2014's Worst-Performing Stock We Cover: Oi
The Brazilian telecom conglomerate's shares were down 80% last year, but the company could still benefit from consolidation in the industry and some secular trends.
The Brazilian telecom conglomerate's shares were down 80% last year, but the company could still benefit from consolidation in the industry and some secular trends.
Peter Wahlstrom: Oi, the no-moat Brazilian telecom conglomerate, was the worst-performing stock [we cover] in 2014. Shares were down 80% and were reflective of a couple of major uncertainties that investors have.
First, the company effectively has a failed merger with Portugal Telecom (PT), and while the merger vote was approved in May 2014 and Portuguese assets and debt were transferred to Oi, the merger was never completed. In short, this is because Portugal Telecom had another investment in another firm that went bankrupt. And now Oi is in limbo, since every time a major move in Portuguese assets is expected, the Portugal Telecom shareholders need to vote.
Second, now Oi is saddled with more than $19 billion of debt postmerger, and it has reduced financial flexibility. Combine this with the fact that Oi has exposure to a generally slowing Brazilian economy plus rising interest rates and it hasn't been a good combination for the firm.
All is not lost, however, as we think Oi can still benefit from consolidation within the Brazilian telecom industry. And there are some secular trends toward increased data usage and service convergence, which should provide long-term opportunity for the company.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals
and individual investors. These products and services are usually sold through
license agreements or subscriptions. Our investment management business generates
asset-based fees, which are calculated as a percentage of assets under management.
We also sell both admissions and sponsorship packages for our investment conferences
and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.