Hedge Costs Drive Wide Oi Loss, EBITDA Lags Behind

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Oi SA posted a wider-than-expected second-quarter loss as the Brazilian phone carrier was forced to close currency-hedging positions because of its protracted bankruptcy protection case, Reuters reported. Oi lost a net 3.303 billion reais ($1 billion) last quarter, about 16 times the size of the first quarter's 200 million-real shortfall, according to a securities filing on Wednesday. The loss was much more than an average consensus estimate of 332.8 million reais compiled by Thomson Reuters. Revenue fell slightly on a quarterly basis, reflecting declining proceeds from sales in Oi's residential, mobility and business segments. Slowing sales drove a sharp decline in costs and expenses, which in turn helped prop up operational earnings and cash flow generation last quarter, the filing said. The numbers suggest Chief Executive Officer Marco Schroeder's turnaround plan is feeling the pinch of Brazil's slow economic recovery and the creditor protection case, which analysts said may be affecting customer views about the company. Read more.