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Share Name | Share Symbol | Market | Type |
---|---|---|---|
NII Holdings Inc | NASDAQ:NIHD | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.17 | 2.15 | 2.22 | 0 | 01:00:00 |
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
THE SECURITIES EXCHANGE ACT OF 1934
|
||
|
|
|
For the quarterly period ended June 30, 2017
|
||
or
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||
o
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|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
THE SECURITIES EXCHANGE ACT OF 1934
|
||
|
|
|
For the transition period from to
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||
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|
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Commission file number 001-37488
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Delaware
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|
91-1671412
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(State or other jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
1875 Explorer Street, Suite 800
Reston, Virginia
(Address of principal executive offices)
|
|
20190
(Zip Code)
|
Large accelerated filer
o
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|
Accelerated filer
þ
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|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
|
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|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
Number of Shares Outstanding
|
Title of Class
|
on August 3, 2017
|
Common Stock, $0.001 par value per share
|
100,483,280
|
|
|
Page
|
|
||
|
||
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||
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||
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||
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|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
Unaudited
|
|||||||
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
ASSETS
|
|||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
219,555
|
|
|
$
|
257,380
|
|
Short-term investments
|
62,856
|
|
|
73,859
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $56,475 and $54,221
|
138,097
|
|
|
153,806
|
|
||
Handset and accessory inventory
|
3,292
|
|
|
8,295
|
|
||
Prepaid expenses and other
|
234,920
|
|
|
280,145
|
|
||
Total current assets
|
658,720
|
|
|
773,485
|
|
||
Property, plant and equipment, net
|
104,833
|
|
|
129,475
|
|
||
Intangible assets, net
|
196,748
|
|
|
243,681
|
|
||
Other assets
|
237,733
|
|
|
271,868
|
|
||
Total assets
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$
|
1,198,034
|
|
|
$
|
1,418,509
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|||||||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
54,650
|
|
|
$
|
69,186
|
|
Accrued expenses and other
|
240,390
|
|
|
271,899
|
|
||
Deferred revenues
|
7,593
|
|
|
11,614
|
|
||
Current portion of long-term debt
|
495,921
|
|
|
540,474
|
|
||
Total current liabilities
|
798,554
|
|
|
893,173
|
|
||
Long-term debt
|
208,269
|
|
|
215,842
|
|
||
Other long-term liabilities
|
194,827
|
|
|
143,472
|
|
||
Total liabilities
|
1,201,650
|
|
|
1,252,487
|
|
||
Contingencies (Note 7)
|
|
|
|
|
|
||
Stockholders’ (deficit) equity
|
|
|
|
|
|
||
Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001, 140,000 shares authorized, 100,383 shares issued and outstanding — 2017, 100,258 shares issued and outstanding — 2016
|
100
|
|
|
100
|
|
||
Paid-in capital
|
2,079,639
|
|
|
2,076,612
|
|
||
Accumulated deficit
|
(2,012,239
|
)
|
|
(1,834,756
|
)
|
||
Accumulated other comprehensive loss
|
(71,116
|
)
|
|
(75,934
|
)
|
||
Total stockholders’ (deficit) equity
|
(3,616
|
)
|
|
166,022
|
|
||
Total liabilities and stockholders’ (deficit) equity
|
$
|
1,198,034
|
|
|
$
|
1,418,509
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share amounts)
Unaudited
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|||||||
Service and other revenues
|
$
|
220,079
|
|
|
$
|
243,122
|
|
|
$
|
463,572
|
|
|
$
|
463,724
|
|
Handset and accessory revenues
|
5,055
|
|
|
6,091
|
|
|
12,517
|
|
|
12,046
|
|
||||
|
225,134
|
|
|
249,213
|
|
|
476,089
|
|
|
475,770
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of service (exclusive of depreciation and amortization included below)
|
87,842
|
|
|
81,910
|
|
|
190,550
|
|
|
171,934
|
|
||||
Cost of handsets and accessories
|
13,041
|
|
|
8,861
|
|
|
21,707
|
|
|
20,027
|
|
||||
Selling, general and administrative
|
129,612
|
|
|
135,922
|
|
|
264,078
|
|
|
269,333
|
|
||||
Impairment, restructuring and other charges
|
54,235
|
|
|
10,557
|
|
|
126,174
|
|
|
16,472
|
|
||||
Depreciation
|
5,717
|
|
|
29,660
|
|
|
14,603
|
|
|
59,770
|
|
||||
Amortization
|
3,618
|
|
|
11,054
|
|
|
7,757
|
|
|
21,049
|
|
||||
|
294,065
|
|
|
277,964
|
|
|
624,869
|
|
|
558,585
|
|
||||
Operating loss
|
(68,931
|
)
|
|
(28,751
|
)
|
|
(148,780
|
)
|
|
(82,815
|
)
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
(26,405
|
)
|
|
(27,181
|
)
|
|
(57,967
|
)
|
|
(52,403
|
)
|
||||
Interest income
|
7,808
|
|
|
10,802
|
|
|
16,944
|
|
|
20,526
|
|
||||
Foreign currency transaction (losses) gains, net
|
(13,352
|
)
|
|
43,356
|
|
|
(1,977
|
)
|
|
82,998
|
|
||||
Other income (expense), net
|
7,186
|
|
|
(2,446
|
)
|
|
5,413
|
|
|
(4,942
|
)
|
||||
|
(24,763
|
)
|
|
24,531
|
|
|
(37,587
|
)
|
|
46,179
|
|
||||
Loss from continuing operations before reorganization items and income tax benefit (provision)
