Dismal 4Q for NII Holdings - Analyst Blog

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Latin American wireless operator NII Holdings Inc. ( NIHD ) declared dismal financial results for the fourth quarter of 2011.

Net loss in the reported quarter was $8.7 million or 5 cents per share compared with a net income of $98.6 million or 57 cents per share in the prior-year quarter. Reported loss per share of 5 cents was worse than the Zacks Consensus Estimate of a profit of 13 cents.

Total revenue in the quarter was $1,595.4 million, up 5% year over year but missed the Zacks Consensus Estimate of $1,680 million.

Quarterly operating expenses increased 14.6% year over year to $1,479.1 million. Operating income in the fourth quarter of 2011 declined 49.3% year over year to $116.3 million. The decline in operating income was mainly attributable to higher selling marketing expenses, increase in customer retention cost, expenditure pertaining to the implementation of new W-CDMA based networks.

Operating margin in the reported quarter was 7.3% compared with 15.1% in the prior-year quarter. Quarterly consolidated OIBDA (Operating Income Before Depreciation and Amortization) stood at $276.6 million, down 26.9% year over year.

At the end of the fourth quarter of 2011, NII Holdings had $2,666.3 million in cash, cash equivalents, and marketable securities compared with $2,305 million at the end of fiscal 2010. Total debt at the end of the reported quarter was $4,826.6 million compared with $3,265.4 million at the end of the previous year. At the end of the third quarter of 2011, debt-to-capitalization ratio was 0.61 compared with 0.50 at the end of fiscal 2010.

Operating Metrics

At the end the fourth quarter of 2011, total digital subscriber base at NII Holdings increased 18.7% year over year to 10,711,900. During the reported quarter, the company added 466, 6000 net new subscribers, up 7% year over year.

Customer churn in the reported quarter was 1.78% versus 1.60% in the prior-year quarter. Quarterly ARPU was $43 compared with $50 in the year-ago quarter. However, quarterly costs per gross subscriber added was $303 compared with $313 in the year-ago quarter.

Fiscal 2011 Financial Outlook

Management forecasts net new subscriber additions of 1.4 million for fiscal 2012. Consolidated operating revenue is expected to be $7.1 billion. Consolidated OIBDA is projected at $1.4 billion. The company expects capital expenditure to be $1.7 billion.

Recommendation

Increased promotional expenses and stiff competition from America Movil ( AMX ) and Telefonica ( TEF ), who are aggressively deploying next-generation wireless technologies in major Latin American markets, may hinder its near-term growth. We, thus, maintain our long-term Underperform recommendation onNII Holdings.

Currently, NII Holdings has a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock.


 
AMER MOVIL-ADR ( AMX ): Free Stock Analysis Report
 
NII HLDGS-CL B ( NIHD ): Free Stock Analysis Report
 
TELEFONICA S.A. ( TEF ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AMX , NIHD , TEF

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