Telecom Argentina SA (TCMFF) Risk Analysis

The LAD established that licensees of ICT services may freely set their prices which shall be fair and reasonable, to offset the costs of exploitation and to tend to the efficient supply and reasonable margin of operation. However, on August 22, 2020, the PEN issued Decree No. 690/20 amending the LAD. Decree No. 690/20 declared ICT services (which includes fixed and mobile telephony services, cable television and Internet) as well as access to telecommunications networks for and between licensees as "essential and strategic competition public services", and empowered ENACOM to ensure accessibility. Decree No. 690/20 further established that (i) the prices of the Essential and Strategic Competition Public ICT Services, (ii) the prices of those services provided in accordance with the Universal Service, and (iii) the prices of those services determined by ENACOM for public interest reasons, shall be regulated by ENACOM. Decree No. 690/20 has been ratified by the Argentine Congress under Law No. 26,122 and has been regulated through ENACOM Resolutions Nos. 1,466/20 and 1,467/20. The Company initiated legal proceedings before the Federal Court of Appeals on Administrative Litigation Matters challenging the constitutionality of Decree No. 690/20 and the aforementioned ENACOM Resolutions. The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights. See "Item 4 -Regulatory Authorities and Framework- Decree No. 690/20 - Amendment to the LAD - Controversy". If ENACOM imposes further restrictions on our prices, our operating margins may be adversely affected. Our ability to comply with the conditions in our license, as well as the relevant provisions in applicable regulations and laws, may be affected by events or circumstances outside of our control, and therefore we cannot predict whether such events or circumstances result in an adverse effect on our financial condition, our operations and cash flows. The Company, with the assistance of its legal advisors, is analyzing the actions that may be necessary in order to protect its rights. See "Item 4 -Regulatory Authorities and Framework- Decree No. 690/20 - Amendment to the LAD - Controversy".

Some of the goods and facilities used in our operation are subject to federal, state and municipal environmental and safety regulations. If such rules are not adequately complied, they could result in fines, potential delays or inability to obtain authorization for our facilities and operations which could have an adverse effect in our business, but also could result in penalties for the Company's administrators. In addition, according with global trends, new and stricter standards may be issued, or authorities may enforce or construe existing laws and regulations in a more restrictive manner, which may force us to make expenditures or incur increased costs to comply with such new rules. An important environmental regulation to mention is the Escazú Agreement, which is legally binding and entered into force in April 2021. This agreement contemplates the rights of people in access to information, participation and justice in environmental matters and establishes guidelines for this. It defines that vulnerable groups, indigenous communities or ethnic groups must receive assistance to formulate their requests and obtain answers free of charge. Establishes the right to "be consulted". The burden of proof shall be reversed. Moreover, this agreement reaches private companies that perform public functions or services, as it forces companies to provide information without government mediation. It also obliges the government to facilitate access to justice for individuals and organizations of society. It establishes a period of 30 business days to respond or deliver information. The likely impact on the Company's business from this agreement could include: - Slowdown of authorizations and work permits in public organisms. - Possible conflicts in laying new networks. - Possible conflicts with masts already placed because of non-ionizing radiation. - Possible requests for information on company processes, such as waste treatment, waste from electrical and electronic equipment (WEEE), recycling, packaging.

Revenues generated by our fixed and mobile telephony, cable television and Internet operations have in the past been impacted by Argentina's unstable macroeconomic environment and have been dependent on the general economic conditions in Argentina. In the past, a general economic downturn in Argentina has had, and would be expected to have in the future, a negative effect on our revenues and a material adverse effect on our results of operations. Historically, for example, increases in losses of cable television customers have corresponded with general economic downturns and regional and local economic recessions.

