10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to

Commission file number: 0-32421

NII HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	91-1671412
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

10700 Parkridge Boulevard, Suite 600 Reston, Virginia	20191
(Address of Principal Executive Offices)	(Zip Code)

(703) 390-5100

(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ     Accelerated filer  o     Non-accelerated filer  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes þ     No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Number of Shares Outstanding
Title of Class	on November 1, 2007
Common Stock, $0.001 par value per share	173,218,233

NII HOLDINGS, INC. AND SUBSIDIARIES

INDEX

			Page
Part I. Financial Information.
	Item 1.	Financial Statements		2
		Condensed Consolidated Balance Sheets — As of September 30, 2007 and December 31, 2006		2
		Condensed Consolidated Statements of Operations and Comprehensive Income — For the Nine and Three Months Ended September 30, 2007 and 2006		3
		Condensed Consolidated Statement of Changes in Stockholders’ Equity — For the Nine Months Ended September 30, 2007		4
		Condensed Consolidated Statements of Cash Flows — For the Nine Months Ended September 30, 2007 and 2006		5
		Notes to Condensed Consolidated Financial Statements		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		56
	Item 4.	Controls and Procedures		57
Part II. Other Information.
	Item 1.	Legal Proceedings		58
	Item 1A.	Risk Factors		58
	Item 6.	Exhibits		58

1

PART I — FINANCIAL INFORMATION

Item 1.   Financial Statements.

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

Unaudited

	September 30,		December 31,
	2007		2006
ASSETS
Current assets
Cash and cash equivalents	$	1,545,403	$	708,591
Accounts receivable, less allowance for doubtful accounts of $19,432 and $15,928		407,825		298,470
Handset and accessory inventory		110,566		70,247
Deferred income taxes, net		84,313		60,450
Prepaid expenses and other		98,247		71,376
Total current assets		2,246,354		1,209,134
Property, plant and equipment, net of accumulated depreciation of $691,243 and $474,520		1,709,258		1,389,150
Intangible assets, net		409,504		369,196
Deferred income taxes, net		133,163		186,867
Other assets		226,358		143,331
Total assets	$	4,724,637	$	3,297,678
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	94,724	$	107,687
Accrued expenses and other		404,208		342,465
Deferred revenues		102,378		83,952
Accrued interest		18,036		11,703
Current portion of long-term debt		48,342		23,294
Total current liabilities		667,688		569,101
Long-term debt		2,032,872		1,134,387
Deferred revenues		33,693		36,156
Deferred credits		105,205		110,033
Other long-term liabilities		123,668		101,521
Total liabilities		2,963,126		1,951,198
Commitments and contingencies (Note 5)
Stockholders’ equity
Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding — 2007 and 2006		—		—
Common stock, par value $0.001, 600,000 shares authorized — 2007 and 2006, 173,215 shares issued and outstanding — 2007, 161,814 shares issued and outstanding — 2006		173		162
Paid-in capital		839,442		723,644
Retained earnings		875,291		630,538
Accumulated other comprehensive income (loss)		46,605		(7,864	)
Total stockholders’ equity		1,761,511		1,346,480
Total liabilities and stockholders’ equity	$	4,724,637	$	3,297,678

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)

Unaudited

	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Operating revenues
Service and other revenues	$	2,275,370		$	1,630,291		$	826,006		$	590,086
Digital handset and accessory revenues		76,826			69,995			26,917			25,500
		2,352,196			1,700,286			852,923			615,586
Operating expenses
Cost of service (exclusive of depreciation and amortization included below)		630,253			438,724			231,313			159,562
Cost of digital handsets and accessories		300,182			228,957			104,370			88,801
Selling, general and administrative		771,508			566,196			282,060			209,206
Depreciation		209,877			132,655			73,552			50,771
Amortization		7,040			4,443			3,669			1,631
		1,918,860			1,370,975			694,964			509,971
Operating income		433,336			329,311			157,959			105,615
Other income (expense)
Interest expense, net		(89,592	)		(66,103	)		(35,610	)		(23,656	)
Interest income		48,996			38,997			23,838			13,259
Foreign currency transaction gains (losses), net		12,637			(801	)		6,838			2,682
Debt conversion expense		(26,455	)		—			(26,455	)		—
Other expense, net		(986	)		(7,275	)		(1,619	)		(1,687	)
		(55,400	)		(35,182	)		(33,008	)		(9,402	)
Income before income tax provision		377,936			294,129			124,951			96,213
Income tax provision		(128,026	)		(107,540	)		(43,285	)		(30,525	)
Net income	$	249,910		$	186,589		$	81,666		$	65,688
Net income, per common share, basic	$	1.52		$	1.22		$	0.48		$	0.43
Net income, per common share, diluted	$	1.40		$	1.08		$	0.46		$	0.38
Weighted average number of common shares outstanding, basic		164,942			153,403			170,000			154,524
Weighted average number of common shares outstanding, diluted		185,098			183,839			183,621			184,319
Comprehensive income, net of income taxes
Foreign currency translation adjustment	$	53,544		$	(4,193	)	$	11,454		$	23,390
Reclassification for losses on derivatives included in other expense, net		456			1,671			60			257
Unrealized gains (losses) on derivatives, net		469			42			109			(1,663	)
Other comprehensive income (loss)		54,469			(2,480	)		11,623			21,984
Net income		249,910			186,589			81,666			65,688
Total comprehensive income	$	304,379		$	184,109		$	93,289		$	87,672

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Nine Months Ended September 30, 2007
(in thousands)

Unaudited

													Accumulated
													Other			Total
	Common Stock						Paid-in			Retained			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings			(Loss) Income			Equity
Balance, January 1, 2007		161,814		$	162		$	723,644		$	630,538		$	(7,864	)	$	1,346,480
Cumulative effect of adopting FIN 48		—			—			—			(5,157	)		—			(5,157	)
Net income		—			—			—			249,910			—			249,910
Other comprehensive income		—			—			—			—			54,469			54,469
Conversion of 2.75% notes and 2.875% notes to common stock		11,268			11			295,649			—			—			295,660
Repurchase of common stock		(4,044	)		(4	)		(329,976	)		—			—			(329,980	)
Reversal of deferred tax asset valuation allowances		—			—			1,728			—			—			1,728
Share-based payment expense for equity-based awards		—			—			50,674			—			—			50,674
Exercise of stock options		4,177			4			89,606			—			—			89,610
Tax benefit on exercise of stock options		—			—			(1,266	)		—			—			(1,266	)
Tax benefit of prior periods’ stock option exercises		—			—			9,383			—			—			9,383
Balance, September 30, 2007		173,215		$	173		$	839,442		$	875,291		$	46,605		$	1,761,511

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Unaudited

	Nine Months Ended September 30,
	2007			2006
Cash flows from operating activities:
Net income	$	249,910		$	186,589
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt financing costs		4,683			3,535
Depreciation and amortization		216,917			137,098
Provision for losses on accounts receivable		33,199			21,783
Foreign currency transaction (gains) losses, net		(12,637	)		801
Deferred income tax provision		31,336			32,788
Utilization of deferred credit		(5,031	)		(5,982	)
Share-based payment expense		51,159			30,375
Excess tax benefit from share-based payment		—			(17,596	)
Accretion of asset retirement obligations		4,271			2,898
Other, net		(1,562	)		4,765
Change in assets and liabilities:
Accounts receivable, gross		(129,059	)		(77,451	)
Handset and accessory inventory		(39,435	)		(18,630	)
Prepaid expenses and other		(24,171	)		(26,649	)
Other long-term assets		(38,679	)		(15,779	)
Accounts payable, accrued expenses and other		98,017			42,006
Current deferred revenue		15,455			15,309
Other long-term liabilities		822			2,328
Net cash provided by operating activities		455,195			318,188
Cash flows from investing activities:
Capital expenditures		(499,748	)		(424,085	)
Payments for acquisitions, purchases of licenses and other		(44,180	)		(3,197	)
Transfers to restricted cash		(12,259	)		(205,295	)
Proceeds from maturities of short-term investments		—			7,371
Other		1,568			779
Net cash used in investing activities		(554,619	)		(624,427	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes		1,200,000			—
Payments to repurchase common stock		(329,980	)		—
Proceeds from stock option exercises		89,610			49,254
Borrowings under syndicated loan facility		—			60,885
Repayments under syndicated loan facility		(9,152	)		(9,941	)
Payment of debt financing costs		(23,090	)		(2,668	)
Gross proceeds from tower financing transactions		13,213			4,683
Repayments under software financing		—			(13,375	)
Repayments under capital leases and tower financing transactions		(4,014	)		(3,082	)
Excess tax benefit from share-based payment		—			17,596
Net cash provided by financing activities		936,587			103,352
Effect of exchange rate changes on cash and cash equivalents		(351	)		(6,394	)
Net increase (decrease) in cash and cash equivalents		836,812			(209,281	)
Cash and cash equivalents, beginning of period		708,591			877,536
Cash and cash equivalents, end of period	$	1,545,403		$	668,255

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1.   Basis of Presentation

General.  Our unaudited condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission, or the SEC. While they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements, they reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for interim periods. In addition, the year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes contained in our 2006 annual report on Form 10-K and our quarterly reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007. You should not expect results of operations for interim periods to be an indication of the results for a full year.

Accumulated Other Comprehensive Income (Loss).  The components of our accumulated other comprehensive income (loss), net of taxes, are as follows:

	September 30,			December 31,
	2007			2006
	(in thousands)
Cumulative foreign currency translation adjustment	$	48,624		$	(4,920	)
Unrealized losses on derivatives		(2,019	)		(2,944	)
	$	46,605		$	(7,864	)

Supplemental Cash Flow Information.

	Nine Months Ended
	September 30,
	2007			2006
	(in thousands)
Capital expenditures
Cash paid for capital expenditures, including capitalized interest	$	499,748		$	424,085
Changes in capital expenditures accrued and unpaid or financed		(33,817	)		37,721
	$	465,931		$	461,806
Interest costs
Interest expense	$	89,592		$	66,103
Interest capitalized		4,266			10,760
	$	93,858		$	76,863
Cash paid for interest, net of amounts capitalized	$	60,191		$	49,013
Cash paid for income taxes	$	94,930		$	64,098

For the nine months ended September 30, 2007 and 2006, we had $12.0 million and $11.3 million, respectively, in non-cash financing activities related to co-location capital lease obligations on our communication towers.

Net Income Per Common Share, Basic and Diluted.  Basic net income per common share includes no dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution of securities that could participate in our earnings.

6

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As presented for the nine and three months ended September 30, 2007, our calculation of diluted net income per share includes common shares resulting from shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans and our restricted stock, as well as common shares resulting from the potential conversion of our 2.875% convertible notes and our 2.75% convertible notes. We did not include the common shares resulting from the potential conversion of our 3.125% convertible notes that we issued in the second quarter of 2007, since their effect would have been antidilutive to our net income per share.

As presented for the nine and three months ended September 30, 2006, our calculation of diluted net income per share includes common shares resulting from shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans and our restricted stock, as well as common shares resulting from the potential conversion of our 3.5% convertible notes, our 2.875% convertible notes and our 2.75% convertible notes.

As discussed in Note 4, on July 25, 2007, we accepted the tender of 99.99% of the $300.0 million in outstanding principal amount of our 2.875% convertible notes under a tender offer that expired on July 23, 2007, resulting in the issuance of 11,268,103 shares of our common stock. The completion of the tender offer resulted in a higher weighted average share count for basic net income per share for the nine and three months ended September 30, 2007, but had no effect on the number of diluted shares.

The following tables provide a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed in our consolidated statements of operations for the nine and three months ended September 30, 2007 and 2006:

	Nine Months Ended September 30, 2007						Nine Months Ended September 30, 2006
	Income		Shares		Per Share		Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(in thousands, except per share data)
Basic net income per share:
Net income	$	249,910		164,942	$	1.52	$	186,589		153,403	$	1.22
Effect of dilutive securities:
Stock options		—		4,051				—		4,477
Restricted stock		—		612				—		842
Convertible notes, net of capitalized interest and taxes		8,781		15,493				11,389		25,117
Diluted net income per share:
Net income	$	258,691		185,098	$	1.40	$	197,978		183,839	$	1.08

7

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months Ended September 30, 2007						Three Months Ended September 30, 2006
	Income		Shares		Per Share		Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(in thousands, except per share data)
Basic net income per share:
Net income	$	81,666		170,000	$	0.48	$	65,688		154,524	$	0.43
Effect of dilutive securities:
Stock options		—		3,268				—		3,885
Restricted stock		—		301				—		800
Convertible notes, net of capitalized interest and taxes		2,126		10,052				4,013		25,110
Diluted net income per share:
Net income	$	83,792		183,621	$	0.46	$	69,701		184,319	$	0.38

Repurchase of Common Stock.  In May 2007, our Board of Directors authorized a program to repurchase shares of our common stock for cash. The Board approved the repurchase of shares having an aggregate market value of up to $500.0 million, depending on market conditions and other factors. As of September 30, 2007, we have repurchased a total of 4,043,725 shares of our common stock for $330.0 million. We did not repurchase any shares during the three months ended September 30, 2007; however, as of November 6, 2007, we have repurchased an additional 665,750 shares for approximately $38.0 million since September 30, 2007. We treat purchases under this program as effective retirements of the purchased shares and therefore reduce our reported shares issued and outstanding by the number of shares repurchased. In addition, we record the excess of the purchase price over the par value of the common stock as a reduction to paid-in capital.

Reclassifications.  We have reclassified certain prior year amounts in our unaudited condensed consolidated financial statements to conform to our current year presentation. These reclassifications did not have a material impact on previously reported balances.

New Accounting Pronouncements.  In June 2006, the Financial Accounting Standards Board, or the FASB, ratified the consensus of the Emerging Issues Task Force, or EITF, on Issue 06-3, “How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation),” or EITF 06-3. EITF 06-3 states that a company should disclose its accounting policy (gross or net presentation) regarding presentation of sales and other similar taxes. If taxes included in gross revenues are significant, a company should disclose the amount of such taxes for each period for which an income statement is presented. EITF 06-3 is effective for financial reports in interim and annual reporting periods beginning after December 15, 2006. We currently disclose our policy with regard to these types of taxes in our revenue recognition policy; however, we do not consider the amounts of these taxes significant for disclosure. Therefore, the adoption of EITF 06-3 did not have a material impact on our consolidated financial statements.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109,” or FIN 48. FIN 48 clarifies the accounting for uncertainty in income tax positions and is effective beginning January 1, 2007. FIN 48 provides that the financial statement effects of an income tax position can only be recognized when, based on the technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. The cumulative effect of applying the provisions of FIN 48 is required to be reported as an adjustment to the opening balance of retained earnings for that fiscal year. Our adoption of FIN 48 in the first quarter of 2007 resulted in a $5.2 million decrease to our retained earnings. See Note 6 for more information.

8

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In September 2006, the FASB issued Statement of Financial Accounting Standards, or SFAS, No. 157, “Fair Value Measurement,” or SFAS 157, which provides guidance for using fair value to measure assets and liabilities when required for recognition or disclosure purposes. SFAS 157 is intended to make the measurement of fair value more consistent and comparable and improve disclosures about these measures. Specifically, SFAS 157 (1) clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability, (2) establishes a fair value hierarchy that prioritizes the information used to develop those assumptions, (3) clarifies the information required to be used to measure fair value, (4) determines the frequency of fair value measures and (5) requires companies to make expanded disclosures about the methods and assumptions used to measure fair value and the fair value measurement’s effect on earnings. However, SFAS 157 does not expand the use of fair value to any new circumstances or determine when fair value should be used in the financial statements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with some exceptions. SFAS 157 is to be applied prospectively as of the first interim period for the fiscal year in which it is initially adopted, except for a limited form of retrospective application for some specific items. We are currently evaluating the impact that SFAS 157 may have on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact that SFAS No. 159 may have on our consolidated financial statements.

Note 2.   Supplemental Balance Sheet Information

Prepaid Expenses and Other.

The components are as follows:

	September 30,		December 31,
	2007		2006
	(in thousands)
Short-term value added tax receivables	$	25,037	$	14,813
Commissions		12,142		16,164
Local taxes		7,610		4,630
Short-term advances to suppliers		7,535		4,793
Advertising		6,394		70
Insurance claims		6,221		3,193
General prepaid expenses		5,448		4,337
Rent		5,008		4,172
Spectrum fees		4,516		3,773
Maintenance		4,100		3,112
Interest receivable		3,243		527
Insurance		2,096		5,767
Other assets		8,897		6,025
	$	98,247	$	71,376

9

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Assets.

The components are as follows:

	September 30,		December 31,
	2007		2006
	(in thousands)
Long-term value added tax receivables	$	95,293	$	66,931
Deposits and restricted cash		40,324		20,983
Deferred financing costs		36,277		17,304
Long-term advances to suppliers		27,289		14,516
Income tax receivable		15,933		15,996
Handsets under operating leases		7,706		5,970
Other		3,536		1,631
	$	226,358	$	143,331

The long-term value added tax receivables balances presented above are primarily comprised of value added taxes paid by Nextel Brazil on capital expenditures and handset purchases. Under Brazilian regulations, Nextel Brazil will recover these amounts over a four-year period.

As of September 30, 2007, the deposits balance includes $11.3 million paid into an escrow account by Nextel Peru under an agreement that provides for the purchase of 54 MHz of 2.5 GHz spectrum throughout greater Lima. The completion of this purchase is conditioned upon receipt of necessary regulatory approvals.

As of September 30, 2007, the deferred financing costs balance includes $21.4 million related to the issuance of our 3.125% convertible notes in the second quarter of 2007. See Note 4 for more information.

As of September 30, 2007 and December 31, 2006, the long-term advances to suppliers balances include $20.1 million and $2.6 million, respectively, that Nextel Mexico prepaid in accordance with the terms of a commercial agreement with Telmex that was entered into in the first quarter of 2006 under which Nextel Mexico receives telecommunications services.

10

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Expenses and Other.

The components are as follows:

	September 30,		December 31,
	2007		2006
	(in thousands)
Payroll related items and commissions	$	75,849	$	55,654
Network system and information technology		56,316		46,741
Capital expenditures		49,247		81,839
Non-income based taxes		40,223		30,430
Customer deposits		39,972		31,044
Income taxes		27,085		16,774
Accrued contingencies		26,374		24,369
License fees		13,031		10,765
Professional fees		11,493		4,288
Deferred tax liability		9,520		7,756
Marketing		7,259		5,551
Insurance		6,531		3,163
Other		41,308		24,091
	$	404,208	$	342,465

Deferred Credits.

The components are as follows:

	September 30,		December 31,
	2007		2006
	(in thousands)
Deferred income tax liability	$	89,191	$	88,886
Deferred credit from AOL Mexico acquisition		16,014		21,147
	$	105,205	$	110,033

Other Long-Term Liabilities.

The components are as follows:

	September 30,		December 31,
	2007		2006
	(in thousands)
Accrued contingencies	$	58,056	$	61,516
Asset retirement obligations		37,320		29,297
Severance plan liability		7,212		6,468
Other		21,080		4,240
	$	123,668	$	101,521

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3.   Intangible Assets

Our intangible assets consist of our licenses, customer base and trade name, all of which have finite useful lives, as follows:

	September 30, 2007							December 31, 2006
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Value		Amortization			Value		Value		Amortization			Value
	(in thousands)
Amortizable intangible assets:
Licenses	$	437,313	$	(27,809	)	$	409,504	$	389,526	$	(20,330	)	$	369,196
Customer base		42,364		(42,364	)		—		42,401		(42,401	)		—
Trade name and other		1,763		(1,763	)		—		1,664		(1,664	)		—
Total intangible assets	$	481,440	$	(71,936	)	$	409,504	$	433,591	$	(64,395	)	$	369,196

Based solely on the carrying amount of amortizable intangible assets existing as of September 30, 2007 and current exchange rates, we estimate amortization expense for each of the next five years ending December 31 to be as follows (in thousands):

	Estimated
	Amortization
Years	Expense
2007	$	14,496
2008		30,161
2009		31,183
2010		31,183
2011		31,183

Actual amortization expense to be reported in future periods could differ from these estimates as a result of additional acquisitions of intangibles, as well as changes in exchange rates and other relevant factors. During the three months ended September 30, 2007 and 2006, we did not acquire, dispose of or write down any goodwill or intangible assets with indefinite useful lives.

License Acquisitions and Renewals

In January 2007, Nextel Brazil renewed 11,900 specialized mobile radio channels of its 800 MHz spectrum licenses with Brazil’s telecommunications regulatory agency, which is known as Anatel, for a term of 15 years, beginning from the respective expiration of each license. In connection with this license renewal, Nextel Brazil paid $13.0 million to Anatel, which will be amortized on a straight line basis over the remaining license periods.

Nextel Mexico filed applications to renew approximately 30 of its licenses, more than half of which have expired. Although Nextel Mexico expects that these renewals will be granted, it cannot guarantee the renewal of these licenses. If some or all of these renewals are not granted, Nextel Mexico could experience an adverse effect on its business.

In July 2007, Proinversion, the privatization agency in Peru, awarded a nationwide license of 35 MHz of 1.9 GHz spectrum to Nextel Peru for $27.0 million through an auction process carried out by the Peruvian government. The license has a term of 20 years. Nextel Peru will amortize this license over its useful life of 20 years excluding possible renewals. In addition, under a separate investment stability agreement reached with the Peruvian government, we are required to make cash contributions to Nextel Peru’s share capital in the amount of

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$150.0 million over the next five years, of which $27.0 million has already been contributed. Under the terms of the spectrum license, Nextel Peru is required to expand the coverage of its network by adding 100 additional districts within five years from the date the spectrum license was awarded.

Note 4.   Debt

The components are as follows:

	September 30,			December 31,
	2007			2006
	(in thousands)
3.125% convertible notes due 2012	$	1,200,000		$	—
2.75% convertible notes due 2025		349,996			350,000
2.875% convertible notes due 2034		45			300,000
Mexico syndicated loan facility		287,860			297,577
Tower financing obligations		157,196			137,625
Capital lease obligations		73,827			62,669
Brazil spectrum license financing		12,250			9,770
Other		40			40
Total debt		2,081,214			1,157,681
Less: current portion		(48,342	)		(23,294	)
	$	2,032,872		$	1,134,387

3.125% Convertible Notes.  In May 2007, we privately placed $1,000.0 million aggregate principal amount of 3.125% convertible notes due 2012, which we refer to as the 3.125% notes. In addition, we granted the initial purchaser an option to purchase up to an additional $200.0 million principal amount of 3.125% notes, which the initial purchaser exercised in full. As a result, we issued a total of $1,200.0 million principal amount of the 3.125% notes for which we received total gross proceeds of $1,200.0 million. We also incurred direct issuance costs of $22.8 million, which we recorded as a deferred financing cost that we will amortize into interest expense over the term of the 3.125% notes.

The 3.125% notes bear interest at a rate of 3.125% per annum on the principal amount of the notes, payable semi-annually in arrears in cash on June 15 and December 15 of each year, beginning December 15, 2007, and will mature on June 15, 2012, when the entire principal balance of $1,200.0 million will be due. In addition, and subject to specified exceptions, the noteholders have the right to require us to repurchase the notes at a repurchase price equal to 100% of their principal amount, plus any accrued and unpaid interest (including additional amounts, if any) up to, but excluding, the repurchase date upon the occurrence of a fundamental change. The 3.125% notes are convertible into shares of our common stock at a conversion rate of 8.4517 shares per $1,000 principal amount of notes, subject to adjustment, prior to the close of business on the final maturity date under any of the following circumstances:

•  during any fiscal quarter commencing after September 30, 2007, if the closing sale price of our common stock exceeds 120% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter;

•  prior to May 15, 2012, during the five business day period after any five consecutive trading day period in which the trading price per note for each day of such period was less than 98% of the product of the closing sale price of our common stock and the number of shares issuable upon conversion of $1,000 principal amount of notes;

•  at any time on or after May 15, 2012; or

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•  upon the occurrence of specified corporate events.

We have the option to satisfy the conversion of the 3.125% notes in shares of our common stock, in cash or a combination of both.

In accordance with the registration rights agreement that we entered into in connection with the issuance of the 3.125% notes, during the third quarter of 2007, we prepared and filed an automatic shelf registration statement with the SEC registering the resale of the 3.125% notes and the shares of our common stock into which the 3.125% notes are convertible. The registration rights agreement requires us to use our reasonable best efforts to keep the shelf registration statement effective until certain events occur. If we fail to do this, we are required to pay liquidated damages to recordholders of the 3.125% notes or to issue additional shares of common stock as follows:

•  pay interest accruing for each day in the specified damages accrual period at a rate per annum equal to 0.5% of the principal amount of the note; and

•  for any note that is submitted for conversion during the specified damages accrual period, (i) pay on the settlement date interest accruing for each day commencing on and including the first day of the damages accrual period and ending on, but excluding, the settlement date at a rate per annum equal to 0.5% of the principal amount of the note and (ii) issue and deliver for each $1,000 principal amount of notes submitted for conversion additional shares of underlying common stock equal to 1% of the applicable conversion rate, except to the extent that we elect to deliver cash upon conversion.

2.875% Convertible Notes.  In July 2007, we accepted the tender of 99.99% of the $300.0 million in outstanding principal amount of our 2.875% convertible notes under a tender offer that expired on July 23, 2007. In connection with this tender offer, we issued 11,268,103 shares of our common stock and paid to the holders of the tendered notes an aggregate cash premium of $25.5 million, $1.0 million in direct external costs and accrued and unpaid interest of $4.2 million.

2.75% Convertible Notes.  For the fiscal quarter ended September 30, 2007, the closing sale price of our common stock exceeded 120% of the conversion price of $50.08 per share for at least 20 trading days in the 30 consecutive trading days ending on September 30, 2007. As a result, the conversion contingency was met and our 2.75% convertible notes are currently convertible into 19.967 shares of our common stock per $1,000 principal amount of notes, or an aggregate of 6,988,390 common shares, at a conversion price of $50.08 per share.

Brazil Syndicated Loan Facility.  On September 14, 2007, Nextel Brazil entered into a $300.0 million syndicated loan facility. Of the total amount of the facility, $45.0 million is denominated in U.S. dollars with a floating interest rate based on LIBOR plus a specified margin, which ranges from 2.00% to 2.50% (Tranche A). The remaining $255.0 million is denominated in U.S. dollars with a floating interest rate based on LIBOR plus a specified margin, which ranges from 1.75% to 2.25% (Tranche B). Tranche A matures on September 14, 2014, and Tranche B matures on September 14, 2012. Nextel Brazil’s obligations under the syndicated loan facility agreement are guaranteed by all of its material operating subsidiaries and are secured by a pledge of the outstanding equity interests in Nextel Brazil and those subsidiaries. In addition, Nextel Brazil is subject to various legal and financial covenants under the syndicated loan facility that, among other things, require Nextel Brazil to maintain certain financial ratios and may limit the amount of funds that could be repatriated in certain periods. Nextel Brazil may utilize borrowings under this syndicated loan facility for capital expenditures, general corporate purposes and the repayment of specified short-term intercompany debt. In connection with this agreement, Nextel Brazil capitalized $5.0 million in deferred financing costs, which Nextel Brazil will amortize as interest expense over the term of the syndicated loan. As of September 30, 2007, Nextel Brazil had not borrowed any amounts under this facility.

On October 25, 2007, Nextel Brazil borrowed $150.0 million in term loans under this syndicated loan facility. In addition, at the time of the drawdown, Nextel Brazil established a debt service reserve account in the amount of $12.7 million in accordance with the terms of this loan. The remaining $150.0 million in term loans are available under this facility until March 12, 2008, subject to the satisfaction of customary borrowing conditions.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5.   Commitments and Contingencies

Brazilian Contingencies.

Nextel Brazil has received various assessment notices from state and federal Brazilian authorities asserting deficiencies in payments related primarily to value-added taxes and import duties based on the classification of equipment and services. Nextel Brazil has filed various administrative and legal petitions disputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. In other cases, Nextel Brazil’s petitions have been denied, and Nextel Brazil is currently appealing those decisions. Nextel Brazil is also disputing various other claims.

As of September 30, 2007 and December 31, 2006, Nextel Brazil had accrued liabilities of $31.3 million and $24.7 million, respectively, related to contingencies, all of which were classified in accrued contingencies reported as a component of other long-term liabilities. Of the total accrued liabilities as of September 30, 2007 and December 31, 2006, Nextel Brazil had $22.8 million and $18.0 million in unasserted claims, respectively. We currently estimate the range of reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be between $192.9 million and $196.9 million as of September 30, 2007. We are continuing to evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies. As a result, future increases or decreases to our accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and estimable.

Argentine Contingencies.

As of September 30, 2007 and December 31, 2006, Nextel Argentina had accrued liabilities of $30.2 million and $29.4 million, respectively, related primarily to local turnover taxes and local government claims, all of which were classified in accrued contingencies and accrued non-income taxes reported as components of accrued expenses and other.

Turnover Tax.  The government of the city of Buenos Aires imposes a turnover tax rate of 6% of revenues for cellular companies while maintaining a 3% rate for other telecommunications services. From a regulatory standpoint, we are not considered a cellular company, although, as noted below, the city of Buenos Aires made claims to the effect that the higher turnover tax rate should apply to our services. As a result, until April 2006, Nextel Argentina paid the turnover tax at a rate of 3% and recorded a liability and related expense for the differential between the higher rate applicable to cellular carriers and the 3% rate, plus interest.

In March 2006, Nextel Argentina received an unfavorable decision from the city of Buenos Aires related to the determination of whether it is a cellular company for purposes of this tax. In addition, the city of Buenos Aires confirmed a previously assessed penalty equal to 80% of the principal amount of the additional tax from December 1997 through May 2004. In April 2006, Nextel Argentina decided to pay under protest $18.8 million, which represented the total amount of principal and interest, related to this turnover tax.

In August 2006, Nextel Argentina filed a lawsuit against the city of Buenos Aires to pursue the reimbursement of the $18.8 million paid under protest in April 2006. Subsequent to this payment, Nextel Argentina paid $4.5 million under protest from April 2006 through December 2006 related to this tax.

In December 2006, the city of Buenos Aires issued new laws, which Nextel Argentina believes support its position that it should be taxed at the general 3% rate and not at the 6% cellular rate. Beginning in January 2007, Nextel Argentina has and will continue to pay the 3% general turnover tax rate and continue with its efforts to obtain reimbursement of amounts previously paid under protest. Nextel Argentina no longer accrues for the incremental difference in the cellular rate. In addition, in March 2007, Nextel Argentina filed an administrative claim to recover the amounts paid under protest from April 2006 through December 2006.

Similarly, one of the provincial governments in another one of the markets where Nextel Argentina operates also increased their turnover tax rate from 4.55% to 6% of revenues for cellular companies. Consistent with its

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earlier position, Nextel Argentina continues to pay the turnover tax in this province at the existing rate and accrues a liability for the incremental difference in the rate on interconnect revenues. As of September 30, 2007 and December 31, 2006, Nextel Argentina accrued $6.3 million and $5.1 million, respectively, for local turnover taxes in this province, which are included as components of accrued expenses and other.

Universal Service Tax.  Nextel Argentina is subject to the Universal Service Regulation, which imposes a tax on telecommunications licensees, equal to 1% of telecommunications service revenue minus applicable taxes and specified related costs. The license holder can choose either to pay the resulting amount into a fund for universal service development or to participate directly in offering services to specific geographical areas under an annual plan designed by the federal government. Although the regulations state that this tax would be applicable beginning January 1, 2001, the authorities did not take the necessary actions to implement the tax. However, a subsequent resolution, issued by the Secretary of Communications in May 2005, prohibits telecommunications operators from itemizing the tax in customer invoices or passing through the tax to customers. In addition, following the Secretary’s instructions, the Argentine CNC ordered Nextel Argentina, among other operators, to reimburse the amounts collected as universal service contributions, plus interest. In June 2007, the Secretary of Communications issued a resolution requiring new universal service tax contributions to be deposited into a financial institution. Nextel Argentina began depositing these contributions in September 2007, effective for the period beginning July 1, 2007. As of September 30, 2007 and December 31, 2006, the accrual for the liability to customers was $7.4 million and $6.9 million, respectively, which is included as a component of accrued expenses and other.

