Simultaneous interpretation into English. To access simultaneous translation, click on "Interpretation" via the globe icon at the bottom of the screen and choose your preferred language: Portuguese or English. We also remind you that this meeting is being recorded and will be available later on the company's investor relations website. During the company's presentation, all participants will have their microphones disabled. To join the question queue, please click on the Q&A icon at the bottom of your screen and enter your name and company. After the presentation, we will start the question- and- answer session. I will now hand over to Mr. Mateus Bandeira, CEO of Oi. Mr. Mateus, over to you.
Good morning. Welcome to our conference call for the third quarter of 2024. I have here Cristiane Barreto, our CFO; Rogério Takayanagi, or Taka, our Director of Strategy and Transformation.
As usual, I'm going to use these initial moments to explain a little the evolution of the company, some of its transformation pillars, and next, we can move on to the traditional presentation for Q3, and then we open for questions at the end. For those following us, let me go straight to slide number four. The company is evolving in its transformation pillars, specifically about the restructuring process. It's important to emphasize once again that we reduced by 60% our net debt, fair value, besides a strong reduction in credit with our suppliers, Take-or-Pay. Recently, we concluded a critical phase, the approval by the board, after Anatel's consent to increase capital. There is just a tax compliance to be concluded so that we can deliver the shares and the implementation of the new governance. I'll give you further details on the next slide.
As for asset sales, we concluded the second round of the process. The V.tal offer, worth BRL 5.7 billion, was deemed the winning offer following the creditor's decision and also the ruling of the court. The offer entails a combination of debt settlement through credit and the issuance of new V.tal shares without no cash component, unlike what we had predicted in the economic viability study, that 100% was supposed to be in cash with a part to be retained by the company. So this has an impact on the company and our cash flow. However, we will continue our efforts to support the implementation of this transaction and to sign the sales and purchasing contract and to obtain the approval.
As for the legacy business, we are finalizing the procedures to complete the consensual solution and sign the authorization term, which will enable the regime migration, and we will then implement the obligations related to the migration, such as the maintenance of services in COLR areas, where Oi is the only viable telephone service, and to seek compensation for historical imbalances of the concession. Moving on to slide number five, I would like to give you more details about our timeline and shareholding structure. Following the issuance of common shares for credit capitalization in line with the approval by the court on November 4th, last Monday, we received Anatel's consent, subject to compliance with commonly established conditions. Once compliance is verified, we will proceed with the issuance and delivery of local shares and ADRs to creditors and shareholders who exercise their preemptive rights.
We will then proceed with the implementation of the new governance in accordance with the terms of the plan by convening an extraordinary general meeting to establish the new composition of the company's board of directors to be elected by the majority of shareholders. Should that happen in the next few days, we will call the assembly and the new governance can be established in the beginning or in mid-December. We have completed the issuance of new common shares, and we are now delivering those shares to creditors, be it in the form of local shares at the local stock exchange or ADRs in the U.S. over-the-counter market, and with that, those shares now represent 80% of the new total of the creditors. Under option one, become the largest shareholders of Oi.
They will hold about 79% of capital, while the remaining 1% was allocated to shareholders who exercise their preemptive rights. In this context, as publicly disclosed on October 28, PIMCO, SC Lowy, and Ashmore will become significant shareholders of Oi, with holdings over 5% of the total capital. I'll speak a little about the highlights of this quarter's results on slide seven now. In the third quarter of this year, the revenue growth was significantly impacted by the accelerated decline in legacy services in all business B2C and B2B, and also because of a more rational approach, especially in the bidding process for new contracts with corporations and governments, resulting in positive impacts on profitability to the detriment of revenue.