|
(93,694
|
)
|
|
(4,220
|
)
|
|
(186,367
|
)
|
|
(36,636
|
)
|
||||
Reorganization items
|
449
|
|
|
(223
|
)
|
|
447
|
|
|
(598
|
)
|
||||
Income tax benefit (provision)
|
5,778
|
|
|
(353
|
)
|
|
5,778
|
|
|
(369
|
)
|
||||
Net loss from continuing operations
|
(87,467
|
)
|
|
(4,796
|
)
|
|
(180,142
|
)
|
|
(37,603
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes
|
2,697
|
|
|
(5,075
|
)
|
|
2,659
|
|
|
(8,856
|
)
|
||||
Net loss
|
$
|
(84,770
|
)
|
|
$
|
(9,871
|
)
|
|
$
|
(177,483
|
)
|
|
$
|
(46,459
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss from continuing operations per common share, basic and diluted
|
$
|
(0.87
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(1.80
|
)
|
|
$
|
(0.37
|
)
|
Net income (loss) from discontinued operations per common share, basic and diluted
|
0.02
|
|
|
(0.05
|
)
|
|
0.03
|
|
|
$
|
(0.09
|
)
|
|||
Net loss per common share, basic and diluted
|
$
|
(0.85
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding, basic and diluted
|
100,298
|
|
|
100,013
|
|
|
100,279
|
|
|
100,009
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive (loss) income, net of income taxes
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
$
|
12,386
|
|
|
$
|
105,489
|
|
|
$
|
4,818
|
|
|
$
|
188,993
|
|
Other comprehensive income
|
12,386
|
|
|
105,489
|
|
|
4,818
|
|
|
188,993
|
|
||||
Net loss
|
(84,770
|
)
|
|
(9,871
|
)
|
|
(177,483
|
)
|
|
(46,459
|
)
|
||||
Total comprehensive (loss) income
|
$
|
(72,384
|
)
|
|
$
|
95,618
|
|
|
$
|
(172,665
|
)
|
|
$
|
142,534
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
(in thousands)
Unaudited
|
||||||||||||||||||||||
|
Common Stock
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
(Deficit) Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2016
|
100,258
|
|
|
$
|
100
|
|
|
$
|
2,076,612
|
|
|
$
|
(1,834,756
|
)
|
|
$
|
(75,934
|
)
|
|
$
|
166,022
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(177,483
|
)
|
|
—
|
|
|
(177,483
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,818
|
|
|
4,818
|
|
|||||
Share-based compensation activity
|
125
|
|
|
—
|
|
|
3,027
|
|
|
—
|
|
|
—
|
|
|
3,027
|
|
|||||
Balance, June 30, 2017
|
100,383
|
|
|
$
|
100
|
|
|
$
|
2,079,639
|
|
|
$
|
(2,012,239
|
)
|
|
$
|
(71,116
|
)
|
|
$
|
(3,616
|
)
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
|
|||||||
|
Six Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2016
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(177,483
|
)
|
|
$
|
(46,459
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
||||
(Income) loss from discontinued operations
|
(2,659
|
)
|
|
8,856
|
|
||
Amortization of debt premiums and financing costs
|
(1,796
|
)
|
|
(38
|
)
|
||
Depreciation and amortization
|
22,360
|
|
|
80,819
|
|
||
Provision for losses on accounts receivable
|
43,164
|
|
|
38,506
|
|
||
Foreign currency transaction losses (gains), net
|
1,977
|
|
|
(82,998
|
)
|
||
Impairment charges and losses on disposals of fixed assets
|
67,038
|
|
|
8,573
|
|
||
Share-based payment expense
|
2,781
|
|
|
3,634
|
|
||
Other, net
|
1,000
|
|
|
1,448
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(29,714
|
)
|
|
(30,333
|
)
|
||
Prepaid value-added taxes
|
13,889
|
|
|
17,915
|
|
||
Handset and accessory inventory
|
4,139
|
|
|
12,239
|
|
||
Prepaid expenses and other
|
(1,592
|
)
|
|
9,423
|
|
||
Other long-term assets
|
(16,902
|
)
|
|
(7,051
|
)
|
||
Accrued value-added taxes
|
(210
|
)
|
|
(4,126
|
)
|
||
Other long-term liabilities
|
52,978
|
|
|
7,845
|
|
||
Accounts payable, accrued expenses, deferred revenues and other
|
(25,407
|
)
|
|
(10,223
|
)
|
||
Net cash (used in) provided by operating activities
|
(46,437
|
)
|
|
8,030
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(36,991
|
)
|
|
(35,662
|
)
|
||
Purchases of investments
|
(454,223
|
)
|
|
(504,932
|
)
|
||
Proceeds from sales of investments
|
466,680
|
|
|
512,860
|
|
||
Change in restricted cash and other deposits
|
29,742
|
|
|
33,706
|
|
||
Other, net
|
(1,985
|
)
|
|
(2,490
|
)
|
||
Total investing cash provided by continuing operations
|
3,223
|
|
|
3,482
|
|
||
Total investing cash provided by discontinued operations
|
49,491
|
|
|
13,545
|
|
||
Net cash provided by investing activities
|
52,714
|
|
|
17,027
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments under equipment financing facility and local bank loans
|
(42,168
|
)
|
|
(27,905
|
)
|
||
Repayments under capital leases and other
|
(2,119
|
)
|
|
(675
|
)
|
||
Net cash used in financing activities
|
(44,287
|
)
|
|
(28,580
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
185
|
|
|
(601
|
)
|
||
Net decrease in cash and cash equivalents
|
(37,825
|
)
|
|
(4,124
|
)
|
||
Cash and cash equivalents, beginning of period
|
257,380
|
|
|
342,184
|
|
||
Cash and cash equivalents, end of period
|
$
|
219,555
|
|
|
$
|
338,060
|
|
Note 1.
|
Basis of Presentation
|
Note 2.
|
Impairment, Restructuring and Other Charges
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Brazil
|
$
|
53,938
|
|
|
$
|
9,244
|
|
|
$
|
125,631
|
|
|
$
|
13,509
|
|
Corporate
|
297
|
|
|
1,313
|
|
|
543
|
|
|
2,963
|
|
||||
Total impairment, restructuring and other charges
|
$
|
54,235
|
|
|
$
|
10,557
|
|
|
$
|
126,174
|
|
|
$
|
16,472
|
|
Balance, December 31, 2016
|
$
|
24,103
|
|
Restructuring charges
|
57,553
|
|
|
Cash payments
|
(10,757
|
)
|
|
Foreign currency translation adjustment
|
(2,600
|
)
|
|
Balance, June 30, 2017
|
$
|
68,299
|
|
Note 3.