Mexican Contingency.

Nextel Mexico is a party to a telecommunications services agreement under which it committed to purchase a minimum amount of certain interconnection services over a two year period ending December 31, 2007. Based on actual usage of those services to date and assuming the agreement is not renewed or extended before the end of 2007, it is possible that Nextel Mexico will not meet its minimum commitment, which could result in a shortfall ranging from $2.5 million to $17.2 million. Based on its legal interpretation of certain provisions in the agreement that would eliminate a portion of the potential shortfall and the uncertainty regarding the level of Nextel Mexico’s use of the interconnection services over the remainder of 2007, as of September 30, 2007, Nextel Mexico accrued $2.5 million for this liability, which is included as a component of accrued expenses and other. Nextel Mexico is in the process of evaluating whether to negotiate an extension of the agreement beyond December 31, 2007.

Legal Proceedings.

We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.

Note 6.   Income Taxes

Adoption of FIN 48.  We are subject to income taxes in both the United States and the non-U.S. jurisdictions in which we operate. Certain of our entities are under examination by the relevant taxing authorities for various tax years. The earliest years that remain subject to examination by jurisdiction are: Chile — 1993; U.S. — 1995; Mexico — 1999; Argentina and Peru — 2001; and Brazil — 2002. We regularly assess the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes. As of January 1, 2007, we adopted FIN 48, “Accounting for Uncertainty in Income Taxes.” As a result of the adoption of FIN 48, we accounted for our change in reserve for uncertain tax positions as a $5.2 million decrease to the beginning balance of retained earnings on our condensed consolidated balance sheet.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table shows a reconciliation of our total FIN 48 unrecognized tax benefit for the nine months ended September 30, 2007 (in thousands):

Unrecognized tax benefits — January 1, 2007	$	55,965
Unrecognized tax benefits originating from positions taken during the current period		9,414
Foreign currency translation adjustment		(141	)
Unrecognized tax benefits — September 30, 2007	$	65,238

The unrecognized tax benefits as of January 1, 2007 and September 30, 2007 include $43.0 million and $48.7 million, respectively, of tax benefits that could potentially reduce our future effective tax rate, if recognized. It also includes $3.0 million related to withholding taxes on intercompany payments that we may recognize in the next 12 months due to the pending expiration of the period of limitation for assessing a tax deficiency related to this position.

We record interest and penalties associated with uncertain tax positions as a component of our income tax provision.

Deferred Tax Assets.  We assessed the realizability of our deferred tax assets during the third quarter of 2007, consistent with the methodology we employed for 2006, and determined that the realizability of those deferred assets has not changed. In that assessment, we considered the reversal of existing temporary differences associated with deferred tax assets and liabilities, future taxable income, tax planning strategies and historical and future pre-tax book income (as adjusted for permanent differences between financial and tax accounting items) in order to determine if it is “more-likely-than-not” that the deferred tax asset will be realized. As of September 30, 2007, Nextel Brazil continues to maintain a 100% valuation allowance against its net deferred tax assets; however, due to the increasing amount of positive evidence related to Nextel Brazil’s ability to utilize its deferred tax assets, we currently believe it is reasonably possible that we will release a portion or all of the Nextel Brazil valuation allowance in the near term. If and when we release the Nextel Brazil valuation allowance, we will first increase paid-in capital to the extent the valuation allowance existed as of our date of reorganization, and reduce our deferred tax expense for any remaining amount. We will continue to evaluate the amount of the necessary valuation allowance for all of our foreign operating companies and our U.S. companies throughout the remainder of 2007.

Mexican Taxes.  During 2004, Nextel Mexico amended its Mexican Federal income tax returns in order to reverse a benefit previously claimed for a disputed provision of the Federal income tax law governing deductions and gains from the sale of property. We filed the amended returns in order to avoid potential penalties, and we also filed administrative petitions seeking clarification of our right to the tax benefits claimed on the original income tax returns. The tax authorities constructively denied our administrative petitions in January 2005. In May 2005, we filed an annulment suit challenging the constructive denial. Resolution of the annulment suit is pending. Based on an opinion by our independent legal counsel in Mexico, we believe it is probable that we will recover this amount. As of September 30, 2007 and December 31, 2006, our consolidated balance sheet includes $16.0 million in income tax receivables, which are included as components of other non-current assets. The income tax benefit for this item was related to our income tax provision for the years ended December 31, 2005, 2004 and 2003.

On October 1, 2007, the Mexican government enacted amendments to the Mexican tax law that will become effective January 1, 2008. The amendments established a new minimum corporate tax, eliminated the existing minimum asset tax and established a new withholding tax system on cash deposits in bank accounts. The new minimum corporate tax is a supplemental tax that supersedes the current asset tax and applies when and to the extent the tax computed under the new minimum corporate tax exceeds the amounts that would be payable under the existing Mexican income tax. The new minimum corporate tax is computed on a cash basis rather than on an accrual basis, and is calculated based on gross revenues, with no deductions allowed for cost of goods sold, non-taxable salaries and wages, interest expense, depreciation, amortization, foreign currency transaction gains and losses or existing net income tax operating losses from prior years. For purposes of the new minimum corporate tax, Nextel

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Mexico will generally deduct the value of depreciable assets and inventory as an expense when these assets are acquired. This tax will be phased in at a rate of 16.5% for 2008, 17% for 2009 and a final tax rate of 17.5% for 2010 and thereafter. Certain tax credits may be available to reduce the amount of new minimum corporate tax that is payable.

We believe that the new minimum corporate tax is an income tax to which SFAS No. 109, “Accounting for Income Taxes,” is applicable. As the date of enactment for the amendments to the Mexican tax law occurred during the fourth quarter of 2007, any effect of the new minimum corporate tax on our existing deferred tax assets and liabilities must be reflected in that period as an increase or decrease to our deferred income tax provision. We are currently evaluating the impact that the new minimum corporate tax may have on our condensed consolidated financial statements. At this time, we do not believe that the new minimum corporate tax will have a material adverse effect on our condensed consolidated financial statements.

Note 7.   Segment Reporting

We have determined that our reportable segments are those that are based on our method of internal reporting, which disaggregates our business by geographical location. Our reportable segments are: (1) Mexico, (2) Brazil, (3) Argentina and (4) Peru. The operations of all other businesses that fall below the segment reporting thresholds are included in the “Corporate and other” segment below. This segment includes our Chilean operating companies and our corporate operations in the U.S. We evaluate performance of these segments and provide resources to them based on operating income before depreciation and amortization and impairment, restructuring and other charges, which we refer to as segment earnings. Because we do not view share-based compensation as an important element of operational performance, we recognize share-based payment expense at the corporate level and exclude it when evaluating the business performance of our segments. For several years, we have charged a management fee to Nextel Mexico for services rendered by corporate management. During 2007, we reported this management fee as a separate line item in the segment reporting information presented below as these amounts are now regularly provided to our chief operating decision maker. During the nine and three months ended September 30, 2006, Nextel Mexico incurred a management fee of $51.1 million and $17.0 million, respectively. However, for the nine and three months ended September 30, 2006, the segment information below does not reflect these management fees as a separate line item because these amounts were not provided to or used by our chief operating decision maker in making operating decisions related to this segment.

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													Corporate			Intercompany
	Mexico			Brazil			Argentina			Peru			and other			Eliminations			Consolidated
	(in thousands)
Nine Months Ended September 30, 2007
Service and other revenues	$	1,280,982		$	570,308		$	293,538		$	128,947		$	2,454		$	(859	)	$	2,275,370
Digital handset and accessory revenues		18,093			25,257			24,270			9,201			5			—			76,826
Operating revenues	$	1,299,075		$	595,565		$	317,808		$	138,148		$	2,459		$	(859	)	$	2,352,196
Segment earnings (losses)	$	491,556		$	141,619		$	100,877		$	26,019		$	(109,818	)	$	—		$	650,253
Management fee		(29,700	)		—			—			—			29,700			—			—
Depreciation and amortization		(106,788	)		(67,734	)		(22,505	)		(15,202	)		(4,983	)		295			(216,917	)
Operating income (loss)		355,068			73,885			78,372			10,817			(85,101	)		295			433,336
Interest expense		(44,765	)		(22,221	)		(1,904	)		(95	)		(28,403	)		7,796			(89,592	)
Interest income		20,948			4,457			3,417			499			27,471			(7,796	)		48,996
Foreign currency transaction gains, net		899			10,041			1,301			371			25			—			12,637
Debt conversion expense		—			—			—			—			(26,455	)		—			(26,455	)
Other income (expense), net		2,183			(3,162	)		1,586			—			(1,593	)		—			(986	)
Income (loss) before income tax	$	334,333		$	63,000		$	82,772		$	11,592		$	(114,056	)	$	295		$	377,936
Capital expenditures	$	200,059		$	177,927		$	42,702		$	29,966		$	15,277		$	—		$	465,931
Nine Months Ended September 30, 2006
Service and other revenues	$	946,500		$	354,863		$	229,629		$	97,978		$	1,890		$	(569	)	$	1,630,291
Digital handset and accessory revenues		17,468			28,707			17,743			6,077			—			—			69,995
Operating revenues	$	963,968		$	383,570		$	247,372		$	104,055		$	1,890		$	(569	)	$	1,700,286
Segment earnings (losses)	$	375,717		$	76,128		$	71,951		$	18,489		$	(75,876	)	$	—		$	466,409
Depreciation and amortization		(72,352	)		(40,671	)		(13,203	)		(8,421	)		(2,746	)		295			(137,098	)
Operating income (loss)		303,365			35,457			58,748			10,068			(78,622	)		295			329,311
Interest expense		(27,421	)		(17,857	)		(2,118	)		(106	)		(18,672	)		71			(66,103	)
Interest income		24,697			2,480			1,765			850			9,276			(71	)		38,997
Foreign currency transaction (losses) gains, net		(823	)		(338	)		394			80			(114	)		—			(801	)
Other (expense) income, net		(2,116	)		(4,567	)		319			—			(911	)		—			(7,275	)
Income (loss) before income tax	$	297,702		$	15,175		$	59,108		$	10,892		$	(89,043	)	$	295		$	294,129
Capital expenditures	$	231,678		$	148,173		$	42,015		$	24,700		$	15,240		$	—		$	461,806
Three Months Ended September 30, 2007
Service and other revenues	$	458,665		$	215,683		$	105,437		$	45,457		$	1,072		$	(308	)	$	826,006
Digital handset and accessory revenues		7,445			7,531			8,616			3,320			5			—			26,917
Operating revenues	$	466,110		$	223,214		$	114,053		$	48,777		$	1,077		$	(308	)	$	852,923
Segment earnings (losses)	$	180,616		$	50,007		$	37,050		$	8,146		$	(40,639	)	$	—		$	235,180
Management fee		(9,900	)		—			—			—			9,900			—			—
Depreciation and amortization		(38,574	)		(25,077	)		(7,637	)		(4,318	)		(1,713	)		98			(77,221	)
Operating income (loss)		132,142			24,930			29,413			3,828			(32,452	)		98			157,959
Interest expense		(15,453	)		(7,879	)		(780	)		(28	)		(14,068	)		2,598			(35,610	)
Interest income		8,039			1,667			1,380			158			15,192			(2,598	)		23,838
Foreign currency transaction (losses) gains, net		(309	)		5,802			995			317			33			—			6,838
Debt conversion expense		—			—			—			—			(26,455	)		—			(26,455	)
Other (expense) income, net		(77	)		(1,608	)		9			(1	)		58			—			(1,619	)
Income (loss) before income tax	$	124,342		$	22,912		$	31,017		$	4,274		$	(57,692	)	$	98		$	124,951
Capital expenditures	$	43,301		$	50,908		$	16,935		$	6,309		$	7,089		$	—		$	124,542

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

													Corporate			Intercompany
	Mexico			Brazil			Argentina			Peru			and other			Eliminations			Consolidated
	(in thousands)
Three Months Ended September 30, 2006
Service and other revenues	$	341,203		$	130,526		$	82,685		$	35,349		$	521		$	(198	)	$	590,086
Digital handset and accessory revenues		4,848			11,307			7,102			2,243			—			—			25,500
Operating revenues	$	346,051		$	141,833		$	89,787		$	37,592		$	521		$	(198	)	$	615,586
Segment earnings (losses)	$	127,037		$	30,073		$	25,187		$	5,893		$	(30,173	)	$	—		$	158,017
Depreciation and amortization		(27,533	)		(15,144	)		(5,708	)		(3,078	)		(1,037	)		98			(52,402	)
Operating income (loss)		99,504			14,929			19,479			2,815			(31,210	)		98			105,615
Interest expense		(10,542	)		(6,248	)		(669	)		(34	)		(6,187	)		24			(23,656	)
Interest income		8,702			895			651			290			2,745			(24	)		13,259
Foreign currency transaction gains (losses), net		2,719			(66	)		(11	)		30			10			—			2,682
Other income (expense), net		178			(1,831	)		90			—			(124	)		—			(1,687	)
Income (loss) before income tax	$	100,561		$	7,679		$	19,540		$	3,101		$	(34,766	)	$	98		$	96,213
Capital expenditures	$	61,760		$	49,790		$	9,623		$	8,179		$	5,582		$	—		$	134,934
September 30, 2007
Property, plant and equipment, net	$	782,216		$	603,007		$	167,959		$	98,869		$	57,471		$	(264	)	$	1,709,258
Identifiable assets	$	2,193,815		$	952,576		$	404,704		$	222,100		$	951,706		$	(264	)	$	4,724,637
December 31, 2006
Property, plant and equipment, net	$	690,573		$	415,577		$	152,818		$	83,920		$	46,822		$	(560	)	$	1,389,150
Identifiable assets	$	1,978,469		$	637,230		$	322,813		$	171,871		$	187,855		$	(560	)	$	3,297,678

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction	22
Business Overview	22
Digital Handsets in Commercial Service	25
Recent Developments	25
Critical Accounting Policies and Estimates	26
Ratio of Earnings to Fixed Charges	27
Reclassifications	27
Results of Operations	27
a. Consolidated	28
b. Nextel Mexico	34
c. Nextel Brazil	38
d. Nextel Argentina	42
e. Nextel Peru	45
f. Corporate and other	48
Liquidity and Capital Resources	50
Future Capital Needs and Resources	51
Forward Looking Statements	54
Effect of New Accounting Standards	55

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Introduction

The following is a discussion and analysis of:

•  our consolidated financial condition and results of operations for the nine- and three-month periods ended September 30, 2007 and 2006; and

•  significant factors which we believe could affect our prospective financial condition and results of operations.

You should read this discussion in conjunction with our 2006 annual report on Form 10-K and our quarterly reports on Form 10-Q for the three months ended March 31, 2007 and June 30, 2007, including but not limited to, the discussion regarding our critical accounting judgments, as described below. Historical results may not indicate future performance. See “Forward Looking Statements” for risks and uncertainties that may impact our future performance.

Business Overview

We provide digital wireless communication services, primarily targeted at meeting the needs of customers who use our services primarily for business purposes, through operating companies located in selected Latin American markets. Our principal operations are in major business centers and related transportation corridors of Mexico, Brazil, Argentina and Peru. In addition, we recently launched our digital services on a limited basis in Santiago, Chile. We also provide analog specialized mobile radio, which we refer to as SMR, services in Mexico, Brazil, Peru and Chile. Our markets are generally characterized by high population densities in major urban and suburban centers, which we refer to as major business centers, and where we believe there is a concentration of the country’s business users and economic activity. We believe that vehicle traffic congestion, low wireline service penetration and the expanded coverage of wireless networks encourage the use of the mobile wireless communications services that we offer in these areas. As of September 30, 2007, our operating companies had a total of 4.39 million digital handsets in commercial service, an increase of 1.20 million, or 38%, from the 3.19 million digital handsets in commercial service as of September 30, 2006.

Our principal objective is to grow our business in selected markets in Latin America by providing differentiated, high value wireless communications services to customers who use our services primarily for business purposes, while improving our profitability and cash flow. Our digital mobile networks support multiple digital wireless services, including:

•  digital mobile telephone service, including advanced calling features such as speakerphone, conference calling, voice-mail, call forwarding and additional line service;

•  Nextel Direct Connect^® service, which allows subscribers anywhere on our network to talk to each other instantly on a “push-to-talk” basis, private one-to-one call or group call;

•  International Direct Connect^® service, together with Sprint Nextel Corporation and TELUS Corporation, which allows subscribers to communicate instantly across national borders with our subscribers in Mexico, Brazil, Argentina, Peru and Chile, with Sprint Nextel Corporation subscribers using compatible handsets in the United States and, except for our customers in Chile, with TELUS subscribers using compatible handsets in Canada;

•  mobile internet services, text messaging services, e-mail services including Blackberry^tm services that we recently introduced, location-based services, which include the use of Global Positioning System (GPS) technologies, digital media services and advanced Java^tm enabled business applications, which are generally marketed as “Nextel Online^sm” services; and

•  international roaming capabilities, which are marketed as “Nextel Worldwide^sm” services.

We intend to continue growing our business in a balanced manner, with a primary focus on generating growth in operating income and free cash flow and enhancing our profitability by maintaining appropriate controls on costs. To support this goal, we plan to continue to expand the coverage and/or capacity of our digital mobile networks in our existing markets and increase our existing subscriber base while managing our costs in a manner designed to

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support that growth and improving our operating metrics. We will seek to add subscribers at rates and other terms that do not have a significant negative impact on our consolidated financial performance.

We may also explore financially attractive opportunities to expand our network coverage in areas where we currently do not provide wireless service. Based on market data that continues to show lower wireless penetration in our markets relative to other regions of the world and our current market share in those markets, we believe that we can continue to generate subscriber base and revenue growth while improving our profitability and cash flow generation. Although certain Latin American markets have been historically volatile, the Latin American markets in which we operate have recently experienced improving economies that have been relatively more stable compared to historical periods.

We believe that the wireless communications industry in the markets in which we operate has been and will continue to be highly competitive on the basis of price, the types of services offered, the diversity of handsets offered and quality of service. In each of our markets, we compete with at least two large, well-capitalized competitors with substantial financial and other resources. Some of these competitors have the ability to offer bundled telecommunications services that include local, long distance and data services, and can offer a larger variety of handsets with a wide range of prices, brands, features and functionalities. Although competitive pricing and variety and pricing of handsets are often important factors in a customer’s decision making process, we believe that the business users who primarily make up our targeted customer base are also likely to base their purchase decisions on quality of service and the availability of differentiated features and services, like our Direct Connect services described below, that make it easier for them to conduct business quickly, efficiently and economically.

The key components of our strategy are as follows:

Focusing on Major Business Centers in Key Latin American Markets.  We operate primarily in large urban markets, including five of the six largest cities in Latin America, which have a concentration of high usage business customers. We target these markets because we believe they offer favorable long-term growth prospects for our wireless communications services while offering the cost benefits associated with offering services in more concentrated population centers. In addition, the cities in which we operate account for a high proportion of total economic activity in each of their respective countries and provide us with a large potential market without the need to build out nationwide wireless coverage. We believe that there are significant opportunities for growth in these markets due to the high demand for wireless communications services and the large number of target business customers.

Targeting High Value Business Customers.  Our main focus is on customers who purchase services under contract with medium to high usage patterns, targeting customers who primarily use our services in their businesses because they value our high quality iDEN networks, our multi-function handsets and our high level of customer service. In our current customer base, our typical customer has between 3 and 30 handsets, and some of our largest customers have over 500 handsets; however, new customers that we are acquiring generally have a lower number of handsets per customer.

Providing Differentiated Services.  We differentiate ourselves from our competitors by offering unique services like our “push-to-talk” digital radio communication service, which we refer to as Direct Connect. This service, which is available throughout our service areas and is fully integrated in a single wireless device that also provides digital mobile telephone service, provides significant value to our customers by eliminating the long distance and domestic roaming fees charged by other wireless service providers, while also providing added functionality due to the near-instantaneous nature of the communication and the ability to communicate on a one-to-many basis. Our competitors have begun to introduce competitive push-to-talk over cellular products, but we believe that the quality of our Direct Connect service is superior at this time. We add further value by customizing data applications that enhance the productivity of our business customers, such as vehicle and delivery tracking, order entry processing and workforce monitoring applications.

Delivering Superior Customer Service.  In addition to our unique service offerings, we seek to further differentiate ourselves by providing a higher level of customer service generally than our competitors. We work proactively with our customers to match them with service plans offering greater value based on their usage patterns. After analyzing customer usage and expense data, we strive to minimize a customer’s per minute costs

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while increasing overall usage of our array of services, thereby providing higher value to our customers while increasing our monthly revenues. This goal is also furthered by our efforts during and after the sales process to educate customers about our services, multi-function handsets and rate plans. In addition, we have implemented proactive customer retention programs to increase customer satisfaction and retention.

Selectively Expanding our Service Areas.  We believe that we have significant opportunities to grow through selective expansion of our service into additional areas in some of the countries in which we currently operate. Such expansion may involve building out certain areas in which we already have spectrum, obtaining additional 800 MHZ spectrum in new areas which would enable us to expand our network service areas, and further developing our business in key urban areas. In addition, we may consider selectively expanding into other Latin American countries where we do not currently operate. As a result of acquiring spectrum in the March 2005 spectrum auctions in Mexico, in mid-2005, we launched an expansion plan under which we have significantly expanded our service areas in Mexico. We also expanded coverage of our network in Brazil under that expansion plan. In the second quarter of 2007, we decided to develop plans to further significantly expand our service areas in Brazil and Chile. See “Capital Expenditures” for a discussion of the factors that drive our capital spending.

Preserving the iDEN Opportunity.  The iDEN networks that we operate allow us to offer differentiated services like Direct Connect while offering high quality voice telephony and innovative data services. The iDEN technology is unique in that it is the only widespread, commercially available digital technology that operates on non-contiguous spectrum, which is important to us because much of the spectrum that our operating companies hold in each of the markets we serve is non-contiguous. Because Motorola is the sole supplier of iDEN technology, we are dependent on Motorola’s support of the evolution of the iDEN technology and of the development of new features, functionality and handset models. Historically, Nextel Communications, Motorola’s largest iDEN customer, provided significant support in the ongoing development of the iDEN technology and related equipment, but following the merger of Nextel Communications and Sprint, Sprint Nextel announced plans to migrate Nextel’s push-to-talk services over time to a next generation CDMA network platform. As a result, we have entered into arrangements with Motorola that are designed to provide us with a continued source of iDEN network equipment and handsets in an environment in which Sprint Nextel’s purchases and support of that equipment may decline. Specifically, in September 2006, we entered into agreements to extend our relationship with Motorola for the supply of iDEN handsets and iDEN network infrastructure through December 31, 2011. Under these agreements, Motorola agreed to maintain an adequate supply of the iDEN handsets and equipment used in our business for the term of the agreement and to continue to invest in the development of new iDEN devices and infrastructure features. In addition, we agreed to annually escalating handset volume purchase commitments and certain pricing parameters for handsets and infrastructure linked to the volume of our purchases. If we do not meet the specified handset volume commitments, we would be required to pay an additional amount based on any shortfall of actual purchased handsets compared to the related annual volume commitment.

Planning for the Future.  Another key component in our overall strategy is to expand and improve the innovative and differentiated services we offer and evaluate the technologies necessary to provide those services. One such initiative is to develop and offer a broader range of data services on our networks like those available on the Blackberry devices we recently launched in all of our markets except Chile, and to evaluate the feasibility of offering next generation voice and broadband data services in the future. This focus on offering innovative and differentiated services requires that we continue to invest in, evaluate and, if appropriate, deploy new services and enhancements to our existing services as well as, in some cases, consider and pursue acquisitions of assets that include spectrum licenses to deploy these services, including in auctions of newly available spectrum and through acquisitions of existing spectrum rights. During 2006, we purchased licenses to use other radio spectrum bands in Mexico and Peru. In addition, in July 2007, we were awarded a nationwide license of 35 MHz of 1.9 GHz spectrum in Peru for a term of 20 years through a governmental auction process. We are in the process of acquiring licenses to use other radio spectrum bands in Argentina and Peru, pending regulatory approval. The licenses relating to the newly acquired spectrum outside the 800MHz band generally provide for nationwide rights to utilize a significant block of contiguous spectrum that may support the future deployment of new network technologies and services. As part of our ongoing assessment of our ability to meet our customers’ current and future needs, we continually review alternate technologies to assess their technical performance, cost and functional capabilities. These reviews may involve the deployment of the technologies under consideration on a trial basis in order to evaluate their capabilities

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and market demand for the supported services. We will deploy a new technology beyond the minimum levels required by the terms of our spectrum licenses only if it is warranted by expected customer demand and when the anticipated benefits of services supported by the new technology outweigh the costs of providing those services. Our decision whether and how to deploy alternative technologies, as well as our choice of alternative technologies, would likely be affected by a number of factors, including the types of features and services supported by the technology, the availability and pricing of related equipment, and our need to continue to support iDEN-based services for our existing customer base either on an ongoing or transitional basis.

We refer to our operating companies by the countries in which they operate, such as Nextel Mexico, Nextel Brazil, Nextel Argentina, Nextel Peru and Nextel Chile.

See “Forward Looking Statements” for information on risks and uncertainties that could affect the above objectives. For information regarding commitments and contingencies, see Note 5 to our condensed consolidated financial statements.

Digital Handsets in Commercial Service

The table below provides an overview of our total digital handsets in commercial service in the countries indicated as of September 30, 2007 and December 31, 2006. For purposes of the table, digital handsets in commercial service represent all digital handsets in use by our customers on the digital mobile networks in each of the listed countries.

	Mexico		Brazil		Argentina		Peru		Chile		Total
	(handsets in thousands)
Digital handsets in commercial service — December 31, 2006		1,544		899		651		345		1		3,440
Net subscriber additions		445		289		117		91		6		948
Digital handsets in commercial service — September 30, 2007		1,989		1,188		768		436		7		4,388

Recent Developments

Issuance of 3.125% Convertible Notes.  In May 2007, we privately placed $1,000.0 million aggregate principal amount of 3.125% convertible notes due 2012. In addition, we granted the initial purchaser an option to purchase up to an additional $200.0 million principal amount of notes, which the initial purchaser exercised in full. As a result, we issued a total of $1,200.0 million principal amount of 3.125% convertible notes for which we received total gross proceeds of $1,200.0 million. We also incurred direct issuance costs of $22.8 million, which we recorded as a deferred financing cost that we will amortize into interest expense over the term of the 3.125% notes. The notes bear interest at a rate of 3.125% per annum on the principal amount of the notes, payable semi-annually in arrears in cash on June 15 and December 15 of each year, beginning December 15, 2007, and will mature on June 15, 2012, when the entire principal balance of $1,200.0 million will be due. In addition, and subject to specified exceptions, the noteholders have the right to require us to repurchase the notes at a repurchase price equal to 100% of their principal amount, plus any accrued and unpaid interest up to, but excluding, the repurchase date upon the occurrence of a fundamental change. The notes are convertible into shares of our common stock at a conversion rate of 8.4517 shares per $1,000 principal amount of notes, subject to adjustment, in specified circumstances.

Repurchase of Common Stock.  In May 2007, our Board of Directors authorized a program to repurchase shares of our common stock for cash. The Board approved the repurchase of shares having an aggregate market value of up to $500.0 million, depending on market conditions and other factors. As of September 30, 2007, we have repurchased a total of 4,043,725 shares of our common stock for approximately $330.0 million. We did not repurchase any shares during the three months ended September 30, 2007; however, as of November 6, 2007, we have repurchased an additional 665,750 shares for approximately $38.0 million since September 30, 2007. We treat purchases under this program as effective retirements of the purchased shares and therefore reduce our reported shares issued and outstanding by the number of shares repurchased. In addition, we record the excess of the purchase price over the common stock’s par value as a reduction to paid-in capital.

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Tender Offer for Conversion of 2.875% Convertible Notes.  In July 2007, we accepted the tender of 99.99% of the $300.0 million in outstanding principal amount of our 2.875% convertible notes under a tender offer that expired on July 23, 2007. In connection with this tender offer, we issued 11,268,103 shares of our common stock and paid to the holders of the tendered notes an aggregate cash premium of $25.5 million, $1.0 million in direct external costs and accrued and unpaid interest of $4.2 million.

Spectrum Acquisitions.  In July 2007, Nextel Peru entered into an agreement providing for the purchase of 54 MHz of 2.5 GHz spectrum throughout the greater Lima area for $11.3 million. In addition, on July 27, 2007, Proinversion, the privatization agency in Peru, awarded a nationwide license of 35 MHz of 1.9 GHz spectrum to Nextel Peru for $27.0 million through an auction process carried out by the Peruvian government.

Brazil Syndicated Loan Facility.  On September 14, 2007, Nextel Brazil entered into a $300.0 million syndicated loan facility. Of the total amount of the facility, $45.0 million is denominated in U.S. dollars with a floating interest rate based on LIBOR plus a specified margin, which ranges from 2.00% to 2.50% (Tranche A). The remaining $255.0 million is denominated in U.S. dollars with a floating interest rate based on LIBOR plus a specified margin, which ranges from 1.75% to 2.25% (Tranche B). Tranche A matures on September 14, 2014, and Tranche B matures on September 14, 2012. Nextel Brazil may utilize borrowings under this syndicated loan facility for capital expenditures, general corporate purposes and the repayment of specified short-term intercompany debt. As of September 30, 2007, Nextel Brazil had not borrowed any amounts under this facility. On October 25, 2007, Nextel Brazil borrowed $150.0 million in term loans under this syndicated loan facility. The remaining $150.0 million in term loans are available under this facility until March 12, 2008, subject to the satisfaction of customary borrowing conditions.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and related notes for the periods presented. Due to the inherent uncertainty involved in making those estimates, actual results to be reported in future periods could differ from those estimates.

As described in more detail in our 2006 annual report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we consider the following accounting policies to be the most important to our financial position and results of operations or policies that require us to exercise significant judgment and/or estimates:

•  revenue recognition;

•  allowance for doubtful accounts;

•  depreciation of property, plant and equipment;

•  amortization of intangible assets;

•  asset retirement obligations;

•  foreign currency;

•  loss contingencies;

•  stock-based compensation; and

•  income taxes.

We adopted Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” or FIN 48, in the first quarter of 2007, which changed how we account for uncertain income tax positions, including how we account for reserves related to potential future income tax assessments from taxing authorities. We now recognize the financial statement effects of an income tax position only when we conclude, based on the technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. Prior to adopting FIN 48, we recognized the financial statement effect of income tax positions based on our income tax return filing positions,

26

and we recorded a reserve for potential future income tax assessments when it was “probable” that the assessment would be realized. We accounted for the changes in connection with the adoption of FIN 48 as an adjustment to the beginning balance of retained earnings on our condensed consolidated balance sheet.

We believe that there have been no material changes to our critical accounting policies and estimates during the three months ended September 30, 2007 compared to those discussed in our 2006 annual report on Form 10-K.

Ratio of Earnings to Fixed Charges

Three Months
Ended
September 30,
2007		2006
	3.67x	3.70x

For the purpose of computing the ratio of earnings to fixed charges, earnings consist of income from continuing operations before income taxes plus fixed charges and amortization of capitalized interest less capitalized interest. Fixed charges consist of:

•  interest on all indebtedness, amortization of debt financing costs and amortization of original issue discount;

•  interest capitalized; and

•  the portion of rental expense we believe is representative of interest.

