Oi Profit Falls in Fourth Quarter Amid Restructuring Plans

Oi SA (BRTO4), the company formerly known as Brasil Telecom SA, reported an 80 percent drop in fourth- quarter profit as expenses increased due to its restructuring plans.

Net income of the Rio de Janeiro-based company was 140.7 million reais, compared with 704.8 million reais a year earlier, according to a regulatory filing. Financial expenses increased to 475.6 million reais, from 310.7 million reais a year earlier, the company said. Oi was created as the group seeks to simplify its corporate structure.

“Oi´s investment story is about to go through a major change,” Banco Itau BBA analyst Susana Salaru wrote in a report today. “We expect 2012 to be a challenging year for Oi.”

The company “could become an interesting name” in the second half of 2012, Salaru wrote, reiterating that she has a recommendation equivalent to neutral on the stock.

Oi may spend about 2 billion reais to buy shares of its units from minority holders, according to preliminary numbers, Chief Financial Officer Alex Zornig told reporters today in a conference call. The company is obliged by Brazilian market rules to offer to buy back the shares of minority shareholders who don’t want to keep the stock after the restructuring. Oi is evaluating what it will do with the shares it acquires and doesn’t plan to sell them back to the market, Zornig said.

The company will keep its ratio of net debt to earnings before interest, tax, depreciation and amortization at less than 3, Zornig said.

Oi’s shares declined 1 percent to 10.06 reais at 11:48 a.m. in Sao Paulo. The benchmark Bovespa stock index fell 0.5 percent.

To contact the reporters on this story: Karen Eeuwens in London at keeuwens@bloomberg.net; Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net

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