On Sep 19, we maintained our Neutral recommendation on
NII Holdings Inc.
). The company reported tepid second-quarter 2013 results with
both the top and the bottom lines missing the Zacks Consensus
Why the Reiteration?
Higher churn, weaker exchange rate, lower ARPU, higher operating
expenses and stiff competition in the Latin American markets may
act as headwinds for the company going forward. Moreover, slower
3G deployment and costs associated with it may further undermine
the company's top-line growth.
NII Holding's leverage ratio has also increased from 0.68 in 2012
to 0.79 at the end of the second quarter of 2013, indicating
higher dependency on debt financing. We believe that the company
will issue more such senior notes in the upcoming quarters in
order to fund its 3G network rollout across its footprint, which
in turn will further increase its leverage ratio.
Nevertheless, the ongoing restructuring of the business model
coupled with the launch of the Atrix HD smartphone in Mexico may
act as tailwinds for the company in the long run. Moreover, the
company will also sell 2,790 Brazilian towers and 1,666 Mexican
towers for $413 million and $398 million, respectively, to
American Tower. The proceeds will be used to finance its 3G
Currently, NII Holdings has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks in the wireless tower industry include
NTT DOCOMO, Inc.
). Currently, both Telefonica and NTT DOCOMO have a Zacks Rank #2
(Buy) while America Movil has a Zacks Rank #3 (Hold).
AMER MOVIL-ADR (AMX): Free Stock Analysis
NTT DOCOMO -ADR (DCM): Get Free Report
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
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