, 2020, the Company offered a Notes subscription in two series for a total amount of nominal value of $1,500, that can be increased to $10,000. The amount of the Notes finally issued and its main characteristics are detailed below:

✓ Series 6

Issuance date: December 10, 2020.

Amount involved: $1,928,950,000 Argentine pesos.

Maturity Date: December 10, 2021.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable on a quarterly basis from its issuance date until its maturity date at a variable annual rate (Badlar plus spread of 2.25%). The last interest payment date will be on maturity date.

✓ Series 7

Issuance date: December 10, 2020.

Amount involved: $125,248,683 UVA, equivalent to $7,787 Argentine pesos as of the date of issuance.

Maturity Date: December 10, 2023.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable on a quarterly basis from its issuance date until its maturity date at a 3% fixed annual rate. The last interest payment date will be on maturity date.

The Company received a disbursement for a total amount of $9,671, since $45 corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

On maturity date, the Company repaid the remaining balance of Series “6” Notes for a total amount of $2,104 ($1,929 of principal and $175 of interest).

As of December 31, 2021, an amount of $12,208 of Series 7 Notes remained unpaid.

●Series 8 Notes

The Company announced, from January 14, 2021, the subscription of notes for a total nominal value determined in UVA equivalent for up to $1,500, that could be increased to $12,000, The amount of the Notes finally issued and its main characteristics are detailed below:

Issuance date: January 20, 2021.

Amount involved: 133,628,950 UVA (equivalent to $8,708, Argentine pesos as of the date of issuance).

Maturity Date: January 20, 2025.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: It bears interests on a quarterly basis from its issuance date until its maturity date at an annual fixed rate of 4.00%. Interests are paid on a quarterly basis, and the last interest payment date will be on the maturity date.

The Company received a disbursement for a total amount of $8,664, since $45 corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

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TELECOM ARGENTINA S.A.

As of December 31, 2021, an amount of $13,094 remained unpaid.

●Series 9 Notes

The Company announced, from June 1, 2021, the subscription of notes for a total nominal value determined in US dollars equivalent for up to US$15 million, that could be increased to US$120 million, payable in Argentine pesos to the applicable exchange rate. The amount of the Notes finally issued and its main characteristics are detailed below:

Issuance date: June 7, 2021.

Amount involved: US$91.8 million payable in Argentine pesos to the applicable exchange rate (equivalent to $8,699 Argentine pesos as of the date of issuance).

Maturity Date: June 7, 2024.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: It bears interests on a quarterly basis from its issuance date until its maturity date at an annual fixed rate of 2.75%. Interests are paid on a quarterly basis, and the last interest payment date will be on the maturity date.

The Company received a disbursement for a total amount of $8,655, since $44 corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

The Company used US$91 million of the proceeds of Series 9 Notes for the total cancellation of Series “A” Notes maturing in June 2021 (see below “Cancellation of Series “A” Notes).

As of December 31, 2021, an amount of $9,412 remained unpaid.

● Series 10 and 11 in Argentine Pesos

The Company announced, from December 3, 2021, the subscription of notes for a total nominal value for up to $3,000, that could be increased to $14,000, The amount of the Notes finally issued and its main characteristics are detailed below:

✓Series 10

Issuance date: December 10, 2021.

Amount involved: 126,568,927 UVA (equivalent to $12,000 Argentine pesos as of the date of issuance).

UVA Initial Value: 94.81.

Maturity Date: June 10, 2025.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: It does not bear interest.

✓Series 11

Issuance date: December 10, 2021.

Amount involved: $2,000,000,000

Maturity Date: June 10, 2023.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: It bears interests on a quarterly basis from its issuance date until its maturity date at a variable annual rate (Badlar plus spread of 3.25%). The last interest payment date will be on maturity date.

The Company received a disbursement for a total amount of $13,928, since $72 corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

As of December 31, 2021, an amount of $12,273 of Series 10 Notes and $2,030 of Series 11 Notes remained unpaid.

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TELECOM ARGENTINA S.A.

Bank and other financing entities loans

International Finance Corporation (“IFC”) loan

On July 5, 2016, Personal, company merged by absorption into Telecom, accepted an offer from the IFC (member of the World Bank Group) for the assessment and transfer of funds for purposes of financing investment needs, work capital and debt refinancing. On October 5, 2016 Personal and the IFC signed the loan agreement (“IFC Loan”) for an amount of US$400 million and for a six-year period, payable in 8 equal semiannual installments since the 30^th month, with a 6-month LIBOR + 4 percentage points. This loan was used to deploy the 4G network and refinance short-term financial liabilities. The loan terms include standard commitments and limitations for this type of financial transactions.

On March 4, 2019 the Company signed a new loan agreement with IFC for a total amount of up to US$450 million, as requested in a timely manner by the Company in one or more disbursements (the "Loan"). The Loan consisted of a tranche "A", a tranche "B-1", a tranche "B-2", a tranche "B-3" and a tranche "B-4" which will accrue compensatory interest payables semiannually for periods that are due at an annual rate equal to 6-month LIBOR plus the following margins: 4.85 percentage points in the case of Tranche A, Tranche B-2 and Tranche B-4, and 4.60 percentage points in the case of Tranche B-1 and Tranche B-3. Likewise, the principal will be payable as follows: Tranche A, Tranche B-2, and Tranche B-4 in 8 consecutive semi-annual equal installments from February 2021 and final maturity in August 2024 and Tranche B-1 and Tranche B-3 in 6 consecutive semi-annual equal installments from February 2021 and final maturity in August 2023. The proceeds from the loan were used to finance capital investments for 2019.

On March 18, 2019, the Company received a disbursement for a total amount of US$290 million (US$285.5 million were received, because US$4.5 million corresponding to debt issuance expenses were deducted from the initial disbursement) in relation to the loan agreement that the Company signed with IFC for a total amount of up to US$450 million on March 4, 2019. The disbursement of US$290 million is divided into two tranches: a) a disbursement of US$160 million, which accrues interest payable semiannually for periods that are due at an annual rate equal to LIBO plus 4.85 percentage points, which will be repaid in 8 consecutive semiannual equal installments from February 2021 with maturity date in August 2024 and b) a disbursement of US$130 million, which accrues interest payable semiannually for periods that are due at an annual rate equal to LIBO plus 4.60 percentage points, which will be repaid in 6 consecutive semiannual equal installments from February 2021 with maturity date in August 2023.

On April 25, 2019, an additional disbursement was received for a total amount of US$20 million which accrues interest payable semiannually for periods that are due at an annual rate equal to LIBO plus 4.85 percentage points, which will be repaid in 8 consecutive semiannual equal installments from February 2021 and final maturity in August 2024.

On September 22, 2020, the Company refinanced those loans and agreed to change, mainly, the amortization schedule of all principal maturities that would take place during the last quarter of 2020 and 2021, by deferring the 85% of them for a term ranging between 24 and 48 months, and pre-paying the remaining 15% jointly with accrued interest and other related expenses (see "Agreement with the TMF Trust Company" to this Note). As a result of this renegotiation, the Company recognized a loss of $792 that is included in "Financial debt renegotiation results" item, within financial results, net.

On December 15, 2021 the Company refinanced again those loans and agreed to change, mainly, the amortization schedule of Tranche B, by deferring the 75% of all principal maturities that would take place during 2022 and 2023 for a term ranging between 24 and 60 months, and pre-paying the remaining 25% jointly with accrued interest and other related expenses.

As a result of this renegotiation, the Company recognized a loss of $885 that is included in “Financial debt renegotiation results” item, within financial results, net.

As of December 31, 2021, an amount of US$447 million of these agreements remained unpaid (equivalent to $45,947).

Inter-American Development Bank (“IDB”) Loan

On April 7, 2017, Personal and IIC (member of the IDB Group), signed a loan agreement for an amount of US$100 million maturing in September 2022, payable in 8 equal semiannual installments since the 24th month, with a 6-month LIBOR + 4 percentage points. The funds of this loan were allocated to deploy the 4G network and for financing working capital and other financial needs. The loan terms include standard commitments and covenants for this type of financial transactions.

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TELECOM ARGENTINA S.A.

On the other hand, on May 29, 2019 the Company subscribed a loan agreement with the Inter-American Development Bank (IDB Invest) for a total amount of up to US$300 million. On June 7, 2019, a disbursement for a total amount of US$75 million was received (US$74.15 million were received, because US$0.85 million corresponding to debt issuance expenses, that were deducted from the initial disbursement). This debt accrues interest of 6-month LIBOR plus 4.90 percentage points, which will be repaid in 10 consecutive semiannual equal installments from November 2021 with maturity date in May 2026.

Likewise, on July 11, 2019, an additional disbursement was received for a total amount of US$25 million (US$24.55 million were received, because US$0.45 million corresponding to debt issuance expenses were deducted from the initial disbursement) which accrues interest payable semiannually for periods that are due at an annual rate equal to 6-mont LIBO plus 4.60 percentage points, which cancellable in 6 consecutive semiannual equal installments from May 2021 and final maturity in November 2023.

On February 4, 2020 the Company and IDB Invest executed a supplement to the original loan agreement for a total amount of US$125 million, consisting of the following: i) a first tranche of US$50 million maturing on November 15, 2023 bearing interest at 6-month LIBOR plus 4.6%, payable in 8 consecutive semiannual installments since May 2020, and ii) a second tranche of US$75 million maturing on November 15, 2022 bearing interest at 6-month LIBOR plus a variable spread of 7% to 7.75%, payable in 6 consecutive semiannual installments since May 2020. The Company received a disbursement for a total amount of US$123.4 million, since US$1.6 million, corresponding to debt issuance expenses, were deducted from the initial disbursement.

On April 7, 2020, the Company received a new disbursement for a total amount of US$25 million maturing on November 15, 2022. The Company received US$24.6 million since US$0.4 million corresponding to debt issuance expenses were deducted.

On September 22, 2020, the Company refinanced those loans and agreed to change, mainly, the amortization schedule of all principal maturities that would take place during the last quarter of 2020 and 2021, by deferring 85% of them for a term ranging between 24 and 66 months, and pre-paying the remaining 15% jointly with accrued interest and other related expenses (see “Agreement with the TMF Trust Company” to this Note). As a result of this renegotiation, the Company recognized a loss of $377 that is included in “Financial debt renegotiation results” item, within financial results, net.

On December 15, 2021, the Company refinanced again those loans and agreed to change, mainly, the amortization schedule of all principal maturities that would take place during 2022 and 2023, by deferring 75% of them in a new amortization schedule ending in December 2024 and June 2027, and pre-paying the remaining 25% jointly with accrued interest and other related expenses.

As a result of this renegotiation, the Company recognized a loss of $1,267 that is included in “Financial debt renegotiation results” item, within financial results, net.

As of December 31, 2021, an amount of US$225 million of these agreements remained unpaid (equivalent to $23,133).

Agreement with TMF Trust Company

To be able to meet the requirements arising from the renegotiation of financial debts carried out by the Company, which involves significant payments in cash, on July 15, 2020 the Company entered into a trust agreement with TMF Trust Company (Uruguay), in its capacity as trustee, for the provision of funds and the administration of those payments.

According to the above-mentioned, by the end of July 2020, the Company disbursed to the Trust a total amount of US$273 million. As of the date of these consolidated financial statements, the Trust has made the following payments in cash:

a. An amount of US$120.2 million to the holders of Series “A” Notes to pay the cash consideration for refinancing the Series “A” Notes, including accrued interest at the date of settlement and related expenses.

b. An amount of US$62.4 million as a partial payment of the settlement of the loan with Deutsche Bank loan AG, London Branch including accrued interest at the date of settlement and related expenses.

c. An amount of US$30.9 million in accordance with the terms of the amendments of the loans signed with IFC, including accrued interest, prepayment premiums and other amounts due.

d. An amount of US$13.4 million in accordance with the terms of the amendments of the loans signed with IDB, including accrued interest, prepayment premiums and other amounts due.

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TELECOM ARGENTINA S.A.

On November 5, 2020, the Trust Administration Committee notified the Trustee that the trust ended, since the purpose of the Trust was fulfilled, its purpose was finished and pending expenses in charge of the Trust were paid. Also, according to its contractual terms, the Trustee was instructed to proceed to transfer the remaining Trust Assets in accordance with the instructions provided by the Trust Administration Committee, after deducting a minimum amount to face future termination and settlement expenses of the Trust. On that date, the Trust transferred, as remaining Trust Assets, 45.5 million Treasury Bonds of the United States to the subsidiary Televisión Dirigida in compliance with pre-existing obligations.

Term Loan

On October 8, 2018, the Company entered into a new agreement with Citibank, N.A., HSBC Mexico, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander, S.A., in its capacity as lenders, Citibank, N.A., HSBC Mexico, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Industrial and Commercial Bank of China Limited, Dubai (DIFC) Branch, JPMorgan Chase Bank, N.A. and Banco Santander, S.A. as organizers, Citibank N.A. as an administrative agent and the Citibank N.A. branch established in Argentina, as agent of local custody, for an aggregate principal amount of US$500 million (which can be increased, in accordance with the terms and conditions thereof) and to 48 months of term (the "Loan").

On October 17, 2018, the Company requested a disbursement of US$500 million. The disbursed principal accrues compensatory interest at an annual rate equivalent to 3-month LIBO plus the following margin: 4.50 percentage points during the first year after the disbursement, 5.00 percentage points, during the second year and 5.25 percentage points from the date that is two years after the disbursement and until the maturity date; and will be payable quarterly in arrears.

The partial pre-payment of “Term Loan” paid by Telecom during 2019 and 2020 were as follows:

✓ On March 25, 2019, Telecom paid US$101.4 million (US$100 million of principal and US$1.4 million of interest);

✓ On July 25, 2019, Telecom paid US$100.15 million (US$100 million of principal and US$0.15 million of interest);

✓ On December 9, 2019, Telecom paid US$50.5 million (US$50 million of principal and US$0.5 million of interest);

✓ On February 12, 2020, Telecom paid US$50.3 million (US$50 million of principal and US$0.3 million of interest); and

✓ On March 30, 2020, Telecom paid US$60.8 million (US$60 million of principal and US$0.8 million of interest).

As of December 31, 2021, an amount of US$141 million remained unpaid (equivalent to $14,506).

China Development Bank Shenzhen Branch (“CDB”) Loan

On December 14, 2020, the Company agreed with CDB a compromised line of credit of up to RMB 700 million (equivalent to approximately US$100 million), that can be increased to RMB 1,400 million, structured in several tranches. The increase in the amount will be subject to the granting of insurance by the China Export & Credit Insurance Corporation.

The proceeds from the loan will be used by the Company to finance its investment plan related to the acquisition of telecommunications equipment.

On December 24, 2020, the Company subscribed a first tranche for a total of RMB 19.6 million, and during 2021 the Company had subscribed from the second to the ninth tranches for a total of RMB 449 million. The loan bears an annual interest rate of 6.8% payable semi-annually and the principal will be repaid in 11 semi-annual and consecutive installments from May 2023 to December 2027.

As of December 31, 2021, an amount of RMB 461 million remained unpaid (equivalent to $7,436).

On January 21, 2022 the Company has subscribed the tenth tranche for a total of RMB 25.9 million, equivalent to $428 million.

