2023-05-23 15:12:09 ET
Oi S.A. (OIBZQ)
Q4 2022 Results Conference Call
May 23, 2023 10:00 AM ET
Company Participants
Rodrigo Abreu - Chief Executive Officer
Cristiane Barretto - Chief Financial Officer
Luis Plaster - Director of Investor Relations
Conference Call Participants
Presentation
Operator
Good morning, ladies and gentlemen, and thank you for joining Oi S.A.'s Conference Call for the fourth quarter of 2022. The event will be held in English with simultaneous translation into Portuguese. Please be informed that this video conference is being recorded and it will be available later on the Company's Investor Relations website.
During the Company's presentation, all participants will be with their microphones disabled. So get in line in order to ask questions, please click on a Q&A icon at the bottom of your screen and write your name and company. After the presentation, we will begin the Q&A session.
Now, I hand over to Mr. Rodrigo Abreu, Oi's CEO. Please Rodrigo, you can now proceed.
Rodrigo Abreu
Thank you. Good morning all and welcome to our Q4 2022 call. And as we have done in previous calls, I'll open the call with the key comments on our results. And then, I'll ask our CFO, Cristiane Barretto to also participate presents in details on our financial results and cost strategy. And I'll come back to close the call.
First of all, it is important to mention that the reason why we have delayed the score so much, and it has nothing to do with our results. As you know, we have provided key numbers when we communicated the delay, but rather the delay has a connection with the whole process of presenting our traditional recovery plan last week and conducting the restructuring discussions with the financial creditors. We needed to conclude several details of our plan before filing last year's results and thus we had to delay the announcement for today.
As you certainly have noticed last night's a few comments are in order to avoid misinterpretations of the results that were published. The first is about our auditor report, which brings as you have noticed a disclaimer of opinion because Price Waterhouse is still waiting for the signature of the definitive documents of our restructuring support agreements with a group of financial creditors that we have started negotiating since last year.
We expect it to have concluded the signature before the release of the audited financial statements of Q4. But given all of the complexity involved in the discussions, this will still take another few weeks. And because of that despite there are no issues with the numbers or with the results presented, there is a disclaimer of opinion on Price Waterhouse's report.
With the RSA signature, which we expect to have in the coming weeks, we expect to come back to the regular auditor's opinion with the Q1 results which will be published next month. The second disclaimer is about the net loss incurred in Q4, which as you have seen amounts to over R$17 billion, and it's critical to mention that this has no relationship whatsoever to operating results and no cash impacts, but rather it represents primarily a major accounting adjustment given the impairment of legacy assets that we performed during the last quarter of 2022.
This impairment of over R$14 billion is related to recognizing the expectation of no positive results coming from the legacy copper assets, which were controlled and managed as a separate business unit for the first time following our reorganization last year. As we have mentioned multiple times, the concession unfortunately is today a money losing business and this impairment simply recognizes it from an accounting perspective.
In order to counter that, as we also have mentioned multiple times, we are in the middle of a very large arbitration process with Anatel about the concession and the possibility of coming to an agreement to migrate it to an authorization model.
With this in perspective, let's talk about Q4 and the 2022 results. 2022 was a year in which we made the shift to a completely new model. And 2023 will be the year where we start to ramp up this new model and where we'll be able to start assessing the operating progress towards future expected results.
As we highlighted when we talked about Q3, even though the results from Q3 and Q4 last year start to represent the pure breed New Oi. We are still ramping up to the run rate numbers we expect for the Company, as we still need to wind down several legacy costs. Continue to trim down the Company's structure and continuously ramp up the core of the New Oi, which are the fiber and B2B businesses.
At the end of the presentation today, we'll also provide an update on the filing of our judicial recovery plan and also on other non-operating updates, which are important to understand the full perspective of the Company. As we know, we still have significant challenges ahead.
With that, let's look at the highlights of Q3. So moving on to Slide 3. Let's start by talking about our progress on some core metrics. In Q4, the New Oi core operating metrics presented solid results, which revenues continue to grow strongly in combination with a very strict cost control. As a first positive indicator, we see that the New Oi continues to grow and we saw 5.6% grow year-over-year in total revenues.
