NII Holdings, Inc. [NASDAQ: NIHD], which operates in Latin America under the brand Nextel, unveiled its consolidated financial results for the first quarter of 2012, reporting revenue of $1.63 billion and operating income before depreciation and amortization of $358 million. Its consolidated average revenue per user was $42, compared with $49 in Q1 2011 and $43 in Q4 2011.
During the quarter, NII added 260,000 net subscribers to its network, bringing its ending subscriber base to 10.9 million, which is a 16% increase year-over-year. According to Jennifer M. Fritzsche, Wells Fargo’s senior analyst, the lower net additions were caused by the company pulling back on its prepaid marketing effort in Argentina, delaying Push-to-Talk (PTT) in Peru, and the Brazilian competitive environment, which lacks 3G phones and services.
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The company said it continues to invest in the deployment of its planned third generation (3G) networks and in building additional capacity for its current networks. Consolidated first quarter 2012 capital expenditures were US$ 234 million. “NIHD is on track to spend US$ 1.7 billion in Cepex FY2012 and expects this to fall in 2013,” said Fritzsche.
During the quarter, Nextel completed enhancements to its 3G PTT services in Peru. Yesterday, the company unveiled its operating subsidiary, Nextel Peru. Along with its partner, Huawei Technologies Co. Ltd, it will launch the U8820 as its first PTT Android-based smartphone in Peru. Launching 3G PTT handsets in Peru is considered an important step. Sales are expected to start in May.
In a statement, Steve Dussek, NII’s chief executive officer, said the company’s consolidated operating results for the first quarter reflect its progress on key priorities to support long-range business goals and the challenges the company faces in certain markets. During the quarter, NII made progress toward launching its planned 3G networks and invested in its distribution channels and support systems, he said.
The company ended the quarter with $4.7 billion in total debt and $2.3 billion in consolidated cash and investments, resulting in a net debt of $2.4 billion.
EVO, CFO and chief transformation officer Gokul Hemmady explained that 2012 is a transformational year for Nextel. The company is taking a balanced approach in its pursuit of profitable growth during this period, he said.
“Our results for the period were affected by a number of factors, including an increase in operating expenses related to the deployment of our 3G networks and pricing pressures driven by a challenging competitive environment in Brazil,” Hemmady said in a statement. “While we expect that these conditions will continue to impact our financial results for the remainder of the year, we are committed to implementing strategies designed to improve our operating performance and that enable us to reach our goals.”
Wells Fargo’s Fritzsche said she would like to see how the Brazil strategy plays out. “The company seemed to indicate it would make rate changes in Brazil to remain competitive, which could have an impact on Brazil,” she said. “[Hemmady] seemed to hedge a bit about the near-term impact on the Brazil ARPU direction. The company continued to emphasize it is making decisions for the long term and in preparation for 3G launch.”
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