TELECOM ARGENTINA SA - Interim / Quarterly Report 2002

6-K 1 nov0802_6k.htm 6-K

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20459

FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 November 8, 2002

Telecom Argentina STET-France Telecom S.A. (Exact name of registrant as specified in its charter)

Telecom Argentina STET-France Telecom S.A. (Translation of registrant's name into English)

Alicia Moreau de Justo, No. 50, 1107 Buenos Aires, Argentina (Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F X Form 40-F

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes No X

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Telecom Argentina STET-France Telecom S.A.

TABLE OF CONTENTS

Item		Sequential Page Number
1.	Telecom Argentina STET-France
Telecom S.A. announces consolidated nine-month period and third quarter
results for fiscal year 2002	3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Christian Chauvin
Name: Christian Chauvin Title: Vice-President

| FOR
IMMEDIATE RELEASE | |
| --- | --- |
| | Market
Cap: P$1.0 billion November
8, 2002 |
| Contacts : | |
| Elvira
Lazzati | |
| Pedro
Insussarry | Kevin
Kirkeby |
| Telecom
Argentina | Golin/Harris
International |
| (54-11)
4968-3627/3626 | (212)
697-9191 |
| [email protected] | [email protected] |
| TELECOM
ARGENTINA STET-FRANCE TELECOM S.A. | |
| ANNOUNCES
CONSOLIDATED NINE-MONTH PERIOD AND | |
| THIRD
QUARTER RESULTS FOR FISCAL YEAR 2002* | |
| HIGHLIGHTS | |

| * | Net
revenues amounted to P$2,961 MM (-42% vs nine months of FY01). |
| --- | --- |
| * | EBITDA** represented
48% of net revenues, reaching P$1,426 MM. |
| * | Net loss reached
P$4,154 MM. |
| * | EPADS amounted
to P$(21.09) for the nine-month period of FY02. |

Buenos Aires, November 8, 2002– Telecom Argentina STET-France Telecom S.A. (BASE: TECO2, NYSE: TEO), one of Argentina’s largest telecommunications companies, today announced a consolidated net loss of P$4,154 million, under Argentine GAAP, for the nine-month period of fiscal year 2002, ended on September 30, 2002. Comparatively, consolidated net income for the nine-month period ended on September 30, 2001, was P$142 million. Consolidated net income for the third quarter of fiscal year 2002 (“3Q02”) was P$480 million. Comparatively, consolidated net income for the third quarter of fiscal year 2001 (“3Q01”) was P$52million.

Earning/(loss) per share and ADR for the nine-month period of fiscal year 2002, ended September 30, 2002 amounted to P$(4.22) and P$(21.09), respectively. Earnings per share and ADR for the similar period of fiscal year 2001, were P$0.14 and P$0.72, respectively. Earning per share and ADR for 3Q02 amounted to P$0.49 and P$2.44, respectively. In comparison, earnings per share and ADR for 3Q01 were P$0.05 and P$0.26, respectively.

Gross profit/(loss), EBITDA, operating profit/(loss), and net income/(loss) for the nine-month period of fiscal year 2002 represented 31%, 48%, (6%) and (140%) of net sales, respectively; compared with 50%, 42%, 15% and 3%, respectively, for the similar period of fiscal year 2001. Gross profit/(loss), EBITDA, operating profit/(loss), and net income/(loss) for 3Q02 represented 21%, 50%, (17%) and 60% of net sales, respectively; compared with 50%, 43%, 17% and 3%, respectively, for 3Q01.

Non-financial data unaudited. ** EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) = OPERATING PROFIT + DEPRECIATION + AMORTIZATION. Telecom has included EBITDA data in this press release because such data is used by certain investors to measure a company’s ability to service debt and fund capital expenditures and is included herein for convenience only. EBITDA is not a measure of financial performance under either Argentine GAAP or US GAAP and should not be considered as an alternative to net income as a measure of liquidity. EBITDA as it is used by Telecom may differ from similarly titled measures reported by other companies.

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The main factors contributing to the decline in margins were: a) the current macroeconomic environment in Argentina, including the devaluation and subsequent volatility in the peso plus the inability of the Company to increase regulated tariffs after the “pesification” of such tariffs at the rate of US$1=1 Peso enforced by the Argentine Government, b) the effects of the inflation adjustment described below c) the decrease in traffic in the basic telephony business (mainly in the domestic and international long distance services), and the declines in both traffic and average revenue per user in the cellular business. All of these factors have affected revenues of the Company.

The Company has accounted for the effects of inflation adjustment adopted by Resolution 415/02 of the CNV for fiscal years beginning January 1, 2002. The Resolution stated that the figures corresponding to previous fiscal years should be considered in constant pesos of December 31, 2001. Therefore, the Company has restated the figures corresponding to September 30, 2001, presented herein for comparative purposes, using an adjustment factor of 2.2120 which represents the wholesale rate of inflation during the first nine months of 2002. Accordingly, the figures corresponding to the nine-month period ended September 30, 2002 and 3Q02 include the effects of the adoption of inflationary accounting.

Moreover, in Point 9 of the financial tables included herein, the Company is providing additional information for a better comprehension of the business including figures that have not been adjusted by inflation and which were used as the base for the information presented in constant pesos. This information, that is not required by the current accounting professional rules, can be found in note N°18 “Relevant Additional Information” of the Consolidated Financial Statements as of September 30, 2002. Comments related to variations in revenues and cost for the different activities correspond to “non-adjusted figures by inflation” or “current pesos” and are related to the mentioned note and tables.

Company Activities

Consolidated Net Revenues

Consolidated net revenues for the nine-month period of fiscal year 2002 totaled P$2,961 million, a decrease of P$2,155 million or 42%, compared with P$5,116 million for the same period of fiscal year 2001 as a result of the inflation adjustment of the figures as of September 30, 2001 and the rates that were frozen after the “pesification” enforced by the Government. Non-adjusted by inflation revenues for the period would have reached P$2,209 million, a decrease of P$104 million or 4% mainly as a consequence of the “pesification” and freeze of regulated rates and to lower traffic.

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In the basic telephony business, the main component of revenues, measured service , decreased by P$549 million or 41% to P$789 million during the nine-month period of fiscal year 2002 as compared to the same period of fiscal year 2001 (P$1,338 million). Non-adjusted figures would have shown a decreased of P$30 million or 5% reaching P$575 million. The decrease was evidenced both in local and domestic long distance traffic as the rates were frozen after the “pesification” enforced by the Government and the deterioration of the macroeconomic conditions in the country that had a negative impact on consumption patterns.

Total traffic volume measured in minutes decreased by 7% for the nine-month period of fiscal year 2002 when compared to the same period of fiscal year 2001. Furthermore, urban traffic measured in minutes decreased by 7% and DLD traffic decreased by 6% when compared to the same period of fiscal year 2001.

Monthly basic charges decreased by P$400 million or 43%, to P$522 million for the nine-months period of fiscal year 2002 when compared to the same period of fiscal year 2001. Non-adjusted figures would have shown a decrease of P$44 million or 11% reaching P$373 million mainly due to the fact that rates were frozen after the “pesification” enforced by the Government and to a lower average number of lines in service of approximately 353,000 lines .

Revenues from supplementary services decreased by P$94 million or 49% to P$98 million for nine-month period of fiscal year 2002 when compared to the same period of fiscal year 2001. Non-adjusted figures would have shown a decrease of P$17 million or 20% reaching P$70 million mainly due to the fact that rates were frozen after the “pesification” enforced by the Government and to a lower number of subscribers of these services.

Installation fees paid by new customers decreased by P$24 million or 60% to P$16 million for the nine-month period of fiscal year 2002 as compared to the same period of fiscal year 2001. Non-adjusted figures would have shown a decrease of P$6 million or 33% reaching P$12 million largely due to a lower number of lines connected (approximately 104,000 lines connected in 2002 as compared to 249,000 lines connected during the same period in 2001) partially compensated by a higher average installation price (P$116 to P$67 per line, denominated in current pesos).

Revenues from public telephony decreased by P$139 million or 48% to P$151 million, during the nine-month period of fiscal year 2002 when compared to the same period of fiscal year 2001. Non-adjusted figures would have shown a decrease of P$21 million or 16% reaching P$110 million. The decrease was a consequence of the rates frozen after the “pesification” enforced by the Government, the lower traffic generated by public telephony telecommunication centers (“Telecentros”) and the lower revenues received from public payphones and telephone cards.

