哈萨克斯坦国家石油运输商KazTransOil：6月份通过Druzhba管道向德国供应了16万吨原油。 ...

Group 1 - KazTransOil, the national oil transporter of Kazakhstan, supplied 230,000 tons of crude oil to Germany via the Druzhba pipeline in May [1]

据国际文传电讯社：哈萨克斯坦国家石油运输商KazTransOil表示，4月哈萨克斯坦对德国的原油出口增 加至16万吨。 ...

Company Performance - Daqing Oilfield's natural gas production exceeded 6 billion cubic meters in 2024, marking steady growth for the 14th consecutive year [1] - The 6 billion cubic meters of natural gas can meet the annual daily needs of 39 million families of three [1] - The northeast China base produced 5 billion cubic meters of natural gas, while the southwest China base produced 1 billion cubic meters in 2024 [1] Historical Context - Daqing Oilfield was discovered in 1959 in Heilongjiang province and has significantly contributed to China's modern petroleum industry [1] Industry Impact - Daqing Oilfield is one of China's largest oil production bases, highlighting its importance in the country's energy sector [1]

[Company Data](index=3&type=section&id=Company%20Data) This section details the company's share capital structure as of September 30, 2021 [Capital Breakdown](index=3&type=section&id=Capital%20Breakdown) Outlines the company's paid-in and treasury share capital for common and preferred stock as of Q3 2021 Capital Breakdown as of 09/30/2021 (in thousands of shares) | Category | Common Shares | Preferred Shares | Total | | :--- | :--- | :--- | :--- | | **Paid-in Capital** | 5,796,478 | 157,727 | 5,954,205 | | **In Treasury** | 30 | 1,812 | 1,842 | [Individual Financial Statements](index=4&type=section&id=Individual%20Financial%20Statements) Presents the company's standalone financial performance, including balance sheets, income, and cash flow statements [Individual Balance Sheets](index=4&type=section&id=Individual%20Balance%20Sheets) Shows a significant increase in total assets to R$55.3 billion, driven by a merger and held-for-sale assets [Assets](index=4&type=section&id=Individual%20Balance%20Sheets%2C%20Assets) Individual Assets (in thousands of BRL) | Line Item | 09/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Current Assets** | **15,332,497** | **6,017,124** | | Cash and cash equivalents | 785,300 | 1,952,680 | | Accounts receivable | 3,538,029 | 1,400,570 | | Held-for-sale assets | 4,840,885 | 100,622 | | **Non-current Assets** | **39,997,369** | **32,508,078** | | Long-term receivables | 17,421,914 | 15,160,428 | | Property, plant and equipment | 15,078,244 | 6,948,832 | | Intangible assets | 2,662,169 | 3,045,378 | | **Total Assets** | **55,329,866** | **38,525,202** | [Liabilities and Equity](index=6&type=section&id=Individual%20Balance%20Sheets%2C%20Liabilities%20and%20Equity) Individual Liabilities and Equity (in thousands of BRL) | Line Item | 09/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Current Liabilities** | **6,704,680** | **3,044,306** | | Trade payables | 2,676,984 | 970,071 | | **Non-current Liabilities** | **47,563,377** | **27,729,404** | | Borrowings and financing | 22,081,725 | 12,935,035 | | Other payables | 21,282,192 | 12,679,013 | | **Total Liabilities** | **54,268,057** | **30,773,710** | | **Shareholders' Equity** | **1,061,809** | **7,751,492** | | **Total Liabilities and Equity** | **55,329,866** | **38,525,202** | [Individual Statements of Profit or Loss](index=8&type=section&id=Individual%20Statements%20of%20Profit%20or%20Loss) Reports a net loss of R$6.7 billion for the nine months to September 2021, a notable improvement from 2020 Individual Profit or Loss Highlights (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Net operating revenue | 4,724,165 | 2,521,231 | | Gross profit | 716,443 | 506,252 | | Share of results of investees | (3,938,627) | (8,582,934) | | Financial income (expenses) | (3,090,060) | (2,995,067) | | Profit/loss for the period | (6,711,199) | (12,327,833) | | Basic earnings per share (R$) | (1.13) | (2.07) | [Individual Statements of Comprehensive Income](index=9&type=section&id=Individual%20Statements%20of%20Comprehensive%20Income) Details a comprehensive loss of R$6.7 billion for the nine months to September 2021, driven by the net loss Individual Comprehensive Income (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Profit for the period | (6,711,199) | (12,327,833) | | Other comprehensive income | 5,434 | 650,646 | | **Comprehensive income for the period** | **(6,705,765)** | **(11,677,187)** | [Individual Statements of Cash Flows](index=10&type=section&id=Individual%20Statements%20of%20Cash%20Flows) Shows a net cash decrease of R$1.2 billion, with significant outflows from investing and operating activities Individual Cash Flow Summary (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Net cash from operating activities | (109,964) | (717,588) | | Net cash from investing activities | (1,484,374) | 2,328,865 | | Net cash from financing activities | 430,304 | (246,930) | | **Increase (decrease) in cash** | **(1,167,380)** | **1,550,046** | | Cash at beginning of period | 1,952,680 | 949,967 | | Cash at end of period | 785,300 | 2,500,013 | [Individual Statement of Changes in Equity](index=12&type=section&id=Individual%20Statement%20of%20Changes%20in%20Equity) Highlights a sharp R$6.7 billion decrease in shareholders' equity, primarily due to the period's net loss Individual Changes in Equity (YTD 09/30/2021, in thousands of BRL) | Line Item | Amount | | :--- | :--- | | Opening balance (01/01/2021) | 7,751,492 | | Profit (loss) for the period | (6,711,199) | | Other comprehensive income | 5,434 | | Share-based compensation | 16,082 | | **Closing balance (09/30/2021)** | **1,061,809** | [Individual Statements of Value Added](index=14&type=section&id=Individual%20Statements%20of%20Value%20Added) Shows a negative wealth for distribution of R$333.5 million, with lenders and lessors as primary recipients Individual Distribution of Value Added (YTD, in thousands of BRL) | Category | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | **Wealth for distribution** | **(333,456)** | **(4,941,547)** | | Personnel | 446,196 | 255,848 | | Taxes and fees | 922,850 | 576,510 | | Lenders and lessors | 5,008,697 | 6,553,928 | | Shareholders (Retained earnings/losses) | (6,711,199) | (12,327,833) | [Consolidated Financial Statements](index=15&type=section&id=Consolidated%20Financial%20Statements) Presents the group's combined financial position, performance, and cash flows, including all subsidiaries [Consolidated Balance Sheets](index=15&type=section&id=Consolidated%20Balance%20Sheets) Shows total assets of R$75.5 billion, with a significant increase in held-for-sale assets to R$34.4 billion [Assets](index=15&type=section&id=Consolidated%20Balance%20Sheets%2C%20Assets) Consolidated Assets (in thousands of BRL) | Line Item | 09/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Current Assets** | **46,291,077** | **33,795,738** | | Cash and cash equivalents | 3,020,184 | 4,107,941 | | Accounts receivable | 4,238,128 | 3,974,238 | | Held-for-sale assets | 34,413,026 | 20,771,942 | | **Non-current Assets** | **29,238,271** | **40,044,049** | | Property, plant and equipment | 16,508,439 | 24,135,058 | | Intangible assets | 3,171,501 | 3,697,821 | | **Total Assets** | **75,529,348** | **73,839,787** | [Liabilities and Equity](index=17&type=section&id=Consolidated%20Balance%20Sheets%2C%20Liabilities%20and%20Equity) Consolidated Liabilities and Equity (in thousands of BRL) | Line Item | 09/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Current Liabilities** | **23,469,967** | **18,013,108** | | Liabilities associated to held-for-sale assets | 13,937,803 | 9,195,376 | | **Non-current Liabilities** | **50,980,265** | **48,056,769** | | Borrowings and financing | 31,071,532 | 25,918,777 | | **Total Liabilities** | **74,450,232** | **66,069,877** | | **Consolidated Shareholders' Equity** | **1,079,116** | **7,769,910** | | **Total Liabilities and Equity** | **75,529,348** | **73,839,787** | [Consolidated Statements of Profit or Loss](index=19&type=section&id=Consolidated%20Statements%20of%20Profit%20or%20Loss) Reports a consolidated net loss of R$6.7 billion for the nine months to September 2021, driven by financial expenses Consolidated Profit or Loss Highlights (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Net operating revenue | 6,716,892 | 7,027,560 | | Gross profit | 1,479,360 | 2,018,457 | | Financial income (expenses) | (6,486,212) | (10,821,576) | | Consolidated profit/loss for the period | (6,713,827) | (12,326,728) | | Basic earnings per share (R$) | (1.13) | (2.07) | [Consolidated Statements of Comprehensive Income](index=21&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Details a consolidated comprehensive loss of R$6.7 billion, almost entirely reflecting the period's net loss Consolidated Comprehensive Income (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Consolidated profit for the period | (6,713,827) | (12,326,728) | | Other comprehensive income | 6,951 | 699,710 | | **Consolidated comprehensive income** | **(6,706,876)** | **(11,627,018)** | [Consolidated Statements of Cash Flows](index=22&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Shows a net cash decrease of R$1.1 billion, with significant financing inflows offsetting operational outflows Consolidated Cash Flow Summary (YTD, in thousands of BRL) | Line Item | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | Net cash from operating activities | (1,631,817) | 3,539,622 | | Net cash from investing activities | (3,576,281) | (1,548,142) | | Net cash from financing activities | 4,163,879 | 1,184,677 | | **Increase (decrease) in cash** | **(1,087,757)** | **3,381,165** | | Cash at beginning of period | 4,107,941 | 2,081,945 | | Cash at end of period | 3,020,184 | 5,463,110 | [Consolidated Statement of Changes in Equity](index=24&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Highlights a R$6.7 billion decline in consolidated equity, driven by the net loss for the period Consolidated Changes in Equity (YTD 09/30/2021, in thousands of BRL) | Line Item | Amount | | :--- | :--- | | Opening balance (01/01/2021) | 7,769,910 | | Profit (loss) for the period | (6,713,827) | | Other comprehensive income | 6,951 | | Share-based compensation | 16,082 | | **Closing balance (09/30/2021)** | **1,079,116** | [Consolidated Statements of Value Added](index=26&type=section&id=Consolidated%20Statements%20of%20Value%20Added) Details the R$4.2 billion in wealth generated and its distribution to stakeholders, primarily lenders and lessors Consolidated Distribution of Value Added (YTD, in thousands of BRL) | Category | YTD 09/30/2021 | YTD 09/30/2020 | | :--- | :--- | :--- | | **Wealth for distribution** | **4,237,584** | **3,376,836** | | Personnel | 1,230,218 | 1,251,484 | | Taxes and fees | 2,236,284 | 2,184,399 | | Lenders and lessors | 7,484,909 | 12,267,681 | | Shareholders (Retained earnings/losses) | (6,713,827) | (12,326,728) | [Notes to the Financial Statements](index=27&type=section&id=Notes%20to%20the%20Financial%20Statements) Provides detailed disclosures on accounting policies, risk management, and key financial statement items [General Information and Judicial Reorganization](index=28&type=section&id=1.