Oi fourth-quarter profits up 49%; debt down

29 Feb 2008

Brazilian telecoms operator Tele Norte Leste Participacoes, which trades as Oi, has reported a 49% year-on-year rise in net income for the three months ended 31 December, to BRL911.5 million (USD544.5 million) from BRL613.3 million a year earlier, the company said in a statement. Revenues rose 0.9% y-o-y to BRL4.48 billion, while financing costs fell 74% to BRL65 million and net debt dropped to BRL2.68 billion. Oi said it used cash to cut debt by 45% while low interest rates also helped cut borrowing costs. Tele Norte Leste is understood to be readying a BRL5.2 billion bid for rival telco, and the country’s third largest operator, Brasil Telecom. If successful, Oi will create an enlarged entity with around two-thirds of the country’s fixed line base – helping it to compete with rival telcos controlled separately by Telefonica of Spain and Mexico’s billionaire entrepreneur Carlos Slim.

In 2008 Oi intends to invest BRL4 billion (excluding acquisitions) to expand and upgrade its fixed line and mobile networks. At least one-third of the money set aside will be used to enable Oi to launch mobile services in Sao Paulo and to upgrade its existing wireless infrastructure to provide video and high speed data downloads. A spokesperson for the firm said: ‘We will start our 2G and 3G operations in Sao Paulo by July. We already offer corporate voice and data solutions in this area but we don’t offer mobility yet. We firmly intend to become the number one player in the Sao Paulo mobile telephony market thanks to our powerful convergence of services and to all the innovative products we already offer in other states’. At the end of 2007 Oi counted 14.2 million main lines in service, down 1.2% year-on-year, while its broadband user base climbed 35% to 1.52 million. The operator’s mobile arm recorded 16 million subscribers by the start of 2008, a 22% increase on the previous year. Oi hopes to increase its mobile base to 18 million users by end-2008 and hopes to sign up roughly 600,000 high speed internet customers to end the year with 2.1 million. The landline base is expected to fall to 14 million by the year end.

Brazil, Oi