0001037016-12-000004.txt : 20120223 0001037016-12-000004.hdr.sgml : 20120223 20120223074113 ACCESSION NUMBER: 0001037016-12-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20120223 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120223 DATE AS OF CHANGE: 20120223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NII HOLDINGS INC CENTRAL INDEX KEY: 0001037016 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 911671412 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-32421 FILM NUMBER: 12632085 BUSINESS ADDRESS: STREET 1: 1875 EXPLORER ST. STREET 2: SUITE 1000 CITY: RESTON STATE: VA ZIP: 20190 BUSINESS PHONE: 7033905100 MAIL ADDRESS: STREET 1: 1875 EXPLORER ST. STREET 2: SUITE 1000 CITY: RESTON STATE: VA ZIP: 20190 FORMER COMPANY: FORMER CONFORMED NAME: NEXTEL INTERNATIONAL INC DATE OF NAME CHANGE: 19970919 FORMER COMPANY: FORMER CONFORMED NAME: MCCAW INTERNATIONAL LTD DATE OF NAME CHANGE: 19970402 8-K 1 a20118-k.htm FORM 8-K 2011 8-K


                                                                                                            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 23, 2012
___________

NII HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation)
000-32421
(Commission File Number)
91-1671412 
(IRS Employer
Identification No.)
 
 
 
1875 Explorer Street, Suite 1000
Reston, Virginia
 (Address of principal executive offices)

20190
(Zip Code)

Registrant's telephone number, including area code: (703) 390-5100

Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
                                                                                                            





Item 2.02 Results of Operations and Financial Condition.    

Year and Fourth Quarter 2011 Results. On February 23, 2012, NII Holdings, Inc. issued a press release announcing certain financial and operating results for the year and quarter ended December 31, 2011. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02.

Item 9.01. Financial Statements and Exhibits.     
    
 (d) Exhibits.
Exhibit No.
 
Description
 
 
 
99.1
 
Press Release dated February 23, 2012
 






SIGNATURES

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 hereunto duly authorized.

                    
    
 
 
NII HOLDINGS, INC.
 
 
(Registrant)
 
 
 
 
 
 
Dated: February 23, 2012
 
By: /s/ SHANA C. SMITH     
 
 
Shana C. Smith
 
 
Assistant Secretary





EXHIBIT INDEX
Exhibit No.
 
Description
 
 
 
99.1
 
Press Release dated February 23, 2012



 EX-99.1 2 exhibit991.htm PRESS RELEASE Exhibit 99.1


Exhibit 99.1

NII HOLDINGS ANNOUNCES FOURTH QUARTER AND YEAR-END 2011 RESULTS
 
Company provides outlook for 2012
 
•
Full year 2011 net subscriber additions of 1,684,000 resulting in an ending subscriber base of 10.7 million
 
•
Full year 2011 consolidated operating revenues of $6.7 billion
 
•
Full year 2011 consolidated operating income before depreciation and amortization (OIBDA) of $1.56 billion
 
RESTON, Va., February 23, 2012 - NII Holdings, Inc. [NASDAQ: NIHD] today announced its consolidated financial results for the fourth quarter and full year 2011. For the full year 2011, the Company added 1,684,000 net subscribers to its network, bringing its total year-end subscriber base to 10.7 million, a 19 percent increase over year-end 2010. Financial results for the full year 2011 included consolidated operating revenues of $6.7 billion, a 20 percent increase compared to 2010; consolidated operating income before depreciation and amortization, or OIBDA, of $1.56 billion, a 9 percent increase compared to 2010 and consolidated operating income of $905 million, a 3 percent increase compared to 2010. For the full year 2011, the Company generated net income of $199 million, or $1.17 per basic share. Capital expenditures were $1.45 billion for full year 2011.
 
For the fourth quarter of 2011, the Company added 467,000 net subscribers to its network. Financial results for the fourth quarter of 2011 included consolidated operating revenues of $1.6 billion, a 5 percent increase over the same period in 2010; consolidated OIBDA of $277 million, a 27 percent decline compared to the fourth quarter of 2010; and consolidated operating income of $116 million, a 49 percent decline compared to the fourth quarter of 2010. Operating income for the fourth quarter of 2011 was affected by several factors including an increase in costs relating to the deployment of the Company's new W-CDMA based networks, higher marketing costs relating to the launch of its new brand, decreases in the values of local currencies compared to the U.S. dollar and higher costs associated with customer retention driven by more intense competition in some markets.
 
