Earnings Release • Aug 12, 2021
Earnings Release
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Announcement | Lisbon | 12 August 2021
PHAROL, SGPS S.A. hereby informs on the 2021 second quarter results disclosed by Oi, S.A., as detailed in the company's document attached hereto.
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This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Brazilian regulations. Statements that are not historical facts, including statements regarding the beliefs and expectations of Oi S.A. – under Judicial Reorganization ("Oi" or "Company"), business strategies, future synergies, cost savings, future costs and future liquidity are forward-looking statements.
The words "anticipates", "intends", "believes", "estimates", "expects", "forecasts", "plans," "aims" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. There is no guarantee that the expected events, tendencies or expected results will actually occur. Such statements reflect the current views of the Company's management and are subject to a number of risks and uncertainties. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operational factors and other factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to the Company or its affiliates, or persons acting on their behalf, are expressly qualified in their entirety by the cautionary statements set forth in this notice. Undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made.
Except as required under the Brazilian and U.S. federal securities laws and the rules and regulations of the CVM, the SEC or other regulatory authorities in other applicable jurisdictions, the Company and its affiliates do not have any intention or obligation to update, revise or disclose any changes to any of the forward-looking statements herein in order to reflect current or future events or their developments, changes in assumptions or changes in other factors affecting the forward-looking statements herein. You are advised, however, to consult any further disclosures the Company makes on related subjects in reports and communications that the Company files with the CVM and the SEC.
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AUG 2 1
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HOMES CONNECTED (HC), Thousand
important driver of ARPU boost. In 2Q21, 9.6% of the Fiber customer base had speeds ≥ 400Mbps, and 16% of the net additions were ≥ 400Mbps
Residential
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AUG 2 1
B2B (OI SOLUÇÕES) R\$ MN
The growth of ITC revenue has contributed to stabilizing Oi Soluções Revenues sequentially.
Oi Soluções revenues stable at ~R\$ 2.6Bn.
IT revenues possibly growing its share to ~40% in 2024
Expand fiber penetration in SME segment, was the main driver fot total SME revenue growth
b2b
1 – Copper Voice and Copper Broadband
The expansion of postpaid net adds is heavily concentrated on control plans and has started to reflect in the postpaid revenue growth.
In prepaid, despite the strong growth in users, the same was not observed in the volume of top-ups, mainly due to the reduction in the value of financial aid offered by the government in the second wave of COVID-19
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CONSOLIDATED REVENUES (R\$ MN)
1 – UPI Mobile Assets, UPI Infra Co, UPI Towers, UPI Data Centers and UPI TV Co | 2 – Revenues related Value Added Services and Serede (third party)
AUG 2 1
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OPEX (R\$ MN)
ROUTINE EBITDA (R\$ MN)
AUG 2 1
1 0
CAPEX & CASH FLOW
| PIS/COFINS Credits Remaining– | R\$ 1.5Bn |
|---|---|
| V·tal Convertible | |
| Debentures – R\$ 2.5Bn |
|
| Mobile Bridge | R\$ 10.5 |
| Loan – R\$ 2.0Bn |
BN |
| Bonds Oi Mobile – R\$ 4.5Bn |
Differentiated fiber network, with coverage, granularity and quality – enabler of 5G in Brazil
The company is already a reality and is born with relevant numbers...
EBITDA EOP 2021, +R\$ 1.1 Bn
Active Base "Born" with >12M HPs and >2.5M HCs
Customers "Born" with +270 contracts between wholesale and neutral network services
...and with the ambition and potential to transform, develop and strengthen the Telecom sector in Brazil
+32M HPs by 2025
R\$ 30Bn investments thru 2025
+2,300 cities with FTTH
A true neutral network
Concession Arbitration is a key component in addressing the costs and future of the legacy operation, and comprises 4 key areas:
Arbitration is also a critical component in addressing the current migration discussions to an authorization, in a process expected to be carried out until the end of 2022
Oi Futuro Social Balance available
Expected improvement in MSCI ESG ratings in the 3Q 21
2 nd wave held in June with 6,600 participations and a general satisfaction index of 96.9%.
| st 1 wave |
nd 2 wave |
|
|---|---|---|
| Engagement at Oi (24 items distributed in the pillars below) |
85.7% | 88.6% |
| Transparency and Alignment Pillar | 88.1% | 90.2% |
| Respectful and Healthy Environment Pillar | 86.5% | 89.2% |
| Leadership and Protagonism Pillar | 89.1% | 91.5% |
| Attitudes for Transformation Pillar | 83.2% | 86.4% |
| Agile Mindset Pillar | 84.6% | 87.9% |
| "I feel engaged in contributing to the transformation" |
N/A | 96.9% |
AUG 2 1
Investor Relations August 11, 2021
| Earnings Release | August 11, 2021 |
|---|---|
Conference Call in English
August 12, 2021 12:00 p.m. (Brasília) 11:00 a.m. (NY) / 16:00 p.m. (UK) Webcast: click here Telephone: US: +1 (844) 204 8942 / +55 (11) 3181-8565 Code: Oi
SIMULTANEOUS TRANSLATION
August 12, 2021 12:00 p.m. (Brasília) 11:00 a.m. (NY) / 16:00 p.m. (UK) Webcast: click here Telephone: +55 (11) 3181-8565 / +1 (844) 204 8942 Code: Oi
This report presents the operating and financial performance of Oi S.A. – under Judicial Reorganization ("Oi S.A." or "Oi" or "Company") – and its subsidiaries for the second quarter of 2021.
