Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>Telecom Argentina’s credit profile strengthened in 2Q26, supported by improved profitability, positive free cash flow, lower leverage and a more manageable near-term maturity schedule.</li>
<li>We upgrade liquidity to adequate, as US$645 million of cash and investments provides nearly 2.0x coverage of scheduled principal maturities through year-end.</li>
<li>We remain Neutral at issuer level: tighter valuations and uncertainty around mandatory TMA divestitures limit broad upside, although relative value remains available within the curve.</li>
</ul>


Telecom Argentina’s credit profile strengthened in 2Q26, supported by improved profitability, positive free cash flow, lower leverage and a more manageable near-term maturity schedule.
We upgrade liquidity to adequate, as US$645 million of cash and investments provides nearly 2.0x coverage of scheduled principal maturities through year-end.
We remain Neutral at issuer level: tighter valuations and uncertainty around mandatory TMA divestitures limit broad upside, although relative value remains available within the curve.


Telecom Argentina 2Q26: Stronger Credit, Upside Gets Selective

<ul>
<li>TMA approval removes outright rejection risk, but the remedy package reduces synergy upside and adds execution risk around divestitures, spectrum, network access and EBITDA retention.</li>
<li>Credit impact looks contained. Leverage remains low, the divested EBITDA appears manageable, and Telecom’s rating is still constrained more by Argentina’s sovereign ceiling than by the business perimeter.</li>
<li>We assign a Neutral recommendation. The 2036s are our preferred Telecom curve expression for investors maintaining exposure, but as a carry hold rather than a new Buy.</li>
</ul>


TMA approval removes outright rejection risk, but the remedy package reduces synergy upside and adds execution risk around divestitures, spectrum, network access and EBITDA retention.
Credit impact looks contained. Leverage remains low, the divested EBITDA appears manageable, and Telecom’s rating is still constrained more by Argentina’s sovereign ceiling than by the business perimeter.
We assign a Neutral recommendation. The 2036s are our preferred Telecom curve expression for investors maintaining exposure, but as a carry hold rather than a new Buy.


Telecom Argentina: TMA Remedies Hit Business, Credit Holds

<ul>
<li>
Strategic Implications: Neutral after rally. Telecom remains improving, but front-end spreads now price in EBITDA recovery, TMA margin convergence and refinancing gains.</li>
<li>
Risk Profile: Liquidity and TMA risk cap upside. Cash covers only about 0.7x short-term debt, with no committed RCF and unresolved regulatory risk.</li>
<li>
Bottom-Line Impact: Prefer the 2036s selectively. The notes offer the curve’s highest yield, wider Z-spread pickup, and a cleaner near-par dollar price.</li>
</ul>



Strategic Implications: Neutral after rally. Telecom remains improving, but front-end spreads now price in EBITDA recovery, TMA margin convergence and refinancing gains.

Risk Profile: Liquidity and TMA risk cap upside. Cash covers only about 0.7x short-term debt, with no committed RCF and unresolved regulatory risk.

Bottom-Line Impact: Prefer the 2036s selectively. The notes offer the curve’s highest yield, wider Z-spread pickup, and a cleaner near-par dollar price.


Telecom Argentina 1Q26: Credit Improves, Upside Narrows

<ul>
<li>
Enhanced Liquidity Profile: The January 2026 issuance of US$600 million in 10-year notes successfully refinanced acquisition debt and July 2026 maturities, significantly reducing immediate default and refinancing risks.</li>
<li>
Integration Margin Pressure: While revenue grew 54.2% YoY via the TMA acquisition, consolidated EBITDA margins contracted to 29.8% due to rising operating costs and non-linear synergy realization.</li>
<li>
Curve Optimization Strategy: Analysts favor the new 2036 notes for superior carry and "clean" par pricing, as shorter-dated 2031s and 2033s offer limited upside at current rich spread levels.</li>
</ul>



Enhanced Liquidity Profile: The January 2026 issuance of US$600 million in 10-year notes successfully refinanced acquisition debt and July 2026 maturities, significantly reducing immediate default and refinancing risks.

Integration Margin Pressure: While revenue grew 54.2% YoY via the TMA acquisition, consolidated EBITDA margins contracted to 29.8% due to rising operating costs and non-linear synergy realization.

Curve Optimization Strategy: Analysts favor the new 2036 notes for superior carry and "clean" par pricing, as shorter-dated 2031s and 2033s offer limited upside at current rich spread levels.


Telecom Argentina 4Q25: Results Support Credit Despite Integration Pressures

<ul>
<li>
Liquidity Profile Strengthened: The US$600m issuance at 8.625% yield replaces near-term debt with 10-year paper, effectively smoothing the maturity profile and reducing immediate refinancing risks.</li>
<li>
Regulatory Overhang Persists: While the Telefónica acquisition offers transformative synergies, significant execution risk remains due to ongoing government intervention and uncertain approval timelines, capping immediate credit upside.</li>
<li>
Relative Value Shifts to 2036s: We maintain an Overweight stance but favor the new 2036 notes</li>
</ul>



Liquidity Profile Strengthened: The US$600m issuance at 8.625% yield replaces near-term debt with 10-year paper, effectively smoothing the maturity profile and reducing immediate refinancing risks.

Regulatory Overhang Persists: While the Telefónica acquisition offers transformative synergies, significant execution risk remains due to ongoing government intervention and uncertain approval timelines, capping immediate credit upside.

Relative Value Shifts to 2036s: We maintain an Overweight stance but favor the new 2036 notes


Telecom Argentina Prices US$600m 10Y Notes at 8.625%, Extending Maturities

Argentina

Telecom Argentina SA provides telecommunications services including local, long-distance and international service in Argentina.  The Company, through its subsidiaries, also provides cellular telecommunications services and offers paging services.

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Telecom Argentina (TEO US)

Telecom Argentina 2Q26: Stronger Credit, Upside Gets Selective

Telecom Argentina’s credit fundamentals are strengthening, but tighter valuations and uncertainty around mandatory TMA divestitures leave broad...

Leandro Gubler

Telecom Argentina: TMA Remedies Hit Business, Credit Holds

Telecom’s TMA approval removes rejection risk, but heavy remedies cut synergy upside; Neutral, with the 2036s preferred as a carry hold.

Leandro Gubler

Telecom Argentina 1Q26: Credit Improves, Upside Narrows

Telecom’s credit improved on EBITDA, leverage and refinancing, but tighter front-end spreads shift the call to Neutral, with 2036s still preferred.

Leandro Gubler

Telecom Argentina 4Q25: Results Support Credit Despite Integration Pressures

Telecom Argentina’s bold refinancing clears a major liquidity hurdle, but as integration costs weigh on margins, investors must pivot to the 2036s...

Leandro Gubler

Telecom Argentina Prices US$600m 10Y Notes at 8.625%, Extending Maturities

Telecom Argentina's US$600m deal eases liquidity pressure; we analyze why the new 2036 notes offer a superior entry point compared to the 2031s.

Leandro Gubler

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