The Project aims to achieve better connectivity and greater access to data services, and consists of two types of funding: (i) a syndicated loan led by IDB Invest of up to US$300 million to fund Telecom Argentina's fixed investments during 2019; and (ii) an uncommitted facility of up to US$100 million to purchase the credits resulting from mobile phone sales.

1. Overview and Scope of IDB Invest's Environmental and Social Review

During February 20 and March 8, 2019, personnel responsible for IDB Invest's Environmental, Social, and Corporate Governance Division (SEG, for its acronym in Spanish) carried out the environmental and social due diligence for this transaction, having reviewed the management documentation and held meetings with personnel responsible for the company's health, safety, security, and environmental management.

Considering the results of the assessment and IDB Invest's Environmental and Social Sustainability Policy, the transaction is classified as a Category B operation. The possible environmental, health, safety, and security risks and impacts associated with the activities involved in this transaction can feasibly be adequately managed by means of plans, programs and procedures whose content is known and use is widespread in the sector. Among the possible risks and impacts, the following are worth mentioning: (i) personal risks (risks of falls; electrical risks; risk from exposure to electric and magnetic fields; respiratory risk due to entry into confined spaces and civil works activities; risk of traffic accidents; ocular risk due to handling fiber optics and laser lights); (ii) risk of polluting the soil and subsoil due to accidental spillage of fuel or due to improper handling of special waste (cables, electronic waste, such as mobile phones, batteries, and electrical appliances); iii) risk to third parties due to road accidents by a company or contractor vehicle, or due to the possible fall of towers or exposure to electric and magnetic fields.

Given the nature and magnitude of the possible impacts and risks identified, the following IFC Performance Standards apply[1]: (PS) 1 (Assessment and Management of Environmental and Social Risks and Impacts), PS 2 (Labor and Working Conditions), PS 3 (Resource Efficiency and Pollution Prevention), PS 4 (Community Health, Safety and Security).

2. Environmental and Social Context

Telecom has national mobile coverage in Argentina. Therefore, the company installs mobile network infrastructure in both rural and urban environments. In rural environments, the infrastructure is usually installed adjacent to the right-of-way of highways, taking advantage of high elevation terrain where available. In urban environments, the upper part of buildings is generally used to install associated transmission towers and routing structures. Telecom has performed the expansion of its infrastructure in compliance with the legislation in force, having developed a stakeholder participation strategy that involves users, suppliers, and public institutions involved in the permitting process

3. Environmental Risks and Impacts andProposed Mitigation and Compensation Measures

3.1. Assessment and Management of Environmental and Social Risks and Impacts

Integrated Environmental and Social Management System

Telecom manages the health and safety risks and possible environmental impacts of its operations through a comprehensive Health, Safety, Security, and Environment (HSSE) management system, conceptually conceived as a continuous improvement system (attaining ISO 14001 certification during 2017 and 2018). This system is in the re-certification stage.

The implementation of the comprehensive HSSE system is led by the HSSE Division Manager, who acts at a central level; the people responsible for Health, Safety and Security at a regional level report to this division, while the environmental management is centralized in Buenos Aires, with an expert responsible person in the city of Santa Fe. The HSSE Division reports to the Social Relations and Employment management, which in turn reports to the Head of Human Capital. The HSSE Manager participates in the monthly meetings held by the Risk Committee, the results of which are reported to the General Subdirectorate. The comprehensive system is expected to be incorporated into an IT platform in order to optimize its implementation and maintenance.

As stated in the Environmental and Social Action Plan, Telecom will update the comprehensive management system so that, through its implementation, the company complies with the IFC Performance Standards and the relevant and applicable Environmental, Health and Safety Guidelines of the World Bank Group[2], in addition to applicable social and environmental laws and regulations.

The company also has a Sustainability division--that reports to the Government Relations, Communication and Media Division, which in turn reports to the CEO--in charge of deploying sustainability plan across the board, focused on community investment, in order to address social and environmental issues.

Environmental, Social, and Health, Safety and Security Policy

Telecom has adopted an Environmental Policy that is extensive to all Telecom processes and operations, which aims to achieve full legal compliance as well as address the possible environmental requirements of financial entities. Likewise, Telecom is discussing the update of an Occupational Health and Safety Policy that identifies, among its main objectives, the implementation of preventive actions to avoid accidents, highlighting the responsibility of the company's personnel and Management in the implementation of such Policy. The principles of the aforementioned Policies, as well as those pertaining to respect for Human Rights, are included in the Telecom Code of Ethics and Conduct, a document based on the principles of the United Nations Global Compact, which Telecom has subscribed.

