• Revenue: BRL2.1 billion, a 14% drop compared to the previous year.
• Core Revenue: BRL1.5 billion, representing 75% of total revenue.
• Fiber Revenue: BRL1.1 billion, with a 2.8% increase quarter over quarter.
• Fiber ARPU: Increased by 3% quarter over quarter.
• Oi Solucoes Revenue: Decreased by 26.6% compared to the previous year.
• IT Services Revenue: Represents approximately 30% of B2B revenue.
• Operating Expenses: BRL2.4 billion, a 10.6% reduction year over year.
• CapEx: BRL109 million, representing 5% of revenue, a 3.1% point decrease year over year.
• Cash Position: BRL1.3 billion at the end of the period, a 30% decrease over the quarter.

• Warning! GuruFocus has detected 4 Warning Signs with OIBZQ.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Oi SA (OIBZQ) successfully reduced its net debt fair value by 60%, indicating significant progress in its restructuring efforts.
• The company completed the issuance of new common shares, with creditors now holding 80% of the total shares, enhancing its financial stability.
• Fiber revenue showed a 2.8% increase quarter over quarter, with fiber ARPU up 3%, reflecting a positive trend in the company's core business.
• Oi SA (OIBZQ) achieved a 20% reduction in expenses and investments, excluding fiber infrastructure and rentals, demonstrating effective cost management.
• The company reported a solid growth of 8% in IT services revenue, with UC&C and IoT segments growing by 60% and 5% respectively, highlighting a shift towards higher-value-added services.

Negative Points

• Revenue declined by 14% compared to the previous year, primarily due to the accelerated decline in legacy services and a more rational approach to new contracts.
• The V.tal offer for asset sales lacked a cash component, impacting the company's cash flow and deviating from initial economic viability predictions.
• Oi Solucoes experienced a 26.6% decrease in revenue compared to the previous year, largely due to the decline in demand for copper-based services.
• The company faced a 30% decrease in its cash position over the quarter, driven by operational consumption and payments to creditors.
• Delays in the necessary approvals to migrate to a new concession regimen resulted in a BRL160 million cash flow impact and hindered real estate sales.

Q & A Highlights

Q: Can you quantify the financial impact of delays in migrating to the new concession regimen? A: The delay has consumed BRL160 million from our cash flow due to fines, and we estimate a delay in raising BRL350 million in resources. This also affects the sale of real estate assets, which could have been accelerated with the migration.

Q: What are the implications of the V.tal offer for the fiber line acquisition, given the lack of a cash flow component? A: The initial plan forecasted a BRL7.3 billion sale with a retention of over BRL1.5 billion. The current scenario presents a negative impact of almost BRL2 billion compared to the accrued scenario.

Q: Could you provide more details about the net value Oi expects from arbitration and its timeline? A: The estimated arbitration amount is about BRL60 billion. The final amount will depend on the arbitration decision and an audit. We hope to have a preliminary decision soon to determine a range for that amount.

Q: Can creditors sell shares in the market when they receive them, and when will new shares be freely negotiable? A: There is no lockup on the shares, so creditors can sell them freely once delivered. The shares will be delivered three working days after conditions are met.

Q: What is Oi doing to protect its cash position in Q4? A: We are adopting strong cost-reduction practices, recovering amounts in arrears, and discussing additional liquidity options to protect cash until the situation normalizes next year.

Q: What is the status of ANATEL's authorization migration, and how much did Oi pay in fines during Q3? A: We have obtained all necessary authorizations, and the final step is the release of collaterals, which depends on a Supreme Court decision. We paid BRL160 million in fines, as predicted in the plan.

Q: After selling Oi fiber clients to V.tal, what will be the company's strategy? A: Oi Solucoes will continue to focus on large corporate accounts, selling a complete portfolio, including internet access, but no longer focusing on retail.

Q: Is there a partnership between Oi Solucoes and V.tal, and what will it look like after the sale? A: Oi Solucoes will continue to use V.tal's network, as it is a major supplier of neutral networks. We will supplement with third-party networks as needed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.