EX-99.1 2 w80276exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA. 20190
(703) 390-5100
http://www.nii.com
Investor Relations: Tim Perrott
(703) 390-5113
tim.perrott@nii.com
Media Relations: Claudia E. Restrepo
(786) 251-7020
claudia.restrepo@nii.com
NII HOLDINGS ANNOUNCES STRONG RESULTS FOR THIRD QUARTER 2010
Company achieves record quarterly level of net additions
Company achieves record level of Operating Income Before Depreciation and Amortization
Company awarded spectrum license in Mexico
  •   Net subscriber additions of 436,000
 
  •   Consolidated operating revenues of $1.45 billion
 
  •   Consolidated operating income before depreciation and amortization, or OIBDA, of $390 million
 
  •   Consolidated operating income of $250 million and consolidated net income of $136 million, or $0.81 per basic share
RESTON, Va. — October 28, 2010 — NII Holdings, Inc. [NASDAQ: NIHD] today announced its consolidated financial results for the third quarter of 2010. During the quarter, the Company added 436,000 net subscribers to its network, bringing its ending subscriber base to nearly 8.6 million, a 32% increase in net additions compared to the third quarter of 2009 and a 22% increase in the ending subscriber base compared to the subscriber base at September 30, 2009. Financial results for the quarter included consolidated operating revenues of $1.45 billion, a 27% increase compared to the third quarter of 2009, and consolidated OIBDA of $390 million for the quarter, a 30% increase compared to the same period last year. For the third quarter of 2010, the Company generated consolidated operating income of $250 million and consolidated net income of $136 million, or $0.81 per basic share.
The Company continued to invest in the expansion of the coverage and capacity of its networks reporting consolidated third quarter 2010 capital expenditures of $176 million, of which $109 million was invested in Brazil and Mexico.

 

 

“We again delivered excellent results for the quarter highlighted by record levels for both subscriber growth and OIBDA during the period,” said Steve Dussek, NII Holdings’ Chief Executive Officer. “Our disciplined approach to profitable growth guided us through an economic downturn last year and is now enabling us to deliver outstanding results in 2010. Our efforts to improve the quality of our customer base and more stable economic environments in our markets helped us to achieve both excellent growth in our subscriber base and strong results for revenues and OIBDA. The strength of our business, combined with our differentiated approach to meeting our customers’ needs and our efforts to expand our market opportunities by adding 3G capabilities, position NII to pursue significant growth opportunities in the Latin American wireless marketplace,” he added.
NII Holdings’ consolidated average monthly service revenue per subscriber (ARPU) was $47 for the third quarter of 2010, an increase of $1 when compared to the same period last year due to higher customer usage and strengthening local currencies. The Company also reported churn of 1.64% for the third quarter, a 30 basis point improvement over the level reported for the same period last year. Consolidated cost per gross add, or CPGA, was $243 for the third quarter of 2010, down $25 compared to the third quarter of 2009.
The Company ended the quarter with approximately $2.9 billion in total long-term debt and $2.4 billion in consolidated cash and investments, resulting in net debt at the end of the quarter of approximately $544 million.
“Our continued focus on our key operating metrics coupled with our ability to attract and meet the needs of our high value customers drove impressive operational and financial results for the quarter, as we generated a 22% increase in our ending subscriber base and a 30% increase in OIBDA over the third quarter of last year” said Gokul Hemmady, NII’s Vice President and Chief Financial Officer. “We continue to capitalize on the tremendous opportunity that is available to us in our markets, and we believe that we are well positioned to generate strong growth and profitability as evidenced by the fact that we are trending ahead of our updated 2010 guidance announced in July,” he added.
In October 2010, Mexico’s Ministry of Communications and Transport granted and delivered a concession title for the use of 30 MHz in the AWS spectrum [1710-1770/2110-2170 MHz] to the Company’s Mexico subsidiary. The Company is currently investing in the development and deployment of a 3G network throughout Mexico utilizing this license and expects to launch the 3G network in certain markets in Mexico in the next 12 to 18 months.
In addition to the preliminary results prepared in accordance with accounting principles generally accepted in the United States (GAAP) provided throughout this press release, NII has presented consolidated OIBDA, ARPU, CPGA and Net Debt. These measures are non-GAAP financial measures and should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial table. To view these and other reconciliations of non-GAAP financial measures that the Company uses and information about how to access the conference call discussing NII’s third quarter 2010 results, visit the investor relations link at<http://www.nii.com>.
About NII Holdings, Inc.
NII Holdings, Inc., a publicly held company based in Reston, Va., is a leading provider of mobile communications for business customers in Latin America. NII Holdings, Inc. has operations in Mexico, Brazil, Argentina, Peru and Chile offering a fully integrated wireless communications tool with digital cellular voice services, data services, wireless Internet access and Nextel Direct Connect® and International Direct ConnectSM, a digital two-way radio feature. NII Holdings, Inc., a