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TELECOM ARGENTINA S.A.

Industrial and Commercial Bank of China (Argentina) S.A.U. (“ICBC”)Loan

As a result of the merge between Telecom Argentina and Cablevisión, the Company assumed a loan agreement with ICBC for import financing for an amount of US$5.2 million that accrues interest at an annual rate of 6% and has semiannual interest maturities. The principal is amortized in 8 semi-annual installments from July 2018 maturing in January 2022.

As of December 31, 2021, an amount of US$0.6 million remained unpaid (equivalent to $68).

During January 2022, the Company repaid the remaining balance of a loan agreement with ICBC Bank for $69 ($67 of principal and $2 of interest).

Banco Santander Río Loan

On August 18, 2021, the Company subscribed a loan agreement with Santander Río Bank S.A. for a total amount of $4,000. Total principal will be settled by one payment at maturity date, which will be on August 18, 2022. The loan bears interest that will be paid in a monthly basis from its issuance date until its maturity date at a fixed rate of 40.50%.

As of December 31, 2021, an amount of $4,024 remained unpaid.

On the other hand, on October 14, 2021, the Company subscribed a new loan agreement with Banco Santander Río S.A. for a total amount of $1,500. Total principal will be settled by one payment at maturity date, which will be on October 17, 2022. The loan bears interest that will be paid in a monthly basis from its issuance date until its maturity date maturity at a fixed nominal annual rate of 37.5%.

As of December 31, 2021, an amount of $1,513 remained unpaid.

Additionally, on December 6, 2021 the Company subscribed a new loan agreement with Santander Río Bank S.A. for a total amount of $1,000. Total principal will be settled by one payment at maturity date, which will be on December 22, 2022. The loan bears interest that will be paid in a monthly basis from its issuance date until its maturity date at a fixed rate of 37.75%.

As of December 31, 2021, an amount of $1,017 remained unpaid.

BBVA Bank Loan

On August 10, 2021, the Company subscribed a loan agreement with BBVA Argentina Bank S.A. for a total amount of $1,000. Total principal will be settled by one payment at maturity date, which will be on August 5, 2022. The loan bears interest that will be paid in a monthly basis from its issuance date until its maturity date at a fixed rate of 40.75%.

As of December 31, 2021, an amount of $1,017 remained unpaid.

Other bank loans

As of December 31, 2021, the Company repaid the following bank loans for:

a) On April 13, 2021 the Company proceeded to the total cancellation of a loan with Banco ICBC, by paying $1,011 million ($975 of principal and $36 of interest).

b) On April 29, 2021 the Company proceeded to the total cancellation of a loan with Banco Galicia, by paying $2,209 million ($2,000 of principal and $209 of interest).

c) On September 16, 2021, the Company repaid the remaining balance of a loan agreement with Macro Bank S.A. for $4,412 million ($4,000 of principal and $412 of interest).

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TELECOM ARGENTINA S.A.

Loans for purchase of equipment

Cisco Systems Capital Corporation

The Company has debt agreements with Cisco Systems Capital Corporation related to purchase equipment financing, amounting to US$76.8 million (of which US$25.2 were received during 2021 and US$51.6 million were received during 2020). Such agreements have an average maturity term of fifty months with partial repayments and accrue an average annual interest of 4%.

As of December 31, 2021, an amount of US$77 million remained unpaid (equivalent to $7,924).

During January and February 2022, the Company had additions for USD 8 million, equivalent to $842.1, due in February and March 2026.

Finnvera

On May 7, 2019, the Company submitted a proposal for an export credit line for a total amount of up to US$96 million to the following entities: (i) Banco Santander, S.A. and JPMorgan Chase Bank, N.A., London Branch, as initial lenders, lead coordinators and guarantors of residual risk, (ii) JPMorgan Chase Bank, N.A., London Branch, as a financing agent, (iii) Banco Santander, S.A. as a bank of documentation and (iv) Banco Santander Río S.A. as a local custody agent, which was accepted on the same date.

The line of credit is guaranteed by Finnvera plc, the official export credit agency of Finland, which granted a bond in favor of the lenders subject to certain terms and conditions.

The funds received will be used to finance up to 85% of the value of certain imported goods and services, the value of certain national goods and services and the total payment of the Finnvera surplus equivalent to 7.82% of the total amount committed by the lenders under the line of credit.

Between May 2019 and December 2020, the Company received disbursements for a total amount of US$95.9 million. This debt accrues interest at a rate equivalent to 6-month LIBO plus 1.04 percentage points payable semiannually in 13 consecutive semiannual equal installments with maturity dates in November 2025 and 2026.

On May 14, 2021, the Company submitted a proposal for an export credit line for a total amount of up to US$30 million to the following entities: (i) JPMorgan Chase Bank, N.A., London Branch, as initial lender, lead coordinator and guarantee of residual risk, (ii) JPMorgan Chase Bank, N.A., London Branch, as a financing agent, and (iii) JPMorgan Chase Bank, N.A, Buenos Aires branch, as a local custody agent, which was accepted on the same date.

The credit line is guaranteed by Finnvera plc, the official export credit agency of Finland, which granted a bond in favor of the lenders subject to certain terms and conditions.

The proceeds from the loans under this credit line will be used to finance up to 85% of the value of certain imported goods and services, the value of certain national goods and services and the total payment of the Finnvera premium equivalent to 14.41% of the total amount committed by the lenders under the credit line.

On July 27, 2021, the Company received a disbursement for a total amount of US$5.1 million (US$4.4 million were received, because US$0.7 million corresponding to the premium were deducted from the initial disbursement).

On December 29, 2021, the Company received a disbursement for a total amount of US$13.5 million (US$11.6 million were received, because US$1.9 million corresponding to the premium were deducted from the initial disbursement).

As of December 31, 2021, an amount of US$71 million remained unpaid (equivalent to $7,243).

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TELECOM ARGENTINA S.A.

Núcleo

Global Programs for the issuance of Notes

On January 4, 2019, Núcleo requested the National Securities Commission and the Stock and Products Exchange of Asunción to register the Global Issuance Program that foresees the issuance of Notes for an amount of up to 500,000,000,000 of Guaraníes (approximately $3,200 as of such date) under the conditions that are defined by the Board of Directors in each series.

On February 5, 2019, the National Securities Commission of Paraguay authorized the Program, under Resolution N° 11E/19.

Under such Program, Núcleo issued the following Series of Notes:

Series I

Issuance date: March 12, 2019.

Amount involved: 120,000,000,000 of Guaraníes (approximately $841 as of the date of issuance).

Maturity Date: March 11, 2024.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest from its issuance date until its maturity date at a fixed annual rate of 9.00%.

Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be the maturity date.

Series II

Issuance date: March 28, 2019.

Amount involved: 30,000,000,000 of Guaraníes (approximately $210 as of the date of issuance).

Maturity Date: March 26, 2024.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest from its issuance date until its maturity date at a fixed annual rate of 9.00%.

Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be the maturity date.

Series III

Issuance date: March 12, 2020.

Amount involved: 100,000,000,000 of Guaraníes (approximately $948 as of the date of issuance).

Maturity Date: March 11, 2025

Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest from its issuance date until its maturity date at a fixed annual rate of 8.75%.

Interest Payment Date: Interest will be paid quarterly in arrears since issuance date. The last interest payment date will be at the maturity date.

Series IV

Issuance date: March 10, 2021.

Amount involved: 130,000,000,000 of Guaraníes (approximately $1,771 as of the date of issuance).

Maturity Date: February 2, 2028.Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest from its issuance date until its maturity date at a fixed annual rate of 7.10%.

Interest Payment Date: Interest will be paid semi-annually in arrears since the issuance date.

Núcleo received a disbursement for a total amount of 129,057 million of Guaraníes (equivalent to $1,758), since 943 million of Guaraníes (equivalent to $13) corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

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TELECOM ARGENTINA S.A.

Series V

Issuance date: March 10, 2021.

Amount involved: 120,000,000,000 of Guaraníes (approximately $1,635 as of the date of issuance).

Maturity Date: January 17, 2031.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate: It bears interest from its issuance date until its maturity date at a fixed annual rate of 8.00%.

Interest Payment Date: Interest will be paid semi-annually in arrears since the issuance date.

Núcleo received a disbursement for a total amount of 119,122 million of Guaraníes (equivalent to $1,623), since 878 million of Guaraníes (equivalent to $12) corresponding to debt issuance expenses were deducted from the initial disbursement (amount corresponding to the transaction date).

The proceeds of the aforementioned series IV and V Notes were used for the cancellation of bank loans and financing of working capital.

As of December 31, 2021, an amount of Guaraníes 708,122 million of Notes remained unpaid (equivalent to $7,518)

NOTE 14 – SALARIES AND SOCIAL SECURITY PAYABLES

	As of December 31,
Current	2021	2020
Salaries, annual complementary salaries, vacation, bonuses and their social security payables	20,846	20,579
Termination benefits	1,417	1,060
	22,263	21,639
Non-current
Termination benefits	1,546	1,268
	1,546	1,268
Total salaries and social security payables	23,809	22,907

Compensation for the Key Managers of Telecom for the years ended December 31, 2021, 2020 and 2019 are shown in Note 27.e).

NOTE 15 – INCOME TAX PAYABLE AND DEFERRED INCOME TAX ASSETS/LIABILITIES

Income tax payable, net is presented below:

	As of December 31,
	2021	2020
Income tax provision	18,630	364
Withholdings and advance payments for income tax	(4,703)	(264)
Income tax payable, net	13,927	100

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TELECOM ARGENTINA S.A.

Income tax payable by company is presented below:

	As of December 31,
	2021	2020
Telecom	13,764	—
Núcleo	107	85
Adesol	47	11
Telecom USA	1	—
Pem	8	—
AVC Continente Audiovisual	—	3
Cable Imagen	—	1
	13,927	100

Deferred Income tax assets and liabilities, net and the actions for recourse tax receivable are presented below:

		As of December 31,
		2021	2020
Tax carryforward		(198)	(17,308)
Allowance for doubtful accounts		(5,231)	(4,391)
Provisions		(2,793)	(2,222)
PP&E and Intangible assets		120,819	111,854
Cash dividends from foreign companies		1,385	888
Income tax inflation adjustment effect		23,194	32,211
Other deferred tax liabilities (assets), net		(1,713)	(62)
Total deferred tax liabilities, net		135,463	120,970
Actions for recourse tax receivable		(889)	(1,331)
Total deferred tax liability, net	(*)	135,574	119,639
Net deferred tax assets		(658)	(622)
Net deferred tax liabilities		135,232	120,261

(*)  Includes $132 of currency translation adjustments on foreign subsidiaries’ initial balances.

As of December 31, 2021, some subsidiaries have a cumulative Tax carryforward of approximately $716, that calculated considering statutory income tax rate, represent a deferred tax asset of approximately $198.

The detail of the maturities of estimated tax carryforward is disclosed:

Company	Tax carryforward	Tax carryforward amount	Tax carryforward
	generation year	as of 12.31.2021	expiration year
Inter Radios	2018	1	2023
Telemás (*)	2019	454	2024
Micro Sistemas	2021	230	2026
Cable Imagen	2021	6	2026
Televisión Dirigida	2021	20	2026
AVC	2021	5	2026
		716

(*)  This company is consolidated in the financial statements of Adesol.

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TELECOM ARGENTINA S.A.

Income tax (expense) benefit differed from the amounts computed by applying the Company’s statutory income tax rate to pre-tax income as a result of the following:

	Years ended December 31,
	2021		2020		2019
	Profit (loss)
Pre-tax income	43,257		4,750		21,127
Non-taxable items – (Earnings) losses from associates	(395)		(749)		385
Non-taxable items – Costs valuation differences of foreign investments	—		(9,917)		(21,665)
Non-taxable items – Other	(471)		(2,266)		(1,632)
Restatement in current currency of Equity, goodwill and others	101,708		93,866		149,896
Subtotal	144,099		85,684		148,111
Weighted statutory income tax rate	34,34	%	24,59	%	26,14	%
Income tax expense at weighted statutory tax rate	(49,480)		(21,070)		(38,716)
Deferred tax liability restatement in current currency and others	58,971		31,244		40,781
Income tax inflation adjustment	(41,919)		(22,403)		(31,222)
Actions for recourse	7		18		107
Income tax on cash dividends of foreign companies	(896)		(243)		(66)
Income tax expense	(*)    (33,317)		(12,454)		(**)    (29,116)
Current tax expense	(18,630)		(364)		(329)
Deferred tax expense	(14,687)		(12,090)		(28,787)
Income tax expense	(33,317)		(12,454)		(29,116)

(*) Includes the effect of the change in the income tax rate provided for in Law No. 27,630 for approximately $(42,800).

(**) Includes the effect of the change in the income tax rate provided for in Law No. 27,541 for approximately $(8,372).

Income tax - Actions for recourse filed with the Tax Authority

Section 10 of Law No. 23,928 and Section 39 of Law No. 24,073 suspended the application of the provisions of Title VI of the Income Tax Law relating to the income tax inflation adjustment since April 1, 1992.

Accordingly, Telecom Argentina determined its income tax obligations in accordance with those provisions, without considering the income tax inflation adjustment.

After the economic crisis of 2002, many taxpayers began to question the legality of the provisions suspending the income tax inflation adjustment. Also, the Argentine Supreme Court of Justice issued its verdict in the "Candy" case July 3, 2009 in which it stated that particularly for fiscal year 2002 and considering the serious state of disturbance of that year, the taxpayer could demonstrate that not applying the income tax inflation adjustment resulted in confiscatory income tax rates.

More recently, the Argentine Supreme Court of Justice applied a similar criterion to the 2010, 2011. 2012 and 2014 fiscal years in the cases brought by "Distribuidora Gas del Centro" (10/14/14, 06/02/15, 10/04/16 and 06/25/19), among others, enabling the application of income tax inflation adjustment for periods not affected by a severe economic crisis such as 2002.

According to the above-mentioned new legal background that the Company took knowledge during 2015, Telecom Argentina filed during 2015 to 2021 actions for recourse with the AFIP to claim the full tax overpaid for fiscal years 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016 for a total amount of approximately $1,593 plus interest, under the argument that the lack of application of the income tax inflation adjustment is confiscatory.

On September 24, 2019 Telecom was notified of the resolutions dated September 12, 2019 and August 30, 2019 in which the AFIP has rejected the actions for recourse corresponding to fiscal years 2009 and 2010 respectively. Also, on November 11, 2019 Telecom was notified of the resolutions dated October 29, 2019 in which the AFIP has rejected the actions for recourse corresponding to fiscal years 2011 and 2012. According to this, on October 15, 2019 and on December 3, 2019, Telecom filed four actions for recourse before the National Court of First Instance.

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TELECOM ARGENTINA S.A.

On July 28, 2021 Telecom was notified of the resolution dated July 26, 2021 in which the AFIP rejected the action for recourse corresponding to fiscal year 2013. On August 23, 2021, Telecom filed an action for recourse before the National Court of First Instance.

The Company's Management, with the assistance of its tax advisors, understands that the arguments presented by the Company follow the same criteria as those considered by the Supreme Court of Argentina in similar precedents, among others. Therefore, the Company should obtain a favorable resolution to such claims.

