NII Holdings, which operates in Latin America under the Nextel brand, announced it will likely file for Chapter 11 bankruptcy protection because it cannot fulfill its financial obligations. Following the announcement, NII Holdings’ shares plummeted. According to the filing, the mobile phone carrier has until Aug. 15 to certify to banks that it’s complying with its debt covenants, after which the lenders can declare a default.
When announcing its second-quarter results, NII Holdings said its financial performance in combination with its inability to meet existing debt obligations, will likely make it necessary to file a petition for relief under Chapter 11 of the bankruptcy code, so it can restructure its obligations.
NII Holdings ended the second quarter with a net loss of 77,000 subscribers, bringing its quarter-end subscriber base to 9.4 million, a 6% decrease from a year ago. Consolidated operating revenues were $969 million, a 23% decrease compared with the second quarter of 2013. The company also posted a consolidated operating loss of $504 million. NII Holdings generated a net loss from continuing operations of $629 million for the second quarter, or $3.65 per basic share.
Earlier this year, there were rumors that NII Holdings would sell its Nextel operations in Chile and Argentina. In June, the Argentinean newspaper La Nación reported that two Argentinian businessmen, Matías Garfunkel and Sergio Szpolski, the owners of Grupo Veintitres, were close to buying the mobile phone service for about $250 million. In 2013, NII Holdings agreed to sell its Peruvian operations to Entel (Empresa Nacional de Telecomunicaciones S.A.) for approximately $400 million. The move was expected since NII Holdings had already announced it would focus on its largest markets in the region: Mexico and Brazil.
In March, NII Holdings posted results showing a difficult year in 2013 with losses in both subscribers and revenue. At the time, Steve Shindler, NII Holdings’ CEO, expressed disappointment with the company’s operational performance and said the company was taking actions to improve business results, including launching Project Accelerate, a program designed to build a foundation for growth using 3G networks to drive operational improvements in 2014.
GVT under dispute: After Telefónica made an offer to acquire Vivendi’s Brazilian unit, GVT, Telecom Italia is reportedly considering a counterbid for the unit. Marco Patuano, CEO of Telecom Italia, which controls the Brazilian operator TIM, is expected to meet with Vivendi chairman Vincent Bollore in Paris to discuss an offer for GVT, sources told Reuters. Telecom Italia has to beat a €6.7 billion ($8.9 billion) bid from Spanish rival Telefónica, which is also Telecom Italia’s biggest investor.
Meanwhile, in another Latin American deal, Telecom Italia and the U.S. investment firm Fintech have agreed to extend the deadline to complete the sale of Telecom Argentina to September 1.
More news from Latin America:
- The government of Chile has ended fixed-line long-distance calling charges within the country. The measure is expected to benefit about 3 million landline accesses.
- Peru’s national telecommunications investment fund (Fitel) is set to award fiber optic projects in four regions across the Andean country. The project will benefit the Apurimac, Ayacucho, Huancavelica and Lambayeque regions.
- Ecuador’s Central Bank and Movistar Ecuador have signed an agreement, giving Movistar subscribers access to e-money services.
- Argentine mobile telephony operator Personal has signed an agreement with WhatsApp to make joint benefit and promotion offers to Personal’s subscribers and users of the messaging application.
- Telefónica is planning to merge its entire Peruvian operations into one company.
- Telefónica Vivo selected Quantenna to power wireless IPTV service. Vivo TV Fiber Wi-Fi Decoder claims to eliminate the need for wired TV connections, delivering HD video to any TV anywhere in a home within the range of its Wi-Fi signal.
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