 

 

Fortune 500 company, trades on the NASDAQ market under the symbol NIHD and is a member of the NASDAQ 100 Index. Visit the Company’s website at <http://www.nii.com>.
Nextel, the Nextel logo, and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding the business outlook, future performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words “estimate,” “project,” “forecast,” “intend,” “expect,” “believe,” “target,” “providing guidance” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, network usage, customer growth and retention, pricing, operating costs, the timing of various events, the economic and regulatory environment and the foreign exchange rates that will prevail during 2010. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to the impact of more intense competitive conditions and changes in economic conditions in the markets we serve; the impact on our financial results, and potential reductions in the recorded value of our assets, that may result from fluctuations in foreign currency exchange rates and, in particular, fluctuations in the relative values of the currencies of the countries in which we operate compared to the U.S. dollar; the risk that our network technologies will not perform properly or support the services our customers want or need, including the risk that technology developments to support our services will not be timely delivered; the risk that customers in the markets we serve will not find our services attractive; unexpected results of litigation; and the additional risks and uncertainties that are described from in NII Holdings’ Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. This press release speaks only as of its date, and NII Holdings disclaims any duty to update the information herein.

 

 

NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(in millions, except per share amounts, and unaudited)
                                 
    Nine Months Ended     Three Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Operating revenues
                                
Service and other revenues
   $ 3,857.7     $ 2,980.8     $ 1,359.4     $ 1,078.3  
Digital handset and accessory revenues
     223.5       181.8       86.7       64.1  
 
                        
 
     4,081.2       3,162.6       1,446.1       1,142.4  
 
                        
Operating expenses
                                
Cost of service (exclusive of depreciation and amortization included below)
     1,084.5       862.0       388.6       316.8  
Cost of digital handset and accessory sales
     521.0       472.7       166.1       161.7  
Selling, general and administrative
     1,396.3       1,015.9       501.6       363.9  
Depreciation
     380.0       289.0       132.2       106.1  
Amortization
     23.6       21.3       7.5       7.6  
 
                        
 
     3,405.4       2,660.9       1,196.0       956.1  
 
                        
Operating income
     675.8       501.7       250.1       186.3  
 
                        
Other income (expense)
                                
Interest expense
     (262.5 )     (145.3 )     (83.5 )     (58.6 )
Interest income
     23.8       19.7       9.9       3.3  
Foreign currency transaction gains, net
     27.4       101.3       28.4       45.1  
Other (expense) income, net
     (11.4 )     4.3       (3.5 )     (1.3 )
 
                        
 
     (222.7 )     (20.0 )     (48.7 )     (11.5 )
 
                        
Income before income tax provision
     453.1       481.7       201.4       174.8  
Income tax provision
     (192.8 )     (159.8 )     (65.1 )     (57.8 )
 
                        
Net income
   $ 260.3     $ 321.9     $ 136.3     $ 117.0  
 
                        
 
                                
Net income per common share, basic
   $ 1.55     $ 1.94     $ 0.81     $ 0.70  
 
                        
Net income per common share, diluted
   $ 1.52     $ 1.91     $ 0.79     $ 0.69  
 
                        
 
