Brazil’s Oi may move up spending due to tax breaks

Grupo Oi , Brazil’s biggest phone company, may move up
investments due to tax breaks for the expansion of its
networks, Chief Financial Officer Alex Zornig said on Friday.

“We may move up some investments planned for the next two
years as a result of tax incentives, but it depends if
suppliers deliver,” Zornig told analysts on a call.

Zornig also said that a 10 percent cut in 2011 capital
spending would be compensated by investments next year. He had
said on Thursday that issues with suppliers meeting contracts
caused Oi to trim investments this year to 4.5 billion reais
($2.6 billion) from 5 billion reais.

Oi and foreign rivals are investing heavily in Brazil as
they ramp up networks for the bandwidth-heavy mobile data and
Internet services demanded by clients flush with rising wages.

Communications Minister Paulo Bernardo told Reuters last
month that Brazil planned about $3.25 billion in tax breaks for
companies building new telecommunications networks, hoping to
ensure that strained networks do not collapse during the 2014
World Cup.

The Rio de Janeiro-based company posted a 21 percent drop
in third-quarter profit on Thursday as revenue fell because of
declining fixed line subscribers.

Oi shares slipped 0.6 percent in early trading, in line
with a slide on the broader Bovespa stock index .