So we had revenue of BRL 2.1 billion, accounting for a drop of 14% compared to the previous years, especially due to the reduction of the so-called non-core revenue, copper and DTH. If we disregard that, the drop was 8.5%, with a growth of 0.8% of Oi Fibra, and even so, the core revenue was BRL 8.5 billion, or 1.5, reaching 75% of our total revenue. Fiber revenue totaled BRL 1.1 billion, remaining nearly in line with the previous year. Compared to last quarter, it recorded a 2.8% increase, with fiber ARPU up 3% quarter- over- quarter. The connected home base remained stable, and that reaffirms the positive effect of our strategy, focusing on quality and maximizing customer-based profitability. As for Oi Solutions, in addition to the significant decrease in revenue coming from our traditional telecom services, Oi maintains its commercial strategy, concentrated on margins and especially in higher value-added segments.
Approximately 30% of B2B revenue already comes from IT services, which are increasingly relevant to customers with a greater growth potential. As for efficiency, the implementation of new initiatives with cost discipline internally, we had a 20% reduction in expenses and investments this quarter, excluding fiber infrastructure and rentals, with an important reduction in all manageable OPEX lines. I now turn it over to Taka, Rogério, who will discuss the evolution of Oi Fibra and Oi Solutions operations. Thank you, Mateus. Slide eight, the evolution of our revenue. The consolidated net revenue had a decline of 14.4% when compared to Q3 2023 last year. The result, again, was impacted by the dynamics of the non-core services because of legacy copper, microwave, satellite, etc. On the positive side, new services, better outlook of fiber already account for 75% of the total revenue.
Speaking of core revenue, they had a drop of 8.5% compared to last year. The decline reflects a commercial strategy focused on profitability, quality of new sales, and active management of B2B and B2C, aiming at healthier margins to the company, as we will see later. On the next slide, number nine, we have the results of Oi Fibra this quarter. Here, we highlight the steady revenue performance, which showed slight annual growth, 2.8% quarter- over- quarter, almost 3% increase, reverting the downward trend observed in recent quarters. The connected homes remained stable due to the optimization of the customer base that contributed with greater penetration, with more profitable customers. Because of a commercial active initiative, we focused on regions that showed greater profitability and lower delinquency that helped us reduce churn rate, delinquency, especially involuntary churn, and even the rationalization of acquisition efforts.
Now, Fibra's ARPU grew 0.8% as compared to the previous year and 3.1% quarter- over- quarter, reflecting the quality of the commercial process, improved process for acquisition and retention offers. Now, on slide 10, we highlight the performance of Oi Solutions. Revenues have been influenced by the ongoing decline in demand for copper-based services and microwave legacy systems. Part of our contract with our customers are served by copper-based services where fiber is not present. So a strategy with a more selective approach with contract renewals and new competitive processes focused on profitability impacted our commercial results. Total revenue for Oi Solutions decreased by 26.6% compared to the previous year. The telecom line, which included more commoditized connectivity services, had a 20% reduction, while the other line, which includes copper-based services, declined 38%.
On the right of this slide, we can see some IT items, a solid growth of 8% compared to the previous year. UC&C and IoT grew 60% and 5% respectively.
Information and Communication Technology revenues represented approximately 29% of Oi Solutions' total revenue in the third quarter of 2024. In spite of the results that were not on par of what we wanted, we believe that this more rational approach to competitive process and bids will focus on our efforts and boost sales. This is offsetting the negative impact on revenue, so we've been able to boost our growth, and we have implemented specific actions to expand the sales funnel. Now I'll hand over to Cristiane Barreto, our CFO, to present the slides on our cost structure and financial performance.
Thank you, Rogério, Morning, everyone.
Moving on to slide 11, I would like to highlight that this quarter efficiency initiatives generated considerable savings on a year-over-year basis, with reductions across all manageable cost lines. Routine operating expenses totaled BRL 2.4 billion, reflecting a 10.6% reduction compared to the same period last year. Excluding rent and insurance costs, which reflects the current dynamics of the fiber operational model, routine costs and expenses showed a year-over-year reduction of 17.2%. On the right side of the slide, we showed that this reduction was supported by three main areas. Commercial area, we decided to adopt a strategy focused on quality and profitability, rationalizing commercial spending by adjusting policies and restructuring channels, promoting more quality on customer acquisition and intensifying digital channels. This approach reduced billing, sales, and customer relationship expenses, advertising and marketing costs, and delinquency levels.