|
Supplemental Financial Statement Information
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Cash in escrow — Nextel Mexico sale
|
$
|
113,812
|
|
|
$
|
163,435
|
|
Cash collateral related to performance bonds
|
45,416
|
|
|
30,928
|
|
||
Value-added taxes
|
26,749
|
|
|
29,829
|
|
||
Prepayment for roaming and radio access network, or RAN, sharing agreements
|
18,486
|
|
|
27,731
|
|
||
Other prepaid expenses
|
25,358
|
|
|
23,020
|
|
||
Other current assets
|
5,099
|
|
|
5,202
|
|
||
|
$
|
234,920
|
|
|
$
|
280,145
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Land
|
$
|
489
|
|
|
$
|
675
|
|
Building and leasehold improvements
|
978
|
|
|
1,489
|
|
||
Network equipment, communication towers and network software
|
80,849
|
|
|
95,298
|
|
||
Software, office equipment, furniture and fixtures and other
|
11,987
|
|
|
10,952
|
|
||
Less: Accumulated depreciation
|
(5,134
|
)
|
|
—
|
|
||
|
89,169
|
|
|
108,414
|
|
||
Construction in progress
|
15,664
|
|
|
21,061
|
|
||
|
$
|
104,833
|
|
|
$
|
129,475
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Average Useful Life (Years)
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
||||||||||||
|
|
|
(in thousands)
|
||||||||||||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Licenses
|
26
|
|
$
|
184,962
|
|
|
$
|
(1,813
|
)
|
|
$
|
183,149
|
|
|
$
|
226,426
|
|
|
$
|
—
|
|
|
$
|
226,426
|
|
Customer relationships
|
4
|
|
15,299
|
|
|
(1,700
|
)
|
|
13,599
|
|
|
17,255
|
|
|
—
|
|
|
17,255
|
|
||||||
|
|
|
$
|
200,261
|
|
|
$
|
(3,513
|
)
|
|
$
|
196,748
|
|
|
$
|
243,681
|
|
|
$
|
—
|
|
|
$
|
243,681
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Brazil judicial deposits
|
$
|
123,200
|
|
|
$
|
85,123
|
|
Prepayment for roaming and RAN sharing agreements
|
25,253
|
|
|
56,523
|
|
||
Cash collateral related to performance bonds
|
3,094
|
|
|
37,433
|
|
||
Other
|
86,186
|
|
|
92,789
|
|
||
|
$
|
237,733
|
|
|
$
|
271,868
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Network system and information technology
|
$
|
49,336
|
|
|
$
|
50,286
|
|
Contingencies
|
48,316
|
|
|
54,260
|
|
||
Payroll related items and commissions
|
32,744
|
|
|
45,187
|
|
||
Non-income based taxes
|
11,548
|
|
|
28,158
|
|
||
Capital expenditures
|
6,430
|
|
|
17,514
|
|
||
Other
|
92,016
|
|
|
76,494
|
|
||
|
$
|
240,390
|
|
|
$
|
271,899
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Accrued lease terminations and other restructuring charges
|
$
|
74,439
|
|
|
$
|
31,365
|
|
Non-current withholding taxes
|
61,001
|
|
|
55,078
|
|
||
Other
|
59,387
|
|
|
57,029
|
|
||
|
$
|
194,827
|
|
|
$
|
143,472
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in thousands)
|
||||||
Capital expenditures
|
|
|
|
|
|
|||
Cash paid for capital expenditures, including capitalized interest on property, plant and equipment
|
|
$
|
36,991
|
|
|
$
|
35,662
|
|
Change in capital expenditures accrued and unpaid or financed, including interest capitalized
|
|
(18,552
|
)
|
|
(24,531
|
)
|
||
|
|
$
|
18,439
|
|
|
$
|
11,131
|
|
Note 4.
|
Discontinued Operations
|
Note 5.
|
Debt
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Brazil equipment financing facility
|
$
|
267,438
|
|
|
$
|
291,597
|
|
Brazil bank loans
|
220,605
|
|
|
242,076
|
|
||
Brazil spectrum financing
|
122,629
|
|
|
125,684
|
|
||
Brazil capital lease and tower financing obligations
|
93,284
|
|
|
96,722
|
|
||
Other
|
234
|
|
|
237
|
|
||
Total debt
|
704,190
|
|
|
756,316
|
|
||
Less: current portion
|
(495,921
|
)
|
|
(540,474
|
)
|
||
|
$
|
208,269
|
|
|
$
|
215,842
|
|
Note 6.
|
Fair Value Measurements
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Brazil equipment financing
|
$
|
267,438
|
|
|
$
|
257,967
|
|
|
$
|
291,597
|
|
|
$
|
280,893
|
|
Brazil bank loans and other
|
220,839
|
|
|
206,727
|
|
|
242,313
|
|
|
221,458
|
|
||||
Brazil spectrum financing
|
122,629
|
|
|
102,518
|
|
|
125,684
|
|
|
117,059
|
|
||||
|
$
|
610,906
|
|
|
$
|
567,212
|
|
|
$
|
659,594
|
|
|
$
|
619,410
|
|
Note 7.
|
Contingencies
|
Note 8.
|
Income Taxes
|
Note 9.