Consequently, the income tax determined in excess qualifies as a tax credit in compliance with IAS 12 and the Company recorded a non-current tax credit of $889 as of December 31, 2021. For the measurement and update of the tax credit, the Company has estimated the amount of the tax determined in excess for the years 2009-2017 weighting the likelihood of certain variables according to the jurisprudential antecedents known as of the date of these consolidated financial statements. The Company’s Management will assess Tax Authority’s resolutions related to actions of recourse filed as well as the jurisprudence evolution in order to, at least annually, remeasure the tax credit recorded.

NOTE 16 –OTHER TAXES PAYABLES

	As of December 31,
Current	2021	2020
Other national taxes	3,339	4,358
Provincial taxes	112	614
Municipal taxes	511	572
	3,962	5,544
Non-current
Provincial taxes	—	8
	—	8
Total other taxes payables	3,962	5,552

NOTE 17 – LEASES LIABILITIES

	As of December 31,
Current	2021	2020
Argentina	5,541	4,631
Abroad	589	404
	6,130	5,035
Non- current
Argentina	11,596	9,237
Abroad	1,190	1,278
	12,786	10,515
Total lease liabilities	18,916	15,550

Movements in the lease liabilities are as follows:

	Years ended December 31,
	2021	2020
Balances at the beginning of the year	15,550	12,968
Additions (*)	17,417	13,109
Financial results, net (**)	2,906	2,929
Cash flows	(6,596)	(7,896)
Decreases (includes RECPAM)	(10,361)	(5,560)
At the end of the year	18,916	15,550

(*) Included in acquisitions of Rights of use.

(**) Included in the lines Other exchange differences and Other net interest and other investment results.

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TELECOM ARGENTINA S.A.

NOTE 18 – OTHER LIABILITIES

	As of December 31,
Current	2021	2020
Deferred revenues on prepaid credit	1,722	1,678
Deferred revenues on connection fees and international capacity leases	966	617
Compensation for directors and members of the Supervisory Committee	—	22
Companies under sect. 33 - Law No. 19,550 and Related Parties (Note 27.c)	—	5
Other	367	790
	3,055	3,112
Non-current
Deferred revenues on connection fees and international capacity leases	595	604
Pension benefits (Note 3.m)	647	637
Other	8	504
	1,250	1,745
Total other liabilities	4,305	4,857

Movements in the pension benefits are as follows:

	Years ended
	December 31,
	2021	2020
At the beginning of the year	637	673
Service cost (*)	31	54
Interest cost (**)	225	356
Actuarial results (***)	35	(204)
Uses (Includes RECPAM)	(281)	(242)
At the end of the year	647	637

(*)      Included in Employee benefit expenses and severance payments.

(**)     Included in Other Financial expenses, net.

(***)    Included in Other comprehensive income (loss).

NOTE 19 – PROVISIONS

Telecom and its subsidiaries are parties to several civil, tax, commercial, labor and regulatory proceedings and claims that have arisen in the ordinary course of business. In order to determine the proper level of provisions, Management of the Company, based on the opinion of its internal and external legal counsel, assesses the likelihood of any adverse judgments or outcomes related to these matters as well as the range of probable losses that may result from the potential outcomes. A determination of the amount of provisions required, if any, is achieved after careful analysis of each individual case.

The determination of the required provisions may change in the future due to new developments or unknown facts at the time of the evaluation of the claims or changes as a matter of law or legal interpretation.

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TELECOM ARGENTINA S.A.

Provisions consist of the following:

	Balances as	Additions							Balances
	of						Decreases		as of
	December 31,	Capital		Interest	Reclassifica-tions		(iii)		December 31,
	2020	(i)		(ii)					2021
Current
Provisions	2,441		5,892	—	2,418		(8,605)		2,146
Total current provisions	2,441		5,892	—	2,418		(8,605)		2,146
Non-Current
Provisions	6,762		2,004	1,435	(2,418)		(1,673)		6,110
Asset retirement obligations	4,501		604	200	—		(1,841)		3,464
Total non-current provisions	11,263		2,608	1,635	(2,418)		(3,514)		9,574
Total provisions	13,704		8,500	1,635	—	(iv)	(12,119)	��	11,720

(i) 7,986 charged to Other operating expenses and 604 to Right of use assets.

(ii) Charged to finance costs, net - Other interests, net and other investments results.

(iii) Includes RECPAM.

(iv) Includes ($8,116) of provisions payments.

	Balances	Additions					Balances
	as of					Decreases	as of
	December	Capital	Interest	Reclassifica-tions		(vii)	December
	31, 2019	(v)	(vi)				31, 2020
Current
Provisions	2,448	3,470	—	1,093		(4,570)	2,441
Total current provisions	2,448	3,470	—	1,093		(4,570)	2,441
Non- Current
Provisions	8,211	1,074	1,014	(1,093)		(2,444)	6,762
Asset retirement obligations	1,300	3,413	368	—		(580)	4,501
Total non-current provisions	9,511	4,487	1,382	(1,093)		(3,024)	11,263
Total provisions	11,959	7,957	1,382	—	(viii)	(7,594)	13,704

(v)    $4,533 charged to Other operating expenses, $3,413 charged to Rights of use assets and $11 charged to Other comprehensive income.

(vi)   Charged to finance costs, net - Other interests, net and other investments results.

(vii)   Includes RECPAM.

(viii)  Includes ($4,549) of provisions payments.

1.     Probable Contingent liabilities

Below is a summary of the most significant claims and legal actions for which the Company, based on the advice of its legal counsel and the judicial background for each claim, has recorded provisions, that considered enough:

a)   Profit sharing bonds

Various legal actions are brought, mainly by former employees of the Company against the Argentine government and Telecom Argentina, requesting that Decree No. 395/92 – which expressly exempted Telefónica and the Company from issuing the profit sharing bonds provided in Law No. 23,696 – be struck down as unconstitutional. The plaintiffs also claim the compensation for damages they suffered because such bonds have not been issued.

In August 2008, the Argentine Supreme Court of Justice found Decree No. 395/92 unconstitutional when resolving a similar case against Telefónica.

Since the Argentine Supreme Court of Justice’s judgment on this matter, the Divisions of the Courts of Appeal ruled that Decree No. 395/92 was unconstitutional. As a result, in the opinion of the legal counsel of the Company, there is an increased probability that the Company has to face certain contingencies, notwithstanding the right of reimbursement that attends Telecom Argentina against the National State.

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TELECOM ARGENTINA S.A.

Such Court decision found the abovementioned Decree unconstitutional and ordered that the proceedings be remanded back to the court of origin so that such court could decide which defendant was compelled to pay –the licensee and/or the Argentine government- and the parameters that were to be taken into account in order to quantify the remedies requested (percent of profit sharing, statute of limitations criteria, distribution method between the program beneficiaries, etc.). It should be mentioned that there is no uniformity of opinion in the Courts in relation to each of those concepts.

Later, in “Ramollino Silvana c/Telecom Argentina S.A.”, the Argentine Supreme Court of Justice, on June 9, 2015, ruled that the profit sharing bonds do not correspond to employees who joined Telecom Argentina after November 8, 1990 and that were not members of the PPP.

This judicial precedent is consistent with the criteria followed by the Company for estimating provisions for these demands, based on the advice of its legal counsel, which considered remote the chances of paying compensation to employees not included in the PPP.

Legal action’s statute of limitations criteria: Argentine Supreme Court of Justice ruling “Dominguez c/ Telefónica de Argentina S.A.”

In December 2013, the Argentine Supreme Court ruled on a similar case to the above referred legal actions, “Domínguez c/ Telefónica de Argentina S.A”, overturning a lower court ruling that had barred the claim (as having exceeded the applicable statute of limitations since ten years had passed since the issuance of Decree No. 395/92).

The Argentine Supreme Court of Justice ruling states that the Civil and Commercial Proceedings Court must hear the case again to consider statute of limitations arguments raised by the appellants that, in the opinion of the Argentine Supreme Court of Justice, were not considered by the lower court and are relevant to the resolution of the case.

On December 30, 2021 and through a plenary ruling, the Civil and Commercial Federal Proceedings Court has issued opinions interpreting the doctrine developed by the Argentine Supreme Court of Justice in its ruling, acknowledging that the statute of limitations must be applied periodically –as of the time of each balance sheet- but limited to five years.

Criteria for determining the relevant profit to calculate compensation: ruling of the Civil and Commercial Federal Proceedings Court in Plenary Session “Parota c/ Estado Nacional y Telefónica de Argentina S.A.”

On February 27, 2014, the Civil and Commercial Appeals Court issued its decision in plenary session in the case “Parota, César c/ Estado Nacional”, as a result of a complaint filed against Telefónica, ruling: “that the amount of profit sharing bonds the corresponding to former employees of Telefónica de Argentina S.A. should be calculated based on the taxable income of Telefónica de Argentina S.A. on which the income tax liability is to be assessed”.

The Court explained that in order to make such determination: “it is necessary to clarify that “taxable income” (pre-tax income) means the amount of income subject to the income tax that the company must pay, which generally means gross income, including all revenue obtained during the fiscal year (including contingent or extraordinary revenue), minus all ordinary and extraordinary expenses accrued during such fiscal year”.

Federación Argentina de las Telecomunicaciones and others against Telecom Argentina S.A. in relation to worker shareholding participation

In June 2013 Telecom Argentina was notified of a lawsuit filed by 4 unions claiming the issuance of a profit sharing bonds (hereinafter “the bonds”) for future periods and for periods for which the statute of limitations is not expired. To enforce this claim, the plaintiffs require that Decree No. 395/92 should be declared unconstitutional.

This collective lawsuit is for an undetermined amount. The plaintiffs presented the criteria that should be applied for the determination of the percentage of participation in the Company’s profit. The lawsuit requiring the issuance of a profit sharing bond represents an obligation with potential future economic impact for the Company.

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TELECOM ARGENTINA S.A.

The Company filed its answer to the claim, arguing that the labor courts lack of jurisdiction. In October 2013, the judge rejected the lack of jurisdiction plea, established a ten-year period as statute of limitation and deferred ruling on the defenses of res judicata, lis pendens and on the third party citation required after a hearing is held by the court. Telecom has appealed the judge’s ruling.

In December 2013 this hearing took place and the intervening court differed the defense of statute of limitations filed by the Company to the moment of the final ruling, among other matters. It also ordered the plaintiff to establish that they have permission to bring the case on behalf Telecom Argentina’s employees included in the claim; meanwhile the trial proceeding will be suspended. The plaintiff appealed the decision and the judge deferred this issue to the time of sentencing.

In December 2017, the Court of First Instance dismissed the claim on the grounds that the claimant lacks of active legitimization because it is an individual claim, not a collective one. The claimant filed an appeal, which is pending before Chamber 7 of the Court of Appeals. In June 2019, the Court of Appeals revoked the decision rendered by the Court of First Instance and ordered that the file be submitted to the Court of First Instance for the initiation of discovery proceedings.

The Company, based on the advice of its legal counsel, believes that there are strong arguments to defend its rights in this claim based, among other things, in the expiration of the statute of limitations of the claim for the unconstitutionality of Decree No. 395/92, the lack of active legal standing for collective claim for bonds issuance -due to the existence of individual claims-, among other reasons regarding lack of active legal standing.

b)   Former sales representative claims of Personal and Nextel

Former sales representatives of Personal and Nextel have brought legal actions for alleged improper termination of their contracts and have submitted claims for payment of different items such as commission differences, value of the customers’ portfolio and lost profit, among other matters. The Company´s Management believes, based on the advice of its legal counsel, that certain items included in the claims would not be sustained while other items, if sustained, would result in lower amounts than those claimed. As of the date of these consolidated financial statements, some legal actions are in the discovery phase and with expert opinions in progress.

c)   Task Solutions against/ Telecom Personal S.A. S/ Ordinario and Task Solutions against/Telecom Argentina S.A. S/ Ordinario

Task Solutions S.A., a company whose main activity was the contact center, promoted lawsuits against Telecom Argentina and Telecom Personal, claiming a total amount of $408,721,835 for damages and losses suffered during the contractual relationship between those companies, as well as the non-renewal of the relationship between them. Task Solutions S.A. maintains that its only contractual relationship was with the defendant companies and that the non-renewal of their relationship caused its cessation of payments. In August 2018, the Company answered the claims denying the compensation claimed and requesting the unconstitutionality of the punitive damages claimed.

On the other hand, the Company reproved the amounts already paid to third parties in relation to labor items. Likewise, a claim was made for the amounts that eventually will have to be paid for that same concept in the future. Such estimation may be modified in relation to the proof that is produced in the case.

In December 2018, Task Solutions was declared bankrupt.

The Company’s Management, with the advice of its legal counsel, believes that it has strong arguments for its defense.

d)   Regulator's Penalty Activities

Telecom Argentina is subject to various penalty procedures, in most cases promoted by the Regulatory Authority, for delays in the reparation and installation of service to fix-line customers. Although generally a penalty considered on an individual basis does not have a material effect on Telecom Argentina's equity, there is a significant disproportion between the amounts of the penalty imposed by the Regulatory Authority and the revenue that the affected customer has generated to Telecom Argentina.

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2.     Possible Contingencies

In addition to the possible contingencies related to regulatory matters described in Note 2 d), a summary of the most significant claims and legal actions for which no provisions have been established is detailed below, although it cannot be ensured the final outcome of these lawsuits:

a.Radio-electric Spectrum Fees

In October 2016 Personal modified the criteria used for the statement of some of its commercial plans (“Abono fijo”) for purposes of paying the radio-electric spectrum fees (derecho de uso de espectro radioeléctrico or “DER”), considering certain changes in such plans’ composition. This meant a reduction in the amount of fees paid by Personal.

In March 2017, the ENACOM demanded Personal to rectify its statements related to October 2016, requiring that such plans’ statements continue to be prepared based on the previous criteria. A similar demand took place in September 2018, for subsequent periods. The Company's Management considers that it has strong legal arguments to defend its position, which are actually confirmed by Resolution ENACOM No. 840/18 and, as a consequence presented, the corresponding administrative notes.

In August 2017, Personal received the notice of charge for the differences in the amounts owed in connection with the payment made in October 2016. Notwithstanding the grounds disclosed in its response, in April 2019, the ENACOM imposed a sanction on the Company due to the non-compliance alleged for that period. The Company filed the corresponding administrative response. However, the company cannot assure that its arguments will be accepted by the ENACOM.

The difference resulting since October 2016, from both sets of liquidation criteria is of approximately $717 plus interest as of December 31, 2021.

On February 27, 2018, Resolutions Nos. 840/18 and No. 1,196/18 were published in the Official Gazette. Through these Resolutions, the ENACOM updated the value of the Radio-electric Spectrum Fee per Unit and, in addition, it established a new regime for mobile communications services, which substantially increased the amounts to be paid in this regard.

Opportunely, Telecom submitted the rectifying affidavits corresponding to the months of March and April 2018 (due in April and May 2018), and paid (under protest) the respective amounts. It also started to comply with, as from September 2018, the filing and payment (under protest) of the corresponding affidavits.

