NII Holdings vows to fight for its place in Brazil

17 Sep 2014

US-based NII Holdings Inc, the parent company of Nextel-branded operators in a number of Latin America countries, which filed for US bankruptcy protection earlier this week, has vowed to hang on to its Nextel Brasil unit, Reuters reports. The holding company says that to effect a turnaround in the Brazilian mobile market – it held a market share of just 1.5% at 30 June according to TeleGeography’s GlobalComms Database – it is banking on regulations and new broadcast spectrum that it hopes will give it a competitive advantage over its bigger rivals. The US-based group considers that such advantages would evaporate were it to merge with a major carrier – one reason why merger talks have not begun despite a wave of consolidation talks currently taking place in the country. According to one unnamed source with knowledge of NII’s position, who wished to remain anonymous due to the sensitivity of its Chapter 11 proceedings: ‘In Brazil, the goal is not to pursue a quick fix and sell it.’

NII Holdings’ decision to file a voluntary petition for Chapter 11 – which protects a company from creditors while it reorganises its assets for a limited period – in a New York court is said to have been prompted by the company’s ongoing struggle with debt, fierce competition in Brazil and Mexico, and a dispute with a US hedge fund. It has, however, been suggested that the decision to file could allow NII Holdings to restructure its debt with creditors by turning them into shareholders, while also allowing it to implement a more sustainable business model with a focus on its core markets of Brazil and Mexico, where it will be ‘business as usual’, the firm said. Reiterating the parent group’s sentiment, on Monday Nextel Brasil issued its own statement saying that it ‘is confident in its growth outlook and reaffirms its commitment to carrying out its activities in the country.’ However, a second source notes that in reality, Nextel is short of options and that having had a chance to pour over Nextel’s books, none ended up submitting a binding offer for it.

To date, Nextel – which has traditionally focused on the business user segment – has struggled to appeal to potential buyers as its iDEN-based networks are seen as antiquated and outmoded. However, it is in the process of upgrading to 3G and reported 234,000 net new sign-ups in the second quarter, while its 4G network launch in Rio de Janeiro in June has already amassed 70,000 subscribers.