Brazilian telecommunications company Oi is continuing the slow business of restructuring its operations and settling debts. It has now signed a deal with infrastructure business American Tower Corporation (ATC) that will see it transfer selected towers (the number has not been revealed) and properties to ATC.
The contract with American Tower outlines the transfer of 100% shares of a special purpose entity (SPE) holding selected properties and tower infrastructure. This transfer serves as a debt-for-equity swap, settling part of Oi’s debt to ATC.
While Brazil’s Administrative Council for Economic Defense (CADE) has approved the deal, its completion depends on approval from regulator Anatel. The Data Centre Dynamics news service says that similar negotiations are reportedly under way with other tower infrastructure companies.
The estimated value of the sale – about US$7.5 million – is a significant sum, but given that in June 2016 Oi filed for bankruptcy protection with debts of about US$12.3 billion at today’s exchange rate (it exited bankruptcy protection in late 2022), it only makes a modest dent in the amount the company owes. This is now estimated at around US$4.2 billion after Oi’s divesting of such assets as its mobile operations, submarine cable company, fibre optic company and around 8,000 fixed telephone towers.
The road ahead for Oi remains challenging given that it now has limited cash-generating assets. However, Data Centre Dynamics says this deal demonstrates the company’s commitment to settling debts and reshaping its business model.
American Tower operates more than 17,000 towers in Brazil, making the market its biggest in Latin America.