Reclassifications

We have reclassified certain prior year amounts in our unaudited condensed consolidated financial statements to conform to our current year presentation. These reclassifications did not have a material impact on previously reported balances.

Results of Operations

Operating revenues primarily consist of wireless service revenues and revenues generated from the sale of digital handsets and accessories. Service revenues primarily include fixed monthly access charges for digital mobile telephone service and digital two-way radio and other services, including revenues from calling party pays programs and variable charges for airtime and digital two-way radio usage in excess of plan minutes, long-distance charges, international roaming revenues derived from calls placed by our customers and charges related to the use of data services. Digital handset and accessory revenues represent revenues we earn on the sale of digital handsets and accessories to our customers.

In addition, we also have other less significant sources of revenues. These revenues primarily include revenues generated from our handset maintenance programs, roaming revenues generated from other companies’ customers that roam on our networks, revenue-based taxes and co-location rental revenues from third-party tenants that rent space on our towers.

Cost of revenues primarily includes the cost of providing wireless service and the cost of digital handset and accessory sales. Cost of providing service consists largely of costs of interconnection with local exchange carrier facilities and direct switch and transmitter and receiver site costs, including property taxes, expenses related to our handset maintenance programs, insurance costs, utility costs, maintenance costs and rent for the network switches and transmitter sites used to operate our digital mobile networks. Interconnection costs have fixed and variable components. The fixed component of interconnection costs consists of monthly flat-rate fees for facilities leased from local exchange carriers, primarily for circuits required to connect our transmitter sites to our network switches and to connect our switches. The variable component of interconnection costs, which fluctuates in relation to the volume and duration of wireless calls, generally consists of per-minute use fees charged by wireline and wireless providers for wireless calls from our digital handsets terminating on their networks. Cost of digital handset and accessory sales consists largely of the cost of the handset and accessories, order fulfillment and installation-related expenses, as well as write-downs of digital handset and related accessory inventory for shrinkage or obsolescence.

27

Our service and other revenues and the variable component of our cost of service are primarily driven by the number of digital handsets in service and not necessarily by the number of customers, as one customer may purchase one or many digital handsets. Our digital handset and accessory revenues and cost of digital handset and accessory sales are primarily driven by the number of new handsets placed into service as well as handset upgrades provided to existing customers during the year.

Selling and marketing expenses include all of the expenses related to acquiring customers. General and administrative expenses include expenses related to revenue-based taxes, billing, customer care, collections including bad debt, repairs and maintenance of management information systems, spectrum license fees, corporate overhead and share-based payment for stock options and restricted stock.

a.   Consolidated

				% of						% of
				Consolidated						Consolidated			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	2,275,370			97	%	$	1,630,291			96	%	$	645,079			40	%
Digital handset and accessory revenues		76,826			3	%		69,995			4	%		6,831			10	%
		2,352,196			100	%		1,700,286			100	%		651,910			38	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(630,253	)		(27	)%		(438,724	)		(26	)%		(191,529	)		44	%
Cost of digital handsets and accessories		(300,182	)		(13	)%		(228,957	)		(13	)%		(71,225	)		31	%
Selling and marketing expenses		(312,380	)		(13	)%		(234,466	)		(14	)%		(77,914	)		33	%
General and administrative expenses		(459,128	)		(20	)%		(331,730	)		(20	)%		(127,398	)		38	%
Depreciation and amortization		(216,917	)		(9	)%		(137,098	)		(8	)%		(79,819	)		58	%
Operating income		433,336			18	%		329,311			19	%		104,025			32	%
Interest expense, net		(89,592	)		(4	)%		(66,103	)		(4	)%		(23,489	)		36	%
Interest income		48,996			2	%		38,997			2	%		9,999			26	%
Foreign currency transaction gains (losses), net		12,637			1	%		(801	)		—			13,438			NM
Debt conversion expense		(26,455	)		(1	)%		—			—			(26,455	)		NM
Other expense, net		(986	)		—			(7,275	)		—			6,289			(86	)%
Income before income tax provision		377,936			16	%		294,129			17	%		83,807			28	%
Income tax provision		(128,026	)		(5	)%		(107,540	)		(6	)%		(20,486	)		19	%
Net income	$	249,910			11	%	$	186,589			11	%	$	63,321			34	%

28

				% of						% of
				Consolidated						Consolidated			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Three Months Ended
Operating revenues
Service and other revenues	$	826,006			97	%	$	590,086			96	%	$	235,920			40	%
Digital handset and accessory revenues		26,917			3	%		25,500			4	%		1,417			6	%
		852,923			100	%		615,586			100	%		237,337			39	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(231,313	)		(27	)%		(159,562	)		(26	)%		(71,751	)		45	%
Cost of digital handsets and accessories		(104,370	)		(12	)%		(88,801	)		(14	)%		(15,569	)		18	%
Selling and marketing expenses		(115,602	)		(14	)%		(88,330	)		(14	)%		(27,272	)		31	%
General and administrative expenses		(166,458	)		(19	)%		(120,876	)		(20	)%		(45,582	)		38	%
Depreciation and amortization		(77,221	)		(9	)%		(52,402	)		(9	)%		(24,819	)		47	%
Operating income		157,959			19	%		105,615			17	%		52,344			50	%
Interest expense, net		(35,610	)		(4	)%		(23,656	)		(4	)%		(11,954	)		51	%
Interest income		23,838			2	%		13,259			2	%		10,579			80	%
Foreign currency transaction gains, net		6,838			1	%		2,682			1	%		4,156			155	%
Debt conversion expense		(26,455	)		(3	)%		—			—			(26,455	)		NM
Other expense, net		(1,619	)		—			(1,687	)		—			68			(4	)%
Income before income tax provision		124,951			15	%		96,213			16	%		28,738			30	%
Income tax provision		(43,285	)		(5	)%		(30,525	)		(5	)%		(12,760	)		42	%
Net income	$	81,666			10	%	$	65,688			11	%	$	15,978			24	%

NM-Not Meaningful

During the first nine months of 2007, we experienced significant growth in our consolidated revenues, which was primarily driven by an increase in our consolidated subscriber base with the majority of those new subscribers located in Mexico, where we have significantly expanded the coverage of our network and the markets we serve, as well as in Brazil. Consolidated operating expenses as a percentage of consolidated operating revenues increased slightly, and consolidated operating margin decreased slightly, in the first nine months of 2007 compared to the first nine months of 2006. These changes were due mainly to increases in our consolidated cost of service, resulting from higher interconnect expenses, and depreciation and amortization, resulting from the rapid expansion of our digital mobile networks, each of which increased as a percentage of our consolidated operating revenues. These increases primarily resulted from the expansion of our networks and launch of new markets, increased customer loading and higher interconnect costs resulting from a higher proportion of mobile-to-mobile calls, which generally have higher per minute interconnection costs. We expect these costs as a percentage of revenue to remain stable through the remainder of 2007. In addition, coverage expansion and network improvements resulted in consolidated capital expenditures totaling $465.9 million for the first nine months of 2007. While we expect that the amounts invested by Nextel Mexico and Nextel Brazil to expand the coverage of their networks and to improve their quality and capacity will continue to represent the majority of our total capital expenditure investments in the future, we expect the capital expenditures invested by Nextel Brazil to increase due to our recent decision to expand our network coverage in Brazil and the capital expenditures invested by Nextel Mexico to decrease due to the substantial completion of our expansion plan in Mexico.

29

1.   Operating revenues

The $645.1 million, or 40%, and $235.9 million, or 40%, increases in consolidated service and other revenues from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 38% increases in the average number of total digital handsets in service for both periods, primarily in Mexico and Brazil, resulting from continued strong demand for our services and our balanced growth and expansion strategy. Average consolidated revenues per handset remained relatively stable from the nine and three months ended September 30, 2006 compared to the same periods in 2007.

2.   Cost of revenues

The $191.5 million, or 44%, and $71.8 million, or 45%, increases in consolidated cost of service from the nine and three months ended September 30, 2006 to the same periods in 2007 are principally a result of the following:

•  $107.5 million, or 49%, and $37.9 million, or 46%, increases in consolidated interconnect costs resulting from 35% and 31% increases in consolidated interconnect minutes of use, as well as an increase in the proportion of mobile-to-mobile minutes of use, which generally have higher per minute interconnection costs;

•  $45.8 million, or 32%, and $17.5 million, or 35%, increases in consolidated direct switch and transmitter and receiver site costs resulting from a 21% increase in the total number of consolidated transmitter and receiver sites in service from September 30, 2006 to September 30, 2007 and increases in costs per site; and

•  $26.6 million, or 43%, and $10.9 million, or 50%, increases in consolidated service and repair costs mainly resulting from increases in subscribers participating under our handset maintenance programs.

The $71.2 million, or 31%, and $15.6 million, or 18%, increases in consolidated cost of digital handset and accessory sales from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 41% and 31% increases in total handset sales, as well as 46% and 40% increases in handset upgrades, partially offset by lower costs per handset sale resulting from reductions in handset unit costs and a change in the mix of handsets sold in 2007.

3.   Selling and marketing expenses

The $77.9 million, or 33%, and $27.3 million, or 31%, increases in consolidated selling and marketing expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are principally a result of the following:

•  $30.5 million, or 32%, and $11.6 million, or 32%, increases in consolidated indirect commissions resulting from 38% and 27% increases in total handset sales through external sales channels;

•  $29.6 million, or 36%, and $10.5 million, or 35%, increases in consolidated payroll expenses and direct commissions resulting from 45% and 38% increases in total handset sales by internal sales personnel; and

•  $15.1 million, or 32%, and $4.1 million, or 22%, increases in consolidated advertising expenses, primarily in Brazil, mainly related to Nextel Brazil’s sponsorship of the Copa Nextel Stock Car series, a professional racecar event, and increased advertising initiatives related to overall subscriber growth.

As described in the discussion of Nextel Mexico below, due to the increase in commission rates that Nextel Mexico recently implemented for its indirect sales channels, we expect that consolidated indirect commissions per handset sale will increase during the remainder of 2007 and in 2008.

30

4.   General and administrative expenses

The $127.4 million, or 38%, and $45.6 million, or 38%, increases in consolidated general and administrative expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily a result of the following:

•  $42.7 million, or 27%, and $12.1 million, or 21%, increases largely due to higher personnel costs related to an increase in headcount and higher facilities-related expenses due to continued subscriber growth and expansion into new areas;

•  $38.3 million, or 48%, and $14.3 million, or 49%, increases in consolidated customer care expenses, mainly payroll and related expenses, resulting from additional customer care personnel necessary to support a larger customer base;

•  $18.6 million, or 83%, and $9.6 million, or 103%, increases in stock option compensation expense, primarily resulting from grants of stock options in April 2006 and April 2007;

•  $11.4 million, or 52%, and $4.4 million, or 62%, increases in consolidated bad debt expense, primarily in Mexico, as a result of the 38% and 39% increases in consolidated operating revenues. Bad debt expense as a percentage of consolidated operating revenues increased from 1.28% for the nine months ended September 30, 2006 to 1.41% for the same period in 2007 and from 1.14% for the three months ended September 30, 2006 to 1.34% for the same period in 2007. We expect bad debt as a percentage of consolidated operating revenues to remain relatively stable at its current levels for the remainder of 2007; and

•  $10.0 million, or 31%, and $3.7 million, or 33%, increases in information technology repair and maintenance costs primarily in Mexico and Brazil related to the expansion of their digital mobile networks.

5.   Depreciation and amortization

The $79.8 million, or 58%, and $24.8 million, or 47%, increases in consolidated depreciation and amortization from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to a 52% increase in our consolidated property, plant and equipment in service from September 30, 2006 to September 30, 2007 resulting from the continued expansion of our digital mobile networks, mainly in Mexico and Brazil.

6.   Interest expense, net

The $23.5 million, or 36%, and $12.0 million, or 51%, increases in consolidated net interest expense from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to the following:

•  $12.5 million and $9.4 million in incremental interest expense incurred on our 3.125% convertible notes that we issued in May 2007;

•  $7.0 million and $2.6 million increases in interest incurred on our towers financing transactions and capital lease obligations in Mexico and Brazil primarily due to increases in both the number of towers financed and capital leases; and

•  $6.5 million and $2.2 million decreases in capitalized interest related to a significant decline in average construction-in-progress balances, primarily in Mexico due to the substantial completion of our expansion plan; partially offset by

•  $4.0 million and $2.4 million decreases in interest expense due to the conversion of our 3.5% notes and 2.875% notes.

7.   Interest income

The $10.0 million, or 26%, and $10.6 million, or 80%, increases in interest income from the nine and three months ended September 2006 to the same periods in 2007 are largely the result of an increase in average consolidated cash balances due to interest earned in the U.S. on the $1.2 billion gross proceeds received from the issuance of our 3.125% convertible notes that we issued in May 2007.

31

8.   Foreign currency transaction gains, net

Consolidated foreign currency transaction gains of $12.6 million and $6.8 million for the nine and three months ended September 30, 2007 are primarily the result of the strengthening of the Brazilian real relative to the U.S. dollar on Nextel Brazil’s U.S. dollar-denominated liabilities, primarily its short-term intercompany payables.

Consolidated foreign currency transaction gains of $2.7 million for the three months ended September 30, 2006 are primarily the result of the strengthening of the Mexican peso relative to the U.S. dollar on Nextel Mexico’s U.S. dollar-denominated liabilities, primarily its intercompany payables.

9.   Other expense, net

The $6.3 million, or 86%, decrease in other expense, net, from the nine months ended September 30, 2006 to the same period in 2007 is primarily due to the reversal of a contingent liability by Nextel Mexico during the first quarter of 2007 and a reduction in realized losses on Nextel Mexico’s hedge of capital expenditures and handset purchases that we reclassify from accumulated other comprehensive loss.

10.   Income tax provision

The $20.5 million, or 19%, and $12.8 million, or 42%, increases in the consolidated income tax provision from the nine and three months ended September 30, 2006 compared to the same periods in 2007 are primarily due to increases in income before taxes, increases in non-deductible expenses in the U.S. and a change in the relevant income tax rules under which, beginning in 2007, we now record the tax effect of intercompany management fees evenly throughout the year, which significantly reduced the changes in the quarter-to-quarter tax rate that occurred in 2006.

Segment Results

We evaluate performance of our segments and provide resources to them based on operating income before depreciation and amortization and impairment, restructuring and other charges, which we refer to as segment earnings. Because we do not view share-based compensation as an important element of operational performance, we recognize share-based payment expense at the corporate level and exclude it when evaluating the business performance of our segments. For several years, we have charged a management fee to Nextel Mexico for services rendered by corporate management. For the nine and three months ended September 30, 2007, we reported this management fee as a separate line item in the segment reporting information as these amounts are now regularly provided to our chief operating decision maker. During the nine and three months ended September 30, 2006, Nextel Mexico incurred a management fee of $51.1 million and $17.0 million, respectively. However, for the nine and three months ended September 30, 2006, our segment information does not reflect these management fees as a separate line item because these amounts were not provided to or used by our chief operating decision maker in making operating decisions related to this segment. The tables below provide a summary of the components of our consolidated segments for the nine and three months ended September 30, 2007 and 2006. The results of Nextel Chile are included in “Corporate and other.”

																% of
																Consolidated
				% of						% of			Selling,			Selling,
				Consolidated						Consolidated			General and			General and			Segment
Nine Months Ended	Operating			Operating			Cost of			Cost of			Administrative			Administrative			Earnings
September 30, 2007	Revenues			Revenues			Revenues			Revenues			Expenses			Expenses			(Losses)
	(dollars in thousands)
Nextel Mexico	$	1,299,075			55	%	$	(453,836	)		49	%	$	(353,683	)		46	%	$	491,556
Nextel Brazil		595,565			25	%		(254,211	)		27	%		(199,735	)		26	%		141,619
Nextel Argentina		317,808			14	%		(147,746	)		16	%		(69,185	)		9	%		100,877
Nextel Peru		138,148			6	%		(72,856	)		8	%		(39,273	)		5	%		26,019
Corporate and other		2,459			—			(2,645	)		—			(109,632	)		14	%		(109,818	)
Intercompany eliminations		(859	)		—			859			—			—			—			—
Total consolidated	$	2,352,196			100	%	$	(930,435	)		100	%	$	(771,508	)		100	%

32

																% of
																Consolidated
				% of						% of			Selling,			Selling,
				Consolidated						Consolidated			General and			General and			Segment
Three Months Ended	Operating			Operating			Cost of			Cost of			Administrative			Administrative			Earnings
September 30, 2007	Revenues			Revenues			Revenues			Revenues			Expenses			Expenses			(Losses)
	(dollars in thousands)
Nextel Mexico	$	466,110			55	%	$	(160,147	)		48	%	$	(125,347	)		45	%	$	180,616
Nextel Brazil		223,214			26	%		(95,961	)		28	%		(77,246	)		27	%		50,007
Nextel Argentina		114,053			13	%		(52,472	)		16	%		(24,531	)		9	%		37,050
Nextel Peru		48,777			6	%		(26,390	)		8	%		(14,241	)		5	%		8,146
Corporate and other		1,077			—			(1,021	)		—			(40,695	)		14	%		(40,639	)
Intercompany eliminations		(308	)		—			308			—			—			—			—
Total consolidated	$	852,923			100	%	$	(335,683	)		100	%	$	(282,060	)		100	%

																% of
																Consolidated
				% of						% of			Selling,			Selling,
				Consolidated						Consolidated			General and			General and			Segment
Nine Months Ended	Operating			Operating			Cost of			Cost of			Administrative			Administrative			Earnings
September 30, 2006	Revenues			Revenues			Revenues			Revenues			Expenses			Expenses			(Losses)
	(dollars in thousands)
Nextel Mexico	$	963,968			57	%	$	(324,136	)		49	%	$	(264,115	)		47	%	$	375,717
Nextel Brazil		383,570			23	%		(175,977	)		26	%		(131,465	)		23	%		76,128
Nextel Argentina		247,372			14	%		(112,604	)		17	%		(62,817	)		11	%		71,951
Nextel Peru		104,055			6	%		(54,394	)		8	%		(31,172	)		6	%		18,489
Corporate and other		1,890			—			(1,139	)		—			(76,627	)		13	%		(75,876	)
Intercompany eliminations		(569	)		—			569			—			—			—			—
Total consolidated	$	1,700,286			100	%	$	(667,681	)		100	%	$	(566,196	)		100	%

																% of
																Consolidated
				% of						% of			Selling,			Selling,
				Consolidated						Consolidated			General and			General and			Segment
Three Months Ended	Operating			Operating			Cost of			Cost of			Administrative			Administrative			Earnings
September 30, 2006	Revenues			Revenues			Revenues			Revenues			Expenses			Expenses			(Losses)
	(dollars in thousands)
Nextel Mexico	$	346,051			56	%	$	(122,005	)		49	%	$	(97,009	)		46	%	$	127,037
Nextel Brazil		141,833			23	%		(64,244	)		26	%		(47,516	)		23	%		30,073
Nextel Argentina		89,787			15	%		(41,739	)		17	%		(22,861	)		11	%		25,187
Nextel Peru		37,592			6	%		(20,178	)		8	%		(11,521	)		6	%		5,893
Corporate and other		521			—			(395	)		—			(30,299	)		14	%		(30,173	)
Intercompany eliminations		(198	)		—			198			—			—			—			—
Total consolidated	$	615,586			100	%	$	(248,363	)		100	%	$	(209,206	)		100	%

33

Exchange Rate Summary

In accordance with accounting principles generally accepted in the United States, we translated the results of operations of our operating segments using the average exchange rates for the nine and three months ended September 30, 2007 and 2006. The following table presents the average exchange rates we used to translate the results of operations of our operating segments, as well as changes from the average exchange rates utilized in prior periods. Because the U.S. dollar is the functional currency in Peru, Nextel Peru’s results of operations are not significantly impacted by changes in the U.S. dollar to Peruvian sol exchange rate.

	Nine Months Ended September 30,
	2007		2006		Percent Change
Mexican peso		10.95		10.90		(0.5	)%
Brazilian real		2.00		2.18		9.0	%
Argentine peso		3.11		3.07		(1.3	)%

	Three Months Ended September 30,
	2007		2006		Percent Change
Mexican peso		10.96		10.96		—
Brazilian real		1.92		2.17		13.0	%
Argentine peso		3.14		3.09		(1.6	)%

A discussion of the results of operations for each of our reportable segments is provided below.

b.   Nextel Mexico

				% of						% of
				Nextel						Nextel
				Mexico’s						Mexico’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	1,280,982			99	%	$	946,500			98	%	$	334,482			35	%
Digital handset and accessory revenues		18,093			1	%		17,468			2	%		625			4	%
		1,299,075			100	%		963,968			100	%		335,107			35	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(270,433	)		(21	)%		(198,714	)		(21	)%		(71,719	)		36	%
Cost of digital handsets and accessories		(183,403	)		(14	)%		(125,422	)		(13	)%		(57,981	)		46	%
		(453,836	)		(35	)%		(324,136	)		(34	)%		(129,700	)		40	%
Selling and marketing expenses		(184,160	)		(14	)%		(146,023	)		(15	)%		(38,137	)		26	%
General and administrative expenses		(169,523	)		(13	)%		(118,092	)		(12	)%		(51,431	)		44	%
Segment earnings		491,556			38	%		375,717			39	%		115,839			31	%
Management fee		(29,700	)		(2	)%		—			—			(29,700	)		NM
Depreciation and amortization		(106,788	)		(9	)%		(72,352	)		(8	)%		(34,436	)		48	%
Operating income		355,068			27	%		303,365			31	%		51,703			17	%
Interest expense, net		(44,765	)		(3	)%		(27,421	)		(3	)%		(17,344	)		63	%
Interest income		20,948			2	%		24,697			3	%		(3,749	)		(15	)%

34

				% of						% of
				Nextel						Nextel
				Mexico’s						Mexico’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Foreign currency transaction gains (losses), net		899			—			(823	)		—			1,722			(209	)%
Other income (expense), net		2,183			—			(2,116	)		—			4,299			(203	)%
Income before income tax	$	334,333			26	%	$	297,702			31	%	$	36,631			12	%
Three Months Ended
Operating revenues
Service and other revenues	$	458,665			98	%	$	341,203			99	%	$	117,462			34	%
Digital handset and accessory revenues		7,445			2	%		4,848			1	%		2,597			54	%
		466,110			100	%		346,051			100	%		120,059			35	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(98,657	)		(21	)%		(71,546	)		(21	)%		(27,111	)		38	%
Cost of digital handsets and accessories		(61,490	)		(13	)%		(50,459	)		(14	)%		(11,031	)		22	%
		(160,147	)		(34	)%		(122,005	)		(35	)%		(38,142	)		31	%
Selling and marketing expenses		(66,200	)		(14	)%		(55,143	)		(16	)%		(11,057	)		20	%
General and administrative expenses		(59,147	)		(13	)%		(41,866	)		(12	)%		(17,281	)		41	%
Segment earnings		180,616			39	%		127,037			37	%		53,579			42	%
Management fee		(9,900	)		(2	)%		—			—			(9,900	)		NM
Depreciation and amortization		(38,574	)		(9	)%		(27,533	)		(8	)%		(11,041	)		40	%
Operating income		132,142			28	%		99,504			29	%		32,638			33	%
Interest expense, net		(15,453	)		(3	)%		(10,542	)		(3	)%		(4,911	)		47	%
Interest income		8,039			2	%		8,702			2	%		(663	)		(8	)%
Foreign currency transaction (losses) gains, net		(309	)		—			2,719			1	%		(3,028	)		(111	)%
Other (expense) income, net		(77	)		—			178			—			(255	)		(143	)%
Income before income tax	$	124,342			27	%	$	100,561			29	%	$	23,781			24	%

NM-Not Meaningful

Nextel Mexico continues to be our largest and most profitable market segment, comprising 55% of our consolidated operating revenues for the nine months ended September 30, 2007. During the nine months ended September 30, 2007, Nextel Mexico experienced strong subscriber growth and a corresponding increase in operating expenses, which was the result of increased costs incurred in connection with Nextel Mexico’s expansion efforts, including network, personnel and other expenses related to the launch of new markets, as well as the high level of subscriber growth throughout 2006 and the first nine months of 2007. In addition, for the nine months ended September 30, 2007, Nextel Mexico’s segment earnings margin decreased from the same period in 2006, primarily as a result of an increase in cost of digital handset and accessories because of a 46% increase in handset sales realized in connection with strong subscriber growth and higher handset subsidies as a percentage of handset costs.

35

During 2007, some of Nextel Mexico’s competitors have significantly lowered prices for postpaid wireless services, offered free or significantly discounted handsets, offered various incentives to larger customers to switch service providers, including reimbursement of cancellation fees, and offered bundled telecommunications services that include local, long distance and data services. Nextel Mexico is addressing these competitive actions by, among other things, launching attractive commercial campaigns offering handsets to new and existing customers on terms that result in higher handset subsidies as a percentage of handset costs and offering more competitive rate plans. During the third quarter of 2007, Nextel Mexico also increased its commission rates and otherwise modified its compensation arrangements with its indirect sales channels in an effort to promote additional sales through these channels. As a result of the more competitive environment, Nextel Mexico has experienced lower average revenue per subscriber and a higher customer turnover rate in 2007 compared to 2006. As Nextel Mexico continues to expand its customer base in both new and existing markets and continues to address a more competitive sales environment, we expect that Nextel Mexico’s average revenue per subscriber will continue to decline throughout the remainder of 2007. We also expect Nextel Mexico’s customer turnover rate to increase throughout the remainder of 2007 as a result of the highly competitive market practices in Mexico.

During the first nine months of 2007, Nextel Mexico substantially completed the network expansion plans launched in 2005 that were designed to significantly increase the number of markets we serve in Mexico. Coverage expansion and network improvements resulted in capital expenditures totaling $200.1 million for the first nine months of 2007, which is a 43% share of consolidated capital expenditures. While we expect that Nextel Mexico will continue to represent a significant portion of our total capital expenditures in the future, as we continue to increase the coverage and capacity of our networks in our existing markets, we expect its percentage of total capital expenditures to decrease slightly now that its expansion plans are substantially complete. We expect subscriber growth in Mexico to continue as we take advantage of new markets launched during 2006 and 2007. As those markets are maturing, Nextel Mexico has begun to focus on driving penetration in additional market segments such as small businesses and mid- to high-income individuals to complement our core target base of larger business customers.

The average exchange rates of the Mexican peso for the nine months ended September 30, 2007 depreciated against the U.S. dollar by less than 1% from the nine months ended September 30, 2006. As a result, compared to 2006, the components of Nextel Mexico’s results of operations for the nine months ended September 30, 2007 after translation into U.S. dollars reflect slightly lower increases than would have occurred if it were not for the impact of the depreciation of the peso. The average exchange rate of the Mexican peso for the three months ended September 30, 2007 remained relatively constant against the U.S. dollar from the three months ended September 30, 2006. As a result, the components of Nextel Mexico’s results of operations for the three months ended September 30, 2007 after translation into U.S. dollars are generally comparable to its results of operations for the three months ended September 30, 2006.

  1.   Operating revenues

The $334.5 million, or 35%, and $117.5 million, or 34%, increases in service and other revenues from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 40% increases in the average number of digital handsets in service from the nine and three months ended September 30, 2006 to the same periods in 2007 resulting from growth in Nextel Mexico’s existing markets, as well as the expansion of service coverage into new markets during 2006 and the first nine months of 2007, partially offset by slight declines in average revenue per handset.

2.   Cost of revenues

The $71.7 million, or 36%, and $27.1 million, or 38%, increases in cost of service from the nine and three months ended September 30, 2006 to the same periods in 2007 are principally due to the following:

•  $39.2 million, or 43%, and $13.8 million, or 41%, increases in interconnect costs generally resulting from 36% and 28% increases in interconnect system minutes of use, as well as an increase in the proportion of mobile-to-mobile minutes of use, which generally have higher per minute costs;

36

•  $16.0 million, or 22%, and $5.5 million, or 21%, increases in direct switch and transmitter and receiver site costs resulting from a 20% increase in the number of transmitter and receiver sites in service from September 30, 2006 to September 30, 2007; and

•  $10.9 million, or 39%, and $5.0 million, or 51%, increases in service and repair costs largely due to increased activity under Nextel Mexico’s handset maintenance program.

The $58.0 million, or 46%, and $11.0 million, or 22%, increases in cost of digital handsets and accessories from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 46% and 25% increases in total handset sales, respectively, as well as increases in handset upgrades.

3.   Selling and marketing expenses

The $38.1 million, or 26%, and $11.1 million, or 20%, increases in selling and marketing expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily a result of the following:

•  $17.8 million, or 26%, and $6.7 million, or 26%, increases in indirect commissions primarily due to 37% and 16% increases in handset sales by Nextel Mexico’s dealers; and

•  $13.7 million, or 34%, and $4.4 million, or 30%, increases in direct commissions and payroll expenses principally due to 63% and 41% increases in handset sales by Nextel Mexico’s sales personnel, partially offset by a decrease in direct commission per handset sale resulting from a change in the mix of rate plans sold.

Due to the increases in commission rates for indirect sales channels that Nextel Mexico recently implemented, we expect that indirect commissions per handset sale will increase significantly during the remainder of 2007 and in 2008.

The $4.9 million, or 15%, increase in advertising costs from the nine months ended September 30, 2006 to the same period in 2007 is largely due to the launch of new markets in connection with Nextel Mexico’s expansion plan, the launch of new rate plans and objectives to reinforce market awareness of the Nextel brand name.

4.   General and administrative expenses

The $51.4 million, or 44%, and $17.3 million, or 41%, increases in general and administrative expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are largely a result of the following:

•  $22.4 million, or 57%, and $7.5 million, or 51%, increases in customer care expenses primarily due to an increase in payroll and employee related expenses caused by an increase in customer care personnel necessary to support a larger customer base, as well as an increase in the number of retail stores;

•  $17.6 million, or 34%, and $5.3 million, or 28%, increases in general corporate costs resulting from an increase in payroll and related expenses caused by more general and administrative personnel, higher business insurance expenses and increased facilities costs due to expansion into new markets; and

•  $8.4 million, or 74%, and $3.2 million, or 89%, increases in bad debt expense. Bad debt as a percentage of revenue increased from 1.18% for the nine months ended September 30, 2006 to 1.52% for the same period in 2007 and from 1.03% for the three months ended September 30, 2006 to 1.44% for the same period in 2007. These increases resulted primarily from the introduction of certain rate plans that are available to customers with higher credit risk. We expect bad debt as a percent of revenue to remain relatively stable through the remainder of 2007.

5.   Management fee

We charge a management fee to Nextel Mexico for its share of the corporate management services performed by us, which effective January 1, 2007, we include in our segment reporting information. Nextel Mexico incurred a management fee of $29.7 million and $9.9 million for the nine and three months ended September 30, 2007. During

37

the nine and three months ended September 30, 2006, Nextel Mexico incurred a management fee of $51.1 million and $17.0 million, respectively.

6.   Depreciation and amortization

The $34.4 million, or 48%, and $11.0 million, or 40%, increases in depreciation and amortization from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to a 44% increase in Nextel Mexico’s property, plant and equipment in service resulting from the continued build-out of Nextel Mexico’s digital mobile network in connection with its market expansion plan.

7.   Interest expense, net

Excluding $7.8 million and $2.6 million in interest on the management fee for the nine and three months ended September 30, 2007 that was not recognized for segment reporting purposes in 2006, Nextel Mexico’s interest expense increased $9.5 million, or 35%, and $2.3 million, or 22%, mostly due to decreases in capitalized interest related to a significant decrease in average construction-in-progress balances due to the substantial completion of its expansion plan, as well as an increase in interest incurred on its co-location capital leases resulting from an increase in the number of communication tower co-location agreements.