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Revenues generated by fixed interconnection services during the nine-month period of fiscal year 2002 decreased by P$29 million or 21% to P$108 million. Non-adjusted figures would have shown an increase of P$18 million or 29% reaching P$80 million. Meanwhile, during the same period revenues generated by interconnection services provided to cellular operators decreased by P$1 million or 3% to P$34 million. Non-adjusted figures would have shown an increase of P$9 million or 56% reaching P$25 million.

Regarding the international telephony business , during the nine-month period of fiscal year 2002 revenues decreased by P$82 million or 41% to P$119 million when compared to the same period of fiscal year 2001. Non-adjusted figures would have shown an increase of P$1 million or 1% reaching P$92 million mainly due to the revenues generated by Telecom USA partially offset by the frozen rates, lower outgoing traffic of approximately 8% and a negative balance with the international carriers.

The revenues generated by the cellular business during the nine-month period of fiscal year 2002 ended September 30, 2002, decreased by P$584 or 42% to P$821 million when compared to the same period of fiscal year 2001. Non-adjusted figures would have shown an increase of P$9 million or 1% reaching P$644 million.

Non-adjusted revenues of Telecom Personal in Argentina would have decreased by P$97 million or 16% to P$492 million when compared to the same period of fiscal year 2001. The decrease was due to a lower number of subscribers (approximately 2% or 42,000 fewer lines), lower levels of traffic and lower sales of handsets. Furthermore, the average revenue per user decreased by 11% (to P$24 per customer per month as of September 30, 2002, denominated in current pesos).

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The customer base reached as of September 30, 2002, approximately 819,000, 1,272,000 and 61,000 subscribersfor the Multiple Area of Buenos Aires (AMBA), Northern and Southern regions, respectively. Total cellular subscribers of Telecom Personal in Argentina reached approximately 2,152,000.

Núcleo, the subsidiary that provides cellular and PCS services in Paraguay , generated P$152 million in revenues during nine-month period of fiscal year 2002 which are consolidated into the revenues of Telecom Personal. This represented an increase of P$50 million, or 49%, as compared to the same period of fiscal year 2001. Non-adjusted figures would have shown an increase of P$106 million or 230% reaching P$152 million. The increase can be mainly attributed to exchange differences and the increase in the customer base.

As of September 30, 2002, Núcleo had approximately 546,000 cellular and PCS customers, an increase of approximately 68,000 customers, or 14%, as compared to September 30, 2001.

Revenues generated by the data transmission business totaled P$262 million,representing a decrease of P$145 million or 36%. Non-adjusted figures would have shown an increase of P$13 million or 7% reaching P$197 million, as a consequence of higher revenues generated by the ground networks and international connectivity.

Additionally, monthly charges and Internet dial-up measured services increased as a consequence of the higher number of Internet subscribers that use the special prefix 0610 and local numbers with 4004 numbering or similar. As of September 30, 2002 Internet minutes represented 31% of total traffic measured in minutes transported over the fixed-line network.

Internet revenues decreased by P$14 million or 20% to P$57 million during the nine-month period of fiscal year 2002. Non-adjusted figures would have shown an increase of P$10 million or 31% reaching P$42 million mainly due to the increase in ADSL fees and Internet traffic. As of September 30, 2002, the number of subscribers to high-speed Internet access services (ADSL) reached approximately 28,000. Furthermore, Internet dial-up customers reached approximately 148,000.

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In the telephone directories’ publishing business , revenues fromthe affiliate company Publicom decreased by P$80 million. Non-adjusted figures would have decreased by P$34 million or 87% reaching P$5 million due to the delay in the publication of directories and lower revenues from advertising.

Operating Costs

The cost of services provided, administrative expenses, and selling expenses for the nine-month period of fiscal year 2002 ended September 30, 2002 decreased by P$1,199 million or 28% to P$3,139 million when compared to the same period of fiscal year 2001 mainly as a result of the adjustment by inflation of figures as of September 30, 2001.

Salaries and social security contributions decreased by P$395 million or 45% to P$474 million for the nine-month period, ended September 30, 2002. Non-adjusted figures would have shown a decrease of P$42 million or 11% to P$351 million primarily due to the reduction in salaries of unionized and non-unionized employees, which was part of the cost reduction plan launched during the previous fiscal year. Additionally, a reduction in headcount at Telecom Personal and Publicom was registered. These decreases were partially offset by the increased headcount in the basic telephony activity reflecting the migration of call centers and 110 information system workers from Publicom to Telecom Argentina. Additionally, certain functions were in-sourced in Telecom Argentina.

Expenses related to taxes decreased by P$28 million or 20% to P$114 million for the nine- month period of fiscal year 2002. Non-adjusted figures would have increased taxes by P$20 million or 31% reaching P$84 million as a result of re-classification of the tax on Bank Debits and Credits.

Materials and supplies charges decreased by P$138 million or 49% to P$141 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$24 million or 19% reaching P$102 million mainly due to lower expenses associated with fewer new lines installed and to lower maintenance of the basic telephony network. Furthermore, a recovery in material from third parties was registered. These effects were partially offset by higher costs for hardware maintenance and higher provisions made for scrap materials.

The allowance for doubtful accounts decreased by P$138 million or 41% to P$198 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$19 million or 13% reaching P$133 million. The decrease was evident in the residential segment of the fixed telephony business, as the level of overdue accounts has decreased compared with the same period of fiscal year 2001.

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Commissions paid to cellular vendors decreased by P$40 million or 70% to P$17 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$10 million or 38% reaching P$16 million as consequence of the lower number of new subscribers incorporated during the period, deductions related to early disconnections, and to a lower average commission paid per new cellular customer.

Interconnection costs decreased by P$46 million or 29% to P$113 million for the nine- month period of fiscal year 2002. Non-adjusted figures would have shown an increase of P$11 million or 15% reaching P$83 million mostly as a result of higher charges paid for local, national and international long distance accesses and circuits rentals.

Service fees decreased by P$71 million, or 44%, to P$90 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$4 million or 5% reaching P$69 million principally due to lower fees related to commercial, technical and other services as part of the cost control actions taken by the Telecom Group since the beginning of last year. Additionally, fees paid to the data base manager and agents related to the pre-subscription process also decreased.

Management fees decreased by P$184 million, or 89%, to P$22 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$80 million or 86% reaching P$13 million as a result of a temporary decrease in the management fee from 3% of net revenues to 1.25% for the period comprised between October °, 2001 and March 31, 2002. Furthermore, the Company and the Operators have agreed to suspend certain provisions of both parties of the management contract, from April 1°, 2002, whereby the payment and the accrued of the management fee has been suspended.

Costs related to advertising decreased by P$111 million or 82% to P$24 million for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$44 million or 72% reaching P$17 million mainly due to lower expenses related to media advertising and promotional campaigns resulting from the cost control actions taken by the Company.

Cost of cellular handsets decreased by P$74 million or 86% to P$12 million for the nine- month period of fiscal year 2002. Non-adjusted figures would have shown a decrease of P$30 million or 77% reaching P$9 million mainly due to the lower number of cellular handsets sold.

Expenses related to sales commissions for pre-subscription and call centers in the basic telephony business decreasedas these tasks are now performed internally by Telecom Argentina.

Other expenses decreased by P$125 million or 32% for the nine-month period of fiscal year 2002. Non-adjusted figures would have shown an increase of P$25 million or 14% reaching P$200 million mainly due to higher expenses related to satellite capacity rentals.

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Fixed asset depreciation increased by P$221 million or 17%,to P$1,488 million during the nine-month period of fiscal year 2002. The increase is related to the incorporation of new assets into cellular and data transmission activities during last fiscal year and the effects of capitalized foreign currency exchange differences originated by debt.

Finally, amortization of intangible assets increased by P$10 million or 9% to P$116 million for the nine-month period of fiscal year 2002, due to higher amortization charges at Núcleo as a consequence of the currency conversion.

