Latin American wireless operator,
NII Holdings Inc.
) targets to sell 4,500 wireless towers by the middle of fiscal
2013 across Brazil and Mexico. The amount to be realized from the
sale will be utilized to fund its 3G deployment goal across these
NII Holdings is planning to raise nearly $1 billion during
fiscal 2013 either through tower sale or by issuing senior notes.
After selling the towers, the company may lease them back.
At the end of the fourth quarter of 2012, NII Holdings had
$1,588.3 million in cash, cash equivalents and marketable
securities. In addition, the total debt at the end of the
reported quarter was $4,866.2 with a very high
debt-to-capitalization ratio of 0.68.
To make matters worse, Standard and Poor's (S&P) lowered
NII Holdings' corporate credit rating by one notch to B-, which
is close to junk status. So it will be difficult for the company
to raise enough debt from the market.
NII Holdings's objective to cover both the highly lucrative
Brazilian and Mexican market require huge cash. These markets are
hugely dominated by
America Movil S.A.B. de C.V.
). To counter such competition, NIHD plans to aggressively
rollout its new 3G service integrated with the Push to Talk (PTT)
technology by the end of 2013.
On the flip side, America Movil started deploying 4G LTE
across these regions, which may increase customer churn for NII
Holdings going forward.
Moreover, NII Holdings is involved in the process of phasing
) Integrated digital enhanced technology (iDEN) and consequently
integrating its new Push to Talk (PTT) technology, hence driving
cost and delaying the 3G launch.
Thus, it is to be seen how NII Holdings survives against such
sustained headwinds without merging with any major telecom
Currently, NII Holdings carries a Zacks Rank #3 (Hold).
AMER MOVIL-ADR (AMX): Free Stock Analysis
MOTOROLA SOLUTN (MSI): Free Stock Analysis
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