                                
Weighted average number of common shares outstanding, basic
     167.8       165.9       168.6       166.1  
 
                        
Weighted average number of common shares outstanding, diluted
     176.9       173.5       175.3       174.2  
 
                        
CONSOLIDATED BALANCE SHEET DATA
(in millions)
                 
    September 30,   December 31,
    2010   2009
    (unaudited)        
Cash and cash equivalents
   $ 1,666.1     $ 2,504.1  
Short-term investments
     559.1       116.3  
Accounts receivable, less allowance for doubtful accounts of $38.5 and $35.1
     740.0       613.6  
Property, plant and equipment, net
     2,727.8       2,502.2  
Intangible assets, net
     408.8       337.2  
Total assets
     7,787.8       7,554.7  
Long-term debt, including current portion
     3,223.9       3,580.8  
Total liabilities
     4,606.7       4,807.9  
Stockholders’ equity
     3,181.1       2,746.8  

 

 

NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
NII Holdings, Inc.
(subscribers in thousands)
                 
    Three Months Ended
    September 30,
    2010   2009
Total digital subscribers (as of September 30)
     8,591.4       7,037.5  
Net subscriber additions
     435.8       329.5  
Churn (%)
     1.64 %     1.93 %
 
                
Average monthly revenue per handset/unit in service (ARPU) (1)
   $ 47     $ 46  
 
                
Cost per gross add (CPGA) (1)
   $ 243     $ 268  
Nextel Mexico
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
                                 
    Nine Months Ended     Three Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Operating revenues
                                
Service and other revenues
   $ 1,494.0     $ 1,328.7     $ 503.3     $ 451.0  
Digital handset and accessory revenues
     69.7       58.1       26.8       19.8  
 
                        
 
     1,563.7       1,386.8       530.1       470.8  
 
                        
 
                                
Operating expenses
                                
Cost of service (exclusive of depreciation and amortization included below)
     269.9       262.3       108.0       90.2  
Cost of digital handset and accessory sales
     303.9       267.2       103.0       87.9  
Selling, general and administrative
     417.9       359.0       136.3       121.3  
 
                        
Segment earnings
     572.0       498.3       182.8       171.4  
Management fee and other
     78.8       23.8       31.4       7.9  
Depreciation and amortization
     142.2       123.9       46.8       43.0  
 
                        
Operating income
   $ 351.0     $ 350.6     $ 104.6     $ 120.5  
 
                        
 
                                
Total digital subscribers (as of September 30)
                     3,271.9       2,909.7  
Net subscriber additions
                     87.1       74.8  
Churn (%)
                     1.79 %     2.24 %
 
                                
ARPU (1)
                   $ 45     $ 47  
 
                                
CPGA (1)
                   $ 385     $ 362  

 

 

Nextel Brazil
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
                                 
    Nine Months Ended     Three Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Operating revenues
                                
Service and other revenues
   $ 1,766.5     $ 1,103.4     $ 650.0     $ 445.9  
Digital handset and accessory revenues
     97.4       76.4       39.5       27.4  
 
                        
 
     1,863.9       1,179.8       689.5       473.3  
 
                        
 
                                
Operating expenses
                                
Cost of service (exclusive of depreciation and amortization included below)
     599.9       400.2       209.2       160.4  
Cost of digital handset and accessory sales
     111.5       113.6       25.4       39.9  
Selling, general and administrative
     559.8       344.6       212.6       135.1  
 
                        
Segment earnings
     592.7       321.4       242.3       137.9  
Management fee and other
     24.9       —       8.3       —  
Depreciation and amortization
     181.4       124.3       64.9       49.6  
 
                        
Operating income
   $ 386.4     $ 197.1     $ 169.1     $ 88.3  
 
                        
 
                                
Total digital subscribers (as of September 30)
                     3,112.6       2,290.9  
Net subscriber additions
                     245.4       184.8  
Churn (%)
                     1.36 %     1.38 %
 
