NIHD Provides Grim 2013 Outlook - Analyst Blog
07 Febbraio 2013 - 7:05PM
Zacks
Latin American wireless operator NII Holdings
Inc. (NIHD) provided a dismal outlook for fiscal 2013,
slashing its revenue and OIBDA projections by a significant margin.
The new guidance was on the back of delay in the launch of 3G
technology, higher churn, weaker exchange rate and lower average
revenue per user (ARPU).
NII Holdings expects revenue to be in the range of $5.7–$5.9
billion and adjusted OIBDA to stay in the band of $600–$650
million. Additionally, the company expects mid-single digit
subscriber growth for the projected year along with $1 billion of
capital expenditure.
NII Holdings plan to successfully roll out 3G network across the
highly lucrative Brazilian market. However, it may not prove to be
beneficial for the company as these Latin American markets are
hugely dominated by America Movil S.A.B. de C.V.
(AMX) and Telefornica SA (TEF). Moreover, America
Movil started deploying 4G LTE across these regions, which may
further expand churn rate for NII Holdings going forward.
Furthermore, deployment of 3G networks requires huge cash which
happens to be a major drawback for NII Holdings, thereby slowing
down things further.
Moreover, NII Holdings is involved in the process of phasing out
Motorola Solution’s (MSI) Integrated digital
enhanced technology (IDEN) and consequently integrating its new
Push to Talk (PTT) technology, hence driving cost and delaying the
3G launch.
To make matters worse, Standard and Poor’s (S&P) lowered NII
Holdings’ corporate credit rating by one notch to B- from the
previous B rating status. The company’s debt now falls six tiers
below the investment grade and is the second of its kind in the
last six months after its rating was lowered in August following
weak second-quarter 2012 results.
Thus, it is to be seen how long NII Holdings can face such
sustained headwinds without merging with any major telecom
carriers.
Currently, NII Holdings carries a Zacks Rank #4 (Sell).
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis Report
NII HLDGS-CL B (NIHD): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
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