Brazil's Oi cuts dividend, scraps forecasts after surprise loss
SAO PAULO Aug 14 (Reuters) - Brazilian telecom Grupo Oi SA posted an unexpected quarterly loss on Wednesday due to weak sales growth, expanding payrolls and mounting debts.
The second-quarter net loss of 124 million reais ($54 million) compared to a profit of 347 million reais a year earlier, and fell far short of the profit of 316 million reais forecast in a Reuters poll of analysts.
Oi cut its dividend and scrapped its performance forecasts for the next three years, citing the need for financial flexibility in the face of volatile market conditions.
Last year, the company had laid out a generous dividend policy and aggressive targets for its turnaround under former Chief Executive Francisco Valim - aims that analysts described as irreconcilable amid a rising debt load and weak cash flow.
Rising interest rates and a weaker local currency drove up debt-servicing costs in the second quarter, leading to a net financial loss of 871 million reais.
Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, also fell 16 percent from a year earlier to 1.797 billion reais, missing an average forecast of 2.223 billion reais.
A spike in salaries and increased provisions for delinquent subscriber accounts drove up operating costs 10 percent, while a stagnant mobile unit led to revenue growth of just 2 percent.
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