|
Segment Reporting
|
|
Nextel Brazil
|
|
Corporate
|
|
Consolidated
|
||||||
|
(in thousands)
|
||||||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
225,105
|
|
|
$
|
29
|
|
|
$
|
225,134
|
|
Segment earnings (losses)
|
$
|
3,080
|
|
|
$
|
(8,441
|
)
|
|
$
|
(5,361
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other charges
|
|
|
|
|
(54,235
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(9,335
|
)
|
|||
Foreign currency transaction losses, net
|
|
|
|
|
|
|
(13,352
|
)
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(11,411
|
)
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
|
|
|
|
|
|
$
|
(93,694
|
)
|
||
Capital expenditures
|
$
|
8,988
|
|
|
$
|
—
|
|
|
$
|
8,988
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
249,168
|
|
|
$
|
45
|
|
|
$
|
249,213
|
|
Segment earnings (losses)
|
$
|
32,256
|
|
|
$
|
(9,736
|
)
|
|
$
|
22,520
|
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other charges
|
|
|
|
|
(10,557
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(40,714
|
)
|
|||
Foreign currency transaction gains, net
|
|
|
|
|
|
|
43,356
|
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(18,825
|
)
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
|
|
|
|
|
|
$
|
(4,220
|
)
|
||
Capital expenditures
|
$
|
3,575
|
|
|
$
|
—
|
|
|
$
|
3,575
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
476,030
|
|
|
$
|
59
|
|
|
$
|
476,089
|
|
Segment earnings (losses)
|
$
|
15,453
|
|
|
$
|
(15,699
|
)
|
|
$
|
(246
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other charges
|
|
|
|
|
(126,174
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(22,360
|
)
|
|||
Foreign currency transaction losses, net
|
|
|
|
|
|
|
(1,977
|
)
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(35,610
|
)
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
|
|
|
|
|
|
$
|
(186,367
|
)
|
||
Capital expenditures
|
$
|
18,439
|
|
|
$
|
—
|
|
|
$
|
18,439
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
475,671
|
|
|
$
|
99
|
|
|
$
|
475,770
|
|
Segment earnings (losses)
|
$
|
36,016
|
|
|
$
|
(21,540
|
)
|
|
$
|
14,476
|
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other charges
|
|
|
|
|
(16,472
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(80,819
|
)
|
|||
Foreign currency transaction gains, net
|
|
|
|
|
|
|
82,998
|
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(36,819
|
)
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
|
|
|
|
|
|
$
|
(36,636
|
)
|
||
Capital expenditures
|
$
|
11,131
|
|
|
$
|
—
|
|
|
$
|
11,131
|
|
|
|
|
|
|
|
||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
|||
Identifiable assets
|
$
|
862,217
|
|
|
$
|
335,817
|
|
|
$
|
1,198,034
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|||
Identifiable assets
|
$
|
1,000,098
|
|
|
$
|
418,411
|
|
|
$
|
1,418,509
|
|
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
|
|
•
|
our consolidated financial condition as of June 30, 2017 and December 31, 2016 and our consolidated results of operations for the three- and six-month periods ended June 30, 2017 and 2016; and
|
•
|
significant factors that we believe could affect our prospective financial condition and results of operations.
|
•
|
mobile telephone voice service;
|
•
|
wireless data services, including mobile internet services, text messaging services and email services;
|
•
|
push-to-talk services, including Direct Connect
®
, Prip and International Direct Connect
®
services, which allow subscribers to talk to each other instantly;
|
•
|
other value-added services, including location-based services, which include the use of Global Positioning System, or GPS, technologies; digital media services; and a wide ranging set of applications available via our content management system, as well as the Android
TM
open application market;
|
•
|
business solutions, such as security, work force management, logistics support and other applications that help our business subscribers improve their productivity; and
|
•
|
voice and data roaming services outside of our coverage areas.
|
•
|
aligning our costs with our current business through continuous evaluation and streamlining of all capital and operating expenditures;
|
•
|
focusing on higher value customer segments that generate higher average revenue per user, or ARPU, and lower subscriber turnover;
|
•
|
utilizing the most profitable sales channels;
|
•
|
offering a unique and superior customer experience, including a reliable and high quality wireless network and online self-care and rate plan flexibility; and
|
•
|
building on the strength of the unique positioning of the Nextel brand.
|
•
|
revenue recognition;
|
•
|
allowance for doubtful accounts;
|
•
|
depreciation of property, plant and equipment;
