Telecom Argentina (TEO)

Total return at 5 years: 18.0%/year = 16.0% appreciation + 1.9% dividend. The target price ($27) is ex-dividend; the $2 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $40 · Multiples $23) exceeds the market price ($13).

Today — with margin of safety: at $13 trades ~44.5% below its value discounted to today (~$23) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($27) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($13) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-10.9%/year) than we project (7.5%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~ARS 575.9 bn of owner earnings in year 5 (vs ~ARS 1,471 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/EBITDA (operador integrado de telecomunicaciones). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Currency and unit. The entire fundamental apparatus runs in billions of pesos of December 2025, the issuer's reporting currency (IFRS, with IAS 29 inflation adjustment). The stock trades in dollars and the certificate trading in New York represents five Class B ordinary shares, so the model's count is 430.7 million certificates (2,153,688,011 ordinary shares divided by five) and the conversion to dollars happens only once, at the close of the cascade, at the live exchange rate. The XBRL's ordinary-share count has been frozen since 2019 and was verified by backing it out of the fiscal 2025 basic earnings per share itself: −P$170,006 million divided by −78.94 gives exactly 2,153.7 million, meaning it is still valid and there was no issuance or buyback. That is why the model carries no share-count path. Year 0 and why it is the fiscal year, not a twelve-month window. Year 0 is the fiscal year closed December 31, 2025. Under IAS 29 each presentation restates its series to the currency of its own closing date, so fiscal 2025 (pesos of December 2025) and first-half 2026 (pesos of June 2026) are in different units, and chaining them would mix two currencies. The XBRL also does not tag quarters, so the annual-filer convention applies. For the same reason, the historical path is read from the 2025 annual report's income statement, which presents all three fiscal years already restated to the same currency: P$5,898,611 million in 2023, P$5,442,958 million in 2024, and P$8,328,814 million in 2025. Chaining fiscal years from different presentations would produce unit artifacts of up to 2.9 times on the same revenue line. The depreciation line was read from the filing. The XBRL's depreciation and amortization concept has been abandoned since 2017 (2,922 days of lag against the rest of the core), so it cannot be used to compute a margin or the owner's flow, and it is not replaced by a neighboring concept. The line was taken from the annual report's income statement: depreciation, amortization, and impairment of fixed and intangible assets of P$2,075,488 million in 2025, P$1,725,057 million in 2024, and P$2,018,038 million in 2023. It reconciles exactly with the earnings before depreciation the company publishes: 450,047 plus 2,075,488 equals 2,525,535. The year-1 path and why 2025's 53% is not extrapolated. The 2025 revenue jump is inorganic: it is the consolidation of the country's second mobile operator since February 24, 2025, acquired for US$1,245 million. The real growth the company itself publishes in its first-half-2026 release is 2.0% for Telecom without that network and 0.8% for the acquired network, and the consolidated 16.0% for the half-year is also a comparison effect (six months against four). Year 1 of the base case combines two things reported separately: the effect of having twelve months of the acquired network instead of ten—the annual report itself publishes that, had it been consolidated since January 1, 2025, that network would have contributed P$3,299,999 million against the P$2,748,493 million recorded, that is, P$551,506 million, 6.6% of consolidated revenue—plus 2.0% of real organic growth. That gives 8.6%. The step down between year 1 and year 2 is exactly that comparison effect wearing off, not a slowdown in the business: from there the path decays gently toward a terminal real rate of 2.5%, the pace the series itself sustains once the acquisition is stripped out. No formal guidance. The company does not publish revenue or earnings-per-share guidance. The releases were searched in the securities regulator's index: the first-half-2026 and first-quarter-2026 releases are identified and cited, and neither contains guidance. The path is therefore anchored to the published real organic growth rate, which is a reported fact, not the consolidated rate. Margins. Year 0's margin before depreciation is 30.3%. The first-half-2026 release publishes 35.8% consolidated, 5.8 points above the same half of 2025, with 39.7% at Telecom excluding the acquired network and 36.8% in the second quarter. The base case brings the margin to 34.0% in year 1 and stabilizes it at 35.5%, meaning it does not assume expansion beyond the level the company has already reported. Capex is modeled at 17% to 18% of revenue, against 18.6% in the first half of 2026 and 16.3% in fiscal 2025. What the annual report cannot contain. On June 17, 2026, the antitrust tribunal conditioned the acquisition on a structural remedy: transferring a minimum of 6,000,000 mobile customers—4,000,000 in the Buenos Aires metropolitan area and 2,000,000 in the rest of the country—with the necessary spectrum rights, plus 211,400 residential internet subscribers in 28 localities, and conduct remedies in the corporate and wholesale segments. Against the 38.9 million consolidated mobile accesses as of June 30, 2026, those 6,000,000 are 15.4% of the base. This valuation covers the current perimeter: the adverse scenario models the loss of that revenue starting in year 2, and no sale price or divestiture proceeds are assumed, since none is in any filing. Integration synergies are also not modeled: the injunction remains in force and the company's own release states that Telecom does not set the commercial or pricing policies of the acquired network. Conventions that remain declared. The 32.4% tax rate is the effective rate the annual report itself publishes in the tax-note reconciliation (34.31% in 2024 and 33.65% in 2023). Maintenance capex is taken as 100% of capex under Greenwald's criterion: with real revenue essentially flat, the change in sales is minimal and capex buys network replacement, not growth; and since it differs from depreciation by more than seven hundred billion pesos, the cash-measured return on capital does not simply duplicate the accounting one. The change in working capital is taken as zero and declared: under IAS 29 the cash flow statement mixes monetary restatement with the operating movement, so there is no clean variation to isolate. Cash is not accumulated: the company redeploys the surplus into capex and foreign-currency debt service, and net debt per the first-half-2026 release is P$4,646,726 million, a fresher figure than the fiscal-year balance sheet that is not mixed with 2025 figures since it is in a different restatement currency. Non-controlling interest is material: 14.5% of net income. Consolidated net income for 2025 was −P$145,304 million and that attributable to the parent was −P$170,006 million, with +P$24,702 million from minority interests—that is, the foreign subsidiaries earned money while the parent lost. What is valued is the amount attributable to the parent, and since year 0's net income is negative, the metric is earnings before depreciation, consistent with the telecom archetype's band.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $27 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $13, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $27 in 5 years plus $2 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $23. Against the current market price ($13), the margin of safety is 44.5% (trades below the maximum → there is margin) and the total return at that price would be 18.0% annually.