Financial and Holding Results

The loss resulting from financial and holding results increased by P$5,473 million to P$5,840 million for nine-month period of fiscal year 2002 as compared to the loss of P$367 million in the same period of fiscal year 2001. This increase can be largely attributed to a loss of P$4,487 million from currency exchange differences from the Peso devaluation which affected the company’s net foreign currency monetary position which was only partially offset by the higher capitalized foreign currency exchange differences by debt for fixed assets acquisitions of P$840 million. Furthermore, the interest on foreign currency liabilities increased by P$194 million due to the continuing deterioration of the value of the peso. Lastly, a loss of P$1,269 million was registered for the inflation effect on monetary assets and liabilities.

Other Expenses

Other expenses, (net) increased by P$5 million or 5% to P$115 million for the nine-month period of fiscal year 2002 compared with similar period of fiscal year 2001. The increase was mainly due to higher reserves for lawsuits and contingencies and the write-off of cellular handsets given in lease without charge (“comodato”).

Statements of Cash Flow

Cash flow from operating activities for the nine-month period of fiscal year 2002 decreased by P$480 million when compared to the similar period of fiscal year 2001.

Meanwhile, cash flow applied to investing activities for the nine-month period of fiscal year 2002 decreased by P$815 millionas compared to 2001as a result of the adjustment by inflation of the figures as of September 30, 2001 and lower incorporation of fixed and intangibles assets.

Funds allocated to financing activities decreased by P$194 million for the period as a result of the adjustment by inflation of the figures as of September 30, 2001, lower debt proceeds and payments net and dividends.For the fiscal year 2001 the Annual Shareholders Meeting approved the non-distribution of dividends.

Investment Plan

Telecom has investments of P$20,907 million in fixed assets, since the start of operations on November 8, 1990, of which P$219 million (P$150 million in current pesos) corresponds to the nine-month period of fiscal year 2002 and were mainly arrised from commitments undertaken during the previous year.

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Of the total amount invested for the period, P$165 million or 75% corresponds to basic telephony, data transmission and Internet (outside plant 15%, switching 9%, transmission 30%, information systems 37%, infrastructure 3% and others 6%), 24% or P$53 million to cellular telephony, and 1% or P$1 million to directory publishing.

Other Matters

Debt Restructuring Process

On September 17, Telecom Argentina held the first informative meeting with the main financial creditors, relating to establishing a framework for the renegotiation of the financial debt of the Company and its subsidiaries.

The Company intents to continue the conversations with its main financial creditors and hold, in the country and abroad, other informative meetings.

As a consequence of the debt restructuring process and the decision of the Company and its subsidiaries in Argentina to suspend principal and interest payment of its financial debts, the Company maintains unpaid amounts related to such concepts. In note 14 of the Consolidated Financial Statements as of September 30, 2002 additional information is included related to this issue.

Resignation of Mr. Juan Carlos Masjoan

On September 20, the Board of Directors accepted the resignation of Mr. Juan Carlos Masjoan, effective as of November 15, 2002, to the position of Chairman and Director of the Company and of its controlled subsidiaries and related companies of the Telecom Group.

According with Article 10 of the Corporate By-Laws and with the resolution taken by the Board of Directors in its meeting of April, 24, 2002, the Vicepresident, Mr. Franco Bertone, has taken over the position of Chairman of the Company.

Calling Party Pays for International Calls

According to Resolution N°124 issued by the Secretariat of Communications, as from January 1, 2003 overseas calls terminated in cellular telephones will pay for Calling Party Pays charges. The Secretariat has determined that a trial period will take place from October 7 to December 31, 2002.

In order to identify such calls, customers dialing from outside must add the prefix 9 to the cellular number, after the country code of Argentina (54).

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Prior to the effectiveness of this resolution, Telecom Personal clients had to pay for the international calls they received.

NYSE Notification

Telecomhas been notified by the New York Stock Exchange (“NYSE”) that it has fallen below the NYSE’s continued listing criteria relating to the minimum share price. The NYSE requires that the average closing price of a security not be less than US$1.00 over a 30-day trading period.

Under NYSE rules, once notified of its failure to meet the minimum share price criteria, a company must bring its share price and average share price back above US$1.00 within six months of receipt of the notification or if deemed necessary have until its next annual shareholders’ meeting if approval from its shareholders is necessary to implement a corporate action that will cure the price deficiency.

After informing its intention to comply with the minimum price criteria for securities listed in the NYSE and reaffirming its plans to keep the Company’s American Depositary Shares listed on the NYSE, the Board of Directors in its meeting of October 3, 2002 decided to request shareholder approval for an increase in the number of the Company’s Class B shares represented by its American Depository Shares (such change the “Ratio Change”) and resolved to include the Ratio Change on the agenda for shareholder approval at the next annual shareholders’ meeting scheduled for April 2003.

Telecom is the parent company of a leading telecommunications group in Argentina, where it offers by itself or through its controlled subsidiaries local and long distance basic telephony, cellular, PCS, data transmission, and Internet services, among other services. Additionally, through a controlled subsidiary the Telecom Group offers cellular and PCS services in Paraguay. The Company commenced operations on November 8, 1990, upon the Argentine Government’s transfer of the telecommunications system in the northern region.

Nortel Inversora S.A. (“Nortel”), which acquired the majority of the Company from the Argentine government, holds 54.74% of Telecom’s common stock. Nortel is a holding company where the common stock (aprox. 68% of capital stock) is owned in equal parts by the Groups Telecom Italia and France Telecom. Additionally, the capital stock of Nortel is comprised of preferred shares that are in hands of minority shareholders.

As of September 30, 2002, Telecom had 984,380,978 shares outstanding.

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| For
more information, please contact Investor Relations Department: |
| --- |
| Pedro
Insussarry 54-11-4968-3743 [email protected] |
| Moira
Colombo 54-11-4968-3628 [email protected] |
| Mariela
Teló 54-11-4968-5373 [email protected] |
| Hector Salomon 54-11-4968-3626 [email protected] |
| Voice mail
54-11-4968-3627 Fax number 54-11-4313-5842 |

●
www.telecom.com.ar
www.telecompersonal.com.ar
www.telecominternet.com.ar
www.arnet.com.ar
e-company.telecom.com.ar
epymes.com.ar
www.tstore.com.ar
www.highway.arnet.com.ar
www.paginasamarillas.com.ar

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Disclaimer This document may contain statements that could constitute forward-looking statements, including, but not limited to the Company’s expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; the impact of recent emergency laws enacted by the Argentine Government; and the impact of rate changes and competition on the Company’s future financial performance. Forward looking statements may be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or other similar expressions. Forward-looking statements involve risks and uncertainties that could significantly affect the Company’s expected results. The risks and uncertainties include, but are not limited to, uncertainties concerning the impact of recent emergency laws enacted by the Argentine Government which have resulted in the repeal of Argentina’s Convertibility law, the devaluation of the peso, restrictions on the ability to exchange pesos into foreign currencies, the adoption of a restrictive currency transfer policy, the “pesofication” of tariffs charged for public services, the elimination of indexes to adjust rates charged for public services and the Executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive and rapid changes in laws and economic and business conditions in Argentina, it is difficult to predict the impact of these changes on the Company’s financial condition. Other factors may include, but are not limited to, the current and on-going recession in Argentina, growing inflationary pressure and reduction in consumer spending and the outcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward looking statements, which speakonly as the date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward looking statements which may be made to reflect events and circumstances after the date of this press release, including, without limitation, changes in the Company’s business or to reflect the occurrence of unanticipated events. Readers are encouraged to consult the Company’s Annual Report and Form 20-F as well as periodic filings made on Form 6-K, which are filed with or furnished to the United States Securities and Exchange Commission.

(Financial tables follow)

Franco Bertone Vicepresident acting President

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TELECOM ARGENTINA STET-FRANCE TELECOM S.A.

