Obbligazione Colombian Telecom 8.5% ( USP28768AB86 ) in USD

Colombian Telecom

100 USD ▲

Colombia

USP28768AB86 ( in USD )

8.5% per anno ( pagato 2 volte l'anno)

perpetue - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Colombia Telecom USP28768AB86 in USD 8.5%, scaduta

2 000 USD

500 000 000 USD

P28768AB8

N/A

Colombia Telecom, ora denominata ETB, è un'azienda di telecomunicazioni colombiana che offre servizi di telefonia fissa e mobile, internet e televisione via cavo.

L'obbligazione perpetua emessa da Colombia Telecom (ISIN: USP28768AB86, CUSIP: P28768AB8), con cedola del 8.5% pagata semestralmente, denominata in USD, per un ammontare totale di 500.000.000 USD e scaglione minimo di 2.000 USD, è giunta a scadenza ed è stata rimborsata al 100% del valore nominale.

OFFERING MEMORANDUM DATED APRIL 24, 2015

Colombia Telecomunicaciones S.A. ESP
U.S.$500.0 Million Subordinated Perpetual Notes
________________________
We are offering U.S.$500.0 million of our subordinated perpetual notes, or the notes. The notes have no fixed maturity date. However, at our
option, we may redeem the notes, in whole but not in part, on March 30, 2020, or the First Call Date, and any Interest Payment Date (as defined
below) thereafter, at their aggregate principal amount, together with any accrued and unpaid interest to, but excluding, the First Call Date or the
relevant Interest Payment Date and any arrears of interest. We may also redeem the notes, in whole but not in part, upon the occurrence of certain
tax, accounting, ratings and certain other events at the applicable redemption prices as set forth in this offering memorandum. Subject to our right to
defer payment, interest on the notes will be payable semi-annually in arrears on March 30 and September 30 of each year, each an Interest Payment
Date, beginning on September 30, 2015.
As more fully described in this offering memorandum, we may defer interest payments on the notes for any period of time; provided that any
such deferred payments will themselves bear interest at the same rate as the principal amount of the notes and will become due and payable on the
Mandatory Payment Dates (as defined under "Description of the Notes--Payment of Deferred Interest").
The notes will bear interest on their principal amount from (and including) March 30, 2015, or the Issue Date, to, but excluding, the First Call
Date at a rate of 8.50% per annum. Thereafter, from and including the First Call Date to, but excluding, the redemption date, if any, for each Reset
Period (as defined under "Description of the Notes--Principal and Interest Payments"), the notes will bear interest at a rate equal to the relevant Fiver
Year Swap Rate (as defined under "Description of the Notes--Principal and Interest Payments") expressed as a percentage, plus a margin of 6.958%,
or the Initial Margin, plus (a) in respect of Reset Periods commencing on or after the First Call Date: 0.25%; plus, (b) in respect of Reset Periods
commencing on or after March 30, 2035: a further 2.75% (unless our S&P credit rating shall have been upgraded to investment grade and is effective
at March 30, 2035, then such 2.75% increase shall only become effective for Reset Periods commencing on or after March 30, 2040).
The notes will be our direct, unconditional, unsecured and subordinated obligations and will rank (i) junior to all of our existing and future
Unsubordinated Indebtedness (as defined under "Description of the Notes--Ranking of the Notes"), (ii) pari passu with all other future Subordinated
Indebtedness (as defined "Description of the Notes--Ranking of the Notes"), and (iii) senior to all existing and future classes of our Share Capital (as
defined "Description of the Notes--Ranking of the Notes"). We do not currently have any subsidiaries and the notes will not be guaranteed by any
subsidiaries we may have in the future. We currently have no securities outstanding that rank junior to the notes other than our Share Capital.
Claims of creditors of any subsidiaries, to the extent we have any in the future, including trade creditors and bank and other lenders, will have priority
over the holders of the notes in claims to assets of our subsidiaries.
Application has been made to list the notes on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF Market of
such exchange. This offering memorandum has been prepared for the purpose of listing on the Euro MTF market of the Luxembourg Stock Exchange
and constitutes a prospectus for purposes of Luxembourg law on prospectus securities dated July 10, 2005, as amended.
Investing in the notes involves risk. See "Risk Factors" beginning on page 21.
________________________
Issue Price:100.000% plus accrued interest, if any, from March 30, 2015.
________________________
The notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, or the Securities Act, or the securities
laws of any other jurisdiction. Accordingly, the notes may not be offered or sold within the U.S. or to U.S. persons, except to qualified institutional
buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act, or Rule 144A, and to certain non-U.S. persons
in offshore transactions in reliance on Regulation S under the Securities Act, or Regulation S. Prospective purchasers that are qualified institutional
buyers are hereby notified that the seller may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule
144A. For more information on transfers of the notes, see "Plan of Distribution" and "Transfer Restrictions."
The notes may not be offered, sold or negotiated in the Republic of Colombia, except under circumstances which do not constitute a public
offering of securities under applicable Colombian securities laws and regulations. Furthermore, foreign financial entities must abide by the terms of
Decree 2555 of 2010 to offer the notes privately to their Colombian clients.
The notes are expected to be delivered in book-entry form through the facilities of The Depository Trust Company, or DTC, and its direct and
indirect participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System, or Euroclear, and Clearstream Banking, société
anonyme, or Clearstream, on or about March 30, 2015.
Joint Structuring Advisors
BBVA HSBC
Joint Bookrunners
BBVA HSBC
Citigroup
Credit
Suisse