With both fiber and B2B growing at a healthy pace, fiber with a 25.5% growth and Oi S.A. with a 3.5% year-over-year growth and we reached this with close to 4 million homes connected and with ICT keeping its growth trajectory. This, while legacy continues to bring growth down and ex-legacy, we could see that the growth of the New Oi would be significantly higher with plus 23% year-over-year.
On the efficiency front, results were also very important with a reduction in year-over-year OpEx of minus 25% and a reduction in CapEx of minus 73% associated with the new operating model, which is asset lights and also an improved allocation of all of the CapEx the Company has been used. If we excluded the infrastructure rental due to the new model and this infrastructure rental is basically the rental of the V.tal fiber infrastructure, OpEx would be down close to 50%.
The Q4 results were important to close 2022 and then we can recap the year in the next slide, Slide number 4. As we mentioned many times, 2022 was a transformational year in which Oi completed some key M&A transactions, consolidated its competitive position, and started to address our main financial issues.
After all that was done since the beginning of the judicial recovery in 2016 and all of the amendments and plan in 2020. In 2022, we completed the transition process with closing all of our key M&A transactions, in particular the sale of the mobile units and the creation of V.tal, the consolidation of the growth in FTTH and also reaching a national scale with the FTTH customer base.
The consolidation of Oi Solucoes as a key ICT player, the continuation of a very sharp cost reduction with very significant results, and the beginning of negotiations with creditors to restructure our financial debt.
The second half showed very strong revenue growth and we can see that and this was after all of the reorganization took place already with the New Oi results in centerfolds. And we also presented significant reduction in CapEx plus OpEx while the asset sales and efficiency initiatives drove this reduction starting in the second half last year.
So, let's look at the detailed results of the core components of the New Oi, starting with consolidated revenue in Slide number 5. In Q4, we can see that the New Oi revenues were up 6% year-over-year driven by the fiber expansion which as mentioned grew 26% year-over-year and represented already 46% of New Oi revenues.
The numbers in the consolidated net revenue still include around 11% of discontinued operations, in particular the DTH results. But as we can see 73% of the total revenues are already core revenues while legacy responded for just 15% of total revenues in Q4 last year.
All the New Oi revenue details we can see that legacy unfortunately continues to bring the numbers down with a 30%, 37% decline but that was more than compensated by the healthy growth of all of the other components in particular fiber.
Talking about fiber, we can look at the detailed results on the next page Slide 6. Our fiber revenue growth continued as mentioned in the Q4 2022 with Oi maintaining ARPU growth and market share leadership in fiber cities despite much stricter policies led to lower net ads overall. The growth occurred both annually and sequentially even in a more competitive Q4 from a market perspective, and we have a 25.5% growth annually and 2.3% growth sequentially.
While net debt had a slowdown in Q4 and when we saw that the whole market had a little bit of a slowdown in Q4, we can also see that Oi maintained its leadership footprint with a close to 31% market share in the cities where Oi Fibra is present. This is a very significant result. And we can see that coming after Oi, we have 20% of the top 10 ISPs and only 13% on the next large player.
This happened with churn down half a percentage point and ARPU up by 6%, and those are very important results to maintain the profitability of the growth of Oi Fibra. The fiber performance continues to be supported by the growing fiber network from V.tal as we can see on Slide 7. And with the growth in Q4, Oi reached 4 million homes connected and expects to continue growing the homes connected presence in 2023. V.tal HP expansion already reached over 20 million HPs and surpass 300 cities.
In addition to investing in new revenue streams as can be seen by the opening of a new data center in Fortaleza, which is enabling interconnection and edge computing as the services offered by V.tal. In the homes connected, we continue our ambition of a solid home connection expansion, looking towards 4.7 million homes connected by approximately by the end of 2023.
And we will grow always focus on a profitable growth model with a higher take up of the new HPs and a better profitability due to lower unitary ONT CapEx and higher quality net adds on the expanded homes connected. And it's also important to highlight that this comes on the tails of significant market recognition on the quality of Oi's fiber service.
We see that for the first time Anatel presented a survey on the best fiber connections in Brazil, according to the results of net preference score from customers. And Oi was ranked as the best fiber connection amongst all of the large fiber services. In addition to that, in a recent survey, Oi also presented the lower level of complaints on its fiber service compared to the overall markets.