Since we generate a substantial portion of our revenues in Argentine Pesos (functional currency of Telecom), any devaluation may negatively affect the U.S. dollar value of our earnings while increasing, in Peso terms, our expenses and capital expenditures denominated in foreign currency. The Argentine Peso has been subject to significant devaluation against the U.S. dollar in the past and may be subject to fluctuations in the future. The value of the Peso compared to other foreign currencies is dependent, among other factors, on the level of international reserves maintained by the BCRA, which have also shown significant fluctuations in recent years. The Argentine macroeconomic environment, in which we operate, has been affected by the continued devaluation of the Peso, which in turn has and could continue to have a direct impact on our financial and economic position. The value of the Peso has fluctuated significantly since 2011. In 2023, the Argentine Peso continued to depreciate against the U.S. dollar and other major foreign currencies. According to Banco de la Nación Argentina, the Peso/dollar exchange rate stood at P$808.45 per US$1.00 as of December 29, 2023, evidencing an appreciation of the U.S. Dollar against the Argentine Peso of approximately 356.3% from its value of P$177.16 per dollar at December 30, 2022 (compared to 72.5% and 22.1% in the years ended December 31, 2022 and 2021, respectively). If we analyze the behavior of the average exchange rate, during 2023 it stood at P$295.29 per dollar. This is because the exchange rate remained relatively stable until the assumption of the new administration in December 2023, when the U.S. Dollar appreciated 118% against the Argentine Peso, bringing the exchange rate to P$800 per dollar on December 13, 2023.The BCRA subsequently announced the transition to a new macroeconomic stability regime establishing a 2% monthly sliding path of the official exchange rate. Additionally, the "Relevamiento de Expectativas de Mercado" ("REM"), published by the BCRA on February 6, 2024, estimated an inflation of 227 % for the year 2024. Monthly inflation for the months of January and February 2024 was 20.6% and 13.2% respectively, while the accumulated figure for the first two months of the year reached 36.6%. In turn, Organisation for Economic Cooperation and Development ("OECD"), stated that inflation in 2024 is estimated to be 250.6%. As a result of the Argentine Peso's increased volatility, the Argentine government and the BCRA implemented several measures to stabilize its value, including, among others, stronger exchange regulations, an increase in short term interest rates and the sale of foreign currency reserves made by the BCRA. The continued devaluation of the Argentine Peso during the past years has had and continues to have a negative impact on the payment of foreign currency denominated debts by local private sector debtors to unrelated foreign entities, and has also led to an increase in inflation, which in turn has a direct impact on real wages. The devaluation has also negatively impacted businesses whose success is dependent on domestic market demand, and adversely affected the Argentine government's ability to honor its foreign debt commitments. Higher restrictions to access the official FX Markets were imposed starting 2020, with a view to reducing the loss of international reserves generated by a greater demand of U.S. dollars by individuals and companies. These restrictions have resulted in the creation of multiple reference exchange rates, such as the "blue chip swap" rate (contado con liquidación), MEP dollar (Mercado Electrónico de Pagos), and soybean dollar (dólar soja), among others. Some of these exchange rates are only available to certain markets participants, or in the activities in which the currency is held. In addition, dealing with certain of these reference rates might directly affect the access of the Company to the Argentine Single and Free Exchange Market ("MULC" for its Spanish acronym). The requirements to access these different exchange rates, as well as the actual exchange rate of each option, vary significantly from one another. Pursuant to Communication "A" 7106 (as amended and supplemented from time to time), the BCRA established certain requirements to access the local exchange market for purposes of repayment of cross-border financial debts, in particular, for the payment of principal outstanding amounts in loans and securities having amortization payments scheduled between October 15, 2020 and December 31, 2021 for principal amounts exceeding US$2,000,000 by the non-financial private sector and financial entities. Particularly, the payment of principal amounts pertaining to loans and securities subject to the regulation should be part of a refinancing plan that must be previously filed with the BCRA, which must provide that (i) only 40% of the principal amount owed and payable shall be paid through the local foreign exchange market on or prior to March 31, 2021; and (ii) the remaining 60% must be refinanced so the average life of the debt is increased for a minimum of two years. Pursuant to Communication "A" 7621, the BCRA requirements set forth by Communication "A" 7106 are also applicable to amortization payments of principal outstanding amounts in loans and securities scheduled until December 31, 2023. As of the date of this Annual Report, this regime has not been renewed. It is not possible to guarantee that the period covered by Communication "A" 7621 will not be reinstated in the future by the BCRA or that other regulations with similar effects will be issued that would require the Company to refinance its obligations, which in turn could have a negative impact on the Company, and in particular, in the Company's ability to meet its debt obligations. See "-Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of the Class B Shares