Oi SA, Brazil’s fourth largest wireless carrier, which is currently in bankruptcy protection, today announced its Q1 2021 earnings and gave updates on the sale of 58% of its fiber optic infrastructure assets (UPI InfraCo or SPC InfraCo), to GlobeNet and BTG, which was announced in April 2021.

UPI InfraCo – Sale Process

Oi SA has initiated, but not concluded, the process to sell UPI InfraCo. Indeed, the company currently has received a binding proposal from BTG, pegging UPI InfraCo at an enterprise value of R$20.0bn ($3.5bn U.S. dollars). In turn, Oi SA has awarded BTG a “Right to Top” any subsequent offers for UPI InfraCo, making BTG the stalking-horse bidder.

However, Oi SA is following the judicial process through which it intends to run a competitive sale process for UPI InfraCo, kicking-off at the beginning of Q3 2021. The company notes that closing of the UPI InfraCo sale is anticipated in either Q4 2021 or Q1 2022.

Digital infrastructure investors, that have recently been active in Brazil, who could participate in the competitive sale process for UPI InfraCo include Colony Capital (through Digital Colony), Brookfield Infrastructure Partners, IHS, CDPQ, KKR, Macquarie, and Asterion Industrial Partners, among others.

Oi SA – Fiber Infrastructure – Overview

Oi SA owns the largest fiber optic network in Brazil, with more than 250k miles (400k kilometers) of fiber optic cable throughout the country.

Fiber-to-the-Home (FTTH) Network

As of Q1 2021, Oi SA’s fiber network passed 10.5 million homes with fiber-to-the-home (FTTH) technology. Additionally, the company had 2.5 million fiber broadband customers. Therefore, the company’s fiber penetration rate equates to 23.5%.

Oi Fiber-to-the-Home FTTH Q1 2021

During Q1 2021, Oi SA passed 1.4 million homes with fiber and added 367k fiber broadband customers. Notably, Oi SA’s fiber build pacing translates into nearly 500k homes passed per month.

Additionally, the company now offers fiber-to-the-home (FTTH) in over 142 cities throughout Brazil. One of these cities is São Paulo, which Oi SA entered in Q1 2021. In the São Paulo market, the company intends to pass 400k homes in 2021 and 2.0 million homes in 2022.

Fiber Build and Customer Targets

By Q4 2021, Oi SA projects that its fiber network will pass 14.5 to 15.0 million homes. Additionally, by Q4 2021, the company projects it will have 3.5 to 4.0 million fiber broadband customers. Therefore, the company’s fiber penetration rate will increase to 25.4%, at the mid-point.

Transport Network

Oi SA operates a nationwide long-haul backbone, through its optical fiber transport network. Specifically, this long-haul network covers more than 2,370 municipalities, connecting the Federal District and all state capitals in Brazil.

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables.

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