UPDATE: NII Holdings Raises 2010 Subscriber, Revenue Forecast

(Updates with comments by NII Holdings executives about Mexico's wireless spectrum auction.)

 
   DOW JONES NEWSWIRES 
 

Latin American mobile operator NII Holdings Inc.'s (NIHD) on Thursday lifted its 2010 guidance for subscriber growth and sales following strong operating results in the first half of the year.

The provider of wireless services under the Nextel brand in five countries raised its subscriber-growth target for the year to 1.45 million to 1.53 million from 1.28 million to 1.38 million and boosted revenue expectations to $5.4 billion to $5.5 billion from $5.2 billion from $5.4 billion.

NII Holdings also raised its capital expenditure forecast to a range between $925 million and $975 million, from $850 million to $950 million, owing to higher-than-expected subscriber growth, the deployment of a third-generation wireless network in Chile, and investments in its network in Brazil.

NII Holdings has grown its subscriber base in recent quarters at the same time that it has reduced churn, or the number of customers who cancel their service. Net subscriber additions rose 62% on the year to 392,300 in the quarter, while total subscribers rose 22% to 8.2 million at the end of June. Churn fell to 1.71% from 2.15%, while average revenue per user rose 6.8% to $47.

In Mexico, its largest market, the company's subscriber base grew 12.3% to nearly 3.2 million at the end of the quarter.

Earlier this month, Nextel Mexico and its partner, Grupo Televisa SAB (TV), submitted the sole bid for a 30MHz nationwide block of spectrum in the 1710MHz-2170MHz frequency band in a government-sponsored auction. Televisa, Mexico's No. 1 broadcaster and largest producer of Spanish-language content in the world, has pledged to invest $1.44 billion for a 30% stake in Nextel Mexico if the partners obtain enough spectrum to deploy a 3G network.

Spectrum caps and other requirements imposed by Mexico's antitrust agency meant that only the Televisa-Nextel consortium could bid for one of the two nationwide licenses up for sale, which has stoked the ire of some competitors and congress members who say the auction unfairly favored the two companies. The consortium's 180.3 million peso ($14.2 million) bid, the minimum outlined in the auction rules, has also come under fire by critics who say that similar blocks of spectrum in the same auction attracted much higher offers from America Movil SAB (AMX) and Telefonica SAB (TEF).

"We would expect that those rules that were set for the auction would be adhered to and we would receive our spectrum," NII Holdings Chief Executive Steve Dussek said during a conference call.

"In terms of the competitors making noise about that, obviously they are," he added.

Federal telecommunications regulator Cofetel has 30 days after the close of bidding on July 19 to certify the auction winners.

NII Holdings expects to start offering the first services over its 3G network in Mexico within 18 months after it receives the spectrum, Vice President of Investor Relations Tim Perrott said in a telephone interview.

Dussek said that NII Holdings is also keeping an eye on possible spectrum auctions in Brazil and Argentina.

The company has deployed a 3G network in Peru based on W-CDMA technology and is rolling out a similar network in Chile as it looks to offer more data services than is currently possible with iDEN, a proprietary wireless technology developed by telecommunications equipment maker Motorola Inc. (MOT) that NII Holdings uses in all of its markets.

NII Holdings said Thursday that its second-quarter earnings slumped 44% due to higher interest costs and lower foreign-currency gains.

The company reported a profit of $75.5 million, or 44 cents a share, down from $134.3 million, or 79 cents a share, a year earlier. Revenue jumped 28% to $1.35 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of 56 cents a share on $1.34 billion in revenue.

Operating margin rose to 15.7% from 15.4%, but that was more than offset as foreign currency gains tumbled 62% and interest costs more than doubled.

The company's shares fell nearly 1.9% to close at $37.70 Thursday.

-By Ken Parks, Nathan Becker and Kevin Kingsbury, Dow Jones Newswires; 52-55-5980-5177; ken.parks@dowjones.com

(END) Dow Jones Newswires

July 29, 2010 18:45 ET (22:45 GMT)

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