%20GENERAL%20INFORMATION) Details the company's operations under a Judicial Reorganization Plan focused on divesting assets to fund fiber optics [Judicial Reorganization Plan (JRP)](index=30&type=section&id=Judicial%20Reorganization%20Plan%20(JRP)) - The company is operating under a court-supervised **Judicial Reorganization Plan (JRP)**, which was amended and approved in September 2020[57](index=57&type=chunk) - The JRP's strategy is to achieve financial flexibility by selling specific business units (UPIs) to fund investments in its **core fiber optics business** and repay creditors[52](index=52&type=chunk)[58](index=58&type=chunk) - The court supervision period was **extended until March 31, 2022**, to allow for the completion of the UPI sales[60](index=60&type=chunk)[61](index=61&type=chunk) [Sale of Isolated Productive Units (UPIs)](index=38&type=section&id=Sale%20of%20Isolated%20Productive%20Units%20(UPIs)) - The JRP mandates the sale of several UPIs, including **Mobile Assets, InfraCo, and TVCo**, to raise funds[320](index=320&type=chunk) - An investment agreement was signed with Globenet for the partial sale of UPI InfraCo for **R$12.9 billion**[90](index=90&type=chunk)[91](index=91&type=chunk) - The sale of UPI InfraCo received final approval from the antitrust authority **CADE in November 2021** and is pending ANATEL's approval[93](index=93&type=chunk)[94](index=94&type=chunk)[356](index=356&type=chunk) [Corporate Restructuring and Mergers](index=39&type=section&id=Corporate%20Restructuring%20and%20Mergers) - As part of the reorganization, Oi merged its wholly-owned subsidiary **Telemar on May 3, 2021**, consolidating its assets and liabilities[95](index=95&type=chunk) Summary of Merged Net Assets from Telemar (May 3, 2021) | Description | Amount (in thousands of BRL) | | :--- | :--- | | Total Assets Acquired | 29,804,012 | | Total Liabilities Assumed | (23,641,995) | | **Merged Net Assets** | **6,162,017** | [Significant Accounting Policies](index=41&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the IFRS-based accounting principles used, including the key classification of UPIs as discontinued operations - The financial statements are prepared in accordance with **IAS 34 / CPC 21 (R1)** for interim reporting[105](index=105&type=chunk) - Comparative balances for the income statement, cash flow, and other statements were restated to segregate **discontinued operations (UPIs)** in accordance with CPC 31/IFRS 5[108](index=108&type=chunk) - Key accounting judgments and estimates include **impairment of long-lived assets, provisions for lawsuits, and the fair value of financial liabilities**[109](index=109&type=chunk) [Financial Instruments and Risk Management](index=46&type=section&id=3.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK%20ANALYSIS) Details the company's significant exposure to foreign exchange and interest rate risks and its hedging strategies [Market Risk (Foreign Exchange and Interest Rate)](index=49&type=section&id=Market%20Risk%20(Foreign%20Exchange%20and%20Interest%20Rate)) - The company's debt is significantly exposed to market risks, with **61.4% of borrowings and financing exposed to foreign exchange fluctuations** and **32.3% subject to floating interest rates** (mainly CDI)[136](index=136&type=chunk)[150](index=150&type=chunk) Sensitivity Analysis of Market Risks (Consolidated) | Scenario | Impact on Profit/Loss (in thousands of BRL) | | :--- | :--- | | 50% BRL Depreciation | (8,831,980) | | 50% Increase in Interest Rates | (3,030,370) | [Credit and Liquidity Risk](index=55&type=section&id=Credit%20and%20Liquidity%20Risk) - Credit risk is managed by diversifying the customer portfolio and investing with prime financial institutions; **91.0% of consolidated cash investments** are with counterparties rated AAA, AA, A, or sovereign[157](index=157&type=chunk)[158](index=158&type=chunk) - Liquidity has been reinforced in 2021 through several financing activities, including a **R$2.5 billion debenture issue** for InfraCo (FTTH expansion) and a **US$880 million Senior Bond issuance** by Oi Móvel[161](index=161&type=chunk)[162](index=162&type=chunk) [Held-for-Sale Assets and Discontinued Operations](index=109&type=section&id=30.%20HELD-FOR-SALE%20ASSETS%20AND%20DISCONTINUED%20OPERATIONS) Reports R$34.4 billion in assets held for sale and a R$536.1 million profit from these discontinued operations - Assets and liabilities related to the disposal of **UPI Mobile Assets, UPI InfraCo, and UPI TVCo** are classified as held for sale[320](index=320&type=chunk) Consolidated Held-for-Sale Balances (in thousands of BRL) | Category | 09/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Assets Held for Sale** | **34,413,026** | **20,771,942** | | Property, plant and equipment | 30,052,350 | 17,297,887 | | **Liabilities Associated to Held-for-Sale Assets** | **13,937,803** | **9,195,376** | | Leases payable | 7,093,509 | 5,636,122 | Profit (Loss) from Discontinued Operations (in thousands of BRL) | Period | Amount | | :--- | :--- | | YTD 09/30/2021 | 536,096 | | YTD 09/30/2020 | (475,076) | [Other Key Notes](index=57&type=section&id=Other%20Key%20Notes) Covers key disclosures on revenue, debt, provisions, contingent liabilities, and the impact of COVID-19 [Revenue, Expenses, and Segment Reporting](index=57&type=section&id=Revenue%2C%20Expenses%2C%20and%20Segment%20Reporting) - The company operates as a single reportable segment, **"Telecommunications in Brazil,"** which excludes discontinued operations[294](index=294&type=chunk) Consolidated Net Operating Revenue by Segment (YTD 09/30/2021, in thousands of BRL) | Segment | Revenue | | :--- | :--- | | Residential | 3,851,899 | | SMEs/Corporate (B2B) | 2,624,558 | | Other | 69,674 | | **Total Brazil Telecom** | **6,546,131** | [Debt and Provisions](index=82&type=section&id=Debt%20and%20Provisions) Consolidated Debt and Provisions (09/30/2021, in thousands of BRL) | Category | Amount | | :--- | :--- | | Total Borrowings and Financing | 31,339,944 | | Provisions (Probable Loss) | 5,327,248 | | Contingent Liabilities (Possible Loss) | 31,307,147 | [COVID-19 and Other Information](index=117&type=section&id=COVID-19%20and%20Other%20Information) - The company has maintained operations during the COVID-19 pandemic with measures like **remote work for ~71% of staff** and safety protocols for field workers, reporting no material deviations in operations or results[339](index=339&type=chunk)[340](index=340&type=chunk)[344](index=344&type=chunk) - An independent internal investigation regarding **"Operation: Mapa da Mina" was completed** and did not identify any indications of illegalities committed by the Company[337](index=337&type=chunk)

[Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of the company's capital structure as of June 30, 2021 [Capital Breakdown](index=3&type=section&id=Capital%20Breakdown) As of June 30, 2021, the company's total capital consisted of 6,598,224 thousand shares, with 645,832 thousand shares held in treasury, primarily composed of common shares Capital Breakdown as of 06/30/2021 (in thousands of shares) | Category | Common Shares | Preferred Shares | Total | | :--- | :--- | :--- | :--- | | **Paid-in Capital** | 6,440,497 | 157,727 | 6,598,224 | | **In Treasury** | 644,020 | 1,812 | 645,832 | [Individual Financial Statements](index=4&type=section&id=Individual%20Financial%20Statements) This section presents the company's individual financial statements, including balance sheets, statements of profit or loss, comprehensive income, cash flows, changes in equity, and value added [Individual Balance Sheets](index=4&type=section&id=Individual%20Balance%20Sheets) The individual balance sheet shows a significant increase in total assets to BRL 58.3 billion, primarily driven by a surge in held-for-sale assets and property, plant, and equipment, while shareholders' equity decreased [Assets](index=4&type=section&id=Individual%20Assets) Total individual assets increased to BRL 58.3 billion as of June 30, 2021, largely due to a substantial rise in current assets, specifically 'Held-for-sale assets', and a more than doubling of 'Property, plant and equipment' Individual Assets Summary (in thousands of BRL) | Line Item | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Total assets** | **58,281,742** | **38,525,202** | | Current assets | 18,354,187 | 6,017,124 | | Cash and cash equivalents | 603,278 | 1,952,680 | | Held-for-sale assets | 6,652,288 | 100,622 | | Non-current assets | 39,927,555 | 32,508,078 | | Property, plant and equipment | 15,003,298 | 6,948,832 | [Liabilities and Equity](index=6&type=section&id=Individual%20Liabilities%20and%20Equity) Total individual liabilities and equity reached BRL 58.3 billion, with total liabilities rising to BRL 52.4 billion, mainly due to increased non-current borrowings and other payables, while shareholders' equity declined Individual Liabilities and Equity Summary (in thousands of BRL) | Line Item | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Total liabilities and shareholders' equity** | **58,281,742** | **38,525,202** | | Current liabilities | 7,351,675 | 3,044,306 | | Non-current liabilities | 45,069,044 | 27,729,404 | | *Borrowings and financing* | *20,591,205* | *12,935,035* | | Shareholders' equity | 5,861,023 | 7,751,492 | | *Retained earnings/accumulated losses* | *(30,156,502)* | *(28,257,917)* | [Individual Statements of Profit or Loss](index=8&type=section&id=Individual%20Statements%20of%20Profit%20or%20Loss) For the six months ended June 30, 2021, the company reported a net loss of BRL 1.90 billion, a significant improvement from the BRL 9.69 billion loss in the same period of 2020, mainly due to lower financial expenses and a positive result from discontinued operations Individual Profit/Loss Summary (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Net operating revenue | 2,638,986 | 1,579,128 | | Gross profit | 373,480 | 228,364 | | Profit (loss) before financial income (expenses) | (1,379,822) | (6,967,141) | | Financial income (expenses) | (886,022) | (2,186,050) | | Profit/loss for the period | (1,898,585) | (9,689,449) | Individual Earnings Per Share (BRL per share) | Share Type | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Common shares (ON) | -0.32000 | -1.63000 | | Preferred shares (PN) | -0.32000 | -1.63000 | [Individual Statements of Comprehensive Income](index=9&type=section&id=Individual%20Statements%20of%20Comprehensive%20Income) For the six months ended June 30, 2021, the total comprehensive loss was BRL 1.90 billion, a significant reduction from the BRL 9.58 billion loss in the prior-year period, primarily due to the lower net loss Individual Comprehensive Income (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Profit for the period | (1,898,585) | (9,689,449) | | Other comprehensive income | (5,289) | 108,619 | | **Comprehensive income for the period** | **(1,903,874)** | **(9,580,830)** | [Individual Statements of Cash Flows](index=10&type=section&id=Individual%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities increased to BRL 971.7 million, while investing activities reversed to a net use of BRL 951.3 million, resulting in an overall decrease in cash and cash equivalents of BRL 1.35 billion Individual Cash Flow Summary (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Net cash from operating activities | (971,687) | (624,370) | | Net cash from investing activities | (951,301) | 1,979,221 | | Net cash from financing activities | 574,824 | (209,004) | | **Increase (decrease) in cash and cash equivalents** | **(1,349,402)** | **1,305,940** | | Cash and cash equivalents at the end of the period | 603,278 | 2,255,907 | [Individual Statement of Changes in Equity](index=12&type=section&id=Individual%20Statement%20of%20Changes%20in%20Equity) Shareholders' equity decreased from BRL 7.75 billion at the beginning of 2021 to BRL 5.86 billion at June 30, 2021, primarily driven by the net loss for the period Individual Changes in Equity YTD 2021 (in thousands of BRL) | Line Item | Amount | | :--- | :--- | | Opening balance (01/01/2021) | 7,751,492 | | Total comprehensive income | (1,903,874) | | *Profit for the period* | *(1,898,585)* | | Capital transactions with shareholders | 13,405 | | **Closing balance (06/30/2021)** | **5,861,023** | [Individual Statements of Value Added](index=14&type=section&id=Individual%20Statements%20of%20Value%20Added) For the six months ended June 30, 2021, the total wealth for distribution was BRL 506.9 million, a significant turnaround from a negative BRL 3.96 billion in the prior year, primarily distributed to lenders and lessors and taxes Individual Wealth Distribution YTD (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | **Wealth for distribution** | **506,941** | **(3,961,276)** | | Personnel | 268,312 | 158,274 | | Taxes