Brazil's Oi profit jumps in fourth quarter on asset sale

SAO PAULO Wed Feb 19, 2014 6:00am EST

SAO PAULO Feb 19 (Reuters) - Profit at Brazilian telecom Grupo Oi SA nearly trebled in the fourth quarter as the sale of underwater fiber optic cable units offset the cost of a cumbersome debt load.

Oi posted a 191 percent rise in quarterly net profit from a year earlier, to 1.183 billion reais ($493.7 million), the company said on Wednesday.

The firm agreed in July to sell its underwater fiber optic cable units to a fund led by investment banking firm Grupo BTG Pactual SA for 1.75 billion reais.

Oi is facing stiff headwinds from a fragile Brazilian economy and rising competition in a crowded wireless market.

The difficulty of keeping up investments, paying dividends and servicing hefty debt costs has bolstered the case for an injection of fresh capital as part of Oi's planned merger with key shareholder Portugal Telecom.

Revenue dropped 2.4 in the October-December quarter compared with a year earlier, with mobile services slipping 3.0 percent and fixed-line revenue rising only 0.7 percent.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 39 percent from the year before to 3.496 billion reais.

Several banks' equity research desks had declined to give earnings estimates for Grupo Oi. Some cited rules barring such forecasts while engaged in an investment banking transaction with the company.

Oi confirmed this month that a group of banks had agreed to contribute 6 billion reais to its upcoming capital increase. (Reporting by Brad Haynes and Silvio Cascione; Editing by Pravin Char)

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