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| in R\$ million or otherwise stated | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| Oi S.A. Consolidated | ||||||||
| Total Net Revenues | 4.389 | 4.544 | 4.453 | $-3.4%$ | $-1.5%$ | 8.842 | 9,292 | $-4.8%$ |
| Routine EBITDA | 1.284 | 1.359 | 1.139 | $-5.5%$ | 12.7% | 2.423 | 2.891 | $-16.2%$ |
| Routine EBITDA Margin [%] | 29.3% | 29.9% | 25.6% | $-0.6$ p.p. | 3.7 p.p. | 27.4% | 31.1% | $-3.7 p.p.$ |
| Net Income (Loss) attributable to owners of the Company | 1.139 | $-3.409$ | $-3.038$ | $-133.4%$ | n.m. | $-1.899$ | $-9.689$ | n.m. |
| Net Debt | 25,695 | 20,043 | 25,172 | 28.2% | 2.1% | 25,695 | 20.043 | 28.2% |
| Available Cash | 3.421 | 6,073 | 3.027 | $-43.7%$ | 13.0% | 3.421 | 6,073 | $-43.7%$ |
| CAPEX | 1,896 | 1.764 | 1,863 | 7.5% | 1.8% | 3.759 | 3.558 | 5.7% |
| in R\$ million or otherwise stated | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| BRAZIL | ||||||||
| Total Net Revenues | 4.333 | 4.490 | 4.395 | $-3.5%$ | $-1.4%$ | 8.728 | 9,189 | $-5.0%$ |
| Routine EBITDA | 1.271 | 1.464 | 1.128 | $-13.2%$ | 12.6% | 2.399 | 2.946 | $-18.6%$ |
| Routine EBITDA Margin [%] | 29.3% | 32.6% | 25.7% | $-3.3 p.p.$ | 3.7 p.p. | 27.5% | 32.1% | $-4.6 p.p.$ |
| CAPEX | 1,883 | 1,751 | 1,859 | 7.6% | 1.3% | 3.742 | 3,531 | 6.0% |
| Routine EBITDA - CAPEX | $-613$ | $-286$ | $-731$ | 114.1% | $-16.2%$ | $-1.343$ | $-586$ | 129.4% |
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| Quarter | 6 months | Weight % | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY | 2021 | 2020 |
| Consolidated Total Net Revenues | 4,389 | 4,544 | 4,453 | $-3.4%$ | $-1.5%$ | 8.842 | 9,292 | $-4.8%$ | 100% | 100% |
| Brazil | 4.333 | 4.490 | 4.395 | $-3.5%$ | $-1.4%$ | 8.728 | 9,189 | $-5.0%$ | 98.7% | 98.8% |
| New Oi | 2.215 | 2,274 | 2,214 | $-2.6%$ | 0.1% | 4.429 | 4,665 | $-5.1%$ | 50.5% | 50.0% |
| Residential | 1,308 | 1.264 | 1,311 | 3.5% | $-0.2%$ | 2.618 | 2.574 | 1.7% | 29.8% | 27.8% |
| B 2 B | 882 | 987 | 880 | $-10.6%$ | 0.2% | 1,761 | 2,041 | $-13.7%$ | 20.1% | 21.7% |
| Other services | 26 | 24 | 23 | 9.3% | 11.8% | 49 | 50 | $-2.1%$ | 0.6% | 0.5% |
| Discontinued Operations | 2,118 | 2,216 | 2,181 | $-4.4%$ | $-2.9%$ | 4,299 | 4,524 | $-5.0%$ | 48.3% | 48.8% |
| International Operations | 55 | 54 | 59 | 2.0% | $-6.0%$ | 114 | 103 | 10.6% | 1.3% | 1.2% |
| Revenue Generating Units [RGU] - ['000] | 55,319 | 52.326 | 53,801 | 5.7% | 2.8% | 55,319 | 52.326 | 5.7% | 100% | 100% |
|---|---|---|---|---|---|---|---|---|---|---|
| New Oi | 13,891 | 14.408 | 14,091 | $-3.6%$ | $-1.4%$ | 13,891 | 14,408 | $-3.6%$ | 25.1% | 27.5% |
| Residential | 10.253 | 10,551 | 10,402 | $-2.8%$ | $-1.4%$ | 10.253 | 10,551 | $-2.8%$ | 18.5% | 20.2% |
| B 2 B | 3,503 | 3,699 | 3,546 | $-5.3%$ | $-1.2%$ | 3,503 | 3,699 | $-5.3%$ | 6.3% | 7.1% |
| Public Telephones | 136 | 158 | 144 | $-13.8%$ | $-5.3%$ | 136 | 158 | $-13.8%$ | 0.2% | 0.3% |
| Discontinued Operations | 41,427 | 37,918 | 39,709 | 9.3% | 4.3% | 41,427 | 37,918 | 9.3% | 74.9% | 72.5% |
| Mobile | 40.333 | 36,670 | 38.564 | 10.0% | 4.6% | 40.333 | 36,670 | 10.0% | 72.9% | 70.1% |
| DTH TV | 1.094 | 1.248 | 1,146 | $-12.4%$ | $-4.5%$ | .094 | 248 | $-12.4%$ | 2.0% | 2.4% |
Consolidated net revenues totaled R\$ 4,389 million in 2Q21 (-1.5% q.o.q. and -3.4% y.o.y.).
Net revenues from Brazilian operations ("Brazil") stood at R\$ 4,333 million (-1.4% q.o.q. and -3.5% y.o.y.). Net revenue from international operations (Africa and East Timor) totaled R\$ 55 million, down 6.0% from 1Q21 and up 2.0% from 2Q20.
Total net revenues from continued operations in Brazil amounted to R\$ 2,215 million in 2Q21 (-2.6% y.o.y. and in line with the previous quarter). Results from the Residential segment were in line in the sequential comparison and increased 3.5% from 2Q20, anchored by the strong growth rate of Fibra, reflecting Nova Oi's focus in this segment, replacing legacy copper services. The B2B segment also had stable revenues compared to 1Q21, but recorded a 10.6% decline over 2Q20, mainly due to the negative scenario brought by the COVID-19 pandemic, which continued to have a strong impact on the economy and companies in general.
| 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY | |
|---|---|---|---|---|---|---|---|---|
| Residential | ||||||||
| Net Revenues [R\$ million] | 1.308 | 1,264 | 1.311 | 3.5% | $-0.2%$ | 2.618 | 2.574 | 1.7% |
| Fiber | 654 | 255 | 560 | 156.3% | 16.8% | 1,215 | 449 | 170.4% |
| Copper | 653 | 1.008 | 750 | $-35.2%$ | $-12.9%$ | 1.404 | 2.125 | $-33.9%$ |
| Copper Voice | 448 | 644 | 509 | $-30.5%$ | $-12.0%$ | 957 | 1.353 | $-29.2%$ |
| Copper Broadband | 205 | 364 | 241 | $-43.6%$ | $-14.8%$ | 446 | 772 | $-42.2%$ |
| Revenue Generating Units [RGU] - ['000] | 10.253 | 10.551 | 10.402 | $-2.8%$ | $-1.4%$ | 10.253 | 10,551 | $-2.8%$ |
| Fiber | 5.345 | 2.411 | 4,663 | 121.7% | 14.6% | 5.345 | 2.411 | 121.7% |
| Fixed Broadband | 2.638 | 1.194 | 2.299 | 121.0% | 14.7% | 2.638 | 1,194 | 121.0% |
| Fixed Line in Service | 2,615 | 1,146 | 2.272 | 128.2% | 15.1% | 2,615 | 1,146 | 128.2% |
| IPTV | 93 | 72 | 92 | 28.9% | 1.1% | 93 | 72 | 28.9% |
| Copper | 4.908 | 8,140 | 5.739 | $-39.7%$ | $-14.5%$ | 4.908 | 8,140 | $-39.7%$ |
| Fixed Line in Service | 3.302 | 5.364 | 3,870 | $-38.4%$ | $-14.7%$ | 3.302 | 5,364 | $-38.4%$ |
| Fixed Broadband | 1,605 | 2.776 | 1,869 | $-42.2%$ | $-14.1%$ | 1,605 | 2.776 | $-42.2%$ |
| FTTH - Homes Connected [HC's] | 2.677 | 1.236 | 2.339 | 116.6% | 14.4% | 2.677 | 1.236 | 116.6% |
3Q14 Earnings Release Net revenues from continued operations in the Residential segment totaled R\$ 1,308 million in 2Q21. In the annual comparison, the Company recorded a growth of 3.5%, confirming the segment's turnaround as a result of the successful execution of the strong expansion strategy of Fiber services. In the sequential comparison, revenues in 2Q21 remained stable (-0.2%).
