Oi (OIBR3): With the sale of the towers, the company can reduce debt and invest in expansion;  But what is missing to leave judicial redemption?

Oi (OIBR3): With the sale of the towers, the company can reduce debt and invest in expansion; But what is missing to leave judicial redemption?

By selling another 8,000 fixed telephone towers to a subsidiary of Highline Brasil the day before, Oi (OIBR3; OIBR4) may have completed its last pending issue before completing a judicial redemption (RJ). The sites were put up for auction after a binding bid by NK 108, who ended up being the event’s sole bidder, acquiring the assets with a bid of R$1.697 billion – the same amount initially proposed.

“The sale of Oi’s fixed-line towers marks the end of the judicial recovery period that has been going on since mid-2016. After putting in a lot of effort, the company has finally managed to get rid of the massive amount of assets that are no longer in use as part of its core business.” , says an analysis by Levante Ideia de Investimentos.

High Line’s purchase of the towers still needs approval from the National Telecommunications Agency (Anatel) and the Administrative Council for Economic Defense (Cade). “The sale of these assets was not foreseen through a judicial reorganization adjustment, and should not interfere with the process. What was most discussed was the possibility of holding and closing the auction (which it did) so that RJ could be completed,” says Gabriel Tenem, an analyst Communications sector at Genial Investimentos.

Oi’s Director of Judicial Reorganization has informed that Judge Fernando Viana, of the 7th Business Court of Rio de Janeiro, will continue to examine the case to decide whether to issue an order to terminate RJ before the entities agree to the operation. .

Controlling the deadline for the end of the process now depends on him more than on the company itself.

Oi will continue to rent out the towers it sold

The Oi fixed telephone towers were assembled into a special purpose company (SPE) called Torres 2. Levante states that the assets were sold after Sale and leaseback, where the operator sells the assets and then uses them by paying a monthly rent to the new owner. Oi needs to continue providing service with the towers until the end of their franchise.

Oi will reduce cost on the one hand, but will have rental cost on the other. It is very difficult to determine whether the deal is favorable. The company did not disclose the rental values ​​and the amount specifically for these towers. But I think it’s something very relevant and part of Oi’s strategy, which will focus on fiber,” says Fabiano Vaz, partner and equity analyst at Nord Research.

Highline will make the first payment of R$1.088 billion to Oi on the closing date of the deal, which should represent a significant contribution to the company’s funds, even as the towers audits are discounted on value. The company still needs to make investments and still can’t make money. This 1 billion Rls ends up being a lot of fun for a company going through this moment. But that’s not something that would change Oy,” says Vaz.

Less debt, more expansion

The second installment from the sale of the towers is R$609 million and can be repaid until 2026. “These amounts will not necessarily be used to reduce debt, but will allow the company to expand on its core activities, such as fiber and services.”, he says.

Levante highlights that by adding all asset sales within the judicial redemption, Oi will receive approximately R$31 billion. The number included data centers, fixed and mobile phone towers, Oi Móvel and television subscribers, as well as the sale of a portion of V.Tal and DTH, which is still under approval by Cade. “It is worth noting that a significant part of this amount has already been set aside for debt repayment,” Aldar analysts write.

In 2020, Oi announced that the new version hard work The company will be the fiber business. In the second quarter of this year, revenue from this segment was R$958 million, with an annual growth rate of 38.7%. Oi ended the period connecting 3.7 million homes and netting 144 thousand homes.

According to the company’s CEO, Rodrigo Abreu, Oi sees opportunities to increase the base of homes connected to the infrastructure implemented by V.Tal (formerly InfraCo), which Oi no longer controls, with the sale to Globenet and BTG.

“With more than R$30 billion in cash received during the entire process, the company will have a better balanced capital structure, relying solely on operational optimization to generate recurring cash, thus allowing investments on a consistent basis,” say analysts at Rise. From the home point of view, the company has evaluation “Apparently discounted”, given the company’s history. However, the analysis team says they do not feel safe
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