|
•
|
amortization of intangible assets;
|
•
|
valuation of long-lived assets;
|
•
|
foreign currency;
|
•
|
loss contingencies; and
|
•
|
income taxes.
|
|
Three Months Ended June 30,
|
|
Actual Percent Change From Prior Year
|
|||||
|
2017
|
|
2016
|
|
||||
Brazilian real
|
3.21
|
|
|
3.51
|
|
|
9
|
%
|
|
Six Months Ended June 30,
|
|
Actual Percent Change From Prior Year
|
|||||
|
2017
|
|
2016
|
|
||||
Brazilian real
|
3.17
|
|
|
3.71
|
|
|
15
|
%
|
|
2016
|
|
2017
|
||||||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
|
March
|
|
June
|
||||||
Brazilian real
|
3.56
|
|
|
3.21
|
|
|
3.25
|
|
|
3.26
|
|
|
3.13
|
|
|
3.31
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||
|
|
|
Dollars
|
|
Percent
|
|
Percent
|
||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||
Three Months Ended
|
|
|
|
|
|
|
|
|
|
||||||||
Brazil segment earnings
|
3,080
|
|
|
32,256
|
|
|
(29,176
|
)
|
|
(90
|
)%
|
|
(91
|
)%
|
|||
Corporate segment losses
|
(8,441
|
)
|
|
(9,736
|
)
|
|
1,295
|
|
|
(13
|
)%
|
|
(13
|
)%
|
|||
Consolidated segment (losses) earnings
|
(5,361
|
)
|
|
22,520
|
|
|
(27,881
|
)
|
|
(124
|
)%
|
|
(115
|
)%
|
|||
Impairment, restructuring and other charges
|
(54,235
|
)
|
|
(10,557
|
)
|
|
(43,678
|
)
|
|
NM
|
|
|
NM
|
|
|||
Depreciation and amortization
|
(9,335
|
)
|
|
(40,714
|
)
|
|
31,379
|
|
|
(77
|
)%
|
|
(79
|
)%
|
|||
Operating loss
|
(68,931
|
)
|
|
(28,751
|
)
|
|
(40,180
|
)
|
|
140
|
%
|
|
127
|
%
|
|||
Interest expense, net
|
(26,405
|
)
|
|
(27,181
|
)
|
|
776
|
|
|
(3
|
)%
|
|
(15
|
)%
|
|||
Interest income
|
7,808
|
|
|
10,802
|
|
|
(2,994
|
)
|
|
(28
|
)%
|
|
(34
|
)%
|
|||
Foreign currency transaction (losses) gains, net
|
(13,352
|
)
|
|
43,356
|
|
|
(56,708
|
)
|
|
(131
|
)%
|
|
(128
|
)%
|
|||
Other income (expense), net
|
7,186
|
|
|
(2,446
|
)
|
|
9,632
|
|
|
NM
|
|
|
NM
|
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
(93,694
|
)
|
|
(4,220
|
)
|
|
(89,474
|
)
|
|
NM
|
|
|
NM
|
|
|||
Reorganization items
|
449
|
|
|
(223
|
)
|
|
672
|
|
|
NM
|
|
|
NM
|
|
|||
Income tax benefit (provision)
|
5,778
|
|
|
(353
|
)
|
|
6,131
|
|
|
NM
|
|
|
NM
|
|
|||
Net loss from continuing operations
|
(87,467
|
)
|
|
(4,796
|
)
|
|
(82,671
|
)
|
|
NM
|
|
|
NM
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
2,697
|
|
|
(5,075
|
)
|
|
7,772
|
|
|
(153
|
)%
|
|
(153
|
)%
|
|||
Net loss
|
$
|
(84,770
|
)
|
|
$
|
(9,871
|
)
|
|
$
|
(74,899
|
)
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended
|
|
|
|
|
|
|
|
|
|
||||||||
Brazil segment earnings
|
15,453
|
|
|
36,016
|
|
|
(20,563
|
)
|
|
(57
|
)%
|
|
(63
|
)%
|
|||
Corporate segment losses
|
(15,699
|
)
|
|
(21,540
|
)
|
|
5,841
|
|
|
(27
|
)%
|
|
(27
|
)%
|
|||
Consolidated segment (losses) earnings
|
(246
|
)
|
|
14,476
|
|
|
(14,722
|
)
|
|
(102
|
)%
|
|
(101
|
)%
|
|||
Impairment, restructuring and other charges
|
(126,174
|
)
|
|
(16,472
|
)
|
|
(109,702
|
)
|
|
NM
|
|
|
NM
|
|
|||
Depreciation and amortization
|
(22,360
|
)
|
|
(80,819
|
)
|
|
58,459
|
|
|
(72
|
)%
|
|
(76
|
)%
|
|||
Operating loss
|
(148,780
|
)
|
|
(82,815
|
)
|
|
(65,965
|
)
|
|
80
|
%
|
|
61
|
%
|
|||
Interest expense, net
|
(57,967
|
)
|
|
(52,403
|
)
|
|
(5,564
|
)
|
|
11
|
%
|
|
(13
|
)%
|
|||
Interest income
|
16,944
|
|
|
20,526
|
|
|
(3,582
|
)
|
|
(17
|
)%
|
|
(29
|
)%
|
|||
Foreign currency transaction (losses) gains, net
|
(1,977
|
)
|
|
82,998
|
|
|
(84,975
|
)
|
|
(102
|
)%
|
|
(102
|
)%
|
|||
Other income (expense), net
|
5,413
|
|
|
(4,942
|
)
|
|
10,355
|
|
|
(210
|
)%
|
|
(194
|
)%
|
|||
Loss from continuing operations before reorganization items and income tax provision
|
(186,367
|
)
|
|
(36,636
|
)
|
|
(149,731
|
)
|
|
NM
|
|
|
NM
|
|
|||
Reorganization items
|
447
|
|
|
(598
|
)
|
|
1,045
|
|
|
(175
|
)%
|
|
(175
|
)%
|
|||
Income tax benefit (provision)
|
5,778
|
|
|
(369
|
)
|
|
6,147
|
|
|
NM
|
|
|
NM
|
|
|||
Net loss from continuing operations
|
(180,142
|
)
|
|
(37,603
|
)
|
|
(142,539
|
)
|
|
NM
|
|
|
NM
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
2,659
|
|
|
(8,856
|
)
|
|
11,515
|
|
|
(130
|
)%
|
|
(130
|
)%
|
|||
Net loss
|
$
|
(177,483
|
)
|
|
$
|
(46,459
|
)
|
|
$
|
(131,024
|
)
|
|
282
|
%
|
|
232
|
%
|
1.
|
Impairment, restructuring and other charges
|
2.
|
Depreciation and amortization
|
3.
|
Interest expense, net
|
4.
|
Foreign currency transaction (losses) gains, net
|
|
June 30, 2017
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
June 30, 2016
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||
|
|
|
|
|
Dollars
|
|
Percent
|
|
Percent
|
||||||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and other revenues
|
$
|
220,050
|
|
|
98
|
%
|
|
$
|
243,077
|
|
|
98
|
%
|
|
$
|
(23,027
|
)
|
|