We also received an important recognition from the Mobile World Congress in Barcelona in an Innovation Award for Oi Fibra X which is our FTTR service our fiber-to-the-room service given a very differentiated service strategy to expand revenues in addition to the basic home connection service.
Now, let me turn the presentation over to our CFO, Cristiane Barretto, who will talk about the progress on our cost efforts, our liquidity and our debt position. Chris?
Cristiane Barretto
Thank you, Rodrigo, and good morning everyone. Starting with Slide 8, we can see the implementation of efficient initiatives such as simplification of process renegotiations of contracts, reduction of Oi structure among others, in addition to the cost out of mobile money for call UPI.
These effects lead a routine EBITDA to decrease by 50% year-over-year when excluding rent and insurance causes. Moving on the right side of the slide, we give more details on the evolution of the main OpEx line. Recurrent personnel fell 16.2% year-over-year, which in R$431 million, as we had a significant headcount decrease of 15,000 employees in the period. It's worth saying that a large part of these layoffs occurred after the closing of the M&A transactions.
Third our services also had a double-digit decrease in first year 2022 down 33.6% year-over-year due to efficient measures which drove lower sales commission energy in contract acquisition. At the same time, leasing of fiber capacity from V.tal which is a cost linkage of growth in fiber connections in the new operating model promoted the rise in rent and assurance expenses which grew 70% when compared to 4Q 2021, offset by reduction in CapEx as a result of the new operating model. All in this quarter double-digit cost reduction in both yearly in quarterly basis as a test all of Oi's best efforts to become leaner and more efficient.
Moving to Slide 9, you can see that we had consistent annual cost reduction throughout the year of 2022 and especially on the second half of the year, as a consequence of Oi's operating transformation and it's initiatives on cost savings and simplification fronts to adapt the cost of the New Oi revenues generation. Third-party services and network maintenance have failed double digit starting from second quarter 2022 with personal catching up in the 4Q resulting in stronger decrease each new quarter when excluding rent and insurance.
Going forward Slide 10, we show the improvement of Oi's margin in lower CapEx even with the current legacy burden. Top line growth in OpEx savings allowed our EBITDA to grow 54% quarter-over-quarter totaling R$345 million with a margin of 13.2% in line with the transition period of the New Oi. This evolution represents an improvement of 5.1 percentage points sequentially even with the growth in fiber related to the OpEx offset by CapEx reduction.
In fact CapEx reduced by 16.2% quarter-over-quarter in light of the new operating model with V.tal combined with a focus on a smart allocation, which should drive CapEx to sales to a level below 10% this year. In summary, New Oi's operating cash flow EBITDA minus CapEx improve it R$200 million quarter-over-quarter due to growth in revenues and improved EBITDA margin.
I also would like to highlight that in no routine EBITDA reported in the financial statements included the non-cash accounting impacts of R$14 billion is related to impairment of the legacy copper business unit as Rodrigo mentioned in the beginning of the presentation.
Now in Slide 11, we can see our cash position, which ended the fourth quarter of 2022 at R$3.2 billion reducing R$370 million when compared to cash balance at the end of the third quarter of 2022. The consumptions are driven by working capital due to higher supplier payments, and one off settlement of legacy disputes at year-end partially offset by the cash in V.tal secondary offer.
Regarding financial debt on Slide 12, I want to highlight the importance reduction we had since 2016. The financial debt restructure in the 2016 RJ plan in a conservative approach, when accrued by inflation and adjusted by the exchange rate variation from 2016 to the actual period would have reached approximately R$70 billion compared to around R$30 billion by the end of 2022.
The reduction resulted from the efforts of the previous reduce recognition and the repayment of debt followed by asset sales during 2022. It is so external factors such as the macro environment delayed approval of M&A operations and disputes regarding the relevant part of the mobile UPI value harm and a better evolution.
Now, I'll hand over to Rodrigo to continue the presentation.
Rodrigo Abreu
Thank you, Chris. So now let's talk about the key developments since Q4, which is in particular our restructuring process. As you know, since last year, Oi has been working very diligently with the help of advisors to address the restructuring of its financial debt and we believe we have substantial progress.
