Oi S.A.

The stable outlook reflects our assumption that Oi will be able to refinance the debenture due January 2022. The outlook also incorporates our expectation that the company will complete its amended JRP, including the asset sales, by early 2022 and will prepay debt in the next four years. We could lower the ratings in the next 12 months if liquidity worsens, which could happen if Oi fails to finish its asset sale plan, or to refinance its debentures due January 2022. We could raise the ratings if the company reports stronger-than-expected cash flows that could bolster credit metrics such as debt to EBITDA dropping towards 6x and free operating cash flow (FOCF) to debt to 5%. Brazil's GDP growth of

...Ongoing focus on fiber expansion. Oi S.A. continues accelerating its fiber expansion, reaching 10.5 million homes passed (HP) in the first quarter of 2021 (up 87% over the first quarter of 2020) and 2.5 million homes connected (HC; up 162% over the first quarter of 2020). Additionally, the company entered the Spo Paulo market, the largest in Brazil, expecting to reach 400,000 HP in 2021 and 2 million HP in 2022. Given that the revenue from the fiber expansion offset the secular declining copper network, it was the first time in several years that Oi reported year-over-year stabilization of its residential revenues. Assets sales plan in works. The judicial reorganization plan's (JRP's) amended terms approved on Sept. 8, 2020, allowed Oi to create isolated production units (UPIs) to carve out assets and sell them in the next few quarters, including its mobile assets and part of its infrastructure assets. The company sold its towers for R$1.067 billion and data center for R$325 million, of...

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