Through Resolution ENACOM No. 4,266/19 issued on October 8, 2019, the basis for calculating the Radio-electric Spectrum Fees corresponding to the Mobile Communications Services (SRMC, STM, PCS and SCMA) was modified based on the Affidavits that expires after the date of issuance of the Resolution. Such modification represents a reduction in the applicable rate for payment of DER for these services.

b.“Consumidores Financieros Asociación Civil para su Defensa” claim

In November 2011, Personal was notified of a lawsuit filed by the “Consumidores Financieros Asociación Civil para su Defensa” claiming that Personal made allegedly abusive charges to its customers by implementing per-minute billing and setting an expiration date for prepaid telecommunication cards.

The plaintiff claim Personal to: i) cease such practices and bill its customers only for the exact time of telecommunication services used; ii) reimburse the amounts collected in excess in the ten years preceding the date of the lawsuit; iii) credit its customers for unused minutes on expired prepaid cards in the ten years preceding the date of the lawsuit; iv) pay an interest equal to the lending rate charged by the Banco de la Nación Argentina; and v) pay punitive damages provided by Section 52 bis of Law No. 24,240.

Personal dismissed the claim with emphasis on the regulatory framework that explicitly endorses its practices, now challenged by the plaintiff in disregard of such regulations.

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This claim is at a preliminary stage as of the date of these consolidated financial statements. However, the judge has ordered the accumulation of this claim with two other similar claims against Telefónica Móviles Argentina S.A. and AMX Argentina S.A. So, the 3 legal actions will continue within the Federal Civil and Commercial Court No. 9.

The plaintiffs are seeking damages for undetermined amounts. Although the Company believes there are strong defenses according to which the claim should not succeed, in the absence of jurisprudence on the matter, the Company’s Management (with the advice of its legal counsel) has classified the claim as possible until a judgment is rendered.

c.Proceedings related to value added services - Mobile contents

In October 2015 Personal was notified of a claim initiated by consumer trade union “Cruzada Cívica para la defensa de los consumidores y usuarios de Servicios públicos”. The plaintiff invokes the collective representation of an undetermined number of Personal customers.

The plaintiff claims the way that content and trivia are contracted, in particular the improper billing of messages sent offering those services and their subscription. Additionally, it proposes the application of a punitive damages to Personal.

This claim is substantially similar to other claims made by the consumer association (Proconsumer) where collective representation of customers is also invoked. As of the date of these consolidated financial statements, this claim with undetermined amounts is at preliminary stage since the demand notifications of everyone involved have not yet been finalized.

Personal has answered the claims through the presentation of legal and factual defenses, subpoenaing third parties involved in the provision of VAS. Likewise, the Company's Management with the advice of its legal counsel, Telecom believes to have strong arguments for its defense. However, given the absence of jurisprudential precedents, the final outcome of these claims cannot be assured.

d.“Asociación por la Defensa de Usuarios y Consumidores against/Telecom Personal S.A.” claim

In 2008 the “Asociación por la Defensa de Usuarios y Consumidores” sued Personal, seeking damages for undetermined amounts, claiming the billing of calls to the automatic answering machine and the collection system called "send to end" in collective representation of an undetermined number of Personal customers. The claim is currently about to render judgment.

In 2015 the Company took knowledge of an adverse court ruling in a similar trial, promoted by the same consumer’s association against other mobile operator. Currently it is pending of judgment.

The Company's Management, with the advice of its legal counsel, believes that it has strong arguments for its defense. However, the outcome of this claim cannot be ensured.

e.Claims by Trade Unions for Union Contributions and Payments

The unions FOEESITRA, SITRATEL, SILUJANTEL, SOEESIT, FOETRA, SUTTACH and the Union of telephony workers and employees of Tucumán (Sindicato de Obreros y Empleados Telefónicos de Tucumán) filed 7 legal actions against Telecom Argentina claiming the union contributions and payments set forth in the respective Collective Bargaining Agreements (“CBA”) corresponding to the third party employees rendering services to the Company, for the not prescribed term of 5 years, plus the damages caused by the lack of payment of such items. The items claimed are the Special Fund and the Solidarity Contribution.

The unions mentioned sustain that Telecom is jointly liable for the payment of the above-mentioned contributions and payments, based on the provisions of sections 29 and 30 of the Labor Contract Law and the nonperformance of the CBA as to its obligation to inform the Union on the hiring of third parties. All claims were answered.

In the action brought by FOEESITRA, the judge of first instance rejected the summons to third parties made by Telecom. An appeal has been filed against that decision.

In the action brought by FOETRA, the Court of Appeals revoked the decision rendered by the court of first instance that had declared the incompetence. The judge of first instance must render a decision on the exceptions filed by Telecom.

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The other claims have been suspended at the request of the parties.

The lawsuits are for an undetermined amount.

The Company's Management, with the advice of its legal counsel, believes that it has strong arguments for favorite results, but since the lack of jurisprudential precedent, the outcome of this claim cannot be ensured.

f.Asociación por la Defensa de Usuarios y Consumidores v. Cablevisión on expedited summary proceeding:

In November 2018 the Company was notified of a lawsuit initiated by the Asociación por la Defensa de Usuarios y Consumidores, requesting that the defendant 1) cease to prevent customers to rescind Internet and cable TV services at the time of request; 2) reimburse to each user the amounts collected for the period of 5 years and until Cablevisión fulfills the request mentioned in 1); and 3) pay punitive damages for each of the affected customers.

In December 2018, the Company filed a response. In its plea, it requested the extension of the period of the statutes of limitation (biennial term) and the declaration of the lack of standing to sue of the association. Likewise, the Company argued that the class to be represented had not been established and that it had not contravened the Antitrust Law and gave a detailed description of the termination procedure used by Cablevisión highlighting its compliance with Sections 10 ter and 10 quater of such law. It also challenged the application of the punitive damages claimed by the plaintiff and the Company also produced documentary evidence. It requested that the claim be rejected in its entirety, and that the legal costs be borne by the plaintiff.The lawsuit is for an undetermined amount.

The Company, with the advice of its legal counsel, considers that it has strong arguments for its defense.However, the outcome of this claim cannot be ensured.

g.   Claim “Unión de Usuarios y Consumidores y otro c/Telecom Argentina S.A.”

On September 3, 2019, Telecom (as surviving company of Cablevisión) was notified of a lawsuit initiated by “Unión de Consumidores y Consumidores” and “Consumidores Libres Cooperativa Ltda. de Provisión de Servicios de Acción Comunitaria”, pending before the Commercial Court of First Instance No. 9, Secretariat No. 17, for undetermined amounts.

In the class action, the claimants requested the Company to credit to its subscribers the increases of September and October 2018, January 2019 and the increases that may be made for as long as the claim remains pending for Internet services, subscription broadcasting services, other technology information and communication services and other supplementary services (all of those services provided under the brands Cablevisión and Fibertel), plus interest until the date of the effective restitution. The claimants allege that the Company infringed certain provisions set forth under the TIC and Communication Services Customers Regulation and Law No. 24,240 related to the terms and the way in which subscribers shall be notified of changes in the prices of those services.

The Company, based on the advice of its legal counsel, considers that it has strong arguments for its defense. However, the final outcome of this claim cannot be assured.

h.Resolution No. 50/10 and subsequent ones of the Secretariat of Domestic Trade of the Nation (“SCI”)

SCI Resolution No. 50/10 approved certain rules to commercialize pay television services. These rules provide that cable television operators must apply a formula to calculate their monthly subscription prices. The price arising from the application of the formula was to be informed to the Office of Business Loyalty (Dirección de Lealtad Comercial), having cable television operators to adjust such amount semi-annually and informing the result of such adjustment to such Office. The Company filed an administrative appeal against Resolution No. 50/10 requesting the suspension of its effects and its nullification.

Additionally, according to the decision issued on August 1, 2011 in judicial cause “LA CAPITAL CABLE S.A. V. Ministerio de Economía-Secretaría de Comercio Interior de la Nación”, the Federal Court of Appeals of the City of Mar del Plata has ordered the SCI to suspend the application of Resolution No. 50/10 with respect to all cable television licensees represented by ATVC. The preliminary injunction ordered by the Court of Mar del Plata was notified to the SCI and the Ministry of Economy on September 12, 2011 and became fully effective. The National Government filed an appeal against the decision issued by the Court of Mar del Plata. Such appeal was dismissed, for which the National Government filed a direct appeal to the Supreme Court, which was also dismissed.

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Notwithstanding the foregoing, between March 2011 and October 2014 successive resolutions were published in the Official Gazette based on Resolution 50/10 that regulated the prices that Cablevision should charge in monthly basis fees to users. These resolutions were challenged and suspended due to the aforementioned injunction. However, each Resolution had a valid period of three to six months, with the last one expiring in October 2014.

In September 2014, the Court issued a decision in judicial cause “Municipalidad de Berazategui V. Cablevisión” ordering the remission of the cases relating to these resolutions to the jurisdiction of the Court of Mar del Plata, that had issued the decision on the collective action in favor of ATVC.

Currently, all judicial causes related to this issue are processed in the Federal Justice of Mar del Plata.

In April 2019, La Capital Cable S.A. was notified of the resolution issued by the Federal Court No. 2 of Mar del Plata in which declared the unconstitutionality of certain sections of a law on which the SCI was based for the issuance of Resolution No. 50/10 and the successive resolutions. The declaration of unconstitutionality means that these resolutions are not applicable to La Capital Cable and the companies grouped by ATVC. However, the National Government filed an appeal against that resolution.

On December 26, 2019, the Federal Court of Mar del Plata rejected the grievances of the National Government and confirmed the decision rendered by the court of first instance which declared the unconstitutionality of the sections of the law based on which the SCI issued Resolution No. 50/10 and the subsequent resolutions. The National Government and ENACOM filed extraordinary appeals, which although they were granted, are still pending before the Supreme Court of Justice of the Nation.

The Company, with the assistance of its legal advisors, is analyzing the potential impacts related to this news, notwithstanding which, it considers that, given the judicial history, solid arguments exist to understand that the dispute prospers favorably in the interests of the Company.

i.Resolution No. 16,765 of the CNV

In 2012, CNV issued Resolution No. 16,765 whereby it ordered the conduction of a preliminary investigation (sumario) against Cablevisión, its directors and members of the Supervisory Committee for an alleged failure to comply with its reporting duties. The CNV considers that this deprived investors of the possibility to become fully aware of the decision issued by the Supreme Court of Argentina in re “Recurso de Hecho deducido por el Estado Nacional Ministerio de Economía y Producción en la causa Multicanal S.A. y otro c/ CONADECO Dto. 527-05” (which as of this date has been resolved) and that a series of issues relating to the information required by the CNV regarding the Extraordinary Meeting of Class 1 and 2 Noteholders held on April 23, 2010 would not have been disclosed.

In April 2012, the Company filed a response requesting that its defenses be sustained and that all charges against it be dismissed. The discovery stage has been closed and the legal brief has been submitted. The case was remitted to the Legal Management.

The Company and its legal advisors believe that the Company has strong arguments in its favor. Nevertheless, the Company cannot assure that the outcome of the preliminary investigation proceeding will be favorable.

j.Resolution No. 17,769 of the CNV

In August 2015, Cablevisión was served notice of Resolution No. 17,769 dated August 13, 2015 whereby the CNV the conduction of a preliminary investigation (sumario) against Cablevisión and its directors, members of the Supervisory Committee and the Head of Market Relations for an alleged delay in the submission of the required documentation relating to the registration of the authorities appointed in the General Meeting of Shareholders of Cablevisión held on April 30, 2000 and the update of the particulars of its registered office in the Autopista de Información Financiera.

In January 2016, the preliminary hearing was held pursuant to Section 138 of Law No. 26,831 and Section 8, Subsection b.1. of Section II, Chapter II, Title III of the Regulations (amended text of 2013).

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The Company and its advisors believe that same has strong arguments in its favor on this matter, but no assurance can be given that the outcome of the preliminary investigation proceeding will be favorable.  

k.Additional rate for the “Impuesto a la Renta Comercial, Industrial o de Servicios” (Tax on Commercial, Industrial or Services Revenues or “IRACIS”)

In April 2017, a subsidiary of the Company received a notice from the Under-Secretary of Taxes of the Republic of Paraguay, whereby that subsidiary was informed that it had failed to determine the additional IRACIS rate on the retained earnings of the companies merged in 2014.

The Company´s subsidiary considers that it has strong arguments to support its position, but no assurance can be given on the final outcome of this claim.

3.     Remote Contingencies

Telecom faces other legal proceedings, fiscal and regulatory considered normal in the development of its activities. The Company Directors and its legal advisors estimate it will not generate an adverse impact on their financial position and the result of its operations, or its liquidity. In accordance with IAS 37 “Provisions”, not any provision has been constituted and/or disclosed additional information in these financial statements related to the resolution of these issues.

4.     Contingency Asset

“AFA Plus Project” Claim

On July 20, 2012, the Company entered into an agreement with the Argentine Football Association (“AFA”), for the provision of services to a system called “Argentine Football System Administration” (“AFA Plus Project”) related to the secure access to first division football stadiums whereby Telecom Argentina should provide the infrastructure and systems to enable the AFA to manage the aforementioned project. The recovery of investments and expenses incurred by Telecom Argentina and its profit margin would come from charging AFA with a referring price stated in 20% of the popular ticket price per each football fan that attend the stadiums during the term of the agreement, so the recoverability of the Company’s assets related to the Project depended on AFA implementing the “AFA Plus Project”.

From 2012 and in compliance with its contractual obligations, the Company made investments and incurred in expenses amounting to $182, of which some are included in PP&E for the provision and installation of equipment and the execution of civil works for improving the football stadiums, registration centers equipment, inventories and material storage and attend other expenses directly associated with AFA Plus Project.

For several specific reasons of the Project, the football environment and the country context, the AFA Plus system was not implemented by the AFA, not even partially. Accordingly, Telecom Argentina has not been able to begin collecting the agreed price.

Finally, throughout the agreement, Telecom Argentina received 0 compensation from AFA for the services provided and the work performed. In September 2014, the AFA notified the Company of its decision to terminate the agreement with Telecom Argentina, modifying the AFA Plus Project, and also informed that it will assume the payment of the investments and expenditures incurred by the Company. Accordingly, negotiations between the parties have started.

In February 2015, AFA made a proposal to compensate the investments and expenditures incurred by the Company through advertising exchange exclusively related to the AFA Plus Project (or the one that replaces this Project in the future), in the amount of US$ 12.5 million. The proposal considered that if the advertising compensation was not realized in one year, AFA would pay to Telecom the agreed amount. The Company analyzed the quality of the assets offered by the AFA in its offer of advertising exchange, and rejected the offer as insufficient.

New negotiations were conducted in 2015 to improve the mentioned offer (requiring a combination of cash payments and advertising) but a satisfactory agreement was not reached and negotiations were suspended for AFA internal affairs.

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In October 2015, the Company formally demanded that AFA pay the amounts due ($179.2 plus interest from its implementation). The AFA rejected the claim but agreed to resume negotiations for a closing agreement which then was suspended by the AFA electoral process.

In January 2016 both parties resumed conciliatory negotiations, while the Company reserved its right to exercise legal claims on the amounts due.

In June 2016 the Company initiated a compulsory pre-judicial mediation procedure. The first audience, held on July 12, 2016, was attended by both parties. A second audience was held on August 3, 2016 and a third and the last one was held on August 23, 2016, which resulted in no agreement between the parties.