It's always good to remind that we announced this process in October of last year with the hiring of a more recent company as our financial advisor to assist in the discussions with the creditors. And throughout the way we have provided detailed information including the blowout of all of the information disclosed to creditors under the context of all of the negotiations.
In March with the announcement of the filing for the judicial recovery and the preliminary agreements with the financial creditors, we started to highlight all the key important topics that we are considering we were considering and now have filed for in our current judicial recovery plan.
Since March, obviously several developments have also happened with the signing of the debt financing of $275 million, which we expect the first tranche to be disbursed up in the coming days and the blowout of an updated long-term plan which was used with creditors along all of the restructuring discussions. And obviously, we filed on last Friday, the judicial reorganization plan with the JR courts.
We are confident the next steps ahead, including the signing of the RSA the Restructuring Support Agreements with the majority of holders of some senior PIK toggle nodes and the lenders of loans from ECAs. We also have a deadlines to reach majority for the approval of the judicial recovery plan and the ratification of the judicial recovery planning within the 150 days from its granting, which is before a supposed GCM.
And we obviously expect that after the conclusion of the approval of the plan, with the majority of the financial creditors approving, we expect that the new money coming in will be cashed in the first quarter of 2024. So let's talk about the key characteristics of the proposed the judicial recovery plan, starting on the next slide, Slide 14.
As expected, the key objective of the plan is to create a sustainable long-term that level four Oi in line with a renewed operating plan to continuing developing the New Oi as has been devised since the beginning of the plan back in 2020. The main objectives, we had in mind when designing this plan, were obviously to reduce indebtedness first and foremost by reaching sustainable levels in the medium and long-term.
To focus on the financial creditors and on honors liabilities, providing the least possible impact on the current operations of the Company, to ensure short and medium term liquidity to sustain operations given that while we are still ramping down our legacy business and ramping up the new word results, we will still have a few years of a negative liquidity ahead of us.
The conversion of debt into equity to readjust our capital structure and obviously it will be critical to have an adjusted capital structure from now onwards and to reach consensus among the majority of all of the financial lenders to have the plan approved, and we are addressing these key objectives with the following key blend points.
First, differentiated treatment to creditors providing new money, which will result in a roughly 50% a max of 50% overall debt haircuts and a longer majority of our financial debt. We also have proposed a plan targets restructuring our financial debt and the take-or-pay contracts for the first time we are including those contracts in a restructuring or else it would not be viable to have long-term sustainability of the Company, if paying for services that are no longer used.
The signing of the debt financing to provide short-term liquidity until the plan is finally approved, enabling the new money caching to support growth and repay the debt when the plan is approved expected in the first quarter of next year, as mentioned in the last slides, the dilution of 80% of the current shareholders through the capitalization of restructured debt and the signing of an RSA with the majority of bondholders and ECA holders to facilitate the implementation of the plan.
The main features of this plan include in particular the treatment of the financial creditors, and we can look at the options afforded financial creditors in the next slide, Slide 15. In the proposed plan, we have a highlighted that a commitment to provide money is the main differentiation in terms of recovery for each of the financial creditor options, we two main options available.
Option 1 should be the one to drive a critical incentive to provide new money without, which obviously the plan is not sustainable. And in Option 1, the creditors providing new money will commit to providing a R$4 billion that the greater of R$4 billion or $750 million in new money. The creditors of the Option 1 some of the creditors will provide a dip financing under market practices and conditions.
And the debt will be converted -- the current debt will be converted into a roll of that over to 10.75 million guaranteed debt. The remaining credits above and beyond the 10.75 billion roll up debt together with the remaining credits from Option 2 we will be converted into 80% of the total shares of the reorganized Oi.
On Option 2 for other creditors, this remained as an Option 2 other financial creditors who don't wish to contribute with new money for the new plan. And this will have any facts of a having 30% of the face value of Option 2, that's converted into what we're calling A&E restated that, with the remaining 70% together with the remaining credits from Option 1 converted into 80% of the total shares of the reorganized Oi.