• Entry multiple. Trades at 5× on earnings before depreciation, below the 6-times floor of the telecom archetype's band.
• Composition of the return. Most of the base case's return comes from growth in earnings before depreciation, not from multiple expansion, which is the condition that separates a thesis from a bet on market re-rating.
• Adverse scenario. With the loss of the six million customers under the structural remedy and a margin that stays at 31%, the estimated return is +18% annually: the downside is bounded.
• Currency dependence. Value is generated in pesos and collected in dollars: a weaker peso reduces value per certificate even if the business does not change, and that exposure is not hedged.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (337%, cash vs. accruals)
• ✕ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital. 2.6% on invested capital of P$11,508,362 million, well below the 10% bar; the denominator carries the acquisition price and the inflation restatement of fixed assets.
• Cash generation. Operating cash flow of P$2,385,858 million against P$1,355,061 million of investment: P$1,030,797 million of surplus remains before debt service, with conversion that the negative net income does not let show.
• Quality of accounting earnings. IAS 29 inflation restatement and the currency result on dollar debt move net income between −P$738,306 million, +P$1,331,805 million, and −P$170,006 million across three fiscal years without the business changing nearly as much.
• Reinvestment runway. Annual investment of 16% to 18% of revenue goes toward fiber and fifth generation, but with real growth of 2.0% and low-single-digit return on capital, it is network replacement more than profitable expansion.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

An integrated telecom's revenue breaks down into accesses times monthly revenue per access, and the two halves move in different directions at this company. On the volume side, the Personal network's mobile base contracted from 21.6 to 19.9 million accesses, while fixed internet rose from 4.0 to 4.2 million and cable television from 3.2 to 3.3 million. On the price side, monthly revenue per mobile customer of the Personal network went from P$7,840.3 to P$9,081.9, internet from P$26,860.4 to P$27,062.6, and cable television from P$18,143.6 to P$18,643.2: the price lever works in mobile and is nearly exhausted in internet and cable, where the adjustment barely exceeded 1% nominal against 31.5% inflation. The acquired network contributes 19.1 million mobile accesses with monthly revenue of P$8,175.7, 1.6 million internet customers at P$24,192.3, and 0.4 million pay-TV customers at P$23,800.1. All figures are those published in the fiscal 2025 annual report and exclude connection, reconnection, and other non-recurring charges.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-dic-2025): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real organic growth. 2.0% without the acquired network and 0.8% with it in the first half of 2026, as published by the company; the 53% figure for fiscal 2025 is the consolidation of the acquisition and is not extrapolated.
• Accesses. The Personal network's mobile base fell from 21.6 to 19.9 million accesses in a year; fixed internet rose from 4.0 to 4.2 million and cable television from 3.2 to 3.3 million.
• Revenue per access. Monthly revenue per mobile customer of the Personal network rose from P$7,840.3 to P$9,081.9, and internet from P$26,860.4 to P$27,062.6: the price lever works in mobile and is exhausted in internet.
• Digital financial services. The wallet went from 2.0 million users in 2023 to 3.6 million in 2024 and 4.7 million in 2025, and a local bank paid US$75 million for 50% of the capital in January 2026.

