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Analyst Blog

On Apr 4, 2014, we issued an updated research report on NII Holdings Inc. . The company lost a considerable number of subscribers in the fourth quarter of 2013. Moreover, higher churns, weaker exchange rate and lower ARPU will continue to hurt the company’s profitability going forward.

Except for one quarter, NII Holdings has delivered negative earnings surprise in three quarters last year, with an average beat of negative 23.91%. The company reported mixed financial results for the fourth quarter of fiscal 2013 with the bottom line missing the Zacks Consensus Estimate but the top line outpacing the same.

In order to strengthen its market position, NII Holdings has launched a new business objective called Project Accelerate. This is likely to help the company gain market share and remain competitive through significant investments in marketing and network infrastructure development.

NII Holdings has already started offering 3G service in Chile, Mexico and Brazil. The company continues to shift customers from iDEN to 3G in Mexico. Moreover, launch of high-end smartphones like iPhones and Galaxy 4 coupled with the rollout of innovative service plans targeting high-valued individuals are expected to boost revenues from the Brazilian markets. Furthermore, with the deployment of attractive 99 Real rate plans in Brazil, the company remains highly optimistic of gaining solid subscriber growth going forward.

NII Holdings is dependent on a single infrastructure supplier, Motorola Solutions Inc. (MSI - Analyst Report). The company confirmed its extended relationship with Motorola Solutions for the supply of iDEN handsets and iDEN network infrastructure. Notably, Telef’s (TEF - Analyst Report) acquisition of BellSouth International’s wireless assets in Latin America and America Movil's (AMX - Analyst Report) acquisitions of TIM Peru and Smartcom S.A. in Chile are intensifying competition in these markets.

Moreover, continuous loss of subscribers coupled with a highly leverage balance sheet are likely to act as headwinds for the company moving ahead.

NII Holdings currently carries a Zacks Rank #3 (Hold).

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