(9
|
)%
|
|
(17
|
)%
|
Handset and accessory revenues
|
5,055
|
|
|
2
|
%
|
|
6,091
|
|
|
2
|
%
|
|
(1,036
|
)
|
|
(17
|
)%
|
|
(24
|
)%
|
|||
Cost of handsets and accessories
|
(13,041
|
)
|
|
(6
|
)%
|
|
(8,861
|
)
|
|
(3
|
)%
|
|
(4,180
|
)
|
|
47
|
%
|
|
35
|
%
|
|||
Handset and accessory net subsidy
|
(7,986
|
)
|
|
(4
|
)%
|
|
(2,770
|
)
|
|
(1
|
)%
|
|
(5,216
|
)
|
|
188
|
%
|
|
164
|
%
|
|||
Cost of service (exclusive of
depreciation and amortization)
|
(87,842
|
)
|
|
(39
|
)%
|
|
(81,910
|
)
|
|
(33
|
)%
|
|
(5,932
|
)
|
|
7
|
%
|
|
(2
|
)%
|
|||
Selling and marketing expenses
|
(23,384
|
)
|
|
(10
|
)%
|
|
(27,982
|
)
|
|
(11
|
)%
|
|
4,598
|
|
|
(16
|
)%
|
|
(24
|
)%
|
|||
General and administrative expenses
|
(97,758
|
)
|
|
(44
|
)%
|
|
(98,159
|
)
|
|
(40
|
)%
|
|
401
|
|
|
—
|
|
|
(9
|
)%
|
|||
Segment earnings
|
$
|
3,080
|
|
|
1
|
%
|
|
$
|
32,256
|
|
|
13
|
%
|
|
$
|
(29,176
|
)
|
|
(90
|
)%
|
|
(91
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and other revenues
|
$
|
463,513
|
|
|
97
|
%
|
|
$
|
463,625
|
|
|
97
|
%
|
|
$
|
(112
|
)
|
|
—
|
|
|
(15
|
)%
|
Handset and accessory revenues
|
12,517
|
|
|
3
|
%
|
|
12,046
|
|
|
3
|
%
|
|
471
|
|
|
4
|
%
|
|
(11
|
)%
|
|||
Cost of handsets and accessories
|
(21,707
|
)
|
|
(5
|
)%
|
|
(20,027
|
)
|
|
(4
|
)%
|
|
(1,680
|
)
|
|
8
|
%
|
|
(7
|
)%
|
|||
Handset and accessory net subsidy
|
(9,190
|
)
|
|
(2
|
)%
|
|
(7,981
|
)
|
|
(1
|
)%
|
|
(1,209
|
)
|
|
15
|
%
|
|
(2
|
)%
|
|||
Cost of service (exclusive of
depreciation and amortization)
|
(190,550
|
)
|
|
(40
|
)%
|
|
(171,934
|
)
|
|
(36
|
)%
|
|
(18,616
|
)
|
|
11
|
%
|
|
(5
|
)%
|
|||
Selling and marketing expenses
|
(50,568
|
)
|
|
(11
|
)%
|
|
(50,052
|
)
|
|
(10
|
)%
|
|
(516
|
)
|
|
1
|
%
|
|
(14
|
)%
|
|||
General and administrative expenses
|
(197,752
|
)
|
|
(41
|
)%
|
|
(197,642
|
)
|
|
(42
|
)%
|
|
(110
|
)
|
|
—
|
|
|
(15
|
)%
|
|||
Segment earnings
|
$
|
15,453
|
|
|
3
|
%
|
|
$
|
36,016
|
|
|
8
|
%
|
|
$
|
(20,563
|
)
|
|
(57
|
)%
|
|
(63
|
)%
|
|
Three Months Ended
|
||||||||||||||||
|
March 31, 2016
|
|
June 30,
2016
|
|
September 30, 2016
|
|
December 31, 2016
|
|
March 31, 2017
|
|
June 30, 2017
|
||||||
|
(subscribers in thousands)
|
|
|
||||||||||||||
iDEN subscriber units
|
1,552.0
|
|
|
1,315.1
|
|
|
1,127.8
|
|
|
962.1
|
|
|
822.7
|
|
|
686.3
|
|
WCDMA subscriber units
|
2,744.7
|
|
|
2,708.7
|
|
|
2,717.1
|
|
|
2,746.3
|
|
|
2,815.2
|
|
|
2,874.6
|
|
Total subscriber units in commercial service — beginning of period
|
4,296.7
|
|
|
4,023.8
|
|
|
3,844.9
|
|
|
3,708.4
|
|
|
3,637.9
|
|
|
3,560.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
iDEN net subscriber losses
|
(195.2
|
)
|
|
(149.7
|
)
|
|
(130.8
|
)
|
|
(110.1
|
)
|
|
(115.4
|
)
|
|
(103.5
|
)
|
WCDMA net subscriber (losses) additions
|
(77.7
|
)
|
|
(29.2
|
)
|
|
(5.7
|
)
|
|
39.6
|
|
|
38.4
|
|
|
(29.3
|
)
|
Total net subscriber losses
|
(272.9
|
)
|
|
(178.9
|
)
|
|
(136.5
|
)
|
|
(70.5
|
)
|
|
(77.0
|
)
|
|
(132.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Migrations from iDEN to WCDMA
|
41.7
|
|
|
37.6
|
|
|
34.9
|
|
|
29.3
|
|
|
21.0
|
|
|
19.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
iDEN subscriber units
|
1,315.1
|
|
|
1,127.8
|
|
|
962.1
|
|
|
822.7
|
|
|
686.3
|
|
|
563.3
|
|
WCDMA subscriber units
|
2,708.7
|
|
|
2,717.1
|
|
|
2,746.3
|
|
|
2,815.2
|
|
|
2,874.6
|
|
|
2,864.8
|
|
Total subscriber units in commercial service — end of period
|
4,023.8
|
|
|
3,844.9
|
|
|
3,708.4
|
|
|
3,637.9
|
|
|
3,560.9
|
|
|
3,428.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total subscriber turnover
|
4.34
|
%
|
|
3.99
|
%
|
|
3.99
|
%
|
|
3.65
|
%
|
|
3.71
|
%
|
|
3.95
|
%
|
iDEN subscriber turnover
|
4.80
|
%
|
|
4.46
|
%
|
|
4.65
|
%
|
|
4.71
|
%
|
|
5.52
|
%
|
|
5.88
|
%
|
WCDMA subscriber turnover
|
4.10
|
%
|
|
3.78
|
%
|
|
3.73
|
%
|
|
3.31
|
%
|
|
3.23
|
%
|
|
3.53
|
%
|
|
Three Months Ended
|
||||||||||||||||
|
March 31, 2016
|
|
June 30,
2016
|
|
September 30, 2016
|
|
December 31, 2016
|
|
March 31, 2017
|
|
June 30,
2017
|
||||||
Total service ARPU (US$)
|
16
|
|
|
19
|
|
|
21
|
|
|
20
|
|
|
21
|
|
|
19
|
|
WCDMA service ARPU (US$)
|
16
|
|
|
20
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
20
|
|
iDEN service ARPU (US$)
|
15
|
|
|
16
|
|
|
19
|
|
|
18
|
|
|
17
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total service ARPU (BR)
|
62
|
|
|
66
|
|
|
67
|
|
|
67
|
|
|
65
|
|
|
62
|
|
WCDMA service ARPU (BR)
|
64
|
|
|
70
|
|
|
69
|
|
|
69
|
|
|
67
|
|
|
64
|
|
iDEN service ARPU (BR)
|
57
|
|
|
56
|
|
|
60
|
|
|
59
|
|
|
55
|
|
|
53
|
|
1.
|
Service and other revenues
|
2.
|
Handset and accessory net subsidy
|
3.
|
Cost of service
|
4.
|
Selling and marketing expenses
|
5.