and fees | 510,967 | 385,149 | | Lenders and lessors | 1,626,247 | 5,184,750 | | Shareholders (Retained earnings/Loss) | (1,898,585) | (9,689,449) | [Consolidated Financial Statements](index=15&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated financial statements, including balance sheets, statements of profit or loss, comprehensive income, cash flows, changes in equity, and value added [Consolidated Balance Sheets](index=15&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet shows total assets remaining relatively stable at BRL 74.9 billion, with a significant shift from non-current to current assets, while consolidated shareholders' equity decreased [Assets](index=15&type=section&id=Consolidated%20Assets) Consolidated total assets were BRL 74.9 billion as of June 30, 2021, with a major change being the increase in current assets to BRL 43.8 billion, primarily due to 'Held-for-sale assets' rising to BRL 33.6 billion, offset by a decrease in non-current assets Consolidated Assets Summary (in thousands of BRL) | Line Item | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Total assets** | **74,894,122** | **73,839,787** | | Current assets | 43,849,483 | 33,795,738 | | *Cash and cash equivalents* | *1,430,238* | *4,107,941* | | *Held-for-sale assets* | *33,627,961* | *20,771,942* | | Non-current assets | 31,044,639 | 40,044,049 | | *Property, Plant And Equipment* | *17,160,981* | *24,135,058* | [Liabilities and Equity](index=17&type=section&id=Consolidated%20Liabilities%20and%20Equity) Consolidated total liabilities and equity stood at BRL 74.9 billion, with total liabilities increasing to BRL 69.0 billion, driven by a rise in current liabilities, while consolidated shareholders' equity fell to BRL 5.88 billion Consolidated Liabilities and Equity Summary (in thousands of BRL) | Line Item | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Total liabilities and shareholders' equity** | **74,894,122** | **73,839,787** | | Current liabilities | 26,321,969 | 18,013,108 | | *Liabilities associated to held-for-sale assets* | *13,146,285* | *9,195,376* | | Non-current liabilities | 42,696,409 | 48,056,769 | | *Borrowings and financing* | *22,715,366* | *25,918,777* | | Consolidated shareholders' equity | 5,875,744 | 7,769,910 | [Consolidated Statements of Profit or Loss](index=19&type=section&id=Consolidated%20Statements%20of%20Profit%20or%20Loss) For the six months ended June 30, 2021, the consolidated net loss was BRL 1.90 billion, a substantial improvement from the BRL 9.75 billion loss in the same period of 2020, mainly due to significantly lower financial expenses and a positive contribution from discontinued operations Consolidated Profit/Loss Summary (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Net operating revenue | 4,473,101 | 4,716,730 | | Gross profit | 1,162,030 | 1,436,010 | | Profit (loss) before financial income (expenses) | (34,148) | (467,375) | | Financial income (expenses) | (2,226,048) | (8,765,246) | | **Consolidated profit/loss for the period** | **(1,902,343)** | **(9,747,190)** | | Attributable to the Company owner | (1,898,585) | (9,689,449) | Consolidated Earnings Per Share (BRL per share) | Share Type | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Common shares (ON) | -0.32000 | -1.63000 | | Preferred shares (PN) | -0.32000 | -1.63000 | [Consolidated Statements of Comprehensive Income](index=21&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated comprehensive loss for the six months ended June 30, 2021, was BRL 1.91 billion, a significant improvement from the BRL 9.64 billion loss in the prior-year period, driven by the reduced net loss Consolidated Comprehensive Income (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Consolidated profit for the period | (1,902,343) | (9,747,190) | | Other comprehensive income | (5,228) | 108,619 | | **Consolidated comprehensive income for the period** | **(1,907,571)** | **(9,638,571)** | | Attributable to the Company owner | (1,903,874) | (9,580,830) | [Consolidated Statements of Cash Flows](index=22&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities was BRL 2.43 billion, a sharp reversal from the prior year, resulting in a total decrease in cash and cash equivalents of BRL 2.68 billion Consolidated Cash Flow Summary (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | Net cash from operating activities | (2,428,154) | 1,704,392 | | Net cash from investing activities | (1,937,852) | 283,819 | | Net cash from financing activities | 1,689,821 | 1,566,000 | | **Increase (decrease) in cash and cash equivalents** | **(2,677,703)** | **3,768,708** | | Cash and cash equivalents at the end of the period | 1,430,238 | 5,850,653 | [Consolidated Statement of Changes in Equity](index=24&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Consolidated shareholders' equity decreased from BRL 7.77 billion at the start of 2021 to BRL 5.88 billion by June 30, 2021, almost entirely due to the total comprehensive loss for the period Consolidated Changes in Equity YTD 2021 (in thousands of BRL) | Line Item | Amount | | :--- | :--- | | Opening balance (01/01/2021) | 7,769,910 | | Total comprehensive income | (1,907,571) | | *Profit for the period* | *(1,902,343)* | | Capital transactions with shareholders | 13,405 | | **Closing balance (06/30/2021)** | **5,875,744** | [Consolidated Statements of Value Added](index=26&type=section&id=Consolidated%20Statements%20of%20Value%20Added) For the six months ended June 30, 2021, the company generated wealth for distribution of BRL 3.33 billion, an increase from the prior year, primarily distributed to lenders and lessors and taxes, with a negative distribution to shareholders Consolidated Wealth Distribution YTD (in thousands of BRL) | Line Item | YTD 06/30/2021 | YTD 06/30/2020 | | :--- | :--- | :--- | | **Wealth for distribution** | **3,331,386** | **2,285,748** | | Personnel | 763,264 | 780,149 | | Taxes and fees | 1,445,588 | 1,438,687 | | Lenders and lessors | 3,024,877 | 9,814,102 | | Shareholders (Retained earnings/Loss) | (1,902,343) | (9,747,190) | [Notes to the Financial Statements](index=28&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed notes supporting the financial statements, covering general information, financial instruments, property, plant and equipment, borrowings, segment reporting, held-for-sale assets, and subsequent events [Note 1. General Information](index=28&type=section&id=Note%201.%20General%20Information) This note details Oi S.A.'s status as a company under judicial reorganization, its operations as a major Brazilian telecommunications concessionaire, and its international activities, including the Judicial Reorganization Plan and its amendment [Company Operations and Concession Agreements](index=28&type=section&id=Company%20Operations%20and%20Concession%20Agreements) Oi S.A. is a major Switched Fixed-line Telephony Services (STFC) concessionaire in Brazil, operating under ANATEL licenses, with concession agreements effective until December 31, 2025, and subject to regulatory review - Oi operates as a STFC concessionaire in Brazil's Region II and holds licenses for long-distance and mobile services nationwide through its subsidiaries[30](index=30&type=chunk)[31](index=31&type=chunk) - The company's STFC concession agreements with ANATEL are valid until December 31, 2025, with ongoing discussions about revising the terms and potentially migrating to a private law regime[34](index=34&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - ANATEL concluded in February 2020 that the short-term liquidity risk was extinguished, revoking special monitoring obligations, despite the company's judicial reorganization[41](index=41&type=chunk)[42](index=42&type=chunk) [Judicial Reorganization](index=30&type=section&id=Judicial%20Reorganization) The company has been under judicial reorganization since June 2016, with the Judicial Reorganization Plan (JRP) approved in late 2017, involving capital increases and DIP financing to restructure debt and fund operations - The Judicial Reorganization Proceeding began on June 20, 2016, with the plan approved by creditors in December 2017 and ratified by the court in January 2018[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - A second capital increase ('Capital Increase - New Funds') was completed in January 2019, raising **BRL 4.0 billion** in new funds[49](index=49&type=chunk)[53](index=53&type=chunk) - Oi Móvel issued **BRL 2.5 billion** in debentures in December 2019 and another **BRL 2.0 billion** in July 2021 as part of Debtor in Possession (DIP) financing to support operations during the reorganization[56](index=56&type=chunk)[64](index=64&type=chunk) - The company requested and was granted an extension of judicial oversight beyond the initial two-year period to complete the complex actions required by the JRP[67](index=67&type=chunk)[69](index=69&type=chunk) [Amendment to the Judicial Reorganization Plan (JRP) and Strategic Plan](index=36&type=section&id=Amendment%20to%20the%20Judicial%20Reorganization%20Plan%20(JRP)%20and%20Strategic%20Plan) An amendment to the JRP was approved in September 2020 to provide greater flexibility for the company's strategic transformation, focusing on fiber optics expansion through the structural separation and sale of five Isolated Production Units (UPIs) - The Amendment to the JRP, approved in September 2020, aims to create a more efficient structure by segregating and selling assets to fund fiber optic expansion[73](index=73&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - The plan involves creating and selling five Isolated Production Units (UPIs): UPI Mobile Assets, UPI Towers, UPI Datacenter, UPI InfraCo, and UPI TVCo[80](index=80&type=chunk) - **UPI Towers:** The sale to Highline do Brasil was completed on March 30, 2021, for approximately **BRL 1.07 billion**[110](index=110&type=chunk)[113](index=113&type=chunk) - **UPI Datacenter:** The sale to Titan Venture Capital was completed on March 15, 2021, for **BRL 325 million**[117](index=117&type=chunk)[120](index=120&type=chunk) - **UPI Mobile Assets:** A joint bid from Telefonica Brasil, TIM, and Claro for **BRL 16.5 billion** was declared the winner in December 2020, pending regulatory approval from CADE and ANATEL[105](index=105&type=chunk)[107](index=107&type=chunk) - **UPI InfraCo:** A joint bid from Globenet and BTG Pactual was declared the winner in July 2021 for the partial sale (majority control) of the fiber infrastructure unit, valuing the unit at an EV of **BRL 20 billion** and pending regulatory approval[89](index=89&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) [Merger of Telemar](index=51&type=section&id=Merger%20of%20Telemar) On May 3, 2021, the concessions held by the wholly-owned subsidiary Telemar were transferred to Oi S.A., followed by Telemar's merger into the parent company, resulting in the absorption of its net assets valued at BRL 6.16 billion Net Assets from Telemar Merger (in thousands of BRL) | Description | Amount | | :--- | :--- | | Total Assets Acquired | 29,735,186 | | Total Liabilities Assumed | (23,573,169) | | **Merged net assets** | **6,162,017** | - The merger of Telemar into Oi S.A. became effective on May 3, 2021, after the transfer of its concessions, representing an upstream merger with no impact on the consolidated financial statements[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) [Going Concern](index=52&type=section&id=Going%20Concern) The financial statements are prepared on a going concern basis, assuming the successful outcome of the judicial reorganization, though management acknowledges material uncertainties remain despite progress in discharging obligations - The financial statements are prepared on a going concern basis, but management notes that material uncertainties related to the judicial reorganization exist[144](index=144&type=chunk)[145](index=145&type=chunk) Key Financial Position Indicators (in thousands of BRL) | Indicator | 06/30/2021 (Consolidated) | 12/31/2020 (Consolidated) | | :--- | :--- | :--- | | Shareholders' equity | 5,875,744 | 7,769,910 | | Working capital | 17,527,514 | 15,782,630 | - The company reports no material deviations in operations or results due to the COVID-19 pandemic as of the reporting date, having intensified digitalization and implemented safety protocols[147](index=147&type=chunk) [Note 3. Financial Instruments and Risk Analysis](index=57&type=section&id=Note%203.