                                
ARPU (1)
                   $ 63     $ 58  
 
                                
CPGA (1)
                   $ 163     $ 220  
Nextel Argentina
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
                                 
    Nine Months Ended     Three Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Operating revenues
                                
Service and other revenues
   $ 376.6     $ 361.5     $ 128.9     $ 117.9  
Digital handset and accessory revenues
     34.3       27.3       13.1       10.0  
 
                        
 
     410.9       388.8       142.0       127.9  
 
                        
 
                                
Operating expenses
                                
Cost of service (exclusive of depreciation and amortization included below)
     131.6       129.8       44.0       42.0  
Cost of digital handset and accessory sales
     56.6       47.4       20.4       18.4  
Selling, general and administrative
     115.7       93.6       39.2       32.8  
 
                        
Segment earnings
     107.0       118.0       38.4       34.7  
Management fee and other
     14.6       —       7.1       —  
Depreciation and amortization
     29.5       28.9       10.0       9.4  
 
                        
Operating income
   $ 62.9     $ 89.1     $ 21.3     $ 25.3  
 
                        
 
                                
Total digital subscribers (as of September 30)
                     1,117.4       1,003.7  
Net subscriber additions
                     34.3       18.0  
Churn (%)
                     1.58 %     2.17 %
 
                                
ARPU (1)
                   $ 34     $ 34  
 
                                
CPGA (1)
                   $ 213     $ 220  

 

 

Nextel Peru
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
                                 
    Nine Months Ended     Three Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Operating revenues
                                
Service and other revenues
   $ 206.2     $ 178.3     $ 71.7     $ 60.0  
Digital handset and accessory revenues
     22.0       19.9       7.3       6.8  
 
                        
 
     228.2       198.2       79.0       66.8  
 
                        
 
                                
Operating expenses
                                
Cost of service (exclusive of depreciation and amortization included below)
     74.5       64.5       24.4       22.1  
Cost of digital handset and accessory sales
     45.0       41.9       15.2       14.6  
Selling, general and administrative
     88.1       72.2       29.0       25.7  
 
                        
Segment earnings
     20.6       19.6       10.4       4.4  
Management fee and other
     14.1       —       5.8       —  
Depreciation and amortization
     38.3       23.1       13.6       8.3  
 
                        
Operating loss
   $ (31.8 )   $ (3.5 )   $ (9.0 )   $ (3.9 )
 
                        
 
                                
Total digital subscribers (as of September 30)
                     1,028.8       795.6  
Net subscriber additions
                     62.9       47.7  
Churn (%)
                     2.06 %     2.03 %
 
                                
ARPU (1)
                   $ 22     $ 24  
 
                                
CPGA (1)
                   $ 150     $ 152  

 

 

NON-GAAP RECONCILIATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
Operating Income Before Depreciation and Amortization
Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated OIBDA is not a measurement under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that consolidated OIBDA provides useful information to investors because it is an indicator of operating performance, especially in a capital intensive industry such as ours, since it excludes items that are not directly attributable to ongoing business operations. Our consolidated OIBDA calculations are commonly used as some of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. Consolidated OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):
NII Holdings, Inc.
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Consolidated operating income
   $ 250.1     $ 186.3  
Consolidated depreciation
     132.2       106.1  
Consolidated amortization
     7.5       7.6  
 
            
Consolidated operating income before depreciation and amortization
   $ 389.8     $ 300.0  
 
            
Average Monthly Revenue Per Handset/Unit in Service (ARPU)
Average monthly revenue per handset/unit in service, or ARPU, is an industry term that measures service revenues, which we refer to as subscriber revenues, per period from our customers divided by the weighted average number of handsets in commercial service during that period. ARPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to ARPU measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. Other revenue includes revenues for such services as roaming, handset maintenance, cancellation fees, analog and other. ARPU can be calculated and reconciled to our consolidated statement of operations as follows (in millions, except ARPU):
NII Holdings, Inc.
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Consolidated service and other revenues
   $ 1,359.4     $ 1,078.3  
Less: consolidated analog revenues
     (0.5 )     (0.5 )
Less: consolidated other revenues
     (171.7 )     (126.9 )
 