underlying the ADSs and "Item 10-Foreign Investment and Exchange Controls in Argentina-External financial indebtedness". In October 2022, the former administration issued the General Resolution No. 5271/2022 creating the Argentine System of Imports (SIRA) and the Argentine System of Imports and Foreign Payments of Services (SIRASE), an import licensing and approval system created to preserve hard currency reserves within the BCRA. All products and services were under the scope of the SIRA regime, which required Argentine importers to submit a SIRA or SIRASE request for all imports before shipping products or contracting services from abroad. The implementation of this system ultimately generated major import approval delays and barriers to foreign exchange availability for Argentine companies during 2023 and, because of the inability for companies to access the MULC, this was the only time in recent years when  many Argentine companies had to extend or renegotiate their commercial debts with foreign suppliers. Due to this situation, we have been unable to access the MULC to cancel most of our obligations in foreign currency for imports of goods and services which are crucial for our operations, while additionally generating the accumulation of commercial debt. This additional commercial debt, in the case it is past-due, is being treated as financial debt when considering the calculation of the financial ratios of the Company, in accordance with the definitions incorporated in some of our debt contracts. Milei's administration has announced that it plans to implement policies aimed at modifying Argentina's macroeconomic conditions, such as reducing the fiscal deficit, reforming the National State, privatizing public companies and rationalizing the current spending of the national administration. These measures and any future measures may generate volatility in economic and financial conditions. To address the issue of increasing commercial debts, under the Milei administration, the BCRA has been offering U.S. dollar-denominated securities (BOPREAL, standing for Bond for the Reconstruction of a Free Argentina in Spanish), which can only be subscribed by importers with overdue debts for goods with customs registration and/or services actually rendered until December 12, 2023. As an alternative, BOPREALs may be used for an easier access to foreign currency, whether through the collection of interest or principal upon maturity, or through the sale of the bonds in the secondary market in exchange for dollars paid abroad. Importers of goods and services may not repay debts incurred prior to December 12, 2023 by any other means, with the exception of dollars held abroad, without jeopardizing access to the official exchange market. Pursuant to current BCRA rules, importers will not be entitled to access the MULC for 90 days if they have conducted exchange transactions involving the sale/purchase of securities (other than BOPREALs) settled in dollars abroad. Given the options currently provided by the BCRA, we are managing the stock of commercial debt that was accumulated due to the aforementioned restrictions. We participated in the auctions of BOPREAL 1 and 2 Series during January and February 2024, As of the date these bonds were received, they are measured at fair value and included as current investments. The bonds would allow us to agree on a settlement of the existing commercial debt with our main vendors, which we are negotiating with each counterparty on a one-by-one basis. Any further depreciation of the Argentine Peso or our inability to acquire foreign currency could have a material adverse effect on our financial condition and results of operations. We cannot predict whether and to what extent the value of the Peso could depreciate against the U.S. dollar and the way in which any such fluctuations could affect our business. Furthermore, no assurance can be given that, in the future, no additional currency or foreign exchange restrictions or controls will be imposed. Existing and future measures may negatively affect Argentina's international competitiveness, discouraging foreign investments and lending by foreign investors or increasing foreign capital outflow which could have an adverse effect on economic activity in Argentina, and which in turn could adversely affect our business and results of operations. We cannot predict how these conditions will affect the consumption of services provided by Telecom or our ability to meet our liabilities denominated in currencies other than the Argentine Peso. Any restrictions on transferring funds abroad imposed by the government could undermine our ability to pay dividends on our ADSs or make payments (of principal or interest) under our outstanding indebtedness in U.S. dollars, as well as to comply with any other obligation denominated in foreign currency. See "Item 10-Additional Information-Foreign Investment and Exchange Controls in Argentina". Depreciation of the Argentine Peso against major foreign currencies may also have an adverse impact on our capital expenditure program and increase the Argentine Peso amount of our trade payables and borrowings denominated in foreign currencies. As of December 31, 2023, approximately P$2,073,259 million of our liabilities net were denominated in foreign currencies. Telecom seeks to manage the risk of devaluation of the Argentine Peso, by entering from time to time into certain DFI agreements and futures contracts in order to hedge some of its exposure to foreign currency fluctuations. However, Telecom remains highly exposed to risks associated with the fluctuation of the Argentine Peso. In addition, the devaluation of the Argentine Peso and foreign exchange restrictions may affect compliance with our covenants (see "Restrictive covenants in Telecom's outstanding indebtedness may restrict its ability to pursue its business strategies.").

