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Oi looking to shift assets to ease debt burden

Oi looking to shift assets to ease debt burden

Brazil’s Oi is preparing to put some of its assets on the market, with O Globo reporting that the sale is likely to include its tower infrastructure and parts of its mobile operations.

The operator has faced financial turmoil for several years, and is in the process of judicial reorganisation. It has confirmed that it will alleviate its debt by selling off five data centres, 400 towers and 6000km of optical fibre, but has not previously indicated that it would part with any or all of its fixed and mobile units in Brazil. It is however lining up a sale of its Angolan unit.

However, O Globo has now reported that Oi could divest its mobile unit entirely and pivot back towards fixed. While the operator’s background is in fixed services, its mobile units now generate a similar amount of revenue.

In its most recent earnings (Q4 2018), Oi announced that its net revenue from Brazil had dropped by 8% to BRL5.3 billion, although it noted that a hike in tariffs in Q3 2017 meant that a year-on-year comparison was not quite like-for-like. Its operating revenue was BRL5.4 billion, down from BRL5.8 billion the previous year.

Falling voice traffic across its B2B, personal mobility and residential operations led to a loss of BRL3.4 billion ($871 million) – significantly more than last year’s BRL2 billion. Oi’s personal mobility unit brought in BRL1.8 billion in revenue, down 3.3%, while the migration to data from traditional voice services has impacted its prepaid revenue – a core pillar of Oi’s offering. However, the operator saw growth in mobile data and pay TV.

Reuters noted that Oi is looking to bounce back after boosting its capital spending in order to strengthen its mobile and broadband networks, and expects its revenue to be growing by 2021. The news agency ascribed Oi’s current ailing performance to a sustained lack of investment in its network.

Oi appears to be on the path to recovery, having reduced its costs in 2018 by BRL1.4 billion via improved “digitalisation, productivity and quality initiatives in the pursuit of greater efficiency”.

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