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Still Neutral on NII Holdings - Analyst Blog

By: Zacks.com
Posted: 9/20/2013 1:30:00 PM
Referenced Stocks: AMX;DCM;NIHD;TEF

On Sep 19, we maintained our Neutral recommendation on NII Holdings Inc. ( NIHD ). The company reported tepid second-quarter 2013 results with both the top and the bottom lines missing the Zacks Consensus Estimate.

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 deployment plan.

Currently, NII Holdings has a Zacks Rank #3 (Hold).

Other Stocks to Consider

Other stocks in the wireless tower industry include America Movil ( AMX ), Telefonica ( TEF ) and NTT DOCOMO, Inc. ( DCM ). 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 Report

NTT DOCOMO -ADR (DCM): Get Free Report

NII HLDGS-CL B (NIHD): Free Stock Analysis Report

TELEFONICA S.A. (TEF): Free Stock Analysis Report

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