Latin American wireless operator,
NII Holdings Inc.
) reported dismal third-quarter 2013 financial results, with both
the top and the bottom line missing the Zacks Consensus Estimate.
AMER TOWER CORP (AMT): Free Stock Analysis
AMER MOVIL-ADR (AMX): Free Stock Analysis
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
To read this article on Zacks.com click here.
NII Holdings lost around 178,000 subscribers in the reported
quarter. Moreover, higher churns, weaker exchange rate, lower
ARPU, increased operating expenses and a slashed outlook impacted
its stock price. Following the result declaration, stock price
fell by $1.37 or 28.54 to a 10-year low of $3.43.
Net loss from continuing operation was $293.1 million or $1.70
per share compared with a loss of $82.4 million or 36 cents per
share per in the prior-year quarter. The number was wider than
the Zacks Consensus Estimate of a loss of $1.31 per share.
Quarterly total revenue was $1,101.3 million, down 21.7% year
over year and also below the Zacks Consensus Estimate of $1,346
Operating expenses fell 6.2% year over year to $1,264.1 million
in the quarter. Operating loss was $162.8 million against a
profit of $60.3 million in the year-ago quarter. Increased
promotional activities and service charges are accountable for
the greater-than-expected loss.
Quarterly consolidated Operating profit before Depreciation and
Amortization was $16.1 million against $225.4 million in the
At the end of the third quarter of 2013, NII Holdings had
$1,897.3 million in cash, cash equivalents and marketable
securities compared with $1,576million at the end of fiscal 2012.
Total debt was $5,697.7 million compared with $4,765.5 million at
the end of fiscal 2012. The debt-to-capitalization ratio was 0.82
against 0.67 at the end of fiscal 2012.
At the end of the third quarter of 2013, the total digital
subscriber base of NII Holdings fell 1.1% year over year to
9735,900. The company lost 178,400 net new subscribers against a
gain of 81,100 subscribers in the prior-year quarter. Customer
churn in the reported quarter was 3.59% against 2.54% in the
Quarterly subscriber revenue ARPU was $31 compared with $40 in
the year-ago quarter. Quarterly service and other revenue ARPU
was $36 versus $46 in the year-ago quarter. Such reduction in
ARPU was mainly hurt by higher promotional expenses incurred by
the company to counter intense competition and fluctuation in the
foreign currency exchange rate. However, quarterly costs per
gross subscriber added were $245 compared with $319 in the
NII Holdings is targeting the highly lucrative Brazilian and
Mexican markets, which are dominated by
America Movil S.A.B. de C.V.
). Thus, to consolidate its position in these markets, NIHD plans
to deploy its 3G service integrated with the Push to Talk (PTT)
technology by the end of 2013. However, lack of funds has been a
bottleneck for the company.
Moreover, deployment of 3G network requires substantial cash,
which will impede NII Holding's further growth. To make matters
worse, Standard and Poor's lowered NII Holdings' corporate credit
rating by one notch to B-.
In order to overcome its financial crisis, NII Holdings struck a
American Tower Corp.
). Per the deal, NIHD will sell 2,790 Brazilian towers and 1,666
Mexican towers for $413 million and $398 million, respectively.
The proceeds will be utilized to fund its 3G deployment goal
across these regions.
Currently, NII Holdings has a Zacks Rank #3 (Hold).