Read this Thursday’s edition of the FolhaMercado newsletter (2) – 02/02/2023 – Market

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Oi forwards judicial recovery – again

Just over a month after exiting the second largest judicial recovery in Brazilian corporate history, Oi filed this Wednesday (1st) in court with a request for urgent relief to prevent its assets from being blocked at the request of creditors.

• In practice, the decision anticipates the effects of a judicial recovery, whose request can be made within 30 days after the injunction. The action is similar to that taken by Americanas in January.

Understand: Oi declares to have BRL 29 billion only in financial debts, and BRL 600 million due on the next 5th (Sunday).

• The company says that non-payment of this debt would trigger clauses that would anticipate the maturity of almost all of the debt.

• Tele says that the first judicial recovery was “unquestionably successful”, but that the company’s capital structure remains unsustainable.

In numbers: if Oi completes one more request for judicial recovery, it will appear twice in the list of the five largest RJs in Brazil:

• Odebrecht (BRL 80 billion), Hey (BRL 65 billion), Samarco (BRL 55 billion), American (BRL 47.9 billion) and Hi (BRL 29 billion).

Remember: Oi filed for judicial recovery in June 2016, after accumulating a gross debt of approximately R$65 billion, with more than 55,000 creditors.

• After being transformed into a nationally controlled supertele, the company’s crisis was aggravated after the merger with Portugal Telecom, in 2010.

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BC’s announcements

The decisions on interest rates by the Central Bank and the Fed (the American BC) announced this Wednesday were not surprising and came in line with the market.

The Selic remained at 13.75% a year, while in the US the pace of tightening slowed and interest rates rose 0.25 point percentage, to a range between 4.5% and 4.75%, the highest level since September 2007.

Investors’ attention focused on the authorities’ communiqués, which indicate the course of monetary policy.

In Brazil, the BC collegiate raised the tone and issued warnings about fiscal uncertainties and the worsening of inflation expectations. For analysts, the monetary authority has signaled that it may postpone the interest rate cut to 2024.

In the US, the Fed said it expects to keep raising interest rates in the next meetings and that a slower tightening will give time to assess the impact of the restrictive policy.

• The expectation of a slowdown in the pace of tightening was responsible for weakening the dollar at the beginning of the year and valuing stock markets.

in investmentsmaintaining the Selic rate at 13.75% continues to benefit fixed income securities.

• In the Yubb search engine survey, private bonds with tax exemption stand out.

• This is the case of LCAs (Agricultural Credit Letters), LCI (Real Estate Credit Letters) and incentivized debentures, with estimated real returns (discounting inflation) of 7.22%, 7.61% and 9.29%, respectively.

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How Shared Netflix Accounts Will Work

Netflix gave more details this Wednesday (1st) about how its shared account verification model will work, whose charging has been in tests in Chile, Costa Rica and Peru since the beginning of last year.

• Streaming updated the platform’s frequently asked questions section on the pages of these countries, indicating how this model will work when it reaches other locations.

Understand: the platform will ask users to connect to the same Wi-Fi network as the main account —either through the app or through the website— at least once a every 31 days.

• The period will serve for the platform to identify the recurrence of the use of connected devices and consider them reliable. Devices that are not connected to this network at least once a month will be blocked.

• The model also gives an option for those who are traveling and need to connect: a code valid for seven days will be sent to the email or cell phone registered in the main account.

• The platform reaffirms that the same account cannot be shared with people who live in other homes and warns of the option to pay extra, below the price of a subscription, for people from other locations to continue with access.

Which explains: charging for shared accounts was one of the alternatives announced by Netflix last year to reverse the loss of subscribers. According to the company, 100 million users share the password with people from other locations.

According to The Information, the company told advertisers that new subscriptions for these plans doubled in January compared to December.

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Has Meta left the worst behind?

Shares in Meta, owner of Facebook, Instagram and WhatsApp, jumped 19% in post-market talks on Wednesday after the company announced higher revenue forecasts for early this year and said it would buy back $40 billion of actions.

Which explains: the company cheered analysts by predicting that its revenue could reach $28.5 billion in the first quarter of this year, a number that would be above the level recorded in the same period of 2021-the last quarter before Apple’s new privacy rules came into effect.

• Meta itself claims to have lost $10 billion with this update from the manufacturer.

• With the announcement now, therefore, the company signals that it managed to circumvent this drop in revenue by betting on other alternatives.

The company also announced a cost reduction for 2023, while CEO Mark Zuckerberg said his management motto for the year is “efficiency”.

In numbers: in the last quarter of 2022, the company recorded revenue of US$ 32.2 billion, down 4% compared to the previous year but above market expectations.

• The company’s net income fell 55% year-on-year to $4.7 billion and below estimates, reflecting restructuring costs (ie layoffs).