Revenues from Fiber services are already higher than revenues from legacy services in relation to the previous quarter, accounting for 50% of total Residential revenues. In 2Q21, Fiber revenues accounted for R\$ 654 million of the total amount from the Residential segment, while copper revenues accounted for R\$ 653 million.
At the end of the period, the Company had 10,253 thousand RGUs in the Residential segment (-2.8% y.o.y. and -1.4% q.o.q.). Fiber RGUs in residential segment showed a growth of 14.6% in the quarter and 121.7% growth in the annual comparison.
The Company continued to record strong growth in FTTH network and accesses in 2Q21. The Company closed the quarter with 12.0 million homes passed with fiber (HPs), adding 1.5 million new HPs to its base, averaging over 507 thousand HPs per month in 2Q21.
Even with the continuous expansion of HP's, the Company also presented an increase in take-up rate. In 2Q21, FTTH net adds came to 366 thousand customers (338 thousand in the Residential segment), averaging over 120 thousand new customers per month. Oi closed 2Q21 with around 2.8 million Homes Connected (HCs) to fiber (2.68 million of which in the Residential segment) and a take-up rate of 23.6%. The objective of the fiber plan is to reach a total base take-up rate above 25% in 2024. This was the fifth consecutive quarter that the Company installed more than 350 thousand HPs to its customer base.
The Company monitors the progress of investments in fiber and continues to improve its installation, support, sales and marketing initiatives. The results can be seen in the take-up rates by HP cohort. Vintages with more than one year of installation have already reached 25% in take-up and vintages with over 15 months of installation are already close to 30%. The cohorts in June 2019 (24 months) reached an average take-up rate of 35.3% at the end of 2Q21. The results of the more recent cohorts (2020-2021) continue improving as the learning curve progresses, also supported by a more granular analysis of viable HPs. The cohorts in June, July and August 2020 already reached respectively 28.5%, 26.8% and 25.3% take-up rate in 2Q21 (13, 12 and 11 months after installation).
Fiber ARPU was R\$ 87 in 2Q21, up 7.3% over 2Q20 and in line with the previous quarter. The marketing and sale strategy of higher speed plans continues to obtain expressive results and Fiber already accounted for 52% of residential RGUs. As a comparison, in 1Q21 this percentage was approximately 45% and in 2Q20 it was 23%. In 2Q21, 9.6% of Fiber customers had subscribed to broadband plans of 400MB or higher. In this quarter, 16% of new plans sold were for 400MB or higher. Fiber is already available in 148 municipalities across the country. In this universe, Oi's market share is above 25% on average.
Fiber revenues reached R\$ 691 million in 2Q21, of which R\$ 654 million from residential customers (annual growth of 156.3%) and R\$ 37 million from companies (B2B), anual growth of 181.5%. Compared to 1Q21, Fiber revenues grew R\$ 99 million, or 16.7%, with an increase of R\$ 94 million, or 16.8%, in the residential base.
3Q14 Earnings Release Fiber revenues already account for 50% of total residential revenues in 2Q21, compared to 20% of the total amount in 2Q20 and 43% in the previous quarter. The fiber project is responsible for the turnaround of residential revenues. Fiber reversed the structural downward trend in residential revenue (due to legacy services) and the segment presented anual revenue growth for the first time in seven years.
The exploration of FTTH opportunities is already a reality, and the Company joined the São Paulo state market this quarter. The Company has 5.2 thousand kilometers of fiber network in the state, and the investment plan is aimed at reaching 400 thousand HPs in 2021 and 2.0 million HPs in 2022.
Oi closed 2Q21 with 3,302 thousand copper fixed voice customers in the Residential segment (-38.4% y.o.y. and -14.7% q.o.q.). In copper broadband, the Company recorded 1,605 thousand RGUs in the segment, down 14.1% in the quarter and 42,2% lower in the annual comparison.
Demand for copper services continued to decline, as these services have been replaced by mobile services and more advanced technologies in residential services, with lower latency and greater reliability, such as Fiber broadband.
In addition to the decline in demand for legacy products, the Company continues to reduce its commercial focus on these services and accelerating the replacement of copper with fiber. Commercial and financial efforts are geared toward accelerating the FTTH project, maximizing value creation for the Company.
| 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY | |
|---|---|---|---|---|---|---|---|---|
| B2B | ||||||||
| Net Revenues [R\$ million] | 882 | 987 | 880 | $-10.6%$ | 0.2% | 1.761 | 2.041 | $-13.7%$ |
| Oi Soluções [Corporate] | 583 | 679 | 588 | $-14.2%$ | $-0.8%$ | 1,170 | 1,374 | $-14.8%$ |
| $\mathsf{I}\mathsf{T}$ | 95 | 116 | 89 | $-18.2%$ | 7.1% | 184 | 224 | $-18.0%$ |
| Data | 283 | 337 | 289 | $-16.2%$ | $-2.0%$ | 571 | 686 | $-16.7%$ |
| Other | 205 | 225 | 210 | $-9.0%$ | $-2.5%$ | 415 | 464 | $-10.6%$ |
| Small Enterprises | 210 | 209 | 204 | 0.1% | 2.6% | 414 | 430 | $-3.9%$ |
| Fiber | 36 | 13 | 31 | 181.5% | 15.5% | 68 | 24 | 182.6% |
| Other | 173 | 197 | 173 | $-11.8%$ | 0.3% | 346 | 407 | $-14.8%$ |
| Wholesale Legacy | 89 | 99 | 88 | $-9.4%$ | 1.4% | 177 | 237 | $-25.1%$ |
| Revenue Generating Units [RGU] - ['000] | 3.503 | 3.699 | 3.546 | $-5.3%$ | $-1.2%$ | 3.503 | 3,699 | $-5.3%$ |
| Fiber | 286 | 109 | 230 | 163.5% | 24.5% | 286 | 109 | 163.5% |
| Copper Voice | 2,943 | 3,202 | 3,010 | $-8.196$ | $-2.2%$ | 2,943 | 3,202 | $-8.1%$ |
| Copper Broadband | 273 | 389 | 306 | $-29.8%$ | $-10.8%$ | 273 | 389 | $-29.8%$ |
Net revenues from continued operations in the B2B segment totaled R\$ 882 million in 2Q21 (-10.6% y.o.y. and in line with the previous quarter).
