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DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 12 Months Ended
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Dec. 31, 2020
DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS |
Schedule of subsidiaries included in the consolidation process and the respective equity interest owned by the company |
|  |  |  |  |  | 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 |  | Broadcasting services |  | Argentina |  | 60.00 | %
Inter Radios |  | Broadcasting services |  | Argentina |  | 100.00 | %
Telecom USA |  | Telecommunication services |  | USA |  | 100.00 | %
Personal Smarthome S.A. (b) |  | Security solutions and services |  | Argentina |  | 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) |  | Company started on December 30, 2020. See Note 3.d.1.e) to these consolidated financial statements.
Schedule of income statement information | Presented below is the Segment financial information as it is analyzed by the Executive Committee and the CEO for the years ended December 31, 2020, 2019 and 2018. ☐ Consolidated Income Statement as of December 31, 2020
|  |  |  | Services |  | Services |  |  |  | Other |  |  |  |  |  |
|  |  |  | rendered in |  | rendered in |  |  |  | abroad |  | Other abroad |  |  |  |
|  |  |  | Argentina – |  | Argentina |  |  |  | segments – |  | segments |  |  |  |
|  | Services rendered in |  | Inflation |  | restated for |  |  |  | Inflation |  | restated for |  |  |  |
|  | Argentina |  | restatement |  | inflation |  | Other abroad segments |  | restatement |  | inflation |  | Eliminations |  | Total
Revenues |  | 240,325 |  | 41,484 |  | 281,809 |  | 18,183 |  | 3,013 |  | 21,196 |  | (1,409) |  | 301,596
Operating costs without depreciation, amortization and impairment of fixed assets |  | (158,901) |  | (27,879) |  | (186,780) |  | (11,419) |  | (1,918) |  | (13,337) |  | 1,409 |  | (198,708)
Adjusted EBITDA |  | 81,424 |  | 13,605 |  | 95,029 |  | 6,764 |  | 1,095 |  | 7,859 |  | — |  | 102,888
Depreciation, amortization and impairment of fixed assets |  | (31,807) |  | (45,429) |  | (77,236) |  | (4,401) |  | (957) |  | (5,358) |  | — |  | (82,594)
Operating income |  | 49,617 |  | (31,824) |  | 17,793 |  | 2,363 |  | 138 |  | 2,501 |  | — |  | 20,294
Earnings from associates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 496
Debt financial expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (24,698)
Other financial results, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 7,055
Income before income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,147
Income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (8,251)
Net loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,104)
Attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,715)
Non-controlling interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 611
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,104)
☐ Consolidated Income Statement as of December 31, 2019
|  |  |  | Services |  | Services |  |  |  | Other |  |  |  |  |  |
|  |  |  | rendered in |  | rendered in |  |  |  | abroad |  | Other abroad |  |  |  |
|  |  |  | Argentina – |  | Argentina |  |  |  | segments – |  | segments |  |  |  |
|  | Services rendered in |  | Inflation |  | restated for |  |  |  | Inflation |  | restated for |  |  |  |
|  | Argentina |  | restatement |  | inflation |  | Other abroad segments |  | restatement |  | inflation |  | Eliminations |  | Total
Revenues |  | 182,233 |  | 120,352 |  | 302,585 |  | 12,931 |  | 8,836 |  | 21,767 |  | (1,666) |  | 322,686
Operating costs without depreciation, amortization and impairment of fixed assets |  | (121,682) |  | (82,631) |  | (204,313) |  | (8,946) |  | (6,151) |  | (15,097) |  | 1,666 |  | (217,744)
Adjusted EBITDA |  | 60,551 |  | 37,721 |  | 98,272 |  | 3,985 |  | 2,685 |  | 6,670 |  | — |  | 104,942
Depreciation, amortization and impairment of fixed assets |  | (26,024) |  | (52,349) |  | (78,373) |  | (2,869) |  | (2,197) |  | (5,066) |  | — |  | (83,439)
Operating income |  | 34,527 |  | (14,628) |  | 19,899 |  | 1,116 |  | 488 |  | 1,604 |  | — |  | 21,503
Losses from associates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (255)