8.   Foreign currency transaction gains (losses), net

Foreign currency transaction gains of $2.7 million for the three months ended September 30, 2006 are primarily due to the impact of an increase in the value of the Mexican peso on Nextel Mexico’s U.S. dollar-denominated liabilities.

9.   Other income (expense), net

The $4.3 million change in other expense, net, from the nine months ended September 30, 2006 to the same period in 2007 primarily relates to the reversal of a contingent liability during the first quarter of 2007 and a reduction in realized losses on Nextel Mexico’s hedge of capital expenditures and handset purchases that we reclassify from accumulated other comprehensive loss.

c.   Nextel Brazil

				% of						% of
				Nextel						Nextel
				Brazil’s						Brazil’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
							(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	570,308			96	%	$	354,863			93	%	$	215,445			61	%
Digital handset and accessory revenues		25,257			4	%		28,707			7	%		(3,450	)		(12	)%
		595,565			100	%		383,570			100	%		211,995			55	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(198,525	)		(33	)%		(122,911	)		(32	)%		(75,614	)		62	%
Cost of digital handsets and accessories		(55,686	)		(10	)%		(53,066	)		(14	)%		(2,620	)		5	%
		(254,211	)		(43	)%		(175,977	)		(46	)%		(78,234	)		44	%
Selling and marketing expenses		(81,976	)		(13	)%		(50,328	)		(13	)%		(31,648	)		63	%
General and administrative expenses		(117,759	)		(20	)%		(81,137	)		(21	)%		(36,622	)		45	%

38

				% of						% of
				Nextel						Nextel
				Brazil’s						Brazil’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
							(dollars in thousands)
Segment earnings		141,619			24	%		76,128			20	%		65,491			86	%
Depreciation and amortization		(67,734	)		(12	)%		(40,671	)		(11	)%		(27,063	)		67	%
Operating income		73,885			12	%		35,457			9	%		38,428			108	%
Interest expense, net		(22,221	)		(4	)%		(17,857	)		(5	)%		(4,364	)		24	%
Interest income		4,457			1	%		2,480			1	%		1,977			80	%
Foreign currency transaction gains (losses), net		10,041			2	%		(338	)		—			10,379			NM
Other expense, net		(3,162	)		—			(4,567	)		(1	)%		1,405			(31	)%
Income before income tax	$	63,000			11	%	$	15,175			4	%	$	47,825			NM
Three Months Ended
Operating revenues
Service and other revenues	$	215,683			97	%	$	130,526			92	%	$	85,157			65	%
Digital handset and accessory revenues		7,531			3	%		11,307			8	%		(3,776	)		(33	)%
		223,214			100	%		141,833			100	%		81,381			57	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(75,229	)		(34	)%		(45,126	)		(32	)%		(30,103	)		67	%
Cost of digital handsets and accessories		(20,732	)		(9	)%		(19,118	)		(13	)%		(1,614	)		8	%
		(95,961	)		(43	)%		(64,244	)		(45	)%		(31,717	)		49	%
Selling and marketing expenses		(32,356	)		(15	)%		(18,971	)		(14	)%		(13,385	)		71	%
General and administrative expenses		(44,890	)		(20	)%		(28,545	)		(20	)%		(16,345	)		57	%
Segment earnings		50,007			22	%		30,073			21	%		19,934			66	%
Depreciation and amortization		(25,077	)		(11	)%		(15,144	)		(11	)%		(9,933	)		66	%
Operating income		24,930			11	%		14,929			10	%		10,001			67	%
Interest expense, net		(7,879	)		(4	)%		(6,248	)		(4	)%		(1,631	)		26	%
Interest income		1,667			1	%		895			—			772			86	%
Foreign currency transaction gains (losses), net		5,802			3	%		(66	)		—			5,868			NM
Other expense, net		(1,608	)		(1	)%		(1,831	)		(1	)%		223			(12	)%
Income before income tax	$	22,912			10	%	$	7,679			5	%	$	15,233			198	%

NM-Not Meaningful

Over the last several years, Nextel Brazil’s subscriber base and segment earnings have increased as a result of a continued focus on customer service, the expansion of its digital mobile network and significant improvements in its operating cost structure. In addition to these factors, improvements in the Brazilian economy and increasing demand for Nextel Brazil’s products and services have resulted in continued growth in existing markets and have led Nextel Brazil to make significant investments in order to expand its services into new markets. Coverage expansion and network improvements resulted in capital expenditures totaling $177.9 million for the first nine

39

months of 2007, which is a 38% share of consolidated capital expenditure investments. We believe that Nextel Brazil’s network expansion and quality improvements are contributing factors to our low consolidated customer turnover rate and our consolidated subscriber growth. Throughout the remainder of 2007, Nextel Brazil plans to continue to expand its digital mobile network and grow its subscriber base. In addition, during the second quarter of 2007, we decided to develop plans to further expand our network coverage in Brazil over the next two to three years.

The average exchange rate of the Brazilian real for the nine and three months ended September 30, 2007 appreciated against the U.S. dollar by 9% and 13% from the same periods in 2006. As a result, the components of Nextel Brazil’s results of operations for the nine and three months ended September 30, 2007 after translation into U.S. dollars reflect higher increases than would have occurred if it were not for the impact of the appreciation in the average value of the Brazilian real.

1.   Operating revenues

The $215.4 million, or 61%, and $85.2 million, or 65%, increases in service and other revenues from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily a result of 42% and 43% increases in the average number of digital handsets in service resulting from growth in Nextel Brazil’s existing markets, and the expansion of service coverage into new markets in connection with our balanced growth and expansion objectives, as well as increases in local currency-based average revenues per subscriber.

The $3.5 million, or 12%, and $3.8 million, or 33%, decreases in digital handset and accessory sales from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to decreases in handset sales revenues resulting from increased sales of SIM cards in 2007, which allow a customer to use our service by inserting the card into a separately purchased handset and which generated lower sales revenues per unit, compared to a higher volume of handsets sold during 2006.

2.   Cost of revenues

The $75.6 million, or 62%, and $30.1 million, or 67%, increases in cost of service from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to the following:

•  $47.8 million, or 82%, and $19.4 million, or 87%, increases in interconnect costs resulting from 50% and 49% increases in interconnect minutes of use, as well as increases in the proportion of mobile-to-mobile minutes of use, which generally have higher per minute costs;

•  $20.8 million, or 46%, and $8.2 million, or 52%, increases in direct switch and transmitter and receiver site costs, including spectrum license fees, resulting from a 22% increase in the number of transmitter and receiver sites in service from September 30, 2006 to September 30, 2007, as well as increases in operating and maintenance costs per site; and

•  $3.7 million, or 28%, and $1.1 million, or 24%, increases in service and repair costs largely due to increased activity under Nextel Brazil’s handset maintenance program.

The $2.6 million, or 5%, and $1.6 million, or 8%, increases in cost of digital handsets and accessories from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 32% and 48% increases in handset upgrades provided to current customers, partially offset by decreases in handset costs resulting from increased sales of SIM cards in 2007 compared to a higher volume of handsets purchased during 2006.

3.   Selling and marketing expenses

The $31.6 million, or 63%, and $13.4 million, or 71%, increases in selling and marketing expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are principally due to the following:

•  $12.9 million, or 53%, and $5.0 million, or 58%, increases in payroll expenses and direct commissions largely as a result of 43% and 40% increases in handset sales by Nextel Brazil’s internal sales force, as well as 49% increases in selling and marketing personnel necessary to support continued sales growth;

40

•  $9.3 million, or 84%, and $4.5 million, or 98%, increases in advertising expenses resulting from the launch of new markets in connection with Nextel Brazil’s expansion plan, its sponsorship of the Copa Nextel Stock Car series, a professional racecar event, and its continued print and media campaigns for various products and services, including the launch of Blackberry services; and

•  $9.0 million, or 70%, and $3.6 million, or 72%, increases in indirect commissions resulting from 47% and 52% increases in handset sales through Nextel Brazil’s external sales channels, as well as increases in indirect commissions earned per handset sale resulting from premiums paid on sales exceeding pre-established thresholds.

4.   General and administrative expenses

The $36.6 million, or 45%, and $16.3 million, or 57%, increases in general and administrative expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily a result of the following:

•  $12.5 million, or 60%, and $5.2 million, or 70%, increases in revenue-based taxes that we report on a gross basis as both service and other revenues and general and administrative expenses, primarily due to the 55% and 57% increases in Nextel Brazil’s operating revenues;

•  $10.9 million, or 46%, and $4.9 million, or 57%, increases in customer care expenses resulting from 35% increases in customer care personnel for both periods necessary to support a larger customer base, as well as increases in various facilities expenses;

•  $8.0 million, or 38%, and $3.8 million, or 51%, increases in general corporate and facilities costs primarily resulting from an increase in general and administrative personnel necessary to support Nextel Brazil’s expansion; and

•  $3.6 million, or 53%, and $1.3 million, or 53%, increases in information technology expenses related to Nextel Brazil’s systems infrastructure as a result of its growing subscriber base.

5.   Depreciation and amortization

The $27.1 million, or 67%, and $9.9 million, or 66%, increases in depreciation and amortization from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to a 76% increase in Nextel Brazil’s property, plant and equipment in service from September 30, 2006 to September 30, 2007 resulting from the continued build-out of Nextel Brazil’s digital mobile network.

6.   Interest expense, net

The $4.4 million, or 24%, and $1.6 million, or 26%, increases in net interest expense are primarily the result of increases in interest incurred on Nextel Brazil’s towers financing transactions and capital lease obligations primarily due to increases in both the number of towers financed and the number of capital leases, as well as decreases in capitalized interest.

7.   Foreign currency transaction gains (losses), net

Foreign currency transaction gains of $10.0 million and $5.8 million for the nine and three months ended September 30, 2007 are primarily due to the strengthening of the Brazilian real relative to the U.S. dollar on Nextel Brazil’s U.S. dollar-denominated liabilities, primarily its short-term intercompany payables.

41

d.   Nextel Argentina

				% of						% of
				Nextel						Nextel
				Argentina’s						Argentina’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	293,538			92	%	$	229,629			93	%	$	63,909			28	%
Digital handset and accessory revenues		24,270			8	%		17,743			7	%		6,527			37	%
		317,808			100	%		247,372			100	%		70,436			28	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(110,038	)		(34	)%		(80,150	)		(33	)%		(29,888	)		37	%
Cost of digital handsets and accessories		(37,708	)		(12	)%		(32,454	)		(13	)%		(5,254	)		16	%
		(147,746	)		(46	)%		(112,604	)		(46	)%		(35,142	)		31	%
Selling and marketing expenses		(24,128	)		(8	)%		(19,988	)		(8	)%		(4,140	)		21	%
General and administrative expenses		(45,057	)		(14	)%		(42,829	)		(17	)%		(2,228	)		5	%
Segment earnings		100,877			32	%		71,951			29	%		28,926			40	%
Depreciation and amortization		(22,505	)		(7	)%		(13,203	)		(5	)%		(9,302	)		70	%
Operating income		78,372			25	%		58,748			24	%		19,624			33	%
Interest expense, net		(1,904	)		—			(2,118	)		(1	)%		214			(10	)%
Interest income		3,417			1	%		1,765			1	%		1,652			94	%
Foreign currency transaction gains, net		1,301			—			394			—			907			230	%
Other income, net		1,586			—			319			—			1,267			NM
Income before income tax	$	82,772			26	%	$	59,108			24	%	$	23,664			40	%

42

				% of						% of
				Nextel						Nextel
				Argentina’s						Argentina’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Three Months Ended
Operating revenues
Service and other revenues	$	105,437			92	%	$	82,685			92	%	$	22,752			28	%
Digital handset and accessory revenues		8,616			8	%		7,102			8	%		1,514			21	%
		114,053			100	%		89,787			100	%		24,266			27	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(39,318	)		(34	)%		(28,520	)		(32	)%		(10,798	)		38	%
Cost of digital handsets and accessories		(13,154	)		(12	)%		(13,219	)		(15	)%		65			—
		(52,472	)		(46	)%		(41,739	)		(47	)%		(10,733	)		26	%
Selling and marketing expenses		(8,997	)		(8	)%		(7,173	)		(8	)%		(1,824	)		25	%
General and administrative expenses		(15,534	)		(14	)%		(15,688	)		(17	)%		154			(1	)%
Segment earnings		37,050			32	%		25,187			28	%		11,863			47	%
Depreciation and amortization		(7,637	)		(6	)%		(5,708	)		(6	)%		(1,929	)		34	%
Operating income		29,413			26	%		19,479			22	%		9,934			51	%
Interest expense, net		(780	)		(1	)%		(669	)		(1	)%		(111	)		17	%
Interest income		1,380			1	%		651			1	%		729			112	%
Foreign currency transaction gains (losses), net		995			1	%		(11	)		—			1,006			NM
Other income, net		9			—			90			—			(81	)		(90	)%
Income before income tax	$	31,017			27	%	$	19,540			22	%	$	11,477			59	%

NM-Not Meaningful

The average exchange rates of the Argentine peso for the nine and three months ended September 30, 2007 depreciated against the U.S. dollar by 1% and 2% from the same periods in 2006. As a result, the components of Nextel Argentina’s results of operations for the nine and three months ended September 30, 2007 after translation into U.S. dollars reflect slightly lower increases than would have occurred if it were not for the impact of the depreciation in the average value of the peso.

1.   Operating revenues

The $63.9 million, or 28%, and $22.8 million, or 28%, increases in service and other revenues from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily a result of the following:

•  28% and 27% increases in the average number of digital handsets in service, resulting primarily from growth in Nextel Argentina’s existing markets; and

43

•  $8.1 million, or 35%, and $3.2 million, or 39%, increases in revenues generated from Nextel Argentina’s handset maintenance program due to growth in the number of Nextel Argentina’s customers that are utilizing this program.

The $6.5 million, or 37%, and $1.5 million, or 21%, increases in digital handset and accessory revenues from the nine and three months ended September 30, 2006 to the same periods in 2007, are primarily the result of 22% and 17% increases in handset sales, as well as increases in handset upgrades.

2.   Cost of revenues

The $29.9 million, or 37%, and $10.8 million, or 38%, increases in cost of service from the nine and three months ended September 30, 2006 to the same periods in 2007 are principally a result of the following:

•  $12.4 million, or 28%, and $3.7 million, or 22%, increases in interconnect costs largely as a result of 19% and 18% increases in interconnect system minutes of use, as well as an increase in the proportion of mobile-to-mobile minutes of use, which generally have higher per minute costs;

•  $11.0 million, or 66%, and $4.4 million, or 78%, increases in service and repair costs largely due to increased activity under Nextel Argentina’s handset maintenance program; and

•  $5.5 million, or 30%, and $2.2 million, or 37%, increases in direct switch and transmitter and receiver site costs, including spectrum license fees, due to a 19% increase in the number of transmitter and receiver sites in service from September 30, 2006 to September 30, 2007, as well as increases in rental costs and municipal taxes per site.

The $5.3 million, or 16%, increase in cost of digital handset and accessory sales from the nine months ended September 30, 2006 to the same period in 2007 is primarily due to a 22% increase in handset sales, as well as a 21% increase in handset upgrades.

3.   Selling and marketing expenses

The $4.1 million, or 21%, and $1.8 million, or 25%, increases in selling and marketing expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to the following:

•  $2.7 million, or 31%, and $1.0 million, or 31%, increases in indirect commissions principally resulting from 29% and 22% increases in handset sales obtained through Nextel Argentina’s external sales channels, as well as an increase in indirect commissions earned per handset sale; and

•  $1.0 million, or 13%, and $0.7 million, or 25%, increases in direct commissions and payroll expenses principally resulting from 14% and 10% increases in handset sales by Nextel Argentina’s sales personnel.

4.   General and administrative expenses

The $2.2 million, or 5%, increase in general and administrative expenses from the nine months ended September 30, 2006 to the same period in 2007 is largely a result of a $2.8 million, or 32%, increase in customer care expenses resulting from an increase in customer care personnel necessary to support a larger customer base, partially offset by a cost reduction resulting from a change in the calculation of the universal service tax.

5.   Depreciation and amortization

The $9.3 million, or 70%, and $1.9 million, or 34%, increases in depreciation and amortization from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 26% increases in Nextel Argentina’s property, plant and equipment in service.

44

e.   Nextel Peru

				% of						% of
				Nextel						Nextel
				Peru’s						Peru’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	128,947			93	%	$	97,978			94	%	$	30,969			32	%
Digital handset and accessory revenues		9,201			7	%		6,077			6	%		3,124			51	%
		138,148			100	%		104,055			100	%		34,093			33	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(50,326	)		(37	)%		(36,382	)		(35	)%		(13,944	)		38	%
Cost of digital handsets and accessories		(22,530	)		(16	)%		(18,012	)		(17	)%		(4,518	)		25	%
		(72,856	)		(53	)%		(54,394	)		(52	)%		(18,462	)		34	%
Selling and marketing expenses		(14,905	)		(11	)%		(12,788	)		(12	)%		(2,117	)		17	%
General and administrative expenses		(24,368	)		(17	)%		(18,384	)		(18	)%		(5,984	)		33	%
Segment earnings		26,019			19	%		18,489			18	%		7,530			41	%
Depreciation and amortization		(15,202	)		(11	)%		(8,421	)		(8	)%		(6,781	)		81	%
Operating income		10,817			8	%		10,068			10	%		749			7	%
Interest expense, net		(95	)		—			(106	)		—			11			(10	)%
Interest income		499			—			850			1	%		(351	)		(41	)%
Foreign currency transaction gains, net		371			—			80			—			291			NM
Income before income tax	$	11,592			8	%	$	10,892			11	%	$	700			6	%

45

				% of						% of
				Nextel						Nextel
				Peru’s						Peru’s			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Three Months Ended
Operating revenues
Service and other revenues	$	45,457			93	%	$	35,349			94	%	$	10,108			29	%
Digital handset and accessory revenues		3,320			7	%		2,243			6	%		1,077			48	%
		48,777			100	%		37,592			100	%		11,185			30	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(17,691	)		(36	)%		(14,176	)		(38	)%		(3,515	)		25	%
Cost of digital handsets and accessories		(8,699	)		(18	)%		(6,002	)		(16	)%		(2,697	)		45	%
		(26,390	)		(54	)%		(20,178	)		(54	)%		(6,212	)		31	%
Selling and marketing expenses		(5,582	)		(11	)%		(4,944	)		(13	)%		(638	)		13	%
General and administrative expenses		(8,659	)		(18	)%		(6,577	)		(18	)%		(2,082	)		32	%
Segment earnings		8,146			17	%		5,893			15	%		2,253			38	%
Depreciation and amortization		(4,318	)		(9	)%		(3,078	)		(8	)%		(1,240	)		40	%
Operating income		3,828			8	%		2,815			7	%		1,013			36	%
Interest expense, net		(28	)		—			(34	)		—			6			(18	)%
Interest income		158			—			290			1	%		(132	)		(46	)%
Foreign currency transaction gains, net		316			1	%		30			—			286			NM
Income before income tax	$	4,274			9	%	$	3,101			8	%	$	1,173			38	%

NM-Not Meaningful

1.   Operating revenues

The $31.0 million, or 32%, and $10.1 million, or 29%, increases in service and other revenues from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to 36% and 35% increases in the average number of digital handsets in service, partially offset by decreases in average revenue per handset mainly resulting from lower rate plans implemented in response to increased competition.

The $3.1 million, or 51%, and $1.1 million, or 48%, increases in digital handset and accessory revenues from the nine and three months ended September 30, 2006 to the same periods in 2007, are primarily the result of 32% and 45% increases in handset sales, as well as increases in handset upgrades.

2.   Cost of revenues

The $13.9 million, or 38%, and $3.5 million, or 25%, increases in cost of service from the nine and three months ended September 30, 2006 to the same periods in 2007 are largely a result of the following:

•  $8.9 million, or 38%, and $1.6 million, or 17%, increases in interconnect costs largely as a result of 30% and 17% increases in interconnect minutes of use; and

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•  $2.5 million, or 29%, and $0.8 million, or 28%, increases in direct switch and transmitter and receiver site costs due to a 14% increase in the number of transmitter and receiver sites in service from September 30, 2006 to September 30, 2007, as well as increases in operating and maintenance costs per site.

The $4.5 million, or 25%, and $2.7 million, or 45%, increases in cost of digital handsets and accessories from the nine and three months ended September 30, 2006 to the same periods in 2007 are largely a result of 32% and 45% increases in handset sales.

3.   Selling and marketing expenses

The $2.1 million, or 17%, and $0.6 million, or 13%, increases in selling and marketing expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to $1.6 million, or 25%, and $0.6 million, or 26%, increases in direct commissions and payroll expenses principally due to 25% and 46% increases in handset sales by Nextel Peru’s sales personnel.

4.   General and administrative expenses

The $6.0 million, or 33%, and $2.1 million, or 32%, increases in general and administrative expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to the following:

•  $2.1 million, or 31%, and $0.8 million, or 33%, increases in general corporate costs due to increases in general and administrative personnel necessary to support Nextel Peru’s expanding business; and

•  $1.6 million, or 22%, and $0.6 million, or 23%, increases in customer care expenses primarily due to increases in customer care and billing operations personnel caused by the need to support a growing customer base.

5.   Depreciation and amortization

The $6.8 million, or 81%, and $1.2 million, or 40%, increases in depreciation and amortization from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to increased depreciation resulting from a 59% increase in Nextel Peru’s property, plant and equipment, as well as additional depreciation related to the early retirement of certain network equipment.

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f.   Corporate and other

				% of						% of
				Corporate						Corporate
				and other						and other			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Nine Months Ended
Operating revenues
Service and other revenues	$	2,454			100	%	$	1,890			100	%	$	564			30	%
Digital handset and accessory revenues		5			—			—			—			5			NM
		2,459			100	%		1,890			100	%		569			30	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(1,790	)		(73	)%		(1,136	)		(60	)%		(654	)		58	%
Cost of digital handsets and accessories		(855	)		(35	)%		(3	)		—			(852	)		NM
		(2,645	)		(108	)%		(1,139	)		(60	)%		(1,506	)		132	%
Selling and marketing expenses		(7,211	)		293	%		(5,339	)		(282	)%		(1,872	)		35	%
General and administrative expenses		(102,421	)		NM			(71,288	)		NM			(31,133	)		44	%
Segment losses		(109,818	)		NM			(75,876	)		NM			(33,942	)		45	%
Management fee		29,700			NM			—			—			29,700			NM
Depreciation and amortization		(4,983	)		(203	)%		(2,746	)		(145	)%		(2,237	)		81	%
Operating loss		(85,101	)		NM			(78,622	)		NM			(6,479	)		8	%
Interest expense, net		(28,403	)		NM			(18,672	)		NM			(9,731	)		52	%
Interest income		27,471			NM			9,276			NM			18,195			196	%
Foreign currency transaction gains (losses), net		25			1	%		(114	)		(6	)%		139			(122	)%
Debt conversion expense		(26,455	)		NM			—			—			(26,455	)		NM
Other expense, net		(1,593	)		(65	)%		(911	)		(48	)%		(682	)		75	%
Loss before income tax	$	(114,056	)		NM		$	(89,043	)		NM		$	(25,013	)		28	%

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				% of						% of
				Corporate						Corporate
				and other						and other			Change from
	September 30,			Operating			September 30,			Operating			Previous Year
	2007			Revenues			2006			Revenues			Dollars			Percent
	(dollars in thousands)
Three Months Ended
Operating revenues
Service and other revenues	$	1,072			100	%	$	521			100	%	$	551			106	%
Digital handset and accessory revenues		5			—			—			—			5			NM
		1,077			100	%		521			100	%		556			107	%
Cost of revenues
Cost of service (exclusive of depreciation and amortization included below)		(726	)		(68	)%		(392	)		(75	)%		(334	)		85	%
Cost of digital handsets and accessories		(295	)		(27	)%		(3	)		(1	)%		(292	)		NM
		(1,021	)		(95	)%		(395	)		(76	)%		(626	)		158	%
Selling and marketing expenses		(2,467	)		(229	)%		(2,099	)		NM			(368	)		18	%
General and administrative expenses		(38,228	)		NM			(28,200	)		NM			(10,028	)		36	%
Segment losses		(40,639	)		NM			(30,173	)		NM			(10,466	)		35	%
Management fee		9,900			NM			—			—			9,900			NM
Depreciation and amortization		(1,713	)		(159	)%		(1,037	)		(199	)%		(676	)		65	%
Operating loss		(32,452	)		NM			(31,210	)		NM			(1,242	)		4	%
Interest expense, net		(14,068	)		NM			(6,187	)		NM			(7,881	)		127	%
Interest income		15,192			NM			2,745			NM			12,447			NM
Foreign currency transaction gains, net		33			3	%		10			2	%		23			230	%
Debt conversion expense		(26,455	)		NM			—			—			(26,455	)		NM
Other income (expense), net		58			5	%		(124	)		(24	)%		182			(147	)%
Loss before income tax	$	(57,692	)		NM		$	(34,766	)		NM		$	(22,926	)		66	%

NM-Not Meaningful

For the nine and three months ended September 30, 2007, corporate and other operating revenues and cost of revenues primarily represent the results of both digital and analog operations reported by Nextel Chile as a result of the launch of digital services in Chile during the fourth quarter of 2006. We plan to significantly expand and enhance our network in Chile over the next several years, which will require additional investments in capital expenditures and will likely result in a modest level of start-up losses. For the nine and three months ended September 30, 2006, corporate and other operating revenues and cost of revenues primarily represent the results of analog operations reported by Nextel Chile.

  1.   General and administrative expenses

The $31.1 million, or 44%, and $10.0 million, or 36%, increases in general and administrative expenses from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to $16.4 million and $8.5 million increases in stock option expense, increases in corporate payroll and related expenses and increases in outside service costs, specifically for consulting services.

49

  2.   Management fee

For the nine and three months ended September 30, 2007, Nextel Mexico incurred management fees of $29.7 million and $9.9 million for services rendered by corporate management. During the nine and three months ended September 30, 2006, Nextel Mexico incurred a management fee of $51.1 million and $17.0 million, respectively. Although we have been charging this fee to Nextel Mexico for several years, we began reporting this management fee as a separate line item in our segment reporting information beginning January 1, 2007.

  3.   Interest expense, net

The $9.7 million, or 52%, and $7.9 million, or 127%, increases in net interest expense from the nine and three months ended September 30, 2006 to the same period in 2007 are substantially the result of interest related to our 3.125% convertible notes that we issued in the second quarter of 2007.

  4.   Interest income

The $18.2 million and $12.4 million increases in interest income from the nine and three months ended September 30, 2006 to the same periods in 2007 are primarily due to interest earned on higher cash balances related to the proceeds received from the issuance of our 3.125% convertible notes in the second quarter of 2007.

  5.   Debt conversion expense

The $26.5 million in debt conversion expense represents cash consideration that we paid in connection with the tender offer for 99.99% of our 2.875% convertible notes in the third quarter of 2007.

Liquidity and Capital Resources

We had a working capital surplus of $1,578.7 million as of September 30, 2007, a $938.7 million increase compared to the working capital surplus of $640.0 million as of December 31, 2006. The increase in working capital, which is defined as total current assets less total current liabilities, primarily resulted from our receipt of $1,177.2 million in net cash proceeds from the issuance of $1,200.0 million in 3.125% convertible notes, partially offset by $330.0 million in cash we used to purchase shares of our common stock during the nine months ended September 30, 2007.

We recognized net income of $249.9 million and $81.7 million for the nine and three months ended September 30, 2007 and $186.6 million and $65.7 million for the nine and three months ended September 30, 2006. During the nine and three months ended September 30, 2007 and 2006, our operating revenues more than offset our operating expenses, excluding depreciation and amortization, and cash capital expenditures.

Cash Flows

	Nine Months Ended						Change from
	September 30,						Previous Year
	2007			2006			Dollars
Net cash provided by operating activities	$	455,195		$	318,188		$	137,007
Net cash used in investing activities		(554,619	)		(624,427	)		69,808
Net cash provided by financing activities		936,587			103,352			833,235
Effect of exchange rate changes on cash and cash equivalents		(351	)		(6,394	)		6,043
Net increase (decrease) in cash and cash equivalents		836,812			(209,281	)		1,046,093
Cash and cash equivalents, beginning of period		708,591			877,536			(168,945	)
Cash and cash equivalents, end of period	$	1,545,403		$	668,255		$	877,148

Our operating activities provided us with $455.2 million of cash during the nine months ended September 30, 2007, a $137.0 million, or 43%, increase compared to the nine months ended September 30, 2006. This increase in

50

generation of cash is primarily due to higher operating income resulting from our profitable growth strategy, partially offset by a significant increase in working capital investments, due to the continued growth of our business, and cash we paid for income taxes due to higher levels of book income, primarily in Mexico.

We used $554.6 million of cash in our investing activities during the nine months ended September 30, 2007, a $69.8 million, or 11%, decrease from the nine months ended September 30, 2006 primarily due to $200.0 million that we transferred to restricted cash in September 2006 related to the acquisition of Cosmofrecuencias, S.A de C.V. in Mexico, partially offset by increased capital expenditures. Cash capital expenditures increased $75.6 million from $424.1 million during the nine months ended September 30, 2006 to $499.7 million during the nine months ended September 30, 2007, primarily due to the continued build-out of our digital mobile networks. We paid $44.2 million in cash for acquisitions and purchases of spectrum licenses during the nine months ended September 30, 2007 compared to $3.2 million during the nine months ended September 30, 2006 primarily due to Nextel Peru’s acquisition of a nationwide license of 35 MHz of 1.9 GHz spectrum during the second quarter of 2007 and Nextel Brazil’s renewal of licenses for 11,900 channels of 800 MHz spectrum during the first quarter of 2007.

Our financing activities provided us with $936.6 million of cash during the nine months ended September 30, 2007, an $833.2 million increase from the nine months ended September 30, 2006, primarily due to $1,200.0 million in cash we received from the issuance of our 3.125% convertible notes and a $40.4 million increase in cash we received from stock option exercises, partially offset by $330.0 million in cash we used to repurchase our common stock and $60.9 million in borrowings we made under our Mexican syndicated loan facility in 2006.

Future Capital Needs and Resources

Capital Resources.  Our ongoing capital resources depend on a variety of factors, including our existing cash and cash equivalents balances, cash flows generated by our operating companies and external financial sources that may be available. As of September 30, 2007, our capital resources included $1,545.4 million of cash and cash equivalents. In addition, in September 2007, Nextel Brazil entered into a syndicated loan facility that will allow Nextel Brazil to borrow up to $300.0 million in term loans, none of which was borrowed as of September 30, 2007. On October 25, 2007, Nextel Brazil borrowed $150.0 million in term loans under this syndicated loan facility. The remaining $150.0 million in term loans are available under this facility until March 12, 2008, subject to the satisfaction of customary borrowing conditions. Our ability to generate sufficient net cash from our operating activities is dependent upon, among other things:

•  the amount of revenue we are able to generate and collect from our customers;

•  the amount of operating expenses required to provide our services;

•  the cost of acquiring and retaining customers, including the subsidies we incur to provide handsets to both our new and existing customers;

•  our ability to continue to grow our customer base; and

•  fluctuations in foreign exchange rates.

Capital Needs and Contractual Obligations.  We currently anticipate that our future capital needs will principally consist of funds required for:

•  operating expenses relating to our digital mobile networks;

•  capital expenditures to expand and enhance our digital mobile networks, as discussed below under “Capital Expenditures;”

•  future spectrum or other related purchases;

•  debt service requirements, including tower financing and capital lease obligations;

•  cash taxes; and

•  other general corporate expenditures.

