(Adds details of earnings, comments from CEO)
SAO PAULO, May 10 (Reuters) - Brazilian phone carrier Oi SA posted on Wednesday a first-quarter net loss far smaller than a year earlier, as falling interest rates and a stronger local currency eased the cost of its hefty debt load.
Oi lost a net 200 million reais ($63 million) in the quarter, down sharply from a loss of 1.815 billion reais a year ago, according to a securities filing.
Net services revenue continued to decline in Brazil, falling 7.3 percent from a year earlier as a severe economic downturn weighed on prepaid mobile demand and triggered fiscal crises for cities and state government that struggled to pay for services.
Still, mobile services revenue edged up 0.2 percent from the fourth quarter in a sign that flexible new data plans and early signs of an economic recovery may have stopped the slide.
"I think (mobile revenue) has stopped falling," said Chief Executive Officer Marco Schroeder in a telephone interview. "We've improved our quality indicators and now we should start to show a different trend for the mobile subscriber base and revenue."
Schroeder said Oi has invested heavily in improving service quality and is likely to increase capital spending this year, although not as much as last year's 18 percent rise. Investments rose 2 percent in the first quarter from a year earlier.
Earnings before interest, taxes, depreciation and amortization slipped 2.4 percent from a year earlier to 1.723 billion reais as a focus on efficiency reduced routine operating expenses by about 10 percent.
Lower borrowing costs in Brazil reduced net interest payments by nearly a third, while the appreciation of Brazil's currency against the U.S. dollar reduced the cost of servicing foreign debt in reais.
Looking ahead to the conclusion of Oi's bankruptcy protection process, the biggest of its kind in Brazilian history, Schroeder said he expected the company's reorganization plan to be approved at a creditor assembly by September.
Given how many creditors and shareholders have expressed interest in injecting more cash into the struggling telecom, Schroeder said the inclusion of a capital increase in the reorganization plan may help to garner more support.
$1 = 3.17 reais Reporting by Brad Haynes; Editing by Chris Reese and Lisa Shumaker