UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of November, 2017

Commission File Number: 001-14270

NORTEL INVERSORA S.A.

(Translation of registrant’s name into English)

AAlicia Moreau de Justo 50

~~Alicia~~Piso ~~Moreau de Justo, No. 50, 1107~~13

C1107AAB-Buenos Aires~~, Argentina~~

Argentina

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ~~☒ Form~~ý Form 40-F ☐¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐ ¨ No ☒ý

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐¨ No ☒ ý

Table of Contents

NORTEL INVERSORA S.A.

~~TABLE~~Table OFof ~~CONTENTS~~Contents

~~Item~~ITEM 1. ~~English~~Unaudited ~~translation~~Condensed ofConsolidated ~~letter~~Financial ~~dated~~Statements ~~November~~as ~~27,~~of ~~2017~~September to30, ~~the Argentine Securities & Exchange Commission (Comisión Nacional de Valores).~~2017

~~FREE~~Table ~~TRANSLATION~~of Contents

~~Buenos~~NORTEL ~~Aires,~~INVERSORA ~~November 27, 2017~~S.A.

~~Chairman~~NORTEL ofINVERSORA ~~the Comisión Nacional de Valores~~S.A.

~~Lic.~~UNAUDITED ~~Marcos~~CONDENSED ~~Ayerra~~CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017

~~Dear~~Table ~~Sirs,~~of Contents

~~RE.:~~NORTEL ~~Absorption~~INVERSORA ~~of Sofora Telecomunicaciones~~ S.A.~~; Nortel Inversora S.A. and Telecom Personal S.A., (the Absorbed Companies) by Telecom Argentina S.A. (the Surviving Company)~~

~~ENACOM~~UNAUDITED ~~Approvals~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017 AND 2016

Mariano Ibañez, in his character of Chairman of Telecom Argentina S.A. (“Telecom Argentina”) and Baruki Gonzalez, in his character of Chairman of Nortel Inversora S.A. (“Nortel”) and of Telecom Personal S.A. (“Telecom Personal”), are pleased to contact you in order to inform that last Friday, on November 24, our represented and Sofora Telecomunicaciones S.A. (“Sofora”) have been notified of Resolution Nº 2017-4545-APN-ENCOM#MM for which the Ente Nacional de Comunicaciones (“ENACOM”), after considering the requests for authorization submitted for the purpose of become effective the referred absorption, resolved:INDEX

1)Operating Toand ~~authorize~~financial ~~Telecom~~review ~~Personal~~and toprospects ~~transfer~~as ~~the records~~ of ~~the~~September ~~Mobile Telephony Services~~30, ~~Mobile~~2017 ~~Cellular~~Unaudited ~~Radio~~condensed ~~communications,~~consolidated ~~Personal~~financial ~~Communications~~statements ~~Area~~Unaudited I,consolidated ~~II,~~statements ~~III~~of ~~and~~financial ~~Advance~~position ~~Mobile~~Unaudited ~~Communications,~~consolidated asincome ~~well~~statements asUnaudited ~~the~~consolidated ~~resources,~~statements ~~permits~~of ~~and~~comprehensive ~~frequencies~~income ~~granted~~Unaudited inconsolidated ~~its~~statements ~~name, in favor~~ of ~~Telecom~~changes ~~Argentina and also,~~ in ~~order~~equity toUnaudited ~~avoid~~consolidated ~~the~~statements ~~duplication~~ of ~~own~~cash ~~records~~flows ofNotes ~~Telecom Argentina, cancel those granted~~ to ~~Telecom Personal to provide~~ the ~~services~~unaudited ofcondensed ~~Data~~consolidated ~~Transmission,~~financial ~~Value~~statements ~~Added~~Limited ~~and~~review ~~National~~report ~~and~~on ~~International~~condensed ~~Long~~interim ~~Distance~~consolidated ~~Telephony.~~financial statements

2)Table Toof ~~authorize the operation for which Sofora and Nortel dissolve without liquidation due to the merger in Telecom Argentina as Surviving Company.~~Contents

InNORTEL ~~accordance~~INVERSORA with the terms of the Preliminary Reorganization Agreement dated March 31, 2017 and the Final Reorganization Agreement granted on November 13, 2017, in order to give effect to the referred absorption, it only remains pending the completion of the conditioning process by Telecom Argentina of its technical-operative systems to assume the operations and activities of Telecom Personal, Nortel and SoforaS. In this regards, given the current status of this process, we estimate that Telecom Argentina will be able to assume the operations of the Absorbed Companies from 12:00 am on December 1, 2017, date in which the transfer of the operations and activities of the Absorbed Companies at Telecom Argentina will be subscribed, as foreseen in the Preliminary Reorganization Agreement and the Final Reorganization AgreementA.

~~Once~~OPERATING ~~the~~AND ~~aforementioned~~FINANCIAL ~~minutes~~REVIEW ~~have~~AND ~~been signed,~~PROSPECTS weAS ~~will~~OF ~~immediately~~SEPTEMBER ~~inform~~30, ~~to this Argentine Securities & Exchange Commission.~~2017

~~Sincerely,~~(In millions of Argentine pesos or as expressly indicated)

~~Telecom Personal S~~1.A. ~~Telecom~~General ~~Argentina S.A. Nortel Inversora S.A. Mariano Ibañez Baruki Gonzalez Chairman Chairman~~considerations

As required by CNV regulations, the Company has prepared its consolidated financial statements as of September 30, 2017 under IFRS. Additional information is given in Note 1 to the consolidated financial statements.

2. Company’s and Telecom Group’s activities for the nine-month periods ended September 30, 2017 (“9M17”) and 2016 (“9M16”)

Total revenues and other income for 9M17 amounted to $47,324 (+21.8% vs. 9M16), operating costs – including depreciations, amortizations and disposal and impairment of PP&E – amounted to $38,330 (+14.9% vs. 9M16), operating income before depreciation and amortization amounted to $14,222 (+39.7% vs. 9M16) – representing 30.1% of consolidated revenues –, operating income amounted to $8,994 (+63.7% vs. 9M16) and net income amounted to $5,675 (+128.5% vs. 9M16). Net income attributable to Nortel amounted to $3,117 in 9M17 (+128.9% vs. 9M16).

			Variation
	9M17	9M16	$	%
Revenues	47,263	38,818	8,445	21.8
Other income	61	36	25	69.4
Operating costs without depreciation and amortization	(33,102)	(28,673)	(4,429)	15.4
Operating income before depreciation and amortization	14,222	10,181	4,041	39.7
Depreciation and amortization	(5,133)	(4,485)	(648)	14.4
Disposal and impairment of PP&E	(95)	(202)	107	(53.0)
Operating income	8,994	5,494	3,500	63.7
Financial results, net	(269)	(1,654)	1,385	(83.7)
Income before income tax expense	8,725	3,840	4,885	127.2
Income tax expense	(3,050)	(1,356)	(1,694)	124.9
Net income	5,675	2,484	3,191	128.5

Attributable to:
Nortel (Controlling Company)	3,117	1,362	1,755	128.9
Non-controlling interest	2,558	1,122	1,436	128.0
	5,675	2,484	3,191	128.5

Basic and diluted earnings per share attributable to Nortel
On Ordinary shares	298.51	130.44
On preferred Class “B” shares	1,037.66	453.42

· Revenues

During 9M17 consolidated total revenues increased 21.8% (+$8,445 vs. 9M16) amounting to $47,263 mainly fueled by the outbound mobile services provided by Personal and Voice and Internet fixed services.

			Variation
	9M17	9M16	$	%
*Services*
Voice	6,119	4,328	1,791	41.4
Internet	5,621	4,351	1,270	29.2
Data	2,595	2,133	462	21.7
Subtotal Fixed Services	14,335	10,812	3,523	32.6
Outbound	22,118	18,043	4,075	22.6
Inbound	1,949	1,168	781	66.9
Other	1,197	1,086	111	10.2
Subtotal Personal Mobile Services	25,264	20,297	4,967	24.5
Outbound	1,789	1,426	363	25.5
Inbound	101	95	6	6.3
Other	157	244	(87)	(35.7)
Subtotal Núcleo Mobile Services	2,047	1,765	282	16.0
Total service revenues	41,646	32,874	8,772	26.7
*Equipment*
Fixed Services	294	78	216	276.9
Personal Mobile Services	5,250	5,649	(399)	(7.1)
Núcleo Mobile Services	73	217	(144)	(66.4)
Total equipment revenues	5,617	5,944	(327)	(5.5)

Total revenues	47,263	38,818	8,445	21.8

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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NORTEL INVERSORA S.A.

Services revenues amounted to $41,646 (+26.7% vs. 9M16) and represented 88.1% of consolidated revenues (vs. 84.7% in 9M16). Equipment revenues decreased 5.5%, amounting to $5,617 and represented 11.9% of consolidated revenues (vs. 15.3% in 9M16).

Fixed Services

During 9M17, services revenues generated by this segment amounted to $14,335 (+$3,523 or 32.6% vs. 9M16), where Voice revenues have grown the most (+$1,791 or +41.4% vs. 9M16), followed by Internet services (+$1,270 or +29.2% vs. 9M16).

Voice revenues (including the net revenues generated by the subsidiary Telecom USA amounting $212) reached $6,119 in 9M17 (+41.4% vs. 9M16). The increase was mainly due to the increase in plans prices.

Internet service revenues amounted to $5,621 in 9M17 (+29.2% vs. 9M16) as a result of the increase in the average plans prices. As a consequence, the Internet average monthly revenue per user (“ARPU”) amounted to $350.1 pesos per month in 9M17 vs. $260.4 pesos per month in 9M16 (+34.4%). As of September 30, 2017, the number of ADSL subscribers amounted to approximately 1,746,000. The churn rate per month amounted to 1.4% in 9M17 (vs. 1.5% in 9M16).

Data revenues (including the revenues generated by the subsidiary Telecom USA of $12) amounted to $2,595 (+$462 vs. 9M16). These revenues were generated focusing on Telecom Argentina’s position as an integrated TICs provider (Datacenter, VPN, among others) for wholesale and government segments. The increase was primarily due to the variation of the $/US$ exchange rate related to agreements settled in such foreign currency and to the increase in the number of Innovation services’ customers.

Personal Mobile Services

During 9M17, total services revenues amounted to $25,264 (+$4,967 or 24.5% vs. 9M16), being the principal business segment in revenues terms (60.7% and 61.7% of services consolidated revenues in 9M17 and 9M16, respectively). Personal reached 19.0 million subscribers in Argentina (-4.4% vs. 9M16). Approximately 66% of the subscriber base is prepaid subscribers and 34% is postpaid subscribers (including “Abono fijo” and Mobile Internet subscribers’ dongles).

The main ratios were:

· The churn rate per month amounted to 2.9% in 9M17 (vs. 2.7% in 9M16).

· ARPU amounted to $139.0 pesos per month in 9M17 (vs. $108.3 pesos per month in 9M16), representing a 28.3% increase.

· Other income generated by mobile Internet services amounted to $12,353 (+$4,856 or +64.8% vs. 9M16), fueled by new offers aimed at content consumption, the migration of subscribers to higher value service plans and the increase in subscribers holding 3G and 4G handsets, which enhance Internet usage.

