NII Holdings Inc.
), the struggling Latin American wireless service provider, has
decided to explore several strategic options for its future
course of business. The company has hired investment bank UBS AG
as an advisory body.
These include forming a partnership with other wireless
operators, disinvestment of some part of its existing business or
a merger or complete sale out of the company to any prospective
NII Holdings, which provides telecom services under the Nextel
brand, is facing severe competitive threat from
America Movil S.A.B.
). These companies are aggressively deploying 3G wireless
technologies in major Latin American markets, offering faster
download speed for smartphones.
NII Holdings failed to establish its iDEN walkie-talkie based
phone service as a potential replacement to other digital
technology formats such as, GSM or CDMA used by mobile-phone
giants in Mexico and Brazil.
Furthermore, NII Holdings is currently under a potential
liquidity trap. The company has approximately $1.7 billion in
cash and $5.8 billion of debt. Management stated that it has
sufficient funds to meet the company's obligations in 2014.
However, NII Holdings is poised to face serious troubles from
2015 until it makes a significant turnaround in its business.
Unfortunately, management is expecting that the subscriber base
will only deteriorate in Mexico going forward. The company has
retained Rothschild Inc. as its financial adviser.
In the fourth quarter of 2013, NII Holdings' total revenue was
down 21.8% whereas net loss was up a whopping 56.3% year over
year. Customer churn was 3.85% compared with 3.4% in the
prior-year quarter. Average revenue per user was $31 against $40
in the year-ago quarter. The stock price has tumbled a whopping
88.5% in the last year. Currently, NII Holdings has a Zacks Rank
In order to overcome financial crisis, NII Holdings struck a
American Tower Corp.
). Per the deal, the company sold 2,790 Brazilian towers and
1,666 Mexican towers for $413 million and $398 million,
In Dec 2013, the company downsized its headquarter's workforce
by over 25% along with eliminating over 1,400 manpower in marker
operations. This restructuring process is aimed to streamline
management's structure, which is expected to improve efficiency
and reduce costs by $50 - $55 million per annum.
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.