“In 2011, we made significant progress on our business and 3G deployment plans and have achieved a number of key milestones in our business including the launch of high performance push-to-talk on our new W-CDMA network in Peru,” said Steve Dussek, NII Holdings' chief executive officer.  “2012 will be a transformative year for our business as we invest in key initiatives that will enable NII to drive more profitable growth in the future.  These initiatives include launching 3G services across most of our markets, delivering our new 3G push to talk services on a broader scale, increasing our marketing efforts to create additional distribution presence and enhance our brand, and creating a global platform of back office and IT systems to support our growth initiatives.   We believe that these investments will prepare our business for the future and will help us create value as we target additional customer segments and provide innovative broadband wireless services to our high value customer base.”
 
NII Holdings' consolidated average monthly service revenue per subscriber (ARPU) was $48 for the




full year, consistent with 2010 levels. The Company also reported consolidated churn of 1.74 percent for the full year 2011, an 8 basis point increase when compared with the churn rate for full year 2010. Consolidated cost per gross add, or CPGA, was $310 for full year 2011, a $24 increase from 2010 resulting from increased costs relating to the launch of the Company's new brand identity and higher handset subsidies and subscriber retention costs relating to the increased level of competition, particularly in Brazil.
 
“Our team delivered solid operational results in 2011, generating good growth in our business even in the face of a more volatile economic environment, more intense competition and weakening local currency exchange rates late in the year,” said Gokul Hemmady, NII Holdings' executive vice president, chief financial officer and chief transformation officer. “We expect to continue to face intense competition in 2012, but we will not let these challenges distract us from our commitment to serving our high value customers. While we are all focused on our goal of offering services on our new W-CDMA networks in our most important markets over the course of 2012, we will only launch these services when we are comfortable that the networks will provide the highest quality service and superior experience that our customers have come to expect.”
 
The Company ended 2011 with $4.8 billion in total debt and $2.6 billion in consolidated cash and investments, resulting in $2.2 billion of net debt at the end of the year.
 
2012 Outlook
 
The Company announced the following outlook for 2012:
 
•
Total net subscriber additions of approximately 1.4 million.
 
•
Consolidated operating revenues of approximately $7.1 billion.
 
•
Consolidated OIBDA of approximately $1.4 billion, which includes the impact of approximately $50 million of non-cash equity compensation expense. The OIBDA outlook also includes the impact of start up costs related to the development and launch of the Company's planned W-CDMA networks and costs to support related initiatives, including investments in brand, expansion of distribution channels, and IT and back office systems.
 
•
Consolidated capital expenditures of approximately $1.7 billion, which includes investments relating to the deployment of the Company's W-CDMA networks and supporting systems, and the enhancement of the capacity of the Company's iDEN® networks to support customer growth.
 
The Company's 2012 outlook is predicated on a number of assumptions, including expectations that average foreign exchange rates for the Mexican Peso and Brazil Real are 13.25 and 1.75, respectively, and that general economic conditions in its markets will remain relatively stable during the year.
 
Additional information relating to NII Holdings' fourth quarter and 2011 results will be provided on the Company's earnings call on Thursday, February 23, 2012 from 8:30 AM to 9:15 AM EST. The call is available via webcast, online at www.nii.com on the Investor Relations page or by phone at the numbers below.
 
Phone:
Domestic
1 877 415 3186 pass-code: NII HOLDINGS
International
1 857 244 7329 pass-code: NII HOLDINGS




 
All participants are asked to dial in 10-15 minutes prior to the start of the conference call. If you are unable to participate, a rebroadcast of the conference call will be available for two weeks following the call. The rebroadcast numbers are as follows:
 
Conference Call Replay:
Domestic
1 617 801 6888 pass-code: 84195799
International
1 888 286 8010 pass-code: 84195799
 
In addition to the preliminary results prepared in accordance with accounting principles generally accepted in the United States (GAAP) provided throughout this press release, NII Holdings has presented consolidated OIBDA, ARPU, CPGA and Net Debt. These measures are non-GAAP financial measures and should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial table. To view these and other reconciliations of non-GAAP financial measures that the Company uses and information about how to access the conference call discussing NII Holdings' fourth quarter and full year 2011 results, visit the investor relations link at www.nii.com.
 
