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RIO DE JANEIRO, Oct 7 (Reuters) - Brazilian telephone and wireless carrier Grupo Oi SA said its Chief Executive Officer Zeinal Bava had resigned from the company with immediate effect on Tuesday, potentially paving the way for a sale of the company’s Portuguese assets.
Oi is in the process of selling non-core assets to pay down its debt and allow it to better jostle for position in Brazil where it has fallen behind other cellphone carriers.
Bava will be temporarily replaced by Chief Financial Officer Bayard Gontijo, who will take up the CEO role while carrying on as CFO and head of investor relations. The company gave no details about the reason for Bava’s departure.
Reuters reported on Monday, citing a source, that billionaire Patrick Drahi’s telecoms firm Altice SA was in talks to acquire Oi’s Portuguese assets, which became part of Oi through a merger with Portugal Telecom SGPS SA.
Earlier on Tuesday, and before news of Bava’s departure, Oi said in a statement that no decision had yet been made on the selling of these Portuguese assets.
But analysts think Bava’s exit might change this.
“Bava was a huge force in this merger,” said Ari Lopes, analyst at telecommunications consultancy Ovum.
“The thing to watch now is who will replace him.” If the new CEO is not a previous Portugal Telecom executive, “it could pave the way for this merger to be undone,” she added.
Lopes said Bava’s departure would further destabilize the firm which has now gone through three CEOs in four years.
Bava joined Oi in June 2013 with the goal of pushing through the merger with Portugal Telecom, seen at the time as necessary to shore up Oi’s financial position and allow it to compete in Brazil.
But the deal began to go awry after a holding company of the Espirito Santo banking family defaulted on nearly 900 million euros ($1.14 billion) it owed to the Portuguese firm.
Oi has continued to be the subject of relentless takeover speculation in Brazil.
The view that Oi will be part of a consolidation of Brazil’s telecoms sector was reinforced last week after the firm did not take part in Brazil’s 4G auction.
Oi, the only majority-Brazilian player in a market dominated by some of the world’s biggest telecom operators, hired local investment bank BTG Pactual in August to study an acquisition of No. 2 wireless carrier TIM Participações SA.
Mexico’s America Movil SAB de CV has said it would be interested in partnering with Oi to bid for TIM.
But Oi’s net debt of 46 billion reais ($19 billion), three times its current market value, has raised questions about whether it has the firepower for such a move.
Media reports have also suggested TIM’s parent company, Telecom Italia SpA, is studying a counter-offer to acquire Oi, although the Italian firm has denied this. (1 US dollar = 0.7907 euro) (Reporting by Luciana Bruno and Stephen Eisenhammer; writing by Stephen Eisenhammer; Editing by Ken Wills)