The Company closed 2Q21 with 3,503 thousand RGUs in the segment (-5.3% y.o.y. and -1.2% q.o.q.).
3Q14 Earnings Release With the launch of the new brand Oi Soluções, Oi positioned itself as an integrator and a provider of digital solutions for Telecommunications and IT (Information Technology) with customized and consulting services, offering a comprehensive portfolio of ICT (Information and Communication Technology) solutions.
Corporate segment revenues have been greatly impacted by the worsening economic scenario in the country, as a result of the restrictions imposed by the COVID-19 pandemic. In 2Q21, this revenue remained in line with the previous quarter and continues to suffer from the negative impacts caused by the second wave of COVID-19. Once again, Data and Copper legacy revenues were impacted, in particular, by renegotiations of contracts for some companies and governments who requested price reductions. IT revenues, which are the Company's focus for the segment's turnaround, showed sequential growth, but still timid, as the players in this market are waiting for more solid signs of economic recovery to return to investing in their telecom projects.
In 2Q21, net revenues from continued operations in the Oi Soluções (Corporate) segment totaled R\$ 583 million (-14.2%% y.o.y. and in line with the previous quarter). IT revenues from continued operations totaled R\$ 95 million in 2Q21 (-18.2% y.o.y. and +7.1% q.o.q.). Data revenues totaled R\$ 283 million in the quarter (-16.2% y.o.y. and -2.0% q.o.q.). Legacy copper revenues (R\$ 205 million) maintained the downward trend, falling 9.0% from 2Q20 and 2.5% quarter-on-quarter.
Net revenues from continued operations in the Small Enterprises segment totaled R\$ 210 million in 2Q21, in line with 2Q20 and up 2.6% over 1Q21.
For the Small Enterprises segment, the Company's strategy is to maintain its focus on extending penetration of fiber services as a network solution for small businesses. Oi continues to market regional offerings and intensify its sales initiatives together with FTTH.
According to the Strategic Plan for the next three years, the Company will focus on more simplified and attractive offers and services with higher speeds, therefore leveraging ARPU. Oi expects this business model will undergo major transformation due to greater digitalization and analytics. In addition, it will build an partnership ecosystem to offer services dedicated to the retail and small enterprises segments, such as digital marketing, online sales, security, vertical solutions, Oi Expert, and many other products.
The Wholesale segment is already in the transition phase of the structural separation process. As result, part of its revenue that will be integrate in InfraCo in the future has been allocated to the discontinued operations results. Net revenues from continued operations in the Wholesale segment, which refers to revenues from copper infrastructure that will remain at Nova Oi, totaled R\$ 89 million in 2Q21 (-9.4% y.o.y. and +1.4% q.o.q.). The year-on-year decline is related to the migration of customers to speeds faster than those regulated by ANATEL.
Since the last quarter of 2020, the Company started to disclose the UPIs provided in the Amendment to the JRP as discontinued operations, as they represent assets available for sale. Accordingly, in the previous sections,
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3Q14 Earnings Release in terms of revenue, we sought to provide more details about the continued portion of the revenue that continues in the Company (Nova Oi). However, in order to facilitate the analysis of the market, in this section we are providing as supplementary information an overview of the Personal Mobility segment, which has now been included in the total revenue from discontinued operations.
The Company accumulated R\$ 1,509 million in net revenue from the Personal Mobility segment in 2Q21, down 3.7% over 2Q20. In the sequential comparison, net revenues from this segment fell 2.0%. This decline occurred mainly in prepaid, which is still being impacted by the COVID-19 pandemic, even with the resumption of government financial assistance, as current amounts being transferred are lower than the previous year.
In postpaid, the Company increased its customer base to 12,902 thousand, an annual growth of 32.7% and a sequential growth of 8.3%. Postpaid revenue have been showing a positive trend, with a 1.5% increase in relation to 2Q20 and in line with the previous quarter.
Customer revenues (which exclude interconnection and handsets) from the Personal Mobility segment totaled R\$ 1,490 million in 2Q21 (-3.8% y.o.y. and -2.0% q.o.q.).
In 2Q21, revenue from network usage totaled R\$ 57 million, closing the quarter with a decline of 2.4% over 2Q20 and down 5.2% in relation to 1Q21.
The Company closed 2Q21 with 37,324 thousand RGUs in Personal Mobility, up 9.8% year-on-year, or 3,336 thousand net additions, of which 3,183 thousand were addition in the postpaid segment and 153 thousand were additions in the prepaid segment. In the sequential comparison, the number of additions increased 5.4%, with a 3.9% growth in prepaid and an 8.3% growth in postpaid.
Oi's mobile customer base (Personal Mobility + B2B) totaled 40,333 thousand RGUs, of which 3,010 thousand were in the B2B segment.
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| Routine Operating Costs and Expenses | ||||||||
| Brazil | 3.063 | 3.025 | 3.266 | 1.2% | $-6.2%$ | 6.329 | 6.244 | 1.4% |
| Personnel | 530 | 535 | 580 | $-0.9%$ | $-8.7%$ | 1,110 | 1,132 | $-1.9%$ |
| Interconnection | 97 | 119 | 96 | $-18.5%$ | 1.0% | 193 | 230 | $-16.0%$ |
| Third-Party Services | 1,299 | 1,318 | 1,326 | $-1.5%$ | $-2.1%$ | 2.625 | 2.732 | $-3.9%$ |
| Network Maintenance Service | 200 | 218 | 206 | $-8.2%$ | $-2.7%$ | 406 | 453 | $-10.3%$ |
| Handset Costs/Other [COGS] | 16 | 12 | 17 | 27.5% | $-3.8%$ | 32 | 33 | $-1.7%$ |
| Marketing | 137 | 66 | 102 | 106.6% | 35.2% | 239 | 137 | 74.7% |
| Rent and Insurance | 662 | 572 | 647 | 15.8% | 2.3% | 1,310 | 1.153 | 13.6% |
| Provision for Contingencies | 31 | 42 | 48 | $-25.8%$ | $-35.3%$ | 79 | 67 | 18.6% |
| Provision for Bad Debt | 58 | 127 | 70 | $-54.3%$ | $-17.5%$ | 128 | 266 | $-51.6%$ |
| Taxes and Other Expenses (Revenues) | 32 | 15 | 174 | 109.2% | $-81.7%$ | 206 | 43 | 384.7% |
| International Operations | 42 | 160 | 48 | $-73.8%$ | $-12.4%$ | 90 | 157 | $-43.0%$ |
| Routine OPEX | 3.104 | 3,185 | 3.314 | $-2.5%$ | $-6.3%$ | 6,419 | 6,401 | 0.3% |
Consolidated operating costs and expenses, including international operations, totaled R\$ 3,104 million in 2Q21 (-2.5% y.o.y. and -6.3% q.o.q.).