%20Financial%20Instruments%20and%20Risk%20Analysis) This note outlines the company's financial instruments and its management of market, credit, and liquidity risks, including foreign exchange and interest rate exposures, and mitigation strategies [Financial Risk Management](index=60&type=section&id=Financial%20Risk%20Management) The company manages financial risks through a three-level process, primarily addressing foreign exchange and interest rate exposures, with foreign currency debt partially hedged and credit risk considered low due to diversified counterparties - The company's activities expose it to market risk (currency and interest rate), credit risk, and liquidity risk, managed through policies approved by the Board of Directors[173](index=173&type=chunk)[174](index=174&type=chunk) - Foreign exchange risk: Approximately **62.9%** of borrowings and financing are exposed to foreign currency fluctuations, with NDFs and offshore cash used as hedges[178](index=178&type=chunk)[179](index=179&type=chunk) - Interest rate risk: Approximately **37.1%** of debt is subject to floating interest rates, with the most material exposure being to the CDI rate[191](index=191&type=chunk) Sensitivity Analysis Summary (Consolidated) | Risk Factor | Scenario | Impact on Profit/Loss (in thousands of BRL) | | :--- | :--- | :--- | | Foreign Exchange | 25% Real Depreciation | (4,103,871) | | Interest Rate | 25% Rate Increase | (1,126,960) | [Note 16. Property, Plant and Equipment](index=86&type=section&id=Note%2016.%20Property,%20Plant%20and%20Equipment) Consolidated net Property, Plant, and Equipment (PP&E) decreased to BRL 17.16 billion at June 30, 2021, primarily due to the reclassification of assets to 'held-for-sale' as part of the UPI divestment strategy Consolidated PP&E Movement (in thousands of BRL) | Line Item | 12/31/2020 | 06/30/2021 | | :--- | :--- | :--- | | **PP&E, net** | **24,135,058** | **17,160,981** | | Cost of PP&E (gross) | 113,887,205 | 94,528,136 | | Accumulated depreciation | (89,752,147) | (77,367,155) | - The decrease in PP&E is mainly due to the transfer of assets to 'held-for-sale' (**BRL 20.7 billion** gross cost) and the recognition of Indefeasible Rights of Use (IRU) agreements with UPI InfraCo[253](index=253&type=chunk)[255](index=255&type=chunk) - As of June 30, 2021, the residual balance of returnable assets indispensable for STFC services was **BRL 8.67 billion** on a consolidated basis[257](index=257&type=chunk) [Note 19. Borrowings and Financing](index=91&type=section&id=Note%2019.%20Borrowings%20and%20Financing) As of June 30, 2021, consolidated borrowings and financing totaled BRL 26.56 billion, composed of Senior Notes, debentures, and loans, with debt covenants with BNDES temporarily stayed until at least May 2022 Consolidated Borrowings and Financing by Type (in thousands of BRL) | Type | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | Senior Notes | 8,663,369 | 9,000,226 | | Debentures (Public & Private) | 10,792,034 | 10,851,658 | | Financial institutions (BNDES, etc.) | 15,594,584 | 15,676,994 | | **Total (before discounts/costs)** | **40,696,875** | **41,518,821** | | **Total (net)** | **26,556,025** | **26,343,734** | - Debt is primarily indexed to fixed rates (**BRL 15.7 billion**), CDI (**BRL 5.4 billion**), and TJLP (**BRL 4.4 billion**)[269](index=269&type=chunk) - Debt covenants with BNDES are temporarily suspended as per the Amendment to the JRP, avoiding the risk of accelerated maturity[273](index=273&type=chunk) [Note 28. Segment Reporting](index=107&type=section&id=Note%2028.%20Segment%20Reporting) The company identifies a single reportable operating segment: Telecommunications in Brazil, which excludes discontinued operations, with net operating revenue for the first six months of 2021 decreasing to BRL 4.36 billion - The company has one reportable operating segment: Telecommunications in Brazil[317](index=317&type=chunk) Telecommunications in Brazil - Net Operating Revenue by Service (YTD, in thousands of BRL) | Service Category | 06/30/2021 | 06/30/2020 (Restated) | | :--- | :--- | :--- | | **Residential** | **2,551,602** | **2,530,538** | | Fixed-line services | 1,111,974 | 1,484,360 | | Broadband | 1,415,921 | 1,027,779 | | **SMEs/Corporate (B2B)** | **1,757,590** | **2,032,995** | | **Total Net Operating Revenue** | **4,359,165** | **4,613,687** | [Note 30. Held-for-Sale Assets and Discontinued Operations](index=117&type=section&id=Note%2030.%20Held-for-Sale%20Assets%20and%20Discontinued%20Operations) This note details assets and liabilities classified as held for sale, primarily related to the UPIs and international operations, with consolidated held-for-sale assets totaling BRL 33.6 billion and associated liabilities of BRL 13.1 billion Held-for-Sale Assets and Associated Liabilities (Consolidated, in thousands of BRL) | Category | 06/30/2021 | 12/31/2020 | | :--- | :--- | :--- | | **Held-for-sale assets** | **33,627,961** | **20,771,942** | | *Sale of UPIs* | *33,505,563* | *20,625,007* | | *International operations* | *75,846* | *99,633* | | **Liabilities associated to held-for-sale assets** | **13,146,285** | **9,195,376** | | *Sale of UPIs* | *13,116,663* | *9,152,947* | - The operations of UPI Mobile Assets, UPI InfraCo, and UPI TVCo are classified as discontinued operations due to the coordinated divestment plan[346](index=346&type=chunk) Profit (Loss) from Discontinued Operations (in thousands of BRL) | Period | Amount | | :--- | :--- | | YTD 06/30/2021 | 367,259 | | YTD 06/30/2020 | (548,343) | [Note 32. Events After the Reporting Period](index=130&type=section&id=Note%2032.%20Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, on July 30, 2021, the company completed two significant financing events: the 2nd issue of Oi Móvel debentures, raising BRL 2.0 billion, and an international Notes issue totaling US$880 million - On July 30, 2021, Oi Móvel completed a private placement of debentures amounting to **BRL 2.0 billion**[372](index=372&type=chunk) - On July 30, 2021, Oi Móvel completed a Notes issue totaling **US$880 million**, using part of the proceeds to repay its **BRL 2.5 billion** 1st issue debentures[373](index=373&type=chunk)

Introduction [Presentation of Financial and Other Information](index=4&type=section&id=PRESENTATION%20OF%20FINANCIAL%20AND%20OTHER%20INFORMATION) The company's IFRS financial statements, presented in Brazilian reais, reflect uncertainties from Judicial Reorganization and reclassified discontinued operations - The company's financial statements are prepared in accordance with IFRS, and its continuity as a going concern depends on the successful outcome of the **Judicial Reorganization (RJ) Proceedings**[14](index=14&type=chunk)[15](index=15&type=chunk) Key Financial Indicators (as of Dec 31) | Indicator | 2020 (R$ million) | 2019 (R$ million) | | :--- | :--- | :--- | | **Shareholders' Equity** | 7,769 | 17,797 | | **Loss for the year** | (10,528) | (9,095) | | **Working Capital** | 15,782 | 6,157 | - Due to the strategic decision to dispose of certain assets (UPIs), the company reclassified these as **discontinued operations** and revised comparative financial statements for 2019 and 2018 under IFRS 5[17](index=17&type=chunk) - The company's Strategic Plan involves transforming into two separate entities: a consumer-focused company for fixed-line services and an infrastructure company with a **neutral network focusing on fiber-optic expansion**[21](index=21&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=11&type=section&id=CAUTIONARY%20STATEMENT%20WITH%20RESPECT%20TO%20FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to significant risks and uncertainties, including Brazilian economic conditions, regulatory changes, and judicial reorganization - The report contains forward-looking statements subject to **significant risks and uncertainties**, and actual results may differ materially from expectations[39](index=39&type=chunk)[40](index=40&type=chunk) - Key factors that could cause results to differ include economic and political conditions in Brazil, changes in telecommunications policies and ANATEL regulations, the outcome of the Judicial Reorganization Proceedings, intense competition, technological changes, and the full effect of the COVID-19 pandemic[41](index=41&type=chunk) Part I [Item 1. Identity of Directors, Senior Management and Advisers](index=13&type=section&id=Item%201.%20Identity%20of%20Directors,%20Senior%20Management%20and%20Advisers) This item is not applicable - Not applicable[44](index=44&type=chunk) [Item 2. Offer Statistics and Expected Timetable](index=13&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This item is not applicable - Not applicable[45](index=45&type=chunk) [Item 3. Key Information](index=13&type=section&id=Item%203.%20Key%20Information) This section presents selected financial data for 2018-2020, revised for discontinued operations, and outlines various industry, company, and country risks [Selected Financial Information](index=13&type=section&id=3.1%20Selected%20Financial%20Information) Selected financial data for 2018-2020, revised for discontinued operations under the RJ Plan Amendment, shows no dividends paid since 2015 - Financial data for 2019 and 2018 has been revised to reclassify **discontinued operations** in line with IFRS 5, following the decision to dispose of certain assets under the RJ Plan Amendment[47](index=47&type=chunk) Selected Income Statement Data (in millions of reais) | | 2020 (R$ million) | 2019 (R$ million) | 2018 (R$ million) | | :--- | :--- | :--- | :--- | | **Net operating revenue** | 9,284 | 10,492 | 12,210 | | **Gross profit** | 2,013 | 2,510 | 3,042 | | **Loss before financial income (expenses), net, and taxes** | (1,811) | (3,367) | (6,764) | | **Financial income (expenses), net** | (12,275) | (5,377) | 26,691 | | **Profit (loss) from continued operations** | (10,535) | (8,731) | 23,220 | | **Profit (loss) for the year** | (10,528) | (9,095) | 24,616 | Selected Balance Sheet Data (as of December 31, in millions of reais) | | 2020 (R$ million) | 2019 (R$ million) | 2018 (R$ million) | | :--- | :--- | :--- | :--- | | **Total current assets** | 33,796 | 17,993 | 21,313 | | **Total assets** | 73,840 | 71,892 | 65,438 | | **Total current liabilities** | 18,014 | 11,836 | 10,689 | | **Total liabilities** | 66,070 | 54,095 | 42,542 | | **Shareholders' equity** | 7,770 | 17,797 | 22,896 | [Risk Factors](index=17&type=section&id=3.2%20Risk%20Factors) The company faces significant regulatory, company-specific, operational, and country risks, including those related to judicial reorganization, competition, and macroeconomic conditions - The Brazilian telecommunications industry is highly regulated by ANATEL, and adverse changes in regulations, non-compliance with concession obligations, or inability to renew concessions could negatively impact the business[56](index=56&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk) - The company faces significant risks related to its **Judicial Reorganization (RJ)**, including pending appeals on confirmation orders and the potential for further RJ Plan amendments if Strategic Plan goals, involving major asset sales, are not met[81](index=81&type=chunk)[82](index=82&type=chunk)[86](index=86&type=chunk) - Material weaknesses in internal control over financial reporting, specifically related to accounting for **discontinued operations** and **impairment assessments**, have been identified and not fully remediated[110](index=110&type=chunk)[111](index=111&type=chunk) - The company faces intense competition from