About NII Holdings, Inc.
NII Holdings, Inc., a publicly held company based in Reston, Va., is a differentiated provider of mobile communication services for businesses and high value consumers in Latin America. NII Holdings, operating under the Nextel brand in Brazil, Mexico, Argentina, Peru and Chile, offers fully integrated wireless communications tools with digital cellular voice services, data services, wireless Internet access and Nextel Direct Connect® and International Direct ConnectSM, a digital two-way radio. NII Holdings, a Fortune 500 and Barron's 500 company, trades on the NASDAQ market under the symbol NIHD. Visit the company's website at www.nii.com.
 
Nextel, the Nextel logo and Nextel Direct Connect and International Direct Connect are trademarks and/or service marks of Nextel Communications, Inc., and are used by NII Holdings' subsidiaries under license in Latin America.
 
Visit NII Holdings' news room for news and to access our markets' news centers: www.nii.com/newsroom
 
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding the business outlook, future performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words "estimate," "project," "forecast," "intend," "expect," "believe," "target," “plan,” "providing guidance" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, network usage; customer growth and retention; pricing; operating costs; the timing of various events, including the timing of the launch of our W-CDMA networks in Brazil, Chile and Mexico; and the economic and regulatory environment. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to




the impact of more intense competitive conditions and changes in economic conditions in the markets we serve; the impact on our financial results, and potential reductions in the recorded value of our assets, that may result from fluctuations in foreign currency exchange rates and, in particular, fluctuations in the relative values of the currencies of the countries in which we operate compared to the U.S. dollar; the risk that our network technologies will not perform properly or support the services our customers want or need, including the risk that technology developments to support our services will not be timely delivered; the risk that customers in the markets we serve will not find our services attractive; unexpected results of litigation; and the additional risks and uncertainties that are described from in NII Holdings' Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and, when filed, our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. This press release speaks only as of its date, and NII Holdings disclaims any duty to update the information herein.
 
Media Contacts:
 
NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA. 20190
(703) 390-5100
www.nii.com
 
Investor Relations: Tim Perrott
(703) 390-5113
tim.perrott@nii.com
 
Media Relations: Claudia Restrepo
(786) 251-7020
claudia.restrepo@nii.com





NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS AND THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(in millions, except per share amounts)

 
Year Ended
  December 31,
 
Three Months Ended
              December 31,
 
2011
 
2010
 
2011
 
2010
 
(unaudited)
 
 
 
(unaudited)
 
 
Operating revenues
  Service and other revenues
$
6,403.2

 
$
5,347.7

 
$
1,519.3

 
$
1,490.0

  Digital handset and accessory revenues
316.2

 
253.6

 
76.1

 
30.1

 
6,719.4

 
5,601.3

 
1,595.4

 
1,520.1

Operating expenses
  Cost of service (exclusive of depreciation and amortization
    included below)
1,786.1

 
1,506.0

 
430.0

 
415.3

  Cost of digital handset and accessory sales
859.4

 
723.1

 
212.6

 
181.4

  Selling, general and administrative
2,511.9

 
1,941.8

 
676.2

 
544.8

  Depreciation
618.4

 
518.8

 
150.9

 
138.8

  Amortization
38.9

 
34.2

 
9.4

 
10.6

 
5,814.7

 
4,723.9

 
1,479.1

 
1,290.9

Operating income
904.7

 
877.4

 
116.3

 
229.2

Other income (expense)
  Interest expense
(322.5
)
 
(342.2
)
 
(52.0
)
 
(79.7
)
  Interest income
34.2

 
28.8

 
9.2

 
5.0

  Foreign currency transaction (losses) gains, net
(37.0
)
 
52.4

 
2.8

 
25.0

  Other expense, net
(37.3
)
 
(18.7
)
 
(20.5
)
 
(7.3
)
 
(362.6
)
 
(279.7
)
 
(60.5
)
 
(57.0
)
Income before income tax provision
542.1

 
597.7

 
55.8

 
172.2

Income tax provision
(343.3
)
 
