NII Holdings is reducing its operations across Latin America. In its most recent move, the US-based company sold 49% of Nextel Argentina to Grupo Clarín, a local media company that holds operations in areas such as cable television, Internet access, printing and publishing, and broadcasting and programming markets. Nextel is the country’s fourth-largest mobile phone company.
The agreement was announced last week and the Argentina’s Federal Administration of Audiovisual Communication (AFSCA) called it illegal. In a note, the media watchdog said “the purchase of Nextel by Cablevisión without AFTIC’s authorization is another attempt by the Clarín Group to mock Argentines, our laws and our democracy”.
Grupo Clarin acquired a 49% equity interest in Nextel Argentina and an option to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of approvals from the regulatory authorities in the country for total consideration of U.S. $178 million, of which $159 million was paid up front — with the remaining amount due within 30 days. According to NII Holdings, the net proceeds received from the transaction will be used to provide additional liquidity to support NII’s operations in Brazil.
Citing one of the authors of the Digital Argentina law, Graciana Peñafort, the local news Buenos Aires Herald, posted that the Clarín’s move came as a surprise because the current telecommunication laws state that any change in ownership has to be previously informed to AFTIC, which has not happened.
After selling assets in Chile, Mexico and Peru, NII Holdings only counted two operations in Latin America: Brazil and Argentina. In statement, Steve Shindler, NII’s chief executive officer, said the transaction with Grupo Clarin creates a promising path for the future of Nextel Argentina and its employees to compete effectively in the mobile market in Argentina. “At the same time, it is consistent with our strategy to concentrate our resources on our operations in Brazil and provides incremental capital to improve our liquidity to support our business there,” he noted.
Nextel Argentina will continue to be controlled and operated by NII pending the receipt of the necessary regulatory approvals.
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