Outbound mobile services revenues amounted to $22,118 in 9M17 (+$4,075 or +22.6% vs. 9M16). The increase was mainly due to higher monthly charges prices in the postpaid and “Abono fijo” subscriber base and to the increase of the online recharges in the prepaid subscriber base.

Inbound mobile services revenues (including CPP and TLRD) amounted to $1,949 (+$781 or +66.9% vs. 9M16). This increase is mainly related to the higher price per minute of CPP services, representing an increase in CPP services revenues, which were partially offset by a decrease in traffic volumes. In addition TLRD average price per minute and interconnection traffic volumes increased.

Other mobile services revenues amounted to $1,197 (+$111 or 10.2% vs. 9M16) mainly due to the increase in reconnection charges, which were partially offset by a decrease in international roaming traffic.

Núcleo Mobile Services

This segment generated services revenues equivalent to $2,047 during 9M17 (+$282 or 16.0% vs. 9M16) mainly due to the Internet revenues increase related to the increase of browsing generated by subscribers with mobile equipment prepared for that purpose. As of September 30, 2017, Núcleo’s subscriber base reached 2.5 million customers. Prepaid and postpaid subscribers (including “Plan Control” subscribers and mobile Internet subscribers) represented 83% and 17% in 9M17, respectively.

Internet revenues amounted to $931 (+32.1% vs. 9M16) and represented 45.5% of Núcleo Mobile Services segment services revenues (vs. 39.9% in 9M16).

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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NORTEL INVERSORA S.A.

Equipment

Revenues from equipment amounted to $5,617, -$327 or -5.5% vs. 9M16. This decrease is mainly related to the Personal Mobile Services with a decrease of $399 vs. 9M16 due to lower handsets sold (-15.0% vs. 9M16) partially offset by higher handset’s sale prices (+9.0% vs. 9M16).

· Operating costs

Consolidated operating costs –including depreciations, amortizations and disposal and impairment of PP&E– totaled $38,330 in 9M17, which represents an increase of $4,970 or +14.9% vs. 9M16. The increase in costs is mainly a consequence of higher revenues, higher expenses related to competition in mobile and Internet businesses, higher direct and indirect labor costs on the cost structure of the Telecom Group in Argentina, the increase in fees for services related to higher supplier prices, the increase in taxes, higher provisions, the increase in bad debt expenses and higher depreciations and amortizations, partially offset by the decrease in the cost of equipment and handsets, the decrease of VAS costs and the decrease in agent commissions.

			Variation		Variation in $ by segment
	9M17	9M16	$	%	Fixed Serv.	Personal M. Serv.	Núcleo M. Serv.	Nortel
Employee benefit expenses and severance payments	(9,163)	(7,218)	(1,945)	26.9	(1,534)	(400)	(11)	-
Interconnection costs and other telecommunication charges	(2,295)	(1,954)	(341)	17.5	(40)	(311)	10	-
Fees for services, maintenance, materials and supplies	(4,771)	(3,592)	(1,179)	32.8	(843)	(288)	(45)	(3)
Taxes and fees with the Regulatory Authority	(4,416)	(3,809)	(607)	15.9	(252)	(342)	(23)	10
Commissions	(3,416)	(3,841)	425	(11.1)	(18)	470	(27)	-
Agent commissions capitalized as SAC	731	1,046	(315)	(30.1)	(44)	(269)	(2)	-
Cost of equipment and handsets	(4,696)	(4,725)	29	(0.6)	(107)	(54)	190	-
Cost of equipment and handsets capitalized as SAC	58	94	(36)	(38.3)	-	(13)	(23)	-
Advertising	(769)	(548)	(221)	(40.3)	(77)	(146)	2	-
Cost of VAS	(690)	(1,142)	452	(39.6)	(12)	512	(48)	-
Provisions	(357)	(106)	(251)	236.8	(48)	(202)	(1)	-
Bad debt expenses	(920)	(844)	(76)	9.0	(53)	(42)	19	-
Other operating expenses	(2,398)	(2,034)	(364)	17.9	(168)	(173)	(21)	(2)
Subtotal	(33,102)	(28,673)	(4,429)	15.4	(3,196)	(1,258)	20	5
Depreciation of PP&E	(3,702)	(3,087)	(615)	19.9	(286)	(273)	(56)	-
Amortization of SAC and service connection charges	(1,160)	(1,087)	(73)	6.7	31	(122)	18	-
Amortization of other intangible assets	(271)	(311)	40	(12.9)	-	45	(5)	-
Disposal and impairment of PP&E	(95)	(202)	107	(53.0)	(32)	140	(1)	-
Total operating costs	(38,330)	(33,360)	(4,970)	14.9	(3,483)	(1,468)	(24)	5

The costs breakdown is as follows:

Employee benefit expenses and severance payments

Employee benefit expenses and severance payments amounted to $9,163 (+$1,945 or +26.9% vs. 9M16). The increase was mainly due to increases in salaries agreed by Telecom Argentina with several trade unions for the unionized employees and also to non-unionized employees, together with related social security charges. With a total headcount of 15,513 by the end of 9M17, (vs. 16,246 employees in 9M16), lines in service per employee reached 357 in the Fixed Services segment (similar to the amount of 9M16), subscribers per employee reached 4,352 in the Personal Mobile Services segment (+4.3% vs. 9M16) and subscribers per employee reached 6,388 (+2.4% vs. 9M16) in the Núcleo Mobile Services segment.

Interconnection costs and other telecommunication charges

Interconnection costs and other telecommunication charges (including charges for TLRD, Roaming, Interconnection costs, cost of international outbound calls and lease of circuits) amounted to $2,295 (+$341 or +17.5% vs. 9M16). The increase was mainly due to higher TLRD partially offset by a decrease in roaming costs.

Fees for services, maintenance, materials and supplies

Fees for services, maintenance, materials and supplies amounted to $4,771, +$1,179 or +32.8% vs. 9M16. The increase was mainly due to higher maintenance costs of radio bases in the mobile services segments, as a result of the variation in the $/US$ exchange rate, an increase in technical assistance cost of radio bases, higher system licenses costs, higher costs of sites location and higher storage costs. There were also increases in other maintenance costs and fees for services, mainly due to higher costs recognized to suppliers in all segments.

Taxes and fees with the Regulatory Authority

Taxes and fees with the Regulatory Authority (including turnover tax, fees with the Regulatory Authority, IDC, municipal and other taxes) amounted to $4,416 (+15.9% vs. 9M16), influenced mainly by the increase in revenues of fixed and mobile services and by the increase of the IDC related to higher collections and payments to suppliers, partially offset by lower fees with the regulatory authority.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

III

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NORTEL INVERSORA S.A.

Commissions

Commissions (including Agent, distribution of prepaid cards and other commissions) amounted to $3,416 (-$425 or -11.1% vs. 9M16). The decrease was mainly due to the decrease in Agents’ commissions as well as a decrease in collection commissions, CPP commissions and others.

On the other hand, agent commissions capitalized as SAC amounted to $731, -$315 or -30.1% vs. 9M16.

Cost of equipment and handsets

Cost of equipment and handsets amounted to $4,696 (-$29 or -0.6% vs. 9M16) mainly due to the decrease in the units of handsets sold in the Núcleo Mobile Services segment, partially offset by the increase in the Personal Mobile Services segment, as a consequence of the increase in the average unit cost of sales (+21% vs. 9M16) partially offset by a decrease in handsets sold (-15% vs. 9M16).

On the other hand, SAC deferred costs from handsets sold amounted to $58, -$36 or -38.3% vs. 9M16.

Advertising

Advertising amounted to $769 (+$221 vs. 9M16). This increase was due to the new advertising campaigns launched by Telecom Group during 2017, especially media advertising.

Cost of VAS

Cost of VAS amounted to $690 (-$452 or -39.6% vs. 9M16). The decrease was mainly due to the decrease of VAS sales in the Personal Mobile Services segment, as a consequence of the content suppliers depuration carried out within the content business general reorganization realized by Personal in 2016.

Provisions

Provisions amounted to $357, +$251 vs. 9M16, mainly due to higher labor claims (+$140 vs. 9M16) and higher civil and commercial claims (+$107 vs. 9M16).

Bad debt expenses

Bad debt expenses amounted to $920 (+$76 or +9.0% vs. 9M16), representing approximately 1.9% and 2.2% of the consolidated revenues in 9M17 and 9M16, respectively. The main increase is observed from the Fixed Services segment (amounting to $53) as a consequence of higher aging of the accounts receivable provisioned, in accordance with the accounting policy of the Group.

Other operating costs

Other operating costs amounted to $2,398 (+$364 or +17.9% vs. 9M16). The increase was mainly due to higher prices on related services recognized to suppliers in the operations in Argentina and the increase of rent prices (+$207 or +37.0% vs. 9M16), as a result of new agreements and the renegotiation of some of the existing ones.

· Operating income before depreciation and amortization

Operating income before depreciation and amortization amounted to $14,222 in 9M17 (+$4,041 or 39.7% vs. 9M16), representing 30.1% of consolidated revenues in 9M17 (vs. 26.2% in 9M16). This growth was mainly fueled by the Fixed Services segment (+$824 or +37.4% vs. 9M16) and the Mobile Services segments (+$3,212 or +40.1% vs. 9M16).

Operating income before depreciation and amortization generated by equipment and handset sales (including SAC capitalization) amounted to $979 in 9M17 vs. $1,313 in 9M16 (-$334 or -25.4% vs. 9M16), while operating income before depreciation and amortization generated by services sales amounted to $13,243 in 9M17 vs. $8,868 in 9M16 (+$4,375 or +49.3% vs. 9M16).

Depreciation and amortization

Depreciation and amortization amounted to $5,133 (+$648 or +14.4% vs. 9M16). The increase in depreciation and amortization includes $615 from PP&E depreciation and $73 from amortization of SAC and service connection costs, partially offset by a decrease of $40 from amortization of intangible assets without SAC. The increase in depreciation and amortization corresponds 39% to the Fixed Services segment and 61% to the Mobile Services segments.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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Disposal and impairment of PP&E

Disposal and impairment of PP&E amounted to $95 in 9M17 (-$107 vs. 9M16), of which $29 are generated by the Fixed Services segment and $66 are generated by the Mobile Services segments.

· Operating income

Operating income amounted to $8,994 in 9M17 (+$3,500 or 63.7% vs. 9M16). The margin over consolidated revenues represented 19.0% in 9M17 (vs. 14.2% in 9M16). This growth was mainly fueled by the Personal Mobile Services segment (+$2,844 or +62.0% vs. 9M16) and the Fixed Services segment (+$537 or +64.8% vs. 9M16).

· Financial results, net

Net financial results resulted in a net loss of $269, representing a lower loss of $1,385 vs. 9M16. The lower loss was mainly due to lower foreign currency exchange losses (+$185 vs. 9M16), higher interests on receivables (+$294 vs. 9M16), higher investments results (+$441 vs. 9M16) and lower interests on loans (+$541 vs. 9M16).

· Net income

Nortel reached a net income of $5,675 in 9M17, +$3,191 or +128.5% as compared to 9M16, representing 12.0% of the consolidated revenues in 9M17 (vs. 6.4% in 9M16). Net income attributable to Nortel amounted to $3,117 in 9M17, +$1,755 or +128.9% as compared to 9M16.