(256.7
)
 
(64.5
)
 
(73.6
)
Net income (loss)
$
198.8

 
$
341.0

 
$
(8.7
)
 
$
98.6

 
 
 
 
 
 
 
 
Net income (loss) per common share, basic
$
1.17

 
$
2.03

 
$
(0.05
)
 
$
0.58

Net income (loss) per common share, diluted
$
1.15

 
$
1.99

 
$
(0.05
)
 
$
0.57

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding,
   basic
170.6

 
168.2

 
171.2

 
169.3

Weighted average number of common shares outstanding,
   diluted
172.8

 
175.7

 
171.2

 
172.2


CONSOLIDATED BALANCE SHEET DATA
(in millions)
 
December 31,
 
December 31,
 
2011
 
2010
 
(unaudited)
 
 
Cash and cash equivalents
$
2,322.9

 
$
1,767.5

Short-term investments
343.4

 
537.5

Accounts receivable, less allowance for
doubtful accounts of $66.3 and $35.1
858.5

 
788.0

Property, plant and equipment, net
3,490.5

 
2,960.0

Intangible assets, net
1,182.2

 
433.2

Total assets
9,806.9

 
8,190.7

Total debt
4,826.6

 
3,265.4

Total liabilities
6,675.9

 
4,871.1

Stockholders' equity
3,131.0

 
3,319.6








NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE YEARS AND THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(UNAUDITED)

NII Holdings, Inc.
(subscribers in thousands)
 
 
 
 
 
 
 
 
 
Year Ended
             December 31,
 
Three Months Ended
              December 31,
 
2011
 
2010
 
2011
 
2010
Total digital subscribers (as of December 31)
10,711.9

 
9,027.5

 
10,711.9

 
9,027.5

  Net subscriber additions
1,684.4

 
1,641.3

 
466.6

 
436.1

  Churn (%)
1.74
%
 
1.66
%
 
1.78
%
 
1.60
%
 
 
 
 
 
 
 
 
Average monthly revenue per handset/unit in service (ARPU) (1)
$
48

 
$
48

 
$
43

 
$
50

 
 
 
 
 
 
 
 
Cost per gross add (CPGA) (1)
$
310

 
$
286

 
$
303

 
$
313


Nextel Brazil
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
 
 
Year Ended
December 31,
 
Three Months Ended
             December 31,
 
2011
 
2010
 
2011
 
2010
Operating revenues
  Service and other revenues
$
3,293.6

 
$
2,504.5

 
$
775.0

 
$
738.0

  Digital handset and accessory revenues
147.6

 
86.8

 
36.7

 
(10.6
)
 
3,441.2

 
2,591.3

 
811.7

 
727.4

Operating expenses
  Cost of service (exclusive of depreciation and amortization included
    below)
1,021.3

 
822.3

 
246.3

 
216.2

  Cost of digital handset and accessory sales
258.2

 
177.2

 
66.7

 
44.9

  Selling, general and administrative
1,133.3

 
786.1

 
299.1

 
225.7

Segment earnings
1,028.4

 
805.7

 
199.6

 
240.6

  Management fee and other
40.0

 
29.0

 
10.0

 
4.1

  Depreciation and amortization
315.6

 
253.3

 
74.9

 
71.9

Operating income
$
672.8

 
$
523.4

 
$
114.7

 
$
164.6

 
 
 
 
 
 
 
 
Total digital subscribers (as of December 31)
4,115.2

 
3,319.1

 
4,115.2

 
3,319.1

  Net subscriber additions
796.1

 
836.5

 
192.2

 
206.6

  Churn (%)
1.58
%
 
1.35
%
 
1.63
%
 
1.37
%
 
 
 
 
 
 
 
 
ARPU (1)
$
65

 
$
63

 
$
56

 
$
67

 
 
 
 
 
 
 
 
CPGA (1)
$
296

 
$
250

 
$
322

 
$
292






Nextel Mexico
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
 
 
Year Ended
December 31,
 
Three Months Ended
             December 31,
 
2011
 
2010
 
2011
 
2010
Operating revenues
  Service and other revenues
$
2,165.5

 
$
2,023.1

 
$
498.4

 
$
529.1

  Digital handset and accessory revenues
83.9

 
90.7

 
18.5

 
21.0

 
2,249.4

 
2,113.8

 
516.9

 
550.1

Operating expenses
  Cost of service (exclusive of depreciation and amortization included
    below)
435.9