3Q14 Earnings Release Routine opex from Brazilian operations amounted to R\$ 3,063 million in 2Q21 (-6.2% q.o.q and +1.2% y.o.y.).
As part of its transformation strategic plan, Oi continues to work on fronts related to cost reductions, simplification of operations, efficiency and digital transformation, preparing the Company to be lighter, more agile and focused on the customer's experience after this operational transition phase.
All of these initiatives were reflected in cost efficiency in the main lines that impact the Company's operation, such as Third Party Services and Network Maintenance Services, for example. On the other hand, this reduction was offset by cost increases related to efforts to commercial expansion (in the Marketing and Handset Costs/Others lines), especially in Fiber and Postpaid, in addition to seasonal inflation and FX variations on rental contracts, particularly in infrastructure for Rent and Insurance.
Personnel expenses totaled R\$ 530 million in 2Q21 (-0.9% y.o.y. and -8.7% q.o.q.). The main reason for the improvement over the previous quarter was the lower provisions for payment of variable compensation linked to the achievement of operational, financial and quality goals for 2021.
Interconnection costs in Brazilian operations amounted to R\$ 97 million in 2Q21 (-18.5% y.o.y. and in line with the previous quarter). In the annual comparison, there was a reduction in costs with international roaming, in addition to a drop in traffic for fixed and mobile networks.
Costs and expenses related to third-party services in Brazilian operations totaled R\$ 1,299 million in 2Q21 (-1.5% y.o.y. and -2.1% q.o.q.). The Company remains focused on cost reduction initiatives through automation and digitalization, with a direct impact on the Customer Relations and Billing lines, as well as energy efficiency initiatives through the renewable energy matrix. In addition, contract renegotiations also contributed to reducing these costs and expenses, both in the annual and sequential comparisons.
Network maintenance service costs and expenses totaled R\$ 200 million in 2Q21 (-8.2% y.o.y. and -2.7% q.o.q.). This reduction in network maintenance service costs and expenses was the result of three factors: (i) the continuous efforts to increase efficiency in field operations and digitize processes and customer service. The growing use of the virtual technical application for troubleshooting is a great example of cost reduction in this line; (ii) the growth and expansion of Fiber, replacing legacy networks, which are older and deteriorated and require more repair; and (iii) contractual renegotiations with some suppliers, which were also importante to reduce plant maintenance costs.
Handset costs in Brazilian operations totaled R\$ 16 million in 2Q21, increasing 27.5% year-on-year and down 3.8% over 1Q21. The increase in the year-on-year comparison was mainly due to the lower volume of handset
10
3Q14 Earnings Release sales in 2Q20, when restrictions imposed by the first wave of the COVID-19 pandemic closed the main sales channels last year.
Marketing expenses totaled R\$ 137 million in 2Q21, increasing 106.6% over the same period in the previous year, since 2Q20 was the quarter most affected by the Covid restrictions and caused the postponement or suspension of advertising campaigns. In the sequential comparison, there was a 35.2% increase in these expenses, mainly impacted by Mother's Day campaigns in mobile segment and Fiber campaigns during 2Q21.
Rent and insurance expenses in Brazilian operations stood at R\$ 662 million in 2Q21 (+15.8% y.o.y. and +2.3% q.o.q.). This upturn was mainly due to contractual adjustments by the IGP-M index in tower and equipment rental fees, as well as new expenses with tower rentals and data centers after the sale of these two UPIs. In addition to the aforementioned reasons, the annual increase was also due to the rental capacity of EILD and FX variation on Globenet expenses, which also had a negative impact on rent expenses during this quarter.
The provision for contingencies in Brazilian operations came to R\$ 31 million in 2Q21 (-25.8% y.o.y. and -35.3% q.o.q.). The drop was mainly due to higher provision reversals, mainly tax lawsuit, and a downturn in the number of new lawsuits, especially in tax and strategic civil spheres.
The provision for bad debt totaled R\$ 58 million in 2Q21 (-54.3% y.o.y. and 17.5% q.o.q.). The year-on-year and quarter-on-quarter drops were concentrated in the retail segment, due to an improvement in collection efforts and a constant decline in delinquency across all products, thanks to continuous improvements in sales and credit analysis processes.
Taxes and other expenses totaled R\$ 32 million in 2Q21 (+109.2% y.o.y. and -81.7% q.o.q.). A portion of the annual variation was a result of the increase in provisions for Fistel activation fees arising from the expansion of the mobile customer base.
| 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY | |
|---|---|---|---|---|---|---|---|---|
| 01 S.A. | ||||||||
| Routine EBITDA [R\$ million] | 1.284 | 1.359 | 1.139 | $-5.5%$ | 12.7% | 2.423 | 2.891 | $-16.2%$ |
| Brazil | 1.271 | 1,464 | 1.128 | $-13.2%$ | 12.6% | 2.399 | 2.946 | $-18.6%$ |
| International Operations | 13 | $-106$ | 11 | 112.6% | $-21.6%$ | 24 | $-54$ | 144.8% |
| Routine EBITDA Margin [%] | 29.3% | 29.9% | 25.6% | $-0.6 p.p.$ | 3.7 p.p. | 27.4% | 31.1% | $-3.7 p.p.$ |
| Brazil | 29.3% | 32.6% | 25.7% | $-3.3 p.p.$ | 3.7 p.p. | 27.5% | 32.1% | $-4.6 p.p.$ |
| International Operations | 24.2% | $-195.6%$ | 18.7% | 219.7 p.p. | 5.5 p.p. | 21.3% | $-52.7%$ | 74.0 p.p. |
| Non-routine Items [R\$ million] | $-13$ | 0 | 1.229 | n.m. | n.m. | 1,216 | 367 | n.m. |
| EBITDA [R\$ million] | 1,271 | 1,359 | 2.368 | $-6.5%$ | $-46.3%$ | 3,639 | 3.258 | 11.7% |
| Brazil | 1.258 | 1.464 | 2.357 | $-14.1%$ | $-46.7%$ | 3.615 | 3.031 | 19.3% |
| International Operations | 13 | $-106$ | 11 | $-112.6%$ | 21.6% | 24 | 227 | $-89.3%$ |
| EBITDA Margin [%] | 29.0% | 29.9% | 53.2% | $-0.9 p.p.$ | $-24.2 p.p.$ | 41.2% | 35.1% | 6.1 p.p. |
Consolidated routine EBITDA totaled R\$ 1,284 million in 2Q21 (-5.5% y.o.y. and +12.7% q.o.q.). This decline in the annual comparison is mainly explained by the reduction in revenue, especially in the prepaid mobile segment, which is part of the revenues from discontinued operations, and in the Corporate segment.
