Oi SA sees revenues decline in Q1; PT merger nearing completion

16 May 2014

Brazilian fixed and mobile operator Oi SA says revenue in January-March dipped 2.3% year-on-year to BRL6.88 billion (USD3.1 billion) – its second consecutive quarter of revenue decline – underlining the need for its merger with Portugal Telecom (PT) in order to stave off the threat of competition in the local market. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 37% y-o-y to BRL2.96 billion, boosted it said, by proceeds from the sale of transmission towers announced in December last year. Net profit fell to BRL228 million from BRL262 million a year earlier.

Oi SA chief executive officer Zeinal Bava is spearheading the group’s plan to merge with PT in a bid to streamline its ownership structure and make the carrier more competitive against rivals such as Telefonica Brasil (Vivo), TIM Participacoes (TIM Brasil) and America Movil’s Claro Brasil. Rio de Janeiro-based Oi SA raised BRL8.25 billion in a capital increase in April this year to help fund the deal. Its share offering (which closes on 29 May), is a prerequisite of closing the PT deal, helping it to pay off the debt held currently by controlling shareholder Telemar Participacoes, whilst simultaneously eliminating its various ‘share classes’ so that each shareholder will have an equal vote.