major players like Claro, Telefônica Brasil, and TIM, as well as OTT providers, eroding traditional revenue streams and pressuring market share and ARPU[114](index=114&type=chunk)[115](index=115&type=chunk)[122](index=122&type=chunk) - Significant financial risk arises from foreign currency exposure, with **66.7% of total consolidated borrowings and financing** denominated in non-Brazilian real currencies as of December 31, 2020[148](index=148&type=chunk) - Under the RJ Plan, the company is prohibited from paying dividends or other distributions to shareholders until **December 31, 2025**, and thereafter only if a specific financial ratio (Net Debt/EBITDA <= 2) is met[163](index=163&type=chunk) [Item 4. Information on the Company](index=41&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details the company's business, strategic transformation via Judicial Reorganization and asset divestment, continuing and discontinued operations, and the Brazilian telecommunications regulatory environment [Overview and Recent History](index=41&type=section&id=4.1%20Overview%20and%20Recent%20History) Oi is transforming its business into two separate entities via its Judicial Reorganization Plan, involving the creation and sale of five Isolated Production Units (UPIs) and the sale of PT Ventures - The company's Strategic Plan aims to transform its business into a consumer-focused fixed-line service company and a **neutral network infrastructure company**, focusing on fiber-optic expansion[179](index=179&type=chunk)[203](index=203&type=chunk) - The Judicial Reorganization (RJ) Plan was amended and confirmed in October 2020, authorizing the formation of **five Isolated Production Units (UPIs)** for asset disposal: Mobile Assets, Towers, Data Center, InfraCo, and TVCo[179](index=179&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - Significant asset sales have been agreed upon or completed: UPI Mobile Assets for **R$16.5 billion**, UPI Towers for approximately **R$1.1 billion**, and UPI Data Center for **R$325 million**[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - A binding proposal from BTG Pactual/Globenet to acquire a **57.9% majority stake in UPI InfraCo** for approximately **R$12.9 billion** has been accepted[212](index=212&type=chunk)[213](index=213&type=chunk) - In January 2020, the company sold its stake in PT Ventures, including a **25% stake in Angola's Unitel**, to Sonangol for **US$1 billion**[204](index=204&type=chunk) [Continuing and Discontinued Operations](index=48&type=section&id=4.2%20Continuing%20and%20Discontinued%20Operations) The company's operations are split into continuing (Residential and B2B) and discontinued (five UPIs held for sale), with an overview of their services and technology - Continuing operations consist of Residential Services, including fixed-line voice and broadband, and B2B Services, offering fixed-line, broadband, and IT solutions for corporate and wholesale customers[227](index=227&type=chunk) - Discontinued operations, classified as held-for-sale, include **UPI Mobile Assets, UPI InfraCo, UPI TVCo, and UPI Data Center**, representing a strategic shift in operations[229](index=229&type=chunk)[289](index=289&type=chunk) - The Personal Mobility business, part of UPI Mobile Assets, served **36.7 million subscribers** as of December 31, 2020, holding a **15.8% market share** in Brazil[293](index=293&type=chunk) - The company's fiber network (FTTH), a key strategic asset largely part of UPI InfraCo, reached **9.1 million homes passed** with **2.1 million connected customers** as of December 31, 2020[237](index=237&type=chunk)[609](index=609&type=chunk) Capital Expenditures (in millions of reais) | | 2020 (R$ million) | 2019 (R$ million) | 2018 (R$ million) | | :--- | :--- | :--- | :--- | | Data transmission equipment | 4,033 | 2,947 | 1,993 | | Installation services and devices | 770 | 742 | 539 | | Mobile network and systems | 544 | 905 | 820 | | **Total capital expenditures** | **7,265** | **7,813** | **6,077** | [Regulation of the Brazilian Telecommunications Industry](index=70&type=section&id=4.3%20Regulation%20of%20the%20Brazilian%20Telecommunications%20Industry) The Brazilian telecommunications industry is regulated by ANATEL, with services under public or private regimes, and a 2019 law allowing concession conversion, covering service quality and competition - The industry is regulated by ANATEL, granting public regime concessions with stricter universal service and quality obligations, and private regime authorizations[376](index=376&type=chunk)[380](index=380&type=chunk) - Law No. 13,879 (2019) allows fixed-line providers to convert public concessions into private authorizations, eliminating certain obligations for new investment commitments, with the conversion methodology still under ANATEL analysis[379](index=379&type=chunk)[391](index=391&type=chunk) - The General Plan on Competition Targets (PGMC) imposes stricter rules on providers with **significant market power**, such as Oi, regarding infrastructure sharing and wholesale pricing to promote competition[482](index=482&type=chunk)[483](index=483&type=chunk) - The company holds numerous radiofrequency spectrum authorizations for **2G, 3G, and 4G services**, each with specific network coverage and service performance obligations monitored by ANATEL[433](index=433&type=chunk)[439](index=439&type=chunk) - The company has roaming agreements with Iranian mobile operators and provides services to the Embassy of Iran in Brasilia, generating minor revenues and expenses in 2020[495](index=495&type=chunk)[497](index=497&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=89&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial performance and condition, discussing factors affecting results, year-over-year comparisons, and an overview of liquidity and restructured indebtedness [Results of Operations](index=108&type=section&id=5.1%20Results%20of%20Operations) The company's 2020 net operating revenue from continuing operations decreased to **R$9.3 billion**, resulting in a **R$10.5 billion** consolidated net loss, primarily due to legacy service declines and higher financial expenses Consolidated Results of Operations (in millions of reais) | | 2020 (R$ million) | 2019 (R$ million) | % Change | | :--- | :--- | :--- | :--- | | **Net operating revenue** | 9,284 | 10,492 | (11.5)% | | **Loss from continuing operations** | (10,535) | (8,731) | 20.7% | | **Profit (loss) from discontinued operations** | 7 | (364) | (102.0)% | | **Consolidated Loss** | (10,528) | (9,095) | 15.8% | - The **11.5% decline in net operating revenue** in 2020 was driven by a **21.1% drop in residential fixed-line services** and a **12.2% drop in B2B services**, partially offset by a **2.6% increase in broadband revenue** fueled by **223% growth in fiber subscribers**[627](index=627&type=chunk)[631](index=631&type=chunk)[633](index=633&type=chunk) - Net financial expenses increased by **128.3% to R$12.3 billion** in 2020, primarily due to exchange rate losses on U.S. dollar-denominated debt following the **28.9% depreciation of the Brazilian real**[625](index=625&type=chunk)[661](index=661&type=chunk) - The significant profit in 2018 of **R$24.6 billion** was largely due to one-time gains from debt restructuring under the RJ Plan, including a **R$13.3 billion fair value adjustment** and an **R$11.1 billion gain on restructuring**[671](index=671&type=chunk)[706](index=706&type=chunk) [Liquidity and Capital Resources](index=124&type=section&id=5.2%20Liquidity%20and%20Capital%20Resources) The company's liquidity, primarily from operating cash flows and asset sales, was **R$4.1 billion** in cash as of December 31, 2020, with future funding dependent on UPI sales and dividend payments restricted - As of December 31, 2020, the company had **R$4.3 billion** in consolidated cash, cash equivalents, and short-term investments[724](index=724&type=chunk) - Key sources of liquidity in 2020 were the **US$1 billion sale of PT Ventures** and a **R$2.5 billion debenture issuance** by Oi Mobile, with future liquidity heavily dependent on successful UPI sales[725](index=725&type=chunk)[726](index=726&type=chunk) - The RJ Plan prohibits dividend payments until **December 31, 2025**, and thereafter only if the consolidated net debt to EBITDA ratio is below 2-to-1[717](index=717&type=chunk) Long-Term Indebtedness as of Dec 31, 2020 (in millions of reais) | Instrument | Outstanding Amount (R$ million) | | :--- | :--- | | PIK Toggle Notes | 9,000 | | Oi 12th issuance of debentures | 4,666 | | Telemar 6th issuance of debentures | 2,602 | | Oi Mobile debentures | 3,584 | | Restructured Export Credit Agreements | 8,825 | | Restructured BNDES credit agreements | 4,257 | | **Total Gross Borrowings and Financing** | **41,519** | | Fair value adjustment & costs | (15,175) | | **Non-current Indebtedness (Net)** | **25,919** | [Item 6. Directors, Senior Management and Employees](index=135&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the corporate governance structure, including the Board of Directors, Executive Officers, and Fiscal Council, outlines compensation policy and employee benefits, and reports **46,624 employees** - The Board of Directors is composed of **11 independent members**, with Eleazar de Carvalho Filho as Chairman and Marcos Grodetzky as Vice-Chairman[788](index=788&type=chunk)[791](index=791&type=chunk) - The executive management team is led by **CEO Rodrigo Modesto de Abreu** and **CFO Camille Loyo Faria**[813](index=813&type=chunk) - Aggregate compensation for the board, executive officers, and fiscal council was **R$73.3 million** in 2020, with a long-term share-based incentive plan for executives in place[835](index=835&type=chunk)[838](index=838&type=chunk)[840](index=840&type=chunk) - As of December 31, 2020, the company had **46,624 employees** from continuing and discontinued operations, with approximately **32.6% union members** and good labor relations[847](index=847&type=chunk)[848](index=848&type=chunk) - The company sponsors several complex defined benefit and defined contribution pension plans for its employees, managed by entities such as Sistel and Fundação Atlântico de Seguridade Social (FATL)[849](index=849&type=chunk)[854](index=854&type=chunk) [Item 7. Major Shareholders and Related Party Transactions](index=149&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section identifies major shareholders, including Brookfield Funds and Bratel S.à r.l., notes the lapse of the PT Option, and describes material related party transactions Major Shareholders as of May 4, 2021 | Name | Common Shares | % of Common Outstanding | Total Shares | % of Total Outstanding | | :--- | :--- | :--- | :--- | :--- | | Brookfield Funds | 557,415,165 | 9.62% | 557,415,165 | 9.36% | | Bratel S.à r.l. (Pharol) | 314,490,159 | 5.43% | 314,490,159 | 5.28% | - The PT Option Agreement, granting Pharol an option to acquire Oi's shares from PTIF, lapsed unexercised on **March 31, 2021**[892](index=892&type=chunk) - Material related party transactions in 2020 included payments of **R$202 million** to joint venture Hispamar for satellite transponder leases and **R$22 million** to associate AIX for duct rentals[895](index=895&type=chunk)[896](index=896&type=chunk) [Item 8. Financial Information](index=152&type=section&id=Item%208.%20Financial%20Information) This section details legal proceedings, with **R$37.0 billion** in estimated contingencies and **R$5.8 billion** provisioned, and outlines the dividend policy, suspended by the Judicial Reorganization Plan - As of December 31, 2020, the company faced total estimated contingencies from legal proceedings of **R$36,994 million**, with provisions of **R$5,810 million** recorded for probable losses[899](index=899&type=chunk) - Significant tax proceedings relate to challenges over ICMS credits and the applicability of ISS, with possible losses estimated at **R$13.5 billion** and **R$2.3 billion**, respectively[905](index=905&type=chunk)[907](index=907&type=chunk) - The company faces numerous administrative proceedings from ANATEL for alleged non-compliance with service quality (RGQ) and universal service (PGMU) targets, with provisions of **R$1,264 million** recorded for these claims[917](index=917&type=chunk)[919](index=919&type=chunk) - The company's dividend policy is suspended, with the RJ Plan prohibiting dividend payments until **December 31, 2025**, and thereafter only if financial covenants are met, with no dividends paid since 2014[945](index=945&type=chunk)[947](index=947&type=chunk)[955](index=955&type=chunk) [Item 9. The Offer and Listing](index=160&type=section&id=Item%209.