51

The following table sets forth the amounts and timing of contractual payments for our most significant contractual obligations determined as of September 30, 2007. The information in the table reflects future unconditional payments and is based upon, among other things, the current terms of the relevant agreements, appropriate classification of items under accounting principles generally accepted in the United States that are currently in effect and certain assumptions, such as future interest rates. Future events could cause actual payments to differ significantly from these amounts. See “Forward Looking Statements.” Except as required by law, we disclaim any obligation to modify or update the information contained in the table.

	Payments due by period
	Less than						More than
Contractual Obligations	1 Year		1-3 Years		3-5 Years		5 Years		Total
					(in thousands)
Convertible notes(1)	$	47,125	$	94,250	$	1,294,250	$	475,170	$	1,910,795
Tower financing obligations(1)		43,949		87,917		87,950		266,922		486,738
Syndicated loan facilities(2)		62,509		119,717		166,254		—		348,480
Capital lease obligations(3)		12,136		25,124		23,872		101,937		163,069
Spectrum fees(4)		13,836		27,672		27,672		169,492		238,672
Spectrum license financing(5)		2,042		4,083		4,083		2,041		12,249
Operating leases(6)		123,065		200,776		130,831		149,589		604,261
Purchase obligations(7)		559,280		53,769		33,120		—		646,169
Other long-term obligations(8)		9,764		19,495		17,647		165,690		212,596
Total contractual commitments	$	873,706	$	632,803	$	1,785,679	$	1,330,841	$	4,623,029

(1)	These amounts include estimated principal and interest payments over the full term of the obligation based on our expectations as to future interest rates, assuming the current payment schedule.
(2)	These amounts do not include principal and interest payments associated with Nextel Brazil’s $300.0 million syndicated loan facility as no amounts were borrowed under this facility as of September 30, 2007.
(3)	These amounts represent principal and interest payments due under our co-location agreements to American Tower and our existing corporate aircraft lease. The amounts related to our existing aircraft lease exclude amounts that are contingently due in the event of our default under the lease, but do include remaining amounts due under the letter of credit provided for our new corporate aircraft.
(4)	These amounts do not include variable fees based on certain operating revenues and are subject to increases in the Mexican Consumer Pricing Index.
(5)	These amounts represent payments related to spectrum license financing in Brazil.
(6)	These amounts principally include future lease costs related to our transmitter and receiver sites and switches and office facilities.
(7)	These amounts include maximum contractual purchase obligations under various agreements with our vendors, as well as estimated payments related to spectrum obligations in Argentina.
(8)	These amounts include our current estimates of asset retirement obligations based on our expectations as to future retirement costs, inflation rates and timing of retirements, as well as amounts related to our FIN 48 liabilities.

Capital Expenditures.  Our consolidated capital expenditures, including capitalized interest, were $465.9 million for the nine months ended September 30, 2007 compared to $461.8 million for the nine months ended September 30, 2006. Almost half of our total capital investment was attributable to our network site upgrades for additional capacity and improved quality related to our expected growth in existing markets. Our capital expenditures related to the expansion of our coverage areas as a percentage of our total capital expenditures are significantly lower than the levels we invested during the same period last year, and we expect this trend to continue as a greater portion of our network related capital expenditures are used to increase the capacity and improve the coverage of our networks in our existing markets. In the future, we expect to finance our capital spending using the

52

most effective combination of cash from operations, cash on hand and proceeds from external financing that may become available. Our capital spending is expected to be driven by several factors, including:

•  the expansion of the coverage of our digital mobile networks to new market areas, primarily in Brazil and Chile;

•  the construction of additional transmitter and receiver sites to increase system capacity and maintain system quality and the installation of related switching equipment in some of our existing market coverage areas;

•  the enhancement of our digital mobile network coverage around some of the major market areas in which we currently operate;

•  future minimum build-out requirements related to spectrum that we acquired or are in the process of acquiring in Mexico, Argentina and Peru;

•  potential funding of future technology initiatives; and

•  non-network related information technology projects.

Our future capital expenditures may be affected by future technology improvements and technology choices. For example, Motorola developed a technology upgrade to the iDEN digital mobile network, the 6:1 voice coder software upgrade, which is designed to increase the capacity of iDEN networks for interconnect calls without requiring additional network infrastructure equipment. Beginning in 2004, we started selling handsets that can operate on the new 6:1 voice coder, and we have deployed the related network software modifications that are necessary to utilize this technology in some of our markets. We have experienced voice quality problems related to certain types of calls made using the 6:1 voice coder technology and in some markets, we have adjusted the network software to reduce the number of calls completed using the 6:1 voice coder technology in order to balance our network capacity needs with the need to maintain voice quality. Because we have not used the 6:1 voice coder technology to its full capacity, we have invested more capital in our infrastructure to satisfy our network capacity needs than would have been necessary if we had been able to complete a higher percentage of calls using the technology, and we may make similar investments in the future as we optimize our network to meet our capacity and voice quality requirements. If we were to decide to significantly curtail the use of the 6:1 voice coder technology in all of our markets, these investments could be significant. See “Forward Looking Statements.”

Future Outlook.  We believe that our current business plan, which includes a significant network expansion in Brazil and continued network expansion in Chile, will not require any additional external funding, and we will be able to operate and grow our business while servicing our debt obligations using a combination of cash on hand and funds generated by our business. We may, nonetheless, elect to meet a portion of our funding needs with funds provided from external sources in order to implement a more efficient capital structure or benefit from financing that is available on favorable terms. Our revenues are primarily denominated in foreign currencies. We expect that if current foreign currency exchange rates do not significantly adversely change, we will continue to generate net income for the foreseeable future. See “Forward Looking Statements.”

In making our assessments of a fully funded business plan and net income, we have considered:

•  cash and cash equivalents on hand and available to fund our operations;

•  expected cash flows from operations;

•  the anticipated level of capital expenditures;

•  the anticipated level of spectrum acquisitions;

•  our scheduled debt service; and

•  income taxes.

If our business plans change, including as a result of:

•  changes in technology or our spectrum holdings;

•  our decision to expand into new markets or further in our existing markets;

•  the construction of additional portions of our networks or the acquisition of competitors or others,

53

or if economic conditions in any of our markets change generally, or competitive practices in the mobile wireless telecommunications industry change materially from those currently prevailing or from those now anticipated, or if other presently unexpected circumstances arise that have a material effect on the cash flow or profitability of our mobile wireless business, then the anticipated cash needs of our business as well as the conclusions presented herein as to the adequacy of the available sources of cash and timing on our ability to generate net income could change significantly. Any of these events or circumstances could involve significant additional funding needs in excess of the identified currently available sources, and could require us to raise additional capital to meet those needs. In addition, we continue to assess the opportunities to raise additional funding on attractive terms and conditions and at times that are not directly related to any of these events or circumstances and may elect to pursue these opportunities as we deem appropriate. However, our ability to seek additional capital, if necessary, is subject to a variety of additional factors that we cannot presently predict with certainty, including:

•  the commercial success of our operations;

•  the volatility and demand of the capital markets; and

•  the future market prices of our securities.

Forward Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995.  Certain statements made in this quarterly report on Form 10-Q are not historical or current facts, but deal with potential future circumstances and developments. They can be identified by the use of forward-looking words such as “believes,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “could,” “should” or “anticipates” or other comparable words, or by discussions of strategy that involve risks and uncertainties. We caution you that these forward-looking statements are only predictions, which are subject to risks and uncertainties, including technical uncertainties, financial variations, changes in the regulatory environment, industry growth and trend predictions. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. The operation and results of our wireless communications business also may be subject to the effects of other risks and uncertainties in addition to the other qualifying factors identified in this Item, including, but not limited to:

•  our ability to meet the operating goals established by our business plan;

•  general economic conditions in Latin America and in the market segments that we are targeting for our digital mobile services;

•  the political and social conditions in the countries in which we operate, including political instability, which may affect the economies of our markets and the regulatory schemes in these countries;

•  substantive terms of any international financial aid package that may be made available to any country in which our operating companies conduct business;

•  the impact of foreign exchange volatility in our markets as compared to the U.S. dollar and related currency depreciation in countries in which our operating companies conduct business;

•  reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon, including technology deployed in connection with the introduction of digital two-way mobile data or Internet connectivity services in our markets;

•  the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our service deployment and marketing plans and customer demand;

•  Motorola’s ability and willingness to provide handsets and related equipment and software applications or to develop new technologies or features for us, including the timely development and availability of new handsets with expanded applications and features;

•  our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth, increased system usage rates and growth;

54

•  the success of efforts to improve and satisfactorily address any issues relating to our digital mobile network performance;

•  future legislation or regulatory actions relating to our SMR services, other wireless communication services or telecommunications generally;

•  the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our digital mobile network business;

•  the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers of cellular services and personal communications services;

•  market acceptance of our new service offerings;

•  our ability to access sufficient debt or equity capital to meet any future operating and financial needs; and

•  other risks and uncertainties described in this quarterly report on Form 10-Q and from time to time in our other reports filed with the Securities and Exchange Commission, including in our 2006 annual report on Form 10-K.

Effect of New Accounting Standards

In June 2006, the Financial Accounting Standards Board, or the FASB, ratified the consensus of the Emerging Issues Task Force, or EITF, on Issue 06-3, “How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation),” or EITF 06-3. EITF 06-3 states that a company should disclose its accounting policy (gross or net presentation) regarding presentation of sales and other similar taxes. If taxes included in gross revenues are significant, a company should disclose the amount of such taxes for each period for which an income statement is presented. EITF 06-3 is effective for financial reports in interim and annual reporting periods beginning after December 15, 2006. We currently disclose our policy with regard to these types of taxes in our revenue recognition policy; however we do not consider the amounts of these taxes significant for disclosure. Therefore, the adoption of EITF 06-3 did not have a material impact on our consolidated financial statements.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109,” or FIN 48. FIN 48 clarifies the accounting for uncertainty in income tax positions and is effective beginning January 1, 2007. FIN 48 provides that the financial statement effects of an income tax position can only be recognized when, based on the technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. The cumulative effect of applying the provisions of FIN 48 is required to be reported as an adjustment to the opening balance of retained earnings for that fiscal year. Our adoption of FIN 48 in the first quarter of 2007 resulted in a $5.2 million decrease to our retained earnings. See Note 6 for more information.

In September 2006, the FASB issued Statement of Financial Accounting Standards, or SFAS, No. 157, “Fair Value Measurement,” or SFAS 157, which provides guidance for using fair value to measure assets and liabilities when required for recognition or disclosure purposes. SFAS 157 is intended to make the measurement of fair value more consistent and comparable and improve disclosures about these measures. Specifically, SFAS 157 (1) clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability, (2) establishes a fair value hierarchy that prioritizes the information used to develop those assumptions, (3) clarifies the information required to be used to measure fair value, (4) determines the frequency of fair value measures and (5) requires companies to make expanded disclosures about the methods and assumptions used to measure fair value and the fair value measurement’s effect on earnings. However, SFAS 157 does not expand the use of fair value to any new circumstances or determine when fair value should be used in the financial statements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with some exceptions. SFAS 157 is to be applied prospectively as of the first interim period for the fiscal year in which it is initially adopted, except for a limited form of retrospective application for some specific items. We are currently evaluating the impact that SFAS 157 may have on our consolidated financial statements.

55

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact that SFAS No. 159 may have on our consolidated financial statements.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

Our revenues are primarily denominated in foreign currencies, while a significant portion of our operations are financed in U.S. dollars through our convertible notes and a portion of our syndicated loan facility in Mexico. As a result, fluctuations in exchange rates relative to the U.S. dollar expose us to foreign currency exchange risks. These risks include the impact of translating our local currency reported earnings into U.S. dollars when the U.S. dollar strengthens against the local currencies of our foreign operations. In addition, Nextel Mexico, Nextel Brazil, Nextel Argentina and Nextel Chile purchase some capital assets and the majority of handsets in U.S. dollars, but record the related revenue generated from their operations in local currency.

We enter into derivative transactions only for hedging or risk management purposes. We have not and will not enter into any derivative transactions for speculative or profit generating purposes. In the past, Nextel Mexico entered into hedge arrangements to reduce its foreign currency transaction risk associated with a portion of its U.S. dollar-forecasted capital expenditures and handset purchases. As of September 30, 2007, we have not entered into any derivative transactions to hedge our foreign currency transaction risk during 2007 or any future period.

Interest rate changes expose our fixed rate long-term borrowings to changes in fair value and expose our variable rate long-term borrowings to changes in future cash flows. As of September 30, 2007, $1,871.1 million, or 90%, of our total consolidated debt was fixed rate debt, and the remaining $210.1 million, or 10%, of our total consolidated debt was variable rate debt. In July 2005, Nextel Mexico entered into an interest rate swap agreement to hedge the variability of future cash flows associated with the $31.0 million Mexican peso-denominated variable interest rate portion of its syndicated loan facility. Under the interest rate swap, Nextel Mexico agreed to exchange the difference between the variable Mexican reference rate, TIIE, and a fixed interest rate, based on a notional amount of $31.4 million. The interest rate swap fixed the amount of interest expense associated with this portion of the Mexico syndicated loan facility effective August 31, 2005.

The table below presents principal amounts, related interest rates by year of maturity and aggregate amounts as of September 30, 2007 for our fixed rate debt obligations, including our convertible notes, our syndicated loan facility in Mexico and our tower financing obligations, the notional amounts of our purchased call options and written put options and the fair value of our interest rate swap. This table does not include amounts related to our $300.0 million syndicated loan facility in Brazil as no amounts were borrowed under this facility as of September 30, 2007. We determined the fair values included in this section based on:

•  quoted market prices for our convertible notes;

•  carrying values for our tower financing obligations and syndicated loan facility as interest rates were set recently when we entered into these transactions; and

•  market values as determined by an independent third party investment banking firm for our purchased call options, written put options and interest rate swap.

The changes in the fair values of our consolidated debt compared to their fair values as of December 31, 2006 reflect changes in applicable market conditions, as well as the issuance of our 3.125% convertible notes and our acceptance of a tender offer for 99.99% of our 2.875% convertible notes. All of the information in the table is presented in U.S. dollar equivalents, which is our reporting currency. The actual cash flows associated with our consolidated long-term debt are denominated in U.S. dollars (US$), Mexican pesos (MP) and Brazilian reais (BR).

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																			September 30,						December 31,
	Year of Maturity																		2007						2006
	1 Year			2 Years			3 Years			4 Years			5 Years			Thereafter			Total			Fair Value			Total			Fair Value
													(dollars in thousands)
Long-Term Debt:
Fixed Rate (US$)	$	1,517		$	1,793		$	1,885		$	1,899		$	1,200,971		$	369,236		$	1,577,301		$	1,773,299		$	678,202		$	1,258,202
Average Interest Rate		10.0	%		10.0	%		10.0	%		10.0	%		3.1	%		3.1	%		3.2	%					3.1	%
Fixed Rate (MP)	$	27,332		$	40,703		$	23,436		$	6,322		$	7,486		$	95,169		$	200,448		$	200,448		$	189,867		$	189,867
Average Interest Rate		12.1	%		11.9	%		12.5	%		16.5	%		16.5	%		16.2	%		14.5	%					14.4	%
Fixed Rate (BR)	$	3,330		$	3,882		$	4,363		$	4,990		$	5,813		$	71,022		$	93,400		$	93,400		$	75,589		$	75,589
Average Interest Rate		17.6	%		18.7	%		19.6	%		20.4	%		21.3	%		25.8	%		24.4	%					25.5	%
Variable Rate (US$)	$	—		$	—		$	—		$	156,600		$	—		$	—		$	156,600		$	156,600		$	156,600		$	156,600
Average Interest Rate		—			—			—			6.6	%		—			—			6.6	%					6.7	%
Variable Rate (MP)	$	16,163		$	24,867		$	12,435		$	—		$	—		$	—		$	53,465		$	53,465		$	57,423		$	57,423
Average Interest Rate		8.7	%		8.7	%		8.7	%		—			—			—			8.7	%					8.5	%
Interest Rate Swap:
Variable to Fixed	$	8,541		$	13,140		$	6,569		$	—		$	—		$	—		$	28,250		$	(711	)	$	29,128		$	(1,406	)
Average Pay Rate		10.8	%		10.8	%		10.8	%		—			—			—			10.8	%					10.8	%
Average Receive Rate		8.7	%		8.7	%		8.7	%		—			—			—			8.7	%					8.5	%

Item 4.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission and that such information is accumulated and communicated to the Company’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered in this report, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of our management teams in the United States and in our operating companies, including our chief executive officer and chief financial officer. Based on and as of the date of such evaluation, our chief executive officer and chief financial officer concluded that the design and operation of our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.   Legal Proceedings.

We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.

For information on our various loss contingencies, see Note 5 to our condensed consolidated financial statements above.

Item 1A.   Risk Factors.

There have been no material changes in our risk factors from those disclosed in our 2006 annual report on Form 10-K.

Item 6.   Exhibits.

Exhibit
Number			Exhibit Description
	3	.1	Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to NII Holdings’ Form 8-K, filed on October 29, 2007).
	10	.1	Term Facility Agreement A/B, dated as of September 14, 2007, by and among Nextel Telecomunicacoes Ltda., Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V., as lender, and Standard Bank Offshore Trust Company Jersey Limited, as Security Agent.
	12	.1	Ratio of Earnings to Fixed Charges.
	31	.1	Statement of Chief Executive Officer Pursuant to Rule 13a-14(a).
	31	.2	Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
	32	.1	Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
	32	.2	Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

58

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

By:  /s/   DANIEL E. FREIMAN

Daniel E. Freiman

Vice President and Controller

(on behalf of the registrant and as

chief accounting officer)

Date: November 6, 2007

59

EXHIBIT INDEX

Exhibit
Number			Exhibit Description
	3	.1	Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to NII Holdings’ Form 8-K, filed on October 29, 2007).
	10	.1	Term Facility Agreement A/B, dated as of September 14, 2007, by and among Nextel Telecomunicacoes Ltda., Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V., as lender, and Standard Bank Offshore Trust Company Jersey Limited, as Security Agent.
	12	.1	Ratio of Earnings to Fixed Charges.
	31	.1	Statement of Chief Executive Officer Pursuant to Rule 13a-14(a).
	31	.2	Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
	32	.1	Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
	32	.2	Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

PRIVILEGED AND CONFIDENTIAL

NEXTEL TELECOMUNICAÇÕES LTDA.,
as Borrower

TERM FACILITY AGREEMENT
A/B

Dated as of September 14, 2007

STANDARD BANK OFFSHORE TRUST COMPANY JERSEY LIMITED,
as Security Agent

and

NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR
ONTWIKKELINGSLANDEN N.V.

as Lender

Milbank, Tweed, Hadley & McCloy LLP

CONTENTS

Article	Page
1. DEFINITIONS AND INTERPRETATION		1
2. THE FACILITIES		14
3. PURPOSE		14
4. CONDITIONS OF UTILIZATION		14
5. UTILIZATION		15
6. REPAYMENT		16
7. PREPAYMENT AND CANCELLATION		16
8. INTEREST		19
9. INTEREST PERIODS		20
10. CHANGES TO THE CALCULATION OF INTEREST		20
11. FEES		21
12. TAX GROSS UP AND INDEMNITIES		22
13. INCREASED COSTS		24
14. OTHER INDEMNITIES		25
15. MITIGATION BY THE LENDER AND PARTICIPANTS		26
16. COSTS AND EXPENSES		26
17. REPRESENTATIONS		27
18. INFORMATION UNDERTAKINGS		32
19. FINANCIAL COVENANTS		34
20. POSITIVE UNDERTAKINGS		35
21. NEGATIVE UNDERTAKINGS		38
22. EVENTS OF DEFAULT		41
23. LEFT INTENTIONALLY BLANK		44
24. CHANGES TO THE LENDER		44
25. CHANGES TO THE BORROWER		47
26. CONDUCT OF BUSINESS BY LENDER		47
27. PAYMENT MECHANICS		48
28. SET-OFF		50
29. THE SECURITY AGENT		50
30. NOTICES		53
31. CALCULATIONS AND CERTIFICATES		54
32. REMEDIES AND WAIVERS		54
33. AMENDMENTS AND WAIVERS		54
34. LEFT INTENTIONALLY BLANK		54
35. COUNTERPARTS		54
36. GOVERNING LAW		55
37. JURISDICTION, SERVICE OF PROCESS AND VENUE		55

Article	Page
38. WAIVER OF JURY TRIAL		55
39. WAIVER OF IMMUNITY		56
40. ENTIRE AGREEMENT		56
41. SURVIVAL		56
42. NO FIDUCIARY RELATIONSHIP		56
43. WAIVER OF SECURITY		56
Signatures		1

SCHEDULE 1	Conditions Precedent To Initial Utilization
SCHEDULE 2	Utilization Request
SCHEDULE 3	Mandatory Cost Formulae
SCHEDULE 4	Form of Transfer Certificate
SCHEDULE 5	Form of Compliance Certificate
SCHEDULE 6	Security
SCHEDULE 7	INTENTIONALLY LEFT BLANK
SCHEDULE 8	Corporate Governance Guidelines
SCHEDULE 9	Excluded Activities
SCHEDULE 10	Insurance
SCHEDULE 11	Existing Liens
SCHEDULE 12	INTENTIONALLY LEFT BLANK
SCHEDULE 13	World Bank Standards
SCHEDULE 14	Labour Contracts, Retrenchment and Discrimination of Workers’ Representatives
SCHEDULE 15	FMO Social Policy
SCHEDULE 16	Annual Environmental and Social Monitoring Report
SCHEDULE 17	Certification Letter

THIS AGREEMENT is dated as of September 14, 2007 and made between:

(1)	NEXTEL TELECOMUNICAÇÕES LTDA., a limited liability company incorporated and existing under the laws of Brazil, enrolled with the General Registry of Corporate Taxpayers of the Brazilian Ministry of Finance (“CNPJ/MF”) under No. 66.970.229/0001-67, having its registered office at Alameda Santos No. 2,356 and 2,364, Cerqueira César, in the City of São Paulo, State of São Paulo, Brazil, Zip Code 01418-200, fax number 55 11 2145 2040, as borrower (the “Borrower”);
(2)	NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V. (“FMO”), a company limited by shares incorporated and existing under the laws of The Netherlands having its registered office at Anna van Saksenlaan 71, 2593 HW, The Hague, The Netherlands, fax number +31 (0)70 314 9757, as lender (the “Lender”); and
(3)	STANDARD BANK OFFSHORE TRUST COMPANY JERSEY LIMITED, a company incorporated in Jersey with registered number 9153, as security agent (the “Security Agent”).

IT IS AGREED as follows:

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions
	In this Agreement:
	“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
	“A Loan” means a loan specified in Sub-clause 2.1.1 (The Facilities) or the principal amount outstanding for the time being of that loan.
	“A Loan Termination Date” means 7 years after the Effective Date.
	“A Loan Utilization” means any utilization of the A Loan.
	“Applicable Margin” means (a) in relation to the A Loan for any Interest Period, the rate per annum set forth below:

Applicable Period	Applicable Margin
If the Leverage Ratio is equal to or greater than 3.00:1:	2.5% per annum
If the Leverage Ratio is equal to or greater than 2.00:1 but less than 3:00:	2.25% per annum
If the Leverage Ratio is less than 2.00:1:	2% per annum
For a period of 12 months following the Effective Date, regardless of the Leverage Ratio:	2.25% per annum

- 1 -

(b) in relation to the B Loan for any Interest Period, the rate per annum set forth below:

Applicable Period	Applicable Margin
If the Leverage Ratio is equal to or greater than 3.00:1:	2.25% per annum
If the Leverage Ratio is equal to or greater than 2.00:1 but less than 3:00:	2% per annum
If the Leverage Ratio is less than 2.00:1:	1.75% per annum
For a period of 12 months following the Effective Date, regardless of the Leverage Ratio:	2% per annum

If the Applicable Margin cannot be determined for any reason, the rate of 2.5% per annum shall apply in relation to the A Loan, and the rate of 2.25% per annum shall apply in relation to the B Loan.

“Authorization” means an authorization, consent, approval, resolution, license, exemption, filing, notarization or registration.

“Availability Period” means the period from and including the Effective Date to and including the date that is 180 days thereafter.

“Available Facility” means the amount of a Facility during the Availability Period minus:

(a)	the amount of any outstanding Loans;
(b)	in relation to any proposed Utilization, the amount of any Loans that are due to be made on or before the proposed Utilization Date; and
(c)	any amount cancelled pursuant to Clause 7.3 (Voluntary Cancellation).

“B Loan” means a Loan specified in Sub-clause 2.1.2 (The Facilities) or the principal amount outstanding at any given time specified of that loan.

“B Loan Termination Date” means 5 years after the Effective Date.

“B Loan Utilization” means any utilization of the B Loan.

“Basic Terms and Conditions of Employment” means the basic terms and conditions of employment as set out in the ILO Conventions 26 and 131 (on Remuneration), ILO Convention 1 (on Working Hours), ILO Convention 155 (on Health & Safety), and the terms and conditions as described in Schedule 14 (Labour Contracts, Retrenchment and Discrimination of Workers’ Representatives), as summarized in Schedule 15 (FMO Social Policy).

“Borrower Quota Pledge Agreement” has the meaning set forth on Schedule 6 (Security Documents).

- 2 -

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York and São Paulo, and solely for the purpose of determining the applicable interest rate (for the purpose of determining LIBOR) in accordance with this Agreement, in London, England.

“Collateral” means the collateral provided for in the Security Documents.

“Commitment Fee” means the commitment fee payable to the Lender pursuant to Clause 11.1 (Commitment Fee).

“Compliance Certificate” means a certificate substantially in the form set out in SCHEDULE 5 (Form of Compliance Certificate).

“Consolidated Debt” means as at any date, the sum of the aggregate outstanding principal amount of all Financial Indebtedness of the Borrower and its consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP).

“Consolidated EBITDA” shall mean, for any period, with respect to the Borrower and its consolidated Subsidiaries, the sum (determined without duplication) of: (x) Consolidated Operating Income for such period plus (y) depreciation and amortization to the extent deducted when determining Consolidated Operating Income for such period plus non-cash items to the extent deducted in determining the same, minus (z) non-cash gains.

“Consolidated Net Worth” means, at any time of determination, Consolidated Total Assets minus Consolidated Total Liabilities.

“Consolidated Operating Income” means, for any period, the operating income of the Borrower and its consolidated Subsidiaries, consolidated in accordance with GAAP.

“Consolidated Total Assets” means, at any time of determination and without duplication, the total assets of Nextel S.A. and its consolidated Subsidiaries, consolidated in accordance with GAAP.

“Consolidated Total Liabilities” means, at any time of determination and without duplication, the total liabilities of Nextel S.A. and its consolidated Subsidiaries, consolidated in accordance with GAAP.

“Core Labour Standards” means the core labour standards as set out in the ILO Conventions 29 and 105 (on Forced Labour), ILO Conventions 138 (on Minimum Age) and 182 (on Worst Forms of Child Labour), ILO Conventions 100 and 111 (on Non-Discrimination), and ILO Conventions 87 and 98 (on Freedom of Association and Collective Bargaining), as summarized in Schedule 15 (FMO Social Policy).

“Creditor Demands” has the meaning set forth in Sub-clause 22.5.4.

“Debt Service Coverage Ratio” means as at any date of determination thereof and measured in Reais, the ratio of (a) Consolidated EBITDA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) the principal amount of any Consolidated Debt that is scheduled to mature during the four consecutive fiscal quarters after such date plus the Interest Expense for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date.

- 3 -

“Debt Service Reserve Account” means the Debt Service Reserve Account contemplated in Clause 20.18 (Debt Service Reserve Account).

“Debt Service Reserve Amount” means on (a) on the date of the first Utilization, an amount in Dollars equal to 110% of the amount of interest that would accrue on the A Loan and the B Loan for six months’ worth of interest at the interest rate applicable on the date of the first Utilization; and (b) on the date six months prior to the first Repayment Date, an amount equal to the sum in Dollars of (i) the amount of two Repayment Installments due hereunder and (ii) the amount calculated in paragraph (a) of this definition.

“Default” means an Event of Default or any event or circumstance specified in Article 22 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the passage of time, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“Default Interest Rate” means an interest rate equal to the aggregate of: (a) LIBOR; (b) the relevant Applicable Margin; provided that the A Loan Applicable Margin shall be applicable to any amounts as to which the Applicable Margin is not herein specified; and (c) 2.00% per annum.

“Dividend” has the meaning set forth in Sub-clause 21.4.1.

“Effective Date” means the date of execution of this Agreement.

“Environmental and Social Claim” means any material claim, proceeding or investigation by a person in respect of an Environmental Law, a Social Law and/or an Environmental and Social Permit.

“Environmental and Social Permits” means any permit, license, consent, approval and other authorisation and the filing of any notification report or assessment required under any Environmental Law and Social Law for the operation of the business of the Obligors conducted on or from the properties owned or used by the Obligors.

“Environmental and Social Requirements” means Environmental Law, Social Law, World Bank Standards, and any Environmental and Social Permits.

“Environmental Law” means any applicable law, rule or regulation (including international treaty obligations) in any jurisdiction in which any of the Obligors conduct business as issued by its national government or authorities, which relates to environmental matters and natural resource management or is directly or indirectly concerned with any contamination, pollution or waste or the release of, or exposure to toxic hazardous substances with possible impacts on human health or discharge of any toxic or hazardous substance at any real property which is or was at any time owned, leased or occupied by any of the Obligors or on which any of the Obligors have conducted any activity.

“Event of Default” means any event or circumstance specified as such in Article 22 (Events of Default).

“Facilities” means the term facilities made available under this Agreement as described in Article 2 (The Facilities) and “Facility” shall mean either one of them.

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“Fee Letters” means the letter, dated as of the date hereof, between the Borrower and the Lender, regarding certain fees payable in connection with the Facilities and the fee letter, dated as of the date hereof, between the Security Agent and the Borrower.

“Finance Documents” means this Agreement, the Participation Agreements, any Fee Letter, the Guarantee Agreements and the Security Documents.

“Financial Indebtedness” means any indebtedness (without duplication in determining the aggregate amount thereof) for or in respect of:

(a)	moneys borrowed;
(b)	any amount raised by acceptance under any acceptance credit facility or dematerialized equivalent;
(c)	any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)	the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a capital lease;
(e)	receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)	any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;
(g)	Hedge Agreements or any other derivative transaction;
(h)	any indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;
(i)	any amount raised by the issue of redeemable shares that are redeemable at the option of the holder, are mandatorily redeemable or are entitled to the benefits of a sinking fund or similar mechanism, in any respect;
(j)	any amount of any liability under an advance or deferred purchase agreement if one of the primary reasons behind the entry into this agreement is to raise finance, except for trade payables payable within 90 days incurred in the ordinary course of business;
(k)	any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;
(l)	any sale/leaseback transactions; and
(m)	the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (k) above; provided, however, that Financial Indebtedness shall not include obligations in respect of performance, surety or appeal bonds provided in the ordinary course of business to the extent not in excess of $20,000,000.

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“GAAP” means generally accepted accounting principles as in effect from time to time in the United States.

“Guarantee Agreements” means the Subsidiary Guarantee Agreement and the Nextel S.A. Guarantee Agreement.

“Hedge Agreements” means interest rate cap agreements, interest rate swap agreements, foreign currency exchange and swap agreements, equity or equity index swap agreements and other hedging agreements or arrangements (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions.

“Holding Company” means, in relation to the Borrower, any other company or corporation in respect of which it is a Subsidiary.

“ILO Conventions” means the conventions of the International Labour Organization.

“Information Memorandum” means the information memorandum of the Borrower, dated as of June 15, 2007.

“Intercompany Debt” means the Long-Term Intercompany Debt and the Short-Term Intercompany Debt.

