Tech Roundup: Redemption closer for Oi Telecom

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the impact of Itaú’s digital transformation on Brazil’s corporate sector, the newest developments with Oi’s recovery plan, and the cyber threats surrounding Latin America. 

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Path to redemption becomes clearer for Oi Telecom

Telecom operator Oi has excited investors by taking major steps to recover from its four-year-long court-supervised recovery process. At the time it was filed, Oi’s BRL 64-billion case (USD 12.38 billion) was the largest in Brazil’s history.

Climbing out of a hole. Last week, Oi announced a deal with telecom regulator Anatel — its main creditor — to settle 1,700 lawsuits and cut Oi’s debt in half, to BRL 7.2 billion. This was the biggest deal ever struck by the Federal Prosecution Service. Moreover, as we reported in our November 27 Tech Roundup, the company auctioned datacenters and mobile telephony towers for BRL 1.4 billion.

What’s next? On December 14, Oi’s most sought-after asset will go to auction: its mobile telephony operations. So far, a BRL 16.5-billion bid by a consortium of competitors TIM, Vivo, and Claro leads the race. Federal courts also authorized the company to sell off seven of its properties, valued at a combined BRL 24 million. Overall, Oi needs to raise at least BRL 26.9 billion with these auctions.

The great reorganization. The “New Oi,” as observers are calling the company, will have an infrastructure unit named InfraCo centered on fiber-optic broadband, while the parent company will focus on the services required to support this infrastructure. Oi intends to sell control of InfraCo for BRL 20 billion, which is set to happen in the first half of 2021; the company has already received at least a dozen offers.

• If successful, InfraCo itself will become a fiber-optic giant in Brazil; the goal is to reach 32 million homes with FTTH technology by 2025. And Oi is on course to meet this target: of Brazil’s four major telecom players, it is the one with the fastest market share growth in this technology.

A long-term call. Régis Chinchila, a stocks analyst at Terra Investimentos, has maintained a “buy” recommendation for Oi stocks. He believes the recovery should last until 2022, as the company looks for higher efficiency and focuses on more profitable business.

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Itáu’s digital leap a model for Brazilian business

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