NII may file for bankruptcy as revenue plummets, net loss widens

12 Aug 2014

US-based operator NII Holdings, which provides wireless services under the brand Nextel in Brazil, Mexico, Argentina and Chile, has said it will likely file a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, as a result of the company’s financial performance combined with its inability to satisfy certain financial covenants under its existing debt obligations. NII Holdings reported consolidated operating revenues of USD968.8 million for the second quarter of 2014, a decrease of 23% from USD1.26 billion in the year-ago period. Consolidated adjusted OIBDA loss, which excludes the impact of non-cash asset impairments, restructuring charges and other unusual items, totalled USD137.1 million for 2Q14, compared to positive OIBDA of USD100.9 million in the same quarter of 2013. NII said its consolidated net loss from continuing operations widened from USD396.4 million to USD623.3 million over the same period, while it ended the second quarter of 2014 with net debt of USD4.8 billion. ‘Despite the actions we’ve taken to improve our operational performance, we have fallen short in our efforts, leaving the company with a liquidity position that is not sufficient to support the business,’ commented Steve Shindler, NII Holdings’ CEO, adding: ‘With our current liquidity position and the cash demands on our business, these ongoing initiatives will not be sufficient to allow the company to continue to operate unless we are able to restructure our debt obligations, find a strategic solution or some combination of those approaches. As a result, we will need to make some key decisions in the short term to address our liquidity situation in an effort to secure the best possible path forward for our stakeholders.’

NII recorded a net subscriber loss of 77,000 during the three months to end-June 2014 with 9.361 million users, a decrease of 6% from 9.914 million a year earlier. W-CDMA customers totalled 2.984 million at the end of 2Q14, up from 885,700 twelve months earlier. Subscribers in Brazil stood at 4.188 million (including 1.05 million W-CDMA users), up from 3.879 million at mid-2013, while customers of Nextel Mexico fell 26% year-on-year to 2.930 million (including 1.691 million 3G) and Nextel Argentina users grew 5% to 1.976 million.