NII Holdings Inc. (NIHD), which offers wireless services in Latin America, has successfully completed the sale of its Mexican towers to American Tower Corp. (AMT).
In Oct his year, NII Holdings struck a deal with American Tower to sell 2,790 Brazilian towers and 1,666 Mexican towers for $413 million and $398 million, respectively. Moreover, NII Holdings will lease back these towers for a period of 12 years.
After selling its Mexican towers, NII Holdings is determined to complete the sale of its Brazilian towers by the end of fiscal 2013.
NII Holdings is targeting the highly lucrative Brazilian and Mexican markets, which are dominated by America Movil S.A.B. de C.V. (AMX) and Telefornica SA (TEF). Thus, to consolidate its position in these markets, NIHD plans to aggressively rollout its 3G service integrated with the Push to Talk (PTT) technology by the end of 2013. However, lack of funds has been a bottleneck for the company.
In order to finance its 3G deployment, NIHD plans to raise nearly $1 billion in fiscal 2013 either through tower sale or by issuing senior notes. Few months back, the company also sold its Peruvian business to Chile’s EmpresaNacional de Telecomunicaciones S.A. (or Entel) for around $411 million.
The company exited the third quarter of 2013 with nearly $5.7 billion of debt and $1.9 billion cash. Moreover, its current debt-to-capitalization ratio stands at 0.82, which tends to be quite high. Offloading the assets will provide NIHD with the much needed liquidity to continue with its third generation network deployment in Brazil and Mexico.
Currently, NII Holdings carries a Zacks Rank #3 (Hold).
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