NINE MONTH PERIOD AND THIRD QUARTER - FISCAL YEAR 2002

(In millions of Argentine constant pesos as of September 30, 2002, except statistical, ratio data and table 9)

| 1- | Consolidated
Balance Sheet | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | | As
of September 30 | | | | |
| | | 2,002 | 2,001 | ∆$ | | ∆% |
| | Cash,
equivalents and investments | 980 | 659 | 321 | | 49 % |
| | Trade
receivables | 639 | 1,646 | (1,007 | ) | -61 % |
| | Other
current assets | 681 | 532 | 149 | | 28 % |
| | TOTAL
CURRENT ASSETS | 2,300 | 2,837 | (537 | ) | -19 % |
| | Trade
receivables | 2 | 4 | (2 | ) | -50 % |
| | Fixed
assets | 10,202 | 10,848 | (646 | ) | -6 % |
| | Other
non-current assets | 1,293 | 1,290 | 3 | | 0 % |
| | TOTAL
NON-CURRENT ASSETS | 11,497 | 12,142 | (645 | ) | -5 % |
| | TOTAL
ASSETS | 13,797 | 14,979 | (1,182 | ) | -8 % |
| | Accounts
payable | 472 | 1,033 | (561 | ) | -54 % |
| | Loans | 11,879 | 2,404 | 9,475 | | 394 % |
| | Other
current liabilities | 205 | 389 | (184 | ) | -47 % |
| | TOTAL
CURRENT LIABILITIES | 12,556 | 3,826 | 8,730 | | 228 % |
| | Accounts
payable | 3 | 24 | (21 | ) | -88 % |
| | Loans | - | 5,116 | (5,116 | ) | -100 % |
| | Other
non-current liabilities | 142 | 706 | (564 | ) | -80 % |
| | TOTAL
NON-CURRENT LIABILITIES | 145 | 5,846 | (5,701 | ) | -98 % |
| | TOTAL
LIABILITIES | 12,701 | 9,672 | 3,029 | | 31 % |
| | Minority
Interest | 8 | 27 | (19 | ) | -70 % |
| | Shareholders'
equity | 1,088 | 5,280 | (4,192 | ) | -79 % |
| | TOTAL
LIABILITIES AND EQUITY | 13,797 | 14,979 | (1,182 | ) | -8 % |
| 2- | Consolidated
Loans | | | | | |
| | | As
of September 30 | | | | |
| | | 2,002 | 2,001 | ∆$ | | ∆% |
| | Corporate
Bonds | 5,964 | 701 | 5,263 | | 751 % |
| | Banks | 2,547 | 1,017 | 1,530 | | 150 % |
| | On purchase
of fixed assets and inventories | 3,368 | 686 | 2,682 | | 391 % |
| | TOTAL
CURRENT LOANS | 11,879 | 2,404 | 9,475 | | 394 % |
| | Corporate
Bonds | - | 2,851 | (2,851 | ) | -100 % |
| | Banks | - | 754 | (754 | ) | -100 % |
| | On purchase
of fixed assets and inventories | - | 1,511 | (1,511 | ) | -100 % |
| | TOTAL
NON-CURRENT LOANS | - | 5,116 | (5,116 | ) | -100 % |
| | TOTAL
LOANS | 11,879 | 7,520 | 4,359 | | 58 % |

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3-
	Nine-Month
Comparison				Three-Month
Comparison
	As
of September 30				As
of September 30
	2,002	2,001	∆$	∆%	2,002	2,001	∆$	∆%
Net revenues	2,961	5,116	(2,155)	-42%	797	1,734	(937)	-54%
Cost of
services provided	(2,049)	(2,553)	504	-20%	(631)	(861)	230	-27%
GROSS
PROFIT	912	2,563	(1,651)	-64%	166	873	(707)	-81%
Administrative
expenses	(231)	(429)	198	-46%	(57)	(138)	81	-59%
Selling
expenses	(859)	(1,356)	497	-37%	(243)	(447)	204	-46%
OPERATING
(LOSS)/PROFIT	(178)	778	(956)	-123%	(134)	288	(422)	-147%
Equity
income from related companies	(28)	(18)	(10)	56%	(5)	(7)	2	-29%
Financial
& holding results	(5,840)	(367)	(5,473)	1491%	1,059	(122)	1,181	-968%
Other
incomes & expenses	(115)	(110)	(5)	5%	(30)	(52)	22	-42%
Tax on
Bank debits and credits	-	(24)	24	-100%	-	(13)	13	-100%
RESULTS
FROM ORDINARY OPERATIONS	(6,161)	259	(6,420)	-2479%	890	94	796	847%
Taxes
on income	2,003	(117)	2,120	-1812%	(402)	(42)	(360)	857%
Minority
interest	4	-	4	-	(8)	-	(8)	-
NET (LOSS)/INCOME	(4,154)	142	(4,296)	-3025%	480	52	428	823%
EBITDA
(*)	1,426	2,151	(725)	-34%	399	751	(352)	-47%
As a %
of Net Revenues	48%	42%			50%	43%

(*) EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)= OPERATING PROFIT + DEPRECIATION + AMORTIZATION. Telecom hasincluded EBITDA data in this press release because such data is used by certain investors to measure a company's ability to service debt and fund capitalexpenditure and is included herein for convenience only. EBITDA is not a measure of financial performance under either Argentine GAAP or US GAAP andshould not be consider as an alternative to net income as a measure of liquidity. EBITDA as it is used by Telecom may differ from similarly titled measuresreported by other companies.

4-
	Nine-Month
Comparison				Three-Month
Comparison
	As
of September 30				As
of September 30
	2,002	2,001	∆$	∆%	2,002	2,001	∆$	∆%
Net income
(loss)	(4,154)	142	(4,296)	-3025%	480	52	428	823%
Depreciation
and Amortization	1,604	1,373	231	17%	533	463	70	15%
Increase
in provisions	261	369	(108)	-29%	68	159	(91)	-57%
(Increase)/decrease
in assets	1,109	(49)	1,158	-2363%	(83)	(149)	66	-44%
(Decrease)/increase
in liabilities	(842)	(504)	(338)	67%	51	117	(66)	-56%
Others,
net	3,258	385	2,873	746%	(729)	130	(859)	-661%
Total
Funds generated by Operating Activities	1,236	1,716	(480)	-28%	320	772	(452)	-59%
Total
Funds applied to Investing Activities	(320)	(1,135)	815	-72%	(20)	(227)	207	-91%
Dividends
paid	-	(471)	471	-100%	-	1	(1)	-100%
Interests
and financial expenses	(441)	(657)	216	-33%	(7)	(146)	139	-95%
Increase
in financial debt, net	(41)	452	(493)	-109%	2	(10)	12	-120%
Total
Funds applied to Financing Activities	(482)	(676)	194	-29%	(5)	(155)	150	-97%
Increase/(decrease)
of Funds	434	(95)	529	-557%	295	390	(95)	-24%

*********** MARKER PAGE="sheet: 14; page: 14"

5-
	Nine-Month
Comparison					Three-Month
Comparison
	As
of September 30					As
of September 30
	2,002	2,001		∆$	∆%	2,002		2,001		∆$	∆%
National
Basic Telephony	1,798	3,127		(1,329)	-43%	467		1,059		(592)	-56%
Measured service
Local	435	714		(279)	-39%	113		259		(146)	-56%
DLD	354	624		(270)	-43%	100		203		(103)	-51%
Monthly basic charges	522	922		(400)	-43%	123		309		(186)	-60%
Supplementary Services (monthly charges)	98	192		(94)	-49%	23		57		(34)	-60%
Installation fees	16	40		(24)	-60%	5		12		(7)	-58%
Public telephones	151	290		(139)	-48%	40		98		(58)	-59%
Interconnection - fixed	108	137		(29)	-21%	29		49		(20)	-41%
Interconnection - cellular	34	35		(1)	-3%	10		9		1	11%
Lease of lines and circuits - fixed	15	40		(25)	-63%	1		17		(16)	-94%
Lease of lines and circuits - cellular	19	29		(10)	-34%	5		9		(4)	-44%
Others	46	104		(58)	-56%	18		37		(19)	-51%
International
Telephony	119	201		(82)	-41%	29		57		(28)	-49%
Outgoing revenues	124	194		(70)	-36%	34		57		(23)	-40%
Settlement revenues (net)	(5)	7		(12)	-171%	(5	)	-		(5)	-
Cellular
Telephony	821	-1,405		(584)	-42%	229		467		(238)	-51%
Telecom
Personal	669	-1,303		(634)	-49%	186		431		(245)	-57%
Monthly fee and measured service	240	520		(280)	-54%	63		166		(103)	-62%
Pre-paid card	108	177		(69)	-39%	38		64		(26)	-41%
Calling Party Pays	222	409		(187)	-46%	61		136		(75)	-55%
Others	99	197		(98)	-50%	24		65		(41)	-63%
Núcleo	152	-102		50	49%	43		36		7	19%
Monthly fee and measured service	44	29		15	52%	13		11		2	18%
Pre-paid card	24	15		9	60%	7		4		3	75%
Calling Party Pays	70	53		17	32%	21		18		3	17%
Others	14	5		9	180%	2		3		(1)	-33%
Data
transmission	262	407		(145)	-36%	81		132		(51)	-39%
Terrestrial Networks	75	113		(38)	-34%	26		37		(11)	-30%
Lease of data circuits	24	60		(36)	-60%	7		14		(7)	-50%
Monthly charges & Internet Traffic	93	135		(42)	-31%	26		64		(38)	-59%
International connectivity	50	60		(10)	-17%	15		18		(3)	-17%
Others	20	39		(19)	-49%	7		(1	)	8	-800%
Internet	57	71		(14)	-20%	18		27		(9)	-33%
Internet monthly fee	44	49		(5)	-10%	14		19		(5)	-26%
Internet traffic	13	22		(9)	-41%	4		8		(4)	-50%
Telephone
Directories (Publicom)	6	86		(80)	-93%	4		51		(47)	-92%
Turnover
tax	(102)	(181	)	79	-44%	(31	)	(59	)	28	-47%
NET
REVENUES	2,961	-5,116		(2,155)	-42%	797		1,734		(937)	-54%

