NII Holdings Inc.
), which offers wireless service through its Nextel brand in
Latin America, has received the Brazilian government approval to
acquire the privately held Unicel do Brazil Telecomunicacoes
Ltda. The deal will provide NIHD with additional network capacity
in the Sao Paolo metropolitan area.
According to the Brazilian telecoms regulator Anatel, NII
Holdings had earlier filed a change of control request with them.
This extension of support provided by the Brazilian government
will enable NIHD to close the transaction quickly and will cost
the company around $370 million Brazilian Reais (approximately
In the second quarter, the company experienced a massive increase
in subscriber churn mainly attributable to the delay in 3G
service launch across its Latin American markets. Consequently,
in an effort to gain market traction, NII Holdings is looking
forward to continuously expand its 3G footprint by making huge
investment in the Latin American countries like Peru, Chile,
Mexico and Brazil.
Reston, Virginia-based NII Holdings is planning to launch third
generation telecom service in Brazil by the end of this year,
which will allow it to compete better with larger Brazilian
Telefonica Brazil S.A.
) and TIM Participacoes S.A. Last year, the company paid a total
compensation of around $595 million to acquire spectrum in Sao
Paulo, Rio de Janeiro and Brasilia.
Unicel, which is 49% owned by Hits Group of Saudi Arabia, offers
GSM service under the Aeiou brand. The company began offering
wireless service in Sao Paulo in August 2008 and has acquired an
extension of 2.5 MHz spectrum in the 900 MHz band. If NIHD can
clinch the deal, it will not only get hold of Unicel's customer
base, but will also provide it with more space to offer faster
internet downloads and data traffic through its network in
Brazil's largest telecom market.
We, maintain our long-term Neutral recommendation on NII
Holdings. Also, the company retains a Zacks #3 Rank, implying a
short-term Hold rating.
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEF BRASIL SA (VIV): Free Stock Analysis
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