BrazilOi hires Oliver Wyman to oversee implementation of investment plan
The largest telecommunications company in Brazil and South America, Oi, has hired management consulting firm Oliver Wyman to guide and monitor one of the company’s larger investment programs of 20+ billion reais aimed at improving broadband and 4G / 5G services.
With over 59 million subscribers, including 13+ million for landline and 36+ million for wireless, Rio de Janeiro headquartered Oi is one of Brazil’s largest corporates. The company was founded on the back of Brazil’s large telecom privatization wave, and after trading as Telemar for nearly a decade, in March 2007 the company rebranded as Oi.
While the company managed to grow from 2007 onwards, its push for expansion came to an abrupt halt when in 2016, Oi had to file for bankruptcy protection – the equivalent of Chapter 11 in the United States. In a bid to fend off mounting competition in mobile and data, Oi built large investment-driven debts, however, amid a harsh recession in the country, creditors backed out from supporting the company just before Oi had to restructure about 50 billion reais in debt owed to banks and bondholders. As a result, in June 2016 Oi filed for Brazil’s largest ever bankruptcy protection.
After agreeing a recovery plan to restructure $20 billion in debt owed by the firm with creditors (including BNDES and Banco do Brasil), Oi did not go into liquidation, with more than 100,000 jobs saved in the process. Since, the company has found itself in court against shareholders and bondholders (including cases that challenge the restructuring proceedings, share dilution, agreements on participating in capital raising schemes) and Brazilian telecoms regulator Anatel (a case involving around 14 billion reais in regulatory fines).
Alongside the restructuring process, Oi’s management is working on returning the company to health, with returning to profitability and reversing client attrition among the top priorities. A large investment program to the tune of 7 billion reais per year over a three-year cycle has been launched to accelerate upgrades in broadband and mobile network, a move which is aimed at attracting more clients to the company’s roster. Oi has lost for example 8% of its mobile clients over the last year, however, officials from the firm have highlighted that an ultra-fast broadband pilot project in Rio de Janeiro has enabled the firm to quickly gain market share in the region. The investments are also geared at enhancing the efficiency of legacy assets, lowering costs for maintenance & operations.
Overseeing the investment programme are consultants from management consultancy Oliver Wyman, which have been brought on board by Oi’s Chief Financial Officer, Carlos Augusto Machado Pereira de Almeida Brandão. In a statement, he said “Oliver Wyman will provide expertise to ensure the tracking and control of execution of investments in a fast, efficient and with the best return potential.” Main focus area of the program is the roll-out of high-speed broadband [fiber optics to the client's home (FTTH)] – “with this project, Oi plans to bring fiber-optic connection to 10 million homes passed by the end of 2021. Promoting the expansion of 4.5G services and preparation for the transition to 5G access when the technology becomes available in Brazil are two other overarching goals.
Oliver Wyman will deliver the project with consultants from its São Paulo office, supported by expertise sourced from its other offices in the Americas: Bogotá (Colombia), Bridgetown (Barbados), Mexico City (Mexico), as well as its 10+ offices in the United States and Canada. Globally, the management consulting firm has 4,500 employees.
