June 16, 2020 / 8:51 PM / 22 days ago

UPDATE 1-Brazil’s Oi eyes business split, seeks $2.9 bln for mobile unit

(Adds details of amendment proposal, CEO’s comments and share performance)

By Gabriela Mello

SAO PAULO, June 16 (Reuters) - Brazilian telecoms firm Oi SA will split off four units from its main business operating under bankruptcy protection as a prelude to billions of dollars in asset sales to fund its growing broadband fiber unit.

Under the proposal, which is expected to be voted in August, Oi seeks to create units - towers, data centers, mobile assets and fiber infrastructure - that will be all or partially sold.

Proceeds from the plan, subject to creditors’ approval, will be used to repay debt and fund the expansion of its broadband fiber network, it said in a securities filing late on Monday.

“With our execution going really well, we can move into the third phase of our transformation plan to pursue our long-term strategy based on fiber,” Chief Executive Rodrigo Abreu told analysts in a conference call on Tuesday morning.

Oi aims to raise at least 15 billion reais ($2.9 billion) with the sale of its mobile business, cited as a condition to exit bankruptcy protection. The company plans to kick off bidding in the fourth quarter and conclude the transaction by the end of 2021.

“Oi has dramatically increased the value of its mobile unit over the last two years,” Abreu said after some analysts questioned the minimum price estimate.

“Having a binding offer beforehand would have been ideal, but this is a fair assessment and we had to provide it, otherwise it would be impossible for our creditors to vote on the proposed sale,” he added.

All major rivals, including TIM Participações SA and Telefonica Brasil SA, have expressed interest in buying Oi’s mobile business.

Another unit comprising cellular towers and telecoms infrastructure in malls, hotels and elsewhere is expected to fetch at least 1 billion reais. The company has already received a firm offer for its five data centers, on the block for no less than 325 million reais, according to Abreu.

Oi also aims to sell up to 51% of its fiber infrastructure unit, the CEO said, adding the bidding is to start in the first-quarter of 2021 and be concluded by September 2021.

The carrier plans to retain its fixed line, cable TV and corporate telecoms businesses, as well as residential broadband customers, under a division named Client Co, he said.

Preferred shares in Oi were down 2.2% and common fell more than 6% in late afternoon trading. ($1 = 5.1371 reais) (Reporting by Gabriela Mello, editing by Louise Heavens and Sonya Hepinstall)

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