TEO Stock Forecast & Price Target

Telecom Argentina has demonstrated a solid financial performance with a Q1 EBITDA margin of 33.1%, significantly surpassing the projected 25% for 2025, indicating strong operational efficiency and profitability. The company's diversified service offerings, including mobile, cable television, and Internet services, have positioned it as one of the leading post-paid-oriented operators in Latin America, with its cable and fixed-line division contributing 58% to consolidated sales in 2018. Additionally, the notable increase in operating leases by 50% highlights the company's investment in its infrastructure, suggesting a commitment to growth and expansion in both domestic and international markets.

Telecom Argentina SA's free cash flow (FCF) declined by 31% year-over-year, amounting to US$80 million, primarily due to a significant impact of US$189 million from working capital issues. The company's financial health is further jeopardized by US$1.2 billion in working capital, labor, and tax liabilities that emerged following its acquisition of TEF, raising concerns about its operational stability in the Latin American market. There is apprehension that the challenging financial landscape may lead to increased pressure from suppliers for payment and a higher risk of receivables defaulting.