On a legacy front, we achieved efficiencies with a new management initiative within the limits established by regulatory requirements, which led to a 25% reduction in network maintenance expenses compared to the previous year. We also engaged in an intense effort to renegotiate content acquisition contracts, especially those that relate to legacy technologies, such as DTH. These initiatives resulted in annual reductions of 25%-30% in these expenses throughout all quarters of 2024. It also impacted the client base, and we also focused on achieving a leaner, simpler, and more agile organizational structure in response to ongoing transformations. We recorded an annual reduction of approximately 19% in total headcount in the last two quarters and an approximate 13% reduction in personal expenses in the same period. We continue to maintain strict cost control to eliminate non-essential expenses leading to significant decreases, for example, in a specialized services line.
Moving on to slide 12, I'd like to underscore the efficiency opportunities due to imminent migration from the concession model and its impact that delays in completing this process are having on our planned scenario. At the bottom of the slide, the legacy operation currently represents a high cash consumption for Oi due to accelerated revenue decline and lack of flexibility in proportionally reducing costs. This has not been taken into account in our JRP. Most of these costs reduced, so our CapEx reduced to 39% in the current quarter, showing the imbalance between the revenue and cost reductions. Most of these costs could have been reduced as we migrate customers from legacy technologies to other technologies and disable unused infrastructure. Additionally, Oi continues to incur penalty payments in line with current regulations, also as disclosed on our JRP.
Plan also includes the sale of Oi's real estate assets, 7,900 properties, land and buildings throughout Brazil. Such sales could be accelerated with the effective regime migration. Our legacy service, especially those that are connected with the copper line, as stated, as previously mentioned, are in line with the previous quarter when we exclude the non-recurring effects of the 2Q24, mainly related to the surplus of the pension plan and the restructuring effects of the take-or-pay contracts. Looking ahead, we see significant opportunities to improve profitability through additional cost reduction initiatives related to legacy services as we transition to the authorization regime and resize operations following the sales of Oi Fibra, reducing operational costs. On the right side of the slide, third quarter CapEx totaled BRL 109 million, representing 5% of revenue, decreasing 3.1 percentage points year- over- year.
This substantial reduction was driven by the gradual implementation of efficiency initiatives and optimization in investment allocation in line with a more selective and profitability-centered approach. Slide 14, we highlight our cash position on the third quarter of 2024, BRL 1.3 billion at the end of the period, 30% decrease over the quarter. Operational consumption partially offset by disbursement of new financial with V.tal in August. Third quarter CapEx reflects the Oi new phase transitioning to a business model with a lower CapEx. This reduction reached 46%, with a 91% in a total directed towards core operations. Working capital consumption was primarily due to payments to creditors and partner suppliers, as provided for in our judicial reorganization plan, JRP. Payments of interest-bearing liabilities were reduced by 14% due to newly negotiated terms of the plan with satellite suppliers under take-or-pay agreements.
Non-core operations consumed BRL 351 million primarily due to payments of obligations to Anatel, any amount of BRL 102 million, in addition to expenses related to compliance and implementation of the JRP. Turn over to Bandeira now, Mr. Mateus Bandeira, our CEO, for final remarks.
Thank you, Chris. As we've said, we have moved forward significantly, both in our JRP as well as on other fronts. And as main challenges now, we have first to conclude our regime migration process, and also we would like to resume our arbitral procedures to mitigate the cash flow impact. We also have the closing of the UPI ClientCo and we face the lack of a cash position in the winning bid and the higher costs that were not foreseen in our JRP. In the operational front, we are focused on recovering revenues in the B2C and B2B fronts.