Debt financial expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (22,677)
Other financial results, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 15,426
Income before income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 13,997
Income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (19,290)
Net loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,293)
Attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,985)
Non-controlling interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 692
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,293)
☐ Consolidated Income Statement as of December 31, 2018
|  |  |  | Services |  | Services |  |  |  | Other |  |  |  |  |  |
|  |  |  | rendered in |  | rendered in |  |  |  | abroad |  | Other abroad |  |  |  |
|  |  |  | Argentina – |  | Argentina |  |  |  | segments – |  | segments |  |  |  |
|  | Services rendered in |  | Inflation |  | restated for |  |  |  | Inflation |  | restated for |  |  |  |
|  | Argentina |  | restatement |  | inflation |  | Other abroad segments |  | restatement |  | inflation |  | Eliminations |  | Total
Revenues |  | 129,836 |  | 203,168 |  | 333,004 |  | 7,894 |  | 12,524 |  | 20,418 |  | (1,474) |  | 351,948
Operating costs without depreciation, amortization and impairment of fixed assets |  | (85,942) |  | (135,420) |  | (221,362) |  | (5,414) |  | (8,590) |  | (14,004) |  | 1,474 |  | (233,892)
Adjusted EBITDA |  | 43,894 |  | 67,748 |  | 111,642 |  | 2,480 |  | 3,934 |  | 6,414 |  | — |  | 118,056
Depreciation, amortization and impairment of fixed assets |  | (20,416) |  | (48,475) |  | (68,891) |  | (1,753) |  | (2,891) |  | (4,644) |  | — |  | (73,535)
Operating income |  | 23,478 |  | 19,273 |  | 42,751 |  | 727 |  | 1,043 |  | 1,770 |  | — |  | 44,521
Earnings from associates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 494
Debt financial expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (71,150)
Other financial results, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 31,786
Income before income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,651
Income tax benefit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,943
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,594
Attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,089
Non-controlling interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 505
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,594
Schedule of Financial Statement Information Based on Geographical Area |
|  | As of December 31
|  | 2020 |  | 2019 |  | 2018
Sales revenues from customers located in Argentina |  | 280,625 |  | 300,957 |  | 331,370
Sales revenues from foreign customers |  | 20,971 |  | 21,729 |  | 20,578
CAPEX corresponding to the segment “Services rendered in Argentina |  | 50,085 |  | 82,209 |  | 81,211
CAPEX corresponding to the segment “Other abroad segments” |  | 5,647 |  | 6,947 |  | 7,726
Fixed assets corresponding to the segment “Services rendered in Argentina” |  | 668,147 |  | 685,122 |  | n/a
Fixed assets corresponding to the segment “Other abroad segments” |  | 26,422 |  | 27,153 |  | n/a
Financial Debt corresponding to the segment “Services rendered in Argentina” |  | 194,487 |  | 201,349 |  | n/a
Financial Debt corresponding to the segment “Other abroad segments” |  | 5,713 |  | 5,579 |  | n/a
Schedule of national consumer price index according to official statistics (INDEC) | The table below show the evolution of the 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 dollar for the same years:
|  | As of December 31, |  | As of December 31, |  | As of December 31, |
|  | 2018 |  | 2019 |  | 2020 |
National Consumer Price Index (December 2016=100) |  | 184.26 |  | 284.44 |  | 385.88 |
Variation in Prices |  |  |  |  |  |  |
Annual |  | 47.6 | % | 53.8 | % | 36.1 | %
Accumulated 3 years |  | 147.8 | % | 183.2 | % | 209.2 | %
Banco Nación US$/$ exchange rate |  | 37.70 |  | 59.89 |  | 84.15 |
Variation in the exchange rate |  |  |  |  |  |  |
Annual |  | 102.1 | % | 58.9 | % | 40.5 | %
Accumulated 3 years |  | 189.1 | % | 276.9 | % | 351.2 | %

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