%20The%20Offer%20and%20Listing) This section details the trading markets for Oi's securities, including shares on B3 and ADSs on NYSE and OTC markets, along with an overview of Brazilian securities market regulation and corporate governance - The company's common shares (OIBR3) and preferred shares (OIBR4) trade on the B3 exchange, while Common ADSs (OIBR.C) trade on the NYSE, and Preferred ADSs (OIBRQ) are quoted on the OTC markets[958](index=958&type=chunk) - The Brazilian securities markets are regulated by the CVM and governed by laws such as the Brazilian Corporate Law, noted as not being as highly regulated or supervised as U.S. markets[960](index=960&type=chunk)[962](index=962&type=chunk) - Oi's shares are listed on the B3's **Level 1 of Differentiated Corporate Governance Practices**, requiring adherence to enhanced disclosure and corporate governance rules beyond standard Brazilian law[977](index=977&type=chunk) [Item 10. Additional Information](index=164&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary corporate and legal information, detailing key provisions of Oi's by-laws, Brazilian exchange controls, foreign investment regulations, and significant tax implications for shareholders - Oi's by-laws stipulate that preferred shares are generally non-voting but acquire full voting rights if the minimum preferred dividend is not paid for three consecutive years, a condition met in April 2017[999](index=999&type=chunk)[1020](index=1020&type=chunk) - A change of control requires the acquirer to make a public tender offer for all of Oi's capital stock to ensure equitable treatment for all shareholders, in line with Novo Mercado rules[1030](index=1030&type=chunk) - Foreign investment in Oi's shares is primarily governed by **Resolution No. 4,373**, allowing registered non-Brazilian holders to remit dividends and sales proceeds abroad and potentially affording favorable tax treatment[1046](index=1046&type=chunk)[1050](index=1050&type=chunk) - For U.S. Holders, Oi believes it was not a **Passive Foreign Investment Company (PFIC)** for the 2020 tax year, but its status is determined annually, and a decline in share value could result in PFIC classification, leading to adverse U.S. tax consequences[172](index=172&type=chunk)[1118](index=1118&type=chunk) [Item 11. Quantitative and Qualitative Disclosures about Market Risk](index=189&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, primarily due to U.S. dollar-denominated debt, managed through non-deliverable forwards and U.S. dollar cash reserves - The company is exposed to foreign currency risk as a significant portion of its debt and equipment costs are **U.S. dollar-denominated**[1134](index=1134&type=chunk) - Hedging strategies include using **non-deliverable forwards (NDFs)** and maintaining U.S. dollar cash reserves as a natural hedge against currency fluctuations[1135](index=1135&type=chunk)[1136](index=1136&type=chunk) [Item 12. Description of Securities Other Than Equity Securities](index=189&type=section&id=Item%2012.%20Description%20of%20Securities%20Other%20Than%20Equity%20Securities) This section details fees associated with the company's American Depositary Shares (ADSs), including issuance, cancellation, and cash distribution fees, and notes **US$3 million** in reimbursements received - Holders of ADSs are subject to fees for issuance, cancellation, and cash distributions, typically up to **US$5.00 per 100 ADSs** for issuance/cancellation and **US$0.02 per ADS** for cash distributions[1139](index=1139&type=chunk) - The company received **US$3 million** in reimbursements from the ADS depositary in 2020 for program-related expenses[1142](index=1142&type=chunk) Part II [Item 15. Controls and Procedures](index=191&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2020, due to material weaknesses in internal control over financial reporting, leading to an adverse auditor opinion - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2020, due to material weaknesses in internal control over financial reporting[1150](index=1150&type=chunk) - Two material weaknesses were identified: controls failed to ensure data integrity for **discontinued operations** and were ineffective over the reasonableness of inputs for **impairment analysis**[1156](index=1156&type=chunk)[1161](index=1161&type=chunk) - Remediation actions include implementing additional control procedures to verify data for discontinued operations and to assess inputs for the discount rate used in impairment analysis[1157](index=1157&type=chunk)[1162](index=1162&type=chunk) - The independent registered public accounting firm, BDO RCS Auditores Independentes S.S., issued an **adverse opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[1156](index=1156&type=chunk) [Item 16. Corporate Governance and Other Matters](index=192&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, identifying Henrique José Fernandes Luz as the audit committee financial expert, detailing fees paid to BDO, and disclosing differences from NYSE standards - The Audit, Risks and Controls Committee includes a designated financial expert, **Henrique José Fernandes Luz**[1159](index=1159&type=chunk) Principal Accountant Fees (in millions of reais) | Fee Type | 2020 (R$ million) | 2019 (R$ million) | | :--- | :--- | :--- | | Audit fees | 5.2 | 5.2 | | Audit-related fees | 0.7 | 4.4 | | All other fees | — | 0.4 | | **Total fees** | **5.9** | **10.0** | - The company relies on the general exemption in Rule 10A-3(c)(3) of the Exchange Act, as Brazilian law requires the full board of directors to appoint and oversee the independent auditor[1169](index=1169&type=chunk) - Significant differences exist between Oi's governance practices and NYSE standards, particularly concerning the requirement for a **majority of independent directors** and the composition of nominating and compensation committees[1176](index=1176&type=chunk)[1177](index=1177&type=chunk)[1182](index=1182&type=chunk) Part III [Item 18. Financial Statements](index=198&type=section&id=Item%2018.%20Financial%20Statements) This section presents the company's audited consolidated financial statements for 2018-2020, prepared under IFRS, including the independent auditor's report with an unqualified opinion on financials but an adverse opinion on internal controls - The independent auditor's report expresses an **unqualified opinion** on the financial statements but notes a material uncertainty regarding the company's ability to continue as a **going concern** due to recurring losses and its Judicial Reorganization Plan[1228](index=1228&type=chunk)[1230](index=1230&type=chunk) - The auditor's report identifies critical audit matters, including the **going concern assessment**, recoverability of long-term assets, provisions for tax and civil contingencies, recoverability of deferred tax assets, and accounting for discontinued operations under the JRP amendment[1234](index=1234&type=chunk) Consolidated Balance Sheet Summary (as of Dec 31, 2020, in thousands of R$) | | Amount (R$ thousands) | | :--- | :--- | | **Total Assets** | 73,839,787 | | *Current Assets* | 33,795,738 | | *Non-current Assets* | 40,044,049 | | **Total Liabilities** | 66,069,877 | | *Current Liabilities* | 18,013,108 | | *Non-current Liabilities* | 48,056,769 | | **Total Shareholders' Equity** | 7,769,910 | Consolidated Statement of Operations Summary (Year ended Dec 31, 2020, in thousands of R$) | | Amount (R$ thousands) | | :--- | :--- | | **Net operating revenue** | 9,284,303 | | **Loss from continuing operations** | (10,535,739) | | **Profit from discontinued operations** | 7,240 | | **Profit (loss) for the year** | (10,528,499) | [Item 19. Exhibits](index=198&type=section&id=Item%2019.%20Exhibits) This section lists exhibits filed as part of the annual report, including the company's by-laws, ADS deposit agreements, the Judicial Reorganization Plan, regulatory agreements, and CEO/CFO certifications - The report includes key corporate documents as exhibits, such as the company's by-laws, ADS deposit agreements, and the **Judicial Reorganization Plan**[1199](index=1199&type=chunk) - Regulatory agreements, including concession and authorization agreements for various telecommunication services, are also filed as exhibits[1201](index=1201&type=chunk)

Part I [Key Information](index=10&type=section&id=Item%203.%20Key%20Information) This section summarizes Oi S.A.'s selected financial data for 2017-2019, noting a significant 2019 net loss, and outlines major business, regulatory, operational, and economic risks [Selected Financial Information](index=10&type=section&id=Selected%20Financial%20Information) The company reported a net loss of BRL 9,095 million in 2019, reversing 2018's profit from judicial reorganization gains, with declining revenue and no dividends since 2014 Consolidated Income Statement Data (2017-2019) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | **Net operating revenue** | BRL 20,136 | BRL 22,060 | BRL 23,790 | | **Gross profit** | 4,821 | 5,881 | 8,121 | | **Operating income (loss)** | (2,977) | (5,268) | (2,361) | | **Financial expenses, net** | (6,110) | 26,609 | (3,197) | | **Net income (loss)** | BRL (9,095) | BRL 24,616 | BRL (6,656) | | **Net income (loss) per common ADS** | BRL (7.57) | BRL 81.94 | BRL (47.10) | Consolidated Balance Sheet Data (as of Dec 31) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | **Total current assets** | 17,993 | 21,313 | 23,748 | | **Total assets** | 71,892 | 65,438 | 68,639 | | **Total current liabilities** | 11,836 | 10,689 | 67,892 | | **Total liabilities** | 54,095 | 42,542 | 82,152 | | **Shareholders' equity** | 17,797 | 22,896 | (13,513) | - The company has not paid any dividends or interest attributable to shareholders' equity since January 1, 2014[49](index=49&type=chunk) [Risk Factors](index=12&type=section&id=Risk%20Factors) The company faces diverse risks including regulatory changes, restrictive debt covenants, legal proceedings, intense competition, COVID-19 impacts, Brazilian economic instability, and limitations on shareholder distributions - The Brazilian telecommunications industry is highly regulated by ANATEL. Changes in laws, regulations, or the imposition of new universal service obligations could adversely affect business operations and financial results[55](index=55&type=chunk) - The company's debt instruments contain covenants that could restrict financing and operating flexibility. Failure to comply, particularly with BNDES financial ratios, could lead to debt acceleration. A waiver was obtained from BNDES for anticipated breaches as of March 31, 2020[78](index=78&type=chunk)[82](index=82&type=chunk) - The COVID-19 pandemic could materially affect business and operations, impacting network quality, sales channels, and customers' ability to pay. The full effect on the business and the Brazilian economy is unpredictable[118](index=118&type=chunk)[120](index=120&type=chunk) - The company faces significant competition from other major providers like Claro, Telefônica Brasil, and TIM, as well as from OTT services (e.g., WhatsApp), which could negatively impact revenue and margins across all service segments[109](index=109&type=chunk)[111](index=111&type=chunk)[117](index=117&type=chunk) - The company is subject to numerous legal and administrative proceedings. As of December 31, 2019, it had provisioned **BRL 5,252 million** for probable losses, with an additional **BRL 30,882 million** in claims where the risk of loss was deemed possible[88](index=88&type=chunk)[89](index=89&type=chunk)[945](index=945&type=chunk) - Under the Judicial Reorganization (RJ) Plan, the company is prohibited from paying dividends or other distributions to shareholders until February 5, 2024, and thereafter only if certain financial ratios are met[167](index=167&type=chunk) [Information on the Company](index=31&type=section&id=Item%204.