In February 2018, the Company initiated a new mandatory prejudicial mediation procedure which was finished without agreement. On December 19, 2018, a claim was brought against AFA for 353,477,495  Argentine pesos plus interest and court costs.

Nowadays, the legal proceeding is at discovery phase.

The Company’s Management with the assistance of its external advisor believes that they have strong legal arguments for claiming and are evaluating the actions to be followed for recovering the investments and expenses made.

It is worth mentioning that, for the purpose to comply with accounting standards, the Company has recorded an allowance arising from the uncertainties related to the recoverable value of assets related to the AFA Plus Project and in no way involves giving up or limiting its rights as a genuine creditor for the AFA Plus Project agreement entered into with AFA.

NOTE 20 – PURCHASE COMMITMENTS

The Company has entered into various purchase commitments amounting in the aggregate to approximately $125,224 as of December 31, 2021 (of which $26,758 corresponds to PP&E commitments).

NOTE 21 – EQUITY

Equity includes:

	As of December 31,
	2021	2020
Equity attributable to Controlling Company	541,423	577,285
Equity attributable to non-controlling interest	8,572	9,659
Total equity (*)	549,995	586,944

(*) Additional information is given in the consolidated statements of changes in equity.

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(a)Capital Stock

As of December 31, 2021 and 2020, the total capital stock of Telecom Argentina amounted to $2,153,688,011 Argentine pesos, represented by the same number of common book-entry shares with nominal value of $1 peso, as detailed below:

Class of Shares	Total
Class “A”	683,856,600
Class “B”	628,058,019
Class “C”	106,734
Class “D”	841,666,658
Total	2,153,688,011

As of the date of these consolidated financial statements, all the shares of Telecom Argentina are authorized by the CNV for public offering.

Class B Shares are listed and traded on the leading companies’ panel of the BYMA and the American Depositary Shares (ADS) representing 5 Class “B” shares of the Company are traded on the NYSE under the symbol TEO.

(b)Provisions of the Telecom Ordinary and Extraordinary Shareholders’ meeting

The Ordinary and Extraordinary Shareholders’ meeting of Telecom held on April 28, 2021 decided, among other issues, the following:

(a) To approve the Annual Report and the financial statements of Telecom as of December 31, 2020;

(b) to approve the Board of Directors’ proposal expressed in current currency of March 31, 2021 using the National Consumer Price Index (National CPI), as provided by CNV Resolution No. 777/18, consisting of the following: (i) absorption of the $6,455,431,747 Argentine pesos negative Retained earnings as of December 31, 2020 ($8,626 in current currency as of December 31, 2021 from the “Voluntary Reserve for capital investments "; and (iii) $13,776,401,012 Argentine pesos ($17,688 in current currency as of December 31, 2021) to be reclassified from the “Facultative Reserve to maintain the capital investments level and the current level of solvency” to “Contributed surplus”;

(c)Share Ownership Plan

In 1992, a Decree from the Argentine government, which provided for the creation of the Company upon the privatization of ENTel, established that 10% of the capital stock then represented by 98,438,098 Class “C” shares were to be included in the PPP (an employee share ownership program sponsored by the Argentine government). Pursuant to the PPP, the Class “C” shares were held by a trustee for the benefit of former employees of the state-owned company who remained employed by the Company and who elected to participate in the plan. In 1999, Decree No. 1,623/99 of the Argentine government eliminated the restrictions on some of the Class “C” shares held by the PPP, although it excluded Class “C” shares of the Fund of Guarantee and Repurchase subject to an injunction against their use. In March 2000, the shareholders’ meeting of the Company approved the conversion of up to unrestricted 52,505,360 Class “C” shares into Class “B” shares (these shares didn’t belong to the Fund of Guarantee and Repurchase), most of which was sold in a secondary public offering in May 2000.

As required by the executive committee of PPP, the Annual Shareholders Meetings held on April 27, 2006, approved that the power for the additional conversion of up to 41,339,464 Class “C” ordinary shares into the same amount of Class “B” ordinary shares, be delegated to the Board of Directors. That delegation does not include 4,593,274 Class “C” shares of the Fund of Guarantee and Repurchase, that were affected by an injunction measure recorded in file “Garcías de Vicchi, Amerinda y otros c/ Sindicación de Accionistas Clase C del Programa de Propiedad Participada s/nulidad de acto jurídico ("Garcias de Vicchi")", with respect to which the Annual Shareholders Meetings considered that there were legal impediments to approve that delegation of faculties for their conversion to Class "B". As of December 31, 2011, the 41,339,464 Class "C" shares had been converted to Class "B" in 11 tranches.

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With the injunction measure issued in the case Garcías de Vicchi having been revoked, the Board of Directors of the Company convened the Ordinary and Extraordinary General Meeting and the Special Meeting of Class “C” shares , that were held on December 15, 2011, and approved the power for the additional conversion of up to 4,593,274 Class “C” shares into the same amount of Class “B” shares in one or more tranches, be delegated to the Board of Directors. As of December 31, 2021, 4,486,540 Class “C” shares were converted into Class “B” shares in 13 tranches.

As of the date of these consolidated financial statements, 106,734 Class “C” shares are still pending to be converted into Class “B” shares.

(d)Capital Market Act - Law No. 26,831 and amendments

On December 28, 2012 the new Capital Market Law (Law No. 26,831) was published in the Official Gazette. This Law eliminates self-regulation of the capital market; grants new powers to the CNV and supersedes Law No. 17,811 and Decree No. 677/01, among other rules. The Law became effective on January 28, 2013. Since that date, governs the universal scope of the Statutory Regime of Public Offer of Mandatory Acquisition.

Productive Financing Law

On May 11, 2018, Productive Financing Law No. 27,440 was published in the Official Gazette. This law established several amendments to the Capital Markets Law No. 26,831 regarding the extent of the powers of the CNV; the exercise of preemptive rights on shares offered through public offering in the case of capital increases; private placements; public tender offers; the jurisdiction of the federal commercial courts of appeals to review the resolutions issued or sanctions imposed by the CNV, among other amendments.

With regard to public tender offers, under the previous regime, the offeror was obliged to formulate a “fair” price to be fixed by weighing the results of different company valuation methods, with a minimum floor related to the average market price for the six-month period immediately preceding the date of the agreement. Pursuant to the amendments introduced by Law No. 27,440 to the Capital Markets Law, the obligation is objective and consists in offering the higher of two existing prices: the price that the offeror would have paid or agreed during the 12 months immediately preceding the first day of the public tender offer period, and the average price of the securities subject to the offer during the semester immediately preceding the date of the announcement of the transaction under which the change of control is agreed upon.

On December 28, 2018, CNV General Resolution No. 779/18 was published in the Official Gazette, pursuant to which the regulatory framework applicable to the Public Tender Offers is regulated.

(e)Acquisition of Treasury Shares

On May 22, 2013, the Board of Directors approved a Company’s Treasury Shares Acquisition Program in the market in Argentine pesos (the “Treasury Shares Acquisition Program”) so as to avoid any possible damages to the Company and its shareholders derived from fluctuations and unbalances between the shares’ price and the Company’s solvency.

According to the mentioned Program, the Company acquired, between May 28, 2013 and November 5, 2013, 15,221,373 treasury shares.

Pursuant to Section 67 of Law No. 26,831, the Company should sell its treasury shares within three years of the date of acquisition, although the Company´s Shareholders’ Meetings provides an extension. Pursuant to Section 221 of the LGS, the rights of treasury shares shall be suspended until such shares are sold, and shall not be taken into account to determine the quorum or the majority of votes at the Shareholders’ Meetings. No restrictions applied to Retained Earnings as a result of the creation of a specific reserve for such purposes named “Voluntary Reserve for Capital Investments”.

The Company’s Shareholders’ Meeting held on April 29, 2016 approved a three-year extension to the term established in Section 67 of Law No. 26,831 for the disposal of the treasury shares.

Pursuant to Section 67 of the Capital Markets Law No. 26,831, between May 28, 2019 and November 5, 2019, Telecom Argentina reduced its capital stock in three tranches by the operation of law for a total nominal value of $15,221,373, through the total cancellation of 15,221,373 Class “B” ordinary shares with nominal value of $1 Argentine peso each and entitled to 1 vote per share, held as treasury shares.

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All tranches of capital reduction were opportunely registered in the IGJ.

As a consequence of the capital reductions mentioned in the previous paragraphs, the Company recognized in 2019 a decrease in its treasury shares of $15, a decrease in the Inflation Adjustment of $1,976 and a decrease in the Treasury Shares Acquisition Cost of $5,674, with an offsetting entry in Retained earnings of $3,683.

As of the date of these consolidated financial statements, the Company does not hold treasury shares.

(f)Law No. 27,260 of “Historical Repair to Retired and Pensioned”

On July 22, 2016, Law No. 27,260 of “Historic Reparation for Retired Persons and Pensioners”, abolishing Law No. 27,181 on "Declaration of public interest of the protection of the social participations of the National State that make up the investment portfolio of the “Sustainability Guarantee Fund of the Argentine Pension Integrated System" in its Section 35, was published in the Official Gazette. In addition, Section 30 of Law No. 27,260 provides that the transfer of shares of public corporations authorized by the CNV that are part of the FGS is banned without a previous and express authorization of the Federal Congress if, as a result of such transfer, the FGS’s holding of the above referred securities becomes less than 7% of the aggregate assets of the FGS. The following exceptions apply: “1.Tender offers addressed to all holders of such assets at a fair price authorized by the CNV, pursuant to the terms of Chapters II, III and IV of Title III of Law No. 26,831. 2. Swaps of shares for other shares of the same or another corporation as a result of a merger, split or other corporate reorganization.”

(g)Decree No. 894/16: exercise of corporate, political and economic rights by the ANSES

On July 28, 2016, Decree No. 894/16 was published in the Official Gazette, providing that in those corporations which shares are part of the Sustainability Guarantee Fund of the Argentine Pension Integrated System’ portfolio, the corporate, political and economic rights corresponding to such shares shall not be exercised by the Secretary of Economic Politics and Development Planning, but shall instead be exercised by the Federal Management of Social Security (“ANSES”).

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NOTE 22 – FINANCIAL INSTRUMENTS

a)Categories of financial assets and financial liabilities

The following tables set out, for financial assets and liabilities as of December 31, 2021 and 2020, the supplementary disclosures on financial instruments required by IFRS 7 and the detail of gains and losses established by IFRS 9.

		Fair value
			accounted
		accounted	through other
	Amortized	through profit	comprehensive
As of December 31, 2021	cost	or loss	Income	Total
Assets
Cash and cash equivalents	16,743	3,106		19,849
Investments	—	10,786		10,786
Trade receivables	22,626	—	—	22,626
Other receivables	958	1,915	—	2,873
Total	40,327	15,807	—	56,134
Liabilities
Trade payables	50,327	—	—	50,327
Financial debt	266,736	88	97	266,921
Leases liabilities	18,916	—	—	18,916
Other liabilities	125	—	—	125
Total	336,104	88	97	336,289

		Fair value
			accounted	accounted
			through	through other
	Amortized		profit or	comprehensive
As of December 31, 2020	cost		loss	Income	Total
Assets
Cash and cash equivalents	12,364		15,601	—	27,965
Investments	258		7,734	—	7,992
Trade receivables	28,701		—	—	28,701
Other receivables	2,226		2,074	—	4,300
Total	43,549		25,409	—	68,958
Liabilities
Trade payables	63,103		—	—	63,103
Financial debt	301,389		257	539	302,185
Leases liabilities	15,550		—	—	15,550
Other liabilities	717		—	—	717
Total	380,759		257	539	381,555

Gains and losses by category – Year 2021

	Net gain/(loss)	Of which interest
Financial assets at amortized cost	6,331	1,323
Financial liabilities at amortized cost	26,277	(22,134)
Financial assets at fair value through profit or loss	707	94
Financial liabilities at amortized cost through profit or loss	(2,823)	—
Total	30,492	(20,717)

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TELECOM ARGENTINA S.A.

Gains and losses by category – Year 2020

	Net gain/(loss)	Of which interest
Financial assets at amortized cost	14,038	1,971
Financial liabilities at amortized cost	(45,461)	(27,556)
Financial assets at fair value through profit or loss	530	586
Financial liabilities at fair value through profit or loss	(2,243)	—
Total	(33,136)	(24,999)

b)Fair value hierarchy and other disclosures

IFRS 13 establishes a hierarchy of fair value, based on the information used to measure the financial assets and liabilities and also establishes different valuation techniques. According to IFRS 13, valuation techniques used to measure fair value shall maximize the use of observable inputs.

The measurement at fair value of the financial instruments of Telecom are classified according to the three levels set out in IFRS 13:

-Level 1: Fair value determined by quoted prices (unadjusted) in active markets for identical assets or liabilities.

-Level 2: Fair value determined based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (e.g. as prices) or indirectly (e.g. derived from prices).

-Level 3: Fair value determined by unobservable inputs where the reporting entity is required to develop its own assumptions.

Financial assets and liabilities recognized at fair value as of December 31, 2021 and 2020, their inputs, valuation techniques and the level of hierarchy are listed below:

Mutual Funds: These investments are included in Cash and cash equivalents, Investments and Guarantee of financial operations included in Other receivables. Telecom and its subsidiaries have other short-term investments amounting to $5,105 and $15,455 as of December 31, 2021 and 2020, respectively. The fair value is based on information obtained from active markets and corresponds to quoted market prices as of year-end; therefore, its valuation is classified as Level 1.

Government bonds: These bonds are included in “Investments” and "Cash and cash equivalents" in the consolidated statement of financial position. As of December 31, 2021 and 2020 Telecom and its subsidiaries have Government bonds in an amount of $10,702 and $9,951, respectively. The fair value was determined using information from active markets, valuing each bond to its closing year market value, so, its valuation qualifies as Level 1.

Derivative financial instruments (Forward contracts to purchase US dollars at fixed exchange rates and interest rates swap): The fair value of Telecom's and its subsidiaries DFI contracts, disclosed in the chapter “Hedge Accounting” was classified as Level 2 and determined by:

a) DFI for forward purchases of US dollars, corresponds to the variation between the market prices at the end of the fiscal year and the time of agreement and;

b) DFI interest rate swap corresponds to the present value of estimated future cash flows based on observable yield curves obtained in the market.

During the years ended December 31, 2021 and 2020, there were 0 transfers between Levels of the fair value hierarchy.

According to IFRS 7, it is also required to disclose fair value information about financial instruments even if they are not recognized at fair value in the balance sheet, for which it is practicable to estimate fair value. The financial instruments which are discussed in this section include, among others, cash and cash equivalents, investments at amortized cost, accounts receivable, accounts payable and other instruments.

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TELECOM ARGENTINA S.A.

Derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instrument. Also, because of differences in methodologies and assumptions used to estimate fair value, the Company’s fair values should not be compared to those of other companies.

The methods and assumptions used to estimate the fair values of each class of financial instrument falling under the scope of IFRS 13 as of December 31, 2021 and 2020 are as follows:

Cash and banks

Carrying amounts approximate its fair value.

Time deposits and Other investments at amortized cost (included in Cash and cash equivalents)

Telecom and its subsidiaries consider as cash and cash equivalents all short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not exceed 3 months. The carrying amount reported in the statement of financial position approximates fair value.

