NII Holdings Inc. (NIHD), which offers wireless services through its Nextel brand in Latin America, has completed the sale of its Peruvian business to Chile’s Empresa Nacional de Telecomunicaciones S.A. (or Entel), for around $411 million.
NIHD will use the sale proceeds to focus on two of its largest markets, Mexico and Brazil. On the other hand, the acquisition will allow Entel to expand its business in foreign countries.
Nextel Peru, part of NII Holdings for the last 15 years, provides wireless services across major business centers in Peru using the W-CDMA (Wideband-Code Division Multiple Access) technology that offers high-speed Internet access. At the end of the first quarter of 2013, Nextel Peru offered services to 15% of the total subscribers of NIHD and contributed only 5.8% to the company’s total revenue.
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.
The company exited the second quarter of 2013 with nearly $5.6 billion of debt and $1.8 billion cash. Offloading the assets will provide NIHD with the much-needed liquidity to continue with its third generation network deployment in Brazil and Mexico.
A few days back, NII Holdings also struck a deal with American Tower Corp. (AMT). Per the deal, NIHD will sell 2,790 Brazilian towers and 1,666 Mexican towers for $413 million and $398 million, respectively.
Currently, NII Holdings carries a Zacks Rank #3 (Hold).
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