Risk and Impact Identification

Occupational hazards are identified and assessed by analyzing the tasks corresponding to each job. The corresponding control measures obtained from the Hazard Identification and Risk Analysis Matrix are developed for the identified risks. Environmental aspects are identified and assessed by means of matrices, considering, among others, attributes of magnitude and probability of occurrence to determine the degree to which they are critical. The matrices include the corresponding control actions.

Organizational Capacities and Competences

The performance of in-house and contracted personnel is continuously evaluated by Telecom's technical supervisors and overseers. Telecom provides HSSE management training courses to its in-house staff and contractors.

Emergency Preparedness and Response Plan

Telecom has emergency prevention and response plans, implementing an emergency drill schedule where it operates (approximately 150 sites). Where the company has personnel, there is an Emergency Committee comprised of a director and deputy director, the head technician, the head of security and evacuation coordinators, among other roles.

Accident management

Telecom has a specific accident management procedure for its in-house and contracted personnel. Accident statistics are continually monitored through the development of accident rates (See Section 3.2).

Management Programs

As set forth in the Environmental and Social Action Plan, Telecom will update the procedures of its comprehensive system to assess and manage the environmental and social risks of future acquisitions of companies and assets, as well as mergers with other companies, ensuring compliance at all times with the applicable IFC Performance Standards. Telecom will prepare and implement a specific procedure, containing risk criteria based on the IFC's Performance Standards, to decide on whether or not to finalize an acquisition or merger proposal. Likewise, Telecom will ensure that all policies, procedures, and environmental and social plans that are applicable within the group, are fully integrated into Telecom's comprehensive management system. All policies and procedures will ensure compliance with the IFC's compliance standards.

Participation of Social Actors

Within its Sustainability division, Telecom develops actions that are integrated to its business, promoting the use of technology and connectivity with an innovative approach aimed at solving social and environmental needs. These community investment actions are developed through its own programs that are implemented in partnership with NGOs and municipalities throughout the country, focusing on the positive use of technology as a tool for education, job training and social inclusion.

The "Nuestro Lugar" ("Our Place") program (www.nuestrolugar.com.ar) promotes the responsible, safe and creative use of technology among children, teenagers and teachers. It is implemented in coordination with municipalities throughout the country, reaching the educational community through awareness workshops on cyber-citizenship, robotics and the pedagogical use of cell phones. On the other hand, the "Digitalers" project (www.digitalers.com.ar) offers free training in programming to young people, as a way of fostering their professional growth, their inclusion in the IT market and their development in the world of technology. This program includes a specific initiative for training women in technology.

In addition, the Sustainability division implements and supports various initiatives for all stakeholders: customers, suppliers, the environment, the community, employees, and trade unions.

3.2. Labor and Working conditions

As of February 1, 2019, Telecom had 24,718 in-house employees and 29,886 contracted employees[3], 28% of whom are women.

Telecom has developed and implemented a set of human resources policies and procedures compatible with IFC Performance Standard 2, ensuring strict compliance with labor legislation for both its own and contracted personnel;

As expressed in Telecom's Code of Ethics and Conduct, the company implements non-discrimination and offers equal opportunities for its employees, regardless of their race, gender, religion, nationality, native language, age, sexual orientation, marital status, disability or socioeconomic level. Likewise, the company respects the freedom of association (the right of unionization) of its workers.

Currently, there are Rank and File, Hierarchical and Professional Unions that the personnel associated with Telecom's activities can join. During 2018, Telecom and the unions have undertaken joint work on improving health and safety management through the implementation of Social Agenda Roundtables; in these instances, representatives of the company and the unions address relevant aspects of employee health and safety. Their conclusions make it possible to improve the management procedures of the comprehensive system. Telecom implements procedures to receive and resolve complaints from its employees, including contractors, guaranteeing the confidentiality of information at all times. Its in-house and contracted personnel are subject to medical examinations at the time of admission and annually, conducted by the respective Occupational Risk Insurer (ORI).

Approximately 10,000 Telecom contractor employees are assigned to network construction and home installation and repair tasks, areas in which the risks of work at height, electrical risks and risks from driving vehicles are considered to be among the most significant. Telecom performs statistical management of accident and occupational disease data, considering operational areas at the national level (North, South, Coastline, Buenos Aires Metropolitan Area (AMBA), Province of Buenos Aires (PBA) and Patagonia). It calculates the following rates: Frequency Rate, Incidence Rate, and Severity Rate. The vast majority of personal accidents occur during home installation and repair; the most frequent types of accidents are those inherent to mechanical risk (excessive physical strain, falls, collision with moving objects, etc.). During 2018, there were 4 fatal accidents of contracted personnel, two due to falls and two due to electrocution. In view of the relevance of electrical risks and falls for contracted works, Telecom is in the process of implementing the use of a fall arrest system for work at height and tools to measure the electrical voltage in third party conductors that could potentially be powered and close to the work area during network installation or repair.

