Incalnvest reports:

Fundamental research by IIR Group indicates a 25% upside in Telecom Argentina’s Class B common stock in a 6 – 24 month perspective. The target price for the company’s ADR (NYSE: TEO) is set at US$10.10, reflecting a 18.82% upside.  IIR’s outlook for TEO is broadly positive based on the healthy top-line growth reported for 2008, and expectations of higher future revenues from wireless services. The wireless market is expected to grow on basis of higher usage as a result of lower tarriffs. According to consultancy firm Frost & Sullivan, the WiMax customer base is expected to grow at a CAGR 97.7% from 2006 to 2012.

The competitive situation, with only two major telecom players present in Argentina, puts TEO in a position to capitalize on the opportunities in the WiMax market.

Moreover, IIR reports TEO is planning to form an agreement with regulators to offer licenses for for triple-play services (internet, TV and phone). On the downside, increased expenses for promotional activity, promotion and branding, is expected to put margins under pressure.

“Recent nationalization of ten pension funds in Argentina will increase liquidity risk and dampen investor perception of Argentina due to increased funding cost,” IIR reports.  This could present a significant risk.