|
General and administrative expenses
|
|
June 30, 2017
|
|
June 30, 2016
|
|
Change from
Previous Year
|
|||||||||
|
|
|
Dollars
|
|
Percent
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||
Three Months Ended
|
|
|
|
|
|
|
|
|||||||
Service and other revenues
|
$
|
29
|
|
|
$
|
45
|
|
|
$
|
(16
|
)
|
|
(36
|
)%
|
General and administrative expenses
|
(8,470
|
)
|
|
(9,781
|
)
|
|
1,311
|
|
|
(13
|
)%
|
|||
Segment losses
|
$
|
(8,441
|
)
|
|
$
|
(9,736
|
)
|
|
$
|
1,295
|
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Six Months Ended
|
|
|
|
|
|
|
|
|||||||
Service and other revenues
|
$
|
59
|
|
|
$
|
99
|
|
|
$
|
(40
|
)
|
|
(40
|
)%
|
General and administrative expenses
|
(15,758
|
)
|
|
(21,639
|
)
|
|
5,881
|
|
|
(27
|
)%
|
|||
Segment losses
|
$
|
(15,699
|
)
|
|
$
|
(21,540
|
)
|
|
$
|
5,841
|
|
|
(27
|
)%
|
|
Six Months Ended
|
||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
$
|
257,380
|
|
|
$
|
342,184
|
|
Net cash (used in) provided by operating activities
|
(46,437
|
)
|
|
8,030
|
|
||
Net cash provided by investing activities
|
52,714
|
|
|
17,027
|
|
||
Net cash used in financing activities
|
(44,287
|
)
|
|
(28,580
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
185
|
|
|
(601
|
)
|
||
Cash and cash equivalents, end of period
|
$
|
219,555
|
|
|
$
|
338,060
|
|
•
|
the amount of revenue we are able to generate and collect from our subscribers, including our ability to increase the size of our subscriber base;
|
•
|
the amount of operating expenses required to provide our services;
|
•
|
the cost of acquiring and retaining subscribers, including the subsidies we incur to provide handsets to both our new and existing subscribers; and
|
•
|
changes in foreign currency exchange rates.
|
•
|
operating expenses and capital expenditures relating to our existing network and the deployment of LTE in other commercial areas in Brazil;
|
•
|
payments in connection with previous spectrum purchases and ongoing spectrum license fees;
|
•
|
debt service requirements;
|
•
|
obligations relating to our tower financing arrangements and capital lease obligations;
|
•
|
cash taxes; and
|
•
|
other general corporate expenditures.
|
•
|
the amount we spend to enhance our WCDMA network in Brazil and deploy LTE;
|
•
|
the extent to which we expand the coverage of our network in new or existing market areas;
|
•
|
the number of additional transmitter and receiver sites we build in order to increase system capacity, maintain system quality and meet our regulatory requirements, as well as the costs associated with the installation of network infrastructure and switching equipment; and
|
•
|
the costs we incur in connection with non-network related information technology projects.
|
•
|
cash and cash equivalents on hand and short-term investments available to fund our operations;
|
•
|
restricted cash currently held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico;
|
•
|
the future return of cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our spectrum in Brazil;
|
•
|
expected cash flows from our operations in Brazil;
|
•
|
the timing of spectrum payments, including ongoing fees for spectrum use;
|
•
|
our anticipated level of capital expenditures;
|
•
|
our scheduled debt service obligations;
|
•
|
our other contractual obligations; and
|
•
|
cash income and other taxes.
|
•
|
if AINMT exercises its option to invest an additional $150.0 million in Nextel Holdings;
|
•
|
based on the continued development of our business plans and strategy;
|
•
|
if currency values in Brazil depreciate or appreciate relative to the U.S. dollar in a manner that is more significant than we currently expect and assume as part of our plans;
|
•
|
if economic conditions in Brazil do not improve or worsen;
|
•
|
if competitive practices in the mobile wireless telecommunications industry in Brazil 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 business.
|
•
|
our ability to attract and retain subscribers;
|
•
|
our ability to satisfy the requirements of or obtain relief under our debt obligations;
|
•
|
our ability to access sufficient debt or equity capital to meet any future operating and financial needs;
|
•
|
our ability to meet established operating goals and generate cash flow;
|
•
|
the availability of other funding sources, including the proceeds from the sale of Nextel Mexico held in escrow, proceeds derived from other asset sales and proceeds derived from an equity investment by AINMT;
|
•
|
risks associated with our partnership with AINMT;
|
•
|
our ability to complete the AINMT investment in a timely fashion or at all;
|
•
|
the impact of business uncertainties in connection with the pending AINMT investment;
|
•
|
general economic conditions in Brazil and in the market segments that we are targeting for our services;
|
•
|
the political and social conditions in Brazil, including political instability, which may affect Brazil's economy and the regulatory environment there;
|
•
|
the impact of foreign currency exchange rate volatility in the local currency in Brazil when compared to the U.S. dollar and the impact of related currency depreciation in Brazil;
|
•
|
our having 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;
|
•
|
risks related to the operation and expansion of our WCDMA network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that new services supported by the WCDMA network will not attract enough subscribers to support the related costs of deploying or operating the network;
|
•
|
our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth as necessary, increased system usage rates and growth or to successfully deploy new systems that support those functions;
|
•
|
future legislation or regulatory actions relating to our services, other wireless communications services or telecommunications generally and the costs and/or potential customer impacts of compliance with regulatory mandates;
|
•
|
the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our 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 successfully manage and support our legacy iDEN network in Brazil;
|
•
|
equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; and
|
•
|
other risks and uncertainties described in Part I, Item 1A. "Risk Factors," in our annual report on Form 10-K for the year ended December 31, 2016, in this quarterly report on Form 10-Q and, from time to time, in our other reports filed with the SEC.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
1.
|
Our interests and the interests of our stockholders may not align with the interests of AINMT, and actions by AINMT could negatively impact our performance.
|
•
|
AINMT could experience financial distress or bankruptcy;
|
•
|
we may incur liabilities as a result of an action taken by AINMT;
|
•
|
disputes between us and AINMT could arise which could distract management from focusing time and efforts on our business, result in an impasse or ultimately in litigation or arbitration or otherwise have a negative influence on our partnership and our ability to successfully operate Nextel Brazil; and
|
•
|
the transfer restrictions, rights of first refusal, and “tag along” and “drag along” rights contained in our agreements with AINMT could restrict our or AINMT’s ability to exit the joint venture if desired or discourage a third-party transaction that might be in the best interests of stockholders.
|
2.
|
If AINMT’s second investment in Nextel Holdings is not completed, it could negatively impact us.
|
3.
|
We will be subject to business uncertainties and contractual restrictions until AINMT’s second investment is completed.
|
4.
|
If we fail to meet continued listing standards of NASDAQ, our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock.
|
Item 2.