· Net financial position

As of September 30, 2017, consolidated net financial asset (Cash and Cash Equivalents plus financial investments plus financial NDF minus financial debt) amounted to $541, showing an increase of $7,094 as compared to the consolidated net financial debt as of September 30, 2016 (amounting to $6,553). This variation was mainly due to an increase in the generation of cash from operating activities of the Telecom Group. As of September 30, 2017, the Fixed Services segment has a net financial asset of $66, the Personal Mobile Services segment has a net financial asset of $661 and the Núcleo Mobile Services segment has a net financial debt of $224. Nortel has a net financial asset of $38.

· Capital expenditures (CAPEX)

CAPEX composition for 9M17 and 9M16 is as follows:

	In millions of $		% of participation		Variation
	9M17	9M16	9M17	9M16	$	%
Fixed Services	3,206	2,660	48%	35%	546	21
Personal Mobile Services	3,145	4,564	47%	59%	(1,419)	(31)
Núcleo Mobile Services	287	475	5%	6%	(188)	(40)
Total CAPEX	6,638	7,699	100%	100%	(1,061)	(14)

PP&E CAPEX amounted to $5,745 and intangible assets CAPEX amounted to $893 in 9M17, while in 9M16 amounted to $6,403 and $1,296, respectively.

In relative terms, CAPEX represented 14.0% of consolidated revenues in 9M17 (19.8% in 9M16), and were intended mainly for the external wiring and network access, transmission and switching equipment, computer equipment and SAC.

PP&E and intangible assets additions (CAPEX plus materials additions) for 9M17 and 9M16 are as follows:

	In millions of $		% of participation		Variation
	9M17	9M16	9M17	9M16	$	%
Fixed Services	4,721	3,269	58%	38%	1.452	44
Personal Mobile Services	3,155	4,845	39%	56%	(1,690)	(35)
Núcleo Mobile Services	293	478	3%	6%	(185)	(39)
Total additions	8,169	8,592	100%	100%	(423)	(5)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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NORTEL INVERSORA S.A.

Main PP&E CAPEX projects are related to the expansion of fixed broadband services in order to improve transmission and speed offered to customers; deployment of 3G and 4G services to support the growth of mobile Internet, improvement of the quality service together with the launch of innovative VAS services and the expansion of transmission and transport networks to meet the growing demand of services of our fixed and mobile customers. Also, significant investments have also been made in the pricing, billing and customer relationship systems.

3. The Company’s and Telecom Group’s activities for the three-month periods ended September 30, 2017 (“3Q17”) and 2016 (“3Q16”)

Nortel’s net income amounted to $2,050 in 3Q17, +$1,294 or +171.2% vs. 3Q16. Net income attributable to Nortel amounted to $1,120 in 3Q17 (+$708 or +171.8% vs. 3Q16).

Total revenues and other income increased 24.8% vs. 3Q16 and operating income before depreciation and amortization amounted to $4,894 (+$1,461 or +42.6% vs. 3Q16), representing 29.3% of the consolidated revenues (vs. 25.6% in 3Q16). Operating income amounted to $3,159 (+$1,370 or +76.6% vs. 3Q16). Financial results, net amounted to a loss of $14 (a lower loss of $605 vs. 3Q16), while income tax expenses amounted to $1,095 (+$681 or +164.5% vs. 3Q16).

			Variation
	3Q17	3Q16	$	%
Revenues	16,719	13,412	3,307	24.7
Other income	22	7	15	214.3
Operating costs without depreciation and amortization	(11,847)	(9,986)	(1,861)	18.6
Operating income before depreciation and amortization	4,894	3,433	1,461	42.6
Depreciation and amortization	(1,741)	(1,591)	(150)	9.4
Disposal and impairment of PP&E	6	(53)	59	n/a
Operating income	3,159	1,789	1,370	76.6
Financial results, net	(14)	(619)	605	(97.7)
Income before income tax expense	3,145	1,170	1,975	168.8
Income tax expense	(1,095)	(414)	(681)	164.5
Net income	2,050	756	1,294	171.2

Attributable to:
Nortel (Controlling Company)	1,120	412	708	171.8
Non-controlling interest	930	344	586	170.3
	2,050	756	1,294	171.2

Basic and diluted earnings per share attributable to Nortel
On Ordinary shares	107.26	39.46
On preferred Class “B” shares	372.85	137.16

During 3Q17 consolidated revenues increased 24.7% (+$3,307 vs. 3Q16) amounting to $16,719, mainly fueled by Personal Mobile Outbound Services and the Fixed Services segment.

			Variation
	3Q17	3Q16	$	%
*Services*
Voice	2,143	1,577	566	35.9
Internet	1,952	1,513	439	29.0
Data	909	731	178	24.4
Subtotal Fixed Services	5,004	3,821	1,183	31.0
Outbound	7,718	6,255	1,463	23.4
Inbound	626	443	183	41.3
Other	428	441	(13)	(2.9)
Subtotal Personal Mobile Services	8,772	7,139	1,633	22.9
Outbound	689	510	179	35.1
Inbound	37	33	4	12.1
Other	54	94	(40)	(42.6)
Subtotal Núcleo Mobile Services	780	637	143	22.4
Total service revenues	14,556	11,597	2,959	25.5

*Equipment*
Fixed Services	269	13	256	n/a
Personal Mobile Services	1,871	1,711	160	9.4
Núcleo Mobile Services	23	91	(68)	(74.7)
Total equipment revenues	2,163	1,815	348	19.2

Total revenues	16,719	13,412	3,307	24.7

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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Consolidated operating costs –including depreciation, amortization and disposal and impairment of PP&E– amounted to $13,582 in 3Q17, which represented an increase of $1,952 or +16.8% vs. 3Q16. The increase in costs is mainly a consequence of a higher revenues, higher expenses related to competition in mobile and Internet businesses, higher direct and indirect labor costs on the cost structure in Argentina, the increase in fees for services related to higher supplier prices, the increase in taxes, higher cost of equipment and handsets, the increase in advertising, and higher depreciations and amortizations, partially offset by lower bad debt expenses, cost of VAS and commissions charges.

			Variation
	3Q17	3Q16	$	%
Employee benefit expenses and severance payments	(3,282)	(2,780)	(502)	18.1
Interconnection costs and other telecommunication charges	(763)	(624)	(139)	22.3
Fees for services, maintenance, materials and supplies	(1,803)	(1,250)	(553)	44.2
Taxes and fees with the Regulatory Authority	(1,546)	(1,311)	(235)	17.9
Commissions	(1,098)	(1,317)	219	(16.6)
Agent commissions capitalized as SAC	216	372	(156)	(41.9)
Cost of equipment and handsets	(1,890)	(1,586)	(304)	19.2
Cost of equipment and handsets capitalized as SAC	21	38	(17)	(44.7)
Advertising	(290)	(177)	(113)	63.8
Cost of VAS	(224)	(350)	126	(36.0)
Provisions	(98)	(25)	(73)	292.0
Bad debt expenses	(245)	(326)	81	(24.8)
Other operating expenses	(845)	(650)	(195)	30.0
Subtotal	(11,847)	(9,986)	(1,861)	18.6
Depreciation of PP&E	(1,267)	(1,105)	(162)	14.7
Amortization of SAC and service connection charges	(381)	(381)	-	-
Amortization of other intangible assets	(93)	(105)	12	(11.4)
Disposal and impairment of PP&E	6	(53)	59	n/a
Total operating costs	(13,582)	(11,630)	(1,952)	16.8

CAPEX amounted to $2,615 in 3Q17 and amounted to $3,204 in 3Q16.

4. Summary of comparative consolidated statements of financial position

	September 30,
	2017	2016	2015	2014	2013
Current assets	19,162	13,014	9,734	8,645	10,100
Non-current assets	38,912	30,597	24,360	16,423	11,848
Total assets	58,074	43,611	34,094	25,068	21,948
Current liabilities	20,524	21,584	14,528	8,844	7,649
Non-current liabilities	11,772	3,056	2,889	2,129	2,052
Total liabilities	32,296	24,640	17,417	10,973	9,701
Equity attributable to Nortel (Controlling Company)	13,964	10,513	9,116	7,820	6,645
Equity attributable non-controlling interest	11,814	8,458	7,561	6,275	5,602
Total Equity	25,778	18,971	16,677	14,095	12,247
Total liabilities and equity	58,074	43,611	34,094	25,068	21,948

5. Summary of comparative consolidated income statements

	3Q17	3Q16	3Q15	3Q14	3Q13	9M17	9M16	9M15	9M14	9M13
Revenues and other income	16,741	13,426	10,098	8,608	7,127	47,324	38,852	28,605	24,223	19,853
Operating costs	(13,582)	(11,637)	(8,792)	(7,387)	(5,932)	(38,330)	(33,358)	(24,166)	(20,394)	(16,605)
Operating income	3,159	1,789	1,306	1,221	1,195	8,994	5,494	4,439	3,829	3,248
Financial results, net	(14)	(619)	(70)	80	161	(269)	(1,654)	(167)	242	375
Income before income tax expense	3,145	1,170	1,236	1,301	1,356	8,725	3,840	4,272	4,071	3,623
Income tax expense	(1,095)	(414)	(439)	(454)	(480)	(3,050)	(1,356)	(1,497)	(1,393)	(1,279)
Net income	2,050	756	797	847	876	5,675	2,484	2,775	2,678	2,344
Other comprehensive income, net of tax	55	34	(37)	-	54	152	274	(86)	233	83
Total comprehensive income	2,105	790	760	847	930	5,827	2,758	2,689	2,911	2,427

Attributable to Nortel (Controlling Company)	1,141	425	433	466	490	3,167	1,460	1,501	1,549	1,289
Attributable to non-controlling interest	964	365	327	381	440	2,660	1,298	1,188	1,362	1,138

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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6. Statistical data (in physical units)

v Fixed services (in thousands, except for lines in service per employees)

	9M17		9M16		9M15		9M14		9M13
	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter

Lines in service	3,838	(23)	3,946	(28)	4,054	(10)	4,106	3	4,124	10

ADSL subscribers	1,746	11	1,800	2	1,804	18	1,750	24	1,669	35

Lines in service per employee (a)

357

373

370

373

a) Line in services / effective employees,

v Mobile services

Personal (in thousands, except for subscriber per employee disclosed in units)

	9M17		9M16		9M15		9M14		9M13
	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter
Post-paid subscribers (i)	2,047	(80)	2,132	10	2,069	6	2,210	(93)	2,450	12

“Abono fijo” plans (i)	4,370	71	4,278	(22)	4,092	82	3,915	62	3,749	106

Prepaid subscribers (ii)	12,530	(485)	13,384	(38)	13,164	(49)	13,451	44	13,374	469

Dongles (iii)	83	(5)	107	(6)	119	(13)	191	(22)	282	(39)

Total subscribers	19,030	(499)	19,901	(56)	19,444	26	19,767	(9)	19,855	548

Lines per employee	4,352	-	4,172	-	3,884	-	3,935	-	3,839	-

(i) Lines which are paid through customer billing,

(ii) Prepaid lines which were refilled at least once in the last 13 months,

(iii) Corresponds to mobile Internet subscribers with post-paid, “Abono fijo”, and prepaid contracts,