TABLE OF CONTENTS
Page
Page
ENFORCEMENT OF CIVIL LIABILITIES .............. iv
THE COLOMBIAN TELECOMMUNICATIONS
FORWARD-LOOKING STATEMENTS ................... vi
INDUSTRY ................................................................ 97
PRESENTATION OF FINANCIAL AND OTHER
BUSINESS ................................................................ 118
INFORMATION ....................................................... viii
MANAGEMENT ...................................................... 156
SUMMARY ................................................................. 1
RELATED PARTY TRANSACTIONS ................... 163
THE OFFERING ........................................................ 10
PRINCIPAL SHAREHOLDERS .............................. 165
SUMMARY FINANCIAL AND OTHER
DESCRIPTION OF THE NOTES ............................ 169
INFORMATION ........................................................ 16
TAXATION .............................................................. 192
RISK FACTORS ........................................................ 21
PLAN OF DISTRIBUTION ..................................... 197
USE OF PROCEEDS ................................................. 46
TRANSFER RESTRICTIONS ................................. 203
FOREIGN EXCHANGE CONTROLS AND
LEGAL MATTERS .................................................. 206
EXCHANGE RATES ................................................. 47
INDEPENDENT AUDITORS .................................. 207
CAPITALIZATION ................................................... 50
LISTING AND GENERAL INFORMATION ......... 208
SELECTED FINANCIAL AND OTHER
ANNEX A SUMMARY OF CERTAIN
INFORMATION ........................................................ 52
SIGNIFICANT DIFFERENCES BETWEEN
MANAGEMENT'S DISCUSSION AND ANALYSIS
COLOMBIAN GAAP AND IFRS ........................... A-1
OF FINANCIAL CONDITION AND RESULTS OF
INDEX TO FINANCIAL STATEMENTS ............... F-1
OPERATIONS ........................................................... 57

___________________
Unless otherwise indicated or the context otherwise requires:
·
all references to "we," "us," "our," "our company," the "issuer" and "ourselves" are to Colombia
Telecomunicaciones S.A. ESP;
·
all references to "CT" are to Colombia Telecomunicaciones S.A. ESP prior to the consummation of the
TEMCO Merger;
·
all references to "TEMCO" are to Telefónica Móviles Colombia S.A.;
·
all references to the "TEMCO Merger" are to the merger of TEMCO with and into CT, with CT as the
surviving entity, which was executed through public deed No. 1751, dated June 29, 2012, and registered
before the Chamber of Commerce of Bogotá on July 6, 2012;
·
all references to "Telefónica" are to Telefónica S.A.;
·
all references to "Telefónica Internacional" are to Telefónica Internacional S.A.U.;
·
all references to "Telefónica group" are to Telefónica and its affiliates;
·
all references to the "PARAPAT Agreement" are to the Contrato de Explotación de Bienes, Activos y
Derechos, dated as of August 13, 2003, as amended, modified and supplemented from time to time, by and
between the Patrimonio Autónomo Receptor de Activos de la Empresa Nacional de Telecomunicaciones en
Liquidación y Las Empresas Teleasociadas en LiquidaciónPARAPAT and Colombia Telecomunicaciones
S.A. ESP;
·
all references to the "PARAPAT Payment Obligations" are to the annual payments we are required to make
pursuant to the PARAPAT Agreement in consideration for the exclusive right to use and operate the
telecommunications properties and assets of Empresa Nacional de TelecomunicacionesTELECOM and
certain of its affiliated companies; and

