UPDATE 1-Brazil's Oi says 2015 investments hinge on cost cutting
(Adds CEO's comments, earnings details)
By Brad Haynes and Luciana Bruno
SAO PAULO/RIO DE JANEIRO, March 27 (Reuters) - Capital spending at Brazilian telecommunications company Oi SA this year will depend on how much it can cut costs as it works to strengthen cash flow, Chief Executive Bayard Gontijo said on Friday.
His comments followed a disappointing fourth-quarter earnings report that showed falling revenue, rising costs and the sale of Portuguese operations triggered a net loss that analysts had not forecast.
Still, Gontijo said an extensive restructuring of the company, which could involve personnel cuts, should free up cash flow and make a new share sale this year unnecessary.
"This is a year where we're going to focus on cash generation based on cost reduction and capex control," Gontijo told analysts on a conference call. "The better we do in terms of cost cutting, the more we're going to have to spend on investments."
Oi cut investments by 29 percent in the fourth quarter from a year earlier, but its expanding payroll, higher provisions for labor disputes and the cost of leasing recently sold cell towers weighed on earnings.
Oi booked a consolidated net loss of 4.421 billion reais ($1.389 billion) in the quarter, down from a profit of 1.183 billion reais a year earlier. Analysts in a Reuters poll, on average, had forecast a net profit of 264 million reais.
Earnings before interest, taxes, depreciation and amortization fell 12.5 percent from a year ago to 3.195 billion reais. (Reporting by Brad Haynes; Additional reporting by Luciana Bruno in Rio de Janeiro; Editing by Peter Galloway)
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