(Adds that bondholders hiring Moelis for restructuring talks, adds background on competition, bond and share prices)
By Brad Haynes
SAO PAULO, March 24 (Reuters) - Oi SA, Brazil’s most indebted telecommunications firm, posted a deep quarterly loss on Thursday and scrapped a policy of giving annual forecasts, citing a need for flexibility in the face of a severe and unpredictable economic crisis.
Oi reported a consolidated fourth-quarter net loss of 4.551 billion reais ($1.237 billion), about the same size as its loss a year earlier, according to a securities filing, due to write-downs related to tax credits and African investments.
Net revenue from Brazilian operations fell 8 percent from a year ago, dragged lower by the worst recession in a generation.
Economic headwinds and fierce competition from the local units of Telefonica SA, Telecom Italia SpA and America Movil SAB have contributed to investor concerns about Oi managing its heavy debt load.
Shares and bonds of Oi have tumbled since late February, when Russian billionaire Mikhail Fridman’s investment firm LetterOne abandoned a $4 billion offer to invest in a possible merger of Oi with Telecom Italia’s local operator TIM Participações SA. Credit rating agency Moody’s downgraded Oi on March 1.
The price on Oi’s 5.625 percent bond due in June 2021 sank to 23.75 cents on the dollar Thursday, from a high last month of nearly 53 cents. Oi shares gained 2 percent on Thursday, but have lost 54 percent in 2016.
Oi hired PJT Partners Inc as a financial advisor this month to evaluate a potential restructuring of gross debts near 55 billion reais ($15 billion) at the end of December, almost 85 percent of which is held in global bonds.
A group of Oi’s bondholders holding about $2.5 billion of debt hired investment bank Moelis & Co to represent them in the restructuring talks, a source with direct knowledge of the matter told Reuters on Thursday. PJT has yet to present a proposal for bondholders, the source said.
Oi’s earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, fell to 1.706 billion reais in the fourth quarter. That was down 47 percent from a year earlier, when the company booked income from the sale of cellular towers.
Routine EBITDA, excluding one-time revenue and expenses, grew 3 percent to 1.745 billion reais.
$1 = 3.70 Brazilian reais Additional reporting by Priscila Jordao and Tatiana Bautzer; Editing by Jeffrey Benkoe and Bernadette Baum