Routine EBITDA from Brazilian operations amounted to R\$ 1,271 million in 2Q21 (-13.2% y.o.y. and +12.6% q.o.q.). The routine EBITDA margin from Brazilian operations was 29.3%, dropping 3.3 p.p. from 2Q20 and increasing 3.7 p.p. over 1Q21.
Routine EBITDA from international operations (Africa and East Timor) came to R\$ 13 million in the quarter, versus a negative R\$ 106 million in 2Q20 and R\$ 11 million in 1Q21.
Non-routine items in 2Q21 refer mainly to gains from the sale of assets.
| Table 7 – Capex | ||||
|---|---|---|---|---|
(1) Includes Fiber + Wholesale.
The Company's consolidated capex, including international operations, totaled R\$ 1,896 million in 2Q21 (+7.5% y.o.y. and +1.8% q.o.q.). Capex in Brazilian operations amounted to R\$ 1,883 million in 2Q21 (+7.6% y.o.y. and +1.3% q.o.q.).
3Q14 Earnings Release Oi's remains focused on its transformation plan in order to continue the expansion of the FTTH network in the country, bringing high-speed broadband to the customers' homes. Investments in Fiber totaled R\$ 1,318 million (+17.5% y.o.y. and in line with the previous quarter). It should be noted that the focus on Fiber investments in the last quarters has already shown results above expectations, being directly responsible for the accelerated operational turnaround process that we are seeing in the residential segment.
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| 01 S.A. | ||||||||
| Routine EBITDA | 1.284 | .359 | 1,139 | $-5.5%$ | 12.7% | 2.423 | 2.891 | $-16.2%$ |
| Capex | .896 | .764 | 1,863 | 7.5% | 1.8% | 3.759 | 3,558 | 5.7% |
| Routine Operational Cash Flow (EBITDA - Capex] |
$-612$ | $-405$ | $-724$ | 51.0% | $-15.5%$ | $-1.336$ | $-666$ | 100.5% |
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| 0i S.A. | ||||||||
| Routine EBITDA | 1.271 | .464 | 1.128 | $-13.2%$ | 12.6% | 2.399 | 2.946 | $-18.6%$ |
| Capex | 1.883 | 1.751 | 1.859 | 7.6% | 1.3% | 3.742 | 3.531 | 6.0% |
| Routine Operational Cash Flow [EBITDA - Capex) |
$-613$ | $-286$ | $-731$ | 114.1% | $-16.2%$ | $-1.343$ | $-586$ | 129.4% |
Consolidated routine operational cash flow (routine EBITDA minus capex) was negative R\$ 612 million in 2Q21, while routine operational cash flow from Brazilian operations was negative R\$ 613 million. This result is on schedule and reflects the continuity of the FTTH expansion project, which requires heavy investments to ensure the implementation of the Company's transformation plan.
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| Depreciation and Amortization | ||||||||
| Total | 1.015 | 1.725 | 1.172 | $-41.1%$ | $-13.4%$ | 2.187 | 3.436 | $-36.3M$ |
Depreciation and amortization expenses totaled R\$ 1,015 million in 2Q21 (-41.1% y.o.y. and -13.4% q.o.q.). The decline in the annual comparison was basically due to the cessation of depreciation and amortization of assets classified as held for sale in December 2020, as required by IFRS standards.
3Q14 Earnings Release Table 11 – Financial Result (Oi S.A. Consolidated)
| R\$ million | 2021 | 2020 | 1021 | 2021 | 2020 |
|---|---|---|---|---|---|
| Oi S.A. Consolidated | |||||
| Net Interest (on fin. investments and loans and financing) | $-545$ | $-534$ | $-564$ | $-1.110$ | $-1.026$ |
| Amortization of fair value adjustment | 58 | $-364$ | $-476$ | $-418$ | $-942$ |
| Net FX Result (on fin. investments and loans and financing) | 1.924 | $-669$ | $-1.375$ | 549 | $-3.326$ |
| Other Financial Income / Expenses | $-237$ | $-1.559$ | $-1.530$ | $-1.767$ | $-4.308$ |
| Net Financial Income (Expenses) | 1.199 | $-3.127$ | $-3.945$ | $-2.746$ | $-9.603$ |
Oi S.A. recorded consolidated net financial income of R\$ 1,199 million in 2Q21, a reversal of the net financial expenses of R\$ 3,945 million in 1Q21 and R\$ 3,127 million in 2Q20. The reversal in the sequential and annual comparison was mainly due to the recognition of income totaling R\$ 1,924 million in "Net FX Result", due to the 12.2% appreciation of the Real against the U.S. Dollar in the quarter, versus a 9.6% and 8.7% depreciation in 1Q21 and 2Q20, respectively. Added to this positive result was the "Amortization of Fair Value Adjustment" item was also impacted by the appreciation of the real against the U.S. dollar in 2Q21. Despite the positive impact from lower accrued interest on loans linked to foreign currency, as a result of the appreciation of the real, "Net Interest" was negatively impacted by the increase in the CDI rate in the period, in addition to interest rates indexed to the IPCA for the Private Debenture disbursement made by InfraCo in the quarter. Finally, the item "Other Financial Income / Expenses" presented financial expenses in the quarter, mainly due to the accounting of fees due in the scope of updating the necessary documents from the approval of the amendment to the PRJ, partially offset by the effect of exchange appreciation on onerous liabilities in the period.
| R\$ million | 2021 | 2020 | 1021 | YoY | QoQ | 2021 | 2020 | YoY |
|---|---|---|---|---|---|---|---|---|
| Net Earnings [Loss] | ||||||||
| Earnings before interest and taxes (EBIT) | 256 | $-366$ | 1.196 | n.m. | n.m. | 1.452 | $-178$ | $-915.4%$ |
| Financial Results | 1.199 | $-3.127$ | $-3.945$ | n.m. | $-130.4%$ | $-2.746$ | $-9,603$ | n.m. |
| Income Tax and Social Contribution | $-315$ | $-1$ | $-293$ | n.m. | n.m. | $-608$ | 33 | n.m. |
| Consolidated Net Income [Loss] | 1.139 | $-3.493$ | $-3.042$ | $-132.6%$ | $-137.5%$ | $-1.902$ | $-9.747$ | n.m. |
| attributable to owners of the Company | 1.139 | $-3.409$ | $-3.038$ | $-133.4%$ | $-137.5%$ | $-1.899$ | $-9.689$ | n.m. |
| attributable to non-controlling interests | 0 | $-84$ | -4 | n.m. | $-106.3%$ | -4 | $-58$ | n.m. |
Table 12 – Net Earnings (Loss) (Oi S.A. Consolidated)
The Company's operating earnings (loss) before the financial result and taxes (EBIT) came to earnings of R\$ 256 million in 2Q21, versus a loss of R\$ 366 million in 2Q20 and earnings of R\$ 1.196 million in 1Q21. The Company recorded net financial earnings of R\$ 1,199 million and a negative expense of R\$ 315 million in the Income Tax and Social Contribution line, resulting in consolidated net earnings of R\$ 1,139 million in the period.