i

·
all references to "Colombia" or the "Republic of Colombia" are to the Republic of Colombia.
This offering memorandum has been prepared by us solely for use in connection with the proposed offering of
the notes described in this offering memorandum. BBVA Securities Inc., HSBC Securities (USA) Inc., Citigroup
Global Markets Inc. and Credit Suisse Securities (USA) LLC will act as initial purchasers with respect to the
offering of the notes. This offering memorandum does not constitute an offer to any other person or to the public
generally to subscribe for or otherwise acquire notes. You are authorized to use this offering memorandum solely
for the purpose of considering the purchase of our notes and not for any other purpose.
We accept responsibility for the information prepared by us contained in this Offering Memorandum, and
certify that, to the best of our knowledge, except as otherwise noted, (i) such information contained in this Offering
Memorandum is accurate and in accordance with the facts as of the date on the cover page of this document, and (ii)
such information does not include any material omission or misstatement that would render the information
contained herein misleading or otherwise materially affect the import of this Offering Memorandum.
We have not authorized anyone to provide any information other than the information contained in this offering
memorandum. We take no responsibility for, and can provide no assurance as to the reliability of, any other
information that others may give you.
Any questions regarding the information in this Offering Memorandum may be directed to the Chief Financial
Officer of the Company by phone at +57(1) 705 0100 or by mail at Colombia Telecomunicaciones S.A. ESP,
Attention: Chief Financial Officer, Transversal 60, No. 114 A-55 Edificio Corporativo, Bogotá D.C., Colombia.
Prospective investors should not construe the contents of this offering memorandum, or any prior or subsequent
communications from us or other professionals associated with the offering, as legal, tax or business advice. Each
prospective investor should consult its own attorney and business advisor as to the legal, business, tax and related
matters concerning this investment. The initial purchasers and their respective affiliates are not acting as your
advisors or agents. Prior to entering into any transaction, you should determine, without reliance upon the initial
purchasers or their affiliates, the economic risks and merits, as well as the legal, tax and accounting characteristics
and consequences of the transaction, and independently determine that you are able to assume these risks. In this
regard, by acceptance of these materials, you acknowledge that you have been advised that (i) the initial purchasers
and their respective affiliates are not in the business of providing legal, tax or accounting advice, (ii) you understand
that there may be legal, tax or accounting risks associated with the transaction, (iii) you should receive legal, tax and
accounting and other advice from advisors with appropriate expertise to assess relevant risks, and to determine
whether it is legally permitted to purchase the securities under applicable legal investment or similar laws or
regulations and (iv) you should apprise senior management in your organization as to the legal, tax and accounting
advice (and, if applicable, risks) associated with this transaction.
The distribution of this offering memorandum and the offering and sale of the notes in certain jurisdictions may
be restricted by law. We and the initial purchasers require persons into whose possession this offering memorandum
comes to inform themselves about and to observe any such restrictions. This offering memorandum does not
constitute an offer of, or an invitation to purchase, any of the notes in any jurisdiction in which such offer or sale
would be unlawful. No one has taken any action that would permit a public offering of the notes to occur in any
jurisdiction.
Neither we nor the initial purchasers are making an offer to sell the notes in any jurisdiction except where such
an offer or sale is permitted. You must comply with all applicable laws and regulations in force in your jurisdiction
and you must obtain any consent, approval or permission required by you for the purchase, offer or sale of the notes
under the laws and regulations in force in your jurisdiction to which you are subject or in which you make such
purchase, offer or sale, and neither we nor the initial purchasers will have any responsibility therefor.
We have furnished the information in this offering memorandum. You acknowledge and agree that the initial
purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of such
information, and nothing contained in this offering memorandum is, or shall be relied upon as, a promise or
representation by the initial purchasers. This offering memorandum contains summaries believed to be accurate