After the conversion of the equities creditors from financial creditors, the current shareholders will own 20% of the restructure company's equity with the material reduction of financial debts and long-term take or play obligations. As mentioned before, the focus of the plan is on restructuring the financial credits and some of the take-or-pay obligations.
So let's look at how other creditors are treated in the next page on Slide 16. As you know, we have four classes of creditors and the plan also details the payment terms for each class of creditors and details also the main guarantees for financial records and the assets their redemption priority in case of the guarantees.
With a little more detail on the left hand side, we can see the following main conditions by creditor class. Classes I, IV and the net credits from the regulatory agencies and this means labor credits, small and medium company credits classes I and IV and the credits that were renegotiated that with Anatel end last year.
We foresee no impact and the maintenance of existing conditions under the previous sub plan or under the current conditions that preset pre negotiated in the case of the regulatory agencies. On Class IV, which are the labor credits, and in addition to the no impact for all of the illiquid credits, which are not still exchangeable. We do have 180 days grace period with five monthly installment payments for all the credits which are pre-RJ, but that we will become eligible after the approval of the plan.
On Class II, which is the guarantee the creditors we do not have any creditors listed in this class given that in the last plan, we liquidated all of the Class II credits with the NDS, which was the only creditor in the class. On Class III, which are the end guarantee the credits, we do have several different types of creditors included and we have different treatments for each of the different types of creditors.
Starting with the small creditors in credits up to R$5,000, we are expecting a payment within 30 days after the approval of the plan, so no impact whatsoever. And the qualified, the non qualified financial creditors, we will have those creditors with an election of either Option 1 or Option 2 as demonstrated in the previous slides or with no option a default for a general class which continues to be the same from the previous planners as I will explain further on.
For take-or-pay nonfinancial credit resets to Class III creditors, we are forcing specific discount options of up to 50% of the credits according to existing guarantees and negotiation options as I will detail in the next slide. And for the supplier, the partners' suppliers in Class III, we also have specific treatments with a relatively short payment schedule and an option for an integral payment with an advanced discount which are present in the plan.
We are splitting the partners' suppliers into different categories depending on the size of the credit, all the way from the smaller creditors with minimum index all the way up to creditors with over 10 million housing credits, which will be paid in four installments in a relatively short period of time.
Finally, as the general option, the general option remains exactly the same as the general option in the previous plan, and the general credits, for see the maintenance of the existing conditions, which is to start payment in February 2038, with the Company having a possibility of redeeming the whole credit with the 15% of face value before the credit expires in February 2038.
In addition to that, it's important also to highlight the main guarantees for the restructure financial creditors. And the main guarantees as highlighted in the plan are first the Oi's shares in V.tal with the first lien for the new money providers a second lien for the role of that's the up to 10.75 billion a role of debt, and the third lien to the A&E restated debt and just remember the A&E are the 30% of option two credits.
After the creation of ClientCo then we will also have ClientCo which are the fiber operations of the Company, which we are foreseen to be credited into a UPI just to hit to give a more flexibility to the operations of our fiber operations including the possibility of an IPO or receiving additional capital injections.
We will have the ClientCo as a first lien guarantee for the money with 100% of the shares and a second lien guarantee of the role of debt with a 90% of the ClientCo shares and those are pretty much the key guarantees. In addition to some guarantees of assets while ClientCo is not created and the real estate, which will be sold during the period of the plan, which will also be an important guarantee for creditors.
And in terms of the priority and sale of guaranteed assets, we have them as follows. In the case of sales Oi's shares in V.tal, 100% of them will be used primarily for payment of the new money repayments and then any residual value will be used for the role of that. In the case of the sale of ClientCo shares, 100% of the proceeds will go to new money. And if all of the new money is already liquidated, then 60% of the residual proceeds will go to painting roll-up debts.
And in the case of sale of other assets, we have a schedule of repayment of that in particular Florida real estate sales. In the case of accumulated sales below R$200 million, 100% of the proceeds remain with the Company for operating needs. Between R$204 million, we have 50% of the proceeds are going into the revenge of the new money and/or of the role of debt in case the new money is already liquidated.
And above R$400 million, we expect a 100% of the proceeds for the repayment of both the new money and/or the role of debt. And this guarantees that the Company will have access to liquidity due to the sale of existing assets, in particular the sale of real estate assets which continue on a rolling basis and we will also be able to reduce the debt for the new money and the role of debt.