Telecom faces operational risks inherent from its business, including those resulting from inadequate internal processes; fraud; employee errors or misconduct; failure to comply with applicable laws and regulations; the loss, lack of security or improper use of confidential information; improper access to corporate systems; lack of sufficient skilled resources to support the evolutions of the business; failure to document transactions properly; systems failures (including our systems, the implementation of corporate systems as identified in "Item 4-Information Technology strategy"); technical failures in the Company's ability to provide its services, errors or failures not foreseen in the foundational projects that the Company is carrying out for updating its core systems such as turnoff legacy delays and stabilizations of deployments; inadequate management of goods and materials in disuse that could become hazardous waste; serious work accidents; failure to preserve the secrecy and content of telecommunications required by law; excessive dependence on certain providers with which a large number of operations are concentrated due to the exclusivity of the technology or service they provide, economic convenience or for strategic reasons; among others. Moreover, certain assets of the Company could be damaged by acts of vandalism or theft of components or by works of third parties on public thoroughfare that damage infrastructure that do not have a second safety path to provide the service. These events could result in direct or indirect losses, adverse legal and regulatory proceedings, the lack of more respectful and plural environments, among others. Telecom maintains insurance policies to cover its main assets, particularly its properties. If economic and financial conditions in Argentina were to deteriorate (i.e. devaluation, inflation, etc.), the insurance coverage may not be representative of the market value of the properties which could result in losses for the Company. Telecom also manages the use of corporate security as a means of protecting and monitoring the Company's assets and employees. In addition, Telecom's suppliers of goods and services are contractually obliged to comply with laws and regulations (including tax, labor, social security, anti-corruption, money laundering standards, etc.). Additionally, our suppliers shall comply with a set of conduct standards, such as the Code of Ethics and Conduct for Third Parties, established by Telecom, and must require similar compliance by their employees and subcontractors. Despite these legal safeguards and monitoring efforts made by Telecom in relation to its suppliers, we cannot assure you that they will comply with all applicable regulations. As a result, Telecom could be adversely affected despite our contractual rights to claim for compensations for damages that they could cause to us. Telecom has risk management practices at the highest levels including a Risk Management Committee designed to detect, manage and monitor the evolution of risks. However, the Company can give no assurances that these measures will be successful for effectively mitigating the operational risks that Telecom faces and such failures could have a material adverse effect on its results of operations and could harm its reputation.

In Argentina, labor organizations have substantial support and considerable political influence. In recent years, the demands of our labor organizations have increased, mainly as a result of the increase in the cost of living, which was affected by increased inflation, higher tax pressure over salaries and the consequent decline in the population's purchasing power. In addition, in the absence of a union agreement concerning convergent services, if we are unable to reach an agreement with the unions on work conditions, or in case of a lack of recognition among union associations, we may be adversely affected by individual labor claims, class actions, higher union contributions expenses, impacts to our operations, impairment of services due to inefficient processes, union conflicts, direct action measures and social impacts which may also affect the quality and continuity of our services to our customers and our reputation. Certain labor and telecommunication unions have initiated claims against the Company alleging non-compliance of certain conditions provided for in the collective bargaining agreements that could allow them to negotiate the inclusion of some suppliers' employees in their collective bargaining agreements. See Note 19 to our Consolidated Financial Statements. If labor organization claims continue or are sustained, this could result in increased costs, greater conflict in the negotiation process and strikes (including general strikes and strikes by the Company's employees and the contractors and subcontractors' employees) that may adversely affect our operations. See "Item 6-Directors, Senior Management and Employees-Employees and Labor Relations". Moreover, the Argentine government has enacted laws and regulations requiring private sector companies to maintain certain salary levels and provide their employees with additional benefits. On December 13, 2019, the Argentine government