Latin American wireless operator
NII Holdings Inc.
) declared dismal financial results for the fourth quarter of
2012, hurt by higher churn, weaker exchange rate and higher
operating expenses, arising from the one-time charges linked with
the company's plan to attract customers in Brazil and a non-cash
asset impairment charge to write down the value of its assets in
On a GAAP basis, net loss in the reported quarter was $592.9
million or $3.45 per share compared with a net income of $3.2
million or 2 cents per share per in the prior-year quarter.
Reported net loss was wider than the Zacks Consensus Estimate of
a loss of $1.06 per share.
Quarterly total revenue was $1,465.6 million, down 8.4% year
over year and also below the Zacks Consensus Estimate of $1,475
Quarterly operating expenses spiked 25.3% year over year to
$1,844.9 million. Operating loss in the fourth quarter of 2012
was $379.3 million against a profit of $127 million in the
previous-year quarter. Such massive loss was mainly due to
restructuring expenses borne by the company.
Quarterly consolidated Operating loss before Depreciation and
Amortization stood at a $178.6 million against a profit of $287.2
million, hammered by foreign exchange fluctuation rate, reduced
ARPU and higher cost associated with the roll out of 3G
At the end of the fourth quarter of 2012, NII Holdings had
$1,588.3 million in cash, cash equivalents and marketable
securities compared with $2,666.3 million at the end of fiscal
2011. Total debt at the end of the reported quarter was $4,866.2
million compared with $4,818.2 million at the end of fiscal 2011.
Debt-to-capitalization ratio for the reported period was 0.68
compared with 0.60 at the end of fiscal 2011.
At the end of the fourth quarter of 2012, total digital
subscriber base at NII Holdings increased 6.1% year over year to
11,361,500. During the reported quarter, the company added 2,200
net new subscribers against 466,600 subscribers in the last year
Customer churn in the reported quarter was 3.4% against 1.78%
in the prior-year quarter and was mainly impacted by removal of
unprofitable subscribers in Brazil. Quarterly subscriber revenue
ARPU was $36 compared with $43 in the year-ago quarter.
Quarterly service and other revenue ARPU was $41 versus $48 in
the year-ago quarter. Such reduction in ARPU was mainly hurt by
fluctuation in foreign currency exchange rate. However, quarterly
costs per gross subscriber added was $260 compared with $299 in
the year-ago quarter.
NII Holdingsexpect adjusted OIBDA for fiscal 2013 to remain in
between $600 and $650 million.
NII Holdings plan to successfully roll out 3G network across
the highly lucrative Brazilian market. However, it may not prove
to be beneficial for the company as these Latin American markets
are dominated by
Furthermore, deployment of 3G networks requires huge cash,
which happens to be a major drawback for NII Holdings, thereby
slowing down things further. To make matters worse, Standard and
Poor's (S&P) lowered NII Holdings' corporate credit rating by
one notch to B- from the previous B rating status.
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
costs and delaying the 3G launch.
Currently, NII Holdings has a Zacks Rank #4 (Sell).
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