Núcleo (in thousands, except for subscriber per employee disclosed in units)

	9M17		9M16		9M15		9M14		9M13
	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter	Accumulated	Quarter
Post-paid subscribers (i)	22	-	22	(4)	29	-	30	1	30	1

“Plan control” subscribers (i)	351	(14)	392	(6)	361	16	311	3	290	12

Prepaid subscribers (ii)	2,059	(10)	2,038	(6)	2,020	(1)	1,943	39	1,925	19

Dongles (iii)	40	(1)	75	(12)	114	(4)	136	(5)	157	(5)

Subtotal mobile	2,472	(25)	2,527	(28)	2,524	11	2,420	38	2,402	27

Internet subscribers - Wimax	5	-	5	-	6	-	5	-	5	(1)

Total subscribers	2,477	(25)	2,532	(28)	2,530	11	2,425	38	2,407	26

Lines per employee (iv)	6,388	-	6,240	-	6,186	-	5,817	-	5,547	-

(i) Lines which are paid through customer billing,

(ii) Prepaid lines which were refilled at least once in the last 13 months,

(iii) Corresponds to mobile Internet subscribers with post-paid, “Plan control” and prepaid contracts,

(iv) Internet Wimax subscribers are not included,

7. Consolidated ratios

	9M17	9M16	9M15	9M14	9M13
Liquidity (1)	0.93	0.60	0.67	0.98	1.32
Solvency (2)	0.80	0.77	0.96	1.28	1.26
Locked-up capital (3)	0.67	0.70	0.71	0.66	0.54

(1) Current assets/Current liabilities,

(2) Total equity/Total liabilities,

(3) Non-current assets/Total assets,

8. Outlook

Fiscal year 2017 is developing in a more favorable macroeconomic context than previous years. We expect moderate economic growth rates for 2017 amounting to approximately 3% (GDP in real terms), with inflation rates that should be close to 22% per year. Also, the Telecom Group is confident that the demand of its products and services will remain at good levels, especially those related to Internet use, and in particular of those related to innovative offers associated with convergence at home, which the Group will continue launching in order to provide to most of the customers with the benefits of hiring its services in their home, company or by enjoying the wide access levels of Personal services. The Group will continue working to enrich its offer with products and services to encourage the increase of its ARPU in all business segments, with pricing policies segmented to the possibilities of each type of customer, without neglecting global profitability of its business.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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Analyzing the evolution of the business service by service, it is expected that fixed telephony evolution will continue in line with recent year’s global trend, influenced by market maturity. Relating to the fixed access Internet service, in order to continue with home Internet improving, Ultra Broad Band (high bandwidth or UBB) will continue to be developed through technologies based on fiber optic in different network points, what will allow the customers in the near future to access to speeds over 100 Mgs.

Personal will continue working focusing on service quality and the nationwide deployment of the 4G LTE network, improving coverage and network speed. Mobile Broadband services will also be expanded with new frequencies and more investments, continuing with technological reconversion and the expansion of the network capacity, obtaining LTE capacity in over than 80% of its sites.

For the high value mobile segment, we continue improving the user experience, working in simplifying customers’ management and attention, through more flexible and differential processes.

For prepaid subscribers, we will continue working on a social network-oriented offer, coupled with real-time campaigns that promote prepaid subscribers base and improve ARPU of such subscribers.

Also, convergent offers will continue to be developed by providing the customers with Internet services, fixed and mobile calls, with differential benefits for a joint services subscription. According to this, the convergent operator status and the market positioning in each country region will be enhanced.

For the corporate segment, efforts will continue to focus on the provision of converged solutions, with a portfolio that will provide customers with next-generation Datacenter services as well as value-added services associated with cloud computing and security solutions.

As disclosed in the consolidated financial statements, it is expected that the Regulatory Authority provides soon the necessary authorizations to implement the corporate integration of Telecom Argentina, and thereby facilitate the services convergence and the improvement of the relating commercial processes.

The Telecom Group will continue working on its goal of promoting operational excellence, looking for a better use of the Group’s physical, human and technological resources, so as to continue meeting the profitability expectations of its investors. In order to achieve this goal, it was developed an ambitious multi-year business plan that foresees the implementation of an investment plan in last generation fixed and mobile network targeted to a convergent ICT market.

Finally, on August 31, 2017 the Shareholders’ Meeting of Telecom Argentina and Cablevisión S.A. have approved the Preliminary Merger Agreement subscribed on June 30, 2017 to merge their corporate and operational structures in order to become a convergent telecommunication supplier and participate in the sector opening, provided by the Argentine regulation for January 2018. In line with these actions, on October 31, 2017 the Chairmen of both companies signed the Final Merger Agreement, ad referendum of the ENACOM authorizations that may correspond under Decree No. 267/15.

The proposed transaction is part of a convergence global process in the provision of fixed and mobile telecommunications services, video and Internet distribution known as “cuádruple play”. This operation will allow the merged company to become a leader in convergent solutions to fulfill the digital people life and to facilitate the digital companies operations. The combination of the two companies will boost investment in the latest infrastructure of mobile technologies as well as the deployment of a high-speed fiber optic network.

The strategy implemented by Telecom Argentina’s Management outlines the necessary basis for the Telecom Group to pursue its continuous goals of improving service quality, strengthening its market positioning and adequately reward the invested capital of those who finance its businesses. This strategy and the important plan of investments in capital assets are based on this vision of future and on the commitment of the Telecom Group with our country and its people.

	Baruki González
	Chairman of the Board of Directors

OPERATING AND FINANCIAL REVIEW AND PROSPECTS AS OF SEPTEMBER 30, 2017

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NORTEL INVERSORA S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Argentine pesos)

		September 30,	December 31,
	Note	2017	2016
ASSETS
Current Assets
Cash and cash equivalents	2	6,235	4,002
Investments	2	1,941	1,751
Trade receivables	2	7,824	7,577
Other receivables	2	1,211	1,012
Inventories	2	1,951	1,278
Total current assets		19,162	15,620
Non-Current Assets
Trade receivables	2	16	208
Other receivables	2	410	362
Income tax assets	2	823	680
Investments	2	4,136	347
Property, plant and equipment (“PP&E”)	2	26,333	23,165
Intangible assets	2	7,194	7,592
Total non-current assets		38,912	32,354
TOTAL ASSETS		58,074	47,974
LIABILITIES
Current Liabilities
Trade payables	2	10,661	8,981
Deferred revenues	2	818	443
Financial debt	2	2,816	3,266
Salaries and social security payables	2	2,072	1,611
Income tax payables	2	2,491	727
Other taxes payables	2	1,169	1,149
Dividends payable	2	20	-
Other liabilities	2	95	76
Provisions	6	382	271
Total current liabilities		20,524	16,524
Non-Current Liabilities
Trade payables	2	169	152
Deferred revenues	2	409	445
Financial debt	2	8,995	8,646
Salaries and social security payables	2	180	184
Deferred income tax liabilities	2	189	571
Income tax payables	2	3	7
Other liabilities	2	212	170
Provisions	6	1,615	1,352
Total non-current liabilities		11,772	11,527
TOTAL LIABILITIES		32,296	28,051
EQUITY
Equity attributable to Nortel (Controlling Company)		13,964	10,797
Equity attributable to non-controlling interest		11,814	9,126
TOTAL EQUITY (see Unaudited Condensed Consolidated Statement of Changes in Equity)	7	25,778	19,923
TOTAL LIABILITIES AND EQUITY		58,074	47,974

The accompanying notes are an integral part of these consolidated financial statements,

		Baruki González
		Chairman of the Board of Directors

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NORTEL INVERSORA S.A.

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions of Argentine pesos, except per share data in Argentine pesos)

		Three-month periods ended September 30,		Nine-month periods ended September 30,
	Note	2017	2016	2017	2016
Revenues	2	16,719	13,412	47,263	38,818
Other income	2	22	7	61	36
Total revenues and other income		16,741	13,419	47,324	38,854
Employee benefit expenses and severance payments	2	(3,282)	(2,780)	(9,163)	(7,218)
Interconnection costs and other telecommunication charges	2	(763)	(624)	(2,295)	(1,954)
Fees for services, maintenance, materials and supplies	2	(1,803)	(1,250)	(4,771)	(3,592)
Taxes and fees with the Regulatory Authority	2	(1,546)	(1,311)	(4,416)	(3,809)
Commissions	2	(882)	(945)	(2,685)	(2,795)
Cost of equipment and handsets	2	(1,869)	(1,548)	(4,638)	(4,631)
Advertising	2	(290)	(177)	(769)	(548)
Cost of VAS	2	(224)	(350)	(690)	(1,142)
Provisions	6	(98)	(25)	(357)	(106)
Bad debt expenses	2	(245)	(326)	(920)	(844)
Other operating expenses	2	(845)	(650)	(2,398)	(2,034)
Depreciation and amortization	2	(1,741)	(1,591)	(5,133)	(4,485)
Disposal and impairment of PP&E	2	6	(53)	(95)	(202)
Operating income		3,159	1,789	8,994	5,494
Finance income	2	759	146	1,780	629
Finance expenses	2	(773)	(765)	(2,049)	(2,283)
Income before income tax expense		3,145	1,170	8,725	3,840
Income tax expense	2	(1,095)	(414)	(3,050)	(1,356)
Net income for the period		2,050	756	5,675	2,484

Attributable to:
Nortel (Controlling Company)		1,120	412	3,117	1,362
Non-controlling interest		930	344	2,558	1,122
		2,050	756	5,675	2,484

Earnings per share attributable to Nortel – basic and diluted	1.d
Ordinary shares		107.26	39.46	298.51	130.44
Class “B” Preferred Shares		372.85	137.16	1.037.66	453.42

The accompanying notes are an integral part of these consolidated financial statements,

		Baruki González
		Chairman of the Board of Directors

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NORTEL INVERSORA S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Argentine pesos)

	Three-month periods ended September 30,		Nine-month periods ended September 30,
	2017	2016	2017	2016

Net income for the period	2,050	756	5,675	2,484

Other components of the Statements of Comprehensive Income
Will be reclassified subsequently to profit or loss
Currency translation adjustments (no effect on Income Tax)	47	34	181	282
Subsidiaries’ NDF effects classified as hedges	8	-	(29)	(8)
Other components of the comprehensive income, net of tax	55	34	152	274

Total comprehensive income for the period	2,105	790	5,827	2,758

Attributable to:
Nortel (Controlling Company)	1,141	425	3,167	1,460
Non-controlling interest	964	365	2,660	1,298
	2,105	790	5,827	2,758

The accompanying notes are an integral part of these consolidated financial statements,

		Baruki González
		Chairman of the Board of Directors

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NORTEL INVERSORA S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Argentine pesos)

	Equity attributable to Nortel (Controlling Company)
	Capital stock (1)		Inflation adjustment of capital stock	Share issue premiums (1)	Subsidiary’s treasury shares acquisition effect (2)	Legal reserve	Voluntary reserve for future cash dividends payments	Special reserve for IFRS implementation	Other comprehensive income	Retained earnings	Total	Equity attributable to non-controlling interest	Total Equity
	Common stock	Preferred shares	Inflation adjustment of capital stock	Share issue premiums (1)	Subsidiary’s treasury shares acquisition effect (2)	Legal reserve	Voluntary reserve for future cash dividends payments	Special reserve for IFRS implementation	Other comprehensive income	Retained earnings	Total	Equity attributable to non-controlling interest	Total Equity