Current and non-current Investments valued at amortized cost

As of December 31, 2020, fair value of such investments amounted to $266 and its carrying value amounted to $258. Fair value for these investments was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).

Trade receivables

Carrying amounts are considered to approximate fair value due to the short term nature of these trade receivables. Noncurrent trade receivables have been recognized at their amortization cost, using the effective interest method and are not significant. All amounts that are assumed to be uncollectible within a reasonable period are written off and/or reserved.

Trade payables and Leases liabilities

The carrying amount of accounts payable and leases liabilities reported in the consolidated statement of financial position approximates its fair value due to the short term nature of these accounts payable. Noncurrent trade payables and leases liabilities have been discounted.

Financial Debt

As of December 31, 2021, fair value of financial debt is as follows:

	Carrying Value	Fair Value
Notes	140,605	138,389
Other financial debts	126,316	116,590
	266,921	254,979

As of December 31, 2020, fair value of financial debt is as follows:

	Carrying Value	Fair Value
Notes	143,843	133,266
Other financial debts	158,342	148,531
	302,185	281,797

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TELECOM ARGENTINA S.A.

The fair value of the loans was assessed as follows:

a) The fair value of Notes traded in active markets was measured based on quoted market prices at the end of the reporting period. As a result, its valuation classifies as Level 1.

b) The fair value of  Notes that are not traded in an active market was measured based on quotes provided by first-tier financial entities, so their valuation qualifies as Level 2.

c) Fort the rest of the financial debt, the fair values were calculated based on cash flows discounted using a current lending rate, so as they are classified as level 3.

Other receivables, net (except for DFI) and other liabilities

The carrying amount of other receivables, net and other liabilities reported in the consolidated statement of financial position approximates its fair value.

c)Hedge accounting

Telecom and its subsidiaries believe that a hedging relationship qualifies for hedge accounting if all of the following conditions established by the IFRS 9 are met:

a) The hedging relationship consists only of eligible hedging instruments and hedged items;

b) At the beginning of the hedge relationship, there is a formal designation and documentation of the hedging relationship and objective and strategy for risk management of the Company and its subsidiaries for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity assesses whether the hedging relationship meets the requirements of hedge effectiveness (including analysis of sources of hedge ineffectiveness and how to determine the hedge ratio); and

c) The hedging relationship satisfies the following requirements of hedge effectiveness:

(i) The economic relationship between the hedged item and the hedging instrument;

(ii) The effect of credit risk is not predominant in respect of changes of value coming from this economic relationship, and

(iii) The coverage ratio of the hedging relationship is the same as the one provided by the amount of the hedged item that really covers the entity and the amount of the hedging instrument that the entity actually uses to cover that amount of the hedged item.

During years 2021, 2020 and 2019

•    LIBOR Hedges

During year ended December 31, 2017, Telecom Argentina entered into several DFI agreements to hedge the fluctuation of LIBOR from the IFC loan amounting to US$400 million and from the IIC loan amounting to US$100 million, which maturity will be in September 2022. The mentioned agreements hedge a total amount of US$440 million. Such DFI allow fixing the variable rate in a range between 2.085% and 2.4525% nominal annual rate.

As of December 31, 2019, Telecom recognized a liability of $286, which is included in other Financial Debt ($257 current and $29 non-current). Additionally, during the year ended December 31, 2019, Telecom recognizes gains of $124 related to those contracts, that are included in Debt financial expenses – Interests on financial debt.

As of December 31, 2020, Telecom recognized a liability of $696, which is included in other Financial Debt ($679 current and $17 non-current). Additionally, during the year ended December 31, 2020, Telecom recognizes a loss of $443 related to those contracts, that are included in Debt financial expenses – Interests on financial debt.

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TELECOM ARGENTINA S.A.

As of December 31, 2021, Telecom recognized a liability of $165, which is included in other Financial Debt, current. Additionally, during the year ended December 31, 2021, Telecom recognizes a loss of $378 related to those contracts, that are included in Debt financial expenses – Interests on financial debt.

•     Exchange rate Hedges

During year ended December 31, 2019, Telecom Argentina entered into several DFI agreements to hedge the fluctuation of the exchange rate from its loan portfolio amounting to US$499 million fixing the average exchange rate in 52.50 Argentine pesos/US$, expiring between March 2019 and April 2020. During 2019, Telecom recognized gains related to these agreements of $1,467 that are included in Debt financial expenses – Foreign currency exchange losses on financial debts.

During year ended December 31, 2020, Telecom Argentina entered into several DFI agreements to hedge the fluctuation of the exchange rate from its loan portfolio amounting to US$477 million fixing the average exchange rate in 87.54 Argentine pesos/US$, expiring between February 2020 and February 2021. During 2020, Telecom recognized a loss related to these agreements of $2,299 that are included Debt financial expenses – Foreign currency exchange losses on financial debts. As of December 31, 2020, Telecom maintained DFI agreements for a total of US$117 million for those that has recognized a receivable of $3, which is included in current Other receivables and a liability of $99 which is included in current Financial Debt.

During year ended December 31, 2021, Telecom Argentina entered into several DFI agreements to hedge the fluctuation of the exchange rate from its loan portfolio amounting to US$473 million fixing the average exchange rate in 102.49 Argentine pesos/US$, expiring between March 2021 and September 2022. During 2021, Telecom recognized a loss related to these agreements of $1,831 that are included Debt financial expenses - Foreign currency exchange losses on financial debts. As of December 31, 2021, Telecom maintained DFI agreements for a total of US$89 million for those that has recognized a liability of $20 which is included in current Financial Debt.

Offsetting of financial assets and financial liabilities in scope of IFRS 7

The information required by the amendment to IFRS 7 as of December 31, 2021 and 2020 is as follows:

	As of December 31, 2021
	Trade	Other	Trade	Other
	receivables	receivables	payables	liabilities
Current and noncurrent assets (liabilities) - Gross value	24,387	3,217	(52,088)	(469)
Offsetting	(1,761)	(344)	1,761	344
Current and noncurrent assets (liabilities) – Booked value	22,626	2,873	(50,327)	(125)

	As of December 31, 2020
	Trade	Other	Trade	Other
	receivables	receivables	payables	liabilities
Current and noncurrent assets (liabilities) - Gross value	30,039	4,436	(64,441)	(853)
Offsetting	(1,338)	(136)	1,338	136
Current and noncurrent assets (liabilities) – Booked value	28,701	4,300	(63,103)	(717)

Telecom and its subsidiaries offset the financial assets and liabilities to the extent that such offsetting is provided by offsetting agreements and provided that Telecom has the intention to make such offsetting, in accordance with requirements established in IAS 32. The main financial assets and liabilities offset correspond to transactions with other national and foreign operators including interconnection, carriers and Roaming (being offsetting a standard practice in the telecommunications industry at the international level that Telecom and its subsidiaries applies regularly). Offsetting is also applied to transactions with agents.

NOTE  23 – REVENUES

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TELECOM ARGENTINA S.A.

	Years ended December 31,
	2021		2020		2019
Mobile Services		161,131		171,089	168,905
Internet Services		90,768		96,954	108,190
Cable Television Services		82,550		89,934	101,526
Fixed and Data Services		58,930		68,825	77,187
Other services revenues		2,318		1,863	1,590
Subtotal Services revenues		395,697		428,665	457,398
Equipment revenues		29,796		26,569	29,669
Total Revenues		425,493		455,234	487,067

NOTE 24 – OPERATING EXPENSES

Operating expenses disclosed by nature of expense amounted to $428,280, $424,602 and $454,610 for the years ended December 31, 2021, 2020 and 2019, respectively. The main components of the operating expenses are the following:

	Years ended December 31,
	2021	2020	2019
Employee benefit expenses and severance payments	Profit (loss)
Salaries, Social security expenses and benefits	(83,429)	(82,094)	(82,763)
Severance indemnities	(6,518)	(3,751)	(10,589)
Other employee expenses	(1,876)	(2,420)	(2,266)
	(91,823)	(88,265)	(95,618)
Fees for services, maintenance, materials and supplies
Maintenance and materials	(28,512)	(28,413)	(31,973)
Fees for services	(20,360)	(21,215)	(22,437)
Directors and Supervisory Committee’s fees	(559)	(201)	(266)
	(49,431)	(49,829)	(54,676)
Taxes and fees with the Regulatory Authority
Turnover tax	(15,813)	(16,496)	(17,547)
Regulatory Entity Fees	(7,863)	(8,503)	(9,549)
Municipal taxes	(4,524)	(4,727)	(5,047)
Other taxes and fees	(4,543)	(5,021)	(5,636)
	(32,743)	(34,747)	(37,779)

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TELECOM ARGENTINA S.A.

	Years ended December 31,
	2021	2020	2019
Cost of equipment and handsets	Profit (loss)
Inventory balance at the beginning of the year	(6,001)	(7,079)	(9,073)
Plus:
Purchases	(19,754)	(17,711)	(21,529)
Others	1,356	1,986	1,434
Less:
Inventory balance at the end of the year	3,438	6,001	7,079
	(20,961)	(16,803)	(22,089)
Other operating expenses
Provisions	(7,896)	(4,533)	(2,643)
Rentals and internet capacity	(2,751)	(3,022)	(4,094)
Energy, water and other services	(6,991)	(8,181)	(10,087)
Other	(3,544)	(4,774)	(6,137)
	(21,182)	(20,510)	(22,961)
Depreciation, amortization and impairment of fixed assets
Depreciation of PP&E	(108,382)	(99,185)	(96,535)
Amortization of intangible assets	(15,558)	(16,056)	(16,991)
Amortization of Rights of use assets	(10,330)	(8,860)	(7,149)
Impairment of fixed assets	(1,284)	(568)	(5,269)
	(135,554)	(124,669)	(125,944)

Operating expenses, disclosed per function are as follows:

	Operating	Administration	Commercializa-tion	Total	Total	Total
Concept	costs	costs	costs	12.31.2021	12.31.2020	12.31.2019
Employee benefit expenses and severance payments	(52,999)	(17,036)	(21,788)	(91,823)	(88,265)	(95,618)
Interconnection costs and other telecommunication charges	(15,262)	—	—	(15,262)	(16,987)	(15,453)
Fees for services, maintenance, materials and supplies	(26,465)	(8,000)	(14,966)	(49,431)	(49,829)	(54,676)
Taxes and fees with the Regulatory Authority	(32,271)	(231)	(241)	(32,743)	(34,747)	(37,779)
Commissions and advertising	(299)	(121)	(23,972)	(24,392)	(26,040)	(30,027)
Cost of equipment and handsets	(20,961)	—	—	(20,961)	(16,803)	(22,089)
Programming and content costs	(28,949)	—	—	(28,949)	(30,443)	(37,053)
Bad debt expenses	—	—	(7,983)	(7,983)	(16,309)	(13,010)
Other operating expenses	(9,818)	(2,080)	(9,284)	(21,182)	(20,510)	(22,961)
Depreciation, amortization and impairment of fixed assets	(107,717)	(13,933)	(13,904)	(135,554)	(124,669)	(125,944)
Total as of 12.31.2021	(294,741)	(41,401)	(92,138)	(428,280)	—	—
Total as of 12.31.2020	(287,980)	(37,020)	(99,602)	—	(424,602)	—
Total as of 12.31.2019	(310,528)	(39,843)	(104,239)	—	—	(454,610)

Operating leases

Future minimum lease payments of non-cancellable operating lease agreements of Telecom and its subsidiaries as of December 31, 2021, 2020 and 2019 in current currency on the transaction date are as follows:

	Less than 1		More than 5
	year	1‑5 years	years	Total
2019	436	142	—	578
2020	341	148	—	489
2021	894	272	65	1,231

Further information is provided in Note 3.j) to these consolidated financial statements.

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TELECOM ARGENTINA S.A.

NOTE 25 – FINANCIAL RESULTS, NET

	Years ended December 31,
	2021	2020	2019
	Profit (loss)
Interests on financial debt (*)	(15,941)	(21,687)	(22,080)
Foreign currency exchange effect on financial debts (**)	46,793	(10,395)	(12,149)
Financial debt renegotiation results	(2,152)	(5,198)	—
Total Debt financial expenses	28,700	(37,280)	(34,229)
Gains (losses) on operations with notes and bonds (***)	1,420	1,411	(5,353)
Other exchange differences	6,947	7,452	14,998
Other interests, net and other investments results	(1,638)	(1,097)	3,175
Other taxes and bank expenses	(4,278)	(4,121)	(4,468)
Financial expenses on pension benefits	(225)	(356)	(275)
Financial discounts on assets, debts and others	(2,440)	(1,090)	(408)
RECPAM	17,163	8,450	15,615
Total other financial results, net	16,949	10,649	23,284
Total financial results, net	45,649	(26,631)	(10,945)

(*)   Includes ($378), ($443) and $124 corresponding to net (loss) gains generated by DFI in the years ended December 31, 2021, 2020 and 2019, respectively.

(**)  Includes ($1,831), ( $2,299) and $1,467 corresponding to net (loss) gains generated by DFI in the years ended December 31, 2021, 2020 and 2019, respectively.

(***) Includes $110 and $1,005 corresponding to the result related to the decrease in financial assets at amortized cost in the year ended December 31, 2021 and 2020.

NOTE 26 – FINANCIAL RISK MANAGEMENT

Financial risk factors

Telecom and its subsidiaries are exposed to the following financial risks in the ordinary course of its business operations:

● Market risk: stemming from change in exchange rates, market prices and interest rates in connection with financial assets that have been originated and financial liabilities that have been assumed;

● Credit risk: representing the risk of the non-fulfillment of the obligations undertaken by the counterpart regarding the operations of Telecom;

● Liquidity risk: connected with the need to meet short-term financial commitments.

These financial risks are managed by:

● The definition of guidelines for directing operations;

● The activity of the Board of Directors and Management which monitors the level of exposure to mentioned risks consistently with prefixed general objectives;

● The identification of the most suitable financial instruments, including derivatives, to reach prefixed objectives;

● The monitoring of the results achieved.

The policies to manage and the sensitivity analyses of the above financial risks by Telecom are described below.

Market risk

One of the main Telecom’s market risks is its exposure to changes in foreign currency exchange rates in the markets in which it operates.

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TELECOM ARGENTINA S.A.

Foreign currency risk is the risk that the future fair values or cash flows of a financial instrument may fluctuate due to exchange rate changes.

Telecom has great part of its commercial debt nominated in US$ and other currencies. Additionally, holds part of its financial debt is denominated in US$.

The financial risk management policies of Telecom are directed towards diversifying market risks by the acquisition of goods and services in the functional currency and minimizing interest rate exposure by an appropriate diversification of the portfolio. This may also be achieved by using carefully selected derivative financial instruments to mitigate long-term positions in foreign currency and/or adjustable by variable interest rates. For more information, see Note 22 to these consolidated financial statements.

Additionally, Telecom and its subsidiaries have cash and cash equivalents and investments mostly denominated in foreign currency that are also sensitive to changes in peso/dollar exchange rates and contribute to reduce the exposure to trade payables in foreign currency.

