TNL (Oi) sets aside USD3.25bn for 2012 CAPEX

19 Apr 2012

Brazilian telecoms group Telemar Participacoes, which markets Oi-branded services in the country through Brasil Telecom, Tele Norte Leste Participacoes and Telemar Norte Leste, has revealed plans to invest BRL6 billion (USD3.25 billion) in its networks and services in 2012. The figure compares with capital expenditure of BRL5 billion in FY 2011. In a statement published on Tuesday, the group said it forecasts net revenue to reach BRL28.9 billion in FY 2012, compared with BRL27.9 billion last year. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the current year is expected to reach BRL8.8 billion, down from BRL8.76 billion in fiscal 2011.

Earlier this month, Oi reported an 80% decline in net income for the fourth quarter of 2011, impacted by increased costs related to its ongoing restructuring. The Rio de Janeiro-based carrier said net profit reached BRL140.7 million for the period under review, compared to BRL704.8 million in 4Q10, as costs climbed to BRL475.6 million from BRL310.7 million a year earlier. Industry watchers are predicting a difficult year ahead for Oi, which is reorganising itself to create a more simplified corporate structure. In February this year TeleGeography’s CommsUpdate reported that shareholders of Telemar Participacoes agreed a plan to simplify the firm’s organisational structure, allowing its management to resume networks investments and set up a new dividend policy. In August 2011 the operating units’ respective boards approved a merger plan to create a single entity that will be Brazil’s second largest fixed and mobile operator by revenue. Under the plan, Brasil Telecom, Tele Norte Leste Participacoes and Telemar Norte Leste will be merged into a single company that will trade under the name Oi SA. Shareholders of the three firms submitted their votes in separate meetings in February in a fourth attempt to alter the structure of the group. Minority shareholders had vetoed the three previous proposals. It is understood that Brazil’s securities regulator, CVM, this time rejected all ten complaints registered by minority investors and allowed controlling shareholders to vote.

Following the restructuring, the three telcos, which between them count seven different classes of shares, will be replaced by Oi, which will have two types of shares traded on the BM&FBovespa SA exchange in Sao Paulo and the New York Stock Exchange. Oi’s board hopes the restructuring will realise BRL100 million (USD58.6 million) of savings per annum.

Brazil, Oi