            
Total consolidated subscriber revenues
   $ 1,187.2     $ 950.9  
 
            
 
                
ARPU calculated with subscriber revenues
   $ 47     $ 46  
 
            
 
                
ARPU calculated with service and other revenues
   $ 54     $ 52  
 
            

 

 

Nextel Mexico
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Service and other revenues
   $ 503.3     $ 451.0  
Less: analog revenues
     (0.3 )     (0.4 )
Less: other revenues
     (61.8 )     (43.2 )
 
            
Total subscriber revenues
   $ 441.2     $ 407.4  
 
            
 
                
ARPU calculated with subscriber revenues
   $ 45     $ 47  
 
            
 
                
ARPU calculated with service and other revenues
   $ 52     $ 52  
 
            
Nextel Brazil
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Service and other revenues
   $ 650.0     $ 445.9  
Less: analog revenues
     (0.1 )     (0.1 )
Less: other revenues
     (85.3 )     (61.2 )
 
            
Total subscriber revenues
   $ 564.6     $ 384.6  
 
            
 
                
ARPU calculated with subscriber revenues
   $ 63     $ 58  
 
            
 
                
ARPU calculated with service and other revenues
   $ 72     $ 68  
 
            
Nextel Argentina
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Service and other revenues
   $ 128.9     $ 117.9  
Less: other revenues
     (18.2 )     (16.9 )
 
            
Total subscriber revenues
   $ 110.7     $ 101.0  
 
            
 
                
ARPU calculated with subscriber revenues
   $ 34     $ 34  
 
            
 
                
ARPU calculated with service and other revenues
   $ 39     $ 40  
 
            

 

 

Nextel Peru
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Service and other revenues
   $ 71.7     $ 60.0  
Less: other revenues
     (5.8 )     (5.1 )
 
            
Total subscriber revenues
   $ 65.9     $ 54.9  
 
            
 
                
ARPU calculated with subscriber revenues
   $ 22     $ 24  
 
            
 
                
ARPU calculated with service and other revenues
   $ 24     $ 26  
 
            
Cost per Gross Add (CPGA)
Cost per gross add, or CPGA, is an industry term that is calculated by dividing our selling, marketing and handset and accessory subsidy costs, excluding costs unrelated to initial customer acquisition, by our new subscribers during the period, or gross adds. CPGA is not a measurement under accounting principles generally accepted in the United States, may not be similar to CPGA measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe CPGA is a measure of the relative cost of customer acquisition. CPGA can be calculated and reconciled to our consolidated statements of operations as follows (in millions, except CPGA):
NII Holdings, Inc. *
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Consolidated digital handset and accessory revenues
   $ 86.7     $ 64.1  
Less: consolidated uninsured replacement revenues
     (5.1 )     (4.5 )
 
            
Consolidated digital handset and accessory revenues, net
     81.6       59.6  
Less: consolidated cost of handset and accessory sales
     166.1       161.7  
 
            
Consolidated handset subsidy costs
     84.5       102.1  
Consolidated selling and marketing
     169.3       133.1  
 
            
Costs per statement of operations
     253.8       235.2  
Less: consolidated costs unrelated to initial customer acquisition
     (47.7 )     (40.0 )
 
            
Customer acquisition costs
   $ 206.1     $ 195.2  
 
            
 
                
Cost per Gross Add
   $ 243     $ 268  
 
            
 
*   CPGA for the three months ended September 30, 2010 was reduced as the result of a $28 million tax credit we received in Brazil during the third quarter of 2010.
Nextel Mexico
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Digital handset and accessory revenues
   $ 26.8     $ 19.8  
Less: uninsured replacement revenues
     (2.4 )     (2.3 )
 
            
Digital handset and accessory revenues, net
     24.4       17.5  
Less: cost of handset and accessory sales
     103.0       87.9  
 
