Latin American wireless operator,
NII Holdings Inc.
) reported mixed fourth-quarter 2013 financial results, with the
bottom line missing the Zacks Consensus Estimate but the top line
outpacing the same.
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NII Holdings lost around 246,600 subscribers in the reported
quarter. Moreover, higher churns, weaker exchange rate and lower
ARPU will continue to hurt the company's profitability going
Net loss from continuing operation was $745.6 million or $4.33
per share compared with a loss of $476.4 million or $2.77 per
share per in the prior-year quarter. The number was wider than
the Zacks Consensus Estimate of a loss of $1.74 per share.
Quarterly total revenue was $1,080.9 million, down 21.8% year
over year but above the Zacks Consensus Estimate of $1,060
Operating expenses fell 26.7% year over year to $1,267.5 million
in the quarter. Operating loss was $186.6 million against a
profit of $346.1 million in the year-ago quarter. Increased
promotional activities and service charges are accountable for
the greater-than-expected loss.
Quarterly consolidated Operating loss before Depreciation and
Amortization was $31.5 million against $166 million in the
previous-year quarter. At the end of the fourth quarter of 2013,
NII Holdings consumed cash from operation of $171.7 million as
against a cash flow from operation of $3.3 million in the
At the end of the fourth quarter of 2013, NII Holdings had
$2,319.6 million in cash, cash equivalents and marketable
securities compared with $1,576 million at the end of fiscal
2012. Total debt was $5,696.6 million compared with $4,765.5
million at the end of fiscal 2012. The debt-to-capitalization
ratio was 0.94 against 0.67 at the end of fiscal 2012.
At the end of the fourth quarter of 2013, the total digital
subscriber base of NII Holdings fell 2.2% year over year to
9489,300. The company lost 246,600 net new subscribers against a
gain of 142,700 subscribers in the prior-year quarter. Customer
churn in the reported quarter was 3.85% against 3.40% in the
Quarterly subscriber revenue ARPU was $31 compared with $40 in
the year-ago quarter. Quarterly service and other revenue ARPU
was $35 versus $45 in the year-ago quarter. Quarterly costs per
gross subscriber added were $344 compared with $315 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 sold 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).