Oi SA’s Earnings Call: Growth Amid Challenges

Oi SA ((OIBRQ)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Oi SA painted a mixed picture for the company, highlighting both growth and challenges. While there was notable growth in Oi Soluções and significant cost-saving measures, the company faced substantial revenue declines and challenges in maintaining cash flow. The focus remains on operational efficiency and transformation towards digital solutions.

Growth in Oi Soluções

Oi Soluções has shown remarkable growth, particularly in the cloud computing segment, where it grew at an annual rate of over 30% by late 2024. The company secured contracts totaling R$53 million in new revenue in the first month of 2025, reinforcing its position in this burgeoning sector.

Domestic Subsidiaries Revenue Growth

The domestic subsidiaries of Oi SA have experienced a revenue boost, growing nearly 20% year-on-year. This growth was driven by operations in Tahto and the launch of Oi Services, which have started to contribute significantly to the company’s consolidated revenue.

Cost Savings in Legacy Network Demobilization

Oi SA has made significant strides in demobilizing its legacy network, achieving cost savings of about R$1 billion from January 2024 to March 2025. The company estimates total accumulated savings of R$2.5 billion by the end of 2025, underscoring its commitment to operational efficiency.

Operational Efficiency and Cost Reduction

The company reported a 19% reduction in operating expenses and investments this quarter. Specific reductions were noted in sales and personnel costs, reflecting Oi SA’s ongoing efforts to streamline operations and reduce expenditures.

ICT Services Growth

ICT solutions have become a significant revenue driver for Oi Soluções, accounting for approximately 39% of its total revenue in the first quarter of 2025. Cloud services revenue increased by 8% year-on-year, while UC&C revenues grew by 30%, highlighting the company’s strategic focus on high-value segments.

Revenue Decline

Nova Oi reported a revenue of R$631 million for the quarter, marking a 27% year-on-year decline. This drop was primarily due to the reduction in non-core revenues and the company’s exit from fiber and TV operations, indicating a strategic shift in focus.

Oi Soluções Revenue Fall

Despite its growth in certain areas, Oi Soluções saw its revenue fall to R$271 million, a 21% year-on-year decline. This was attributed to a decrease in demand for legacy services and a more selective commercial strategy.

Cash Balance and Burn Rate

At the end of the period, Oi SA’s cash balance stood at R$1.5 billion, with a cash burn rate of 18% for the quarter. A significant portion of the cash is tied to specific obligations, highlighting the company’s ongoing liquidity challenges.

Forward-Looking Guidance

Oi SA’s guidance for the future underscores the importance of Oi Soluções as a growth driver, with new contracts worth R$53 million secured in early 2025. Despite a 27% year-on-year decline in overall revenue, Oi Soluções accounted for about 60% of total revenue, focusing on high-value ICT services. The company aims for an accumulated cost saving of R$2.5 billion by the end of 2025 through digital solutions and network optimization. Oi SA continues to explore funding alternatives to address liquidity needs and drive further transformation.

In conclusion, Oi SA’s earnings call reflected a mixed sentiment with both promising growth areas and significant challenges. The company’s focus on operational efficiency and digital transformation is evident, though revenue declines and cash flow issues remain pressing concerns. As Oi SA navigates these challenges, its strategic initiatives and cost-saving measures will be crucial in shaping its financial future.