Brazilian telecommunications operator Oi (Tele Norte Leste Participacoes S.A.) has announced that its CEO Luiz Eduardo Falco will leave the company by the end of the first semester. Falco had served as Oi CEO for the past 10 years. Oi has already started searching for a replacement for Falco.
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Portugal Telecom has confirmed that the previously announced investment in Telemar Norte Leste – operating in Brazil as Oi – has been completed, and the company has acquired a direct and indirect stake of 25.28% in Telemar Norte Leste for a cash consideration of R$8.32 billion (US$5 billion).
As previously stated the corporate governance rights attributed to PT will allow the proportional consolidation of its 25.6% direct and indirect stake in Telemar Participações, which fully consolidates TNL and TMAR. This proportional consolidation will take place from 1 April 2011.
PT’s investment in Oi is structured as follows: (1) a 35% stake in AG Telecom Participações; (2) a 35% stake in LF Tel; (3) a 12.07% stake in Telemar Participações; (4) a 10.49% stake in TNL, and (5) a 9.43% stake in TMAR.
Following these transactions, PT said that it will continue to benefit from a robust balance sheet and significant financial flexibility, with a cash flow profile consistent with its attractive shareholder remuneration policy and an investment grade rating.
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Brazilian mobile network is reported to have invited four companies – Alcatel-Lucent, Huawei, ZTE and Nokia Siemens Networks – to participate in LTE trials in the country.
Oi will be conducting the trials both in laboratory conditions and in live networks in several cities. The exact deployment for each of the infrastruture suppliers is still being finalised.
There is speculation that the first LTE networks will come into operation in time for the World Cup to be held in Brazil in 2014.
The regulator is expected to grant a temporary license covering the 2.5Ghz bands for the tests.
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Oi in Brazil reported fourth-quarter net profit of BRL 284 million, compared to a net loss of BRL 538 million in the fourth quarter of 2009. Net revenues fell to BRL 7.29 billion, compared to BRL 7.58 billion a year earlier, while EBITDA slightly increased to BRL 2.27 billion, from BRL 2.21 billion.
The company ended 2010 with nearly 64 million subscribers, up by 3.4 percent versus December 2009 and up from 62.4 RGUs in September 2010. The growth came mainly from the prepaid mobile base and higher demand for fixed broadband internet services. Oi’s mobile user base added 1.9 million customers in the fourth quarter and 3.1 million users in 2010, for a total 39.3 million customers at end-2010. The number of fixed broadband customers also increased by 3.4 percent in 2010, to a total 4.35 million at 31 December. The fixed base dropped 6 percent in the fourth quarter, at 20.02 million lines in service at end-December, from 21.29 million in December 2009.
Fixed-line ARPU reached BRL 53.7, down from BRL 55.3 in the previous quarter, and down from BRL 57 in December 2009. Mobile ARPU rose quarter on quarter to BRL 23.5 versus BRL 22.9 in Q3, and BRL 22.5 in the fourth quarter of 2009. Oi had 275,000 pay-TV subscribers at end-2010, slightly down from 280,000 in September 2010 and up from 234,000 in December 2009. Oi plans investments of BRL 5-6 billion in 2011, focused on expanding 3G and fixed broadband access.
One of the company’s targets is to increase the share of broadband customers with speeds above 4 Mbps, from 12 to 40 percent by year’s end. Oi aims to finish 2011 with 30,000 households connected to its FTTH network.
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Portugal Telecom has signed the definitive sale and purchase, subscription and shareholders agreements with Oi and its controlling shareholders. The announcement follows PT’s investment in and the strategic partnership with Oi, on 28 July 2010, and the extension of the validity of the memorandum of understanding, on 30 October 2010.
The key transaction terms have been maintained in accordance with the strategic nature of this investment, namely minimum direct and indirect economic stake in Oi of 22.38 percent for a cash disbursement of BRL 8.32 billion, and significant corporate governance rights to be attributed to PT, resulting in the proportional consolidation of its direct and indirect stake in TmarPart (25.6%).
PT thus gains control of 12.07 percent of Telemar Participacoes, part of Oi’s business, as well as 35 percent stakes in the AG and LF units. The deal also involves a capital increase of up to BRL 12 billion by Oi units TNL and TMAR each. The Oi transaction is expected to close by the end of March.
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Tele Norte Leste Participacoes, S.A. operating in Brazil under the brand Oi reported a second-quarter net profit of BRL 444 million, compared to a net loss of BRL 146 million in the same period last year.
The growth was mainly due to better operating results and synergies. Net revenues climbed to BRL 7.39 billion, compared to a pro forma BRL 7.30 billion a year earlier.
The company ended June with 62.55 million subscribers, adding around 310,000 new subscribers in the quarter and 2.7 million users since June 2009.
The growth came mainly from the mobile telephony base, which added 613,000 users in the quarter and 3.3 million customers in 12 months, for a total 37.22 million customers at end-June.
Over the past 12 months, the mobile base was up 9.7 percent. The number of fixed broadband customers also increased, by 1 percent from March and by 5.9 percent from a year earlier, to a total 4.307 million.
Including 68,000 new 3G mobile broadband users, the total broadband increase was 556,000 customers.
The fixed telephony base fell to 20.759 million lines in service at end-June, from 21.085 million in March and 21.753 million in June 2009. Fixed-line ARPU declined to BRL 55.2, from BRL 55.5 in Q1, while mobile ARPU increased to BRL 22.4, versus BRL 21.8 in March 2010 and BRL 21.0 in June 2009.
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The number of mobile subscribers in Brazil grew 1.63 percent in May over April, with 2.95 million new customers added, taking the total to 183.71 million.
Cumulative net additions from January to May 2010 totalled 9.75 million, the best result for this five-month interval since the start of the measurements in 2000. Of the total mobile lines, 151.4 million were prepaid (82.4 percent) and the remaining 32.3 million were postpaid.
Vivo Participações continued as market leader with 55.6 million customers and a market share of 30.25 percent. Telecom Americas (Claro) was second with 46.7 million subscribers (25.41 percent), TIM had 43.8 million (23.84 percent), and Tele Norte Leste Participacoes, S.A. (Oi) was at 37 million customers (20.15 percent).
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