All of the main conditions that are listed here are 100% in line with a preliminary agreement that we had with a group of financial creditors that was announced early in the year. And this will also be the basis for all of the definitive RSA documents the restructuring support agreement documents that we expect to be signing in the next coming weeks.
Moving on to Slide 17, we can see what we should expect after the implementation of the new plan. We should expect the Company with lower debt levels and lower honors liabilities and improve debt amortization schedule and unimproved value. In terms of that, obviously, we do have just on our financial debt circa R$30 billion slightly more, if we consider the general credits and we expect the reduction of up to 50% of this financial debt with the conversion of debt to equity.
In terms of maturities, this is an important feature of the new plan as well. We have a key maturity of the plan in 2025 for all the 2025 bonds, and now of the maturities have been pushed to 2027 and 2028 for both of the new money in the role of debt. And for the remaining debt of Option 2, the maturities have been first to 2033.
In terms of onerous liabilities, we did have before the plan strong cash consumption for the period of the plan of circa R$11 billion is a significant amount of money through the life of the plan all the way to the end of the plan. And obviously, with all of the renegotiations that we're doing, we expect a goal of circa 50% reduction of payments to satellite towers and submarine cables.
And finally, in terms of equity, we know that the equity have a significant impact by the volume of financial debt which could even lead to negative equity consideration considering the current numbers. And after the plan, we expect the prospect of a sustainable company leading to an improved equity position.
The specific points about the plan are the take-or-pay liabilities and also what other areas we have to address to make the plan sustainable. And we expect to address them with important negotiations as we can see in Slide 18. Those negotiations to reduce take-or-pay obligations are a very important part of the plan discussions. And also we do have progress and other negotiations occurring on both the regulatory front and the non-core M&A front as we update to briefly.
On the take-or-pay contract, so we start with the towers and we are negotiating with the three key tower companies of our plan with the goal of getting close to a 50% of payments from 26 onwards after the end of the STFC concession. And obviously, those negotiations are still ongoing. We are discussing and obviously this will be an important part of this next step of the plan approval process.
With the DTH satellite providers, we have a preliminary agreement regarding a potential 50% haircut of the future takeoff of the obligations upon the termination of satellite usage from 2025 onwards. It's important to mention that this termination of satellite usage is connected to the M&A activity that we have on the DTH. We will talk about them shortly.
And finally on the LTLA front, which are the submarine cables coming from the globe net sale are way back in the life of the Company. We have already announced that we are discussing a proposal in place with a reduction of up to 50% of our payments from '25 to 2028 and an additional offset of the LTLA debt of 22% with an agreement in exchange for Oi scrap expected by V.tal. This agreement is currently being discussed in remediation as part of the RJ proceedings, and we will be subject to all of the regulatory and governance approvals as part of the RJ process.
To talk about some other updates, both on the regulatory front and on the M&A front. We start with the regulatory disputes. As you know, we have mentioned multiple times that we do have a big concession arbitration in place. And the key development that we have very recently was the closing of the concession arbitration case hearing with Anatel which took place in May '23. And after that, we now have a commitment to partial decisions expected for the second half of 2023.
This is very important because this is the first time upon the process of arbitration, in which it will be possible to estimate with a little bit more precision on what to expect of the decisions coming forward and how much the Company should be awarded in this that we believe is a key feature of our plan to actually bring some stability and sustainability to what is today, as we mentioned, a money-losing business in the concession.
In the meantime, the Company continues to invest in discussions and productive discussions for a potential agreement aiming at the STFC concession from -- a migration from a concession to an authorization and those discussions occur in parallel with all of the arbitration. In addition to that, as we mentioned, we did have a recognition at the end of 2022 of an impairment of the R$14 billion of all the copper concession assets with no cash impact, which resulted from the negative future results expected from the segregated legacy business units.
And this obviously comes from the impact of the declining customer base and the very high costs, which are fixed costs many times associated with maintaining the regulatory obligations in comparison with the value of the current residual fixed assets.
