What happened

Shareholders in Brazilian telecom Oi S.A. (NYSE: OIBR.C) are having a bad month. Reporting Q2 earnings last week, Oi fessed up to a $385 million loss for the quarter. No sooner had it done so than rumors began circulating that the Brazilian government might decide to "intervene" to save the company (i.e. take it over), and ensure continuity of telecommunications services for Oi customers.

Oi stock closed out the week down 34% from the price at which it began. Today, it shed another 27.1% as of 2:30 p.m. EDT.

View of Brazil from space with Brazilian flag superimposed on it

Image source: Getty Images.

So what

What sparked today's sell-off? It seems Brazilian officials aren't the only ones losing confidence in Oi management. This morning, the newspaper O Estado de Sao Paulo reported that Oi's largest shareholder, GoldenTree Asset Management, has asked the company's board to replace CEO Eurico Teles.  

Justifying its request, GoldenTree explained that Oi needs a CEO "that may execute the operational restructuring recently proposed."

Now what

Adding credence to these latest worries, O Estado notes that the chairman of the board has already proposed giving board member Rodrigo Abreu the CEO's job. This suggests that GoldenTree's request was something more than a suggestion, and that a change in management could already be in the works.

When you consider that Oi has lost money in four of the past five years, and is well on its way to losing money again this year, you might expect investors to be pleased to learn about a change in management. Instead, they appear to be taking fright at the uncertainty of a big change at the top -- and selling off Oi stock en masse.