ii

with respect to certain documents, but reference is made to the actual documents for complete information. All such
summaries are qualified in their entirety by such reference.
We are relying upon an exemption from registration under the Securities Act for an offer and sale of securities
which do not involve a public offering. By purchasing notes, you will be deemed to have made certain
acknowledgments, representations and agreements as set forth under "Transfer Restrictions" in this offering
memorandum. The notes are subject to restrictions on transfer and resale and may not be transferred or resold
except as permitted under the Securities Act and applicable state securities laws. As a prospective purchaser, you
should be aware that you may be required to bear the financial risks of this investment for an indefinite period of
time. See "Plan of Distribution" and "Transfer Restrictions."
Neither the United States Securities and Exchange Commission, or the SEC, nor any state securities
commission has approved or disapproved of these securities or determined if this offering memorandum is truthful
or complete. Any representation to the contrary is a criminal offense.
The notes are subject to restrictions on transferability and resale and may not be transferred or resold except as
permitted under the Securities Act and the applicable state securities laws pursuant to registration or exemption
therefrom. Please refer to the sections in this offering memorandum entitled "Plan of Distribution" and "Transfer
Restrictions."
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES ("RSA") WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY
IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
IMPLIES THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANY EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF
THIS PARAGRAPH.
NOTICE REGARDING COLOMBIAN SECURITIES LAW
The notes have not been and will not be registered in the Colombian National Registry of Securities and Issuers
(Registro Nacional de Valores y Emisores) maintained by the Colombian Superintendency of Finance
(Superintendencia Financiera de Colombia, or the SFC). The notes may not be offered, sold or negotiated in
Colombia, except under circumstances which do not constitute a public offering of securities under applicable
Colombian securities laws and regulations. Furthermore, foreign financial entities must abide by the terms of
Decree 2555 of 2010 to offer the notes privately to their Colombian clients.

iii

ENFORCEMENT OF CIVIL LIABILITIES
We are a public utility services company (empresa de servicios públicos, or ESP) organized as a stock
corporation (sociedad anónima) under the laws of Colombia. Most of our directors and all of our executive officers
named in this offering memorandum are residents of Colombia. All of our assets are located outside the United
States. Although we will appoint an agent for service of process in the United States, it may be difficult for you to
effect service of process on, or to enforce judgments of U.S. courts against, us or our directors and officers based on
the civil liability provisions under the laws of jurisdictions other than Colombia, including the U.S. federal and state
securities laws.
We have been advised by our Colombian counsel, Brigard & Urrutia Abogados S.A.S., that the Colombian
Supreme Court determines whether to enforce a U.S. judgment predicated on the U.S. laws through a procedural
system known under Colombian law as exequatur. The Colombian Supreme Court will enforce a foreign judgment,
without reconsideration of the merits, only if the judgment satisfies the requirements of Articles 693 to 695 of
Colombia's Code of Civil Procedure (Código de Procedimiento Civil), in the process of being replaced by Articles
605 to 607 of Colombia's General Procedure Code (Código General del Proceso, or GPC) pursuant to Article 627,
paragraph 6, of Colombia's GPC, and as determined by the Colombian Superior Council of the Judiciary (Consejo
Superior de la Judicatura), which provide that the foreign judgment will be enforced only if:
·
a treaty exists between Colombia and the country where the judgment was granted related to the
recognition and enforcement of foreign judgments under which judgments issued by Colombian courts can
be recognized in the country where the judgment was granted or, in the absence of such treaty, there is
reciprocity in the recognition of foreign judgments between the courts of the relevant jurisdiction and the
courts of Colombia;
·
the foreign judgment does not relate to "in rem rights" vested in assets that were located in Colombia at the
time the suit was filed;
·
the foreign judgment does not contravene or conflict with Colombian laws relating to public order other
than those governing judicial procedures;
·
the foreign judgment, in accordance with the laws of the country where it was rendered, is final and is not
subject to appeal;
·
a duly certified and authenticated copy of the foreign judgment (along with an official translation into
Spanish, if the judgment is issued in a foreign language) has been presented to the competent court in
Colombia, provided, however, that Article 606 of Colombia's GPC only requires a legalized copy of the
foreign judgment;
·
the foreign judgment does not refer to any matter upon which Colombian courts have exclusive
jurisdiction;
·
no proceeding is pending in Colombia with respect to the same cause of action, and no final judgment has
been awarded in any proceeding in Colombia on the same subject matter and between the same parties;
·
in the proceeding commenced in the foreign court that issued the judgment, the defendant was served in
accordance with the law of such jurisdiction and in a manner reasonably designated to give the defendant
an opportunity to defend against the action; and
·
the legal requirements pertaining to the corresponding exequatur proceedings are satisfied.
The United States and Colombia do not have a bilateral treaty providing for automatic reciprocal recognition
and enforcement of judgments in civil and commercial matters. The Colombian Supreme Court has accepted that
reciprocity exists when it has been proven that either a U.S. court has enforced a Colombian judgment or that a U.S.
court would enforce a foreign judgment, including a judgment issued by a Colombian court. In accordance with