On the M&A front, we would like to announce that we reached the signing phase of the sale of the Timor-Leste foreign operations. Those are small foreign operations that still remain from the period after the merger with Portugal Telecom. And this is yet another step towards the simplification and monetization of our foreign assets which should no longer be a focus for the Company since the announcement of the amended plan back in 2020.
And finally, the DTH negotiations, as I mentioned, are still in progress, but we see a potential of having the sale of those operations aimed at improving our future cash profile while we will continue to maintain the TV service with IPTV according to all the terms of the current negotiation in place, which are still related to the MOU that we announced a long time ago. But given all of the complexities involved in the negotiation, we expect to close in the coming future.
So next, let's finally provides some quarterly updates on our ESG activities. And obviously, this is important for any company. And in our case, even in the middle of all of the transformation. We continue to demonstrate our commitment with ESG goals with the recognition in multiple fronts.
On the A front, the focus on this quarter comes on the refurbishing the units. We have over 80,000 recovered equipment units for FTTH and data, and this represented not only a significant amount of CapEx savings in the fourth quarter of 2022, but also a reduction of electronic garbage coming to scrap. We also would like to highlight our efforts on recycling copper scrap, and we had a historic record in Q4. We're recycling 7.1 tons of copper cables and mixed scrap. And this, again, goes towards avoiding just waste and a significant environmental impact.
On the S front, we have multiple developments on education and inclusions, such as the completion of our second class of female leadership program, the launching of the second course for educators in our Orbita platform. And were a finalist in the inclusive communication category, the Diversity in Practice Award. In addition to that, we had an important recognition in people management as the top employer in Brazil and on the top 25 best company in Brazil by Premio Gupy, which is a recognized HR award in Brazil.
And finally, on the G scale, we have the definition of new committees after the election of the new Board of Directors, and we updated our disclosure in securities trading. We were also considered one of the top-rated companies by the survey Who Defends Your Data, in particular with the best position among the large telco operators, and we obtained our ISO 27001 standard certification for information security management.
So let's close our presentation by providing you with a summary of our challenges in the next slide. As we have always mentioned, Oi is focused on implementing its recovery plan, doing everything which is required to do that. And this is, at the current time, aimed at the drastic, it's three key challenges, which are debt, the legacy equation resolving all the legacy issues, which continue to present significant negative results for the Company and a continuous improvement in operations leading towards the build-out of the new Oi.
Those are the key challenges of 2023. And I would dare say the main challenges of the Company for the coming years. All of those have a significant importance in terms of what the new Oi will be capable of doing. Starting with the debt reduction and obviously here, the key focus is the progress of the new judicial reorganization plan. The plan was presented on May 19.
We now will have the signing of an RSA, and we expect the renegotiation, as mentioned, of the take-or-pay contracts. And with all of that, it will be possible to bring back the Company down to debt levels, which are sustainable in comparison with the capacity of revenue and results generation that we expect the Company to have in the coming years.
The second key component is the legacy equation and the legacy business here, in particular, the STFC concession has negative results that needs to be addressed in order for Oi to reach long-term sustainability. There is noise -- no sustainable Oi without actually resolving all of the issues coming from the legacy negative results.
And the Anatel arbitration is a key component adding to an agreement for the concession migration and the compensation of historical imbalances of the concession including some economic imbalances, which present a significant positive number for the Company as part of the arbitration under discussion.
And finally, the last and maybe the most important challenge is to continue with our operational improvements in building the new Oi. And those operational improvements refer both to growth, continuing our growth and scale of the fiber take-up and reaching higher profitability levels with the new fiber model, improving the scale of Oi Solutions and IT revenues and unlocking value with new revenue streams.
But also efficiency, adjusting Oi structure to a lean and agile company, minimizing the legacy impact on EBITDA and cash flow by being super vigilant with all of the operating impacts of the legacy operation right now; having a continuous cost reduction effort through significant efficiency initiatives and having a smart CapEx allocation will focus on profitability.
Those are the three pillars of our transformation. We know they are not minor tasks. We know that each and every one of them requires a significant amount of effort with some levels of uncertainty, it's important to highlight that, but which the team is addressing with a lot of effort, a lot of work and a lot of thinking, which is now crystallized in the recovery plan that we have just presented.
