Brazil’s Oi said it is taking actions to ensure it is able to “participate in the industry consolidation process in Brazil”, and that it is “carefully assessing all the available alternatives in order to identify the most efficient structure in terms of value creation for its shareholders and for all of its stakeholders”.

The company said that the expected sale of PT Portugal (dependent on shareholder approval at a meeting scheduled for early January), together with the sale of another set of mobile towers, concluded this month, will significantly cut its debt and strengthen its financial flexibility.

“Oi is one of the three integrated companies in Brazil and is very well positioned to face the industry challenges and to capture the market opportunities, leveraging its ability to provide convergent services by offering complete service packages to its customers,” it said in a statement.

According to Reuters, Oi will ask bondholders to temporarily loosen restrictions on debt levels, in order to give it the most flexibility in merger talks.

Oi has previously been linked with a joint bid for Telecom Italia’s Brazilian arm TIM, in partnership with America Movil and Telefonica, although Oi has played down the maturity of this deal.

TIM and Oi have been seen as natural partners due to their strengths in mobile and fixed markets respectively, with Telecom Italia seemingly supportive of such a plan.

Ambitious telecoms firm Altice is currently in negotiation with Oi to acquire its Portuguese assets.

Oi also said that its performance in October and November confirms its opinion that it has hit an “inflection point”, in line with an “operational turnaround process”.

The company said it saw a “routine EBITDA” from its Brazilian business of BRL544 million ($201.8 million), up 3.8 per cent, on revenue of BRL2.33 billion, up 3.7 per cent.