iv

previous rulings of the Colombian Supreme Court, reciprocity may also be granted by treaty or by law. However,
such enforceability decisions are considered by the Colombian Supreme Court on a case-by-case basis.
Notwithstanding the foregoing, we cannot assure you that a Colombian court would enforce a U.S.-based judgment
with respect to the notes based on U.S. securities laws. In addition, certain remedies available under provisions of
the U.S. securities laws may not be admitted or enforced by Colombian courts if such remedies are deemed to be
contrary to public policy in Colombia.
Proceedings before Colombian courts are conducted in Spanish. In such exequatur proceedings, each party may
(i) request that evidence be collected in accordance with the requirements listed above, and (ii) file final allegations
in support of such party's position before a judgment is rendered. Proceedings for enforcement of a money judgment
by attachment or execution against any assets or property located in Colombia would be within the exclusive
jurisdiction of Colombian courts.

v

FORWARD-LOOKING STATEMENTS
This offering memorandum contains forward-looking statements. Some of the matters discussed concerning
our business operations and financial performance include forward-looking statements within the meaning of the
Securities Act or the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act.
Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include
words such as "expects," "anticipates," "intends," "plans," "could," "intend," "may," "believes," "should," "will,"
"would," "estimates" and similar expressions are forward-looking statements. Although we believe that these
forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and
uncertainties and are made in light of information currently available to us.
Our forward-looking statements may be influenced by factors, including the following:
·
political, economic and demographic developments in Colombia;
·
changes in the legal and regulatory framework of the telecommunications sector in Colombia, including
changes in the interpretation of the provisions of such legal and regulatory framework by Colombian
courts;
·
potential disruptions or failures of our network equipment, systems or services and our ability to manage,
implement and monitor billing and operational support systems;
·
changes in technology, including our ability to upgrade our networks to remain competitive and our ability
to anticipate and react to frequent and significant technological changes;
·
our ability to acquire subscribers and our disconnection rates, or churn rates;
·
our ability to adapt our operations to changing technology and consumer preferences;
·
the nature and extent of competition in the telecommunications industry in Colombia and the effect of
competition on the rates we are able to charge for our services;
·
volatility and fluctuations in demand for telecommunications services and the effect of such changes on the
rates that we are able to charge for our services;
·
changes in interconnection rates;
·
capital market conditions, including the availability of credit and changes in interest rates;
·
our ability to attribute and record on our balance sheet higher values for our net assets in connection with
our implementation of International Financial Reporting Standards;
·
our expectation to maintain, on terms acceptable to us, our network assets, licenses and concessions;
·
our expectation of recording significant deferred tax assets on our balance sheet under IFRS and our ability
to recognize a portion of such assets to offset our income tax expense;
·
our level of capitalization, including the levels of our indebtedness and overall leverage;
·
currency devaluations and foreign exchange fluctuations;
·
potential effects of natural disasters, war or other hostilities;