 
391.7

 
97.5

 
121.8

  Cost of digital handset and accessory sales
436.3

 
402.7

 
104.8

 
98.8

  Selling, general and administrative
630.0

 
574.2

 
157.9

 
156.3

Segment earnings
747.2

 
745.2

 
156.7

 
173.2

  Management fee and other
122.2

 
119.7

 
20.3

 
40.9

  Depreciation and amortization
197.2

 
190.6

 
44.4

 
48.4

Operating income
$
427.8

 
$
434.9

 
$
92.0

 
$
83.9

 
 
 
 
 
 
 
 
Total digital subscribers (as of December 31)
3,695.4

 
3,361.3

 
3,695.4

 
3,361.3

  Net subscriber additions
334.1

 
373.9

 
72.0

 
89.4

  Churn (%)
1.79
%
 
1.84
%
 
2.01
%
 
1.77
%
 
 
 
 
 
 
 
 
ARPU (1)
$
45

 
$
47

 
$
40

 
$
47

 
 
 
 
 
 
 
 
CPGA (1)
$
413

 
$
395

 
$
381

 
$
432


Nextel Argentina
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
 
 
Year Ended
December 31,
 
Three Months Ended
             December 31,
 
2011
 
2010
 
2011
 
2010
Operating revenues
  Service and other revenues
$
596.6

 
$
517.5

 
$
157.0

 
$
140.9

  Digital handset and accessory revenues
52.3

 
46.0

 
13.2

 
11.7

 
648.9

 
563.5

 
170.2

 
152.6

Operating expenses
  Cost of service (exclusive of depreciation and amortization included
    below)
186.7

 
178.3

 
48.0

 
46.7

  Cost of digital handset and accessory sales
88.1

 
74.8

 
23.1

 
18.2

  Selling, general and administrative
205.3

 
161.5

 
57.5

 
45.8

Segment earnings
168.8

 
148.9

 
41.6

 
41.9

  Management fee and other
18.0

 
16.9

 
0.6

 
2.3

  Depreciation and amortization
42.2

 
39.8

 
10.5

 
10.3

Operating income
$
108.6

 
$
92.2

 
$
30.5

 
$
29.3

 
 
 
 
 
 
 
 
Total digital subscribers (as of December 31)
1,388.2

 
1,153.9

 
1,388.2

 
1,153.9

  Net subscriber additions
234.3

 
123.8

 
134.1

 
36.5

  Churn (%)
1.54
%
 
1.61
%
 
1.43
%
 
1.42
%
 
 
 
 
 
 
 
 
ARPU (1)
$
35

 
$
34

 
$
35

 
$
36

 
 
 
 
 
 
 
 
CPGA (1)
$
197

 
$
217

 
$
135

 
$
235






Nextel Peru
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
 
 
Year Ended
December 31,
 
Three Months Ended
             December 31,
 
2011
 
2010
 
2011
 
2010
Operating revenues
  Service and other revenues
$
321.9

 
$
282.0

 
$
82.4

 
$
75.8

  Digital handset and accessory revenues
32.2

 
30.0

 
7.6

 
8.0

 
354.1

 
312.0

 
90.0

 
83.8

Operating expenses
  Cost of service (exclusive of depreciation and amortization included
    below)
107.7

 
100.0

 
27.5

 
25.5

  Cost of digital handset and accessory sales
71.9

 
62.8

 
16.5

 
17.8

  Selling, general and administrative
139.2

 
126.9

 
37.1

 
38.8

Segment earnings
35.3

 
22.3

 
8.9

 
1.7

  Management fee and other
30.0

 
22.4

 
7.0

 
8.3

  Depreciation and amortization
64.9

 
52.7

 
18.4

 
14.4

Operating loss
$
(59.6
)
 
$
(52.8
)
 
$
(16.5
)
 
$
(21.0
)
 
 
 
 
 
 
 
 
Total digital subscribers (as of December 31)
1,434.8

 
1,128.2

 
1,434.8

 
1,128.2

  Net subscriber additions
306.6

 
285.8

 
62.5

 
99.4

  Churn (%)
2.21
%
 
2.01
%
 
2.71
%
 
1.93
%
 
 
 
 
 
 
 
 
ARPU (1)
$
19

 
$
22

 
$
18

 
$
22

 
 
 
 
 
 
 
 
CPGA (1)
$
144

 
$
159

 
$
135

 
$
165


(1) For information regarding ARPU and CPGA, see “Non-GAAP Reconciliations for the Years and Three Months Ended December 31, 2011 and 2010” included in this release.

