NII results ‘fall short of expectations’; tower sale planned in Brazil, Mexico

6 Feb 2013

US-based operator NII Holdings, which provides wireless services under the Nextel brand in Brazil, Mexico, Argentina, Peru and Chile, has announced its preliminary consolidated financial results for the fourth quarter and full year ended 31 December 2012. The company said it expects to report consolidated operating revenues of approximately USD1.5 billion for Q4, with net subscriber additions of around 2,200 and total capital expenditures of approximately USD525 million. For the full year 2012, it expects roughly 650,000 net subscriber additions, bringing its total customer base to 11.4 million at 31 December 2012, an estimated 6% increase over year-end 2011. Annual consolidated operating revenues are estimated at USD6.1 billion, with adjusted operating income before depreciation and amortisation (OIBDA) of between USD930 million and USD950 million. NII’s adjusted OIBDA excludes the impact of non-cash impairment and restructuring charges, including a USD300 million impairment charge related to the firm’s operations in Chile. Total capital expenditure for 2012 is expected to be USD1.5 billion. ‘While 2012 was a pivotal year for NII as we made progress in the deployment of our 3G networks and new service offerings, we fell well short of expectations. We intend to get back to delivering results in 2013 that meet expectations through solid execution and have already taken steps to streamline our business operations both at our headquarters and in our markets consistent with that goal,’ commented Steve Shindler, NII Holdings’ chairman and interim CEO.

Nextel Brazil removed ‘certain unprofitable customers’ from its subscriber base in the last three months of 2012, which resulted in an estimated 292,000 net subscriber loss for its operations during the quarter. The Brazilian unit expects to offer voice and data services on its new 3G network in Sao Paulo by the end of 2Q13 and in Rio de Janeiro by the end of the year. In Mexico, the company is expected to report 41,000 net subscriber additions for 4Q12 and remains on schedule to extend its 3G network footprint to match its existing iDEN coverage by the end of Q3 2013. NII revealed that it is in the process of pursuing a sale and leaseback of up to 4,500 telecoms towers in Brazil and Mexico through a competitive bidding process. The firm is currently evaluating offers from a number of interested parties and expects to be in a position to complete these transactions during 2013. Elsewhere, NII said it is continuing to support its operations in Peru, Chili and Argentina, while also ‘exploring strategic options for these markets, such as partnerships, service arrangements and asset sales’.

In light of its plans to focus on its core markets and 3G network deployment, NII forecasts consolidated adjusted OIBDA in the range of USD600 million to USD650 million for 2013 and a fall in consolidated revenues to USD5.7 billion-USD5.9 billion. The company anticipates mid-single digit growth rate for its consolidated subscriber base, while CAPEX is expected to fall by around one-third in 2013 to USD1 billion.