Court Suspends Oi’s US$870M V.tal Stake Sale to BTG Funds

Economy

A Rio de Janeiro appeals court has frozen the sale of Oi’s stake in V.tal to BTG Pactual, reopening a fight over whether Brazil’s biggest fallen telecom is selling its best asset far too cheaply.

The first private-law chamber of the Rio state court granted suspensive effect on Friday, halting a lower-court ruling that had cleared Oi to sell its 27.5% holding in V.tal for R$4.5 billion (US$870 million). Oi, which is in judicial recovery, disclosed the decision to the market on Sunday.

The appeals came from creditors — among them funds run by PIMCO and SC Lowy, plus UMB Bank — who say the price is a giveaway. Judicial recovery is Brazil’s version of bankruptcy protection, a court-supervised process that lets distressed companies restructure debts and sell assets while shielded from creditor lawsuits.

Why the V.tal sale was halted

Price was the whole fight — Oi’s recovery plan set a floor of R$12.3 billion (US$2.4 billion) for the stake, yet the winning bid came in at little more than a third of that. A recovery plan is the formal blueprint creditors vote on, laying out which assets will be sold, how proceeds will be divided, and what minimum prices must be met.

The appeals judge, Augusto Moreira Junior, called the offer equivalent to less than 40% of the value originally expected, and found that the discount hurt creditors and shareholders. That echoed the objection of the 92% of financial creditors who had rejected the terms before the lower court waved the deal through anyway.

The lower court had reasoned that creditors held no absolute veto, since the cash was needed to pay Oi’s other debts. The appeals chamber disagreed, at least for now.

The numbers behind the complaint are stark — a consultancy hired by the telecoms regulator Anatel valued V.tal’s fiber alone at more than R$32 billion (US$6.2 billion), many times what Oi’s leftover stake would fetch under the blocked deal. Whether that valuation reflects what buyers would actually pay in the current market, or whether Oi could attract higher bids if the sale were reopened, remains an open question.

What it means for Oi and BTG

V.tal is no ordinary asset — built from Oi’s fiber arm in 2021, it runs more than 500,000 kilometers of fiber and is the neutral backbone that smaller internet providers across Brazil rent capacity from. A neutral network means V.tal does not compete with retail internet providers; instead, it sells wholesale access to any company that wants to offer broadband, making it infrastructure rather than a direct consumer service.

BTG funds already own most of V.tal, having paid R$12.9 billion (US$2.5 billion) for control in 2022 and later buying Oi’s retail fiber base for R$5.68 billion (US$1.1 billion). Buying out Oi’s leftover stake would hand the bank full ownership — which is exactly what the suspended ruling would have done.

For Oi, the freeze is a setback: the proceeds were meant to feed a depleted cash pile, and the company just last week failed to sell another unit, Oi Solucoes, for lack of bids. The company once dominated Brazilian telecoms but has been dismantled piece by piece through two rounds of judicial recovery, leaving V.tal as the crown jewel among dwindling holdings.

BTG is not free to walk away cheaply either, facing a R$2.25 billion (US$435 million) penalty if it withdraws, after already injecting R$500 million (US$97 million) into Oi in April for immediate debt payments. The suspension is provisional, and the dispute now heads back through the courts.

The fight has spilled across borders before: because Oi’s recovery was also recognized by a US court, creditors took their objections to a bankruptcy judge in New York earlier this year. Oi is one of more than twenty listed Brazilian companies now working through court-supervised restructuring, a wave swollen by years of punishing interest rates.

How the appeals court will ultimately rule, whether a new auction might draw competing bids, and what timeline Oi now faces to exit protection all hinge on legal arguments still to be heard. The outcome will shape not only Oi’s survival but also the precedent for how much say creditors retain when recovery plans meet market reality.

Frequently Asked Questions

What is V.tal?

V.tal is Brazil’s largest neutral fiber-optic network, carved out of the telecom Oi in 2021 and now controlled by funds managed by BTG Pactual. It operates hundreds of thousands of kilometers of fiber that smaller internet providers rely on for wholesale access, which makes it Oi’s most valuable remaining asset and a strategic piece of the country’s broadband infrastructure.

Why did the court suspend the sale?

A Rio de Janeiro appeals chamber granted creditors’ request to freeze the sale, agreeing that the R$4.5 billion (US$870 million) price sat far below the R$12.3 billion (US$2.4 billion) minimum set in Oi’s recovery plan. The judge described the offer as less than 40% of the value originally expected, siding with bondholders who said the deal shortchanged them.

What does it mean for Oi’s recovery?

Oi is in its second judicial recovery and counting on asset sales to pay creditors and exit court protection. Freezing the V.tal sale removes an expected cash injection and adds legal uncertainty, leaving the timeline for Oi’s recovery, and BTG’s full ownership of the network, unsettled until the courts rule again.

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