• Revenue recurrence. Monthly fee per access across more than 62.1 million customers in four services sharing the same network; revenue is contractual and has low volume variability.
• Pricing power. Prices are free except for wholesale interconnection, but in an economy with 31.5% inflation in 2025 the adjustment lags and erodes real revenue, as shown by the 7.7% real drop in revenue in 2024.
• Competitive structure. Three national mobile operators and a fragmented pay-TV market; the acquisition consolidated from four to three, but the structural remedy requires giving back part of that concentration.
• Operating leverage. The margin before depreciation rose from 30.0% to 35.8% between the first half of 2025 and that of 2026 with organic growth of just 2.0%: the fixed cost structure amplifies every point of real revenue.
• Cycle and country exposure. It collects in pesos, pays debt in dollars, and operates under exchange controls in a country with volatile access to international credit; it is the variable that dominates net income.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• !Leverage (net debt / EBITDA)Net debt / EBITDA 1.8x
• ✕Interest coverage (EBIT / interest)1.2x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 337% of ROIC
• ✕Value creation (ROIC − 10% bar)-7pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.7x — no over-investment
• –Float / working capitalNeutral WC
• –Dilution (SBC % of revenue + shares)no data

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt of P$4,644,501 million at fiscal year-end against earnings before depreciation of P$2,525,535 million: around 1.8 times, moderate in absolute terms.
• Debt currency. P$5,436,854 million of liabilities are in foreign currency while revenue is mostly in pesos: this is the exposure that dominates net income.
• Maturity profile. Notes of US$1,000 million at 9.250% due 2033 and US$600 million at 8.5% due 2036, issued to refinance the acquisition loans and redeem the 2026 notes.
• Interest coverage. Interest on loans of P$386,126 million against earnings before depreciation of P$2,525,535 million: cash coverage is ample; what hits results is the currency effect, which is not a cash outflow for the period.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Control structure. Cablevisión Holding controls with 28.16% of capital in Class D shares and appoints the majority of the board and the chief executive officer under a shareholders' agreement with Fintech Telecom, which supplies the chief financial officer.
• Capital allocation. The US$1,245 million purchase of the second mobile network financed with dollar debt is the decision that defines the period: it added scale but raised currency exposure and became subject to a structural remedy.
• Continuity. The chief executive officer has held the role since January 1, 2020; the board chairman joined the board that same day and assumed the chairmanship afterward, following Alejandro Urricelqui. There were also two rotations in the finance leadership within eight months.
• Management ownership. There is no corporate governance report at the securities regulator because the company files as a foreign private issuer; individual holdings by directors and officers are not disclosed in the annual report and are declared as a gap.

• Missing buyers: it is a foreign filer that reports in pesos under IAS 29 inflation accounting, with statements that must be restated each fiscal year to the currency of their closing date; the certificate trading in New York represents five ordinary shares and analyst coverage is scarce.
• Motivated sellers: net income attributable to the parent was negative in 2025 (−P$170,006 million) due to the currency effect on dollar debt, not the operating business, which posted positive operating income of P$450,047 million after two years of loss.
• The June 2026 structural remedy requires transferring six million mobile customers with their spectrum: the price discounts the loss of scale without crediting the proceeds from that transfer, which still has no known amount.
• Country discount: exchange controls, triple-digit inflation in two of the last three fiscal years, and volatile access to the international debt market.

The source of the discount is identifiable and positive, not an absence of explanation. There are two concrete facts behind it. The first is accounting: the 2025 net loss is a currency result on dollar debt, not an operating impairment, and operating income turned positive that same year. Whoever looks at net income sees a company losing money; whoever looks at earnings before depreciation sees a 30.3% margin that by the following first half was already at 35.8%. The second is timing: the structural remedy became known in June 2026, after the annual report, and the price priced in the loss of six million customers without there yet being an amount for that transfer. Add to that the country discount, which is real and not in dispute: the company collects in pesos, pays in dollars, and operates under exchange controls. The gap between perception and reality is not in denying that risk but in the fact that the entry multiple sits below the floor of the archetype's band while the margin has already expanded by five and a half points and operating income has already turned positive.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +6%/year (+35% total): the margin of safety protects the downside. The bull (+29%/year, +263% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Structural remedy. Transferring a minimum of 6,000,000 mobile customers with their spectrum and 211,400 internet subscribers in 28 localities: 15.4% of the consolidated mobile base, with no known amount for the transaction.
• Currency risk. The peso depreciated around 41% in 2025, 27.7% in 2024, and 356.3% in 2023; each devaluation raises debt-service costs without peso revenue keeping pace.
• Inflation and price lag. 31.5% in 2025 after 117.8% and 211.4%: when price adjustments lag, real revenue falls, as with the 7.7% real loss in 2024.
• Technological substitution. The annual report states that internet content services and satellite internet are producing a significant decline in traditional revenue streams, and names the low-earth-orbit satellite operator as a competitor.
• Refinancing. The company depends on successive dollar-denominated note issuances to refinance the acquisition debt, in a country with volatile and costly access to international markets.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: narrow moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 8% at a multiple/growth of 0.7 → cheap for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 3% (EBIT/EV) + ROIC 3% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -11% vs our 8%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +4%/yr, bull-scenario ceiling +28%/yr over 5y and a +44% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, eroding; sources: efficient scale, intangibles, switching costs, cost advantage → fails the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -11%, within what we project (8%) — the story squares with the numbers.