3 Q11 Argentina Mobile Operator Forecast Executive Summary

3Q.2011 Argentina Mobile Operator ForecastArgentina to have 60.4 million mobile subscriber connections in 2015 with Movistartaking 30% market share

October 2011

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

INDUSTRY AVERAGE SUBSCRIBER GROWTH IN THE ARGENTINE WIRELESS MARKET IS ABOUT 6%

The operator-wide average subscriber growth (YoY) was 6.1% in 2Q.2011, down from 10.2% in 2Q.2010.

Telecom Argentina saw its subscriber growth (YoY) increase from 12.9% in 2Q.2010 to 13.5% in 2Q.2011.

Movistar Argentina (Telefonica)’ssubscriber growth declined from 8.3% in 2Q.2010 to -0.1% in 2Q.2011

Claro (America Movil)’s subscriber growth declined from 9.8% in 2Q.2010 to 4.9% in 2Q.2011.

On the other hand, Nextel's subscriber growth rose from 9.8% in 2Q.2010 to 12.5% in 2Q.2011.

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4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

Telecom Argentina S.A. Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTI Nextel Communications Argentina S.A. Industry Total

Chart 1: Subscriber Growth (4Q08 – 2Q11), %

Subscriber growth is slowing down in Argentina6.1% industry average subscriber growth in 2Q.2011

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Source: IEMR

INDUSTRY AVERAGE ARPU IN ARGENTINA IS INCREASING

The industry average monthly ARPU was US$ 11.33 in 2Q.2011, up +12.0% YoY.

Movistar, Nextel and Telecom Argentina continue to increase their ARPUs. In particular, Claro’s ARPU growth was the highest among operators in the latest quarter. Its monthly ARPU was US$9.62 in 2Q.2011, up +17.1% YoY.

Nextel’s ARPU remains much higher than those of the other operators. Nextel’s monthly ARPU rose by 3.7% (YoY) to reach US$ 37.21 in 2Q.2011.

Chart 2: ARPU Growth (4Q08 – 2Q11), %

ARPU growth in Argentina remains positive12.0% industry average ARPU growth in 2Q.2011

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4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

Telecom Argentina S.A. Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTI Nextel Communications Argentina S.A. Industry Total

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Source: IEMR

The operator-wide average Minute of Use (MOU) per subscriber was 111 minutes per month in 2Q.2011, up +2.9% YoY.

MOU per subscriber at Telecom Argentina, Movistar, and Claro was 103 minutes, 91 minutes, and 131 minutes respectively in 2Q.2011.

MOU/Sub growth (YoY) at Telecom Argentina and Movistar was 3.1% and 4.8% respectively in 2Q.2011.

On the other hand, Claro’s MOU/Sub growth (YoY) was negative at -2.2% in 2Q.2011 (which is the same as in 2Q.2010).

Chart 3: MOU/Sub Growth (4Q08 – 2Q11), %

Minutes of Use per Subscriber is stabilizingIndustry average MOU/Sub is approximately 111 minutes per month

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4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

Telecom Argentina S.A. Movistar Argentina (Telefonica S.A.)

Claro (America Movil S.A.B. DE C.V.) / CTI Industry Total

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Source: IEMR

+18.2% INDUSTRY-AVERAGE EBITDA GROWTH IN 2Q.2011

The industry average EBITDA growth rate (YoY) in 2Q.2011 was 18.2%, down from 19.4% in 2Q.2010.

EBITDA growth rate at Telecom Argentina increased from 22.8% in 2Q.2010 to 34.5% in 2Q.2011.

EBITDA growth rate (YoY) at Movistarfell from 9.5% in 2Q.2010 to 8.2% in 2Q.2011.

EBITDA growth rate at Claro was 12.2% in 2Q.2011 (down from 36.0% in 2Q.2010).

Nextel’s EBITDA growth was 28.6% in 2Q.2011 (up from -19.4% in 2Q.2010).

Chart 4: EBITDA Growth (4Q08 – 2Q11), %

Strong EBITDA growth in Argentina continues18.2% industry average EBITDA growth in 2Q.2011

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4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

Telecom Argentina S.A. Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTI Nextel Communications Argentina S.A. Industry Tatal

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Source: IEMR

We forecast that the number of total wireless subscriber connections in Argentina will increase from 51.6 million in the end of 2010 to 60.4 million in the end of 2015.

Given the latest quarter numbers, our model predicts that Movistar will have approximately 18.2 million mobile subscriber connections in 2015.

We expect that Telecom Argentina will have 19.9 million wireless subscribers in 2015 (32.9% market share).

In our view, Claro will have 20.8 million mobile subscribers in Argentina with a 34.5% market share in 2015.

Chart 5: Subscribers by operator (CY09 – CY15F)

So what is IEMR’s Forecast? Total mobile subscriber connections in Argentina to reach 60.4 million in 2015

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CY09 CY10 CY11F CY12F CY13F CY14F CY15F

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Telecom Argentina S.A.Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTINextel Communications Argentina S.A.

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Source: IEMR

WE EXPECT THE OPERATOR-WIDE AVERAGE ARPU LEVEL TO INCREASE OVER THE NEXT TWO YEARS

Our forecasting model predicts that monthly ARPU levels in Argentina will be increasing over the forecast period.

According to our model, the industry average ARPU will be approximately ARS 53.50 per month in 2013.

We expect that monthly ARPUs at Movistar and Telecom Argentina will remain in the range of ARS 50 – 60 over the next two years.

Nextel’s ARPU level will continue to be the highest in Argentina’s wireless market. We expect that it will be about ARS 168 in 2013.

Chart 6: Average Revenue per User (ARPU) per month (CY09 – CY13F), ARS

So what is IEMR’s Forecast?Industry average ARPU in Argentina will be increasing

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Telecom Argentina S.A.Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTINextel Communications Argentina S.A. Average

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Source: IEMR

WE EXPECT CLARO TO ENJOY HIGHEST EBITDA OVER THE NEXT TWO YEARS

Our model is predicting that, from 2012 to 2013, Claro’s EBITDA margins will remain higher than those of Telecom Argentina and Movistar at about 48% - 49%.

We forecast that Telecom Argentina's EBITDA margin (calculated as EBITDA/service revenue) will improve from 40.2% in 2009 to 43.2% in 2013.

We expect that Movistar’s EBITDA margin will also be about 34% in 2013.

Chart 7: EBITDA margins (CY09 – CY13F), %

So what is IEMR’s Forecast? Claro to enjoy the highest profitability over the next two years

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Telecom Argentina S.A.Movistar Argentina (Telefonica S.A.) Claro (America Movil S.A.B. DE C.V.) / CTINextel Communications Argentina S.A. Average

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3 Q11 Argentina Mobile Operator Forecast Executive Summary