%20Information%20on%20the%20Company) Oi S.A. is a major integrated Brazilian telecom provider undergoing judicial reorganization, focusing on FTTH expansion, wholesale fiber, and mobile business strategic alternatives, operating under ANATEL regulation [Overview and Recent History](index=31&type=section&id=Overview%20and%20Recent%20History) Oi, a major Brazilian telecom provider with 53.4 million RGUs, has been in judicial reorganization since 2016, recently implementing a new strategic plan focused on FTTH, asset sales, and mobile business alternatives - As of December 31, 2019, Oi had approximately **53.4 million** revenue generating units (RGUs), operating throughout Brazil[180](index=180&type=chunk) - The company filed for judicial reorganization (RJ) in June 2016. The RJ Plan was approved by creditors in December 2017 and confirmed by the court in February 2018[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - In July 2019, Oi announced a new strategic plan focused on accelerating FTTH deployment, expanding wholesale operations, divesting non-core assets, and exploring strategic alternatives for its mobile business[207](index=207&type=chunk)[208](index=208&type=chunk) - In January 2020, Oi sold its stake in PT Ventures for **US$1 billion**, and in February 2020, it sold a property in Botafogo for **BRL 120.5 million** as part of its non-core asset divestment strategy[208](index=208&type=chunk)[211](index=211&type=chunk) - The company is seeking to amend the RJ Plan to gain flexibility for its strategic initiatives, including the potential sale of its mobile business, with a new general creditors' meeting expected to be held in 2020[193](index=193&type=chunk)[195](index=195&type=chunk) [Our Services](index=36&type=section&id=Our%20Services) Oi's services span Residential, Personal Mobility, and B2B segments, offering bundled fixed-line, broadband, and Pay-TV, data-centric mobile plans, and comprehensive corporate and wholesale solutions - Residential Services focus on bundled offerings (double, triple, quadruple-play) combining fixed-line voice, broadband (xDSL and FTTH up to **200 Mbps**), Pay-TV, and mobile services[223](index=223&type=chunk)[227](index=227&type=chunk)[233](index=233&type=chunk) - Personal Mobility Services are shifting from voice to data, with Oi Mais and Oi Livre plans offering large data allowances and unlimited calls. The company is focused on migrating users from 2G/3G to 4G[236](index=236&type=chunk)[239](index=239&type=chunk) - B2B Services provide a comprehensive portfolio for corporate clients, including advanced data transmission (up to **100 Gbps**), IT infrastructure services via Oi SmartCloud data centers, and wholesale services for other carriers[245](index=245&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) [Technology and Property, Plant & Equipment](index=45&type=section&id=Technology%20and%20Property%2C%20Plant%20%26%20Equipment) Oi's network relies on a 376,000 km fiber backbone, with significant FTTH investments reaching 4.6 million homes passed by 2019, and mobile network upgrades, reflecting BRL 7,813 million in 2019 capital expenditures - The company is executing a long-term program to upgrade its access network to Fiber-to-the-Home (FTTH) using GPON technology, reaching over **4.6 million** homes passed and **675,000** homes connected by the end of 2019[293](index=293&type=chunk) - As of December 31, 2019, the net book value of property, plant and equipment was **BRL 38,911 million**. Assets essential for providing fixed-line services are considered "reversible assets" and revert to ANATEL upon concession termination[305](index=305&type=chunk)[306](index=306&type=chunk) Capital Expenditures (2017-2019) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | Data transmission equipment | BRL 2,947 | BRL 1,993 | BRL 1,846 | | Mobile network and systems | 905 | 820 | 602 | | Backbone transmission | 630 | 304 | 237 | | **Total capital expenditures** | **BRL 7,813** | **BRL 6,077** | **BRL 5,629** | [Regulation of the Brazilian Telecommunications Industry](index=54&type=section&id=Regulation%20of%20the%20Brazilian%20Telecommunications%20Industry) Oi's operations are regulated by ANATEL under public and private regimes, with new laws allowing concession conversion, and specific obligations for universal service, quality, and mobile network coverage, alongside regulated interconnection rates - Law No. 13,879, enacted in October 2019, allows fixed-line concessionaires to convert their public regime concessions into private regime authorizations, potentially eliminating burdensome obligations in exchange for new investments, primarily in broadband expansion[365](index=365&type=chunk)[376](index=376&type=chunk) - The General Plan of Universal Service Goals (PGMU) sets network expansion and modernization obligations for public regime providers. The latest update in 2018 replaced some obligations (like maintaining public telephones) with requirements to build out backhaul and provide 4G wireless access in specified locations[368](index=368&type=chunk)[371](index=371&type=chunk) - The company holds various authorizations for mobile services (2G, 3G, 4G) which include specific network coverage and quality of service obligations. Failure to meet these targets can result in fines or termination of licenses[407](index=407&type=chunk)[412](index=412&type=chunk)[417](index=417&type=chunk) - ANATEL's General Plan on Competition Targets (PGMC) imposes stricter regulations on providers with significant market power, such as Oi, in areas like infrastructure sharing and wholesale pricing to promote competition[463](index=463&type=chunk)[464](index=464&type=chunk) [Operating and Financial Review and Prospects](index=73&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes Oi's financial performance, highlighting a BRL 9.1 billion net loss in 2019 contrasting with 2018's profit, driven by judicial reorganization impacts, declining revenues, significant capital expenditures, and liquidity management [Results of Operations](index=91&type=section&id=Results%20of%20Operations) Oi reported a BRL 9,095 million net loss in 2019, a reversal from 2018's profit driven by judicial reorganization gains, with an 8.7% revenue decline and significant impairment losses Consolidated Results of Operations (2018 vs 2019) | | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | **Net operating revenue** | BRL 20,136 | BRL 22,060 | (8.7)% | | **Gross profit** | 4,821 | 5,881 | (18.0)% | | **Operating loss** | (2,977) | (5,268) | (43.5)% | | **Financial income (expenses), net** | (6,110) | 26,609 | (123.0)% | | **Profit (loss)** | BRL (9,095) | BRL 24,616 | (136.9)% | - Net operating revenue from residential services fell **13.5%** in 2019, driven by a **21.3%** decline in fixed-line services revenue due to customer migration to mobile and a **9.8%** drop in broadband revenue[611](index=611&type=chunk)[613](index=613&type=chunk) - Personal mobility services revenue decreased by **3.2%** in 2019, mainly due to a **42.6%** drop in mobile interconnection revenue from tariff reductions and a decline in prepaid customers, partially offset by growth in the postpaid segment[611](index=611&type=chunk)[618](index=618&type=chunk) - A significant impairment loss of **BRL 2,111 million** was recorded in 2019, primarily on regulatory licenses, due to a revised strategic plan and increased market competition[640](index=640&type=chunk) - Net financial expenses were **BRL 6,110 million** in 2019, compared to a net financial income of **BRL 26,609 million** in 2018. The 2018 figure included substantial one-time gains from the debt restructuring under the RJ Plan, such as a **BRL 13,290 million** fair value adjustment and an **BRL 11,055 million** gain on restructuring[648](index=648&type=chunk) [Liquidity and Capital Resources](index=106&type=section&id=Liquidity%20and%20Capital%20Resources) Oi's liquidity is funded by operations, a 2019 capital increase, and asset sales, with cash and equivalents at BRL 2,082 million, significant capital expenditures, and contractual obligations totaling BRL 74,670 million, with dividend restrictions Consolidated Cash Flow Summary (2017-2019) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | **Net cash generated in operating activities** | BRL 2,312 | BRL 2,863 | BRL 4,402 | | **Net cash used in investing activities** | (6,851) | (4,917) | (4,422) | | **Net cash generated (used) in financing activities** | 2,236 | (424) | (692) | | **Net decrease in cash and cash equivalents** | (2,303) | (2,477) | (701) | | **Cash and cash equivalents at end of year** | BRL 2,082 | BRL 4,385 | BRL 6,863 | - In 2019, financing activities provided **BRL 2,236 million** in cash, primarily from the **BRL 4.0 billion** capital increase, which was partially offset by **BRL 1,611 million** in lease financing costs under the new IFRS 16 standard[725](index=725&type=chunk) - Investing activities used **BRL 6,851 million** in cash in 2019, dominated by **BRL 7,426 million** in capital expenditures for property, plant, and equipment, mainly for network expansion[723](index=723&type=chunk) Contractual Obligations as of December 31, 2019 | | Less than One Year | One to Three Years | Three to Five Years | More than Five Years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | | (in millions of BRL) | | | | | | **Borrowings and financings** | BRL 679 | BRL 3,312 | BRL 11,317 | BRL 27,113 | BRL 42,421 | | **Lease liabilities** | 1,510 | 4,224 | 2,474 | 7,275 | 15,483 | | **Unconditional purchase obligations** | 1,433 | — | — | — | 1,433 | | **Total** | **BRL 4,123** | **BRL 9,019** | **BRL 14,565** | **BRL 46,963** | **BRL 74,670** | [Directors, Senior Management and Employees](index=115&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details Oi's Board of Directors, executive officers, and Fiscal Council, noting 11 independent board members, 58,089 employees in 2019, BRL 64.5 million in compensation, and new share-based incentive plans - The Board of Directors is composed of up to **11** members, all of whom are independent. The current chairman is Eleazar de Carvalho Filho[765](index=765&type=chunk)[769](index=769&type=chunk)[772](index=772&type=chunk) - The executive team is led by CEO Rodrigo Modesto de Abreu, who was appointed in January 2020. Other key officers include CFO Camille Loyo Faria and Chief Legal Officer Antonio Reinaldo Rabelo Filho, both appointed in October 2019[791](index=791&type=chunk)[792](index=792&type=chunk) - As of December 31, 2019, Oi had **58,089** employees, with the largest groups in plant operations (**36,149**) and call center operations (**15,046**)[827](index=827&type=chunk)[828](index=828&type=chunk) - Aggregate compensation for the board of directors, executive officers, and fiscal council was **BRL 64.5 million** in 2019. A new share-based long-term incentive plan for executives was approved and implemented, with an initial grant of **33.7 million** common shares in December 2019[815](index=815&type=chunk)[819](index=819&type=chunk)[821](index=821&type=chunk) - The company sponsors several pension plans, primarily managed by Fundação Sistel de Seguridade Social (Sistel) and Fundação Atlântico de Seguridade Social (FATL). As of December 31, 2019, the company recorded a net liability for pension benefits of **BRL 633 million**, mainly related to obligations under the TCSPREV plan[830](index=830&type=chunk)[835](index=835&type=chunk)[843](index=843&type=chunk) [Major Shareholders and Related Party Transactions](index=129&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) Oi's major shareholders as of April 2020 include Brookfield, Solus, GoldenTree, and Bratel, with ownership shifts post-judicial reorganization, and related party transactions primarily involve associates like Hispamar Major Shareholders as of April 24, 2020 | Name | Common Shares | % of Common | Total Shares | % of Total | | :--- | :--- | :--- | :--- | :--- | | Brookfield Funds | 535,308,795 | 9.24% | 535,308,795 | 8.99% | | Solus Funds | 371,261,320 | 6.40% | 385,394,906 | 6.47% | | GoldenTree Funds | 317,881,347 | 5.48% | 317,881,347 | 5.34% | | Bratel S.