vi

·
the outcome of litigation against us;
·
delays in the development of our projects, changes to our investment plan for our telecommunications
operations, due to changes in demand, our provider selection process, authorizations, expropriations, etc.;
·
our ability to acquire additional radio spectrum capacity or successfully expand our existing mobile
networks;
·
actions of our shareholders;
·
changes in commodity prices, labor, supply, fuel, utilities, distribution and other operating costs; and
·
other factors identified or discussed under "Risk Factors."
Our forward-looking statements are not guarantees of future performance and our actual results or other
developments may differ materially from the expectations expressed in the forward-looking statements. As for
forward-looking statements that relate to future financial results and other projections, actual results may be
different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties,
potential investors should not rely on these forward-looking statements.
Forward-looking statements speak only as of the date they are made, and neither we nor the initial purchasers
undertake any obligation to update them in light of new information or future developments or to release publicly
any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of
unanticipated events.

vii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION
General
All references herein to "peso," "pesos" or "COP$" are to pesos, the official currency of Colombia. All
references herein to "U.S. dollars," "dollars" or "U.S.$" are to U.S. dollars. On March 13, 2015, the exchange rate
for pesos into U.S. dollars was COP$2,610.08 to U.S.$1.00, based on the exchange rate as reported by the Central
Bank of Colombia (Banco de la República de Colombia, or the Central Bank). The exchange rate was
COP$2,392.46 to U.S.$1.00 on December 31, 2014, COP$1,926.83 to U.S.$1.00 on December 31, 2013, and
COP$1,768.23 to U.S.$1.00 on December 31, 2012, in each case, as reported by the Central Bank.
We maintain our books and records in pesos. Solely for the convenience of the reader, we have translated some
amounts included in "Summary Financial and Other Information," "Capitalization," "Selected Financial and Other
Information" and elsewhere in this offering memorandum from pesos into U.S. dollars using the exchange rate as
reported by the Central Bank as of December 31, 2014 of COP$2,392.46 to U.S.$1.00. These convenience
translations should not be considered representations that any such amounts have been, could have been or could be
converted in the future into U.S. dollars at that or at any other exchange rate. The peso/U.S. dollar exchange rates
fluctuate widely, and the exchange rates set forth above or elsewhere in this offering memorandum may not be
indicative of future exchange rates. See "Foreign Exchange Controls and Exchange Rates" for information
regarding exchange rates between the peso and the U.S. dollar since January 1, 2010.
Financial Statements
General
The historical financial information contained in this offering memorandum has been derived from the
following financial statements, which are included elsewhere in this offering memorandum:
·
our audited financial statements as of and for the years ended December 31, 2014 and 2013, together with
the notes thereto, or our 2014 audited financial statements; and
·
our audited financial statements as of and for the years ended December 31, 2013 and 2012, together with
the notes thereto, or our 2013 audited financial statements.
We refer to our 2014 audited financial statements and our 2013 audited financial statements, collectively, as our
audited financial statements.
We are the result of the merger of TEMCO with and into CT, for which the deed of merger was executed on
June 29, 2012. See "Business--TEMCO Merger" in this offering memorandum. The first financial statements
reflecting the combined financial results of CT and TEMCO are our audited 2012 financial statements, which are
included elsewhere in this offering memorandum. Our audited financial information for the year ended December
31, 2012 gives effect to the TEMCO Merger as if it had occurred on January 1, 2012, but our and TEMCO's
operations were actually combined only for the period following June 29, 2012. Accordingly, our audited financial
statements for the year ended December 31, 2012 do not necessarily reflect our actual consolidated results of
operations had the TEMCO Merger occurred as of January 1, 2012.
Accounting Principles
We have prepared the financial statements included in this offering memorandum in accordance with
accounting practices adopted in Colombia, or Colombian GAAP, and the regulations of the Colombian
Superintendency of Corporations (Superintendencia de Sociedades). Colombian GAAP, as applied in the
preparation of our financial statements, differs in certain significant respects from International Financial Reporting
Standards as issued by the International Accounting Standards Board, or IFRS. We have not prepared audited or
unaudited financial statements under IFRS in connection with this offering. For a discussion of certain significant