declared a labor emergency for a 180-day term. In this context, the Argentine government doubled the amount of the statutory severance payments payable to employees hired before December 13, 2019 and dismissed between December 13 2019 and June 13, 2020. The layoff prohibition was extended pursuant to Decree No. 528/20 and Decree No. 961/20. Decree No. 39/21, in effect until April 27, 2021, extended the prohibition of dismissals without just cause or based on lack or reduction of work and force majeure, as well as the prohibitions to suspensions for economic reasons, except for suspensions made under the terms of Section 223 bis of the Labor Contract Law (agreements between employers and employees later approved by the Ministry of Labor, made either individually or collectively with the purpose of suspending employment for lack or reduction of work due to no fault from the employer), which were not affected by the prohibition. Likewise, Decree No. 39/21 extended the occupational emergency until December 31, 2023, but there is no more prohibition of dismisses, or double severance payment. Moreover, in September 2022, the National Labor Court of Appeals (Cámara Nacional de Apelaciones del Trabajo) in Buenos Aires issued Resolution No. 2,764, which modifies the way labor credits are claimed before the National Labor Court for the Federal Capital (Justicia Nacional del Trabajo de la Capital Federal). As a result of this resolution, interest should be accrued on an annual basis for a given labor credit claim as of the date such claim is filed and until the claim is effectively cancelled (with some variants whether it is in first or second instance courts and - even - between the different courts of law). In many cases, formulas are used to limit the aforementioned interest calculation. On February 29, 2024, the Supreme Court of Argentina in re "OLIVA, FABIO OMAR vs. COMA S.A. on/ DISMISSAL" decided that the calculation of compound interest in this case resulted in unjust enrichment and emphasized that the Civil and Commercial Code of Argentina does not authorize the calculation of compound interest. Chapter 4 of the Decree of Necessity and Urgency No. 70/2023 substantially amends certain labor laws. Mainly, it eases the conditions for hiring and registering personnel, limits the fines and interest rates that can be claimed in court, and declares telecommunications services, as well as sanitary, production, transportation, distribution, and commercialization services related to water, gas, and electricity supply, aviation services, customs and migration services, and childcare and education services, as essential services. In addition, it declared that services such as radio and television, as well as financial services, among others, shall be deemed of paramount importance. The General Confederation of Labor (CGT), along with other trade unions, requested that these provisions in Chapter 4 be declared unconstitutional, and obtained an injunction that ordered the suspension of its application. On January 30, 2024, the National Court of Appeals on Labor Matters issued a ruling declaring the unconstitutionality of these provisions. As of date of this Annual Report, the Supreme Court of Argentina has not yet issued a final ruling. The Argentine government may adopt new measures that determine salary increases or additional benefits for workers, and workers and their unions may pressure employers to comply with such measures. Any salary increase or additional benefit could result in an increase in costs and a decrease in the results of the operations of Argentine companies, including those of Telecom. Further, future extensions of the prohibition of layoffs and dismissals due to force majeure or lack of or decreased work or the duplication of the statutory severance payments to dismissed employees may affect the efficiency of our employees and therefore our costs and results of operations.

We purchase basic and premium programming from approximately 70 programming suppliers. Several programming suppliers agreed to offer volume discount pricing structures because of the growth and market share shown by our cable television operations. Participants in the cable television industry negotiate the terms of a majority of the respective programming contracts that had originally been denominated in U.S. dollars to provide for Peso-denominated pricing formulas generally linked to the number of customers and without minimum purchase requirements. As a consequence, contract terms are generally shortened and pricing provisions are adjusted in order to transfer the benefit of increases in the monthly fee for basic cable television services to the programming companies. The new contracts also provide for automatic termination upon the occurrence of major macroeconomic disruptions. We cannot assure you that we will be able to regularly negotiate renewals of our programming contracts at current cost levels, particularly since many of our suppliers have U.S. dollar-based costs. Additionally, suppliers are expected to seek price increases as a reflection of economic conditions in Argentina. There can similarly be no assurances that we will be able to obtain volume discounts in the future.