       
































NON-GAAP RECONCILIATIONS
FOR THE YEARS AND THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(UNAUDITED)

Operating Income Before Depreciation and Amortization
Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated OIBDA is not a measurement under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that consolidated OIBDA provides useful information to investors because it is an indicator of operating performance, especially in a capital intensive industry such as ours, since it excludes items that are not directly attributable to ongoing business operations. Our consolidated OIBDA calculations are commonly used as some of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. Consolidated OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):

NII Holdings, Inc.
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
2011
 
2010
 
2011
 
2010
Consolidated operating income
$
904.7

 
$
877.4

 
$
116.3

 
$
229.2

Consolidated depreciation
618.4

 
518.8

 
150.9

 
138.8

Consolidated amortization
38.9

 
34.2

 
9.4

 
10.6

Consolidated operating income before
  depreciation and amortization
$
1,562.0

 
$
1,430.4

 
$
276.6

 
$
378.6

 
 
 
 
 
 
 
 


 
Guidance Estimate*
 
Year Ending
December 31,
 
2012
Consolidated operating income
$
650.0

Consolidated depreciation
700.0

Consolidated amortization
50.0

Consolidated operating income before
  depreciation and amortization
$
1,400.0

 
 

* The Company's guidance estimate for OIBDA for the year ending December 31, 2012 includes the impact of approximately $50 million of non-cash equity compensation expense. This estimate is predicated on a number of assumptions, including the assumption that foreign currency exchange rates and general economic conditions in its markets will remain relatively stable during the year. The information regarding the Company's outlook and objectives for 2012, including its guidance estimate for OIBDA for the year ended December 31, 2012, is forward looking and is based upon management's current beliefs, as well as a number of assumptions concerning future events, and as such, should be taken in the context of the risks and uncertainties identified in the “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 included above and of the risks and uncertainties outlined in the SEC filings of NII Holdings, Inc., including the Company's Annual Report on Form 10-K for the year ended December 31, 2010, and, when filed, the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and the Company's other filings with the SEC.
















Average Monthly Revenue Per Handset/Unit in Service (ARPU)
Average monthly revenue per handset/unit in service, or ARPU, is an industry term that measures service revenues, which we refer to as subscriber revenues, per period from our customers divided by the weighted average number of handsets in commercial service during that period. ARPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to ARPU measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. Other revenue includes revenues for such services as roaming, handset maintenance, cancellation fees, analog and other. ARPU can be calculated and reconciled to our consolidated statement of operations as follows (in millions, except ARPU):
NII Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Consolidated service and other revenues
$
6,403.2

 
$
5,347.7

 
$
1,519.3

 
$
1,490.0

 
Less: consolidated analog and other revenues
(777.2
)
 
(669.2
)
 
(185.6
)
 
(182.6
)
 
Total consolidated subscriber revenues
5,626.0

 
$
4,678.5

 
$
1,333.7

 
$
1,307.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARPU calculated with subscriber revenues
$
48

 
$
48

 
$
43

 
$
50

 
 
 
 
 
 
 
 
 
 
ARPU calculated with service and other revenues
$
54

 
$
55

 
$
48

 
$
56

 
 
 
 
 
 
 
 
 
 

Nextel Brazil
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Service and other revenues
$
3,293.6

 
$
2,504.5

 
$
775.0

 
$
738.0

 
Less: analog and other revenues
(404.8
)
 
(328.5
)
 
(95.5
)
 
(92.4
)
 
Total subscriber revenues
2,888.8

 
$
2,176.0

 
$
679.5

 
$
645.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARPU calculated with subscriber revenues
$
65

 
$
63

 
$
56

 
$
67

 
 
 
 
 
 
 
 
 
 
ARPU calculated with service and other revenues
$
74

 
$
72

 
$
64

 
$
76

 
 