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6- Consolidated Income Statement by Activities Nine-month period FY 2002 (01/01/02 09/30/02)

	In million of Argentine constant pesos as of September 30, 2002
	Activities														Variation *
	Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities		∆ $		∆ %
NET
REVENUES	1,739		117		254		791		55		5		2,961		(2,155	)	-42 %
Salaries and social security contributions	(325	)	(16	)	(37	)	(75	)	(6	)	(15	)	(474	)	395		-45 %
Agent commissions	-		-		-		(17	)	-		-		(17	)	40		-70 %
Taxes	(56	)	(6	)	(5	)	(46	)	-		(1	)	(114	)	28		-20 %
Materials
and supplies	(103	)	(4	)	(5	)	(26	)	(2	)	(1	)	(141	)	138		-49 %
Transport
and freight	(21	)	(2	)	(2	)	(4	)	(1	)	(1	)	(31	)	38		-55 %
Allowance
for doubtful accounts	(119	)	(8	)	(1	)	(62	)	(2	)	(6	)	(198	)	138		-41 %
Interconnection
cost	(113	)	-		-		-		-		-		(113	)	46		-29 %
Lease of lines
and circuits	-		(5	)	(12	)	(14	)	(2	)	-		(33	)	20		-38 %
Service fees	(66	)	(4	)	(6	)	(11	)	(1	)	(2	)	(90	)	71		-44 %
Management
fees	(22	)	-		-		-		-		-		(22	)	184		-89 %
Advertising	(11	)	-		-		(11	)	(2	)	-		(24	)	111		-82 %
Cost of cellular
handsets	-		-		-		(12	)	-		-		(12	)	74		-86 %
Sales commisions	(2	)	-		-		-		(1	)	-		(3	)	22		-88 %
Others	(126	)	(6	)	(4	)	(123	)	(3	)	(1	)	(263	)	125		-32 %
EBITDA	775		66		182		390		35		(22	)	1,426		(725	)	-34 %
EBITDA MARGIN	45	%	56	%	72	%	49	%	64	%	-440	%	48	%
Depreciation
of fixed assets	(1,066	)	(25	)	(75	)	(315	)	(3	)	(4	)	(1,488	)	(221	)	17 %
Amortization
of intangible assets	(47	)	-		(1	)	(67	)	(1	)	-		(116	)	(10	)	9 %
OPERATING
RESULTS	(338	)	41		106		8		31		(26	)	(178	)	(956	)	-123 %
EQUITY INCOME FROM RELATED COMPANIES	(10	)	-		(10	)	-		-		(8	)	(28	)	(10	)	56 %
Interest on
assets	(1,003	)	-		-		(485	)	-		(52	)	(1,540	)	(1,646	)	-1553 %
Interest on
liabilities	(3,635	)	-		(1	)	(686	)	-		22		(4,300	)	(3,827	)	809 %
FINANCIAL
AND HOLDING RESULTS	(4,638	)	-		(1	)	(1,171	)	-		(30	)	(5,840	)	(5,473	)	1491 %
OTHER INCOMES
AND EXPENSES	(59	)	-		-		(43	)	-		(13	)	(115	)	(5	)	5 %
TAX ON BANK
DEBITS AND CREDITS	-		-		-		-		-		-		-		24		-100 %
RESULTS FROM
ORDINARY OPERATIONS	(5,045	)	41		95		(1,206	)	31		(77	)	(6,161	)	(6,420	)	-2479 %
Taxes on income	1,643		(8	)	(36	)	401		(11	)	14		2,003		2,120		-1812 %
Minority interest	-		-		-		4		-		-		4		4		-
NET (LOSS)/INCOME	(3,402	)	33		59		(801	)	20		(63	)	(4,154	)	(4,296	)	-3025 %

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Nine month period FY 2002 vs. Nine month period FY 2001

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Consolidated Income Statement by Activities Nine-month period FY 2001 (01/01/01 09/30/01)

	In million of Argentine constant pesos as of September 30, 2002
	Activities
	Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities
NET REVENUES	3,023		195		394		1,351		69		84		5,116
Salaries and
social security contributions	(551	)	(24	)	(58	)	(139	)	(20	)	(77	)	(869	)
Agent commissions	-		-		-		(57	)	-		-		(57	)
Taxes	(57	)	(7	)	(7	)	(71	)	-		-		(142	)
Materials
and supplies	(188	)	(9	)	(20	)	(36	)	(2	)	(24	)	(279	)
Transport
and freight	(46	)	(5	)	(5	)	(11	)	(2	)	-		(69	)
Allowance
for doubtful accounts	(222	)	(15	)	(4	)	(89	)	(2	)	(4	)	(336	)
Interconnection
cost	(157	)	(2	)	-		-		-		-		(159	)
Lease of lines
and circuits	-		-		(27	)	(24	)	(2	)	-		(53	)
Service fees	(113	)	(7	)	(7	)	(16	)	-		(18	)	(161	)
Management
fees	(206	)	-		-		-		-		-		(206	)
Advertising	(73	)	(2	)	(4	)	(32	)	(22	)	(2	)	(135	)
Cost of cellular
handsets	-		-		-		(86	)	-		-		(86	)
Sales commissions	(18	)	-		-		-		(7	)	-		(25	)
Others	(143	)	(18	)	(16	)	(200	)	(7	)	(4	)	(388	)
EBITDA	1,249		106		246		590		5		(45	)	2,151
EBITDA MARGIN	41	%	54	%	62	%	44	%	7	%	-54	%	42	%
Depreciation
of fixed assets	(880	)	(29	)	(55	)	(299	)	(2	)	(2	)	(1,267	)
Amortization
of intangible assets	(51	)	(2	)	(2	)	(49	)	-		(2	)	(106	)
OPERATING
RESULTS	318		75		189		242		3		(49	)	778
EQUITY INCOME FROM RELATED COMPANIES	(5	)	-		(13	)	-		-		-		(18	)
Interest on
assets	91		-		-		15		-		-		106
Interest on
liabilities	(343	)	-		-		(130	)	-		-		(473	)
FINANCIAL
AND HOLDING RESULTS	(252	)	-		-		(115	)	-		-		(367	)
OTHER INCOMES
AND EXPENSES	(72	)	-		(2	)	(27	)	(2	)	(7	)	(110	)
TAX ON BANK
DEBITS AND CREDITS	(20	)	-		-		(4	)	-		-		(24	)
PROFIT FROM
ORDINARY OPERATIONS	(31	)	75		174		96		1		(56	)	259
Taxes on income	22		(49	)	(66	)	(44	)	-		20		(117	)
Minority interest	-		-		-		-		-		-		-
NET (LOSS)/INCOME	(9	)	26		108		52		1		(36	)	142

