EX-12.1 3 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Exhibit 12.1

Telecom Argentina STET-France Telecom S.A.

Computation of Ratio of Earnings to Fixed Charges/Deficiency

In the Coverage of Fixed Charges by Earnings Before Fixed Charges (in Argentine GAAP)

|  | As of and for fiscal year ended |  |  | As of and for the nine months ended |
|  | September 1998 |  |  | September 1999 |  |  | December 2000 |  |  | December 2001 |  |  | December 2002 |  |  | September 2002 |  |  | September 2003 |
|  | (in millions of Argentine constant pesos, except for the ratio) |
A—Earnings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pretax income (loss) |  | 1,250 |  |  | 1,143 |  |  | 599 |  |  | 216 |  |  | (5,650 | ) |  | (6,130 | ) |  | 790 |
Fixed charges |  | 472 |  |  | 565 |  |  | 682 |  |  | 702 |  |  | 939 |  |  | 720 |  |  | 459 |
Amortization of capitalized interest |  | 48 |  |  | 53 |  |  | 64 |  |  | 56 |  |  | 91 |  |  | 65 |  |  | 71 |
Distributed income from equity investments |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitalized interest |  | (65 | ) |  | (104 | ) |  | (129 | ) |  | (103 | ) |  | (66 | ) |  | (66 | ) |  | (6 | )
|  | 1,705 |  |  | 1,657 |  |  | 1,216 |  |  | 871 |  |  | (4,686 | ) |  | (5,411 | ) |  | 1,314 |
B—Fixed charges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expenses |  | 374 |  |  | 438 |  |  | 515 |  |  | 560 |  |  | 846 |  |  | 633 |  |  | 441 | (1)
Capitalized interest |  | 65 |  |  | 104 |  |  | 129 |  |  | 103 |  |  | 66 |  |  | 66 |  |  | 6 |
Estimate of the interest within rental expense |  | 33 |  |  | 23 |  |  | 38 |  |  | 39 |  |  | 27 |  |  | 21 |  |  | 12 |
Preference security dividend |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
|  | 472 |  |  | 565 |  |  | 682 |  |  | 702 |  |  | 939 |  |  | 720 |  |  | 459 |
Ratio (A/B) |  | 3.6 |  |  | 2.9 |  |  | 1.8 |  |  | 1.2 |  |  | (5.0 | )(2) |  | (7.5 | )(2) |  | 2.9 |
Deficiency |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,625 |  |  | 6,131 |  |  |  |

(1) | Includes P$49 million related to the repurchase of debt.

(2) | The ratios related to the year ended December 31, 2002 and to the nine-month period ended September 30, 2002 indicate less than one-to-one coverage. Consequently, earnings for these periods are inadequate to cover fixed charges. A total amount of earnings of P$5,625 million and P$6,131 million is required to attain a ratio of one-to-one determined under Argentine GAAP for the year ended December 31, 2002 and the nine-month period ended September 30, 2002, respectively.

Computation of Ratio of Earnings to Fixed Charges/Deficiency

In the Coverage of Fixed Charges by Earnings Before Fixed Charges (in U.S. GAAP)

|  | As of and for fiscal year ended |  |  | As of and for the nine months ended |
|  | September 1998 |  |  | September 1999 |  |  | December 2000 |  |  | December 2001 |  |  | December 2002 |  |  | September 2002 |  |  | September 2003 |
|  | (in millions of Argentine constant pesos, except for the ratio) |
A—Earnings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pretax income (loss) |  | 1,263 |  |  | 1,241 |  |  | 550 |  |  | (3,307 | ) |  | (2,865 | ) |  | (3,284 | ) |  | 936 |
Fixed charges |  | 472 |  |  | 565 |  |  | 682 |  |  | 702 |  |  | 939 |  |  | 720 |  |  | 459 |
Amortization of capitalized interest |  | 48 |  |  | 53 |  |  | 64 |  |  | 56 |  |  | 91 |  |  | 65 |  |  | 71 |
Distributed income from equity investments |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitalized interest |  | (65 | ) |  | (104 | ) |  | (129 | ) |  | (103 | ) |  | (66 | ) |  | (66 | ) |  | (6 | )
|  | 1,718 |  |  | 1,755 |  |  | 1,167 |  |  | (2,652 | ) |  | (1,901 | ) |  | (2,565 | ) |  | 1,460 |
B—Fixed charges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expenses |  | 374 |  |  | 438 |  |  | 515 |  |  | 560 |  |  | 846 |  |  | 633 |  |  | 441 | (1)
Capitalized interest |  | 65 |  |  | 104 |  |  | 129 |  |  | 103 |  |  | 66 |  |  | 66 |  |  | 6 |
Estimate of the interest within rental expense |  | 33 |  |  | 23 |  |  | 38 |  |  | 39 |  |  | 27 |  |  | 21 |  |  | 12 |
Preference security dividend |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
|  | 472 |  |  | 565 |  |  | 682 |  |  | 702 |  |  | 939 |  |  | 720 |  |  | 459 |
Ratio (A/B) |  | 3.6 |  |  | 3.1 |  |  | 1.7 |  |  | (3.8 | )(2) |  | (2.0 | )(2) |  | (3.6 | )(2) |  | 3.2 |
Deficiency |  |  |  |  |  |  |  |  |  |  | 3,354 |  |  | 2,840 |  |  | 3,285 |  |  |  |

(1) | Includes P$49 million related to the repurchase of debt.

(2) | The ratios related to the years ended December 31, 2002 and 2001 and to the nine-month period ended September 30, 2002 indicate less than one-to-one coverage. Consequently, earnings for these periods are inadequate to cover fixed charges. A total amount of earnings of P$2,840 million, P$3,354 million and P$3,285 million is required to attain a ratio of one-to-one determined under US GAAP for the years ended December 31, 2002 and 2001 and the nine-month period ended September 30, 2002, respectively.