“Intercompany Loans Pledge and Subordination Agreement” has the meaning set forth on Schedule 6 (Security Documents).

“Interest Expense” means for any period, the sum, for the Borrower and its consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of all interest in respect of Financial Indebtedness accrued or capitalized during such period (whether or not actually paid during such period).

“Interest Payment Date” means 15 January, 15 April, 15 July and 15 October in any year.

“Interest Period” means, in relation to a Loan, each period determined in accordance with Article 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.4 (Default interest).

“Investment” by a person means any purchase or other acquisition of any capital stock or other equity interest in another person, or of warrants, rights, options or securities of such other person, and any capital contribution to such other person, and any loan, advance or other extension of credit to or for the benefit of such other person.

“Lender’s Account” means account number 000305707, in the name of Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., maintained at HSBC Bank USA, New York, New York 10017, (S.W.I.F.T.- code: MRMDUS33, A.B.A.- number: 021001088).

“Lender Break Costs” means the amount (if any) by which:

(a) the interest which the Lender or any Participant should have received for the period from the date of receipt of all or any part of its Participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the Loan or Unpaid Sum received been paid on the last day of that Interest Period; exceeds:

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(b) the amount which the Lender or any Participant would be able to obtain by placing an amount equal to the Loan or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Leverage Ratio” shall mean, at any time of determination, the ratio of: (i) Financial Indebtedness (excluding any Intercompany Debt) of the Borrower and its consolidated Subsidiaries at such date to (ii) Consolidated EBITDA, annualized for the two immediately preceding and completed fiscal quarters.

“LIBOR” means, in relation to any Loan:

(a)	the applicable Screen Rate; or
(b)	(if no Screen Rate is available for the Interest Period of the relevant Loan) the arithmetic mean of the rates (rounded upwards to the nearest three decimal points) as supplied to the Lender at its request quoted by the Reference Banks to leading banks in the London interbank market,

as at 11:00 a.m., on the Quotation Day for the offering of deposits in dollars for a period most nearly equal to the Interest Period for that Loan.

“Lien” means any guaranty or right in rem (“garantia ou direito real”), mortgage, lien, pledge, charge, encumbrance or other security interest or any preferential arrangement that has the practical effect of creating a security interest.

“Loans” means collectively the A Loan and the B Loan or, as the context requires, the principal amount of the A Loan and B Loan outstanding under the Facilities from time to time and “Loan” means either one of them.

“Long-Term Intercompany Debt” means any debt incurred by the Borrower, owing from time to time from the Borrower to the Parent or any consolidated subsidiary of the Parent excluding the Short-Term Intercompany Debt.

“Mandatory Cost” means in relation to the Lender and any Participant in respect of any Interest Period for a Loan, the cost to the Lender and any Participant of compliance with the requirements of the European Central Bank or similar banking authority, determined in accordance with SCHEDULE 3 (Mandatory Cost Formulae) (any such cost, for the purposes of this Agreement, to be represented by the percentage rate notified by the Lender prior to the last day of the relevant Interest Period).

“Material Adverse Effect” means a material adverse effect on:

(a)	the business, operations, property, condition (financial or otherwise) or prospects of the Obligors taken as a whole, provided that a material adverse effect on the prospects of the Obligors taken as a whole shall not be deemed to cause a mandatory prepayment under Sub-clause 7.2.3;
(b)	the ability of any Obligor to perform its obligations under the Finance Documents; or

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(c) the validity or enforceability of the Finance Documents or the rights or remedies of the Lender under the Finance Documents.

“Measurement Date” means March 31st, June 30th, September 30th and December 31st of each year.

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

(a)	if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and
(b)	if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

The above rules will only apply to the last Month of any period.

“Nextel S.A. ” means Nextel Telecomunicações S.A.

“Nextel S.A. Guarantee Agreement” means the Guarantee Agreement, dated as of the date hereof, by Nextel S.A.

“Obligors” means, collectively, Nextel S.A., the Borrower and each of the Borrower’s Subsidiaries.

“Parent” means NII Holdings, Inc., a Delaware corporation in the United States.

“Participant” means any person who acquires a Participation.

“Participating Member State” means any member state of the European Community that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

“Participation” means the interest of any Participant in the B Loan.

“Participation Agreement” means an agreement entitled “Participation Agreement” between Lender and the Participants pursuant to which each Participant acquires a Participation.

“Party” means a party to this Agreement.

“Permitted Investments” means (i) the incurrence by the Borrower of Financial Indebtedness owing to any Subsidiary or the Parent if such indebtedness is subordinated (on terms and conditions satisfactory to the Lender) to all obligations owing by the Borrower under the Finance Documents, (ii) equity contributions by the Borrower to any Subsidiary, (iii) Investments in any person to the extent such person becomes a Subsidiary as a result of such Investment, (iv) acquisitions by the Borrower or any of its Subsidiaries of radio spectrum licenses for the deployment or operation of wireless telecommunications services in Brazil that are complementary or ancillary to the Borrower’s business, (v) Investments to the extent such Investment is made with the proceeds of a capital contribution from the Parent to the Borrower and the Lender shall have received evidence reasonably satisfactory to it of such capital

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contribution and its relationship to such Investment, (vi) Investments to the extent the Leverage Ratio for the two preceding Measurement Dates has been equal to or less than 1.75:1 and the Borrower shall have delivered to the Lender a certificate (in reasonable detail) of an officer of the Borrower demonstrating pro-forma compliance with all undertakings and financial covenants until the Termination Date after giving effect to such Investments, and confirming that no Default has occurred or is continuing or will arise by reason of such Investment, (vii) readily marketable direct obligations of the government of Brazil, (viii) time deposits maintained with the Lender or other financial institutions and maturing within twelve months from the date of acquisition thereof, (ix) demand deposits maintained in the ordinary course of business with the Lender or any other commercial banks maintaining deposit accounts in countries where the Borrower has operating facilities if such accounts with such other commercial banks are limited to amounts customary for working capital purposes for companies in the similar industry as the Borrower, (x) debt obligations maturing within twelve months of the time of acquisition thereof that from time to time are accorded a rating of BBB or better by Standard & Poor’s (or an equivalent rating by another recognized credit rating agency), and (xi) commercial paper maturing within twelve months of the time of acquisition thereof that from time to time are accorded a rating of BBB or better by Standard & Poor’s (or an equivalent rating by another recognized credit rating agency.

“Permitted Liens” means:

(a)	Liens for Taxes, assessments and governmental charges or levies that are not yet delinquent or due or that are being contested in good faith by appropriate action or proceedings, provided that adequate reserves in accordance with GAAP, with respect thereto are maintained on the books of the Borrower;
(b)	Liens to secure obligations arising from the bidding or acquisition of radio spectrum licenses that are complementary or ancillary to the Borrower’s business, auctioned by the applicable governmental authorities to the extent required by applicable rules, regulations or guidelines;
(c)	Liens imposed by operation of law;
(d)	Liens arising in the ordinary course of business not for borrowed money securing obligations that are not overdue for a period of more than 30 days;
(e)	purchase money Liens incurred in the ordinary course of business, which Liens shall not extend to property other than the property subject to the purchase money Liens;
(f)	Liens to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations;
(g)	Liens existing as of the Effective Date to the extent the amount secured by any such Lien is 1,000,000 Reais or below and existing Liens set forth by the Borrower on SCHEDULE 11 (Existing Liens);
(h)	easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes;

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(i)	Liens in favor of the Lender as collateral security for the Facilities.
(j)	Liens arising under leases of the Borrower or any of its Subsidiaries as lessee for its telecommunication towers, entered into in the ordinary course of business; and
(k)	Liens on property of a Subsidiary existing at the time such Subsidiary is merged into or consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the Borrower; provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary.

“Permitted Sale-leaseback Transactions” means any and all transactions or arrangements pursuant to which the Borrower and/or any of its Subsidiaries sells or otherwise transfers for value its telecommunications towers, cell sites and related equipment with an aggregate fair market value (as determined by the proceeds of the transfer of such assets) not to exceed $100,000,000 (which amount shall not include any proceeds received or to be received by the Borrower or any such Subsidiary for sale-leaseback transactions of such assets consummated prior to the Effective Date), and simultaneously with such transfer, agrees to lease back such assets, provided that: (a) the obligations under any such sale-leaseback transaction shall be deemed Financial Indebtedness; (b) such sale-leaseback transactions may not be entered into during the continuation of a Default; and (c) for any individual sale-leaseback transaction in excess of $ 10,000,000 or sale-leaseback transactions in the aggregate in excess of $ 20,000,000 in any calendar year, such proceeds received or to be received by the Borrower or any such Subsidiary for such sale-leaseback transactions shall be reinvested in the business of the Borrower or any such Subsidiary in its reasonable commercial judgment or used to repay the Facility.

“Prepayment Fee” means pursuant Sub-clause 7.4.1 with respect to the A Loan, the fees as set forth below:

Applicable Period	Amount of Prepayment Fee
From the Effective Date until the second anniversary of the Effective Date	1.25% of the aggregate principal amount prepaid
From the date immediately following the second anniversary of the Effective Date until the third anniversary of the Effective Date	1.00% of the aggregate principal amount prepaid
From the date immediately following the third anniversary of the Effective Date until the fourth anniversary of the Effective Date	0.75% of the aggregate principal amount prepaid
From the date immediately following the fourth anniversary of the Effective Date until the fifth anniversary of the Effective Date	0.50% of the aggregate principal amount prepaid
After the fifth anniversary of the Effective Date	None

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“PWC” means PricewaterhouseCoopers International Limited or any of its Subsidiaries (to the extent engaged in the auditing business).

“Quotation Day” means, in relation to any period for which an interest rate is to be determined, 2 Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Real” or “Reais” means the lawful currency of Brazil from time to time.

“Reference Banks” means three leading commercial banks active in the Relevant Interbank Market selected by the Lender.

“Relevant Interbank Market” means the London interbank market.

“Repayment Date” means: (a) for the A Loan, each Interest Payment Date occurring during the period commencing twenty one months from the Effective Date and ending on the twenty-second Interest Payment Date following the first Repayment Date, provided that the final Repayment Date shall be no later than the A Loan Termination Date; and (b) for the B Loan, each Interest Payment Date occurring during the period commencing twenty one months from the Effective Date and ending on the fourteenth Interest Payment Date following the first Repayment Date, provided that the final Repayment Date shall be no later than the B Loan Termination Date.

“Repayment Installment” means each installment for repayment of the Loans referred to in Clause 6.1 (Repayment of Loans).

“Repeating Representations” means all the representations set out in Article 17 (Representations) except for those representations that are made as of, or that relate to, a specific date, as set forth in Clause 17.22 (Repetition).

“ROF” means the SISBACEN system called Registration of Financial Transaction (“Registro de Operacao Financeira – ROF”) with Banco Central do Brasil.

“Screen Rate” means in relation to LIBOR, the British Bankers Association Interest Settlement Rate for dollars for a period of 3 months, displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Lender may specify another page or service displaying the appropriate rate after consultation with the Borrower.

“Security Documents” means the documents listed in SCHEDULE 6 (Security).

“Security Interest Agreement” has the meaning set forth on Schedule 6 (Security Documents).

“Share Pledge Agreement” has the meaning set forth on Schedule 6 (Security Documents).

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“Short-Term Intercompany Debt” means the short-term intercompany debt with a term of one year or less, such term being deemed to commence on the Effective Date (including any refinancing or renewal not exceeding the original principal amount thereof, provided that to the extent the term of such debt is or becomes longer than one year, such debt will be deemed Long-Term Intercompany Debt) incurred by the Borrower to the Parent or any consolidated Subsidiary of the Parent, from January 1, 2007 through the Effective Date, including the amount of any accrued but unpaid interest thereon and an amount sufficient to cover all withholding taxes required to be withheld under the laws of Brazil.

“Social Law” means (a) any law, rule or regulation applicable in Brazil concerning (i) labour, (ii) social security, (iii) the regulation of industrial relations (between government, employers and employees), (iv) the protection of occupational as well as public health and safety, (v) the regulation of public participation, (vi) the protection and regulation of ownership of land rights (both formal and traditional), immovable goods and intellectual and cultural property rights, (vii) the protection and empowerment of indigenous peoples or ethnic groups, (viii) the protection, restoration and promotion of cultural heritage, (ix) all other laws, rules and regulations providing for the protection of employees and citizens, (b) any applicable ILO convention signed and ratified by Brazil, as well as all ILO conventions listed as Core Labour Standards and Basic Terms and Conditions of Employment, and (c) any applicable United Nations treaty, convention or covenant on human rights signed and ratified by Brazil.

“Subsidiary” means in relation to any company or corporation, any person:

(a)	which is controlled, directly or indirectly, by the first mentioned company or corporation;
(b)	more than half the issued share capital of which is beneficially owned, directly or indirectly by the first mentioned company or corporation; or
(c)	which is a Subsidiary of another Subsidiary of the first mentioned company or corporation,

and for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body.

“Subsidiary Guarantee Agreement” means the Subsidiary Guarantee Agreement, dated as of the date hereof, by each Subsidiary of the Borrower.

“Subsidiary Quota Pledge Agreement” has the meaning set forth on Schedule 6 (Security Documents).

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“Termination Date” means collectively the A Loan Termination Date or the B Loan Termination Date, as the case may be.

“Transfer Certificate” means a transfer certificate in the form set out in SCHEDULE 4 (Transfer Certificate).

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“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under the Finance Documents.

“Utilization” means collectively an A Loan Utilization or a B Loan Utilization or both as the context may require.

“Utilization Date” means the date of a Utilization, being the date on which the relevant Loan is to be made.

“Utilization Request” means a notice substantially in the form set out in SCHEDULE 2 (Requests).

“VAT” means value added tax or tax of a similar nature in any relevant jurisdiction.

“Waiver Fee” means the waiver fee payable to the Lender pursuant to Clause 11.2 (Waiver Fee).

“World Bank” means any or all of the International Bank for Reconstruction and Development and affiliated institutions, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes, individually, or collectively, as the context may require.

“World Bank Standards” means the IFC Environmental and Social Sustainability Performance Standards and the World Bank and IFC Environmental, Health and Safety Guidelines as applicable to the operations, as listed in Schedule 13.

1.2 Construction

1.2.1 Unless a contrary indication appears any reference in this Agreement to:

(a)	any definition of or reference to a person acting in a particular capacity shall include its successors in such capacity;
(b)	“assets” includes present and future properties and rights of every description;
(c)	a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended or novated;
(d)	“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(e)	a “person” includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) of two or more of the foregoing;
(f)	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organization;

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(g)	a provision of law is a reference to that provision as amended or re-enacted;
(h)	a time of day is a reference to New York time, unless if in connection with the determination of LIBOR or related to the payment of principal and interest hereunder, in which case such reference is to London time;
(i)	the terms defined in this Agreement include the plural as well as the singular and vice versa;
(j)	words importing gender include all genders;
(k)	any reference to an Article, Clause, Sub-clause or Schedule refers to an Article, Clause, Sub-clause or Schedule to this Agreement;
(l)	any reference to “this Agreement” refers to this Agreement, including all Schedules hereto, and the words herein, hereof, hereto and hereunder and words of similar import refer to this Agreement and its Schedules as a whole and not to any particular Article, Clause, Sub-clause or Schedule or any other subdivision;

1.2.2	Article, Clause, Sub-clause and Schedule headings are for ease of reference only.
1.2.3	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.2.4	A Default (other than an Event of Default) is “continuing” if it has not been remedied or waived.

1.3	Currency Symbols and Definitions
	“$” and “dollars” denote lawful currency of the United States of America.
2.	THE FACILITIES
	Subject to the terms of this Agreement, the Lender makes available to the Borrower term facilities in dollars consisting of:

2.1.1	An A Loan in an aggregate amount of $ 45,000,000;
2.1.2	A B Loan in an aggregate amount of $ 255,000,000.

3.	PURPOSE
	The Borrower shall apply all amounts borrowed by it under the Facilities towards capital expenditures, general corporate purposes and the repayment of Short-Term Intercompany Debt.
4.	CONDITIONS OF UTILIZATION
4.1	Initial conditions precedent

4.1.1 The Borrower may not deliver a Utilization Request unless (a) no applicable

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	law or regulation shall restrain, prevent or, in the reasonable judgment of the Lender, impose materially adverse conditions upon the transactions contemplated hereby; (b) no circumstance, event or occurrence has taken place since December 31, 2006 that has or would be reasonably likely to have a Material Adverse Effect; (c) there shall not have occurred any circumstance, change or condition in the Loans syndication, financial or capital markets generally, nor a material adverse circumstance, change or condition in the economy of Brazil or in the market for loans to and debt securities of issuers in Brazil, since December 31, 2006, that, in the judgment of the Lender, could reasonably be expected to materially impair the syndication of the Facility contemplated hereby; and (d) the Lender has received all of the documents and other evidence listed in SCHEDULE 1 (Conditions precedent to initial utilization) in form and substance satisfactory to the Lender.
4.1.2	The Lender has entered into Participation Agreements with Participants for the acquisition by them of Participations in an aggregate amount equal to the full amount of the B Loan and those Participation Agreements are in full force and effect.
4.1.3	Notwithstanding any other provision of this Agreement, the Lender is not obliged to make:

(a)	any B Loan Utilization, except to the extent that the Lender shall have received from the Participants, in immediately available funds, funds for that B Loan Utilization in accordance with the Participation Agreement;
	and
(b)	any Utilization except pro rata from the A Loan and the B Loan in proportion to their respective amounts.

4.2	Further conditions precedent
	The Lender will only be obliged to make a Loan available to the Borrower if on the date of the Utilization Request and on the proposed Utilization Date:

4.2.1	no Default is continuing or would result from the proposed Loan;
4.2.2	the Repeating Representations to be made by the Borrower are true in all material respects;
and the Lender has received a certificate of an officer of the Borrower to this effect.

4.3	Maximum number of Loans
	The Borrower may deliver Utilization Requests for the Utilization of a maximum of six Loans.
5.	UTILIZATION
5.1	Delivery of a Utilization Request
	The Borrower may utilize a Facility by delivery to the Lender of a duly completed Utilization Request not later than ten Business Days before the proposed Utilization Date.

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5.2 Completion of a Utilization Request

5.2.1 Each Utilization Request is irrevocable and will not be regarded as having been duly completed unless:

(a)	the proposed Utilization Date is a Business Day within the Availability Period; and
(b)	the currency and amount of the Utilization comply with Clause 5.3 (Currency and Amount)

5.2.2 Only one Loan may be requested in each Utilization Request.

5.3 Currency and amount

5.3.1	The currency specified in a Utilization Request must be dollars.
5.3.2	The amount of the proposed Loan must be an amount which is not more than the Available Facility and which is a minimum of $ 20,000,000 or if less, the Available Facility.

5.4	Utilization
	Not later than 11:00 a.m. on the relevant Utilization Date, the Lender shall make available the amount of the Loan to the Borrower, by depositing dollars to the account specified by the Borrower in the relevant Utilization Request.
6.	REPAYMENT
6.1	Repayment of A Loan
	The Borrower shall repay the A Loan to the Lender in twenty-two (22) equal (as nearly as practicable) and consecutive quarterly installments of principal on each Repayment Date.
	Repayment of B Loan
	The Borrower shall repay the B Loan to the Lender, in fourteen (14) equal (as nearly as practicable) and consecutive quarterly installments of principal on each Repayment Date.
6.2	Re-borrowing
	The Borrower may not re-borrow any part of a Facility which is repaid.
7.	PREPAYMENT AND CANCELLATION
7.1	Illegality
	If it becomes unlawful in any applicable jurisdiction for Lender or any Participant to perform any of its obligations as contemplated by this Agreement or to fund or maintain any Loan or Participation:

7.1.1 The Lender shall promptly notify the Borrower upon becoming aware of that event whereupon the Lender shall have the option to (a) immediately cancel

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the Facilities (or in the case of such event relating to a Participant) immediately cancel the Relevant Participation (as defined in the Participation Agreement)); and/or (b) require the Borrower to repay the Loans (or in the case of the illegality relating to a Participant, a proportion of the B Loan which is equal to the Pro Rata Proportion (as defined in the Participation Agreement) made to the Borrower on the last day of the Interest Period for each Loan occurring after the Lender has notified the Borrower or, if required to be earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law).

7.2 Change of control and Material Adverse Effect

7.2.1 If (i) the Parent ceases to directly or indirectly control the Borrower, and/or (ii) any person or group of persons, other than the Parent or any of the Parent’s Subsidiaries, acting in concert gains control of the Borrower:

(a)	the Borrower shall immediately notify the Lender upon becoming aware of that event;
(b)	the Lender shall not be obliged to fund a Utilization;
(c)	the Lender may cancel the Available Facilities and declare all outstanding Loans, together with accrued interest and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facilities will be cancelled and all such outstanding amounts will become immediately due and payable.

7.2.2 For the purpose of Sub-clause 7.2.1 above “control” means:

(a) the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

(i)	cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the Borrower; or
(ii)	appoint or remove all, or the majority, of the directors or other equivalent officers of the Borrower; or
(iii)	give directions with respect to the operating and financial policies of the Borrower which the directors or other equivalent officers of the Borrower are obliged to comply with; or

(b)	the holding of more than one-half of the issued share capital of the Borrower (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).
(c)	for the purpose of Sub-clause 7.2.1 above “acting in concert” means, a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them, either directly or indirectly, of shares in the Borrower, to obtain or consolidate control of the Borrower.

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7.2.3 If a Material Adverse Effect occurs:

(a)	the Borrower shall promptly notify the Lender upon becoming aware of that event;
(b)	the Lender shall not be obliged to fund a Utilization during the pendency thereof;
(c)	the Lender may, by not less than 15 Business Days notice to the Borrower, cancel the Available Facilities and declare all outstanding Loans, together with accrued interest and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facilities will be cancelled and all such outstanding amounts will become immediately due and payable.

7.3 Voluntary cancellation

7.3.1	Subject to Clause 7.6 (Restrictions), the Borrower may, if it gives the Lender not less than 15 Business Days (or such shorter period as the Lender may agree) prior notice, cancel the whole or any part (being a minimum amount of $ 20,000,000 or integral multiples of $ 5,000,000 in excess thereof) of the Available Facility. Such cancellation shall be pro-rata as between the A Loan and the B Loan.
7.3.2	In the event that the Borrower cancels the whole or any part of the Available Facility in accordance with this Clause 7.3 (Voluntary Cancellation) it shall on the date of such cancellation, pay a cancellation fee equal to 1.25% of the aggregate principal amount of the A Loan subject to such cancellation. For the avoidance of doubt, any cancellation by the Borrower of the whole or any part of the Available Facility portion of the B Loan shall not be subject to any such cancellation fee.
7.3.3	Notwithstanding the foregoing, any undrawn amount of the Available Facility will automatically be cancelled upon the expiry of the Availability Period and the Borrower shall pay a cancellation fee of 1.25% of such undrawn amount of the A Loan, to be payable on the last day of the Availability Period.

7.4 Voluntary prepayment of Loans

7.4.1	Subject to Clause 7.6 (Restrictions) the Borrower may, if it gives the Lender not less than ten Business Days’ (or such shorter period as the Lender may agree) prior notice, prepay the whole or any part of any Loan (but if in part, being an amount that reduces the amount of such Loan by a minimum amount of $ 20,000,000, or integral multiples of $ 5,000,000 in excess thereof).
7.4.2	In the event that the Borrower prepays the whole or any part of the Loans in accordance with this Clause 7.4 (Voluntary prepayment of Loans) it shall on the date of such prepayment, pay a Prepayment Fee solely in respect of the A Loan so prepaid.
7.4.3	Loans may only be prepaid after the last day of the Availability Period.

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7.5	Allocations
	Amounts of principal prepaid under this Article 7 shall:

7.5.1	be allocated by the Lender pro rata between the A Loan and the B Loan in proportion to their respective principal amounts outstanding; and
7.5.2	thereafter, be applied by the Lender to satisfy the respective principal amounts outstanding under the A Loan and the B Loan, as appropriate, in inverse chronological order of maturity.

7.6 Restrictions

7.6.1	Any notice of cancellation or prepayment given by any Party under this Article 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
7.6.2	Any cancellation or prepayment pursuant to this Agreement shall be made together with accrued interest on the amount prepaid (in the case of a prepayment) and any other outstanding fees or costs including any cancellation fee or Prepayment Fee (in respect of the A Loan) and shall be subject to any Lender Break Costs (provided that no Lender Break Costs shall be payable in connection with any prepayments made on any Repayment Date) .
7.6.3	The Borrower may not re-borrow any part of a Facility which is prepaid pursuant to this Agreement. No amount of a Facility cancelled under this Agreement may be subsequently reinstated.
7.6.4	The Borrower shall not repay or prepay all or any part of the Loans or cancel all or any part of the Available Facility, except at the times and in the manner expressly provided for in this Agreement.

8.	INTEREST
8.1	Calculation of interest
	The rate of interest on each Loan for each Interest Period is the percentage rate per annum, which is the aggregate of:

8.1.1	The Applicable Margin; and
8.1.2	LIBOR.

8.2	Notification of rates of interest
	The Lender shall promptly notify the Borrower (in writing) of the determination of a rate of interest under this Agreement.
8.3	Payment of interest
	The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period.

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8.4 Default interest

8.4.1

Without limiting the remedies available to the Lender under any Finance Document or otherwise (and to the maximum extent permitted by applicable law), if the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at the Default Interest Rate. Any interest accruing under this Clause 8.4 shall be immediately payable by the Borrower on demand by the Lender or, if not demanded, on each Interest Payment Date falling after any such overdue amount became due.

8.4.2

If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(a)	the (first) Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(b)	the rate of interest applying to the overdue amount during that first Interest Period shall be the Default Interest Rate.

8.5	Mandatory Costs
	If applicable, the Lender may charge to the Borrower in addition to the interest determined under Clause 8.1 (Calculation of interest), the Mandatory Costs.

9.	INTEREST PERIODS
9.1	Duration of Interest Periods

9.1.1

The first Interest Period for a Loan shall begin at the Utilization Date for such Loan and end on the date falling immediately prior to the next occurring Interest Payment Date, other than where such Utilization Date is less than 30 days before the next occurring Interest Payment Date, in which case such Interest Period shall end on the date falling immediately prior to the second Interest Payment Date occurring after the Utilization Date. Thereafter, each subsequent Interest Period shall commence on that Interest Payment Date and end on the date falling immediately prior to the next occurring Interest Payment Date.

9.1.2

An Interest Period for a Loan shall not extend beyond the relevant Termination Date.

10.	CHANGES TO THE CALCULATION OF INTEREST
10.1	Absence of quotations
	Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11:00 a.m. on the Quotation Day, the applicable LIBOR shall be determined by the Lender on the basis of the quotations of the remaining Reference Banks.
10.2	Market disruption

10.2.1 If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on that Loan for that Interest Period shall be the rate per annum which is the sum of:

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(a)	the Applicable Margin;
(b)	the rate notified to the Borrower by the Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to the Lender of funding that Loan from whatever source it may reasonably select; and
(c)	the Mandatory Cost, if any.

10.2.2 In this Agreement “Market Disruption Event” means:

(a)	at or about 11:00 am, two Business Days before the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Lender to determine LIBOR for dollars and the relevant Interest Period; or
(b)	before close of business on the Quotation Day for the relevant Interest Period, the Lender determines that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR.

10.3	Lender Break Costs
	The Borrower shall, within five Business Days of demand of the Lender, pay to the Lender, Lender Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
11.	FEES
11.1	Commitment fee

11.1.1

The Borrower shall pay to the Lender, a commitment fee in dollars computed at the rate of 1.25% per annum on the unused amount of the Lender’s commitment under Article 2, for each day of the Availability Period.

11.1.2

The accrued commitment fee is payable in arrears on the first occurring Interest Payment Date following the first day of the Availability Period, on each Interest Payment Date thereafter during the Availability Period and on the first occurring Interest Payment Date after the Availability Period. If the Available Facility is cancelled in full, the accrued commitment fee is also payable to the Lender, on the date that such cancellation becomes effective.

11.2	Waiver fee
	The Borrower shall pay to the Lender, a waiver fee of $ 15,000 for any material waiver or amendment required to remedy the Borrower’s breach or potential breach of any term of the Finance Documents.
11.3	Other fees
	The Borrower agrees to pay to the Lender, fees in such amounts and at such times as are specified in the Fee Letter and this Agreement.

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12.	TAX GROSS UP AND INDEMNITIES
12.1	Definitions

12.1.1	In this Agreement:
	“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
	“Tax Payment” means either the increase in a payment made by the Borrower under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).

12.2 Tax gross-up

12.2.1	The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
12.2.2	The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender accordingly.
12.2.3	If a Tax Deduction required by law is to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
12.2.4	If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
12.2.5	Within 15 Business Days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Lender evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority, or at the request of the Lender any other information, documents and receipts that the Lender may reasonably require to establish that full and timely Tax Payment has been made.

12.3 Tax indemnity

12.3.1

The Borrower shall (within five Business Days of demand) indemnify the Security Agent and the Lender and each of its respective Affiliates, directors, officers, employees, attorneys and agents, for an amount equal to the loss, liability or cost, which the Security Agent and the Lender determine will be or has been (directly or indirectly) suffered for or on account of Tax by the Security Agent and the Lender in respect of a Finance Document.

12.3.2

Sub-clause 12.3.1 above shall not apply:

(a) with respect to any Tax assessed on either the Security Agent or the Lender:

(i) under the laws of the jurisdictions in which the Security Agent or the Lender are incorporated or, if different, the jurisdictions (or jurisdictions) in which the Security Agent or the Lender are treated as resident for tax purposes; or

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(ii) under the laws of the jurisdictions in which the Security Agent or the Lender are incorporated in respect of amounts received or receivable in that jurisdiction,

	if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Security Agent or the Lender; or
(b)	to the extent a loss, liability or cost is compensated for by an increased payment under Clause 12.2 (Tax gross-up) ; or
(c)	to the extent any Tax Payments or increased Tax Payments are caused by the Lender’s failure to provide the Borrower with documentation required by law to be provided in order to permit a reduced Tax Payment or the elimination of such Tax Payment.

12.3.3 If either of the Security Agent or the Lender make or intend to make a claim under Sub-clause 12.3.1 above, it shall promptly notify the Borrower of the event which will give rise to such claim and provide the Borrower with the particulars giving rise to such claim, including evidence that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority, or at the request of the Borrower, other information, documents and receipts that the Borrower may reasonably require to establish that a full and timely Tax Payment has been made.

12.4	Stamp taxes
	The Borrower shall pay and, within five Business Days of demand by the Security Agent or the Lender, indemnify the Security Agent and the Lender and each of its respective Affiliates, directors, officers, employees, attorneys and agents, against any cost, loss or liability the Security Agent and the Lender, as applicable, incur in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.5	VAT

12.5.1

All consideration expressed to be payable under a Finance Document by the Borrower shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply to the Borrower in connection with a Finance Document, the Borrower shall pay to the Security Agent and the Lender, (in addition to and at the same time as paying the consideration), an amount equal to the amount of the VAT incurred by it.

12.5.2

Where a Finance Document requires the Borrower to reimburse the Security Agent and the Lender for any costs or expenses, it shall also at the same time pay and indemnify the Security Agent and the Lender against all VAT incurred by the Security Agent and the Lender in respect of the costs or expenses to the extent that the Security Agent and the Lender reasonably determine that it is not entitled to credit or repayment of the VAT.

