The Latin American telecom operator
NII Holdings Inc.
) has decided to reduce its headquarter's workforce by over 25%
along with eliminating over 1,400 manpower in marker
This restructuring process is aimed to streamline management's
structure, which is expected to improve efficiency and reduce
cost by $50-$55 million per annum. The company will incur a
one-time severance expense of $25-$35 million in 2013. Of this,
around $8.6 million in charges already accounted for in the
company's third-quarter 2013 results.
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. Mounting competitive pressure is
resulting in substantial subscriber loss for NII Holdings.
In the third quarter of 2013, NII Holdings' total revenue was
down 21.7% whereas net loss was up a whopping 255.7% year over
year. Customer churn was 3.59% compared with 2.54% in the
prior-year quarter. Average revenue per user was $31 against $40
in the year-ago quarter.
The company lost around 178,000 subscribers in the third
quarter. Yesterday, NII Holdings announced that it expects to
lose approximately 400,000 subscribers in Mexico during the
ensuing fourth quarter. The estimation is based on the
modification of its customer deactivation policy for inactive
Meanwhile, NII Holdings struck a deal with
American Tower Corp.
) to sell 2,790 Brazilian wireless towers and 1,666 Mexican
wireless towers for $413 million and $398 million, respectively.
The proceeds will be utilized to fund the company's 3G deployment
goal across Latin American regions. Currently, NII Holdings has a
Zacks Rank #3 (Hold).
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
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