(Adds details of Oi's debt profile, latest bond trading)
By Brad Haynes and Alberto Alerigi
SAO PAULO, Dec 15 (Reuters) - Oi SA, Brazil's most indebted telecoms company, is asking bondholders to temporarily loosen restrictions on its debt levels to pursue potential merger options, its acting chief executive said on Monday.
The company will hold a Jan. 26 bondholder meeting to waive terms known as covenants limiting the company's ratio of gross debt to earnings before interest, taxes, depreciation and amortization (EBITDA), according to a newspaper ad on Monday.
CEO Bayard Gontijo said asset sales would boost cash flow next year, but he was looking for flexibility with the timing of debt payments and a possible merger bid.
"I want the time to use our cash in the most effective way. If it is for debt payments, then let's take time to pay the most expensive debts. If it is for a merger, then let's use our cash efficiently," Gontijo said in a telephone interview.
Oi plans to conclude the sale of its Portuguese assets in the first half of 2015 and sell its African assets in the second half, Gontijo told Reuters.
He reiterated Oi's intent to be a "protagonist" in the consolidation of Brazil's telecom market. Oi has engaged in talks with Spain's Telefonica SA and Mexico's America Movil SAB to buy and split up rival wireless carrier TIM Participações SA.
But Gontijo said the company has not made up its mind about the best way to pursue deals in Brazil and whether it would use cash or other instruments.
Oi's gross debt had soared 52 percent by Sept. 30 from a year ago to 51.6 billion reais ($19.2 billion). The company's net debt, including cash on hand, was 47.8 billion reais. About 30 percent of Oi's obligations are bank debt and 70 percent was raised from capital markets.
The yield on Oi's dollar-denominated bond due in Oct 2020 rose to 7.19 percent from 6.98 percent on Thursday, when it last traded.
Earlier on Monday, Oi also released preliminary indicators showing that it had increased sales in October and November compared to the prior three months, reversing a sequential slide in revenue during the first three quarters of 2014.
The unaudited figures showed a 4 percent rise in net revenue and adjusted EBITDA compared to the monthly averages in the third quarter. Seasonal demand in the telecom market often leads to stronger year-end sales.
Compared to the monthly averages in the fourth quarter of 2013, Oi's revenue in October and November slipped 3 percent from a year earlier and adjusted EBITDA fell 18 percent. (Reporting by Brad Haynes and Alberto Alerigi Jr.; Editing by W Simon and Christian Plumb)