Financial assets and liabilities denominated in foreign currencies

Financial assets and liabilities denominated in foreign currencies as of December 31, 2021 and 2020, are the following:

	2021	2020
	In equivalent millions of Argentine pesos
Assets	19,969	31,160
Liabilities	(233,985)	(311,361)
Liabilities Net	(214,016)	(280,201)

In order to reduce this net position in foreign currency Telecom has DFI as of December 31, 2021 amounting to US$89 million, therefore, the net liability not hedged amounts to US$1,994 million as of that date.

Exchange rate risk – Sensitivity analysis

Based on the composition of the consolidated statement of financial position as of December 31, 2021, which is a not hedged net liability position in foreign currency of US$1,994 million, Management estimates that an increase in the U.S. dollar exchange rate of approximately 20%, would result in a variation of approximately $40,964 of the consolidated financial position in foreign currency.

Interest rate risk – Sensitivity analysis

Within its structure of financial debt, Telecom and its subsidiaries have bank overdrafts denominated in Argentine pesos accruing interest at rates that are reset at maturity, notes and other financial entities' loans denominated in Argentine pesos, U.S. dollar,RMB and Guaraníes that bear interest at fixed and variable rates. For further information, see Note 13 to these consolidated financial statements.

The Company has financial debts at variable rate, which amounts approximately to $104,919 as of December 31, 2021. In order to reduce the effect of changes in interest rates, Telecom has DFI that amounts to $11,299 as of December 31, 2021, that convert variable rates into fixed rates. Therefore, the net financial debt not hedged amounts to $93,620 as of December 31, 2021. Management believes that any variation of 100 bps in the agreed interest rates would result in $936 gain / loss.

Price Risk – Sensitivity Analysis

Telecom’s and its subsidiaries' investments in financial assets at fair value through profit or loss are susceptible to the risk of changes in market prices arising from fluctuations in the future value of these assets. The Company conducts an ongoing monitoring of the evolution of these assets’ prices.

As of December 31, 2021, the total value of investments with changes in fair value recognized in net income amounted to $10,786.

Management estimates that any 10% variation in the market price would result in $1,079 gain / loss.

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TELECOM ARGENTINA S.A.

This sensitivity analysis provides only a limited point of view of the sensitivity to market risk of certain financial instruments. The actual impact of changes in financial instruments may differ significantly from this estimate.

Credit risk

Credit risk represents Telecom's exposure to possible losses arising from the failure of commercial or financial counterparts to fulfill their assumed obligations. Such risk stems principally from economic and financial factors that could affect to our debtors.

Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

Telecom's maximum theoretical exposure to credit risk is represented by the carrying amount of the financial assets and trade receivables, net recorded in the consolidated statement of financial position.

	Cash and cash		Trade	Other
Date due	equivalents	Investments	receivables, net	receivables, net	Total
Total due	—	—	12,578	26	12,604
Total not due	19,849	10,786	10,048	2,847	43,530
Total as of December 31, 2021	19,849	10,786	22,626	2,873	56,134

The accruals to the allowance for doubtful accounts are recorded: (i) for an exact amount on credit positions that present an element of individual risk (bankruptcy, customers under legal proceedings with the Company); and (ii) on credit positions that do not present such characteristics, by customer segment considering the aging of the accounts receivable balances, expected credit losses, customer creditworthiness and changes in the customer payment terms. Total overdue balances not covered by the allowance for doubtful accounts amount to $12,578 as of December 31, 2021 ($14,576 as of December 31, 2020).

Regarding the credit risk relating to the asset included in the “Net financial debt or asset”, it should be noted that Telecom evaluates the outstanding credit of the counterparty and the levels of investment, based, among others, on their credit rating and the equity size of the counterparty. In order to minimize credit risk, Telecom also pursues a diversification policy for its investments of liquidity with leading high-credit-quality banking and financial institutions and generally for short-term periods. Consequently, there are no significant positions with any one single counterpart.

Telecom serves a wide range of customers, including residential customers, businesses and governmental agencies. As such, Telecom's account receivables are not subject to significant concentration of credit risk.

Liquidity risk

Liquidity risk represents the risk that Telecom and its subsidiaries have no funds to accomplish its obligations of any nature (labor, commercial, fiscal and financial, among others).

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TELECOM ARGENTINA S.A.

Telecom and its subsidiaries' working capital breakdown and their main variations are disclosed below:

	2021		2020		Variation
Trade receivables	22,554		28,612		(6,058)
Other receivables (not considering financial DFI)	6,931		8,323		(1,392)
Inventories	3,115		5,618		(2,503)
Current liabilities (not considering financial debt)	(100,714)		(97,279)		(3,435)
Operative working capital	(68,114)		(54,726)		(13,388)
Over revenues	16	%	12	%
Cash and cash equivalents	19,849		27,965		(8,116)
Financial DFI	—		3		(3)
Other receivables	1,915		2,071		(156)
Investments	10,786		7,804		2,982
Current financial debt	(64,869)		(62,795)		(2,074)
Net Current financial (liability) asset	(32,319)		(24,952)		(7,367)
Negative operating working capital (current assets - current liabilities)	(100,433)		(79,678)		(20,755)
Liquidity rate	0.4		0.5

Telecom and its subsidiaries have a typical working capital structure corresponding to a company with intensive capital that obtains spontaneous financing from its suppliers (especially PP&E) for longer terms than those it provides to its customers. According to this, the negative working capital amounted to $100,433 as of December 31, 2021 (increasing $20,755 vs. December 31, 2020).

Telecom has an excellent credit rating and has several financing sources and several offers from first-class international institutions to diversify its current funding structure, which includes accessing to domestic and international capital market and obtaining competitive bank loans in what relates to terms and financial costs.

The Company’s management evaluates the national and international macroeconomic context to take advantage of market opportunities that allows it preserving its financial health for the benefit of its investors.

Telecom manages its cash and cash equivalents and its financial assets trying to match the term of investments with those of its obligations. Cash and cash equivalents position is invested in highly liquid short-term instruments.

Telecom maintains a liquidity policy that includes cash through its normal course of business. Telecom and its subsidiaries have consolidated cash and cash equivalents amounting to $19,849 (equivalent to US$193 million) as of December 31, 2021 (as of December 31, 2020 amounted to US$220 million).

During years ended December 31, 2021 and 2020, Telecom continued obtaining funds from the financial market used to pay its investments, operative working capital, and other corporative expenses and refinancing part of its financial debts in the framework of its permanent policy of optimizing the term, rate and structure of its financial debts. For further information on bank loans agreements, bank loans payments and bank loans restructured, see Note 13 to these consolidated financial statements.

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The table below contains a breakdown of financial liabilities into relevant maturity groups based on the remaining period at the date of the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Trade	Financial	Leases	Other
Maturity Date	payables	Debt	liabilities	liabilities	Total
Due	2,717	—	—	—	2,717
January 2022 thru December 2022	46,519	68,437	6,724	123	121,803
January 2023 thru December 2023	900	58,941	4,009	2	63,852
January 2024 thru December 2024	166	58,489	3,036	—	61,691
January 2025 and thereafter	35	128,108	6,958	—	135,101
	50,337	313,975	20,727	125	385,164

Capital management

The primary objective of Telecom's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.

Telecom manages its capital structure and makes adjustments considering the business evolution and changes in the macroeconomic conditions.

To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders and the level of indebtedness.

The company does not have to comply with regulatory capital adequacy requirements.

NOTE 27 - BALANCES AND TRANSACTIONS WITH COMPANIES UNDER SECTION 33 - LAW No. 19,550 AND RELATED PARTIES

a)  Controlling Company

On January 1, 2018, Cablevisión was merged with and into Telecom Argentina (surviving entity), which was approved by the CNV (and registered in the IGJ under No. 16,345, Book 91, Tome “Corporations”). Since such date, CVH is the controlling company of Telecom Argentina, holding directly and indirectly 28.16% of the capital stock of the Company. Additionally, both VLG S.A.U. (controlled by CVH) and Fintech, contributed to the Voting Trust, in accordance with the Shareholders´ Agreement, shares representing 10.92% of the capital of the Company so the shares subject to such agreement represent 21.84% of the total capital of the Company (the “Shares in Trust”).

As informed in the Voting Trust Agreement, the trustee appointed by CVH must vote the Shares in Trust as instructed or voted by CVH with respect to all issues except in respect of certain matters subject to veto under the Shareholders´ Agreement.

Shareholders’ Agreement: Fintech - CVH

On July 7, 2017 CVH, VLG, Fintech Media LLC (merged to date with Fintech), Fintech Advisory Inc., GC Dominio S.A. (all of them direct or indirect shareholders of Cablevisión S.A.) and Fintech (direct or indirect shareholder of Telecom Argentina) entered into a shareholders’ agreement that governs the exercise of their rights as shareholders of the Company. The Shareholders´ Agreement establishes basically:

● the representation in the corporate bodies, provided that subject to the fulfillment of certain conditions and as long as CVH holds a certain percentage of Telecom Shares, CVH shall be entitled to designate the majority of the directors, members of the Executive Committee, Audit Committee, Supervisory Committee, CEO and any other Key Employee (other than the CFO and the Internal Auditor). CVH shall also be entitled to nominate the Chairman of the Board of Directors and Fintech to nominate de Vice chairman of the Board of Directors.

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● a scheme of supermajorities and required votes for the approval by the Shareholders´ Meetings or Board of Directors´ Meetings, respectively, of certain matters such as: i) the approval of the Business Plan and the Annual Budget of Telecom Argentina; ii) amendments of the bylaws, iii) changes in Independent Auditors, iv) the creation of committees of the Board of Directors, v) hiring of Key Employees as defined in the Shareholders´ Agreement (Key employees will be proposed by CVH, except for the CFO and the internal auditor); vi) merger of Telecom or any other controlled entity, vii) acquisitions of certain assets, viii) sale of certain assets, ix) capital increases; x) incurrence of indebtedness over certain limits, xi) capital investments not contemplated in the Business Plan and the Annual Budget above certain amounts; xii) related party transactions, xiii) contracts that may impose restrictions to the distribution of dividends; xiv) new lines of business or discontinuing existing lines of business; xv) contracting for significant amounts not contemplated in the Business Plan and the Annual Budget, among others.

Voting trust pursuant to the Shareholders’ Agreement between Fintech and CVH

In accordance with the Shareholders´ Agreement, on April 15, 2019, a Voting Trust Agreement (the "Trust Agreement") was regularized, under which Fintech and VLG S.A.U. (i) each contributed with 235,177,350 shares of Telecom in a voting trust (the "Voting Trust") which, when added to the shares that CVH holds (directly and indirectly) in Telecom, exceed fifty percent (50%) of the outstanding shares, and (ii) CVH and Fintech each appointed a co-trustee. The shares contributed to the Voting Trust will be voted by the co-trustee of CVH in accordance with the vote of CVH or following the instructions of CVH, except in respect of certain matters subject to veto under the Shareholders´ Agreement, in which case will be voted by the co-trustee of Fintech in accordance with the vote of Fintech or following the instructions of Fintech.

Public Tender Offer due to change of control

On June 21, 2018, CVH informed the Company that it was promoting and formulating a mandatory public tender  offer due to a change of control (“PTO”) for all Class B Shares issued by Telecom Argentina listed on BYMA (including outstanding Class C Shares of Telecom Argentina that might be converted into Class B Shares before the expiration deadline) (the “PTO Shares”) at a price of $110.85 Argentine pesos per PTO Share (previously deducting the items detailed in the OPA announcement).

Pursuant to public releases published by CVH, as part of the administrative process to authorize the PTO, the CNV expressed its disagreement with the price announced by CVH, and took the position that the price per PTO Share should be US$4.8658 payable in Argentine pesos at the foreign exchange rate in effect on the business day immediately prior to the settlement of the PTO. CVH considered the CNV’s position unfounded and initiated the legal proceeding "Cablevisión Holding S.A. c/ Comisión Nacional de Valores s/ Medidas Cautelares" (File. No. 7998/18) in the Federal Civil and Commercial Court No. 3. On November 1, 2018, the Federal Civil and Commercial Court No. 3 confirmed a preliminary injunction obtained by CVH and ordered the CNV to abstain for six months from issuing any decision with respect to the authorization of the PTO promoted by CVH on June 21, 2018.

On June 10, 2019 CVH informed Telecom that on such date CVH was served with notice of a preliminary injunction rendered on May 9, 2019 in the case “Burgueño Daniel v. Executive Branch - CNV on (Autonomous) Preliminary Injunction” (File No. 89537/18) pending before the Court of Appeals on Administrative Litigation Matters No. 1, Secretariat No. 1, suspending the process relating to the PTO, until the CNV resolves on the applicability of Resolution No. 779/18 or the expiration of the term contemplated in section 5 of Law No. 26,854 governing injunctions. This preliminary injunction was extended by several succeeding court decisions, being the last one the court decision rendered on May 15, 2020, which extended the mentioned preliminary injunction for six months.

On July 6, 2020 CVH informed Telecom that on such date CVH was served with notice of a decision rendered on July 3, 2020 by the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters in re “Burgueño Daniel v. Executive Branch - CNV on (Autonomous) Preliminary Injunction” (File No. 89537/18), whereby said Court decided to interrupt the judicial recess period only to consider the appeal filed by the CNV on May 26, 2020, dismiss such appeal and, consequently, confirm the extension of the preliminary injunction granted thereunder.

On the other hand, on July 19, 2019, CVH was served with notice of a resolution rendered on the same date by the Chamber I of the Federal Civil and Commercial Court of Appeals in re “Cablevisión Holding S.A. v. Argentine Securities Commission on Injunctions” (File No. 7998/18), lifting the preliminary injunction granted to CVH whereby the CNV was ordered to abstain from issuing any decision with respect to the authorization of the PTO. The resolution also provided that an appeal by CVH to CNV’s decision with respect to the PTO would have a suspensive effect. CVH filed a federal extraordinary proceeding against the Federal Civil and Commercial Court of Appeal’s decision, which was dismissed on December 26, 2019. However, as explained above, the PTO remained at the time subject to the preliminary injunction obtained by a shareholder of CVH – Daniel Burgueño – in the separate legal proceedings mentioned in the previous paragraphs.

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On November 26, 2019, CVH was served with a notice of a proceeding initiated by a shareholder of CVH, Mr. Daniel Burgueño, in re “Burgueño, Daniel Fernando v. EN-CNV s/ Proceso de Conocimiento” (File No. 33763/19), pending before the National First Instance Court on Federal Administrative Litigation Matters No. 1, Secretariat No. 1. Mr. Burgueño seeks the court to rule that CVH is not required to conduct the PTO as a result of the change of control in Telecom in light of paragraph k) of Section 32 of Resolution CNV No. 779/18, regulating Law No. 26,831 (as amended by Law No. 27,440).

On December 27, 2019, CVH informed Telecom that on such date CVH was served with notice of the first instance court’s decision in re “Burgueño, Daniel Fernando v. EN-CNV s/ Proceso de Conocimiento” (File No. 33763/19) ruling in favor of the complaint brought by Mr. Burgueño, confirming that CVH’s does not have the obligation to conduct the PTO according to Resolution CNV No. 779/18, specifically Section 32, paragraph k), and ordering the CNV to deem the proceedings initiated in connection with the PTO concluded, and also ordered CVH to cease with the PTO.

