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SAO PAULO, Nov 9 (Reuters) - Oi SA posted a narrower third-quarter loss on Wednesday, as Brazil’s No. 4 wireless carrier cut costs to thwart mounting competition and emerge faster from bankruptcy protection.
In a securities filing, Rio de Janeiro-based Oi reported a net shortfall of 1.015 billion, slightly smaller than in the year-ago period. Management led by Chief Executive Officer Marco Schroeder slashed operating costs by 10 percent last quarter on an inflation-adjusted basis.
Still, Brazil’s harshest recession in decades and record unemployment weighed on net operating revenue, which fell more than 6.0 percent to 6.4 billion reais last quarter. Part of the reduction stemmed from Schroeder’s decision to purge Oi’s client base on the fixed-line and pre-paid wireless segments, the filing said.
The numbers underscore steps by Oi to restore profitability and muster creditor support by doing more with less. Oi, which in June filed for Brazil’s biggest ever bankruptcy protection process, boosted its cash and equivalents position after generating about 500 million reais of operating profit, Schroeder said in an interview on Wednesday.
“We generated cash and cut costs to be more efficient,” he said. The rise in cash flow was partially explained by the fact that Oi suspended debt servicing during bankruptcy protection, he added.
Schroeder expects Oi to finalize talks with financial creditors to restructure about 41.2 billion reais of financial liabilities by mid next year. The company’s board approved the hiring of a financial advisor to resume negotiations with creditors, Schroeder said, without disclosing the name of the firm.
Representing about 80 percent of Oi’s wireless clientele, Oi’s pre-paid subscriptions shrank by 7.4 percent in the quarter. On the fixed line segment, the client base fell, albeit at a slower rate than in the previous quarter.
On the other hand, Oi boosted pay TV plan and broadband subscriptions by 7.6 percent and 0.5 percent, respectively, reflecting renewed efforts to offer higher-value services. Data services revenue also jumped by 21 percent. (Reporting by Ana Mano; Editing by Guillermo Parra-Bernal and Jonathan Oatis)