Balances as of January 1, 2016	53	15	108	15	(155)	180	7,000	204	294	1,891	9,605	8,048	17,653
Reserve for future cash dividends payments (3)	-	-	-	-	-	-	1,891	-	-	(1,891)	-	-	-
Dividends from Telecom Argentina (4)	-	-	-	-	-	-	-	-	-	-	-	(888)	(888)
Dividends (5)	-	-	-	-	-	-	(380)	-	-	-	(380)	-	(380)
Dividends (6)	-	-	-	-	-	-	(172)	-	-	-	(172)	-	(172)
Comprehensive income:
Net income for the period	-	-	-	-	-	-	-	-	-	1,362	1,362	1,122	2,484
Other comprehensive income	-	-	-	-	-	-	-	-	98	-	98	176	274
Total Comprehensive Income	-	-	-	-	-	-	-	-	98	1,362	1,460	1,298	2,758

Balances as of September 30, 2016	53	15	108	15	(155)	180	8,339	204	392	1,362	10,513	8,458	18,971

Balances as of January 1, 2017	53	15	108	15	(155)	180	8,339	204	386	1,652	10,797	9,126	19,923

Dividends from Núcleo (7)	-	-	-	-	-	-	-	-	-	-	-	(35)	(35)
Reserve for future cash dividends payments (8)	-	-	-	-	-	-	1,652	-	-	(1,652)	-	-	-
Tuves Paraguay acquisition (9)	-	-	-	-	-	-	-	-	-	-	-	63	63
Comprehensive income:
Net income for the period	-	-	-	-	-	-	-	-	-	3,117	3,117	2,558	5,675
Other comprehensive income	-	-	-	-	-	-	-	-	50	-	50	102	152
Total Comprehensive Income	-	-	-	-	-	-	-	-	50	3,117	3,167	2,660	5,827

Balances as of September 30, 2017	53	15	108	15	(155)	180	9,991	204	436	3,117	13,964	11,814	25,778

(1) As of September 30, 2017 and 2016 all shares of common stock and Series “B” Preferred shares were issued and fully paid.

(2) See Note 7 – Equity to these consolidated financial statements.

(3) As approved by the Ordinary and Extraordinary Shareholders’ Meeting of the Company held on April 29, 2016.

(4) As approved by the Telecom Argentina’s Board of Directors Meeting held on April 29, 2016.

(5) As approved by the Company’s Board of Directors Meeting held on April 29, 2016.

(6) As approved by the Company’s Board of Directors Meeting held on August 9, 2016.

(7) As approved by the Ordinary Shareholders’ Meeting of Núcleo held on March 28, 2017.

(8) As approved by the Company’s Ordinary and Extraordinary Shareholders’ Meeting held on April 27, 2017.

(9) See Note 12.j).

The accompanying notes are an integral part of these consolidated financial statements.

		Baruki González
		Chairman of the Board of Directors

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NORTEL INVERSORA S.A.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Argentine pesos)

		Nine-month periods ended September 30,
	Note	2017	2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period		5,675	2,484
Adjustments to reconcile net income to net cash flows provided by operating activities
Bad debt expenses	2	920	844
Allowance for obsolescence of inventories, materials and other deducted from assets	2	78	54
Depreciation of PP&E	2	3,702	3,087
Amortization of intangible assets	2	1,431	1,398
Consumption of materials	2	631	346
Disposals and impairment of PP&E		76	200
Net book value of disposals of PP&E		32	11
Provisions	6	357	106
Other financial losses		804	1,147
Income tax expense	2	3,050	1,356
Income tax paid	3	(1,849)	(1,294)
Net increase in assets	3	(1,975)	(2,728)
Net increase (decrease) in liabilities	3	2,613	(683)
Total cash flows provided by operating activities		15,545	6,328
CASH FLOWS FROM INVESTING ACTIVITIES
PP&E acquisitions	3	(7,825)	(6,808)
Intangible assets acquisitions	3	(723)	(1,317)
Proceeds on the sale of PP&E		23	13
Cash flows related to acquisition of Tuves Paraguay	3	2	-
Investments not considered as cash and cash equivalents	3	(3,271)	1,139
Total cash flows used in investing activities		(11,794)	(6,973)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from financial debt	3	2,262	4,478
Payment of financial debt	3	(3,019)	(1,231)
Payment of interest and related costs	3	(753)	(1,189)
Payment of cash dividends and related tax withholdings		(18)	(1,440)
Total cash flows (used in)/provided by financing activities		(1,528)	618

NET FOREIGN EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS		10	63

INCREASE IN CASH AND CASH EQUIVALENTS		2,233	36
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR		4,002	937
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		6,235	973

See Note 3 for additional information on the consolidated statements of cash flows.

The accompanying notes are an integral part of these consolidated financial statements.

		Baruki González
		Chairman of the Board of Directors

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017 AND 2016

(In millions of Argentine pesos, except as otherwise indicated)

INDEX

		Page
	Glossary of terms	7
	Notes to the unaudited condensed consolidated financial statements
1	Basis of preparation of the unaudited condensed consolidated financial statements and significant accounting policies	9
2	Breakdown of the main accounts	13
3	Supplementary cash flow information	24
4	Segment information	27
5	Balances and transactions with companies under Section 33 – Law No. 19,550 and related parties	30
6	Commitments and contingencies of the Telecom Group	32
7	Equity	33
8	Restrictions on distribution of profits	34
9	Selected consolidated quarterly information	35
10	Corporate reorganization of the Telecom Group and its controlling companies	35
11	Merger by absorption between Telecom Argentina and Cablevisión S.A.	38
12	Recent developments corresponding to the nine-month period ended September 30, 2017 for the Telecom Group	40
13	Subsequent events to September 30, 2017	46

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GLOSSARY OF TERMS

The following explanations are not intended as technical definitions, but to assist the general reader to understand certain terms as used in these unaudited consolidated financial statements.

ADSL (Asymmetric Digital Subscriber Line): A type of digital subscriber line technology (DSL); a data communications technology that enables faster data transmission over copper lines than a conventional voiceband modem can provide.

BYMA (Bolsa de Comercio de Buenos Aires): The Buenos Aires Stock Exchange.

BCRA (Banco Central de la República Argentina): The Central Bank of Argentina.

CAPEX: Capital Expenditures Investments.

CNV (Comisión Nacional de Valores): The Argentine National Securities Commission.

Company or Nortel: Nortel Inversora S.A.

CONATEL (Comisión Nacional de Telecomunicaciones del Paraguay): The Regulatory Authority of Paraguay.

CPCECABA (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires): The Professional Council of Economic Sciences of the City of Buenos Aires.

CPP: Calling Party Pays, These are the charges related to fixed telephony customer’s calls to mobile subscribers.

“Abono fijo”: Under the “Abono fijo” plans, a subscriber pays a set monthly bill and, once the contract minutes per month have been used, the subscriber can obtain additional credit by recharging the phone card through the prepaid system.

D&A: Depreciation and amortization.

DLD: Domestic long-distance.

ENACOM: The National Communications Agency.

ENARD (Ente Nacional de Alto Rendimiento Deportivo): National High Sport Performance Organization.

ENTel (Empresa Nacional de Telecomunicaciones): Argentine State Telecommunication Company, which was privatized in November, 1990.

FACPCE (Federación Argentina de Consejos Profesionales en Ciencias Económicas): Argentine Federation of Professional Councils of Economic Sciences.

FFSU or SU Fund (Fondo Fiduciario del Servicio Universal): Universal Service Fiduciary Fund.

Fintech: Fintech Telecom LLC, Sofora’s controlling company.

IAS: International Accounting Standards.

IASB: International Accounting Standards Board.

ICT: Information and Communication Technologies.

IDC (Impuesto a los débitos y créditos bancarios): Tax on deposits to and withdrawals from bank accounts.

IFRS: International Financial Reporting Standards, as issued by the International Accounting Standards Board.

IGJ (Inspección General de Justicia): General Board of Corporations.

LAD (Ley Argentina Digital): Argentine Digital Law No. 27,078

Lebacs: Notes issued by the BCRA.

LGS (Ley General de Sociedades): Argentine Corporations Law No. 19,550 as amended. Since the enforcement of the new Civil and Commercial Code its name was changed to “General Corporations Law”.

Micro Sistemas: Micro Sistemas S.A.

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NDF: Non-Deliverable Forward.

Núcleo: Núcleo S.A.

NYSE: New York Stock Exchange.

PCS (Personal Communications Service): A mobile communications service with systems that operate in a similar manner to cellular systems.

PEN (Poder Ejecutivo Nacional): The executive branch of the Argentine government.

Telecom Personal/Personal: Telecom Personal S.A.

Personal Envíos: Personal Envíos S.A.

PP&E: Property, plant and equipment.

Regulatory Authority: Previously, the SC, the CNC and the AFTIC. Since the issuance of the Decree of Need and Urgency No. 267/15, the Regulatory Authority is the National Communications Agency (ENACOM).

Regulatory Bodies: Collectively, the SC and the CNC.

Roaming: a function that enables mobile subscribers to use the service on networks of operators other than the one with which they signed their initial contract. The roaming service is active when a mobile device is used in a foreign country (included in the GSM network).

RT: Technical resolutions issued by the FACPCE.

RT 26: Technical resolution No. 26 issued by the FACPCE, amended by RT 29 and RT 43.

SAC: Subscriber Acquisition Costs.

SC (Secretaría de Comunicaciones): The Argentine Secretary of Communications.

SEC: Securities and Exchange Commission of the United States of America.

SMS: Short message systems.

Sofora: Sofora Telecomunicaciones S.A. Nortel’s controlling company.

SU: The availability of Basic telephone service, or access to the public telephone network via different alternatives, at an affordable price to all persons within a country or specified area.

Telecom Group / Group: Telecom Argentina and its consolidated subsidiaries.

Telecom Argentina: Telecom Argentina S.A.

Telecom Italia Group: Telecom Italia S.p.A and its consolidated subsidiaries, except where referring to the Telecom Italia Group as Telecom Argentina’s operator in which case it means Telecom Italia S.p.A and Telecom Italia International N.V.

Telecom USA: Telecom Argentina USA Inc.

TLRD (Terminación Llamada Red Destino): Termination charges from third parties’ wireless networks.

US GAAP: United States of America Generally Accepted Accounting Principles.

Tuves Paraguay: Tuves Paraguay S.A.

VAS (Value-Added Services): Services that provide additional functionality to the basic transmission services offered by a telecommunications network such as SMS, Video streaming, Personal Video, Personal Cloud, M2M (Communication Machine to Machine), Social networks, Personal Messenger, Contents and Entertainment (content and text subscriptions, games, music ringtones, wallpaper, screensavers, etc), MMS (Mobile Multimedia Services) and Voice Mail, among others.

WAI: W de Argentina - Inversiones S.A.

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NOTE 1 – BASIS OF PREPARATION OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation and significant accounting policies

As required by the CNV for most of public companies, these consolidated financial statements have been prepared in accordance with RT 26 of FACPCE (as amended by RT 29 and RT 43) and in accordance with IFRS as issued by the IASB, as adopted by the CPCECABA.

