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From Unshakable Leadership to Billionaire Bankruptcy: Understand the Collapse of Oi
The largest operator in Brazil went bankrupt in an outcome that concludes one of the longest and most tumultuous attempts at judicial recovery in the country. The trajectory of the Oi group is a complex case study, marked by ambition, power, and a monumental financial collapse. From an absolute leader in the telecommunications sector to a symbol of one of the largest corporate bankruptcies in Brazilian history, the company that was once valued at over R$ 21 billion plunged into debt, faced two judicial recoveries, and now has its bankruptcy declared by the Justice of Rio de Janeiro.
The final verdict came on November 10, 2025, by the judge of the Seventh Business Court of the Court of Justice of Rio de Janeiro, as reported by the Disruptive Knowledge Channel. With R$ 1.7 billion in debts and 36,000 investors at risk of total loss, bankruptcy was considered inevitable given the inability to restructure. After all, how did a connection giant come to ruin, needing to rely on its competitors to survive and selling “pieces of itself until nothing was left”?
Who Was Oi and How Did It All Begin?
The story of Oi has its roots in 1972 with the creation of Telebrás, a state-owned company responsible for all telephone services in Brazil. However, over the years, Telebrás failed to keep up with demand, showing limited coverage and low service quality. The privatization in 1998 was the landmark that changed this scenario. The state company was divided into 12 regional parts and auctioned off, generating around R$ 22 billion.
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From this division came the “telcos,” including Tele Norte Leste, which operated 16 fixed-line telephone companies. In 2001, Tele Norte Leste unified its operations, creating Telemar. This brand evolved and later gave rise to Oi. Already in 2001, Telemar went public, and in 2002, it became the company with the largest market value in Latin America, launching its mobile division, which was initially called Oi. The turning point came in 2007, when the Telemar group unified all its brands under the single name: Oi.
Oi stood out for its innovative stance. In 2008, it was the first operator to launch 3G technology in Brazil and to offer satellite internet nationwide. With large investments from institutions like Caixa Econômica Federal and Banco do Brasil, Oi was consolidating itself as one of the largest operators in the country, as detailed by the Disruptive Knowledge Channel.
How Much Did the Strategic Error Cost the Company?
Despite the financial peak in the early 2010s, when it reached a revenue of R$ 29 billion, Oi’s prosperity was an illusion. The company continued to accumulate billion-dollar losses, with profit never materializing. One of the strategic errors that drained the company’s cash was the purchase of Pegasus for R$ 35 million, which came with a debt of over R$ 39 million. The intention was to transform Oi into a complete provider of corporate services, but the plan resulted in more debt.
The error that turned out to be the most costly, however, was the purchase of Brasil Telecom in 2008 for R$ 5.8 billion, one of the largest fixed-line telephone operators. What appeared to be a move for national expansion quickly became a problem, as Brasil Telecom carried a debt exceeding R$ 3 billion. The debts accumulated alarmingly. By 2013, Oi’s total liabilities, adding all acquisitions, already exceeded R$ 40 billion.
In search of relief, the company attempted a merger with Portugal Telecom in 2010. Portugal Telecom injected an investment of R$ 5 billion, acquiring 23% of the stake. However, this investment did not come in cash, but in assets, including R$ 3 billion invested in debt securities from Rio Forte, a subsidiary of a Portuguese bank. When Rio Forte went bankrupt, Oi absorbed the loss, seeing its debts soar even further. By the end of 2015, Oi’s total debt was nearing R$ 55 billion, even with revenue close to R$ 28 billion, marking the beginning of the collapse, as well noted by the Disruptive Knowledge Channel.
Why Did the Dominance of Fixed-Line Telephony Collapse?
The biggest crisis in Oi’s telecommunications history occurred in 2015. The fixed-line sector had been for years the heart and main source of revenue for the operator. However, the rapid advancement of mobile telephony and the massive use of smartphones caused the demand for fixed lines to plummet. This change in consumer behavior, coupled with inefficient management and strategic failures, drastically affected the company’s revenue, which was already operating with zero cash and giant debts coming due.
With no alternatives, in 2016, Oi entered its first judicial recovery, which was one of the largest in Brazilian history, with debts exceeding R$ 65 billion. The recovery plan was approved in December 2017, allowing for a 20-year period for payment. The strategy was to sell everything that was not essential. Oi sold assets, towers, and its customer base for TV service. The largest move was the auction of Oi Mobile.
In 2019, Tim, Claro, and Vivo united and acquired Oi Mobile for R$ 16.5 billion. After years of bureaucracy and investigations from CADE and Anatel, the sale was approved in 2022 for R$ 15.9 billion. This sale allowed Oi to pay off part of the debt, concluding the judicial recovery process after 6 years. However, the calm did not last long.
Where Did the Company Go Wrong in Its Final Attempt to Survive?
Just three months after concluding the first judicial recovery, in March 2023, Oi made a new request for judicial recovery, citing even more severe financial difficulties. The company still bore a colossal debt of R$ 43 billion. To try to avoid bankruptcy, the company focused on selling even more assets and concentrating on fiber optics and Oi Solutions (IT corporate services), aiming to serve businesses and public agencies instead of individual consumers.
However, the effort was not enough. According to the court ruling, bankruptcy was inevitable because Oi spent the last few years relying solely on asset sales to keep its cash flow operational instead of generating revenue through its core business. In other words, the company survived by selling “pieces of itself” until there was nothing left. By the end of the first half of 2025, the company had a net debt of R$ 10 billion and only R$ 1 billion in cash, a reflection of its insolvency, according to the Disruptive Knowledge Channel.
Is It Worth Watching the Liquidation?
With the bankruptcy declared, the Justice begins the formal process of liquidation, in which assets will be appraised and sold to pay creditors, following the priority order of bankruptcy law. Shareholders and investors, who are at the end of the line, face a high chance of total loss of investment. Oi’s shares plummeted 35% immediately after the bankruptcy announcement.
Despite the collapse, the Justice determined that Oi should maintain essential services during the transition, such as fixed telephony, emergency networks, and interconnection, ensuring continuity of critical services, such as the 75,500 active public phones and the network of Caixa lottery outlets. Although major creditors appealed the decision, arguing that bankruptcy was not the best alternative, the judge upheld the ruling, closing the chapter of a company that was once the symbol of power in Brazilian telecommunications.
This story of strategic errors and a billion-dollar liability raises many questions: Do you agree with the sale of Oi Mobile to competitors? Do you think the bankruptcy of the largest operator in Brazil impacts the telecommunications market today? Leave your opinion in the comments; we want to hear from those experiencing this change firsthand and felt the impact day-to-day.
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