 
 
 
 
 
 
 
 

Nextel Mexico
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Service and other revenues
$
2,165.5

 
$
2,023.1

 
$
498.4

 
$
529.1

 
Less: analog and other revenues
(252.3
)
 
(241.0
)
 
(57.0
)
 
(63.5
)
 
Total subscriber revenues
1,913.2

 
$
1,782.1

 
$
441.4

 
$
465.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARPU calculated with subscriber revenues
$
45

 
$
47

 
$
40

 
$
47

 
 
 
 
 
 
 
 
 
 
ARPU calculated with service and other revenues
$
51

 
$
53

 
$
45

 
$
53

 
 
 
 
 
 
 
 
 
 





Nextel Argentina
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Service and other revenues
$
596.6

 
$
517.5

 
$
157.0

 
$
140.9

 
Less: other revenues
(83.3
)
 
(73.8
)
 
(21.3
)
 
(19.7
)
 
Total subscriber revenues
513.3

 
$
443.7

 
$
135.7

 
$
121.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARPU calculated with subscriber revenues
$
35

 
$
34

 
$
35

 
$
36

 
 
 
 
 
 
 
 
 
 
ARPU calculated with service and other revenues
$
40

 
$
40

 
$
40

 
$
41

 
 
 
 
 
 
 
 
 
 

Nextel Peru
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Service and other revenues
$
321.9

 
$
282.0

 
$
82.4

 
$
75.8

 
Less: other revenues
(25.3
)
 
(23.1
)
 
(6.6
)
 
(6.1
)
 
Total subscriber revenues
296.6

 
$
258.9

 
$
75.8

 
$
69.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARPU calculated with subscriber revenues
$
19

 
$
22

 
$
18

 
$
22

 
 
 
 
 
 
 
 
 
 
ARPU calculated with service and other revenues
$
21

 
$
24

 
$
20

 
$
24

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add (CPGA)
Cost per gross add, or CPGA, is an industry term that is calculated by dividing our selling, marketing and handset and accessory subsidy costs, excluding costs unrelated to initial customer acquisition, by our new subscribers during the period, or gross adds. CPGA is not a measurement under accounting principles generally accepted in the United States, may not be similar to CPGA measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe CPGA is a measure of the relative cost of customer acquisition. CPGA can be calculated and reconciled to our consolidated statements of operations as follows (in millions, except CPGA):
NII Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Consolidated digital handset and accessory revenues
$
316.0

 
$
253.4

 
$
76.1

 
$
30.1

 
Less: consolidated uninsured replacement revenues
(23.2
)
 
(18.8
)
 
(5.1
)
 
(5.4
)
 
Consolidated digital handset and accessory revenues, net
292.8

 
234.6

 
71.0

 
24.7

 
Less: consolidated cost of handset and accessory sales
859.3

 
722.4

 
212.4

 
181.2

 
    Consolidated handset subsidy costs
566.5

 
487.8

 
141.4

 
156.5

 
Consolidated selling and marketing
858.5

 
679.5

 
241.7

 
194.8

 
Costs per statement of operations
1,425.0

 
1,167.3

 
383.1

 
351.3

 
Less: consolidated costs unrelated to initial customer
 
 
 
 
 
 
 
 
  Acquisition
(261.2
)
 
(231.8
)
 
(62.6
)
 
(82.3
)
 
    Customer acquisition costs
$
1,163.8

 
$
935.5

 
$
320.5

 
$
269.0

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add
$
310

 
$
286

 
$
303

 
$
313

 
 
 
 
 
 
 
 
 
 




Nextel Brazil
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Digital handset and accessory revenues
$
147.6

 
$
86.8

 
$
36.7

 
$
(10.6
)
 
Less: uninsured replacement revenues
(10.3
)
 
(9.5
)
 
(2.0
)
 
(2.6
)
 
Digital handset and accessory revenues, net
137.3

 
77.3

 
34.7

 
(13.2
)
 
Less: cost of handset and accessory sales
258.2

 
177.2

 
66.7

 
44.9

 
    Handset subsidy costs
120.9

 
99.9

 
32.0

 
58.1

 
Selling and marketing
365.9

 
273.8

 
102.9

 
77.6

 
Costs per statement of operations
486.8

 
373.7

 
134.9

 
135.7

 
Less: costs unrelated to initial customer acquisition
(42.7
)
 
