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OI: Company Is Still Reviewing Plans To R$ 8 Billion Capital Increase

(Agencia CMA Latam) - Brazil's telecom company Oi is still studying alternatives to raise R$ 8 billion (US$ 2,54 billion) in capital under its bankruptcy recovery plan. There were rumors that the capital increase could be considerably lower, at R$ 5 billion (US$ 1,59 billion).

The company also said that the board of creditors should vote on the recovery plan between September and October.

"We are keeping in touch with shareholders to seek a balanced proposal. A good part of the capital increase will come from new money for investment and part may consist of debt conversion," said Oi chairman, Marco Schroeder, in a conference call with analysts.

The capital increase would allow the company to resume investments and could also increase debtors support to the recovery plan. Brazil's telecommunications sector requires significant investment by businesses in the infrastructure and growth of their networks.

According to Schroeder, the R$ 8 billion capital injection would allow Oi to reach a CapEx level of R$ 7 billion per year, compared to a R$ 5 billion average CapEx that the operator has been achieving. "We have already identified projects that we could do with these additional R$ 2 billion, which would have an impact on projects such as 4G mobile broadband and digitalization," he said.

Schroeder explained that Oi could expand mobile broadband to more cities, since they are restricted to cities in the states of Rio de Janeiro and Minas Gerais, in addition to increasing the speed of the network.

Currently, Oi invests with its resources, since it can not make new financing during the judicial recovery. In the first half of 2017, Oi invested R$ 2.455 billion, up 1.5% from the same period last year.

In addition to increasing investments, the company has been reducing expenses and said there is still room for further cuts. Oi is betting on the digitalization, stimulating clients to pay their bills and to solve problems solely by the internet.

by Agencia CMA Latam

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