Teleco Blog

31
12/2017

Market Cap, Oi and other highlights

Eduardo Tude

Market Cap

Telecom operators like AT&T, Verizon and América Móvil registered growth in their market cap valor in 2017, even though smaller than Facebook, Amazon, Microsoft and Google;
In Brazil, Telefônica, TIM and Oi also gained market cap.

Oi’s Judicial Recovery

A calm week after the approval of the recovery plan during the creditors meeting. There’s expectation for the homologation of the plan by the Brazilian Justice which may happen in the begin of 2018 and for the possible appeals made by Anatel and Société Mondiale Fund (Nelson Tanure). The dispute may continue until the decision of the Brazilian Supreme Court;
Meanwhile, the change at Oi’s control must to be approved by Anatel. The deadline for the capitalization is February 28th, 2019;
Oi’s ON stocks decreased 0.3% in the week and PN fell 2.0%. Along the last four weeks Oi’s stocks had losses of 19.5% and 14.3% respectively.

Complaints made to Anatel

Comparing Nov/2017 with Nov/2016 we observe that the complaints made by users to Anatel decreased 15.2%.

17.9% in mobile telephony;
19.3% in fixed telephony;
8.8% in fixed broadband;
6.1% in pay TV.

Multimedia Communication Service Providers

Brazil ended 2017 counting 7.2 thousand SCM providers, 879 more than the number registered in 2016.

24
12/2017

Oi, 5G, Vivo and other highlights

Eduardo Tude

Oi’s Judicial Recovery:

Oi’s judicial recovery plan was approved in the Creditors General Meeting that took place on December 19^th. The original version presented on December 12^th went through intense negotiations during the week and was modified in order to be approved in the meeting.

The main points of the plan towards the debts are:

R$ 26 billion from the debit of R$ 32.3 billion with bondholders can be converted into up to 75% of Oi’s capital. The rest will be paid in seven years. First some conditions must be accomplished by bondholders to make investment of R$ 4 billion at Oi, among them the approval of the plan in any levels and it publication o the new Universalization Plan;
The debt of R$ 3.3 billion with BNDES will be paid in 15 years;
The debts with suppliers up to R$ 150 thousand must be paid in full and the debts above this value must be paid in 5 years;
Labor debts will be paid in 11 months;
R$ 8.3 billion in fees applied by Anatel must be paid in 240 months and R$ 6.1 billion related to other processes in 20 years. Anatel voted against the plan and wants to appeal to justice. Anatel wants to preserve itself because it understands that the Law prevents it from negotiating these credits;
According to this plan, Oi’s debt will reduced from R$ 63.95 billion to R$ 38.45 billion.

The next steps will be the homologation of the plan by justice and possible appeals made by Anatel and Oi’s current controllers like Société Mondiale Fund (Nelson Tanure). The dispute may continue until the Brazilian Supreme Court makes its decision. The change in Oi’s control still must to be approved by Anatel. The deadline to this capitalization is February 28^th, 2019.

Oi’s ON stocks presented reduction of 2.9% in the week and PN stocks increased 4.1%.

3GPP accomplished the schedule and announced the conclusion of the 5G NR (New Radio) specification in its non-standalone version;
This version (NSA) and the complete (Standalone) share the same specifications in physic layers and the hardware of these two versions are expected to be compatible;
This step is important to enable tests and operations scheduled for 2018.

Vivo

Vivo announced that it already covers 106 Brazilian cities with 4G+, including all the capitals. With 4G+ the company can offer speeds two times faster due to the aggregation of the 700MHz frequency with the 2.600MHz band or with the 1.800MHz frequency. Vivo uses 700 MHz frequency for 4G in 306 cities already;
Vivo started the commercial operation of its FTTH network in Teresina (PI). Investments reached R$ 35.2 million;
Telefônica’s Conduct Adjustment Term was discussed this week during a public hearing at the Brazilian Deputies Chamber. Abrint, Telcomp and many operators have demonstrated concern that the values from fees, exchanged by additional commitments on Telefônica’s Conduct Adjustment, will be used to build fiber networks in cities where there are already similar networks operated by other broadband providers.

Other Highlights

AT&T and Time Warner postponed to July 21^st, 2018, the deadline to finish the merger agreement between both companies;
Apple admitted that it reduces the performance of older iPhones on purpose. Many customers are suing the company because of it;
Huawei may start selling smartphones to North American operators in 2018;
Court of Justice of the European Union decided that Uber must be treated as a transportation service instead of a web services platform.

17
12/2017

Oi, Conduct Adjustment Term and other highlights

Eduardo Tude

Oi’s Judicial Recovery

Oi’s creditors meeting is scheduled to Wednesday (Dec 12th);
Oi’s president, Eurico Teles, presented a new judicial recovery plan that has great chance to be approved by creditors. With the new plan creditors participation in Oi’s capital may increase to 75%;
R$ 60.5 billion in financial commitments and regulatory fines are transformed into R$ 32.6 billion - a discount of R$ 27.9 billion;
As the approval by the administration council wasn’t necessary, part of the current stockholders won’t resist to the plan. Société Mondiale fund (Nelson Tanure) is trying to suspend the meeting and may raise questions about its result;
Oi’s ON stocks had reduction of 17.6% in the week and PN decreased 15.2%.

Telefônica’s Conduct Adjustment Term

Anatel decided to disclose part of the documents of Telefônica’s Conduct Adjustment Term answering the request made by Abrint, Claro, Telcomp and TIM;
Disclosing the 105 cities where Telefônica will build FTTH networks using additional resources from the Term will give more transparency to the process. Broadband providers are concerned that Telefônica would be getting benefits from these resources to break into new markets where these companies have networks already;
On February 15th 2018, Anatel may report its legal opinion and on February 28th the Term will be sent to the administration council.

Use of Light Poles

During a meeting that occurred last Friday, Anatel and Aneel decided that they will review the resolution that regulates the rental of street poles.

Network Neutrality in the United States

FCC revoked the network neutrality rule approved in 2015, removing rules that prohibited Internet service providers from blocking, throttling or giving preferential treatment to traffic through pay-for-prioritization;
According to the president of FCC, the Federal Trade Commission should protect consumers from unfair and anticompetitive on-line practices;
We’ll keep track of this matter in the United States. In Brazil network neutrality is guaranteed by law (internet civil landmark).

Disney purchases Fox

Disney announced the purchase of FOX for US$ 52.5 billion. The operation still need to be approved by authorities in the United States and in other countries;
This acquisition reinforces Disney’s position as content producer in market that is vertically consolidating itself after the acquisition of Time Warner by AT&T and the growth of Netflix.

Coming weeks

Oi’s creditors meeting on December 19th.

Eduardo Tude

President and partner at Teleco (consultancy company), works since 2002 as analyst of Telecom market, coordinating consulting projects, publishing weekly articles, preparing sector reports and presenting workshops.

Telecom Engineer (IME 1978) and MSc. in Telecom Engineering (INPE 81), Tude is member in the Mobile World Congress’s judging commission for the Global Mobile Awards, in Barcelona, and was also a visiting specialist professor at Unicamp.

Tude had many positions in the management of Telecommunication companies in areas like Mobile Systems (Ericsson), Optical Networks (Pegasus Telecom) and Satellites (INPE).

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Market Cap, Oi and other highlights

Oi, 5G, Vivo and other highlights

Oi, Conduct Adjustment Term and other highlights