Also, we have other initiatives coming with the new governance that will be led by the companies' creditors that will now be our main shareholders. Thank you very much. We'll now open to our Q&A session.
We will now begin the question- and- answer session. To join the Q&A and ask your questions, please click on the Q&A icon at the bottom of your screen and enter your name and company. After your name is announced, a request to activate your microphone will appear on your screen, and you need to click on it to ask your question. If you prefer, you can forward your question in writing. [Foreign language] . Okay. So starting. Our first question comes from Ramon from UBS. Ramon, we will now enable your audio so that you may proceed with your question.
[Foreign language]. Good morning, everyone.
Thank you for selecting my question. I have two questions. First, in your presentation, you mentioned the delay in the necessary approvals to migrate to the new concession regime. Can you please quantify in financial terms the impact of such delays for Oi? Second, with regards to the V.tal offer for the fiber line acquisition, since they don't have a cash flow component, what are the implications for Oi? Thank you.
Thank you for both of your questions. With regards to the first one, as I've said, we did not forecast in our JRP the approval till the first quarter. We were not forecasting paying any fines from the transition from the previous model, so that has consumed BRL 160 million from our cash flow.
And also, we have an estimate of delay in the raising of resources of BRL 350 million due to the delay in such model migration that would have been offset by moving copper to other technologies. That also impacts the selling of real estate. We had a bold plan to start selling the real estate. Some of them were still reversible, so with the delay in the migration, we are hampered from maximizing that value raising through the sale of real estate. As it is of public knowledge, in our JRP, we had two alternatives to sell ClientCo. One was with the cash flow round that has supported our initial plan, forecasting a BRL 7.3 billion sales with a retention of BRL 1.5 billion and a payment of BRL 1.4 billion. So that is a negative impact of almost BRL 2 billion comparing to the accrual scenario, the actual scenario.
As also disposed of in our JRP, should we move on to the second option, we have the forecast of BRL 1.5 billion being acquired according to the JRP.
Thank you so much.
Thank you. I'll now turn over to Mr. Luis Plaster, our investor relations director, for questions from the audience.
Thank you, Rodrigo. We received a few questions on the platform, and I'll mention them. First, from Guilherme Borges, an investor. His question is to Mateus. Could you give us some more color about the net value that Oi expects to obtain from arbitration and when arbitration would be concluded?
Thank you for the question, Guilherme. On the arbitration amount, the estimated amount in today's terms is about BRL 60 billion, as we reported previously in our earnings call of Q2.
So the estimated amount of what has been requested is about BRL 60 billion, but the final amount will depend on the arbitration decision that will depend on an audit. We can guess the amount, but about BRL 60 billion, and we're going to wait until the audit is concluded and the decision. When we hope to have that as soon as possible, perhaps in a short period of time, we might have a preliminary decision to determine a range for that amount.
Thank you, Mateus.
[Foreign language] . Thank you. I have here two more questions from Guilherme. The first also goes to Mateus. Can creditors sell shares in the market when they receive those shares if you think that will happen? And the second question is when new shares will be able to be freely negotiated in the market?
Thank you, Guilherme.
I can't speak on behalf of creditors. What I can say is that once those conditions are solved, we need three working days to deliver those shares. And to your first question, there is no lockup of those shares. They can sell freely those shares. Obviously, to exercise their political rights, they must have them. But should they wish, they can sell them immediately and freely. But there is no way I can answer that question in the name of creditors.
Thank you, Mateus.
The next question comes from Revisson Bonfim. What is your expected cash use in Q4, and what is Oi doing to protect its cash position?
Thank you very much for your question. We are still adopting strong practices to reduce costs, to reduce the cash impact in Q4. We will continue that, and we are trying to recover amounts in arrears.
We still have a number of activities of additional liquidity, the transfer of rights, and we are discussing additional deadlines to protect cash until the cash situation is normalized over next year.
