High debt reduces Oi's credit rating.

August 16 (Reuters) - Fitch Ratings on Friday downgraded Brazilian telecommunications operator Oi's rating from "BBB" to "BBB-", maintaining a negative outlook and indicating it may downgrade again if the company's leverage level does not decrease.

The downgrade reflects weak operating results and higher net debt, factors that lead the agency to expect Oi's leverage to remain higher than anticipated in the coming quarters.

"The company's operating results in the second quarter were weaker than expected, partly due to higher costs, some of which were non-recurring," the agency said in a statement.

Fitch assesses that the company's projection of EBITDA between 9 billion and 9,8 billion reais in 2013 is unlikely. In the last 12 months ending June 30, the ratio between net debt and EBITDA reached 3,5 times, the agency said.

The negative outlook reflects Fitch's concerns about Oi's ability to reduce its leverage. "Further downgrades may occur if the company's leverage remains at current levels," Fitch stated.

According to the agency, the outlook could be revised to stable if Oi manages to reduce the ratio between net debt and EBITDA to 3 times or less, with improved operating results.

"Oi's ratings reflect a solid market position, business scale, diverse service platforms, and moderate regulatory risk," said Fitch.

The agency also noted that the company has taken steps to improve its cash flow by reducing dividend payments and planned investments.

"Furthermore, Oi's new management is taking steps to improve the cost structure, which may take time," the agency added, forecasting that leverage will remain above 3 times until the end of the year.

(By Luciana Brunol)