Oi to sell assets to fund ‘fibre wholesale opportunity’ in Brazil

Oi to sell assets to fund ‘fibre wholesale opportunity’ in Brazil

Oi with fibre.jpg

Brazilian operator Oi is hoping to raise between 6.5 and 7.5 billion reais ($1.7-$2 billion) for new fibre-based operations by selling some of its non-core assets.

Oi will use the money saved to invest in fibre infrastructure, “to unlock and capture significant value from strategic options”. It believes it has a “unique and non-replicable infrastructure”, that gives it a “large unregulated fibre wholesale opportunity”.

The company, which two months ago announced a quarterly profit of $170 million after its bankruptcy reorganisation, said yesterday that it wants to sell towers by the end of this year and a data centre in the first half of 2020. Oi is understood to have a data centre in Brasilia, the capital city. 

Other funds should come from the result of the arbitration of Oi’s dispute with Angolan mobile operator Unitel, which should bring in $650 million by the end of 2019, and unspecified “other non-strategic” disposals by the end of 2020.

The total should bring in 70-80% of Oi’s market capitalisation, the company said in a presentation to investors and analysts.

Oi wants also to reduce its recurring cost base by one billion reais ($265 million) a year – through such measures as portfolio simplification, IT simplification and reorganisation.

The company has already raised four billion reais ($1.1 billion) in a capital increase, and aims to raise 2.1-3.1 billion reais ($560-$820 million) through social security credits. Oi said yesterday that it has already received a favourable decision on the first $560 million of that.

Oi said it “plans to become the leader in fibre and infrastructure” in Brazil, with “potential to increase [its] multiple through [its] fibre-centric model and value from strategic options”.

But it has an uphill battle. Yesterday’s presentation compared Oi’s multiple of 3.4 with a figure for “traditional telcos” such as Vivo, TIM Brasil, America Móvil, Verizon, Deutsche Telekom, AT&T, T Mobile, Telstra and Vodafone of 6.7, and the 11.7 which it calculates from fixed infrastructure telcos such as Uniti, Zayo, Chorus, GTT and Cogent.




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