Thank you very much, Chris.
The next question comes from Anton. The question is in English, but we will answer that in Portuguese. We have simultaneous interpretation, but can you explain where things stand with Anatel's authorization migration? What is the updated timeline? And how much did we pay in fines during Q3 to Anatel?
Thank you, Anton. On the authorization, we've already obtained all authorizations, the confirmation of AGU and the migration document. It's with Anatel, and it's just one last obligation of the company, which is the release of collaterals to cover those obligations we take on, which is to provide services in COLR areas.
Those collaterals were given through a mandatory deposit at Banco do Brasil, and that deposit withdrawal will depend on the Minister of the Supreme Court. So we must comply with the formality that was already part of the plan. That collateral has been accepted by Anatel and AGU. That is likely to happen in the next few days. Maybe today. We do not know. But we depend on a decision by the Supreme Court or that collateral. As soon as that happens, the authorization consent will be issued.
Perfect. Thank you, Mateus.
[Foreign language] . A second part of the question, which was how much fine did we pay until the AGU ratifies? BRL 160 million were paid that were predicted in the plan. Thank you.
[Foreign language] .
If I may add on the regulatory scenario, if arbitration had been resumed, I'm going to ask Mateus to clarify the arbitration question.
Thank you for the question. I don't know who asked it, but arbitration was not resumed on October 1st. It will be resumed five days after the efficacy of the terms. That will depend on the compliance of the last condition, which is preventing the migration consent. The collaterals to cover the COLR migration term will be approved. Five days after, arbitration will be resumed. Carlos Eduardo Gabriel had asked that question. Thank you, Carlos.
We have a question from Douglas. The question goes to Rogério. After Oi Fibra clients are sold to V.tal, what will be the company's strategy? Will the company still sell broadband plans? What will happen after those clients are sold to V.tal?
Thank you, Douglas.
The fiber unit we are selling is a retail unit with small businesses. After that sale, Oi Soluções will continue. It will be our main focus. Oi Soluções sells a complete portfolio, even internet access, but focused on large accounts. We will keep on selling, but no longer with that focus on retail, but large corporate accounts instead.
Thank you.
Another question on operations from Michael. Is there any partnership between Oi Soluções and V.tal, and what will that relationship look like after the sale of ClientCo?
As our infrastructure was built based on fiber that we sold to V.tal, a relevant part of the infrastructure will continue in that commercial relationship, but a commercial relationship like any other. V.tal has a very robust and broad network countrywide, the main supplier of neutral network. Oi Soluções uses V.tal's network, not exclusively. We must hire third-party links to supplement our infrastructure.
A major client normally has access spread throughout the country where V.tal is present. Because of their competitiveness, we prefer to use them whenever they are present because of the delivery speed, and we supplement the network with third-party networks.
Thank you.
We have two questions here. The two final questions. From Revisson Bonfim. From StoneX. Do you intend to raise more capital? More than one second question about the expected fines yet to be paid by Oi in Q4, and how far would those fines go?
Thank you for the question, Revisson. As I mentioned, the plan already anticipated if we didn't have cash a possibility to raise BRL 1.5 billion. So we are studying the need over next year based on the company's cash flow. Since in our economic assessment, we had that possibility of raising BRL 1.5 billion to meet our migration requirements on fines.
No, the term negotiation has eliminated. We are not likely to pay Anatel any fine, only those BRL 170 million that we already paid.
Thank you, Chris.
With that, we've covered the main questions. Some topics were recurring. We are available in our investor relations area, and I turn over to Mateus for his final thoughts. Thank you.
Thank you. I just would like to thank you all for being with us during this earnings call, and I would like to thank you for your questions as well as Plaster said. We are here for you if you have any further questions. Thank you all so much.
Thank you. This concludes our third quarter of 2024 Oi Earnings presentation. For more information, please check the company's IR website, www.oi.com.br/ri. You can discuss.