Oi(OIBRQ) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a cash consumption of R$1.9 billion in the quarter, with R$700 million attributed to timely payments of Anatel fees [23] - EBITDA for the quarter was R$1.2 billion, aligning with the guidance for 2019 [19] - The company experienced a 30% decline in EBITDA year-over-year but expects a growth of 15% to 20% going forward [47] Business Line Data and Key Metrics Changes - In the mobile segment, the company achieved a 33% share of postpaid net adds, the largest in its history, leading to an 11.5% annual growth in postpaid revenues [4][5] - IT revenue in the corporate segment grew by 27% year-over-year, contributing to the stabilization of B2B revenue trends [5][16] - The residential segment saw a 1.2% quarter-over-quarter decline, indicating a slowdown in the annual decline primarily due to falling copper revenue [6] Market Data and Key Metrics Changes - The company ended July with 291,000 homes connected with FTTH, representing a 10.2% take-up rate [4] - The fiber deployment accelerated, reaching 2.8 million homes passed by July, with a target of 4.6 million by the end of 2019 [3][8] - The company aims for a take-up rate of 15.2% with 700,000 customers by the end of 2019 [9] Company Strategy and Development Direction - The core strategy focuses on fiber deployment, with significant investments aimed at expanding the fiber footprint to enhance competitive advantage [25][26] - The company plans to divest non-core assets to fund its strategy, targeting R$12.5 billion to R$14.5 billion in funding through various initiatives [30] - The transition from copper to fiber is expected to improve margins and reduce churn rates, supporting revenue growth in the long term [26][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth by 2021, despite current declines, due to the positive impact of fiber deployment [44] - The company is closely monitoring cash flow and exploring options such as secured debt issuance and capital raises to maintain CapEx investments [34][23] - Management acknowledged the challenges posed by competition in the fiber segment but emphasized the strength of their brand and network quality [38] Other Important Information - The company accelerated investments by 20% sequentially and 50% year-over-year, reaching a CapEx of R$7 billion to R$7.5 billion for the year [21][22] - Digital transformation initiatives are expected to enhance customer experience and operational efficiency, contributing to cost reductions [19][20] Q&A Session Summary Question: Does the company have an estimated date for the sale of Unitel? - The company expects to close the deal in the fourth quarter of this year and is in advanced negotiations [33] Question: What is the company's strategy regarding cash burn and maintaining CapEx investments? - The company anticipates cash burn as part of its investment strategy and is exploring alternatives like secured debt and capital raises to support investments [34] Question: What strategies are in place to accelerate FTTH take-up rates? - The company competes effectively against ISPs by leveraging brand strength and network quality, focusing on suburban areas for expansion [38] Question: What are the expected contributions to OpEx savings? - The company has an ambitious cost takeout program and expects to provide more details in the next quarter [40] Question: What is the guidance for CapEx and revenue trends? - The company expects CapEx to exceed R$7 billion this year, targeting around R$7.5 billion, and anticipates a stabilization and potential growth in revenues [43][44] Question: What gives confidence in achieving EBITDA growth? - The shift towards higher-margin business lines like FTTH and cost reduction initiatives are key drivers for expected EBITDA growth [48]