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Thursday, December 19, 2013

Our Top 2014 Stock to Buy NII Holdings Inc ( NIHD ) $NIHD #OTC

Our Top 2014 Stock to Buy stocks under 5 a share - NII Holdings Inc ( NIHD ) $NIHD

Nii Holdings, Inc. (NIHD)
2.375 ▲ 0.345 (17.00%)
Volume: 4,885,006 @ 12:42:53 PM ET


Day's Range


2.01 - 2.39

NII Holdings (NIHD) announced a deal to sell shares of its Nextel Peru indirect subsidiary for approximately $400 million. We previously quoted a rumored price of $500 million which may have included certain reimbursements of capital commitments and inventory on top of the share purchase. The deal importantly comes in at the top end of its range and shows the company's regained position of strength in negotiations to sell its non core operating territories and other assets. Perhaps more significant is the additional liquidity on NIHD'S balance sheet from this sale should enhance the value of the tower division which is in the process of being spun off presumably to a pure play tower operator such as American Tower (AMT) who late last year purchased a German tower package , BUY , BUY , Buy under $3 a share .............
"The transaction, which is structured as a purchase of the shares of NII's indirect subsidiary, Nextel del Peru S.A. ("Nextel Peru"), is being entered into as part of NII's announced strategy to focus its capital and other resources in Mexico and Brazil, its two largest markets. The proceeds received from this sale will provide additional liquidity as the Company continues to invest in the deployment of its next generation networks in Mexico and Brazil. NII's next generation networks will enable the Company to provide the highest quality wireless experience to high value customers in those markets." NIHD tower sales will generate gross proceeds of approximately $1 billion!

NII Holdings might sell other assets in Argentina and Chile, analysts say.

"New CEO Steve Shindler and CFO Juan Figueroa are re-establishing credibility with the Street," Macquarie Capital analyst Kevin Smithen said in a research note. "While this process is going to take many quarters and will need to include operational and financial improvements in Mexico and Brazil, today's announcement was the first bit of good news out of NIHD in over a year."

NII's U.S. shares have plunged 71% in the past 12 months, even with its big jump in the stock market today.
James Breen, an analyst at William Blair & Co., said in a report that the Peru sale "should help minimize some of the company's overall cash burn ... . With capital expenditures trending down, we believe this puts the company in position to generate free cash flow at the end of 2014."
Stifel Nicolaus analyst Christopher King also sees a stronger balance sheet. Currently it is trading around $2.20. The company provides digital wireless communication services in several Latin American markets, such as Mexico, Brazil, Argentina, Peru and Chile. NIHD has seen continuous erosion in its EPS due to continuous customer loss, weaker exchange rate, lower ARPU, higher operating expenses, and stiff competition from local players like America Movil (AMX) and Telefonica (TEF). However, the EPS is showing a rising trend since the first quarter of 2013, on the back of a healthy annual subscriber growth and a remarkable decline in costs per gross subscriber added. I believe there is a strong chance of a rebound in the stock price due to an improved outlook about the company's earnings growth

"The company now has cash on hand (assuming the Nextel Peru deal closes) of approximately $2.8 billion, with additional liquidity of approximately $500 million available through undrawn vendor financing," he wrote. "We continue to expect the company's pending tower sales process to be completed within the next 90 days or so, which we believe will generate gross proceeds of approximately $1 billion."

To the best of our knowledge, this is the first time the company has formally announced that it intends to focus only on Mexico and Brazil. We had assumed a $300 million sale for Peru in our bare bones valuation of the company and also believe that Mexico can be sold for a further premium as other operators need the bandwidth from the licensed frequencies NIHD's Nextel Mexico holds.

NIHD CEO Steven Schindler, who some employees call the "iron fist", is making good on his vision to streamline the company and focus on building value through subscriber growth and network upgrades. We now believe Schindler has strengthened his company's finances to the point where he can extract more value from his planned sale of assets. The acceleration of the Peru deal shows us he means business. We estimated that Nextel Mexico would yield $2.15 billion in a sale. This was conservative as it was 50% of the price to be paid on a deal that never was completed. With increased strength from the Peru sale, we think Schindler can command a higher price than $2.15 billion. A mere 10% increase would add another $215 million to the company's value, or $1.25 per share. We think this is achievable and therefore update our bare bones value for NIHD to $12.11. We look forward to seeing what next on Shindler's asset sale list. The main problem of NIHD was that its customer retention efforts were unsuccessful due to growing competition and rising operating expenses. However, the company has undertaken an aggressive strategy, termed as Project Accelerate, to quickly recover lost ground and put itself back on the path to profit growth. Project Accelerate comprises of five components, which are as follows

