Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oi SA (OIBZQ, Financial) achieved a 70% reduction in financial debt through a successful restructuring process.
- The company issued new debt instruments, providing liquidity for future investments.
- Oi SA (OIBZQ) plans to focus on B2B operations, targeting corporate clients with integrated digital solutions.
- The company reported a significant reduction in operating expenses, with a 4.3% year-on-year decrease.
- Oi SA (OIBZQ) saw growth in net adds and homes connected for its fiber services, indicating positive customer acquisition trends.
Negative Points
- Revenue dropped by 13% year-on-year, primarily due to a decline in demand for legacy services.
- The company experienced a one-off impact from floods in the state of (inaudible), affecting fiber revenue growth.
- Oi SA (OIBZQ) continues to face challenges with cash flow, impacted by legacy operations.
- The company’s total revenue from Oi Solucoes fell by around 23% year-on-year.
- Despite restructuring efforts, the company still has significant debt obligations and ongoing financial challenges.
Q & A Highlights
Q: Can you talk about the factors that impacted the cash flow, especially from the operations side? We see a reduction in cash burn but also in CapEx. Could you discuss the expectation of cash generation in the coming periods?
A: (Mateus Affonso Bandeira, CEO) As for CapEx, we are well in line with what we had published in the plan, about BRL500 million for this year. We're slightly below that. In the coming quarters, we are also going to be slightly below BRL500 million. Regarding cash flow, we have initiatives to improve costs and capture results faster, especially from the migration and Legacy costs. The cash flow is slightly better than last quarter but still challenged by the Legacy impacts.
Q: Is there a term for the approval by the Attorney General regarding the consensus solution? What constraints might be in those items?
A: (Mateus Affonso Bandeira, CEO) Our expectation is that the Attorney General should confirm the approval by mid-September, specifically by the 13th of September, without any additional items.
Q: Is there a schedule for the monetization of the real estate assets? Do you have a breakdown of the value of the real estate assets over BRL35 million?
A: (Cristiane Sales, CFO) Considering the high number of real estate assets, we hope to monetize according to the plan. We have a specific process, hiring experts to accelerate this. We have about 50 real estate assets above BRL35 million in our portfolio.
Q: What assumptions is Oi using for the expected date to sell ClientCo?
A: (Thalles Eduardo Da Paixao, Chief Legal Officer) The second round for the disposal of the UPI ClientCo is well determined in our reorganization plan. We expect a hearing to take place in September and the definition to be in mid-September. We anticipate complications or a longer period for the resolution of regulatory issues, aiming for early 2025.
Q: Are the arbitration proceeds going to sit with the company after the asset sales?
A: (Mateus Affonso Bandeira, CEO) The proceeds from the arbitration will first settle the debt with Anatel. Then, the migration commitments taken on by V.tal will be addressed. Any excess amount will be shared equally by V.tal and Oi, with Oi Solucoes being the main focus of these investments.
Q: If the Attorney General approves the agreement and the disposal of assets can settle the debt, would you still need to dispose of the share Oi has in V.tal?
A: (Mateus Affonso Bandeira, CEO) Yes, it goes along with the Fiber UPI. These items are included in our strategic financial strategy to settle our debt.
Q: As the agreement is approved by the Attorney General and with the new debt bonds being issued, would the company conclude the Court Supervisory Organization process?
A: (Thalles Eduardo Da Paixao, Chief Legal Officer) The Court supervision should last at least 24 months. Once we have completed the obligations and are paying outstanding debt, the judge can rule on this.
Q: What can we expect from the new Oi after the assets have been disposed of? How will the operations be?
A: (Rogerio Takayanagi, Director of Strategy and Transformation) We are simplifying the company, especially regarding the Legacy. We will turn off unused infrastructure, reducing the size and expenses of the company. We aim to leverage connectivity services and add value-added systems like cloud, unified communications, and cybersecurity, which require smaller investments.
Q: With the conversion process of the debt and the capital increase, will shareholders be entitled to underwrite those shares? Will they have the right of first refusal?
A: (Thalles Eduardo Da Paixao, Chief Legal Officer) Yes, shareholders will have that right in a 30-day period according to the applicable legislation.
Q: What are the main takeaways from this quarter?
A: (Mateus Affonso Bandeira, CEO) We have made substantial progress on critical fronts, including a significant reduction of 70% in financial debt, raising BRL650 million in liquidity, and advancing the UPI ClientCo Solucoes process. We will continue to focus on profitable growth, cost controls, and increased efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
