Oi (OIBR) Stock Jumps 11.11% Amid Speculations of Company Retaining $460 Million of Portugal Telecom Debt

Published Date : Jan 21, 2015

Shares of Brazilian Telecom Company Oi increased by 11.11% today due to heavy trading after it was reported that the company was to retain US$460 million worth debt issued by its Portuguese partner Portugal Telecom SGPS in a projected sale of assets to telecom operator Altice. 

Portugal Telecom SGPS gave the information while responding to regulators about Altice deal after Portugal Telecom SGPS shareholders declined voting for the sale’s approval. If the transaction is complete, Altice will be able to expand its existing operations of cable television and add mobile phone services to it. 

The news resulted in a buzz for Oi and nearly 8.18 million shares of the company were traded by 3:04 p.m. in the New York stock exchange. This is a good growth as compared to the average trading of 1.62 million shares for the company. 

In a rating, TheStreet Ratings rated OI SA on a rating score of D. About the rating, the TheStreet Rating Team states that the ratings are driven by several weaknesses which would result in a greater impact than any strength. This would make it difficult for investors to gain positive results. 

It added that the company has weaknesses in several areas, such as its weak growth in the earnings per share, weak growth in company’s net income, generally high rate of debt risk management, a weak operating flow of cash, and disappointing returns on equity. 

The reality is that OI SA has observed a steep decline in its earnings per share in the last quarter as compared to its performance in the same quarter a year ago. The company has shown a trend of decline in earnings per share over the past two years. In the past fiscal year, the company had reported lower earnings, of US$3.90 as compared to US$7.93 in the prior year.