On Jul 3, 2014, we issued an updated research report on
NII Holdings Inc.
). The company lost a considerable number of subscribers in the
first quarter of 2014. Moreover, higher churn rate, weaker exchange
rate and lower ARPU will continue to hurt the company's
profitability going forward.
Except for one quarter, NII Holdings has delivered negative
earnings surprises in three quarters last year, with an average
beat of a negative 72.14%. The company reported mixed financial
results for the first quarter of 2014 with the bottom line coming
in line with the Zacks Consensus Estimate but the top line missing
In order to strengthen its market position, NII Holdings has
introduced a new business objective - Project Accelerate. This is
likely to help the company gain market share and remain competitive
through significant investments in marketing and network
NII Holdings has started offering 3G services in Chile, Mexico and
Brazil. Also, the company continues to shift customers from iDEN to
3G in Mexico. Moreover, launch of high-end smartphones like
) iPhones and Galaxy 4 coupled with the rollout of innovative
service plans targeting high-valued individuals are expected to
boost revenues from the Brazilian markets. Furthermore, with the
deployment of attractive 99 Real rate plans in Brazil, the company
remains highly optimistic of gaining solid subscriber growth going
NII Holdings is dependent on a single infrastructure supplier,
Motorola Solutions, Inc.
). Meanwhile, the company extended its agreement with Motorola
Solutions for the supply of iDEN handsets and iDEN network
infrastructure. Notably, Telef's acquisition of BellSouth
International's wireless assets in Latin America and America
Movil's acquisitions of TIM Peru and Smartcom S.A. in Chile
are intensifying competition in these markets.
Moreover, continuous loss of subscribers coupled with a highly
leverage balance sheet are likely to act as headwinds for the
company moving ahead.
NII Holdings currently carries a Zacks Rank #3 (Hold). Another
stock in the related sector worth considering is
) with a Zacks Rank #2 (Buy).
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