NII Holdings Inc.NIHD

Morningstar Rating

Stock Research and Analysis

by Imari Love

Although NII Holdings should see solid opportunities in Latin America's wireless market during the next few years, we think increasing competition will place greater pressure on the firm's operations going forward. Technology risks and the firm's lack Read more

Bulls Say

The firm's niche in Latin America is very profitable, with average monthly revenue per customer of $46.

By investing only in populated areas where economic activity is high, NII has been able to enjoy high returns on investments and strong operating margins.

NII increased its population coverage by more than 13 million in the first nine months of 2009. The company plans to continue expanding its footprint in the region, which not only will allow it to service more customers but also should result in lower interconnection costs and roaming charges.

NII has done a good job of lowering its churn rate in Mexico. The firm has upped its customer retention investments and tightened its credit standards to focus on higher-value, lower-risk customers. The churn rate in Mexico (2.24%) is currently at multi-year lows. Read more

Bears Say

NII competes with telecom giants that are beginning to target the postpaid wireless market. America Movil is relaunching its push-to-talk service, which could affect NII's market share. These well-capitalized operators have the ability to launch a price war, which could significantly hurt NII's profit margins.

IDEN technology currently can't be upgraded to 3G, which prevents significantly faster data-transfer speeds.

Although currency movements have provided a tail wind for NII in the past, rapid declines in its operating currencies against the U.S. dollar as of late could hurt the firm's performance in the near term, resulting in lower top-line growth.

The firm faces immense competition in Mexico from Telcel (America Movil), which controls about 80% of Mexico's wireless market. Given that Mexico is the company's most profitable segment, NII's entire business could suffer if its Mexican operation comes under significant pricing pressure. Read more

Strategy

NII targets its push-to-talk wireless service at business customers such as building contractors and security firms that need instant communications to conduct their businesses. The company is constantly Read more

Management

Steven Shindler stepped down as CEO in February 2008 after the company appointed telecom veteran Steven P. Dussek as CEO. Shindler continues to serve as chairman and remains active in managing the business. Dussek was previously CEO of Dobson Communications. Read more

Profile

NII Holdings was incorporated in Virginia but conducts all of its businesses in Latin America. The firm provides a push-to-talk wireless service, using technology licensed Read more

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