We know that there are still significant steps ahead of us. We know that there will be still a lot of work to be done, but we are confident that doing what we are doing we are acting in the best interest of the Company. And we envisage a future which can be sustainable for the Company if we're able to address each one of those three pillars of challenges ahead.
So with that, we conclude the first part of the presentation, and we can go to the initial Q&A session. Thank you.
Question-and-Answer Session
Operator
Perfect. We will now begin a Q&A session. Please remember the questions should be asked in English. [Operator Instructions] For our first question, it will be read by the Company's management.
Luis Plaster
So Rodrigo, there is a question here that talks about the evolution of carbon, I know in the presentation, we talk about CapEx to sales below 10% is still leasing and also on the grow-out on a day when evolution of unitary ONT CapEx that has a continuous reduction. What are the drivers behind those evolutions?
Rodrigo Abreu
Thank you, Plaster. Well, we have actually two drivers -- actually three drivers to add an operational component to it. The first one is obviously just the technological evolution and the continuous price reduction that the technology has been having in the industry. When we started the whole plan way back then, we had ONT prices that were up to $90.
Those were continuously reduced over time, and then they were reduced circa $50 and then to $40, now we're operating with certain types of ONTs, which can go all the way down to less than $30. And obviously, this will continue happening.
What we have done in our strategy as well as to mix some types of different ONTs, some which are more aimed at premium service, which is a slightly higher cost, but still below the $40. And which are aimed at entry-level service, which will be below the $30. So this is a first component, which is very significant and which without a question, I mean a significant reduction in the CapEx estimates for the future.
And by the way, we're already seeing that. We included that as part of our estimates for the plan, but we're already seeing that in practice. We have been seeing the prices for the ONTs dropping quite significantly. In addition to that, there is a very, very strong effort that the Company is doing on increasing the percent of refurbished equipment in the network.
As you know, this industry, unfortunately, still has overall, and I wouldn't say just for Oi, but overall, a relatively high churn rates. So we do have customers which migrate in and out of everybody's networks over time. And one particular element for us, which we have been focusing on improving is on the amount of the recovery of the used ONTs and by refurbishing those ONTs and re-capacitating them to install new customers.
So with this, we are installing new customers, obviously, with the mix of a new and recapture, reconditioned ONTs, which are perfectly functional ONTs, and now with this, reducing the overall cost even further.
In addition to that, there is just a continuous operating evolution, which reduces the cost of installation, which actually creates techniques for rapid install including obviously, all of the new methods of installing a customer's premise equipment. And this obviously has also been significantly reduced since the start of the fiber operation.
So we now can see that without a question, the initial estimates way back in 2019-2020, when we had the cost for installing a customer's home has been coming down quite significantly, and we still expect some reduction to come because of the factors that I just mentioned, in particular, the refurbishing of ONTs and the reduction of ONT costs.
Operator
[Operator Instructions] So our first question comes from Mr. Anton Anikst, buy-side analyst, Knighthead Capital. We'll now open your audio so you can ask your question. You can proceed please.
So now, we will begin the Q&A session with questions received by the Company from individual shareholders. The section will be held in Portuguese.
Now, I hand over back to the Company. Please you may proceed.
Luis Plaster
So now, we're going to go to a different section in we have an objective of representing the main concerns of individual shareholders in our results presentation. And what we did is we have been talking to the different groups of individual shareholders and also people who talk about the Company and make an opinion about the Company.
And we received many questions, many demands and many concerns of different subjects that we're going to try to address in this specific section here. And also, we received around 500 mails per month in our IR mail, and we're trying to get the largest concerns also. So now Rodrigo will address some of the concerns and some of the questions.
If you can go to the next slide. These four sections are the main concerns in respect to those individual shareholders. We're going to do it only in Portuguese, but these questions, these slides will be translated into our website, and we're going to have the transcript later also in English. But to address specifically those concerns, we're going to do that in Portuguese.
[Foreign Language]
Operator
Thank you. That concludes Oi's conference call of the fourth quarter of 2022. For further information, please visit the Company's IR website, www.oi.com.br/ri. You can now disconnect.
For further details see:
Oi S.A. (OIBZQ) Q4 2022 Earnings Call Transcript