            
Handset subsidy costs
     78.6       70.4  
Selling and marketing
     65.3       59.8  
 
            
Costs per statement of operations
     143.9       130.2  
Less: costs unrelated to initial customer acquisition
     (43.4 )     (33.0 )
 
            
Customer acquisition costs
   $ 100.5     $ 97.2  
 
            
 
                
Cost per Gross Add
   $ 385     $ 362  
 
            

 

 

Nextel Brazil *
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Digital handset and accessory revenues
   $ 39.5     $ 27.4  
Less: uninsured replacement revenues
     (2.7 )     (2.3 )
 
            
Digital handset and accessory revenues, net
     36.8       25.1  
Less: cost of handset and accessory sales
     25.4       39.9  
 
            
Handset subsidy costs
     11.4       14.8  
Selling and marketing
     72.4       50.4  
 
            
Costs per statement of operations
     61.0       65.2  
Less: costs unrelated to initial customer acquisition
     (1.1 )     (4.4 )
 
            
Customer acquisition costs
   $ 59.9     $ 60.8  
 
            
 
                
Cost per Gross Add
   $ 163     $ 220  
 
            
 
*   CPGA for the three months ended September 30, 2010 was reduced as the result of a $28 million tax credit we received in Brazil during the third quarter of 2010.
Nextel Argentina
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Digital handset and accessory revenues, net
   $ 13.1     $ 10.0  
Less: cost of handset and accessory sales
     20.4       18.4  
 
            
Handset subsidy costs
     7.3       8.4  
Selling and marketing
     12.9       11.6  
 
            
Costs per statement of operations
     20.2       20.0  
Less: costs unrelated to initial customer acquisition
     (1.9 )     (1.8 )
 
            
Customer acquisition costs
   $ 18.3     $ 18.2  
 
            
 
                
Cost per Gross Add
   $ 213     $ 220  
 
            
Nextel Peru
                 
    Three Months Ended  
    September 30,  
    2010     2009  
Digital handset and accessory revenues, net
   $ 7.3     $ 6.8  
Less: cost of handset and accessory sales
     15.2       14.6  
 
            
Handset subsidy costs
     7.9       7.8  
Selling and marketing
     12.1       7.5  
 
            
Costs per statement of operations
     20.0       15.3  
Less: costs unrelated to initial customer acquisition
     (1.2 )     (0.9 )
 
            
Customer acquisition costs
   $ 18.8     $ 14.4  
 
            
 
                
Cost per Gross Add
   $ 150     $ 152  
 
            

 

 

Net Debt
Net debt represents total long-term debt less cash, cash equivalents, short-term and long-term investments. Net debt to consolidated operating income before depreciation and amortization represents net debt divided by consolidated operating income before depreciation and amortization. Prior to 2008, we calculated net debt as total long-term debt less cash and cash equivalents. In 2008, we added short-term investments to the items subtracted from long-term debt to calculate net debt because we concluded that our short-term investments were similar to cash and cash equivalents in terms of liquidity and should be used similarly in providing the assessment of our overall leverage in the net debt calculation. In the second quarter of 2010, we extended the permissible investment maturity dates for cash investments, which resulted in the classification of some of our cash investments as long term investments. As a result, we now include the cash in long-term investments to the items subtracted from long-term debt to calculate net debt. Net debt is not a measurement under accounting principles generally accepted in the United States, may not be similar to net debt measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our balance sheets. We believe that net debt and net debt to consolidated operating income before depreciation and amortization provide useful information concerning our liquidity and leverage. Net debt as of September 30, 2010 can be calculated as follows (in millions):
NII Holdings, Inc.
         
Total long-term debt
   $ 2,806.9  
Add: reduction to long-term debt pursuant to implementation of FSP APB 14-1
     66.2  
Add: debt discounts
     21.1  
Less: cash and cash equivalents
     (1,666.1 )
Less: short-term investments
     (559.1 )
Less: long-term investments
     (125.0 )
 
      
Net debt
   $ 544.0