| R\$ Million | Jun/21 | Jun/20 | Mar/21 | % Gross Debt |
|---|---|---|---|---|
| Debt | ||||
| Short Term | 6,401 | 454 | 4,180 | 22.0% |
| Long Term | 22,715 | 25,661 | 24,020 | 78.0% |
| Total Debt | 29.116 | 26,115 | 28,199 | 100.0% |
| Local Currency Exposure | 12,418 | 9.108 | 9.673 | 42.7% |
| Foreign Currency Exposure | 16,669 | 17.007 | 18,534 | 57.3% |
| Swaps | 29 | 0 | -7 | 0.1% |
| [-] Cash | $-3.421$ | $-6.073$ | $-3.027$ | $-11.7%$ |
| $\left[-\right]$ Net Debt | 25,695 | 20,043 | 25,172 | 88.3% |
Oi S.A. closed 2Q21 with consolidated gross debt of R\$ 29,116 million, up 3.3%, or R\$ 917 million, over 1Q21 and 11.5% higher, or R\$ 3,001 million, year-on-year. The quarter-on-quarter and year-on-year increases were mainly due to the issue of private debentures by InfraCo, in the amount of R\$ 2.5 billion, which must be prepaid in the event of a cash-in from resources arising from the sale of this company's controlling stake. There were also the usual effects of interest accrual and amortization of the present value adjustment, which have contributed to increasing debt with every passing quarter. It is worth noting that in both periods, the real appreciated against the U.S. dollar, by 12.2% and 8.7%, respectively, partially offsetting the new disbursement and interest accrual in the quarter and in the year. At the end of June, debt in foreign currency accounted for 59.7% of fair value debt. The consolidated average debt duration remained at approximately 9 years in the quarter.
The consolidated cash position was R\$ 3,421 million in 2Q21, increasing 13% quarter-on-quarter and declining 43.7% year-on-year. As a result, net debt totaled R\$ 25,695 million in 2Q21, 2.1% higher than in 1Q21 and 28.2% higher than in 2Q20. The increase in net debt, quarter-on-quarter and year-on-year, was mainly due to the continued high Capex in the period. The annual increase was also due to payment of non-recurring obligations in the period, such as the obligations foreseen in the Judicial Reorganization Plan with suppliers and interest on the 2025 Bond.
| 3Q14 Earnings Release | ||
|---|---|---|
Table 15 – Cash Position (Brazilian Operations)
| 1021 Cash Position | 3,027 |
|---|---|
| Routine EBITDA | 1.271 |
| IFRS16 | -486 |
| Capex | $-1.883$ |
| Working capital | $-314$ |
| Onerous liability | $-326$ |
| Judicial Deposits + Taxes | 46 |
| InfraCo Debenture | 2.500 |
| Financial operations | $-705$ |
| Non Core | 291 |
| 2021 Cash Position | 3.421 |
| R\$ million | 2021 | 2020 | 1021 | 2021 | 2020 |
|---|---|---|---|---|---|
| Net Operating Revenues | 4.389 | 4.544 | 4.453 | 8.842 | 9.292 |
| Operating Costs and Expenses | $-3.118$ | $-3.185$ | $-2,085$ | $-5,203$ | $-6,034$ |
| Personnel | $-544$ | $-547$ | $-592$ | $-1,136$ | $-1,156$ |
| Interconnection | $-98$ | $-120$ | $-97$ | $-195$ | $-232$ |
| Third-Party Services | $-1.314$ | $-1.334$ | $-1.341$ | $-2.654$ | $-2.763$ |
| Network Maintenance Service | $-201$ | $-219$ | $-206$ | $-407$ | $-453$ |
| Handset Costs/Other [COGS] | $-19$ | $-17$ | $-19$ | $-38$ | $-40$ |
| Marketing | $-138$ | $-67$ | $-102$ | $-240$ | $-138$ |
| Rent and Insurance | $-668$ | $-577$ | $-651$ | $-1,320$ | $-1,161$ |
| Provision for Contingencies | $-31$ | $-41$ | $-48$ | $-79$ | $-63$ |
| Provision for Bad Debt | $-58$ | $-127$ | $-71$ | $-129$ | $-266$ |
| Taxes and Other Revenues [Expenses] | $-47$ | $-135$ | 1.042 | 995 | 239 |
| EBITDA | 1.271 | 1.359 | 2.368 | 3.639 | 3.258 |
| Margin % | 29.0% | 29.9% | 53.2% | 41.2% | 35.1% |
| Depreciation and Amortization | $-1.015$ | $-1.725$ | $-1.172$ | $-2.187$ | $-3.436$ |
| EBIT | 256 | $-366$ | 1.196 | 1.452 | $-178$ |
| Financial Expenses | 1.159 | $-3,237$ | $-4,130$ | $-2,971$ | $-10,303$ |
| Financial Income | 40 | 110 | 185 | 225 | 700 |
| Net Earnings [Loss] Before Tax and Social Contribution | 1.454 | $-3.493$ | $-2.748$ | $-1.294$ | $-9.781$ |
| Income Tax and Social Contribution | $-315$ | -1 | $-293$ | $-608$ | 33 |
| Consolidated Net Earnings [Loss] | 1.139 | $-3.493$ | $-3.042$ | $-1.902$ | $-9.747$ |
| Margin % | 26.0% | $-76.9%$ | $-78.8%$ | $-21.5%$ | $-104.9%$ |
| Profit [Loss] attributed to the controlling shareholders | 1,139 | $-3,409$ | $-3,038$ | $-1,899$ | $-9,689$ |
| Profit [Loss] attributed to the non-controlling shareholders | $\mathbf{0}$ | $-84$ | $-4$ | $-4$ | $-58$ |
| 3Q14 Earnings Release | ||
|---|---|---|
| TOTAL LIABILITIES | 74,894 | 72.952 | 73.152 |
|---|---|---|---|
| Current | 18,876 | 16.674 | 11,915 |
| Suppliers | 5.111 | 4.895 | 4.340 |
| Leases | 1.941 | 1.716 | 1.632 |
| Loans and Financing | 6.372 | 4.187 | 454 |
| Credit Assignment - Sistel | 197 | 197 | 0 |
| Financial Instruments | 37 | $\overline{7}$ | 0 |
| Payroll and Related Accruals | 709 | 939 | 810 |
| Provisions | 546 | 823 | 693 |
| Payable Taxes | 11 | 55 | 39 |
| Other Taxes | 1.829 | 1.815 | 1.766 |
| Dividends Payable | 20 | 21 | 6 |
| Liabilities associated to held-for-sale assets | 30 | 35 | 171 |
| Authorizations and Concessions Payable | 54 | 102 | 67 |
| Other Accounts Payable | 2.020 | 1.883 | 1.936 |
| Non-Current Liabilities | 50,142 | 51,535 | 53.074 |
| Suppliers | 3.453 | 3.769 | 3.780 |
| Leases | 8.081 | 6,940 | 7.110 |
| Loans and Financing | 22,715 | 24.020 | 25,661 |
| Credit Assignment - Sistel | 82 | 131 | 0 |
| Payable and Deferred Taxes | 588 | 288 | 0 |
| Other Taxes | 1,318 | 1.320 | 1.247 |
| Contingency Provisions | 4.904 | 5,021 | 4.713 |
| Pension Fund Provision | 752 | 728 | 658 |
| Other Accounts Payable | 8,248 | 9.317 | 9,904 |
| Shareholders' Equity | 5.876 | 4.743 | 8.164 |
3Q14 Earnings Release For accounting purposes, the UPIs set forth in the Amendment to the Judicial Reorganization Plan (Mobile Asset UPI, InfraCo UPI, TVCo UPI and Data Center UPI) were classified as discontinued operations, as they represent assets available for sale. Accordingly, following accounting rules, the Financial Statements presented in the Quarterly Information (ITR) refer only to the Company's continued operations.
