NII Customer Retention Challenged

NII Holdings (NIHD - Analyst Report), a provider of wireless services in Mexico, Brazil, Argentina and Peru, continues to be impacted by volatile economic conditions which largely contributed to the sequential decline in net subscriber additions across most of its markets in the last quarter.

The company remains challenged with higher-than-expected customer churn levels associated with aggressive deployments of next-generation wireless services by competitors and weakening economic conditions in Mexico and Argentina.

On a positive note, Brazil remains the primary growth area for NIHD. NIHD is also expanding the geographic coverage of its iDEN network (espacially in Brazil) while preparing for the launches of its 3G services. We believe operating results in the upcoming quarter are likely to be affected by Latin American currency weakness against the US dollar.

We reiterate our Hold recommendation as we assess subscriber retention trends and reduced guidance levels provided by management.