Pharol SGPS SA

XMUN:PTCA

Cost control: Management said OpEx was down in both Brazil and Portugal, and emphasized that the company is working toward a flat cost base in 2014 despite inflation and other headwinds.

Cash generation: Oi highlighted BRL 502 million of EBITDA minus CapEx generation in Brazil and BRL 186 million in Portugal, using asset sales and tighter spending to improve liquidity and reduce expensive debt.

Asset sales: Since June last year, Oi said it has sold about BRL 4 billion of assets, including BRL 3.3 billion of cash from fixed-line towers and submarine cables in the quarter.

Growth reset: In Brazil, management said it deliberately slowed some postpaid and Pay-TV activity to fix churn and improve sales quality first, then saw stronger April trends in Pay-TV gross adds and TV sales.

Portugal strength: Portugal Telecom continued to post strong convergent and triple-play momentum, with management stressing higher customer bundling, better market share, and improving resilience of the business.

MTR impact: The company said falling mobile termination rates will hurt 2014 EBITDA by about BRL 200 million, but should also support a more rational market over time.

Guidance tone: Management repeatedly said it wants to underpromise and overdeliver, but reaffirmed the path toward becoming cash flow positive in 2016.