To facilitate the analysis of the evolution of the Company's results, in line with the information usually disclosed in previous years, the table below presents a restatement of the consolidated information, which comprises the sum of the results from continued and discontinued operations. For comparison purposes, this Press Release uses the consolidated information in its analysis. For more information, please refer to note 30 of the Quarterly Information (ITR).
It is worth noting that the result of continued operations considers the businesses that will be sold not to be part of the result of the operations on the reporting dates, as it segregates the result of the UPIs that will be sold, and should not be used as an approximation of the Company's results after the completion of the sale of the UPIs, since this statement is an accounting document and does not consider all the changes that will happen in the Company's operation and business during its ongoing transformation process.
| R\$ million | 2021 | ||||
|---|---|---|---|---|---|
| Consolidated | Discontinued Operations |
Continued Operations |
|||
| Net Operating Revenues | 4.389 | 2.154 | 2.235 | ||
| Operating Costs and Expenses | $-3.118$ | $-1.425$ | $-1.693$ | ||
| Personnel | $-544$ | $-141$ | $-403$ | ||
| Interconnection | $-98$ | $-58$ | $-40$ | ||
| Third-Party Services | $-1.314$ | $-624$ | $-690$ | ||
| Network Maintenance Service | $-201$ | $-95$ | $-106$ | ||
| Handset Costs/Other [COGS] | $-19$ | $-18$ | 0 | ||
| Marketing | $-138$ | $-12$ | $-126$ | ||
| Rent and Insurance | $-668$ | $-340$ | $-328$ | ||
| Provision for Contingencies | $-31$ | 0 | $-31$ | ||
| Provision for Bad Debt | $-58$ | $-37$ | $-21$ | ||
| Taxes and Other Revenues [Expenses] | $-47$ | $-99$ | 52 | ||
| EBITDA | 1.271 | 729 | 542 | ||
| Margin % | 29.0% | 33.8% | 24.3% | ||
| Depreciation and Amortization | $-1.015$ | $-296$ | $-720$ | ||
| EBIT | 256 | 433 | $-177$ | ||
| Financial Income | 40 | 9 | 31 | ||
| Financial Expenses | 1.159 | $-157$ | 1.316 | ||
| Net Earnings [Loss] Before Tax and Social Contribution | 1.454 | 285 | 1.169 | ||
| Income Tax and Social Contribution | $-315$ | $-314$ | $-1$ | ||
| Consolidated Net Earnings [Loss] | 1.139 | $-29$ | 1.168 |
3Q14 Earnings Release CVM INSTRUCTION 358, ART. 12: Direct or indirect controlling shareholders and shareholders who elect members of the Board of Directors or the Fiscal Council, and any other individual or legal entity, or group of persons, acting as a group or representing the same interests, that attains a direct or indirect interest representing five percent (5%) or more of a type or class of shares of the capital of a publicly held company, must notify the Securities and Exchange Commission (CVM) and the Company of the fact, in accordance with the above article.
Oi recommends that its shareholders comply with the terms of article 12 of CVM Instruction 358, but it takes no responsibility for the disclosure or otherwise of acquisitions or disposals by third parties of interests corresponding to 5% or more of any type or class of its shares, or of rights over those shares or other securities that it has issued.
| Capital | Treasury | Free-Float 1 | |
|---|---|---|---|
| Common | 6.440.496.850 | 644,020,099 | 5.795.724.240 |
| Preferred | 157.727.241 | 1.811.755 | 155,915,485 |
| Total | 6,598,224,091 | 645.831.854 | 5,951,639,725 |
Shareholding position as of 6/30/2021.
(1) The outstanding shares do not consider treasury shares of the shares held by the Board of Directors and by the Executive Board.
The main tables in this Earnings Release will be available in Excel format in the "Financial Information/Quarterly Reports" section of the Company's website (https://ri.oi.com.br/en/).
Definitions of the terms used in the Earnings Release are available in the Glossary section of the Company's website: https://ri.oi.com.br/en/glossary/
Rio de Janeiro, August 11, 2021. This report includes consolidated financial and operating information for Oi S.A. - Under Judicial Reorganization ("Oi S.A." or "Oi" or "Company") and its direct and indirect subsidiaries as of March 31, 2020. In compliance with CVM instructions, the information is presented in accordance with International Financial Reporting Standards (IFRS). Due to the seasonality of the telecom sector in its quarterly results, the Company will focus on comparing its financial results with the same period of the previous year.
This report contains projections and/or estimates of future events. The projections contained herein were compiled with due care, taking into account the current situation, based on work in progress and the corresponding estimates. The use of terms such as "projects", "estimates", "anticipates", "expects", "plans", "hopes" and so on is intended to indicate possible trends and forward-looking statements, which, clearly, involve uncertainty and risk, so that future results may differ from current expectations. These statements are based on various assumptions and factors, including general economic, market, industry conditions, and operational factors. Any changes to these assumptions or factors may lead to practical results that differ from current expectations. Excessive reliance should not be placed on these statements.
Forward-looking statements relate only to the date on which they are made, and the Company is not obliged to update them as new information or future developments arise. Oi takes no responsibility for transactions carried out or investment decisions taken on the basis of these projections or estimates. The financial information contained herein is unaudited and may therefore differ from the final results.
Marcelo Ferreira +55 (21) 3131-1314 [email protected] Bruno Nader +55 (21) 3131-1629 [email protected]
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