Telecom Argentina: Acquisition Setback And Overvaluation Hold Back Progress

2025-03-28 08:45:00 ET

Summary

• Telecom Argentina’s fundamentals improved in 2024, particularly in financial leverage, driven by the macroeconomic recovery.
• Valuations remain stretched, though less irrational than a few months ago.
• The Argentine government's block of the TMA acquisition significantly hampers the company’s growth prospects and synergies.
• Telecom Argentina’s last year's stock price surge largely reflects an already priced-in recovery scenario.
• Despite improvements, there’s little margin of safety, with continued downside risk for TEO stock in 2025.

I've been bearish on Telecom Argentina (TEO) for the past few months, specifically since I wrote my last article covering the stock in November last year.

At the time, my point of skepticism about Argentina's largest telecom company was based mainly on seemingly stretched valuation multiples, which were unable to justify fundamentals even with the incredible macroeconomic recovery in Argentina after Milei took the Casa Rosada....

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