3.3. Resource Efficiency and Pollution Prevention

The objectives of Telecom's Environmental Policy include the promotion of the efficient use of natural resources, the gradual adoption of renewable energy sources, the reduction of greenhouse gas emissions and the minimization of waste and pollution risks.

Telecom classifies the waste from its operations; in general terms, the waste generated can be classified as urban solids, service activity waste (cables and terminals), hazardous waste (batteries, motor oils, filters, etc.), WEEE (waste electrical and electronic equipment), pathogenic waste (materials from medical emergencies, expired medicines, etc.), and effluents. The waste is managed by legally authorized operators. Telecom implements separation at source of urban solid waste and encourages the reduction of paper consumption.

3.4. Community Health and Safety

Antennas are installed once they have been authorized by the relevant authority; the electric and magnetic field strengths generated by each antenna are measured to verify that they are within the permissible limits[4]. Telecom periodically measures antenna radiation following a specific methodology.

As part of the mobile network deployment, Telecom undertakes communication actions in certain municipalities to increase public awareness of the need to install more antennas to improve service quality and coverage. Among other actions, the company holds meetings and talks with sector specialists on how the mobile service works, where the antennas should be located, and the measures taken to make them safe for the population.

The company only sells mobile devices that comply with international regulations that guarantee that they are safe for people and that they are approved by the Argentine regulatory agency. The radio wave exposure parameters use a unit of measurement called the Specific Absorption Rate or SAR. SAR tests are carried out using standard methods, with the telephone transmitting at the highest level of power authorized in all the frequency bands used.

In accordance with the requirements of IFC Performance Standard 4, Telecom will implement all preventive measures to reduce the risk of accidents associated with the circulation of vehicles of its own and contracted personnel in public spaces.

4. IDB Invest Contact Information

For project inquiries, including environmental and social issues related to an IDB Invest investment, please contact the client using the information provided above. Also, as a last resort, affected communities have access to the IDB Invest Independent Consultation and Investigation Mechanism.

For inquiries and comments to IDB Invest, please contact: IDB Invest's Communications Group

Email:divulgacionpublica@iadb.org

Phone number: +1 (202) 623-3952

Fax number: +1 (202) 312-4057

Address: 1300 New York Ave. NW Washington, DC. USA. 20577

Email:mecanismo@iadb.orgorMICI@iadb.org

[1]International Finance Corporation

[2]https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/ehs-guidelines

[3]The activities of contracted employees are carried out in the following areas: commercial establishments, call centers, home repair of equipment, network construction, and data processing (data centers).

[4]In Argentina, the resolutions of the Ministry of Health and the National Communications Commission define maximum emission values

It consists of two types of funding: (i) a syndicated loan led by IDB Invest of up to US$300 million to fund Telecom Argentina's fixed investments during 2019; and (ii) an uncommitted facility of up to US$100 million to purchase the credits resulting from mobile phone sales.

The loan consists of the US$75 million funded by the IDB Group and the rest from mobilizing other funds, with a term of up to 7 years and a grace period of up to 2 years.

The Facility will be available for a period of up to 4 years. Under the Facility, IDB Invest will purchase, at its sole discretion, credits for the sale of mobile phones.

ACCOUNTABILITY MECHANISM OF IDB INVEST

The Independent Consultation and Investigation Mechanism (MICI) is the independent complaint mechanism and fact-finding body for people who have been or are likely to be adversely affected by an Inter-American Development Bank (IDB) or Inter-American Investment Corporation (IIC)-funded project. If you submit a complaint to MICI, they may assist you in addressing the problems you raised through a dispute-resolution process with those implementing the project and/or through an investigation to assess whether the IDB or IIC is following its own policies for preventing or mitigating harm to people or the environment. You can submit a complaint by sending an email to MICI@iadb.org. You can learn more about the MICI and how to file a complaint at http://www.iadb.org/en/mici/mici,1752.html (in English) or http://www.iadb.org/es/mici/mici,1752.html (Spanish).

Telecom S.A. Finance Directorate
Phone #: +54 11 4968 3206
e-mail:
relinver@teco.com.ar

Team Leader: Edgar Cabañas, Lead Investment Officer