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12.6	Documentation of Taxes
	Upon reasonable request by the Borrower, the Lender shall promptly provide the Borrower with relevant documentation evidencing Taxes paid by the Lender relating to the Finance Documents, to the extent permitted by applicable regulations.
13.	INCREASED COSTS
13.1	Increased costs

13.1.1

Subject to Clause 13.3 (Exceptions) the Borrower shall, within five Business Days of a demand by the Lender, pay to the Lender, the amount of any Increased Costs incurred by the Lender or any Participant as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

13.1.2

In this Agreement “Increased Costs” means:

(a)	a reduction in the rate of return from the Facilities or on the Lender’s (or any Participant’s) overall capital;
(b)	an additional or increased cost; or
(c)	a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by the Lender or any Participant to the extent that it is attributable to a) the Lender having entered into a commitment or funding or performing its obligations under any Finance Document or b) on that Participant as result of that Participant having acquired its Participation.

13.2	Increased cost claims
	If the Lender intends to make a claim pursuant to Clause 13.1 (Increased costs) the Lender shall promptly submit in good faith to the Borrower a certificate as to the amount of such increased cost, specifying the particulars thereof.
13.3	Exceptions

13.3.1 Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

(a)	attributable to a Tax Deduction required by law to be made by the Borrower;
(b)	compensated for by Clause 12.3 (Tax indemnity)
(c)	compensated for by the payment of the Mandatory Cost; or
(d)	attributable to the willful breach by the Lender or any Participant of any law or regulation or any of the terms of the Finance Documents.

13.3.2 In this Clause 13.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 12.1 (Definitions).

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14.	OTHER INDEMNITIES
14.1	Currency indemnity

14.1.1 If any sum due from the Borrower under any Finance Document (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

(a)	making or filing a claim or proof against the Borrower;
	and/or
(b)	obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings.

The Borrower shall as an independent obligation, within five Business Days of demand by the Security Agent or the Lender, indemnify the Security Agent and the Lender against any cost, loss or liability arising out of or as a result of the conversion, including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to the Security Agent and the Lender at the time of its receipt of that Sum.

14.1.2 To the extent permitted by any applicable law, rule or regulation, the Borrower waives any right it may have in any jurisdiction to pay any amount under any Finance Document in a currency or currency unit other than that in which it is expressed to be payable.

14.2 Other indemnities

14.2.1 The Borrower shall, within five Business Days of demand, indemnify the Security Agent and the Lender and each of its respective Affiliates, directors, officers, employees, attorneys and agents (each an “Indemnified Party”) from and against, and agrees to hold it harmless against, any and all claims, damages, losses, liabilities, obligations, penalties, actions, judgments, suits, costs and expenses of any kind, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with the administration of this Agreement, except to the extent such claim, damage, loss, liability, obligation, penalty, action, judgment, suit, cost or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct,

(a) including (i) the occurrence of any Event of Default; (ii) a failure by the Borrower to pay any amount due under any Finance Document on its due date; (iii) funding, or making arrangements to fund, its participation in a Loan requested by the Borrower in a Utilization Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by the Lender or any Participant); or (iv) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower); or

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(b) relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to this Agreement or any of the other Finance Documents or the transactions contemplated hereby or thereby or any use made or proposed to be made with the proceeds of the Loan, whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its shareholders or creditors, an Indemnified Party or any other Person, or an Indemnified Party is otherwise a party thereto, and whether or not any of the conditions precedent set forth in SCHEDULE 1 (Conditions Precedent) are satisfied or the other transactions contemplated by this Agreement are consummated.

14.2.2 The Borrower agrees not to assert any claim against any Indemnified Party, on any theory of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to this Agreement or any of the other Finance Documents or any of the transactions contemplated hereby or thereby or the actual or proposed use of the proceeds of the Loan. The obligations of the Borrower under this Clause 14.2 shall survive the termination of this Agreement, the repayment of the Loan and the resignation or removal of the Security Agent.

15.	MITIGATION BY THE LENDER AND PARTICIPANTS
15.1	Mitigation

15.1.1	The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Article 12 (Tax gross-up and indemnities), Article 13 (Increased costs) or paragraph (3) of SCHEDULE 3 (Mandatory Cost Formulae) including (but not limited to) transferring its rights and obligations under the Finance Documents.
15.1.2	The Lender shall ensure in the Participation Agreement that each Participant be bound by Sub-clause 15.1.1.
15.1.3	The Lender’s or any Participant’s failure to comply with Clause 15.1 (Mitigation) above shall not in any way limit the obligations of the Borrower under any of the Finance Documents.

15.2 Limitation of liability

15.2.1	The Borrower shall indemnify the Lender for all out-of-pocket costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation).
15.2.2	The Lender is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the good faith opinion of the Lender (upon consultation with the Borrower), to do so might be prejudicial to it.

15.3	LEFT INTENTIONALLY BLANK
16.	COSTS AND EXPENSES
16.1	Amendment costs
	If (a) the Borrower requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 27.8 (Change of currency), the Borrower shall, within five Business Days of demand, reimburse the Security Agent and the Lender for the amount of all out-of-pocket costs and expenses (including reasonable legal fees) incurred by the Security Agent and the Lender in responding to, evaluating, negotiating or complying with that request or requirement.

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16.2	Enforcement costs
	The Borrower shall, within three Business Days of demand, pay to the Security Agent and the Lender the amount of all out-of-pocket costs and expenses (including legal fees and any travel expenses) incurred by the Security Agent and the Lender in connection with the enforcement of, or the preservation of any rights under, any Finance Document.
16.3	Ongoing costs
	The Borrower shall within five Business Days on demand pay to the Security Agent and the Lender, the amount of all out-of-pocket costs and expenses (including reasonable legal fees and any travel expenses, provided the Borrower shall not be required by this Clause 16.3 (Ongoing costs) to pay travel expenses in excess of $ 15,000 in any calendar year) incurred in the aggregate by the Security Agent or the Lender in connection with monitoring the Loans under this Agreement including any inspection or access permitted under Clause 20.10 (Access), provided further that the Security Agent shall only incur travel expenses under this Clause 16.3 with the consent of the Lender.
17.	REPRESENTATIONS
	The Borrower makes the representations and warranties set out in this Article 17 (Representations) to the Security Agent and the Lender on the date of this Agreement.
17.1	Status

17.1.1	It is a limited liability company, duly incorporated and validly existing under the law of its jurisdiction of incorporation.
17.1.2	It has the power to own its assets and carry on its business as it is being conducted.

17.2	Binding obligations
	The obligations expressed to be assumed by the Obligors in each Finance Document are, subject to any general principles of law as at the date of this Agreement limiting its obligations which are referred to in any legal opinion delivered pursuant to Article 4 (Conditions of Utilization), legal, valid, binding and enforceable obligations.
17.3	Non-conflict and non-violation
	The entry into, delivery and performance by the Obligors of, and the transactions contemplated by, the Finance Documents do not and will not:

17.3.1 conflict with or violate any law or regulation applicable to it;

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17.3.2	conflict with its constitutional documents;
17.3.3	conflict with any or violate any agreement or instrument binding upon it or any of its assets or any material contractual obligation, in each case where the liability thereunder of the relevant Obligor is in excess of $ 10,000,000; or
17.3.4	result in the creation of any Lien on any of its assets other than as collateral security for the Facilities.

17.4	Power and authority
	It has the power to enter into, perform and deliver, and has taken all necessary action to authorize its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
17.5	Authorizations
	All Authorizations which are necessary or advisable for (a) the execution, delivery or performance of the Finance Documents or any agreement or instrument required hereunder or thereunder, (b) the legality, validity, enforceability and admissibility in evidence hereof or thereof, (c) the Utilizations hereunder or (d) the payment by the Borrower of all sums which it may be liable to pay under the Finance Documents, have been duly effected, completed and/or obtained and are in full force and effect, including, but not limited to, the electronic registration of the financial terms of this Agreement with Banco Central do Brasil by means of ROF and all related authorizations, registrations (or amendments thereof) and communications from, with or in respect of ROF and/or any department of Banco Central do Brasil which may be required prior to each Utilization hereunder by the applicable regulations of Brazil, which has been made and is in full force and effect, or shall be made or be in full force and effect prior to such Utilization, except for the registration of each Utilization and the related schedules of payment (“esquemas de pagamento”) with respect thereto with Banco Central do Brasil, which the Borrower shall promptly effect after the entrance of such Utilization into Brazil.
17.6	Governing law and enforcement

17.6.1 In any proceedings in Brazil to enforce this Agreement, the choice of New York law as the governing law hereunder will be recognized by the Courts of Brazil and such law will be applied, the irrevocable submissions of the Borrower to the non-exclusive jurisdiction of the courts of the State of New York and the courts of the United States of America in New York and the appointment by the Borrower of the Process Agent are legal, valid, binding and enforceable; and any judgment obtained in New York will be recognized and enforceable against the Borrower and its assets in Brazil after having been duly ratified by the Superior Court of Justice (Superior Tribunal de Justiça) of Brazil; such ratification by the Superior Court of Justice of Brazil will occur if the court decision (i) complies with all formalities required for the enforcement thereof under the laws of the jurisdiction in which it was rendered and does not violate due process; (ii) was issued by a competent court in such jurisdiction after valid service of process upon the parties to the action, or after sufficient evidence of the parties’ absence has been given in accordance with the applicable law of such jurisdiction; (iii) is not subject to appeal or re-examination of any other nature by any court or authority in the

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	jurisdiction it was rendered; (iv) is not against public policy, national sovereignty or good morals of Brazil (as provided for in Article 17 of the Law of Introduction to the Brazilian Civil Code); and (v) is duly authenticated by the competent consulate of Brazil in the jurisdiction where it is issued and is accompanied by a translation thereof into Portuguese made by a public sworn translator certified in Brazil.
17.6.2	Subject to Sub-clause 17.6.3 below, the Finance Documents are in proper legal form under the laws of Brazil and are capable of enforcement in the courts of Brazil.
17.6.3	Except as provided in Clause 20.12, there is no requirement to file, register or otherwise record this Agreement or any instrument or agreement required hereunder in any public office or elsewhere in Brazil to ensure the validity, legality, effectiveness, enforceability or admissibility in evidence hereof or thereof, except for (i) the notarization of the signature of the parties to this Agreement by a notary public licensed under the laws of the place of signing, (ii) the consularization of the signature of such notary public in the appropriate Brazilian consulate; (iii) the registration of this Agreement, together with a sworn translation of this Agreement into the Portuguese language, with the appropriate Registry of Deeds and Documents, which registration can be made at any time prior to the enforcement thereof in Brazil; and (iv) the registration of the Security Documents that are governed by Brazilian law in accordance with the provisions of such agreements.
17.6.4	There is no requirement for the Lender to register or be licensed or qualified with any governmental authority solely by reason of execution and performance of the Finance Documents.

17.7	Tax Deduction
	It is not required to make any Tax Deduction from any interest and fee payment and repayment it may make under any Finance Document.
17.8	No default

17.8.1	No Default or Event of Default exists under the Finance Documents or might reasonably be expected to result from the making of any Utilization.
17.8.2	No other event or circumstance is outstanding which constitutes an event of default (however defined) under any other agreement or instrument which is binding on it or to which its assets are subject, which might have a Material Adverse Effect.

17.9 Financial statements

17.9.1	The audited consolidated financial statements of the Parent as of the end of and for the year ending December 31, 2006, reported on by PWC, copies of which have been furnished to the Lender, were prepared in accordance with GAAP consistently applied and fairly represent the financial condition and operations of the Parent during the relevant financial year.
17.9.2	The consolidated financial statements of the Borrower as of the end of and for the year ending December 31, 2006, copies of which have been furnished to the Lender, were prepared in accordance with GAAP consistently applied and fairly represent the financial condition and operations of the Borrower during the relevant financial year.

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17.9.3	The consolidated financial statements of Nextel S.A. as of the end of and for the year ending December 31, 2006, copies of which have been furnished to the Lender, were prepared in accordance with GAAP consistently applied and fairly represent the financial condition and operations of Nextel S.A. during the relevant financial year.
17.9.4	Since December 31, 2006, there has been no circumstance, event or occurrence that has had or is reasonably likely to have a Material Adverse Effect.

17.10	No misleading information
	The information, reports, financial statements, exhibits and schedules contained in the Information Memorandum, taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading on the date as of which such information is stated or certified; and if any of such information, reports, financial statements, exhibits and schedules shall become materially untrue or misleading, the Borrower shall promptly inform the Lender thereof. All written information furnished on or after the date hereof by the Borrower to the Lender in connection with this Agreement, the Finance Documents, the Borrower’s information memorandum provided in connection with the Facilities and the transactions contemplated hereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to the Borrower that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished by the Borrower to the Lender for use in connection with the transactions contemplated hereby.
17.11	Pari passu ranking
	The obligations and liabilities of the Borrower under the Finance Documents shall constitute direct, unconditional and unsubordinated obligations of the Borrower and shall rank at least pari passu with all other existing or future unsubordinated Financial Indebtedness of the Borrower.
17.12	No proceedings pending or threatened
	No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency or governmental, regulatory or other investigations, proceedings or disputes which, if adversely determined, would be likely to have a Material Adverse Effect (to the best of its knowledge and belief) have been started or threatened against any Obligor.
17.13	Taxation

17.13.1 It has duly and punctually paid and discharged all Taxes imposed upon it or its assets within the time period allowed without incurring penalties (save to the extent that (i) payment is being contested in good faith, (ii) it has maintained adequate reserves for those Taxes in accordance with GAAP and (iii) payment can be lawfully withheld).

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17.13.2

It is not materially overdue in the filing of any Tax returns.

17.13.3

Except as otherwise disclosed to the Lender prior to the Effective Date, to the best knowledge of the Borrower (after due investigation), no claims are being or are reasonably likely to be asserted against it with respect to Taxes (save to the extent that (i) payment is being contested in good faith, (ii) it has maintained adequate reserves for those Taxes in accordance with GAAP and (iii) such payment can be lawfully withheld).

17.14	Commercial Activity; No Immunity
	The Borrower is subject to civil and commercial law with respect to its obligations under the Finance Documents, and the making and performance of the Finance Documents by the Borrower constitute private and commercial acts rather than public or governmental acts. In any proceedings taken in its jurisdiction of incorporation in relation to the Finance Documents, it will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process.
17.15	Good Title to Assets; Liens
	It has a good, valid and marketable title to, or valid leases or licenses of, and all appropriate Authorizations to use, the assets necessary in any material respect to carry on its business as presently conducted (the Nextel brand name being deemed a materially necessary asset). None of the assets of the Obligors are subject to any Liens except Permitted Liens.
17.16	Compliance with Laws
	It has not violated nor breached any law to which it may be subject, which has resulted in or could reasonably be expected to result in, a Material Adverse Effect.
17.17	Corporate Governance
	It has performed and observed in all material respects all requirements as set out in SCHEDULE 8 (Corporate Governance Guidelines).
17.18	Regulation

17.18.1	The Borrower is not required to register as an “investment company” under the U.S. Investment Company Act of 1940, as amended.
17.18.2	No part of the proceeds of the Loans will be used for the purpose (whether immediate, incidental or ultimate) of buying or carrying any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

17.19

Security Interest in Collateral

The Security Documents create legal and valid Liens on all the Collateral in favor of the Security Agent or the Lender, as applicable and such Liens constitute perfected and continuing Liens on such Collateral, securing the obligations of the Borrower under the Finance Documents, enforceable against the Borrower and all third parties, and having priority over all other Liens on such Collateral, except to the extent, if any, expressly set forth in the Security Documents.

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17.20	Environmental and Social Compliance
	Each of the Obligors have in all material respects complied with all Environmental and Social Requirements where failure to do so might reasonably be expected to have a Material Adverse Effect.
17.21	Environmental and Social Claims
	No Environmental and Social Claim has been commenced or (to the best of its knowledge and belief) is threatened against any Obligor where that claim, if determined against such Obligor, would be reasonably likely to have a Material Adverse Effect.
17.22	Repetition
	The Repeating Representations are deemed to be made by the Borrower (by reference to the facts and circumstances then existing) on the date of each Utilization Request and the first day of each Interest Period (except for the representations in Clauses 17.3 and 17.5 which are deemed to be repeated by the Borrower solely on the date of each Utilization Request and the representation in Clause 17.7 which is deemed to be made by the Borrower solely on the Effective Date).
18.	INFORMATION UNDERTAKINGS
	The undertakings in this Article 18 (Information undertakings) remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents.
18.1	Financial statements
	The Borrower shall supply to the Lender in the English language:

18.1.1

as soon as the same become available, but in any event within 120 days after the end of each of its financial years, the audited consolidated financial statements of the Parent, prepared in accordance with GAAP (which obligation may be satisfied by delivery of the Parent’s annual report in Form 10-K filed by the Parent with the U.S. Securities and Exchange Commission); and the consolidated financial statements of Nextel S.A. and the consolidated financial statements of the Borrower, both prepared in accordance with GAAP.

18.1.2

as soon as the same become available, but in any event within 45 days after the end of each quarter of each of its financial years, the consolidated financial statements of the Borrower and the consolidated financial statements of Nextel S.A. for that period.

18.2 Compliance Certificate

18.2.1 The Borrower shall supply to the Lender, with each set of financial statements delivered pursuant to Clause 18.1 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Article 19 (Financial covenants) as at the date of such financial statements.

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18.2.2 Each Compliance Certificate shall be signed by two officers (of which one shall be the Chief Financial Officer) of each of the Borrower and Nextel S.A. and shall be reported on by PWC in the form of Schedule 5 (Form of Compliance Certificate).

18.3 Requirements as to financial statements

18.3.1	Each set of financial statements of the Borrower delivered by the Borrower pursuant to Clause 18.1 shall be certified by the CFO or Treasurer of the Borrower as fairly representing its financial condition as at the date of such financial statements.
18.3.2	The Borrower shall procure that each set of its financial statements delivered pursuant to Clause 18.1 is prepared using GAAP, and accounting practices and financial reference periods consistent with those applied in the preparation of the financial statements referenced in Sub-clause 17.9.2. If, in relation to any set of financial statements there has been a change in GAAP, or the accounting practices or reference periods, the Borrower agrees to disclose in the footnotes to those financial statements that there has been a change in GAAP, or the accounting practices or reference periods and to quantify the impact of such change(s), if material, to enable the Lender to determine whether Article 19 (Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements.
	Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the financial statements referenced in Sub-clause 17.9.2 were prepared.
18.3.3	The Borrower shall procure that the financial statements of Nextel S.A. delivered pursuant to Clause 18.1.1 shall be accompanied by a letter addressed to the Lender, substantially in the form of Schedule 17 (Certification Letter).

18.4 Environmental and Social reporting

18.4.1	The Borrower shall as soon as it is available, but in any event no later than the date it has to deliver its audited consolidated annual statements in accordance with Sub-clause 18.1.1, deliver to the Lender the Annual Environmental and Social Monitoring Report in the form set out in SCHEDULE 16.
18.4.2	The Borrower shall inform the Lender as soon as reasonably practicable upon becoming aware of:

(a)	any Environmental and Social Claim being commenced against any Obligor; or
(b)	any facts or circumstances which will or are reasonably likely to result in any Environmental and Social Claim being commenced or threatened against any Obligor, where the Environmental and Social Claim, if determined against the relevant Obligor, would be reasonably likely to have a Material Adverse Effect.

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18.4.3 The Borrower shall promptly, but in any event within five Business Days of the occurrence of any of the events set out in this Clause 18.4, supply to the Lender (a) details of any incident or accident (including without limitation any explosion, spill or workplace accident which results in death, serious or multiple injuries or material environmental contamination) or any material incident of a social nature (including without limitation any violent labour unrest or material dispute with local communities) occurring on or nearby any site, plant, equipment or facility of any Obligor which has or is reasonably likely to have a Material Adverse Effect on the environment, health and safety and social and/or cultural context together with, in each case, a specification of the nature of the incident or accident and the on-site and off-site effects of such events and (b) details of any action the Borrower proposes to take in order to remedy the effects of these events, and shall keep the Lender informed about any progress in respect of such remedial action.

18.5	Information: miscellaneous
	The Borrower shall supply to the Lender:

18.5.1	promptly upon becoming aware of them, reasonable details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Obligor, and which might, if adversely determined, have a Material Adverse Effect;
18.5.2	promptly, such further information regarding the financial condition, business and operations of any Obligor as the Lender may reasonably request; and
18.5.3	as soon as possible after the date of this Agreement its assigned VAT number and any other details in respect thereof.
18.5.4	annually, commencing in the first quarter of 2009, the updated “base case” business plan of the Borrower.

18.6 Notification of default

18.6.1 The Borrower shall notify the Security Agent and the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

19.	FINANCIAL COVENANTS
	The covenants set forth in (a) through (c) below shall be calculated as of each Measurement Date, and at all times:

(a)	the Leverage Ratio shall be equal to or less than 3.50:1;
(b)	the Debt Service Coverage Ratio shall be equal to or greater than 1.50:1; and
(c)	the Consolidated Net Worth of Nextel S.A. shall be equal to or greater than 786.2 million Reais.

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20.	POSITIVE UNDERTAKINGS
	The undertakings in this Article 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents.
20.1	Maintenance of Existence and Property
	The Borrower will, and will cause each of its Subsidiaries to (a) preserve and maintain its corporate existence and (b) maintain all of its property used or useful in its business in good working order and condition, ordinary wear and tear excepted, except to the extent such failure to maintain such property could not reasonably be expected to have a Material Adverse Effect.
20.2	Authorizations
	The Borrower shall, and shall cause each of its Subsidiaries to promptly:

(a)	obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)	supply certified or authenticated copies to the Lender of,

	any Authorization which is necessary or advisable in the reasonable opinion of the Lender for (a) the execution, delivery or performance of the Finance Documents or any agreement or instrument required hereunder or thereunder, (b) the legality, validity, enforceability and admissibility in evidence hereof or thereof, (c) the borrowings hereunder or (d) the payment by the Borrower of all sums which it may be liable to pay under the Finance Documents, except to the extent the failure to obtain, comply and maintain such Authorizations could not reasonably be expected to have a Material Adverse Effect.
20.3	Compliance with Laws
	The Borrower shall, and shall cause each of its Subsidiaries to comply in all respects with all laws to which it may be subject, if failure to so comply would materially impair its ability to perform its obligations under the Finance Documents or could reasonably be expected to have a Material Adverse Effect.
20.4	Performance under Agreements
	The Borrower shall, and shall cause each of its Subsidiaries to perform under each agreement or instrument which is binding on it or to which its assets are subject, except where the failure to so perform could not reasonably be expected to have a Material Adverse Effect.
20.5	Keeping of Books
	The Borrower will, and will cause each of its Subsidiaries to keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each of its Subsidiaries in accordance with GAAP.
20.6	Insurance

20.6.1 The Borrower shall, and shall cause each of its Subsidiaries to:

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(a)	maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks and to the extent as is usual for companies carrying on the same or substantially similar business including, but not limited to, the insurances listed in SCHEDULE 10 (Insurances) and any other insurances as may be required by law;
(b)	reinvest 100% of the net proceeds of insurance proceeds, to the extent greater than $ 5,000,000, in replacement or repair of the relevant assets utilizing reasonable commercial judgment;
(c)	ensure that all premiums are paid on time and other obligations of the Borrower and each of its Subsidiaries under the insurance policies are duly complied with, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and
(d)	not do or omit to do, or permit to be done or not done, anything which might materially prejudice any of its rights or the rights of the Lender to claim or recover under any insurance policy.

20.6.2 On and at any time after the occurrence of an Event of Default the Borrower and each of its Subsidiaries may only apply insurance proceeds for any claim in accordance with reasonable directions given to it by the Lender.

20.7 Environmental and Social Compliance; Environmental and Social Monitoring

20.7.1

The Borrower shall procure that it diligently designs, constructs, operates and maintains all of its plants, sites and equipment in a safe, efficient and business-like manner, and shall and the Borrower shall ensure that each of its Subsidiaries shall comply in all material respects with all Environmental and Social Requirements and take all reasonable steps in anticipation of known or expected future changes to or obligations under the same, except to the extent such failure to comply could not reasonably be expected to have a Material Adverse Effect.

20.7.2

The Borrower shall permit the Lender and/or consultants or other professional advisers and contractors of the Lender, upon reasonable prior notice, free access at reasonable business hours and on reasonable notice at the cost of the Borrower to (a) carry out environmental and/or social monitoring visits and/or audits; (b) view the premises of the Borrower and each of its Subsidiaries; and (c) meet and discuss matters with senior management employees of the Borrower as they become available.

20.8	Corporate governance
	The Borrower shall comply in all material respects with the corporate governance guidelines set out in SCHEDULE 8 (Corporate Governance Guidelines) to the extent applicable to a limited liability company (“sociedade limitada”).
20.9	Taxation
	The Borrower shall, and shall cause each of its Subsidiaries to duly and punctually pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties (save to the extent that (i) payment is being contested in good faith, (ii) adequate reserves are being maintained for those Taxes in accordance with GAAP and (iii) where such payment can be lawfully withheld).

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20.10	Access
	The Borrower shall, and shall cause each of its Subsidiaries, upon reasonable prior notice and reasonable request (which shall not be required during the occurrence and continuation of a Default), to permit the Lender and/or accountants or other professional advisers and contractors of the Lender free access at all reasonable times and on reasonable notice (at the cost of the Borrower only upon the occurrence and continuation of a Default) to (a) inspect and take copies and extracts from the books, accounts and records of the Borrower, its Subsidiaries and the Parent; (b) view the premises of the Borrower, its Subsidiaries and the Parent; and (c) meet and discuss matters with senior management employees of the Borrower as they become available.
20.11	Ranking
	The Borrower will, and will cause each of its Subsidiaries to promptly take all actions as may be necessary to ensure that the obligations and liabilities of the Borrower under the Finance Documents will at all times constitute direct, unconditional and unsubordinated obligations of the Borrower and shall rank at least pari passu with all other existing or future unsubordinated Financial Indebtedness of the Borrower.
20.12	Registration of Agreement
	Prior to each Utilization hereunder, the Borrower shall register the financial conditions of this Agreement with Banco Central do Brasil by means of ROF, in accordance with the applicable rules and regulations of Banco Central do Brasil and shall take each and all other necessary measures relating to the ROF registration and/or the requirements of Banco Central do Brasil. Upon the entrance of the funds into Brazil in respect of such Utilization, the Borrower shall proceed with the registration with Banco Central do Brasil of the schedules of payments with respect thereto, so as to permit payment of the principal, interest, fees, commissions and expenses duly provided for in the Loan due under this Agreement, in accordance with the terms of this Agreement. Unscheduled and unregistered payments shall be subject to special authorization of the Banco Central do Brasil in order to be remitted. So long as the Loan is outstanding hereunder, the Borrower shall ensure that the ROF registration thereof is in full force and effect.
20.13	Subsidiary Guarantee Agreement Joinder
	From time to time, the Borrower will cause any entity that becomes a Subsidiary of the Borrower to immediately become a party to the Subsidiary Guarantee Agreement by execution of a joinder.
20.14	Hedge Agreements
	As of each Measurement Date, the Borrower will provide the Lender with a report, setting forth in reasonable detail its interest rate and currency exposure and all relevant information on any current or proposed Hedge Agreements.
20.15	Intercompany Debt
	The Borrower shall, at all times, cause the Long-Term Intercompany Debt to be subordinated to the payment in full of the Facilities, on terms and conditions reasonably satisfactory to the Lender.

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20.16	Recourse Transactions
	The Borrower and its Subsidiaries may sell, transfer or otherwise dispose of any receivables on recourse terms, provided that if the Borrower or any of its Subsidiaries sell, transfer or otherwise dispose of receivables in excess of 10% of its outstanding receivables in any single transaction or series of related transactions, the Borrower shall deliver to the Lender a certificate (in reasonable detail) of an officer of the Borrower demonstrating pro-forma compliance with all undertakings and financial covenants until the Termination Date after giving effect to such transactions, and confirming that no Default has occurred or is continuing or would arise thereby.
20.17	PWC
	The Borrower shall only employ PWC or other auditors of similar reputation and standing.
20.18	Debt Service Reserve Account

20.18.1

The Borrower shall cause the Debt Service Reserve Account to be (and shall remain) funded on the date of the first Utilization in Dollars in an amount equal to the Debt Service Reserve Amount. The Borrower’s failure to cause the Debt Service Reserve Account to be funded in an amount equal to the Debt Service Reserve Amount at any time thereafter shall be deemed an Event of Default under Clause 22.1 (Non-payment).

20.18.2

Upon the occurrence of an Event of Default, the Security Agent shall cause all funds in the Debt Service Reserve Account to be paid to the Lender for application in accordance with Clause 27.4 (Partial payments).

20.19	Translation and Registration
	The Borrower shall provide the Lender with a registration of this Agreement, the Guarantee Agreements, the Intercompany Loans Pledge and Subordination Agreement and the Security Interest Agreement, together with sworn translations of such agreements into Portuguese language, with the appropriate Registry of Deeds and Documents (Cartório de Registro de Títulos e Documentos) to the Lender’s satisfaction, within ninety (90) days of the Effective Date or prior to the second Utilization, whichever occurs first. In the event of any discrepancy or inconsistency between the Portuguese and English language versions of this Agreement, the English language version shall prevail.
21.	NEGATIVE UNDERTAKINGS
	The undertakings in this Article 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents.

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21.1 Negative pledge

21.1.1

The Borrower shall not, and shall not permit any of its Subsidiaries to create or permit to subsist any Lien other than Permitted Liens over any of its assets.

21.1.2

Except as provided in Sub-clause 21.2.2, the Borrower shall not, and shall not permit any of its Subsidiaries to sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by any other person (other than the Borrower or any of its Subsidiaries) in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

21.2 Disposals

21.2.1	The Borrower shall not, and shall not permit any of its Subsidiaries to enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.
21.2.2	Sub-clause 21.2.1 above does not apply to any sale, lease, transfer or other disposal:

(a)	made in the ordinary course of trading of the disposing entity;
(b)	of assets in exchange for other assets comparable or superior as to type, value and quality;
(c)	of assets that are obsolete in the Borrower’s line of business;
(d)	Permitted Sale-leaseback Transactions;
(e)	as permitted under Clause 21.5 (Mergers);
(f)	as permitted under Clause 20.16 (Recourse Transactions); or
(g)	any other dispositions of assets after the date hereof, provided the aggregate amount received by the Borrower and any of its Subsidiaries in respect of all such dispositions under this clause (g) is equal to or less than $ 10,000,000 in any 12-month period and equal to or less than $ 40,000,000 over the term of the Facility.

21.3	Investments
	The Borrower will not, and will not permit any of its Subsidiaries to make any Investments, except for Permitted Investments.
21.4	Dividends and Intercompany Loans

21.4.1 The Borrower shall not, without the prior written consent of the Lender pay, make or declare any distribution of profit, dividend or other distribution (in cash or otherwise) (a “Dividend”) in respect of any financial year of the Borrower unless the Leverage Ratio for the two preceding Measurement Dates has been equal to or less than 1.75:1 and the Lender has received a certificate (in reasonable detail) of an officer of the Borrower demonstrating pro-forma compliance with all undertakings and financial covenants until the Termination Date and confirming that no Default has occurred or is continuing; provided that no such Dividend may be so paid, made or declared if a Default related to payment has occurred or is continuing, or a Default or Event of Default under Clause 22.2 has occurred or is continuing.

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21.4.2 The Borrower shall not make any loans to the Parent or any of the Parent’s Affiliates or Subsidiaries, unless the Borrower has complied with Sub-clause 21.4.1 as if such loan were a Dividend.