For the preparation of these consolidated financial statements, the Company has elected to make use of the option provided by IAS 34, so, these consolidated financial statements do not include all the information required in an annual financial statement, and must be read jointly with the audited consolidated financial statements of Nortel as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014, included in the Nortel 2016 Form 20-F.

As of September 30, 2017, entities included in the consolidation process and the respective equity interest owned by Nortel and Telecom Argentina is presented as follows:

Subsidiaries	Percentage of capital stock owned by Nortel and voting rights (i)	Percentage of capital stock owned by Telecom Argentina and voting rights (i)	Indirect control through	Date of acquisition	Segment that consolidates (Note 4)
Telecom Argentina	(iv) 55.60%			11.08.90	Fixed Services
Personal		100.00%	Telecom Argentina	07.06.94	Personal Mobile Services
Micro Sistemas (ii)	0.01%	99.99%	Telecom Argentina	12.31.97	Fixed Services
Telecom USA		100.00%	Telecom Argentina	09.12.00	Fixed Services
Núcleo (iii)		67.50%	Personal	02.03.98	Núcleo Mobile Services
Personal Envíos (iii)		67.50%	Núcleo	07.24.14	Núcleo Mobile Services
Tuves Paraguay (v)		47.25%	Núcleo	06.30.17	Núcleo Mobile Services

(i) Percentage of equity interest owned has been rounded.

(ii) Dormant entity as of September 30, 2017 and December 31, 2016 and for the nine-month periods ended September 30, 2017 and 2016.

(iii) Non-controlling interest of 32.50% is owned by the Paraguayan company ABC Telecomunicaciones S.A.

(iv) Corresponds to Nortel’s equity interest in Telecom Argentina as of September 30, 2017, considering Telecom Argentina’s total outstanding shares Nortel’s equity interest in Telecom Argentina’s total capital amounts to 54.74% as of September 30, 2017.

(v) Non-controlling interest of 22.75% is owned by the Paraguayan company ABC Telecomunicaciones S.A. and non-controlling interest of 30.00% is owned by TU VES S.A. Chile (See Note 12.j).

For the preparation of these consolidated financial statements, the Company followed the same accounting policies applied in the most recent annual consolidated financial statements, except for:

(i) the accounting of the acquisition of the whole remaining shares of its subsidiary Telecom Personal (0.008%, see Note 12.c). By means of this transaction, the minority interest was adjusted in $1 and the difference between the purchase value (amounting to $4) and the minority interest was recorded into the account “Cost of equity interest increase in controlled companies” within the Consolidated Statement of Changes in Equity – Controlling Company as of September 30, 2017 in accordance with the provisions of IFRS 10.

(ii) the accounting of the controlling interest acquisition of Tuves Paraguay, as of June 30, 2017. For this controlling interest acquisition, the provisions of IFRS 3 “Business Combination” have been followed (See Note 12.j).

These unaudited condensed interim financial statements for the nine-month period ended September 30, 2017 have not been audited. The Company’s management estimates they include all the necessary adjustments to present fairly the results of operations for each period. The results for the nine-month period ended September 30, 2017, does not necessarily reflect in proportion the Company’s results for the complete year.

The preparation of these consolidated financial statements in conformity with IFRS requires the Company’s Management to use certain critical accounting estimates. Actual results could differ from those estimates.

These consolidated financial statements (except for cash flow information) are prepared on an accrual basis of accounting. Under this basis, the effects of transactions and other events are recognized when they occur. Therefore income and expenses are recognized at fair value on an accrual basis regardless of when they are perceived or paid. When significant, the difference between the fair value and the nominal amount of income and expenses is recognized as finance income or expense using the effective interest method over the relevant period.

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These consolidated financial statements have also been prepared on a going concern basis, as there is a reasonable expectation that Nortel and its subsidiaries (through Telecom Argentina as surviving company after the reorganization) will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve months).

Publication of these consolidated financial statements for the period ended September 30, 2017 was approved by resolution of the Board of Directors’ meeting held on November 10, 2017.

b) Financial statement formats

The financial statement formats adopted are consistent with IAS 1, In particular:

· the consolidated statements of financial position have been prepared by classifying assets and liabilities according to “current and non-current” criterion. Current assets and liabilities are those that are expected to be realized within twelve months after the period-end;

· the consolidated income statements have been prepared by classifying operating expenses by nature of expense as this form of presentation is considered more appropriate and representative of the specific business of the Telecom Group as evaluated by the Management, and are in line with the industrial sector of telecommunications;

· the consolidated statements of comprehensive income include the profit or (loss) for the period as shown in the consolidated income statement and all components of other comprehensive income;

· the consolidated statements of changes in equity have been prepared showing separately (i) profit (loss) for the period, (ii) other comprehensive income (loss) for the period, and (iii) transactions with shareholders (controlling and non-controlling);

· the consolidated statements of cash flows have been prepared by presenting cash flows from operating activities according to the “indirect method”, as permitted by IAS 7.

These consolidated financial statements contain all material disclosures required under IAS 34. Some additional disclosures required by the LGS and/or by the CNV have been also included, among them, complementary information required in the last paragraph of Article 1 Chapter III Title IV of the CNV General Resolution No. 622/13. Such information is disclosed in Notes 2 and 6 to these consolidated financial statements, as admitted by IFRS.

In addition, certain non-material reclassifications have been included in the comparative figures for the nine-month period ended September 30, 2016 of the consolidated income statements under Other Income and Disposals and impairment of PP&E with the purpose of improving the comparability of information with that elaborated for the nine-month period ended September 30, 2017.

c) Segment reporting

An operating segment is defined as a component of an entity that engages in business activities from which it may earn revenues and incur expenses, and whose financial information is available, held separately, and evaluated regularly by the Telecom Group’s Chief Executive Officer (“CEO”).

Operating segments are reported in a consistent manner with the internal reporting provided to the Telecom Group’s CEO, who is responsible for allocating resources and assessing performance of the operating segments at the net income (loss) level and under the accounting principles effective (IFRS as issued by the IASB) at each time for reporting to the Regulatory Bodies. The accounting policies applied for segment information are the same for all operating segments.

Information regarding segment reporting is included in Note 4.

d) Net income per share

The Company computes net income per common share by dividing net income for the period attributable to Nortel (Controlling Company) by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive potential common shares then outstanding during the period. Since the Company has no dilutive potential common stock outstanding, there are no dilutive earnings per share amounts.

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The following tables set forth the computation of basic and diluted net income per share for the periods indicated:

	Nine-month periods ended September 30,
	2017	2016
Numerator:
Net income attributable to Nortel	3,117	1,362
Net income available to Class “B” Preferred Shares	(1,525.84)	(666.73)
Net income available to common shares	1,591.16	695.27
Denominator:
Number of common shares outstanding	5,330,400	5,330,400
Basic and diluted net income per common share	298.51	130.44

Class “B” Preferred Shares:
Numerator:
Net income available to Class “B” Preferred Shares	1,525.84	666.73
Denominator:
Number of Class “B” Preferred Shares outstanding	1,470,455	1,470,455
Basic and diluted net income per Class “B” Preferred Share	1,037.66	453.42

e) Application of IAS 29 (Financial reporting in hyperinflationary economies)

IAS 29 establishes the conditions under which an entity shall restate its financial statements if it is located in an economic environment considered “hyperinflationary”. It should be mentioned that if the qualitative and / or quantitative characteristics to consider an economy as a “hyperinflationary” economy set out in paragraph 3 of IAS 29 occur, the restatement of financial statements must be made retroactively from the date of the revaluation used as deemed cost (in the case of Group companies located in Argentina, since February 2003) or from the acquisition date for assets acquired after that date.

The Company’s Management periodically verifies the evolution of official statistics as well as the general factors of the economic environment in the countries in which the Telecom Group operates. The Company’s Management also considers the opinion of other organizations interested in this matter: the national and international accounting profession, domestic and foreign audit firms, national and the United States’ capital market regulators, and, in particular, the International Practices Task Force (“IPTF”), aware that the conclusions to which a financial statement issuer arrives must be consistent with the vision of those organizations for an uniform application of IAS 29.

Although the standard does not establish an absolute rate at which hyperinflation is deemed to arise, usually and in accordance with the guideline of IAS 29, a cumulative inflation rate over three years approaching or exceeding 100% is used as reference considering additionally other qualitative factors related to the macroeconomic environment.

The Company analyzes the economic environment as required by the provisions of IAS 29, based on the inflation rates published by the National Institute of Statistics and Census (INDEC), following the same criteria adopted by the accounting profession in the Argentine Republic.

After declaring a state of statistical emergency in January 2016 and due to the reorganization of the INDEC structure, that agency was impelled to publish the Internal Wholesale Price Index for November and December 2015 and the Consumer Price Index for the period November 2015- April 2016. Under these circumstances, the INDEC suggested the alternative utilization of Price Indexes published by the Province of San Luis and the City of Buenos Aires, which are integral part of the National Statistic System until the INDEC publishes Price Indexes in compliance with international standards of quality. Finally, in May 2016 the INDEC published the Internal Wholesale Price Index (“IPIM”) retroactively from January 2016 while the Consumer Price Index (“IPC”) was published from May 2016. It’s worth mentioning that, as of the date of issuance of these consolidated financial statements, the INDEC has not completed the IPIM and IPC’s statistical series, despite the requirements of domestic accounting profession organizations.

Therefore, for years 2015 and 2016 the Company analysis was performed according to Consumer Price Index and Internal Wholesale Price Index published by the INDEC until October 2015 and it was complemented applying November and December 2015 Price Index published by the Province of San Luis and the City of Buenos Aires, as the INDEC suggested. Also, the company applied Price Index of the period January-April 2016 published by the Province of San Luis and the City of Buenos Aires for the calculation of the Consumer Price Index for the year 2016. It is worth mentioning that these simplified procedures as provided in paragraph 17 of IAS 29 were performed due to the unavailability of official statistics at national level.

The tables below show the evolution of these indexes in the last three years according to official statistics (INDEC), with the exceptions explained above regarding the use of alternative indexes for November and December 2015 for Consumer Price and Internal Wholesale Price and, additionally, the Consumer Price Index for the period January-April 2016:

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	2014	2015	2016
		*()**	()**
Consumer Price Index
Consumer Price Index (annual)	23.9%	20.6%	36.3%
Consumer Price Index (3 years accumulated)	52.4%	65.8%	103.7%

Internal Wholesale Price Index
Internal Wholesale Price Index (annual)	28.3%	19.2%	34.6%
Internal Wholesale Price Index (3 years accumulated)	66.5%	75.4%	105.8%

(*) Consumer Price Index and Internal Wholesale Price Index published by INDEC until October 2015 were 11.9% and 10.6% respectively, These rates (which contain ten months accumulated), were updated with November and December 2015 Consumer Price Index average rates for this two months (7.8%) published by the Province of San Luis and the City of Buenos Aires.