On September 8, 2020 CVH informed Telecom that on such date CVH was served with notice of a decision rendered by the Chamber V of the Federal Court of Appeals on Administrative Litigation Matters in re “Burgueño Daniel Fernando v. EN - CNV s/ Proceso de Conocimiento” (File. No. 33763/19), rejecting the appeal filed by the CNV of the decision rendered by the court of first instance mentioned in the prior paragraph.

Finally, on October 29, 2020, CVH informed Telecom that on such date CVH was served with notice of the judgment of Chamber V of the Federal Court of Appeals on Administrative Litigation Matters issued in re “Burgueño Daniel Fernando v. EN - CNV s/ Proceso de Conocimiento” (File. No. 33763/19) dismissing the extraordinary appeal filed by the CNV against the first instance judgment rendered on September 8, 2020 mentioned in the prior paragraph.

On February 17, 2022 the Supreme Court of Justice dismissed the direct appeal filed by the CNV, not admitting the extraordinary appeal filed by the CNV against the resolution rendered by Chamber V of the Federal Court of Appeals on Administrative Litigation Matters.

b)  Related Parties

For the purposes of these consolidated financial statements, related parties are those individuals or legal entities which are related to Telecom in terms of IAS 24.

c)  Balances with Companies under section 33 - Law No. 19,550 and Related Parties

● Companies under section 33 - Law No. 19,550 – Associates

CURRENT ASSETS	As of December 31,
Trade receivables	2021	2020
Ver TV	1	3
	1	3
Other receivables
La Capital Cable	222	159
TSMA	—	4
Ver TV	2	15
	224	178
CURRENT LIABILITIES
Other liabilities
Televisora Privada del Oeste S.A.	—	5
	—	5

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● Related parties

CURRENT ASSETS	As of December 31,
Trade receivables	2021	2020
Other Related parties	181	246
	181	246
Other receivables
Other related parties	4	48
	4	48
CURRENT LIABILITIES
Trade payables
Other Related parties	1,211	1,378
	1,211	1,378

d)  Transactions with Companies under section 33 - Law No. 19,550 and related parties

·      Companies under section 33 - Law No. 19,550– Associates

	Transaction	Years ended December 31,
		2021	2020	2019
		Profit (loss)
		Revenues
La Capital Cable	Services revenues and other revenues	46	66	103
Ver TV	Services revenues	6	2	—
		52	68	103
		Operating costs
La Capital Cable	Fees for services	(90)	(80)	(80)
		(90)	(80)	(80)
		Financial results
Ver TV	Interests	—	50	—
La Capital Cable	Interests	—	23	—
		—	73	—

● Related Parties

	Transaction	Years ended December 31,
		2021	2020	2019
		Profit (loss)
		Revenues
Other Related parties	Services and advertising revenues	317	320	340
		317	320	340
		Operating costs
Other Related parties	Programming costs	(4,227)	(4,797)	(5,011)
Other Related parties	Editing and distribution of magazines	(852)	(1,134)	(1,428)
Other Related parties	Advisory services	(529)	(726)	(690)
Other Related parties	Advertising purchases	(558)	(747)	(960)
Other Related parties	Other purchases and commissions	(193)	(231)	(177)
		(6,359)	(7,635)	(8,266)

The transactions discussed above were made on terms no less favorable to Telecom than would have been obtained from unaffiliated third parties. When Telecom's transactions represented more than 1% of its total shareholders’ equity, they were approved according to Law No. 26,831, the Bylaws and the Executive Committees’ Faculties and Performance Regulation.

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e)  Key Managers

Compensation for Directors for technical-administrative functions and Key Managers includes fixed and variable compensation, retention plans, social security contribution, and, in some cases, accrued severance compensation. Compensation for Directors and Key Managers of Telecom Argentina for the years ended December 31, 2021, 2020 and 2019 amounted to $1,184, $1,454 and $800, respectively (in current currency of the transaction date), and were recorded as expenses under the line item “Employee benefits expenses and severance payments”. As of December 31, 2021, an amount of $352 remained unpaid.

Telecom Argentina has recorded a provision of $418, $86 and $110 for the fees of its Board of Directors’ members for the year ended December 31, 2021, 2020 and 2019, respectively (in current currency of the transaction date).

The members and alternate members of the Board of Directors do not hold executive positions in the Company or Company’s subsidiaries.

f)  Amendment of the Telecom Argentina’s Bylaws

The Extraordinary General Meeting and the Special Meetings of the Class “A” and Class “D” Shares held on October 10, 2019 approved the amendment of sections 4, 5 and 6 of the Bylaws, so that the shares Class "A" and Class "D", currently book-entry, may be represented in a cardboard or in book-entry form, as determined by a special meeting of Class "A" or Class "D" shares. The delegation of powers to the Board of Directors was approved to determine the time, terms and condition of issuance of the securities representing the cardboard shares, in the event that this was resolved in the future by the respective Special Meetings of Class “A” and Class "D" shares.

Afterwards, General Extraordinary Shareholders' Meeting and Class "A" and Class "D" Shares Special Shareholders' Meetings held on December 11, 2020 approved the amendment of section 10 of the Company´s Bylaws so as to establish a minimum prior notice for any call to Board Meetings of 5 calendar days, except in the event of urgency, in which case the Meeting may be called with a prior notice of 1 day, and to establish new notification procedures to calls for such Meetings.

On April 14, 2021, the Company was notified by the IGJ of the registration of both Bylaws’ amendments.

NOTE 28 – RESTRICTIONS ON DISTRIBUTION OF PROFITS

Under the LGS, the by-laws of the Company and rules and regulations of the CNV, a minimum of 5% of net income for the year in accordance with the statutory books, plus/less previous years’ adjustments and accumulated losses, if any, must be appropriated by resolution of the shareholders to a legal reserve until such reserve reaches 20% of the outstanding capital (common stock plus inflation adjustment of common stock).

NOTE 29 – IMPACT OF CORONAVIRUS IN TELECOM

Since the beginning of 2020 and given the extent of the Covid-19 spread, several governments in the world have implemented diverse measures to restrict the movement of the population and to content the spread of the virus.

In Argentina, the National Government ordered the Mandatory and Preventive Social Isolation from March 20, 2020, which only allowed the movement of individuals involved in the provision/production of essential services and products, among them, the provision of telecommunication services.

On November 9, 2020, the National Government ordered the Mandatory and Preventive Social Distancing, in which the provision of telecommunication services remained considered as “essential”.

During 2021, the Argentine government continued adopting several measures to address the adverse effects of the COVID-19 pandemic and to prevent the spread of the virus. By the end of 2020, Argentina launched a nation-wide vaccination plan supervised by national and provincial authorities aimed at immunizing Argentina’s population. During the first quarter of 2021 the national vaccination plan aimed at immunizing the elder population, as well as health care and education personnel. During the second and third quarter of 2021, the national vaccination plan extended its scope of application to the remaining adult population. Since October 2021, the vaccination plan extended its target population to children over 3 years of age, prioritizing those with pre-existing comorbidities.

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Aiming at increasing the population’s immunity to new COVID-19 variants continue to spread around the world (such as Delta and Omicron, among others), the Argentine government began vaccinating with a third booster shot to people that have received two doses of the vaccine. Like the rest of the world, Argentina does not escape the exponential rise in infections that, since the end of 2021 and early 2022, has been strongly affecting all age groups.

During 2021, together with the progress of the vaccination schedule, the Argentine government took several measures in response to how the situation concerning COVID-19 evolved, both during the Covid-19 new outbreak stages and during the slowdown stages of the spread of the virus. The measures implemented by the Argentine government did not directly affect our operations because telecommunication services were, and are still, deemed essential.

Telecom provides valuable services to society, by connecting people, homes, companies and governments remain connected. The services rendered by the Company also allow small, medium and large companies to remain in business, and therefore contribute to sustain our country’s economy. Moreover, since the beginning of the COVID-19 outbreak our services have allowed people to stay connected and entertained, as well as to work from home and remain informed.

✓External initiatives implemented by Telecom related to the health emergency

The COVID-19 pandemic has driven joint actions by domestic companies that gave essential support to face the health emergency.

Telecom, as part of its permanent commitment to its community in response to the COVID-19 emergency, has implemented diverse initiatives with great social value, among which stand out the connectivity for field hospitals and the discount in the service for sanitary and educational platforms, which are still in force today, in addition to benefits to enable customers to take further advantage of connection possibilities and access to valuable information and educational and entertainment content.

✓Internal initiatives implemented by Telecom related to the health emergency

On the other hand, the Company implemented a series of initiatives to ensure the continuity of its operations, safeguarding the health and the wellness of all the employees and of those that are part of the value chain. Among these initiatives stand out the creation of a Crisis Committee or the implementation of home office for more than 70% of its employees and the infrastructure works reinforcement, which provided networks with the capacity required to continue operating without any inconvenience.

With the evolution of the pandemic, the Company implemented a new hybrid working modality for all the personnel whose position allows them to work remotely, with experience centers for face-to-face meetings under health and care protocols; in combination with remote work.

For those tasks that cannot be performed remotely, it continues to be reinforced the cleaning and disinfection at working places and environments including the vans used for providing technical support, and provision of hand washing and sanitizing methods and the distribution of personal care kits in accordance with the protocol established by the Superintendence of Labor Risks.

Additionally, among other measures, we expanded the capacity for international outgoing Internet traffic by 40% and we entered into agreements to enhance the links with international suppliers and IP networks; we early executed in public thoroughfare of infrastructure works on residential fixed data networks, strengthening of data centers and hubs and increase of the capacity of Flow's content distribution network; and we expanded the capacity of the mobile network in certain smaller cities in the provinces where there is only one network, and the continuation of preventive maintenance tasks in all the networks.

Furthermore, since the beginning of this health situation, the Company launched a campaign promoting all the digital communication channels and encouraging customers to request support through those channels and several initiatives were developed through the corporate program “Nos Acompañamos” (We Are in Company) intended for all Company employees, for the purpose of taking care of psychological, biological and social wellness, and focused on the work-life balance.

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✓Main Accounting Impacts

As of the date of these consolidated financial statements, the Company has not experienced any significant impacts on its results as a consequence of the pandemic. Despite the several difficulties that caused a slowdown or complexities in our operations; such as the increased Internet data traffic, the increase in mobile voice service, the decrease in the collection of service fees, at the beginning of the mandatory isolation or the inconveniences to make repairs and installations inside our customers’ homes; among others, the operations are still in place and are expected to continue in spite of the difficulties.

In accordance with IAS 36, the Company’s Management has assessed during 2021if there were indicators of impairment of the recoverable value of its fixed assets. Even though the pandemic could have a significant impact in the economic activity in Argentina, what could be an impairment trigger, according to mentioned assessment, no negative impacts have been identified in the capacity of generation of future cash flows of the Company as a consequence of the pandemic, as the volume of operations is expected to remain stable.

- Liquidity Risk

The implementation of measures aimed at reducing the circulation of people initially included the closure of in-person collection channels, thus affecting the collections of the Company as from March 20, 2020. This situation gradually evolved during the second quarter of 2020 with the strengthening of the digital channels, the reopening of the in-person collection channels, and the different debt collection actions conducted by the Company that allowed the recovery of doubtful receivables. Therefore, this situation does not represent a liquidity risk.

Telecom and its subsidiaries have enough liquidity, bank credit lines and a notes program that allow them to finance their short-term obligations and the investment plan in addition to the projected operating cash flows.

However, the Company implemented measures that allowed it to have the highest possible liquidity to face the volatility of the context with greater uncertainty, offset the potential decrease in cash flows and fulfill its obligations.

The ultimate effects of Covid-19 and its impact on the global and local economy are still unknown. Governments may issue stricter measures, which cannot be predicted at this stage.

The Company’s Management will continue to develop actions that minimize the potential impairment on its results, as a result of these situations, maintaining a level of service and customer satisfaction, and seeking to maximize the precautions in social management in this context.

The Company's Board of Directors and the Crisis Committee continue monitoring the evolution of the situation and taking the necessary measures to preserve human life and the sustainability of Telecom's businesses.

NOTE 30 – SUBSEQUENT EVENTS TO DECEMBER 31, 2021

1)Loans for purchase of equipment

Export Development Canada (EDC)

On January 3, 2022, the Company submitted a proposal for an export credit line for a total amount of up to US$23.4 million to the following entities: (i) JPMorgan Chase Bank, N.A., as initial lender, residual risk guarantor and agent of the facility, (ii) JPMorgan Chase Bank, N.A., Buenos Aires branch as an onshore custody agent, and (iii) JPMorgan Chase Bank, N.A. and EDC as lead co-organizers, which was accepted on the same date.

The line of credit is guaranteed by EDC, the official export credit agency of Canada.

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The funds received will be used to finance up to 85% of the value of certain imported goods and services, up to 50% of the value of certain national goods and services and the total payment of the EDC surplus equivalent to 14.41% of the total amount committed by the lenders under the line of credit.

As of the date of these consolidated financial statements, the Company has not received any disbursement related to the aforementioned credit line.

2)Offers for Irrevocable Call Option on the minority Shares of Open Pass S.A.

On December 29, 2021, the subsidiary Micro Sistemas received from two shareholders of Open Pass S.A. (a company that provides IT services related to software development and maintenance, with which Micro Sistemas has a contract for the use and development of the electronic wallet platform) offers for irrevocable call options for a total of 6,999,580 of the shares (representing 15% of total Open Pass S.A. capital stock). On January 4, 2022 Micro Sistemas accepted the offers by paying    US$700,000 as consideration for the granting of said purchase options.

The call options could be exercised by Micro Sistemas, at its sole discretion, during a period of twelve (12) months from the date of acceptance.

The call options include, together with the shares, the assignment and transfer of all the economic and political rights inherent therein. If the options are exercised, the price to be paid for the shares has been determined at US $7,500,000.

3)Cash dividends collected from associates

During January 2022 cash dividends were collected form Ver TV and TSMA in an amount of $131.4 ($130.8 directly and $0.6 indirectly through the subsidiary Inter Radios).

4)​ ​Global Programs for the issuance of Notes

In connection with the Notes Global Program for a maximum outstanding amount of US$3,000 million or its equivalent in other currencies, the Company announced the subscription of new series of notes. The amount of the Notes finally issued and its main characteristics are detailed below:

✓ Series 12 Notes

Issuance date: March 9, 2022.

Amount involved: U$S22,7 million payables in argentine pesos at the applicable exchange rate (equivalent to $2,458 million pesos at the issuance date).

Maturity Date: March 9, 2027.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable on a quarterly basis from its issuance date until its maturity date at an annual fixed rate of 1.00%. The last interest payment date will be on maturity date.

✓ Series 13 Notes

Issuance date: March 9, 2022.

Amount involved: $2,347,500,000.

Maturity Date: September 9, 2023.

Amortization: Principal will be paid in one installment at maturity date.

Interest rate and Payment Date: Interest is payable in a quarterly basis from its issuance date until its maturity date at a variable annual rate (Badlar plus spread of 1.5%). The last interest payment date will be on maturity date.

5) Banco Santander Río Loan

On March 9, 2022, the Company entered into a loan agreement with Santander Río Bank S.A. for a total amount of P$3,500, maturing on March 9, 2023 and bearing interest at a fixed rate of 44.50%. The principal amount will be fully amortized in a single installment on the maturity date.

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Carlos Moltini

Chairman of the Board of Directors

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