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Consolidated Income Statement by Activities Third Quarter FY 2002 (07/01/02 09/30/02)

	In million of Argentine constant pesos as of September 30, 2002
	Activities														Variation *
	Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities		∆ $		∆ %
NET REVENUES	449		29		79		220		16		4		797		(937	)	-54 %
Salaries and
social security contributions	(84	)	(4	)	(10	)	(17	)	(1	)	(6	)	(122	)	165		-57 %
Agent commissions	-		-		-		(6	)	-		-		(6	)	7		-54 %
Taxes	(9	)	(4	)	(5	)	(11	)	-		-		(29	)	20		-41 %
Materials
and supplies	(29	)	(2	)	(3	)	(8	)	(1	)	(1	)	(44	)	62		-58 %
Transport
and freight	(4	)	(1	)	(2	)	-		-		(1	)	(8	)	14		-64 %
Allowance
for doubtful accounts	(13	)	-		-		(22	)	(1	)	1		(35	)	98		-74 %
Interconnection
cost	(32	)	-		-		-		-		-		(32	)	23		-42 %
Lease of lines
and circuits	-		(2	)	(2	)	(4	)	(1	)	-		(9	)	7		-44 %
Service fees	(17	)	(2	)	(2	)	(3	)	-		-		(24	)	23		-49 %
Management
fees	-		-		-		-		-		-		-		69		-100 %
Advertising	(2	)	-		-		(2	)	(1	)	-		(5	)	40		-89 %
Cost of cellular
handsets	-		-		-		(3	)	-		-		(3	)	25		-89 %
Sales commisions	(1	)	-		-		-		-		-		(1	)	4		-80 %
Others	(48	)	-		7		(38	)	(1	)	-		(80	)	28		-26 %
EBITDA	210		14		62		106		10		(3	)	399		(352	)	-47 %
EBITDA MARGIN	47	%	48	%	78	%	48	%	63	%	-75	%	50	%
Depreciation
of fixed assets	(333	)	(8	)	(25	)	(114	)	(1	)	(3	)	(484	)	(55	)	13 %
Amortization
of intangible assets	(15	)	-		(1	)	(32	)	(1	)	-		(49	)	(15	)	44 %
OPERATING
RESULTS	(138	)	6		36		(40	)	8		(6	)	(134	)	(422	)	-147 %
EQUITY INCOME FROM RELATED COMPANIES	(2	)	-		(3	)	-		-		-		(5	)	2		-29 %
FINANCIAL
AND HOLDING RESULTS	763		-		-		294		-		2		1,059		1,181		-968 %
OTHER INCOMES
AND EXPENSES	(17	)	-		-		(11	)	-		(2	)	(30	)	22		-42 %
TAX ON BANK
DEBITS AND CREDITS	-		-		-		-		-		-		-		13		-100 %
RESULTS FROM
ORDINARY OPERATIONS	606		6		33		243		8		(6	)	890		796		847 %
Taxes on income	(248	)	(1	)	(12	)	(138	)	(3	)	-		(402	)	(360	)	857 %
Minirity interest	-		-		-		(8	)	-		-		(8	)	(8	)	100 %
NET (LOSS)/INCOME	358		5		21		97		5		(6	)	480		428		823 %

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Third quarter FY 2002 vs. Third Quarter FY 2001

*********** MARKER PAGE="sheet: 18; page: 18" MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Consolidated Income Statement by Activities Third Quarter FY 2001 (07/01/01 09/30/01)

	In million of Argentine constant pesos as of September 30, 2002
	Activities
	Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities
NET REVENUES	1,023		56		128		449		27		51		1,734
Salaries and
social security contributions	(179	)	(6	)	(21	)	(44	)	(6	)	(31	)	(287	)
Agent commissions	-		-		-		(13	)	-		-		(13	)
Taxes	(22	)	(2	)	(2	)	(23	)	-		-		(49	)
Materials
and supplies	(63	)	(2	)	(6	)	(18	)	-		(17	)	(106	)
Transport
and freight	(18	)	-		-		(4	)	-		-		(22	)
Allowance
for doubtful accounts	(90	)	(6	)	(4	)	(29	)	(2	)	(2	)	(133	)
Interconnection
cost	(55	)	-		-		-		-		-		(55	)
Lease of lines
and circuits	-		-		(10	)	(6	)	-		-		(16	)
Service fees	(36	)	(2	)	(2	)	-		-		(7	)	(47	)
Management
fees	(69	)	-		-		-		-		-		(69	)
Advertising	(22	)	(1	)	(2	)	(12	)	(8	)	-		(45	)
Cost of cellular
handsets	-		-		-		(28	)	-		-		(28	)
Sales commissions	(2	)	-		-		-		(3	)	-		(5	)
Others	(43	)	(8	)	(6	)	(44	)	(4	)	(3	)	(108	)
EBITDA	424		29		75		228		4		(9	)	751
EBITDA MARGIN	41	%	52	%	59	%	51	%	15	%	-18	%	43	%
Depreciation
of fixed assets	(296	)	(11	)	(24	)	(98	)	-		-		(429	)
Amortization
of intangible assets	(18	)	-		(2	)	(12	)	-		(2	)	(34	)
OPERATING
RESULTS	110		18		49		118		4		(11	)	288
EQUITY INCOME FROM RELATED COMPANIES	(3	)	-		(4	)	-		-		-		(7	)
FINANCIAL
AND HOLDING RESULTS	(86	)	-		-		(36	)	-		-		(122	)
OTHER INCOMES
AND EXPENSES	(28	)	-		(2	)	(20	)	-		(2	)	(52	)
TAX ON BANK
DEBITS AND CREDITS	(11	)	-		-		(2	)	-		-		(13	)
PROFIT FROM
ORDINARY OPERATIONS	(18	)	18		43		60		4		(13	)	94
Taxes on income	27		(29	)	(20	)	(22	)	(2	)	4		(42	)
Minority interest	-		-		-		-		-		-		-
NET (LOSS)/INCOME	9		(11	)	23		38		2		(9	)	52

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7- Ratios

	In constant pesos As of September 30 — 2002	2001
Liquidity	0.18	0.74
Consolidated
Financial Indebtedness(*)	9.94	1.29
Total Consolidated
Indebtedness	11.59	1.82
Return on
equity (**)	(1.18)	0.05

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| () | Financial
indebtedness = (Loans Cash, equiv. & Investments) / ShareholdersEquity. |
| --- | --- |
| (*) | Return
on equity = Profit from ordinary operations / (Shareholders Equity net
income for the period). |

MARKER FORMAT-SHEET="Para Hang" FSL="Default"

8- Statistical Data

	NATIONAL BASIC TELEPHONY
	September 30, 2002				September 30, 2001
TELECOM	Cumulat.	9-month period	Quarter		Cumulat.	9-month period	Quarter
	(1)		(1)		(1)
Installed
lines	3,802,400	2,342		6		3,796,460	72,524	13,624
Lines replaced	1,851,232	-		-		1,851,232	15,088	-
Lines in service
(2)	3,610,130	(281,670	)	(22,129	)	3,892,229	52,398	(21,913	)
Customer lines	3,310,342	(273,280	)	(20,921	)	3,586,679	11,290	(28,937	)
Public telephony
lines	79,497	(2,679	)	(182	)	82,574	2,538	(158	)
Digitalization
(%)	100	-		-		100	-	-
Fixed lines
in service per 100
inhabitants
(northern region)	19.6	(1.6	)	(0.1	)	21.3	0.2	(0.2	)
Fixed lines
in service per
employee	326	(34	)	(1	)	379	15	1
Investment
in fixed assets	20,907	219		28		20,414	765	179

MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default"

(1) Cumulative since the start of activities.