(**) Due to the unavailability of Consumer Price Index published by the INDEC, the Company estimated 16.6% for the period January-April 2016; this estimation is an average of the indexes published by the Province of San Luis and the City of Buenos Aires for that period. The Consumer Price Index at national level published by the INDEC for the period May-December 2016 was 16.9%,

The Annual Price Index for the last year (Consumer Price Index: 36.3%, Internal Wholesale Price: 34.6%) and three years accumulated (Consumer Price Index: 103.7%, Internal Wholesale Price: 105.8%) show high levels of inflation rates that, for the first time, exceed 100% accumulated and highlight, between other matters, the effect in the internal prices of the argentine peso devaluation since December 2015, the elimination of certain exchange restrictions, and the increase in the public services tariffs approved by the Government after been frozen for more than a decade.

According to the high inflation levels in Argentina registered in the last years, the Company’s Management has further assessed the characteristics set out in paragraph 3 of IAS 29, including (i) the quantitative condition provided in section (e) “the cumulative inflation rate over three years is approaching, or exceeds, 100%”, as well as (ii) the qualitative characteristics contained in paragraphs a) to d) of that paragraph.

From the analysis assessed as of December 31, 2016, the Company’s Management considered that the quantitative condition provided in section e) of IAS 29 has been met, while the qualitative conditions of the Argentine economy are mixed (some of them would recommend the existence of a high inflation environment and others have not substantially changed respect to previous years, when it was concluded that financial statements should not be restated). Under these circumstances, and in order to objectify the analysis, the Company’s Management gave priority to the conclusions reached by some international auditing firms to which the Company’s Management had access, which considered that, to such date, there was insufficient evidence to consider the Argentine economy as “hyperinflationary” under IAS 29 terms, Similar conclusions for US GAAP were reached by the IPTF, according to its memo issued on November 17, 2016.

An extract of the mentioned memo stated in point III,A,3(a) related to countries with projected inflation rates above 100% (accumulated over the last three years): “The Task Force is aware that in late December 2016, certain US accounting firms submitted a white paper to the SEC staff from the Office of the Chief Accountant that asserted that the firms would not require a registrant to consider Argentina’s economy as highly inflationary under US GAAP for the reporting period from October 1, 2016 to December 31, 2016. The SEC staff from the Office of the Chief Accountant, after reviewing the white paper submitted by the firms, stated that the staff would not object to a calendar year-end registrant’s determination that Argentina’s economy would not be considered highly inflationary under US GAAP for the reporting period from October 1, 2016 to December 31, 2016”. In addition, the Task Force suggests registrants to continue monitoring inflation information and other Argentine economy conditions in order to assess whether it is necessary to consider it as highly inflationary during 2017.

While there are differences in the definition of a “hyperinflationary” and “highly inflationary” environments between IFRS and US GAAP, respectively, the Company believed that the assessment of the macroeconomic situation of a country should be substantially similar under both accounting frameworks and, on this condition, considered consistent the conclusions arrived by the IPTF with those provided in the analysis assessed by international audit firms according to IFRS and US GAAP.

Additionally, while the CNV required public companies the full implementation of IFRS-as issued by the IASB- from periods beginning on January 1, 2012, Decree No. 664/03 continues to be in force as of the date of issuance of these consolidated financial statements. Through this Decree, the PEN instructed the control authorities –including the CNV- not to accept filings of restated financial statements. This legal restriction is foreseen in the current Regulations of the CNV (Title IV - Chapter III - Article 3 - paragraph 1).

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Developments of the nine-month period of 2017

The publication of the INDEC inflation index for the current year has shown a decrease in inflation levels during the first nine months of 2017 as compared to 2016 (the cumulative coefficient of the CPI in the first nine months of 2017 amounts to 17.5% and IPIM to 13.5%, while the accumulated CPI coefficient for the last 36 months amounts to approximately 99.6% and the IPIM rate is approximately 87.9%). Based on the deceleration in inflation rates during the first nine months of 2017 and in the analysis performed as of December 31, 2016 described above, Telecom Argentina’s Management has concluded that no new evidence has been verified during the current period which leads to qualify the economy as highly inflationary.

Similar conclusions for US GAAP were reached by the IPTF, according to its memo issued on May 16, 2017.

An extract of the mentioned memo stated that: “Considering the guidance in ASC 830, it does not appear that Argentina would be required to be considered highly-inflationary for the reporting periods from January 1, 2017 to June 30, 2017 for calendar year-end registrants. Registrants would be expected to have appropriate controls in place to monitor Argentina’s reported inflation data throughout 2017 and consider other pertinent economic indicators to determine if and when Argentina should be considered highly-inflationary.”

For these reasons, these financial statements have not been adjusted for inflation in accordance with IAS 29. Although the above described, the Telecom Argentina’s Management will continue monitoring the characteristics and the evolution of the inflation rates in Argentina in order to comply properly with IAS 29 provisions, with special consideration of the pronouncements of argentine regulators – which as of the date are forbidden to accept the filing of financial statements restated for inflation according to Decree No. 664/03 and its supplementary standards. The Telecom Argentina’s Management will also monitor the pronouncements of foreign regulators, as well as the evaluation that the domestic and international accounting profession will perform with regards to the uniform application of IAS 29 together with other issuers that apply IFRS in the Argentine Republic.

NOTE 2 – BREAKDOWN OF THE MAIN ACCOUNTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	September 30,	December 31,
CURRENT ASSETS	2017	2016
a) Cash and cash equivalents
Cash	36	56
Banks	305	885
Time deposits	2,221	898
Lebacs at fair value	3,605	-
Lebacs at amortized cost	-	604
Other short-term investments	68	1,559
	6,235	4,002
b) Investments
Government bonds at fair value	346	1,456
Government bonds at amortized cost in foreign currency	350	3
Provincial government bonds at amortized cost in foreign currency	45	-
Government bonds at amortized cost – US dollar linked	281	-
Provincial and Municipal government bonds at amortized cost – US dollar linked	33	12
Provincial and Municipal government bonds at amortized cost	8	10
Other short-term investments	878	270
	1,941	1,751
c) Trade receivables
Fixed Services	1,913	1,949
Personal Mobile Services – Services sales	4,236	3,733
Personal Mobile Services – Equipment sales	1,992	2,257
Núcleo Mobile Services	213	271
Subtotal	8,354	8,210
Allowance for doubtful accounts	(530)	(633)
	7,824	7,577

Movements in the allowance for current doubtful accounts are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(633)	(386)
Additions – Bad debt expenses	(920)	(844)
Uses	1,025	631
Currency translation adjustments	(2)	(2)
At the end of the period	(530)	(601)

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	September 30,	December 31,
	2017	2016
d) Other receivables
Prepaid expenses	652	621
Expenses reimbursement	137	126
Tax credits	175	46
Restricted funds	46	33
Receivables for return of handsets under warranty	17	29
Guarantee deposits	10	10
PP&E disposals receivables	8	18
Tax on personal property – on behalf of shareholders	-	8
NDF (*)	45	2
Companies under Section 33 – Law No. 19,550 (Note 5.c)	1	-
Other	142	140
Subtotal	1,233	1,033
Allowance for other receivables	(22)	(21)
	1,211	1,012

(*) Include 41 of financial NDF as of September 30, 2017.

Movements in the allowance for other receivables are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(21)	(25)
Additions	(1)	(1)
Uses	-	2
At the end of the period	(22)	(24)

	September 30,	December 31,
	2017	2016
e) Inventories
Mobile handsets and others	1,723	1,321
Equipment for construction projects	261	-
Fixed telephones and equipment	13	11
Subtotal	1,997	1,332
Allowance for obsolescence of inventories	(46)	(54)
	1,951	1,278

Movements in the allowance for obsolescence of inventories are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(54)	(86)
Additions – Fees for services, maintenance and materials	(10)	(36)
Uses	18	42
At the end of the period	(46)	(80)

Sale and direct cost of equipment and handsets by business segment is as follows:

	Three-month periods ended September 30,		Nine-month periods ended September 30,
	2017	2016	2017	2016
Sales of equipment and handsets - Fixed Services	269	13	294	78
Cost of equipment and handsets – Fixed Services	(202)	(39)	(233)	(126)
Total equipment income (loss) – Fixed Services	67	(26)	61	(48)
Sales of equipment and handsets – Personal Mobile Services	1,871	1,711	5,250	5,649
Cost of equipment and handsets – Personal Mobile Services	(1,641)	(1,411)	(4,319)	(4,252)
Total equipment income – Personal Mobile Services	230	300	931	1,397
Sales of equipment and handsets – Núcleo Mobile Services	23	91	73	217
Cost of equipment and handsets – Núcleo Mobile Services	(26)	(98)	(86)	(253)
Total equipment loss – Núcleo Mobile Services	(3)	(7)	(13)	(36)
Total equipment and handsets sale	2,163	1,815	5,617	5,944
Total cost of equipment and handsets (net of SAC capitalization)	(1,869)	(1,548)	(4,638)	(4,631)
Total income for sale of equipment and handsets	294	267	979	1,313

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	September 30,	December 31,
	2017	2016
NON-CURRENT ASSETS
f) Trade receivables
Fixed Services	3	14
Núcleo Mobile Services – Equipment sales	13	194
	16	208
g) Other receivables
Prepaid expenses	273	260
Credit on SC Resolution No. 41/07 and IDC	56	57
Restricted funds	43	33
Regulatory receivables (Paraguay)	37	27
Indemnity receivables relating Tuves Paraguay acquisition	27	-
Tax on personal property – on behalf of shareholders	31	31
Tax credits	29	28
Guarantee deposits	13	12
Other	11	19
Subtotal	520	467
Allowance for regulatory matters	(56)	(57)
Allowance for tax on personal property	(31)	(31)
Allowance for other tax credits	(17)	(17)
Allowance for regulatory receivables (Paraguay) (i)	(6)	-
(i) Included in Regulatory receivables.	410	362

Movements in the allowance for regulatory matters are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(57)	(84)
Uses	1	-
At the end of the period	(56)	(84)

Movements in the allowance for tax on personal property are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(31)	(31)
Additions	-	-
At the end of the period	(31)	(31)

Movements in the allowance for tax credits are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(17)	(17)
Additions	-	-
At the end of the period	(17)	(17)

	September 30	December 31,
	2017	2016
h) Investments
National government bonds at amortized cost in foreign currency	3,755	255
Provincial and municipal government bonds at amortized cost in foreign currency	344	-

Provincial and municipal government bonds at amortized cost – US dollar linked	36	61
Provincial and municipal government bonds at amortized cost	-	8
Tuves Paraguay shares purchase option	-	22
2003 Telecommunications Fund	1	1
	4,136	347
i) PP&E
Land, buildings and facilities	1,502	1,310
Computer equipment and software	2,093	2,265
Switching and transmission equipment (i)	6,023	5,614
Mobile network access and external wiring	10,350	9,078
Construction in progress	3,466	2,915
Other tangible assets	780	704
Subtotal PP&E	24,214	21,886
Materials	2,608	1,629
Valuation allowance and impairment for materials	(136)	(68)
Impairment of PP&E	(353)	(282)
Total PP&E	26,333	23,165

(i) Includes tower and pole, transmission equipment, switching equipment, power equipment, equipment lent to customers at no cost and handsets lent to customers at no cost.

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NORTEL INVERSORA S.A.