21.5	Merger
	The Borrower will not, and will not permit any of its Subsidiaries to change its corporate structure or enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or sell or otherwise transfer all or substantially all of its assets to any other person or persons, whether in one transaction or in a series of related transactions; provided, however, that (a) the Borrower may be merged with or into any of its Subsidiaries or any other person provided that: (i) the Borrower is the continuing or surviving Person, (ii) no Change in Control pursuant to Clause 7.2 results and after giving effect thereto, (iii) no Default has occurred and is continuing and no Default will occur after giving effect thereto, (iv) the Borrower has delivered to the Lender a certificate (in reasonable detail) of an officer of the Borrower demonstrating pro-forma compliance with all undertakings and financial covenants until the Termination Date and (v) in the case of a merger with or into a person other than a Subsidiary, the Borrower shall have delivered to the Lender a full business plan; or (b) in the case of a merger of any of the Borrower’s Subsidiaries, that: (i) such Subsidiary is the surviving entity, (ii) no Change in Control with respect to such Subsidiary occurs as a result of such merger, (iii) no Default has occurred and is continuing and no Default will occur after giving effect thereto and (iv) the Borrower has delivered to the Lender a certificate (in reasonable detail) of an officer of the Borrower demonstrating pro-forma compliance with all undertakings and financial covenants until the Termination Date.
21.6	Change of business
	The Borrower will not engage in any material way in any business other than telecommunications business and other businesses incidental thereto or in which it is not uncommon for groups of companies at present generally engaged in the telecommunication business to become engaged.
21.7	Arm’s length basis
	The Borrower shall not, and shall not permit any of its Subsidiaries, without the prior written consent of the Lender, to enter into any transaction with any person or enter into or continue business relations with its quotaholders, employees, Affiliates and/or Subsidiaries except on proper commercial terms negotiated at arms’ length.
21.8	Excluded Activities
	The Borrower shall not, and shall not permit any of its Subsidiaries to engage in any of the excluded activities as listed in Schedule 9 (Excluded Activities).

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21.9	Limitations on Financial Indebtedness
	The Borrower shall not, and shall not permit any of its Subsidiaries to incur any incremental Financial Indebtedness if the Borrower fails to meet the financial covenants set forth in Article 19 as of any date.
22.	EVENTS OF DEFAULT
	Each of the events or circumstances set out in this Article 22 is an Event of Default.
22.1	Non-payment
	The Borrower does not pay when due (whether at stated maturity, by acceleration or otherwise) any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable within three Business Days of when due.
22.2	Covenants
	The Borrower shall fail to perform or observe any of its obligations under Clauses 18.1, 18.2, 18.3, Article 19, or Clauses 20.1(a), 20.10, 20.11, 21.1, 21.2, 21.3, 21.4, 21.5, 21.6, 21.7, 21.8 and 21.9.
22.3	Other obligations

22.3.1	The Borrower does not comply with any provision of the Finance Documents (other than those referred to in Clause 22.1 (Non-payment) and Clause 22.2 (Covenants)); or Nextel S.A. or any of the Subsidiaries of the Borrower shall fail to perform or observe any of its obligations under any Finance Document.
22.3.2	No Event of Default under Sub-clause 22.3.1 above will occur if the failure to comply is capable of remedy and is remedied within 30 days.

22.4	Misrepresentation
	Any representation or statement made or deemed to be made by any Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.
22.5	Cross default

22.5.1	Any payment in respect of any item of Financial Indebtedness of any Obligor having a principal or notional amount of at least $ 10,000,000 (or its equivalent in other currencies) is not paid when due or within any originally applicable grace period.
22.5.2	Any item Financial Indebtedness of any Obligor having a principal or notional amount of at least $ 10,000,000 (or its equivalent in other currencies), is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
22.5.3	Any commitment for any item of Financial Indebtedness of the Borrower having a principal or notional amount of at least $ 10,000,000 (or its equivalent in other currencies) is cancelled or suspended by a creditor of any Affiliate or Subsidiary of the Borrower as a result of an event of default (however described).

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22.5.4 Any creditor of the Borrower becomes entitled to declare any item of Financial Indebtedness of any Affiliate or Subsidiary of the Borrower having a principal or notional amount of at least $ 10,000,000 (or its equivalent in other currencies) (“Creditor Demands”), due and payable prior to its specified maturity as a result of an event of default (however described), unless such Creditor Demands are being contested in good faith by the Borrower or any such Affiliate or Subsidiary of the Borrower and all such information relating to the contest of such Creditor Demands has been promptly provided to the Lender.

22.6 Insolvency

22.6.1	Any Obligor is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.
22.6.2	A moratorium is declared in respect of any indebtedness of any Obligor.

22.7	Insolvency proceedings
	Any corporate action, legal proceedings or other procedure or step is taken in relation to:

22.7.1	the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor;
22.7.2	a composition, compromise, assignment or arrangement with any creditor of any Obligor;
22.7.3	any resolution is passed to petition for or to file documents with a court or any registrar for winding–up, administration, dissolution, judicial or extrajudicial reorganization (recuperação judicial or extrajudicial) or bankruptcy of any Obligor;
22.7.4	any person presents a petition, or files documents with a court or any registrar, for winding–up, administration, dissolution, judicial or extrajudicial reorganization or bankruptcy of any Obligor, unless, in the case of presentation of a petition for bankruptcy by a creditor, it is being contested in good faith and with due diligence and is discharged or struck out within thirty (30) days;
22.7.5	an order for winding–up, administration, dissolution, judicial or extrajudicial reorganization or bankruptcy with respect to any Obligor is made;
22.7.6	the appointment of a liquidator, receiver, administrative receiver, administrator, judicial manager (administrador judicial), compulsory manager or other similar officer in respect of any Obligor or any of its assets; or
22.7.7	enforcement of any Lien over any assets of any Obligor, securing in excess of $ 10,000,000, or any analogous procedure or step is taken in any jurisdiction.

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22.8	Creditors’ process
	Any expropriation, attachment, sequestration, distress or execution affects any of the assets of any Obligor with a fair market value of at least $ 10,000,000 (or its equivalent in other currencies).
22.9	Unlawfulness and Unenforceability
	It is or becomes unlawful for any Obligor to perform in any material respect any of its obligations under the Finance Documents, or the Finance Documents become unenforceable in any material respect.
22.10	Repudiation
	Any Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.
22.11	Governmental intervention
	By or under the authority of any governmental authority in Brazil:

22.11.1	the management of any Obligor is wholly or partially displaced or the authority of any Obligor in the conduct of its business is wholly or partially curtailed; or
22.11.2	any of the issued quotas of any Obligor or the whole or any part of its revenues or assets is seized, nationalized, expropriated or compulsorily acquired.

22.12	LEFT INTENTIONALLY BLANK
22.13	Lien
	Any Lien stated to be created under any Finance Document is not at any time a valid and perfected first-priority Lien (except as otherwise expressly permitted herein or therein) in any Collateral purported to be covered thereby; or any Obligor shall assert in writing, or engage in any action or inaction based on any such assertion, that any Lien created under any Finance Document ceases to be a valid and perfected first-priority Lien (except as otherwise permitted herein or therein) in any Collateral purported to be covered thereby.
22.14	LEFT INTENTIONALLY BLANK
22.15	Undischarged Judgment
	A judgment is or judgments are rendered against any Obligor in an amount of $10,000,000, or more (or the equivalent in other currencies) and shall remain unsatisfied, undischarged and in effect for a period of 30 consecutive days without a stay of execution, unless the same is adequately bonded or is being contested by appropriate proceedings properly instituted and diligently conducted and reserved pursuant to GAAP and, in either case, such process is not being executed against assets thereof.

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22.16	Authorization
	Any Authorization at any time necessary to enable any Obligor to comply with any of its obligations under the Finance Documents shall be revoked, withdrawn or withheld or shall be modified or amended in a manner prejudicial, in the reasonable opinion of the Lender, to the interests of the Lender.
22.17	Ranking
	The obligations and liabilities of the Borrower under the Finance Documents shall fail to rank at least pari passu with all other existing or future unsubordinated Financial Indebtedness of the Borrower.
22.18	Acceleration
	On and at any time after the occurrence of an Event of Default the Lender may, by notice to the Borrower:

22.18.1	cancel the Available Facility whereupon it shall immediately be cancelled;
22.18.2	declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
22.18.3	declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand.

23.	LEFT INTENTIONALLY BLANK
24.	CHANGES TO THE LENDER
24.1	Assignments by the Lender
	Subject to this Article 24, the Lender (the “Existing Lender”) may:

24.1.1	assign any of its rights; or
24.1.2	transfer by novation any of its rights and obligations,

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”) subject to (a) the prior written notice to the Borrower and (b) except during the pendency of any Event of Default or Default, the Borrower’s prior consent (which consent shall not be unreasonably withheld, provided that withholding of consent by the Borrower due to a material change in the treatment of the Facilities by the Lender shall not be considered unreasonable). The principal outstanding balance of the portion of the Loan of the assigning Lender subject to each such assignment shall not be less than $ 5,000,000.00 or an integral multiple of $ 1,000,000 in excess thereof.

24.2

Conditions of assignment or transfer

24.2.1 An assignment will be effective only on:

(a) receipt by the Borrower of written confirmation from the New Lender (in form and substance satisfactory to the Borrower) that the New Lender will assume the same obligations to the other Parties as it would have been under if it was the Lender; and

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(b) performance by the New Lender of all “know your customer” or other checks relating to any person that it is required to carry out in relation to such assignment to a New Lender, the completion of which the New Lender shall promptly notify to the Lender.

24.2.2	A transfer will only be effective if the procedure set out in Clause 24.4 (Procedure for transfer) is complied with.
24.2.3	No transfer by the Lender otherwise permitted hereunder shall operate to increase the costs to the Borrower of borrowing any Loans.

24.3 Limitation of responsibility of Lender

24.3.1 Unless expressly agreed to the contrary, the Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a)	the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(b)	the financial condition of any Obligor;
(c)	the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or
(d)	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,
and any representations or warranties implied by law are excluded.

24.3.2 A New Lender shall confirm to the Lender that it:

(a)	has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of the Obligors in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Lender in connection with any Finance Document; and
(b)	will continue to make its own independent appraisal of the creditworthiness of the Obligors whilst any amount is or may be outstanding under the Finance Documents.

24.3.3 Nothing in any Finance Document obliges the Lender to:

(a)	accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Article 24; or
(b)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

24.4 Procedure for transfer

24.4.1 Subject to the conditions set out in Clause 24.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Sub-clause 24.4.3 below when the Lender executes an otherwise duly completed Transfer Certificate. The Lender shall subject to Sub-clause 24.4.3 below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

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24.4.2	The Lender shall only be obliged to execute a Transfer Certificate delivered to it by the New Lender upon the New Lender’s completion of all “know your customer” or other checks relating to any person that it is required to carry out in relation to the transfer to such New Lender.
24.4.3	On the Transfer Date:

(a)	to the extent that in the Transfer Certificate the Lender seeks to transfer by novation its rights and obligations under the Finance Documents the Borrower and the Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);
(b)	the Borrower and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Lender;
(c)	the New Lender shall become a Party as a “Lender” and reference in this Agreement to “Lender” shall be construed to be reference to the New Lender.

24.5	Copy of Transfer Certificate to Borrower
	The Lender shall as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Borrower a copy of that Transfer Certificate.
24.6	Disclosure of information

24.6.1 The Lender and the Security Agent agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to any Affiliate of and to the respective partners, directors, officers, employees, agents, subagents, advisors and other representatives of the Lender, the Security Agent or Affiliate (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of the Information and instructed to keep it confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent required by applicable law or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under any Finance Document or any action or proceeding relating to any Finance Document or the enforcement of rights under any Finance Document, (f) to any assignee of or participant in, or prospective assignee of or participant in, any of its rights or obligations under the Finance Documents, or to any actual or prospective counterparty (or its advisors) to any swap or derivative

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transaction relating to an Obligor or its obligations (it being understood that the person to whom the information is to be given under this paragraph (f) will be informed of the confidential nature of the Information and instructed to keep it confidential), (g) with the consent of the Borrower, or (h) to the extent such Information becomes publicly available other than as a result of a breach of this Clause 24.6 or becomes available to the Lender or the Security Agent or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower. To the extent that disclosure of any Information is required pursuant to clause (b) or (c) above, so long as any of the Lender or the Security Agent is not prohibited from so doing by any applicable laws, rules, regulations, judgments or court orders, such Lender or Security Agent will notify the Borrower thereof in writing at its address for notices set forth in this Agreement, provided that the Borrower shall have no right to seek any action or remedy or have any claim or cause of action against any of the Lender or the Security Agent in the event that any such person, as the case may be, shall fail to so notify the Borrower.

24.6.2

As used herein, “Information” means all information received by the Lender or the Security Agent from the Obligors relating to any Obligor or its businesses, other than any such information that is available to the Lender or the Security Agent on a non-confidential basis prior to disclosure by any Obligors, provided that in the case of information received from an Obligor after the date hereof such information is clearly identified at the time of delivery as confidential or that given the nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential or proprietary. Any person required to maintain the confidentiality of Information under this Clause 24.6 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain such confidentiality as such person would accord to its own confidential information, which in no event shall be less than a reasonable degree of care.

25.	CHANGES TO THE BORROWER
	The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, but an Obligor may not assign any of its rights or transfer any of its rights or obligations under the Finance Documents without prior written consent of the Lender.
26.	CONDUCT OF BUSINESS BY LENDER
	No provision of this Agreement will:

26.1.1	interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
26.1.2	oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
26.1.3	oblige Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax (except such failure to so disclose will be subject to Sub-clause 12.3.2(c)).

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27.	PAYMENT MECHANICS
27.1	Payments to the Lender

27.1.1

On each date on which the Borrower is required to make a payment to the Lender, under a Finance Document, the Borrower shall make the same available to the Lender (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Lender as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

27.1.2

Payment shall be made into the Lender’s Account and the Borrower shall at the time of making each payment under the Finance Documents for account of the Lender, specify to the Lender the amounts payable by the Borrower under the Finance Documents to which such payment is to be applied.

27.2 Distributions by the Lender

27.2.1 On each date on which this Agreement requires an amount to be paid by the Lender, the Lender shall make available the amount of its payment to the Borrower at the relevant account specified below or such other account specified from time to time, provided that such account is located in Brazil: Nextel Telecomunições Ltda., Bank: Itau 341, Branch: 0912, Account Number: 07085-1 (the “Borrower Account”).

27.3	Distributions to the Borrower
	The Lender may (with the consent of the Borrower or in accordance with Article 28 (Set-off)) apply any amount received by it for the Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
27.4	Partial payments

27.4.1 If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under the Finance Documents or in the event that the Borrower fails to specify the amounts payable to which such payment is to be applied, or if an Event of Default has occurred and is continuing, the Lender shall apply that payment towards the obligations of the Borrower under the Finance Documents in the following order:

(a)	first, in or towards payment pro rata between the A Loan and the B Loan of any unpaid fees, costs and expenses of the Lender under the Finance Documents;
(b)	secondly, in or towards payment pro rata between the A Loan and the B Loan of any accrued interest, fee or commission due but unpaid under this Agreement;
(c)	thirdly, in or towards payment pro rata between the A Loan and the B Loan of any principal due but unpaid under this Agreement; and
(d)	fourthly, in or towards payment pro rata between the A Loan and the B Loan of any other sum due but unpaid under the Finance Documents.

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27.4.2	The Lender may vary the order set out in Sub-clauses 27.4.1 (a) to (d) above.
27.4.3	Sub-clauses 27.4.1 (a) to (d) above will override any appropriation made by the Borrower.

27.5	No set-off by the Borrower
	All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

27.6 Business Days

27.6.1	Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
27.6.2	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

27.7 Currency of account

27.7.1	Subject to Sub-clauses 27.8.1 and 27.8.2 below, dollars is the currency of account and payment for any sum due from the Borrower under any Finance Document.
27.7.2	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
27.7.3	Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.

27.8 Change of currency

27.8.1 Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognized by the central bank of any country as the lawful currency of that country, then:

(a)	any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Lender; and
(b)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognized by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Lender (acting reasonably).

27.8.2 If a change in any currency of a country occurs, this Agreement will, to the extent the Lender specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

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28.

SET-OFF

The Lender may set off any matured obligation due from any Obligor under the Finance Documents against any matured obligation owed by the Lender to any Obligor, regardless of the place of payment, booking branch or currency of either obligation, provided, that the Lender will give the Borrower prompt notice of such set-off. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

29. THE SECURITY AGENT

29.1

Appointment, Powers and Immunities

The Lender hereby appoints and authorizes the Security Agent to act as its agent under the Finance Documents with such powers as are specifically delegated to the Security Agent by the terms of the Finance Documents, including the execution and delivery of the Finance Documents together with such other powers as are reasonably incidental thereto. The Security Agent (which term as used in this sentence and in Clause 29.5 (Indemnification) hereof and the first sentence of Clause 29.6 (Non-Reliance on Security Agent) hereof shall include reference to the Security Agent’s Affiliates and subagents and its own and its Affiliates’ and subagents officers, directors, employees and agents):

(a)	shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Finance Documents, and shall not by reason of this Agreement or the other Finance Documents be a trustee or fiduciary for any party hereto;
(b)	shall not be responsible to the Lender for any recitals, statements, representations or warranties contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Finance Document or any other document referred to or provided for herein or therein or for any failure by any Obligor or any other person to perform any of its obligations hereunder or thereunder;
(c)	shall not be required to initiate or conduct any litigation or collection proceedings hereunder unless directed by the Lender and the Security Agent shall have received satisfactory indemnities pursuant to Subclause 29.5 (Indemnification) (and shall not commence an action or proceeding on behalf of the Lender without obtaining the consent of the Lender thereto); and
(d)	shall not be responsible for any computation made in good faith or for any other action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct.

The Security Agent may, with the consent of the Lender, employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of or for the supervision of any such agents or attorneys-in-fact selected by it utilizing due care.

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	The Security Agent will act in accordance with instructions duly given to it by the Lender in accordance with the Finance Documents. The Security Agent shall give prompt notice to the Lender of any notice or document (and its contents) received from the Borrower and promptly provide the Lender with such notice or document.
	Before the Security Agent acts or refrains from acting, it may require an officer’s certificate of any Obligor and/or an opinion of counsel satisfactory to the Security Agent with respect to the proposed action or inaction. The Security Agent shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. Whenever in the administration of any Finance Document the Security Agent shall deem it necessary or desirable that a matter be provided or established prior to taking or suffering or omitting to take any act hereunder or thereunder, such matter (unless other evidence in respect thereof be herein or therein specifically prescribed) may, in the absence of gross negligence or bad faith on the part of the Security Agent, be deemed to be conclusively proved and established by an officers’ certificate delivered to the Security Agent, and such certificate, in the absence of gross negligence or bad faith on the part of the Security Agent, shall be full warrant to the Security Agent for any action taken, suffered or omitted to be taken by it under the provisions of any Finance Document upon the faith thereof.
29.2	Reliance by Security Agent
	The Security Agent shall be entitled to conclusively rely upon any certification, notice or other communication (including any thereof by telephone, fax, email, telegram or cable) reasonably believed by it to be genuine and correct and to have been signed, made or sent by or on behalf of the proper person or persons, and upon advice and statements of legal counsel and other experts selected by the Security Agent. As to any matters not expressly provided for by this Agreement, the Security Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Lender, and such instructions of the Lender and any action taken or failure to act pursuant thereto shall be binding on the Lender.
29.3	Defaults
	The Security Agent shall not be deemed to have knowledge or notice of the occurrence of a Default unless it has received notice from the Lender or the Borrower specifying such Default and stating that such notice is a “Notice of Default”. In the event that the Security Agent receives a Notice of Default, the Security Agent shall give prompt notice thereof to the Lender. The Security Agent shall (subject to Clause 29.1 (Appointment, Powers and Immunities) and 29.7 (Failure to Act) hereof) only take such action with respect to any such Default as shall be expressly directed by the Lender, provided that, unless and until the Security Agent shall have received such directions, it may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Lender except to the extent that this Agreement expressly requires that such action be taken only with the consent or upon the authorization of the Lender.

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29.4	INTENTIONALLY LEFT BLANK
29.5	Indemnification
	The Lender agrees to indemnify the Security Agent (to the extent not reimbursed, but without limiting the obligations of the Borrower under Article 16 (Costs and Expenses)), for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever (including reasonable legal fees and expenses) that may be imposed on, incurred by or asserted against the Security Agent arising out of or by reason of any investigation in any way relating to or arising out of this Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that the Borrower is obligated to pay under Article 16 (Costs and Expenses) hereof, but excluding, unless an Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that the Lender shall not be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Security Agent. The obligations of the Lender under this Clause 29.5 shall survive the termination of this Agreement, the repayment of the Loans and the resignation or removal of the Security Agent.
29.6	Non-Reliance on Security Agent
	The Lender agrees that it has, independently and without reliance on the Security Agent, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Obligors and decision to enter into this Agreement and that it will, independently and without reliance upon the Security Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement and the other Finance Documents. The Security Agent shall not be required to keep itself informed as to the performance or observance by the Obligors of this Agreement and the other Finance Documents or to inspect the properties or books of the Obligors. Except for notices, reports and other documents and information expressly required to be furnished to the Lender, the Security Agent shall not have any duty or responsibility to provide the Lender with any credit or other information concerning the affairs, financial condition or business of the Obligors that may come into the possession of the Security Agent or any of its Affiliates.
29.7	Failure to Act
	No provision of any Finance Document shall require the Security Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate security or indemnity against such risk or liability is not reasonably assured to it. The Security Agent shall be entitled to consult with legal counsel of its choice and at the expense of the Borrower and will not incur any liability in acting in good faith in accordance with any advice from such counsel.

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29.8	Resignation or Removal of the Security Agent
	Subject to the appointment and acceptance of a successor Security Agent as provided below, the Security Agent may resign at any time by giving notice thereof to the Lender and the Borrower, and the Security Agent may be removed at any time with or without cause by the Lender. Upon any such resignation or removal, the Lender shall have the right to appoint a successor Security Agent, which shall be a bank that has an office in New York, New York or Brazil. If no successor Security Agent shall have been so appointed by the Lender and shall have accepted such appointment within 30 days after the retiring Security Agent’s giving of notice of resignation or the Lender’s removal of the retiring Security Agent, then the retiring Security Agent may, on behalf of the Lender, either (i) appoint a successor Security Agent, which shall be a bank that has an office in New York, New York or Brazil or (ii) petition a court of competent jurisdiction to appoint a successor Security Agent. Upon the acceptance of any appointment as Security Agent hereunder by a successor Security Agent, such successor Security Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Security Agent, and the retiring Security Agent shall be discharged from its duties and obligations hereunder; provided that any replacement shall be subject to the taking of appropriate steps to transfer the Collateral to the new Security Agent. Notwithstanding the foregoing, no removal of the Security Agent shall be effective until all amounts then due and owing to the removed Security Agent shall be paid in full. After any retiring Security Agent’s resignation or removal hereunder as the Security Agent, the provisions of this Article 29 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Security Agent.
30.	NOTICES
30.1	Communications in writing
	Any communication to be made under or in connection with the Finance Documents shall be made in writing (including fax) and faxed or hand delivered (by a reputable commercial courier service).
30.2	Address and Delivery
	Any notice or demand to be made by one person to another under or in connection with the Finance Documents may be served by depositing such notice or demand at the address of such other person as identified with its name below on the signature page or by fax to the fax number identified with the name of such other person below on the signature page (which shall be deemed to have been received when confirmed by fax). Promptly upon receipt of notification of an address and fax number or change of address or fax number or changing its own address or fax number, the Parties shall notify each other.
30.3	English language

30.3.1	Any notice given under or in connection with any Finance Document must be in English.
30.3.2	All other documents provided under or in connection with any Finance Document must be:

(a)	in English; or
(b)	if not in English, and if so required by the Lender, accompanied by a certified English translation provided by the Borrower at the Borrower’s cost and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document or a Security Document governed by Brazilian law.

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31.	CALCULATIONS AND CERTIFICATES
31.1	Accounts
	In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Lender are prima facie evidence of the matters to which they relate.
31.2	Certificates and Determinations
	Any certification or determination by the Lender of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
31.3	Day count convention
	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
31.4	Partial invalidity
	If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
32.	Remedies and Waivers
	No failure to exercise, nor any delay in exercising, on the part of the Lender, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
33.	AMENDMENTS AND WAIVERS
33.1	Required consents
	Any term of the Finance Documents may be amended or waived only with the written consent of the Lender and the Borrower, and any such amendment or waiver will be binding on all Parties.
34.	LEFT INTENTIONALLY BLANK
35.	COUNTERPARTS
	Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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36.	GOVERNING LAW
	This Agreement shall be governed by and construed in accordance with the law of the State of New York.
37.	JURISDICTION, SERVICE OF PROCESS AND VENUE
37.1	Jurisdiction
	Each of the parties hereto agrees that any suit, action or proceeding with respect to this Agreement or any other Finance Document to which it is a party or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, County of New York, and in the courts of its own corporate domicile, in respect of actions brought against it as a defendant, irrevocably waives any right it may have to the jurisdiction of any other courts pursuant to applicable law and irrevocably submits to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action, proceeding or judgment.
37.2	Process Agent
	The Borrower irrevocably appoints CT Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its agent and true and lawful attorney-in-fact in its name, place and stead to accept on behalf of the Borrower and its property and revenues service of copies of the summons and complaint and any other process which may be served in any such suit, action or proceeding brought in the State of New York, and the Borrower agrees that the failure of the Process Agent to give any notice of any such service of process to the Borrower shall not impair or affect the validity of such service or, to the extent permitted by applicable law, the enforcement of any judgment based thereon. Nothing herein shall in any way be deemed to limit the ability of the Lender to serve any such process or summonses in any other manner permitted by applicable law.
37.3	Venue
	The Borrower irrevocably waives to the fullest extent permitted by law any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Finance Document brought in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York and hereby further irrevocably waives to the fullest extent permitted by law any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum and any right it may have to the jurisdiction of any court other than the courts indicated in Clause 37.1 above pursuant to applicable law. A final judgment (in respect of which time for all appeals has elapsed) in any such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which the Borrower is or may be subject, by suit upon judgment.
38.	WAIVER OF JURY TRIAL
	EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER FINANCE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

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39.	WAIVER OF IMMUNITY
	To the extent that the Borrower may be or become entitled to claim for itself or its Property or revenues any immunity on the ground of sovereignty or the like from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment or execution of a judgment, and to the extent that in any such jurisdiction there may be attributed such an immunity (whether or not claimed), the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity with respect to its obligations under this Agreement and the other Finance Documents.
40.	ENTIRE AGREEMENT
	This Agreement and the other Finance Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof.
41.	SURVIVAL
	The obligations of the Borrower under Sub-clause 7.6.2, Clause 10.3, Article 12, Article 13, Article 14, Article 16 and Clause 24.6 and the obligations of the Lender under Clause 29.5, shall survive the repayment of the Loan and the termination of the Available Facility and, in the case of the Lender assigning any interest in the Loan hereunder, shall survive, in the case of any event or circumstance that occurred prior to the effective date of such assignment, the making of such assignment, notwithstanding that the assigning Lender may cease to be the “Lender” hereunder. In addition, each representation and warranty made, or deemed to be made by a notice of the Loan, herein or pursuant hereto shall survive the making of such representation and warranty.
42.	NO FIDUCIARY RELATIONSHIP.
	The Borrower acknowledges that the Lender has no fiduciary relationship with, or fiduciary duty to, the Borrower arising out of or in connection with this Agreement or the other Finance Documents, and the relationship between the Lender and the Borrower is solely that of creditor and debtor. This Agreement and the other Finance Documents do not create a joint venture among the parties.
43.	WAIVER OF SECURITY.
	To the extent that the Borrower may, in any suit, action or proceeding brought in any of the courts referred to above or a court of Brazil or elsewhere arising out of or in connection with this Agreement or any other Finance Document to which the Borrower is a party, be entitled to the benefit of any provision of law requiring the Lender in such suit, action or proceeding to post security for the costs of the Borrower, or to post a bond or to take similar action, the Borrower hereby irrevocably waives such benefit, in each case to the fullest extent now or in the future permitted under the laws of New York or, as the case may be, the jurisdiction in which such court is located.

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This Agreement has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 6

SECURITY

Borrower Quota Pledge Agreement, dated as of the date hereof, between Nextel S.A., McCaw International (Brazil), Ltd., the Lender and the Borrower.

Intercompany Loans Pledge and Subordination Agreement, dated as of the date hereof between the Parent, McCaw International (Brazil), Ltd. and the Security Agent.

Security Interest Agreement, dated as of the date hereof between the Borrower and the Security Agent.

Share Pledge Agreement, dated as of the date hereof, between McCaw International (Brazil), Ltd., Airfone Holdings, Inc., Nextel Telecomunicações S.A., the Borrower and the Lender.

Subsidiary Quota Pledge Agreement, dated as of the date hereof, between the Borrower, Nextel Telecomunicações de Longa Distância Ltda., Nextel S.A. and the Lender.

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SIGNATURES

NEXTEL TELECOMUNICAÇÕES LTDA.,

as Borrower

/s/ Authorized representative	/s/ Authorized representative
Name:	Name:
Title:	Title:

Address: Alameda Santos No. 2,356 and 2,364
Cerqueira César,
São Paulo, Brazil, 01418-200

Fax: +55 11 2145 2040

Witnesses:

1st   /s/                                      

Name:
ID.:

2nd   /s/                                      

Name:
ID:

Signature Pages To Term Facility Agreement

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NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ
VOOR ONTWIKKELINGSLANDEN N.V.,

as Lender

/s/ Authorized representative	/s/ Authorized representative
Name:	Name:
Title:	Title:

Address: Anna van Saksenlaan 71
2593 HW The Hague
The Netherlands

Fax: +31 (0)70 314 9757

Witnesses:

1st   /s/                                      

Name:
ID.:

2nd   /s/                                      

Name:
ID:

Signature Pages To Term Facility Agreement

- 2 -

STANDARD BANK OFFSHORE TRUST COMPANY JERSEY LIMITED,

as Security Agent

/s/ Authorized representative	/s/ Authorized representative
Name:	Name:
Title:	Title:

Address: Standard Bank House
47-49 La Motte Street
St. Helier, JE4 8XR

Fax: +44 1534 881299

Witnesses:

1st   /s/                                      

Name:
ID.:

2nd   /s/                                      

Name:
ID:

Signature Pages To Term Facility Agreement

- 3 -

EX-12.1

Exhibit 12.1

NII HOLDINGS, INC.
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(dollars in thousands)

	Three Months Ended
	September 30,
	2007		2006
Income from continuing operations before income tax	$	124,951	$	96,213
Add:
Fixed charges		46,958		34,726
Amortization of capitalized interest		1,327		893
Less:
Interest capitalized		1,080		3,289
Equity in (losses) gains of unconsolidated affiliates		—		—
Losses attributable to minority interests		—		—
Earnings as adjusted	$	172,156	$	128,543
Fixed charges:
Interest expense on indebtedness (including amortization of debt expense and discount)	$	35,610	$	23,656
Interest capitalized		1,080		3,289
Portion of rent expense representative of interest (30%)		10,268		7,781
Fixed charges	$	46,958	$	34,726
Ratio of earnings to fixed charges		3.67		3.70
Deficiency of earnings to cover fixed charges	$	—	$	—

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)

I, Steven M. Shindler, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2007 of NII Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2007

/s/ STEVEN M. SHINDLER  

Steven M. Shindler 

Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)

I, Gokul Hemmady, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2007 of NII Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2007

/s/ GOKUL HEMMADY  

Gokul Hemmady 

Chief Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2007 (the “Report”) of NII Holdings, Inc. and subsidiaries (the “Company”), I, Steven M. Shindler, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge and belief:

1.	The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 6, 2007

/s/ STEVEN M. SHINDLER  

Steven M. Shindler 

Chief Executive Officer 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2007 (the “Report”) of NII Holdings, Inc. and subsidiaries (the “Company”), I, Gokul Hemmady, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge and belief:

1.	The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 6, 2007

/s/ GOKUL HEMMADY  

Gokul Hemmady 

Chief Financial Officer