viii

differences between Colombian GAAP and IFRS, see "--Effects of IFRS Adoption" and "Annex A--Summary of
Certain Significant Differences Between Colombian GAAP and IFRS."
In July 2009, the Colombian Congress enacted Law 1314 of 2009, or Law 1314, which requires the gradual
implementation in Colombia of internationally accepted standards for accounting, financial disclosure and internal
controls. Subsequently, the Colombian Technical Council of Public Accounting (Consejo Técnico de la Contaduría
Pública, or CTCP) released a guidance document, or the CTCP Guidance Document, which sets forth the types of
Colombian companies required to adopt IFRS and the expected timetable for the implementation and adoption of
IFRS in Colombia. Because Telefónica, our parent company, is required to prepare its financial statements under
IFRS, we are also required to fully adopt IFRS in accordance with the CTCP Guidance Document.
In December 2012, the Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público, or
MHCP) and the Colombian Ministry of Trade, Industry and Tourism (Ministerio de Comercio, Industria y Turismo,
or MCIT), issued Decrees 2706 and 2784 of 2012, as amended by Decree 3023 of 2013 and Decree 2615 of 2014,
which included provisions for the mandatory implementation of IFRS by companies required to do so pursuant to
the CTCP Guidance Document. These decrees set forth a mandatory transition period beginning on January 1, 2014
and require that our first fully-IFRS compliant financial statements be those for the year ending December 31, 2015.
Accordingly, we are required to adopt IFRS beginning on January 1, 2015. Therefore, our financial statements as of
and for the year ending December 31, 2015, and for any interim period in 2015, will be prepared in accordance with
IFRS.
However, Article 165 of Law 1607 of 2012, which adopted certain tax reforms, provides that solely for tax
purposes, the accounting standards under Colombian GAAP will remain in effect during the four years following
our adoption of IFRS in January 2015, in order to help measure the impact of IFRS on the tax regime for purposes of
developing future tax legislation. In addition, Decree 2548 of 2014, enacted to facilitate compliance with this
requirement, requires us to prepare our financial statements in accordance with IFRS while also maintaining
additional accounting records for tax purposes that are prepared in accordance with Colombian GAAP between
January 1, 2015 and December 31, 2018. We understand that additional official interpretations, rules or regulations
relating to the application of Article 165 of Law 1607 of 2012 may be issued by the relevant tax authorities or other
governmental authorities in Colombia in the future based on, among others, the provisions and timetable set forth
under Decree 2548 of 2014. In the event that any such official interpretation, rule or regulation is issued and, as a
result, we cease to be able to deduct our interest payments under the notes for Colombian tax purposes, then we
would be entitled to redeem the notes at our option pursuant to the provision described in "Description of the
Notes--Redemption and Repurchase--Redemption for Tax Deductibility Event."
For more information on the adoption of IFRS, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Financial Presentation and Accounting Policies--Changes in Colombian
Accounting Standards."
Effects of IFRS Adoption
As discussed above, as of January 1, 2015, we are required to prepare and report our financial statements in
accordance with IFRS, which differs in certain material respects from Colombian GAAP. See "Annex A
Summary of Certain Significant Differences Between Colombian GAAP and IFRS" and "Risk Factors--Risks
Relating to Our Business and the Colombian Telecommunications Industry--Our Adoption of IFRS as of January 1,
2015 will result in the recognition of our PARAPAT Payment Obligations as liabilities on our balance sheet, among
other effects on our financial statements."
While we have not yet prepared audited or unaudited financial statements in accordance with IFRS, the
adoption of IFRS requires certain material changes to our financial statements, including the requirement that we
recognize our PARAPAT Payment Obligations as liabilities on our balance sheet. Recognition of PARAPAT
Payment Obligations as liabilities on our balance sheet, as well as other adjustments in our financial statements as a
result of our adoption of IFRS, will have an adverse effect on our financial condition. For a reconciliation to IFRS
of our shareholders' equity as of December 31, 2014 under Colombian GAAP, see "Management's Discussion and
Analysis of Financial Condition and Results of Operation--Financial Presentation and Accounting Policies--Effects
of IFRS Adoption--Reconciliation of Our Shareholders' Equity to IFRS." For additional information on the effect

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