|
Issuer Purchases of Equity Securities
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Per Share
|
|
Total Number of Shares Purchased as Part of Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||
April 1, 2017 - April 30, 2017
|
|
17,635
|
|
(1)
|
$
|
0.96
|
|
|
17,635
|
|
|
|
||
May 1, 2017 - May 31, 2017
|
|
356
|
|
(1)
|
0.54
|
|
|
356
|
|
|
|
|||
June 1, 2017 - June 30, 2017
|
|
41,657
|
|
(1)
|
0.71
|
|
|
41,657
|
|
|
|
|||
Total
|
|
59,648
|
|
(1)
|
0.78
|
|
|
59,648
|
|
|
$
|
—
|
|
Item 5.
|
Other Information
|
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Incorporated by Reference Filing Date
|
|
Filed Herewith
|
10.1
|
|
Amendment No. 4 to the Bank Credit Certificate, dated August 3, 2017, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal.
|
|
|
|
|
|
|
|
*
|
10.2
|
|
Amendment No. 4 to the Bank Credit Certificate, dated July 28, 2017, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A.
|
|
|
|
|
|
|
|
*
|
10.3
|
|
Investment Agreement, dated June 5, 2017, among NII Holdings, Inc., AINMT Holdings AB and AINMT Brazil Holdings, B.V., among others.
|
|
8-K
|
|
10.1
|
|
06/06/17
|
|
|
10.4
|
|
Shareholders Agreement in Relation to Nextel Holdings S.à r.l., dated June 5, 2017, among NII International Telecom S.C.A. and AINMT Brazil Holdings, B.V., among others.
|
|
8-K
|
|
10.2
|
|
06/06/17
|
|
|
10.5(+)
|
|
Separation and Release Agreement, dated July 25, 2017, between NII Holdings, Inc. and Steven Shindler.
|
|
8-K
|
|
10.1
|
|
07/27/17
|
|
|
10.6(+)
|
|
Employment Agreement between Nextel Telecomunicações Ltda. and Roberto Rittes, dated April 24, 2017.
|
|
8-K
|
|
10.2
|
|
07/27/17
|
|
|
10.7(+)
|
|
Letter Agreement between NII Holdings, Inc. and Daniel Freiman, dated July 25, 2017.
|
|
8-K
|
|
10.3
|
|
07/27/17
|
|
|
10.8(+)
|
|
Letter Agreement between NII Holdings, Inc. and Shana Smith, dated July 25, 2017.
|
|
8-K
|
|
10.4
|
|
07/27/17
|
|
|
10.9(+)
|
|
Settlement, Release and Other Covenants Agreement, dated May 23, 2017, between Nextel Telecomunicações Ltda. and Francisco Tosta Valim Filho.
|
|
8-K
|
|
10.1
|
|
05/24/17
|
|
|
31.1
|
|
Statement of Principal 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 Principal 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.
|
|
|
|
|
|
|
|
*
|
99.1
|
|
Form of Restated Articles of Association of Nextel Holdings S.à r.l.
|
|
8-K
|
|
99.1
|
|
06/07/17
|
|
|
99.2
|
|
Form of Second Restated Articles of Association of Nextel Holdings S.à r.l.
|
|
8-K
|
|
99.2
|
|
06/07/17
|
|
|
101
|
|
The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iii) Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
*
|
+
|
Indicates Management Compensatory Plan, Contract or Arrangement.
|
By:
|
/s/ TIMOTHY M. MULIERI
|
|
|
|
|
|
|
Timothy M. Mulieri
|
|
|
Vice President, Corporate Controller
|
|
|
(on behalf of the registrant and as Principal Accounting Officer)
|
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Incorporated by Reference Filing Date
|
|
Filed Herewith
|
10.1
|
|
Amendment No. 4 to the Bank Credit Certificate, dated August 3, 2017, between Nextel Telecomunicações Ltda., and Caixa Econômica Federal.
|
|
|
|
|
|
|
|
*
|
10.2
|
|
Amendment No. 4 to the Bank Credit Certificate, dated July 28, 2017, between Nextel Telecomunicações Ltda., and Banco do Brasil, S.A.
|
|
|
|
|
|
|
|
*
|
10.3
|
|
Investment Agreement, dated June 5, 2017, among NII Holdings, Inc., AINMT Holdings AB and AINMT Brazil Holdings, B.V., among others.
|
|
8-K
|
|
10.1
|
|
06/06/17
|
|
|
10.4
|
|
Shareholders Agreement in Relation to Nextel Holdings S.à r.l., dated June 5, 2017, among NII International Telecom S.C.A. and AINMT Brazil Holdings, B.V., among others.
|
|
8-K
|
|
10.2
|
|
06/06/17
|
|
|
10.5(+)
|
|
Separation and Release Agreement, dated July 25, 2017, between NII Holdings, Inc. and Steven Shindler.
|
|
8-K
|
|
10.1
|
|
07/27/17
|
|
|
10.6(+)
|
|
Employment Agreement between Nextel Telecomunicações Ltda. and Roberto Rittes, dated April 24, 2017.
|
|
8-K
|
|
10.2
|
|
07/27/17
|
|
|
10.7(+)
|
|
Letter Agreement between NII Holdings, Inc. and Daniel Freiman, dated July 25, 2017.
|
|
8-K
|
|
10.3
|
|
07/27/17
|
|
|
10.8(+)
|
|
Letter Agreement between NII Holdings, Inc. and Shana Smith, dated July 25, 2017.
|
|
8-K
|
|
10.4
|
|
07/27/17
|
|
|
10.9(+)
|
|
Settlement, Release and Other Covenants Agreement, dated May 23, 2017, between Nextel Telecomunicações Ltda. and Francisco Tosta Valim Filho.
|
|
8-K
|
|
10.1
|
|
05/24/17
|
|
|
31.1
|
|
Statement of Principal 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 Principal 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.
|
|
|
|
|
|
|
|
*
|
99.1
|
|
Form of Restated Articles of Association of Nextel Holdings S.à r.l.
|
|
8-K
|
|
99.1
|
|
06/07/17
|
|
|
99.2
|
|
Form of Second Restated Articles of Association of Nextel Holdings S.à r.l.
|
|
8-K
|
|
99.2
|
|
06/07/17
|
|
|
101
|
|
The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iii) Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
*
|
+
|
Indicates Management Compensatory Plan, Contract or Arrangement.
|
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