Oi's Turnaround
After a tough year, when the company went through shareholder transformations that turned up to be complicated by the fusion with Portugal Telecom, Oi started a turnaround process in the 4th quarter of 2014 (4Q14).
Oi's net revenue in Brazil increased 4.9% in 4Q14 over the previous quarter, more than the market average (4.0%).
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It will be necessary to wait for the next quarters to verify if this trend that points out to recovery of growth will be kept. Seasonal effects usually make revenue registered in the last quarter of the year be bigger in comparison to previous quarters, but it's positive the fact that the value is superior to the Brazilian average.
The main principal responsible for Oi's revenue growth in 4Q14 was the segment of personal mobility (mobile telephony without corporative market) which increased 11.6% in the quarter. Residential segment grew 0.9% and corporative 2.3%.
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Oi's personal mobility revenue raised (4Q14/3Q14) in all its components: Voice (4.1%), Data/VAS (22.6%) and Handsets (39.1%).
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When we compare 4Q14 with 4Q13, voice revenue presents drop of 12.8%, data/SVA increased 32.4% and handsets 74.5%.
Without the effect of Christmas and the year-end festivities, voice revenue may present again negative growth in 1Q15. Oi's revenue growth will depend on the growth of mobile data revenue.
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In order to increase mobile data, Oi needs to invest in its 3G/4G network. At the same form, grow in fixed broadband implies investments to convert its ADSL networks into a high speed network based on fiber.
However, Oi is reducing investments. Capex dropped from R$ 6.3 billion in 2013 to R$ 5.1 billion in 2014.
The operator still didn't establish Capex for 2015, but wants to increase it in R$ 1.2 - 1.8 billion more the difference between routine EBITDA and Capex, that reached R$ 1.5 billion in 2014 (Guidance).
The company also wants to elevate Brazilian routine EBITDA from R$ 6.6 billion in 2014 to a value between R$ 7.0 and 7.4 billion in 2015 (Guidance).
Based on these Oi's indications, we can estimate that Oi's Brazilian Capex, which reached R$ 5.1 billion in 2014, may drop to a value between R$ 3.7 and 4.7 billion in 2015.
Oi wants to increase its EBITDA through reductions in operational cost, improving cash flow.
Oi's net debt continues to be high, despite the drop from R$ 47.8 billion to R$ 30.6 billion with the sale of Portugal Telecom's assets to Altice. It represents 4.3 times routine EBITDA.
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