à r.l. (Pharol) | 312,827,844 | 5.40% | 314,627,844 | 5.29% | - The shareholding structure has changed significantly, with GoldenTree reducing its stake from a high of **14.7%** in April 2019 to **5.48%** in April 2020[868](index=868&type=chunk)[872](index=872&type=chunk) - The company has a call option agreement (PT Option Agreement) with Pharol, stemming from the 2014 Rio Forte commercial paper default. As of March 31, 2020, a significant portion of the option has lapsed unexercised[883](index=883&type=chunk)[885](index=885&type=chunk) - Material related party transactions include leasing satellite transponders from Hispamar (**19%** owned by Oi), with expenses totaling **BRL 203 million** in 2019[892](index=892&type=chunk) [Financial Information](index=134&type=section&id=Item%208.%20Financial%20Information) This section details Oi's legal proceedings, with BRL 36.1 billion in estimated contingencies and BRL 5.3 billion provisioned, primarily for tax, civil, and labor claims, and notes dividend payments are suspended until February 2024 due to the RJ Plan - As of December 31, 2019, the company had provisions of **BRL 5,252 million** for legal proceedings where loss is probable. The total estimated amount for proceedings with probable or possible loss was **BRL 36,134 million**[896](index=896&type=chunk) - Significant tax proceedings relate to Value-Added State Taxes (ICMS), with possible losses estimated at **BRL 13,470 million**, and FUST/FUNTTEL contributions, with possible losses of **BRL 5,134 million**[903](index=903&type=chunk)[907](index=907&type=chunk) - Civil claims include administrative proceedings from ANATEL, for which **BRL 570 million** was provisioned, and claims related to historical financial interest agreements (PEX/PCT), with provisions of **BRL 398 million**[917](index=917&type=chunk)[924](index=924&type=chunk) - The Judicial Reorganization (RJ) Plan prohibits the company from paying dividends or interest on shareholders' equity until February 5, 2024. After this date, payments are contingent on meeting a net debt to EBITDA ratio of less than or equal to **2:1**[948](index=948&type=chunk) [The Offer and Listing](index=143&type=section&id=Item%209.%20The%20Offer%20and%20Listing) Oi's shares trade on B3 and NYSE (Common ADSs), with Preferred ADSs on OTC, regulated by CVM, and listed on B3's Level 1 for enhanced corporate governance - The company's common shares (OIBR3) and preferred shares (OIBR4) trade on the B3 in Brazil. Common ADSs (OIBR.C) trade on the NYSE[959](index=959&type=chunk) - The Brazilian securities markets are regulated by the CVM, the National Monetary Council, and the Brazilian Central Bank[960](index=960&type=chunk) - Oi's shares are listed on the B3's Level 1 of Differentiated Corporate Governance Practices, requiring compliance with rules such as maintaining a **25%** free float and stricter disclosure policies[978](index=978&type=chunk) [Additional Information](index=146&type=section&id=Item%2010.%20Additional%20Information) This section details Oi's by-laws, material contracts, exchange controls, and taxation, including preferred share voting rights, tender offer rules, Brazilian tax on dividends and interest on equity, and U.S. tax considerations for ADSs and PFIC status - Due to the failure to pay the Minimum Preferred Dividend for three consecutive years, holders of Preferred Shares obtained full voting rights as of April 28, 2017[1018](index=1018&type=chunk) - A change of control of Oi must be preceded by a public tender offer for all of the company's capital stock, in line with Novo Mercado rules[1029](index=1029&type=chunk) - Under Brazilian tax law, dividends paid from profits generated after January 1, 1996 are not subject to withholding tax for non-Brazilian holders. Interest on shareholders' equity is subject to a **15%** withholding tax (or **25%** for holders in 'Favorable Tax Jurisdictions')[1071](index=1071&type=chunk)[1078](index=1078&type=chunk) - For U.S. tax purposes, Oi believes it was not a Passive Foreign Investment Company (PFIC) for the 2019 taxable year, but believes it was a PFIC for 2018. This status affects the tax treatment of distributions and gains for U.S. holders[176](index=176&type=chunk)[1123](index=1123&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=172&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Oi faces market risks from foreign currency and interest rates, with 52.2% of debt in foreign currencies, and uses derivatives and natural hedges to mitigate these exposures, focusing on cash flow and liquidity protection - The company is exposed to foreign exchange risk as a significant portion of its debt (**52.2%** as of Dec 31, 2019) and capital expenditures are denominated in or linked to foreign currencies, mainly the U.S. dollar[1150](index=1150&type=chunk)[1152](index=1152&type=chunk) - A hypothetical **10%** depreciation of the Brazilian real would result in an approximate **BRL 914 million** loss on foreign currency monetary restatement of debt[1152](index=1152&type=chunk) - The company is exposed to interest rate risk as a significant portion of its real-denominated debt is tied to floating rates like CDI and TJLP. A hypothetical **100 basis point** increase in interest rates would increase annual interest expense by approximately **BRL 131 million**[1153](index=1153&type=chunk)[1156](index=1156&type=chunk) - The company's hedging policy focuses on protecting cash flow and liquidity using instruments like non-deliverable forwards and natural hedges (holding U.S. dollar cash)[1150](index=1150&type=chunk)[1157](index=1157&type=chunk) Part II [Controls and Procedures](index=174&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that Oi's disclosure controls and internal control over financial reporting were effective as of December 31, 2019, having remediated a material weakness in related party transaction controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[1168](index=1168&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2019, based on the COSO 2013 framework[1172](index=1172&type=chunk) - A material weakness identified in 2018 concerning controls over related party transactions was remediated as of December 31, 2019[1174](index=1174&type=chunk)[1175](index=1175&type=chunk) [Other Information](index=175&type=section&id=Item%2016.%20Other%20Information) This section covers governance, including the audit committee financial expert, code of ethics, BDO audit fees of BRL 10.0 million in 2019, and differences between Oi's corporate governance and NYSE standards - The Audit, Risks and Controls Committee has determined that Henrique José Fernandes Luz is the company's audit committee financial expert[1177](index=1177&type=chunk) Principal Accountant Fees (2018-2019) | | 2019 | 2018 | | :--- | :--- | :--- | | | (in millions of BRL) | | | **Audit fees** | BRL 5.2 | BRL 5.0 | | **Audit-related fees** | 4.4 | — | | **All other fees** | 0.4 | 0.3 | | **Total fees** | **BRL 10.0** | **BRL 5.3** | - The company relies on the general exemption in Rule 10A-3(c)(3) of the Exchange Act for foreign private issuers regarding audit committee listing standards, as Brazilian law reserves the power to appoint auditors to the full Board of Directors[1184](index=1184&type=chunk) - Significant differences exist between Oi's corporate governance and NYSE standards, particularly regarding the requirement for a majority of independent directors and the composition and charters of nominating and compensation committees[1189](index=1189&type=chunk)[1190](index=1190&type=chunk)[1195](index=1195&type=chunk) Part III [Financial Statements](index=180&type=section&id=Item%2018.%20Financial%20Statements) This section presents Oi S.A.'s audited consolidated financial statements for 2019, prepared under IFRS, including the auditor's unqualified opinion with a going concern emphasis, and detailed notes on the judicial reorganization and accounting policies [Report of Independent Registered Public Accounting Firm](index=185&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion on Oi's 2019 financial statements and internal controls, but included a going concern emphasis due to judicial reorganization and recurring losses, highlighting several critical audit matters - The auditor issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2019[1230](index=1230&type=chunk)[1231](index=1231&type=chunk) - A 'Going Concern' paragraph was included, noting that the company's operation under a Judicial Reorganization Plan and its recurring losses raise substantial doubt about its ability to continue as a going concern[1243](index=1243&type=chunk) - Critical Audit Matters highlighted by the auditor include: the going concern assessment, recoverability of long-term assets, provisions for tax and civil contingencies, recognition of unbilled revenue, accounting for federal tax credits, adoption of IFRS 16, and legal investigations[1247](index=1247&type=chunk) [Notes to the Consolidated Financial Statements](index=198&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail the ongoing Judicial Reorganization, IFRS 16 adoption (BRL 8.2 billion in lease assets), BRL 5.3 billion in contingency provisions, debt structure changes, and subsequent events like the PT Ventures sale - The company is seeking to amend its Judicial Reorganization Plan (JRP) to achieve greater operational and financial flexibility to implement its strategic plan, with a new General Creditors' Meeting expected in 2020[1322](index=1322&type=chunk)[1323](index=1323&type=chunk) - The adoption of IFRS 16 on January 1, 2019, resulted in the initial recognition of **BRL 8,168 million** in right-of-use assets and corresponding lease liabilities[1437](index=1437&type=chunk)[1441](index=1441&type=chunk) - As of Dec 31, 2019, total provisions for probable losses from legal and administrative proceedings amounted to **BRL 5,252 million**, with labor claims at **BRL 2,051 million**, civil at **BRL 2,150 million**, and tax at **BRL 1,051 million**[1591](index=1591&type=chunk) - In January 2020, the company completed the sale of its PT Ventures stake for a total of **US$1 billion**, a key part of its non-core asset divestment plan[1753](index=1753&type=chunk) - The company recognized approximately **BRL 3 billion** in federal tax credits in 2019 following final court decisions allowing the deduction of ICMS from the PIS/COFINS tax base[1543](index=1543&type=chunk)[1544](index=1544&type=chunk)

Oi S.A. ADR (OTC:OIBRQ) Q4 2019 Earnings Conference Call March 26, 2020 9:00 AM ET Company Participants Rodrigo Abreu - Chief Executive Officer and Chief Operating Officer Camille Faria - Chief Financial and Investor Relations Officer Conference Call Participants Frederico Mendes - Banco Bradesco BBI S.A Susana Salaru - Itaú Corretora de Valores S.A. Marcelo Santos - JPMorgan Chase & Co. Guido Rosas - Goldman Sachs Group Inc. Carlos Sequeira - Banco BTG Pactual S.A. Operator Good morning, ladies and gentlem ...

RESULTS 4Q19 Investor Relations | March 25, 2020 IMPORTANT NOTICE 2 This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Brazilian regulations. Statements that are not historical facts, including statements regarding the beliefs and expectations of Oi S.A. – under Judicial Reorganization ("Oi" or "Company"), business strategies, future synergies, cost savings, future costs and future liquidity are forward-loo ...