Oi lines up asset sales as losses mount - Mobile World Live

Oi lines up asset sales as losses mount

29 MAR 2019

Troubled Brazilian operator Oi prepared a sale of assets which could include parts of its mobile business as well as its tower infrastructure, O Globo reported.

The company, which is in judicial reorganisation, is looking to offload 6,000km of optical fibre, five data centres and 400 towers. But it was also mooted that it may go further, and sell part of its fixed and/or mobile units.

Earlier this year it was reported (again by O Globo) that Oi was considering the outright sale of the mobile unit to focus on its fixed operations: its heritage is in fixed, although in revenue terms its residential and personal mobility units are similar in size.

Also on the block is Oi’s operation in Angola.

Financials
Oi this week announced its results for Q4 2018, with a loss attributable to shareholders of BRL3.4 billion ($871 million), compared with a prior year loss of BRL2 billion, on operating revenue of BRL5.4 billion, down from BRL5.8 billion.

Net revenue from Brazil of BRL5.3 billion was down 8 per cent, with the annual comparison partially impacted by tariff increases in Q3 2017. Across its three units (residential, personal mobility and B2B) its performance continued to be impacted by declines in voice traffic, although mobile data and pay-TV were growth spots.

Service revenue of BRL1.8 billion in the personal mobility segment was down 3.3 per cent, with the prepaid segment, which is a critical part of the business, impacted by high unemployment rates, lower interconnection tariff and the impact of voice-to-data migration, which is leading to a reduction in multi-SIM ownership.

Reuters stated the company is looking to return to revenue growth in 2021, following an increase in capital expenditure designed to boost its broadband and mobile networks. The current weakness was attributed to underinvestment in its network in recent years.

Capex of BRL6.1 billion in 2018 was up from BRL5.6 billion in 2017, and is expected to reach BRL7 billion this year. Spend is focused on fibre deployment and refarming of 1.8GHz and 2.1GHz frequencies.

The company highlighted a BRL1.4 billion cost reduction in 2018, as it “continues to work on digitalisation, productivity and quality initiatives in the pursuit of greater efficiency”.

In January, Oi appointed Boston Consulting Group to advise in a strategic review, which includes “the analysis and definition of business models with a long-term perspective and preparation of guidelines and implementation plans that assure the adoption of such models”.

At the same time, it selected Bank of America Merrill Lynch as financial adviser to “procure and structure operations that involve monetisation of non-core assets and M&A opportunities, in a further step to maximise value creation and to broaden the options of financing sources to execute its investment plan, focusing in FTTH and 4.5G coverage”.

These were said to be complementary and coordinated with Oi’s capital expenditure plan, which in turn is being supported by consultancy Oliver Wyman.

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