NII Holdings, Inc. (NII Holdings), incorporated on October 18, 2000, is a holding company for the operations of Nextel Communications, Inc. in selected International markets. The Company provides wireless communication services under the Nextel brand. It provides its services through operating companies located in Brazil, Mexico, Argentina, Peru and Chile, with its principal operations located in business centers and related transportation corridors of these countries. The Company’s networks utilize integrated digital enhanced network, or iDEN, technology developed by Motorola, Inc. to provide its mobile services on its 800 mega hertz spectrum holdings in all of its markets. As of December 31, 2012, its operating companies had a total of about 11.36 million handsets and other devices in commercial service. In August 2013, NII Holdings Inc announced it has completed sale of its Peruvian operations to Empresa Nacional De Telecomunicaciones SA. In November2013, NII Holdings, Inc sold 1,483 communications sites in Mexico to American Tower Corporation.

The services offered by the Company include mobile telephone service; Nextel Direct Connect and International Direct Connect service, which allows subscribers to talk to each other instantly, on a push-to-talk basis, for private one-to-one calls or group calls; value-added services, including text messaging services; mobile Internet services; e-mail services; location-based services, which include the use of Global Positioning System (GPS), technologies; digital media services; and a ranging set of applications available via content management system, as well as the Android open application market; business solutions, such as security, work force management, logistics support and other applications that help its business subscribers improve their productivity, and international roaming services.

The Company offers a range of wireless communications services and related subscriber equipment and a variety of service plans with different rate plan structures and bundles that are designed to meet the needs of its targeted customer groups. These services and equipment have been designed to provide features that meet those customers’ needs for fast and reliable voice and data communications that allow them to conduct business quickly and efficiently.

Voice Services

The Company’s mobile telephony services with calling features that include voicemail, call waiting, call forwarding and three-way calling. Its voice services also includes one of its key differentiators, Nextel Direct Connect, the long-range walkie-talkie service that allows communication at the touch of a button. The Nextel Direct Connect service gives its customers the ability to instantly set up a conference either privately (one-to-one) or with a group (one-to-many). In some of its markets, the Company also offers services that provide the subscribers on its iDEN networks with instant communication capabilities in a variety of other ways, including a push-to-email application that allows a user to send a streaming voice message from his or her handset to an email recipient using its Direct Connect feature, Direct Talk, a service available on certain handsets that enables off-network walkie-talkie communication, and Desktop Dispatch, a service that allows users to send Direct Connect messages between Nextel handsets and any Internet connected personal computer.

Wireless Data Services

The Company offers a variety of wireless data services and solutions that are designed to help its customers increase their productivity through the delivery of real-time information to mobile workers anytime and anywhere; it offers its customers always-on connectivity to the Internet directly from their device through mobile Internet access, which combines the resources of the Internet with convenient mobile content services; it offers a range of messaging services, including short messaging services (SMS), multimedia messaging services (MMS) and mobile email; the Company’s data solutions, which are accessible via wireless handsets, laptop computers and handheld computing devices, facilitate quick responses among workers in the field by streamlining operations through faster exchanges of information to support workforce mobility, and its handsets support Java, which provides a standards-based programming environment that can support a broad array of specialized and differentiated applications, and many of its handsets incorporate the Android operating system, which provides an open environment for the distribution and support of hundreds of thousands of business and consumer applications and digital media content to meet the needs of a broad set of subscribers.

Roaming and International Calling Services

The Company offer a number of traditional, as well as differentiated, international calling and roaming services communicate instantly across national borders to other Direct Connect subscribers in all of its markets. It also offer its subscribers with iDEN-based handsets the ability to roam in areas in other countries served by operating companies’ networks and by the iDEN networks operated by Sprint Nextel in the United States, TELUS in Canada and Intelfon in El Salvador. It offers subscribers using iDEN-based handsets the ability to roam on networks in other countries that operate using the global system for mobile communications, or GSM, standard and that operate using networks that are reverse compatible with global system for mobile communications (GSM), including WCDMA networks.

Wireless Devices

The Company offers its customers a array of wireless handsets, including smartphones and feature phones capable of supporting its Nextel Direct Connect service on both its iDEN and WCDMA networks. In addition, WCDMA handsets utilizes QChat technology, which will be able to communicate via push-to-talk service with customers on both iDEN and WCDMA networks. Its smartphone portfolio includes a variety of devices using both the Android and BlackBerry operating systems that enable subscribers to access the Internet on their handsets and include QWERTY keyboard and touch screen options. Additionally, the Company offers mobile broadband devices including data air cards and personal wireless fidelity (WiFi) access devices, or mobile wireless fidelity( MiFi), to subscribers in Mexico, Peru and Chile on WCDMA networks.

The Company competes with America Movil, Telefonica Moviles, Telemar’s Oi and Telecom Italia Mobile
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