Oi: 'We're in judicial recovery, not bankruptcy'

After more than two years of intense negotiations with creditors and various legal disputes, Brazilian telecom operator Oi has vowed to put the stigma surrounding its judicial recovery process behind it in an effort to curtail speculation and misconceptions that are undermining the company's ability to bounce back.

"We're in judicial recovery, not bankrupt. The judicial recovery is an opportunity for recovery," Oi's CEO Eurico Teles said at the Painel Telebrasil telecoms summit in Brasília.

In his presentation, Teles outlined the arduous process that led to the approval of a restructuring plan by creditors in December and which included the resignation of board members and the company CEO.

The CEO declared that Oi will emerge from its reorganization at a new market level that is in line with its status, stressing that the telco has 54,000 direct employees, serves 5,000 municipalities (2,000 of which are served solely by Oi), and a backbone network of 360,000km.

According to Teles, Oi had 5.5bn reais (US$1.5bn) in cash before the recovery process and has now 6.8bn reais.

He said the company was focused on "settling its monstrous debt of 64bn reais" and is negotiating the reduction of the private sector part of the debt from 49bn reais to 14bn reais.

The executive stressed that the telecommunications services provider is complying with the steps set out in the judicial recovery plan, which include a new capital increase for 4bn reais in the second half of the year.

"We were in Barcelona in February for the Mobile World Congress, and our suppliers were enthusiastic to talk to us," he said.

Meanwhile, Teles called for the approval of the PLC 79 bill, which amends the general telecommunications law, arguing that the modernization of the legislation is imperative to bring new resources into the sector. PLC 79 transfers the funds spent on services that no longer serve the population, such as the payphones, to broadband instead.

By way of example, he pointed out that Oi spent 320mn reais last year to maintain public payphones, which are now largely unused, but collected only 5.4mn reais in revenues from them.