Oi SA's US$1.1 billion asset selloff reassured venture capitalists that Chief Executive Officer Zeinal Bava could boost the fortunes of the largest phone company in Brazil.
Undersea cables and towers would be sold to reinforce funding for the company. This year, Oi committed to pay BRL2 billion or US$900 million to stockholders. It also pledged to invest BRL6 billion in infrastructure and lessen its BRL27.5 billion in debt. The company's debt was the highest among all of its local affiliates.
Oi needed the sell off so that it could catch up to Telefonica Brasil SA and Tim Participacoes SA. The wireless market became volatile since customers cut their landlines. The sale would be the second for this year for the Rio de Janeiro-headquartered corporation.
"The company is going to be able to have the resources to lower debt and go ahead with its investment and dividend payment plan," CGD Securities' Rio de Janeiro-based analyst, Alex Pardellas, said. "Oi has a lot more assets it can still sell."
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