Movements in PP&E (without allowance and impairment for materials and impairment of PP&E) are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	23,515	18,218
CAPEX	5,745	6,403
Materials	1,531	893
Total PP&E additions	7,276	7,296
Tuves Paraguay acquisition	160	-
Currency translation adjustments	236	406
Consumption of materials	(631)	(346)
Decreases	(32)	(30)
Depreciation of the period	(3,702)	(3,088)
At the end of the period	26,822	22,456

Movements in the valuation allowance and impairment for materials are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(68)	(52)
Additions - Fees for services, maintenance, and materials	(68)	(13)
At the end of the period	(136)	(65)

Movements in the impairment of PP&E are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	(282)	(203)
Additions – Impairment of PP&E	(71)	(195)
At the end of the period	(353)	(398)

	September 30,	December 31,
	2017	2016
j) Intangible assets
SAC – Fixed Services	59	96
SAC – Mobile Services	1,190	1,427
Service connection or habilitation costs	127	119
3G/4G licenses	4,861	5,105
PCS license	588	588
Rights of use and exclusivity	226	256
Customer relationship	128	1
Tuves Paraguay goodwill (Note 12.j)	2	-
Other intangible assets	13	-
	7,194	7,592

Movements in Intangible assets are as follows:

	Nine-month periods ended September 30,
	2017	2016
At the beginning of the year	7,592	7,659
CAPEX	893	1,296
Tuves Paraguay acquisition	141	-
Currency translation adjustments	11	19
Decreases	(12)	-
Amortization of the period	(1,431)	(1,398)
At the end of the period	7,194	7,576

	September 30,	December 31,
	2017	2016
CURRENT LIABILITIES
k) Trade payables
For the acquisition of PP&E	3,292	4,496
For the acquisition of other assets and services	3,982	3,424
For the acquisition of inventory	3,166	676
Companies under Section 33-Law No. 19,550 (Note 5.c)	2	-
Subtotal suppliers	10,442	8,596
Agent commissions	219	385
	10,661	8,981

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NORTEL INVERSORA S.A.

	September 30,	December 31,
	2017	2016
l) Deferred revenues
On construction projects	347	-
On prepaid calling cards – Fixed and Mobile services	268	261
On mobile customer loyalty programs	108	87
On international capacity rental	52	41
On connection fees – Fixed Services	34	35
From CONATEL – Núcleo Mobile Services	-	4
Other	9	15
	818	443
m) Financial debt
Bank overdrafts – principal (Personal)	49	1,666
Bank overdrafts – principal (Telecom Argentina)	561	41
Bank loans – principal (Núcleo)	107	219
Bank loans – others - principal (Personal)	-	620
Notes – principal (Personal)	718	566
NDF	26	2
Accrued interests (Personal)	1,352	145
Accrued interests (Telecom Argentina)	2	-
Accrued interests (Núcleo)	1	7
	2,816	3,266
n) Salaries and social security payables
Annual complementary salaries, vacation and bonuses	1,553	1,103
Social security payables	372	383
Termination benefits	147	125
	2,072	1,611

o) Income tax payables
Income tax payables 2016	-	2,102
Income tax payables 2017	3,615	-
Income tax withholdings and payments in advance	(1,129)	(1,380)
Law No. 26,476 Tax Regularization Regime	5	5
	2,491	727
p) Other taxes payables
VAT, net	418	360
Tax withholdings	214	319
Internal taxes	144	138
Tax on SU	118	110
Turnover tax	104	75
Regulatory fees	80	60
Municipal taxes	63	53
Perception Decree No. 583/10 ENARD	28	26
Tax on personal property – on behalf of shareholders	-	8
	1,169	1,149
q) Dividends payable
Related parties (Note 5.c)	20	-
	20	-
r) Other liabilities
Compensation for directors and members of the Supervisory Committee	49	51
Guarantees received	18	15
Other	28	10
	95	76
NON-CURRENT LIABILITIES
s) Trade payables
For the acquisition of PP&E	169	152
	169	152
t) Deferred revenues
On international capacity rental – Fixed Services	202	252
On mobile customer loyalty programs	125	106
On connection fees – Fixed Services	82	87
	409	445

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NORTEL INVERSORA S.A.

	September 30,	December 31,
	2017	2016
u) Financial debt
Notes – principal (Personal)	741	2,084
Bank loans – IFC loan - principal (Personal)	7,963	6,234
Bank loans – principal (Núcleo)	258	328
NDF	33	-
	8,995	8,646
v) Salaries and social security payables
Termination benefits	142	144
Bonuses	38	40
	180	184
w) Income tax payables
Law No. 26,476 Tax Regularization Regime	3	7
	3	7
x) Other liabilities
Pension benefits	205	164
Legal fees	4	4
Other	3	2
	212	170

y) Income tax assets and deferred income tax assets and liabilities

The Telecom Group and the Company’s income tax assets and the actions for recourse tax receivables consist of the following:

	Income tax assets			Deferred tax liabilities
As of September 30, 2017	Telecom Argentina	Telecom USA	Total	The Company	Personal	Núcleo	Total
Allowance for doubtful accounts	141	4	145	-	413	16	429
Provisions	367	-	367	-	212	-	212
PP&E	-	2	2	-	-	18	18
Inventory	-	-	-	-	77	-	77
Termination benefits	87	-	87	-	-	-	-
Deferred revenues	82	-	82	-	-	-	-
Pension benefits	72	-	72	-	-	-	-
Other deferred tax assets, net	97	-	97	-	-	1	1
Total deferred tax assets	846	6	852	-	702	35	737
PP&E	(423)	-	(423)	-	(141)	-	(141)
Intangible assets	(72)	-	(72)	-	(500)	-	(500)
Cash dividends from foreign companies	-	-	-	-	(a) (156)	(52)	(208)
Tuves Paraguay’s deferred tax liabilities, net	-	-	-	-	-	(d) (25)	(25)
Mobile handsets financed sales	-	-	-	-	(48)	-	(48)
Investments	-	-	-	(1)	-	-	(1)
Other deferred tax liabilities, net	-	-	-	-	(3)	-	(3)
Total deferred tax liabilities	(495)	-	(495)	(1)	(848)	(77)	(926)
Total deferred tax assets (liabilities), net	(b) 351	6	357	(1)	(c) (146)	(e) (42)	(189)

Actions for recourse tax receivable	466	-	466
Total income tax assets	817	6	823

(a) Include 1 recorded in Other comprehensive income for the nine-month period ended on September 30, 2017.

(b) Include (3) of temporary differences withdrawals related to the filing of the affidavit for the year 2016.

(d) Originated in Tuves Paraguay acquisition.

(e) Include (4) related to Currency translation adjustments on initial balances.

	Income tax assets			Deferred tax liabilities
As of December 31, 2016	Telecom Argentina	Telecom USA	Total	The Company	Personal	Núcleo	Total
Allowance for doubtful accounts	86	2	88	-	271	16	287
Provisions	341	-	341	-	149	-	149
PP&E	-	1	1	-	-	13	13
Inventory	-	-	-	-	120	-	120
Termination benefits	82	-	82	-	-	-	-
Deferred revenues	85	-	85	-	-	-	-
Pension benefits	57	-	57	-	-	-	-
Other deferred tax assets, net	120	-	120	-	-	1	1
Total deferred tax assets	771	3	774	-	540	30	570
PP&E	(477)	-	(477)	-	(205)	-	(205)
Intangible assets	(83)	-	(83)	-	(584)	-	(584)
Cash dividends from foreign companies	-	-	-	-	(150)	(44)	(194)
Mobile handsets financed sales	-	-	-	-	(84)	-	(84)
Investments	-	-	-	(2)	(4)	-	(6)
Other deferred tax liabilities, net	-	-	-	-	(68)	-	(68)
Total deferred tax liabilities	(560)	-	(560)	(2)	(1,095)	(44)	(1,141)
Total deferred tax asset (liability), net	211	3	214	(2)	(555)	(14)	(571)

Actions for recourse tax receivable	466	-	466
Total income tax assets	677	3	680

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NORTEL INVERSORA S.A.

z) Aging of assets and liabilities as of September 30, 2017

	Cash and cash equivalents	Investments	Trade receivables	Income tax assets	Other receivables
Date due	Cash and cash equivalents	Investments	Trade receivables	Income tax assets	Other receivables
Total due	-	-	1,566	-	-
Not due
Fourth quarter 2017	6,235	1,333	5,055	-	759
First quarter 2018	-	337	620	-	198
Second quarter 2018	-	105	417	-	149
Third quarter 2018	-	166	166	-	105
October 2018 thru September 2019	-	373	16	-	195
October 2019 thru September 2020	-	474	-	-	99
October 2020 and thereafter	-	3,288	-	-	56
Not date due established	-	1	-	823	60
Total not due	6,235	6,077	6,274	823	1,621
Total	6,235	6,077	7,840	823	1,621

Balances bearing interest	5,894	6,076	1,534	-	-
Balances not bearing interest	341	1	6,306	823	1,621
Total	6,235	6,077	7,840	823	1,621


Average annual interest rate (%)	(a)	(b)	(c) (d)	-	-

(a) 2,221 are assets in foreign currency bearing interests between 0.27% and 0.42% and 3,673 are assets in argentine pesos bearing interests between 19.41% and 27.28%.

(b) 358 are assets in argentine pesos (8 bearing interests between 15% and 20.81% and 350 are US dollar linked bonds bearing interests between 1.95% and 2.40%), 5,718 are assets in foreign currency bearing interests between 3.25% and 10.88%.

(c) From due trade receivables 144 bear 50% over the Banco de la Nación Argentina 30-day interest rate paid by banks, 489 bear 50% over the Banco de la Nación Argentina notes payable discount rate and 759 bear 35.9% and 100 bear 36%.

(d) From not due trade receivables 18 bear 36%, 23 bear 8.3% and 1 bear 34.2%.

	Trade payables	Deferred revenues	Financial debt	Salaries and social security payables	Income tax payables	Deferred income tax liabilities	Other taxes payables	Dividends payable	Other liabilities
Date due	Trade payables	Deferred revenues	Financial debt	Salaries and social security payables	Income tax payables	Deferred income tax liabilities	Other taxes payables	Dividends payable	Other liabilities
Total due	331	-	-	-	-	-	-	-	-
Not due
Fourth quarter 2017	10,235	671	694	913	3	-	1,169	-	43
First quarter 2018	95	51	338	786	1	-	-	20	1
Second quarter 2018	-	49	739	289	2,486	-	-	-	50
Third quarter 2018	-	47	1,045	84	1	-	-	-	1
October 2018 thru September 2019	94	155	3,231	109	3	-	-	-	25
October 2019 thru September 2020	42	46	2,223	41	-	-	-	-	10
October 2020 and thereafter	33	208	3,541	30	-	-	-	-	177
Not date due established	-	-	-	-	-	189	-	-	-
Total not due	10,499	1,227	11,811	2,252	2,494	189	1,169	20	307
Total	10,830	1,227	11,811	2,252	2,494	189	1,169	20	307

Balances bearing interest	21	-	11,709	-	6	-	-	-	-
Balances not bearing interest	10,809	1,227	102	2,252	2,488	189	1,169	20	307
Total	10,830	1,227	11,811	2,252	2,494	189	1,169	20	307


Average annual interest rate (%)	6%	-	(e)	-

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