Oi was dealt a blow only weeks ago when it says its acquisition target Portugal Telecom failed to disclose debts to Oi before the transaction finalized, Now, some reports say that Oi’s ability to compete at an upcoming 4G spectrum auction will likely be hurt by the deal.
Portugal Telecom reportedly failed to notify Oi of its $1.2 billion worth of shares in a company that later defaulted, leading to heavy losses.
But before those losses were disclosed to Oi, the $14 billion merger was consummated. Oi predicted the takeover would lead to new growth in Brazil and boost cash flow. Now, however, Oi is facing lowered ratings and more scrutiny from Brazil development lender BNDES.
Further, say reports, analysts once believed Oi had a “once in a lifetime” opportunity at the upcoming 4G spectrum auction as sources say the Brazilian government looked to the telco to drive consolidation But now, losses from the troubled merger will hurt Oi’s competitive edge in the industry, experts say.
Both Oi and Portugal Telecom declined to comment on the revelations.
Full content: Bloomberg
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