*********** MARKER PAGE="sheet: 20; page: 20" MARKER FORMAT-SHEET="Para Hang" FSL="Default"

9- Detail of principal consolidated Financial Statements captions (Non-adjusted figures plus inflation effect)

MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default"

Consolidated Revenues Breakdown

	Nine month comparison							Three month comparison
	As of September 30							As of September 30
	2,002		2,001		∆ $		∆ %	2,002		2,001		∆ $		∆ %
National
Basic Telephony	1,305		1,414		(109	)	-8 %	450		479		(29	)	-6 %
Measured
service
Local	315		323		(8	)	-2 %	108		117		(9	)	-8 %
DLD	260		282		(22	)	-8 %	96		92		4		4 %
Monthly
basic charges	373		417		(44	)	-11 %	118		140		(22	)	-16 %
Supplementary
Services (monthly charges)	70		87		(17	)	-20 %	23		26		(3	)	-12 %
Installation
fees	12		18		(6	)	-33 %	4		5		(1	)	-20 %
Public
telephones	110		131		(21	)	-16 %	38		44		(6	)	-14 %
Interconnection
- fixed	80		62		18		29 %	28		22		6		27 %
Interconnection
- cellular	25		16		9		56 %	10		4		6		150 %
Lease
of lines and circuits - fixed	10		18		(8	)	-44 %	1		8		(7	)	-88 %
Lease
of lines and circuits - cellular	13		13		-		0 %	5		4		1		25 %
Others	37		47		(10	)	-21 %	19		17		2		12 %
International
Telephony	92		91		1		1 %	31		26		5		19 %
Outgoing
revenues	97		88		9		10 %	34		26		8		31 %
Settlement
revenues (net)	(5	)	3		(8	)	-267 %	(3	)	-		(3	)	-
Cellular Telephony	644		635		9		1 %	235		211		24		11 %
Telecom Personal	492		589		(97	)	-16 %	179		195		(16	)	-8 %
Monthly
fee and measured service	174		235		(61	)	-26 %	52		75		(23	)	-31 %
Pre-paid
card	83		80		3		4 %	44		29		15		52 %
Calling
Party Pays	163		185		(22	)	-12 %	61		62		(1	)	-2 %
Others	72		89		(17	)	-19 %	22		29		(7	)	-24 %
Nucleo	152		46		106		230 %	56		16		40		250 %
Monthly
fee and measured service	44		13		31		238 %	16		5		11		220 %
Pre-paid
card	24		7		17		243 %	9		2		7		350 %
Calling
Party Pays	70		24		46		192 %	25		8		17		213 %
Others	14		2		12		600 %	6		1		5		500 %
Data transmission	197		184		13		7 %	79		60		19		32 %
Terrestrial
Networks	57		45		12		27 %	26		11		15		136 %
Lease
of data circuits	18		27		(9	)	-33 %	7		6		1		17 %
Monthly
charges & Internet Traffic	69		61		8		13 %	26		23		3		13 %
International
connectivity	38		27		11		41 %	15		8		7		88 %
Others	15		24		(9	)	-38 %	5		12		(7	)	-58 %
Internet	42		32		10		31 %	16		12		4		33 %
Internet
monthly fee	32		22		10		45 %	12		8		4		50 %
Internet
traffic	10		10		-		0 %	4		4		-		0 %
Telephone
Directories (Publicom)	5		39		(34	)	-87 %	4		24		(20	)	-83 %
Turnover tax	(76	)	(82	)	6		-7 %	(30	)	(28	)	(2	)	7 %
NET REVENUES
(non-adjusted figures)	2,209		2,313		(104	)	-4 %	785		784		1		0 %
Effect of
inflation	752		2,803		(2,051	)	-73 %	12		950		(938	)	-99 %
NET REVENUES
(adjusted figures)	2,961		5,116		(2,155	)	-42 %	797		1,734		(937	)	-54 %

MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default"

Consolidated Statement of Cash Flow

	Nine month comparison							Three month comparison
	As of September 30							As of September 30
	2,002		2,001		∆ $		∆ %	2,002		2,001		∆ $		∆ %
Net income
(loss)	(4,154	)	142		(4,296	)	-3025 %	480		52		428		823 %
Depreciation
and Amortization	1,604		1,373		231		17 %	533		463		70		15 %
Others, net	3,742		(739	)	4,481		-606 %	(743	)	(222	)	(521	)	235 %
Effect of
inflation	44		940		(896	)	-95 %	50		479		(429	)	-90 %
Total Funds
generated by Operating Activities	1,236		1,716		(480	)	-28 %	320		772		(452	)	-59 %
Total Funds
applied to Investing Activities (non-adjusted figures)	(176	)	(513	)	337		-66 %	13		(48	)	61		-127 %
Effect of
inflation	(144	)	(622	)	478		-77 %	(33	)	(179	)	146		-82 %
Total Funds
applied to Investing Activities	(320	)	(1,135	)	815		-72 %	(20	)	(227	)	207		-91 %
Dividends
paid	-		(213	)	213		-100 %	-		28		(28	)	0 %
Interests
and financial expenses	(288	)	(297	)	9		-3 %	38		(36	)	74		-206 %
Increase in
financial debt, net	(37	)	204		(241	)	-118 %	1		(32	)	33		-103 %
Effect of
inflation	(157	)	(370	)	213		-58 %	(44	)	(115	)	71		-62 %
Total Funds
applied to Financing Activities	(482	)	(676	)	194		-29 %	(5	)	(155	)	150		-97 %
Increase/(decrease)
of Funds	434		(95	)	529		-557 %	295		390		(95	)	-24 %

*********** MARKER PAGE="sheet: 21; page: 21" MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Consolidated net revenues, operating costs and EBITDA by activities Nine-month period FY 2002 (01/01/02 09/30/02)

	Activities — Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities		Variation * — ∆ $		∆ %
NET
REVENUES (non-adjusted figures)	1,263		89		191		621		40		5		2,209		(104	)	-4 %
Effect of
inflation	476		28		63		170		15		-		752		(2,051	)	-73 %
NET REVENUES
(adjusted figures)	1,739		117		254		791		55		5		2,961		(2,155	)	-42 %
Salaries and
social security contributions	(241	)	(11	)	(27	)	(57	)	(5	)	(10	)	(351	)	42		-11 %
Agent commissions	-		-		-		(16	)	-		-		(16	)	10		-38 %
Taxes	(40	)	(4	)	(4	)	(35	)	(1	)	-		(84	)	(20	)	31 %
Materials
and supplies	(71	)	(3	)	(3	)	(21	)	(1	)	(3	)	(102	)	24		-19 %
Transport
and freight	(15	)	(2	)	(2	)	(3	)	(1	)	-		(23	)	8		-26 %
Allowance
for doubtful accounts	(74	)	(5	)	(1	)	(48	)	(1	)	(4	)	(133	)	19		-13 %
Interconnection
cost	(83	)	-		-		-		-		-		(83	)	(11	)	15 %
Lease of lines
and circuits	-		(9	)	(10	)	(14	)	-		-		(33	)	(9	)	38 %
Service fees	(50	)	(3	)	(4	)	(9	)	(1	)	(2	)	(69	)	4		-5 %
Management
fees	(13	)	-		-		-		-		-		(13	)	80		-86 %
Advertising	(7	)	-		-		(9	)	(1	)	-		(17	)	44		-72 %
Cost of cellular
handsets	-		-		-		(9	)	-		-		(9	)	30		-77 %
Sales commisions	(1	)	-		-		-		(1	)	-		(2	)	9		-82 %
Others	(89	)	(7	)	(5	)	(98	)	(1	)	-		(200	)	(25	)	14 %
OPERATING COSTS (non-adjusted figures)	(684	)	(44	)	(56	)	(319	)	(13	)	(19	)	(1,135	)	205		-15 %
Effect of
inflation	(280	)	(7	)	(16	)	(82	)	(7	)	(8	)	(400	)	1,225		-75 %
OPERATING
COSTS (adjusted figures)	(964	)	(51	)	(72	)	(401	)	(20	)	(27	)	(1,535	)	1,430		-48 %
EBITDA (non-adjusted
figures)	579		45		135		302		27		(14	)	1,074		101		10 %
Effect of
inflation	196		21		47		88		8		(8	)	352		(826	)	-70 %
EBITDA (adjusted
figures)	775		66		182		390		35		(22	)	1,426		(725	)	-34 %
EBITDA MARGIN
(non adjusted figures)	46	%	51	%	71	%	49	%	68	%	-280	%	49	%
EBITDA MARGIN
(adjusted figures)	45	%	56	%	72	%	49	%	64	%	-440	%	48	%

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Nine month period FY 2002 vs. Nine month period FY 2001

