October 8, 2015 / 7:38 PM / in 4 years

Exclusive: NII Holdings to explore options for Brazilian Nextel unit - sources

NEW YORK/SAO PAULO (Reuters) - Latin American mobile service provider NII Holdings Inc (NIHD.O) is planning to explore strategic alternatives for its Brazilian unit, which operates under the Nextel brand, according to people familiar with the matter.

NII, which has a market capitalization of about $700 million, has spoken to investment banks in recent weeks about hiring a financial adviser to explore its options, including a potential sale, the people said this week.

The sources asked not to be identified because the deliberations are confidential. NII shares closed down 4.6 percent at $6.64 on Thursday.

Nextel Brazil is often in touch with banks over financing and strategic issues, although there are no plans to sell the company in the short term, Chief Executive Officer Francisco Valim told Reuters in a phone interview.

The company is looking for a buyer for its towers, Valim said. This would help Nextel Brazil cut operating costs, boost profitability and free up cash, he added.

“We are constantly looking for more alternatives to ramp up our ability to compete,” said Valim, who became the company’s top executive late in August.

Nextel Brazil is by far the largest part of NII Holdings’ business. NII Holdings filed for bankruptcy protection in the United States in September 2014 after struggling with $5.8 billion in debt and fierce competition in Brazil and Mexico.

The Reston, Virginia-company emerged from bankruptcy in June under the control of bondholders that included Aurelius Capital Management. Its shares starting trading again on Nasdaq in July, and the company appointed a new president of the Brazilian unit in August.

NII sold its Mexican wireless business in January for $1.875 billion to AT&T Inc (T.N) and has since divested businesses in Chile and Peru. It also struck a $178 million deal to sell its unit in Argentina to Grupo Clarin, but Argentina’s telecommunication regulators rejected the sale on Sept. 25.

Nextel’s network works on decades-old radio technology that lets customers use their cell phones like walkie-talkies. Modern smartphones, on the other hand, have an array of instant messaging options that have made the push-to-talk function obsolete.

Its Nextel Brazil unit generated $303.2 million in service and other revenues and $78.8 million in segment losses for the three months ended June 30.

While rivals are already operating fourth-generation (4G) cellular networks in Brazil’s biggest cities, Nextel is just building its own network and relying on rules that allow small carriers to avoid paying interconnection fees.

Reporting by Liana B. Baker in New York and Guillermo Parra Bernal in Sao Paulo; Editing by Lisa Shumaker and Cynthia Osterman

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