(48.0
)
 
(10.0
)
 
(36.8
)
 
    Customer acquisition costs
444.1

 
325.7

 
124.9

 
98.9

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add
$
296

 
$
250

 
$
322

 
$
292

 
 
 
 
 
 
 
 
 
 

Nextel Mexico
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Digital handset and accessory revenues
$
83.9

 
$
90.7

 
$
18.5

 
$
21.0

 
Less: uninsured replacement revenues
(12.8
)
 
(9.2
)
 
(3.1
)
 
(2.8
)
 
Digital handset and accessory revenues, net
71.1

 
81.5

 
15.4

 
18.2

 
Less: cost of handset and accessory sales
436.3

 
402.7

 
104.8

 
98.8

 
    Handset subsidy costs
365.2

 
321.2

 
89.4

 
80.6

 
Selling and marketing
287.5

 
275.5

 
70.5

 
76.1

 
Costs per statement of operations
652.7

 
596.7

 
159.9

 
156.7

 
Less: costs unrelated to initial customer acquisition
(201.5
)
 
(170.9
)
 
(48.2
)
 
(42.1
)
 
    Customer acquisition costs
451.2

 
425.8

 
111.7

 
114.6

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add
$
413

 
$
395

 
$
381

 
$
432

 
 
 
 
 
 
 
 
 
 

Nextel Argentina
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Digital handset and accessory revenues
$
52.3

 
$
46.0

 
$
13.2

 
$
11.7

 
Less: cost of handset and accessory sales
88.1

 
74.8

 
23.1

 
18.2

 
    Handset subsidy costs
35.8

 
28.8

 
9.9

 
6.5

 
Selling and marketing
64.3

 
51.3

 
18.5

 
15.0

 
Costs per statement of operations
100.1

 
80.1

 
28.4

 
21.5

 
Less: costs unrelated to initial customer acquisition
(9.2
)
 
(7.9
)
 
(2.5
)
 
(1.6
)
 
    Customer acquisition costs
90.9

 
72.2

 
25.9

 
19.9

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add
$
197

 
$
217

 
$
135

 
$
235

 
 
 
 
 
 
 
 
 
 




Nextel Peru
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(unaudited)
 
Digital handset and accessory revenues
$
32.0

 
$
29.8

 
$
7.6

 
$
8.0

 
Less: cost of handset and accessory sales
71.9

 
62.1

 
16.5

 
17.6

 
    Handset subsidy costs
39.9

 
32.3

 
8.9

 
9.6

 
Selling and marketing
62.7

 
55.0

 
16.6

 
18.3

 
Costs per statement of operations
102.6

 
87.3

 
25.5

 
27.9

 
Less: costs unrelated to initial customer acquisition
(7.2
)
 
(4.4
)
 
(1.7
)
 
(1.3
)
 
    Customer acquisition costs
95.4

 
82.9

 
23.8

 
26.6

 
 
 
 
 
 
 
 
 
 
Cost per Gross Add
$
144

 
$
159

 
$
135

 
$
165

 
 
 
 
 
 
 
 
 
 


Net Debt

Net debt represents total debt less cash, cash equivalents, short-term and long-term investments. Net debt to consolidated operating income before depreciation and amortization represents net debt divided by consolidated operating income before depreciation and amortization. Prior to 2008, we calculated net debt as total debt less cash and cash equivalents. In the second quarter of 2010, we extended the permissible investment maturity dates for cash investments, which resulted in the classification of some of our cash investments as long-term investments. As a result, we now include the cash in long-term investments to the items subtracted from total debt to calculate net debt. Net debt is not a measurement under accounting principles generally accepted in the United States, may not be similar to net debt measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our balance sheets. We believe that net debt and net debt to consolidated operating income before depreciation and amortization provide useful information concerning our liquidity and leverage. Net debt as of December 31, 2011 can be calculated as follows (in millions):
NII Holdings, Inc.
Total debt
$
4,826.6

Add: debt discounts
28.3

Less: cash and cash equivalents
2,322.9

Less: short-term investments
343.4

Net debt
$
2,188.6

 
 








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