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Consolidated net revenues, operating costs and EBITDA by activities Nine-month period FY 2001 (01/01/01 09/30/01)

	Activities — Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities
NET REVENUES
(non-adjusted figures)	1,367		88		178		611		31		38		2,313
Effect of
inflation	1,656		107		216		740		38		46		2,803
NET REVENUES
(adjusted figures)	3,023		195		394		1,351		69		84		5,116
Salaries and
social security contributions	(249	)	(11	)	(26	)	(63	)	(9	)	(35	)	(393	)
Agent commissions	-		-		-		(26	)	-		-		(26	)
Taxes	(26	)	(3	)	(3	)	(32	)	-		-		(64	)
Materials
and supplies	(85	)	(4	)	(9	)	(16	)	(1	)	(11	)	(126	)
Transport
and freight	(21	)	(2	)	(2	)	(5	)	(1	)	-		(31	)
Allowance
for doubtful accounts	(100	)	(7	)	(2	)	(40	)	(1	)	(2	)	(152	)
Interconnection
cost	(71	)	(1	)	-		-		-		-		(72	)
Lease of lines
and circuits	-		-		(12	)	(11	)	(1	)	-		(24	)
Service fees	(51	)	(3	)	(3	)	(8	)	(8	)	(73	)
Management
fees	(93	)	-		-		-		-		-		(93	)
Advertising	(33	)	(1	)	(2	)	(14	)	(10	)	(1	)	(61	)
Cost of cellular
handsets	-		-		-		(39	)	-		-		(39	)
Sales commissions	(8	)	-		-		-		(3	)	-		(11	)
Others	(64	)	(8	)	(7	)	(91	)	(3	)	(2	)	(175	)
OPERATING COSTS (non-adjusted figures)	(801	)	(40	)	(66	)	(345	)	(29	)	(59	)	(1,340	)
Effect of
inflation	(973	)	(49	)	(82	)	(416	)	(35	)	(70	)	(1,625	)
OPERATING
COSTS (adjusted figures)	(1,774	)	(89	)	(148	)	(761	)	(64	)	(129	)	(2,965	)
EBITDA (non-adjusted
figures)	566		48		112		266		2		(21	)	973
Effect of
inflation	683		58		134		324		3		(24	)	1,178
EBITDA (adjusted
figures)	1,249		106		246		590		5		(45	)	2,151
EBITDA MARGIN
(non adjusted figures)	41	%	55	%	63	%	44	%	6	%	-55	%	42	%
EBITDA MARGIN
(adjusted figures)	41	%	54	%	62	%	44	%	7	%	-54	%	42	%

*********** MARKER PAGE="sheet: 22; page: 22" MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Consolidated net revenues, operating costs and EBITDA by activities Third Quarter FY 2002 (07/01/02 09/30/02)

	Activities — Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities		Variation * — ∆ $		∆ %
NET REVENUES
(non-adjusted figures)	434		30		77		225		15		4		785		1		0 %
Effect of
inflation	15		(1	)	2		(5	)	1		-		12		(938	)	-99 %
NET REVENUES
(adjusted figures)	449		29		79		220		16		4		797		(937	)	-54 %
Salaries and
social security contributions	(84	)	(3	)	(9	)	(19	)	(2	)	(4	)	(121	)	11		-8 %
Agent commissions	-		-		-		(7	)	-		-		(7	)	(1	)	17 %
Taxes	(11	)	(2	)	(3	)	(11	)	(1	)	-		(28	)	(6	)	27 %
Materials
and supplies	(27	)	(1	)	(1	)	(9	)	-		(3	)	(41	)	7		-15 %
Transport
and freight	(3	)	(1	)	(2	)	(1	)	(1	)	-		(8	)	2		-20 %
Allowance
for doubtful accounts	(12	)	(1	)	-		(23	)	-		1		(35	)	25		-42 %
Interconnection
cost	(30	)	-		-		-		-		-		(30	)	(5	)	20 %
Lease of lines
and circuits	-		(3	)	(4	)	(5	)	1		-		(11	)	(4	)	57 %
Service fees	(18	)	(1	)	(1	)	(4	)	-		(1	)	(25	)	(3	)	14 %
Management
fees	(1	)	-		-		-		-		-		(1	)	30		-97 %
Advertising	(2	)	-		-		(3	)	-		-		(5	)	15		-75 %
Cost of cellular
handsets	-		-		-		(2	)	-		-		(2	)	11		-85 %
Sales commisions	-		-		-		-		-		-		-		2		-100 %
Others	(42	)	(4	)	1		(36	)	-		1		(80	)	(34	)	74 %
OPERATING COSTS (non-adjusted figures)	(230	)	(16	)	(19	)	(120	)	(3	)	(6	)	(394	)	50		-11 %
Effect of
inflation	(9	)	1		2		6		(3	)	(1	)	(4	)	535		-99 %
OPERATING
COSTS (adjusted figures)	(239	)	(15	)	(17	)	(114	)	(6	)	(7	)	(398	)	585		-60 %
EBITDA (non-adjusted
figures)	204		14		58		105		12		(2	)	391		51		15 %
Effect of
inflation	6		-		4		1		(2	)	(1	)	8		(403	)	-98 %
EBITDA (adjusted
figures)	210		14		62		106		10		(3	)	399		(352	)	-47 %
EBITDA MARGIN
(non adjusted figures)	47	%	47	%	75	%	47	%	80	%	-50	%	50	%
EBITDA MARGIN
(adjusted figures)	47	%	48	%	78	%	48	%	63	%	-75	%	50	%

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Third quarter FY 2002 vs. Third Quarter FY 2001

MARKER FORMAT-SHEET="Para Flush" FSL="Default"

Consolidated net revenues, operating costs and EBITDA by activities Third Quarter FY 2001 (07/01/01 09/30/01)

	Activities — Local Telephony		Inter- national Telephony		Data Transm.		Cellular Telephony		Internet		Publishing Directories		Con- solidated Activities
NET REVENUES
(non-adjusted figures)	463		25		58		203		12		23		784
Effect of
inflation	560		31		70		246		15		28		950
NET REVENUES
(adjusted figures)	1,023		56		128		449		27		51		1,734
Salaries and
social security contributions	(83	)	(3	)	(9	)	(20	)	(3	)	(14	)	(132	)
Agent commissions	-		-		-		(6	)	-		-		(6	)
Taxes	(10	)	(1	)	(1	)	(10	)	-		-		(22	)
Materials
and supplies	(28	)	(1	)	(3	)	(8	)	-		(8	)	(48	)
Transport
and freight	(8	)	-		-		(2	)	-		-		(10	)
Allowance
for doubtful accounts	(40	)	(3	)	(2	)	(13	)	(1	)	(1	)	(60	)
Interconnection
cost	(25	)	-		-		-		-		-		(25	)
Lease of lines
and circuits	-		-		(4	)	(3	)	-		-		(7	)
Service fees	(16	)	(1	)	(1	)	(1	)	-		(3	)	(22	)
Management
fees	(31	)	-		-		-		-		-		(31	)
Advertising	(10	)	-		(1	)	(5	)	(4	)	-		(20	)
Cost of cellular
handsets	-		-		-		(13	)	-		-		(13	)
Sales commissions	(1	)	-		-		-		(1	)	-		(2	)
Others	(18	)	(3	)	(3	)	(20	)	(1	)	(1	)	(46	)
OPERATING COSTS (non-adjusted figures)	(270	)	(12	)	(24	)	(101	)	(10	)	(27	)	(444	)
Effect of
inflation	(329	)	(15	)	(29	)	(120	)	(13	)	(33	)	(539	)
OPERATING
COSTS (adjusted figures)	(599	)	(27	)	(53	)	(221	)	(23	)	(60	)	(983	)
EBITDA (non-adjusted
figures)	193		13		34		102		2		(4	)	340
Effect of
inflation	231		16		41		126		2		(5	)	411
EBITDA (adjusted
figures)	424		29		75		228		4		(9	)	751
EBITDA MARGIN
(non adjusted figures)	42	%	52	%	59	%	50	%	17	%	-17	%	43	%
EBITDA MARGIN
(adjusted figures)	41	%	52	%	59	%	51	%	15	%	-18	%	43	%

*********** MARKER PAGE="sheet: 23; page: 23"

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