Caixa strengthens contingencies to counter Oi Brazil telecom crisis
Caixa Econômica Federal has intensified technical provisions to protect its institutions, programmes and concessions from any fallout from the emergency restructuring of Oi Telecom.
Grabbing national headlines, the telecoms network was placed under a ‘financial restructuring order’ by the Business Court of Rio de Janeiro, to agree on an approved restructuring plan with creditors.
Oi serves as the chief technology partner of Caixa, overseeing the company’s IT infrastructure for processing its lottery concessions’ wagering transactions.
The telecoms network further enables key IT services for Caixa’s distribution of social welfare benefits across more than 13,000 lottery agencies throughout Brazil.
Addressing the media, Caixa leadership stated that a contingency plan has been prepared following the rapid deterioration of Oi’s financial position, first exposed in April.
The state-owned bank is looking to maintain connectivity to its nationwide lottery network and customers in the event it cannot run said network while going through judicial restructuring proceedings.
The move follows Oi’s disclosure in July that its cash position had fallen from BRL88m (£12m) to BRL19.6m (£2.8m), which triggered Brazil’s court-appointed administrator as the business was considered “unsustainable without further intervention”.
The concerns were formally raised by the Brazilian Federation of Lottery Companies (Febralot). The trade body urged Caixa to establish an emergency contingency plan to move services to a different telecommunications provider.
Febralot also called for Caixa to work with Brazil’s National Telecommunications Agency (Anatel) and the court that oversees Oi’s restructuring to ensure that the service would continue to operate as an essential public service.
The problem extends well beyond the lottery sector in Brazil.
Caixa is one of the federal government’s most important public institutions, as the main distributor of social welfare payments including Bolsa Família, the FGTS worker severance fund and PIS labour benefits, operator of all federal lottery products and the country’s largest mortgage lender through housing policies such as Minha Casa and Minha Vida.
It also manages the government’s payment infrastructure, public sector banking services and development finance programmes.
As a result, Caixa’s lottery agency network is more than a retail gambling venue.
Along with lottery and sports betting transactions, the network provides cash withdrawal, deposits, bill payments, pension transfers and the social benefits that millions of Brazilians depend on. A long-standing interruption in the network would have profound economic and social implications.
Caixa confirms that it is closely monitoring Oi’s judicial restructuring and has already explained the operational and social consequences of any service outage to the supervising court.
The bank also submitted a technical proposal to preserve connectivity and accelerate the digitalisation of its telecommunications network by using other network technologies.
Despite the concerns, Caixa said there was no current indication that services in its lottery estate will be interrupted. Oi is also one of only a few companies in the consortium that provide connectivity services, and others like Sencinet are still providing infrastructure, technical support and field operations.