Latin American wireless operator
NII Holdings Inc.
) provided a dismal outlook for fiscal 2013, slashing its revenue
and OIBDA projections by a significant margin. The new guidance
was on the back of delay in the launch of 3G technology, higher
churn, weaker exchange rate and lower average revenue per user
NII Holdings expects revenue to be in the range of $5.7-$5.9
billion and adjusted OIBDA to stay in the band of $600-$650
million. Additionally, the company expects mid-single digit
subscriber growth for the projected year along with $1 billion of
NII Holdings plan to successfully roll out 3G network across
the highly lucrative Brazilian market. However, it may not prove
to be beneficial for the company as these Latin American markets
are hugely dominated by
America Movil S.A.B. de C.V.
). Moreover, America Movil started deploying 4G LTE across these
regions, which may further expand churn rate for NII Holdings
Furthermore, deployment of 3G networks requires huge cash
which happens to be a major drawback for NII Holdings, thereby
slowing down things further.
Moreover, NII Holdings is involved in the process of phasing
) Integrated digital enhanced technology (IDEN) and consequently
integrating its new Push to Talk (PTT) technology, hence driving
cost and delaying the 3G launch.
To make matters worse, Standard and Poor's (S&P) lowered
NII Holdings' corporate credit rating by one notch to B- from the
previous B rating status. The company's debt now falls six tiers
below the investment grade and is the second of its kind in the
last six months after its rating was lowered in August following
weak second-quarter 2012 results.
Thus, it is to be seen how long NII Holdings can face such
sustained headwinds without merging with any major telecom
Currently, NII Holdings carries a Zacks Rank #4 (Sell).
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