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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 March 31, 2018
|
||
or
|
||
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
|
||
|
|
|
Commission file number 001-37488
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Delaware
|
|
91-1671412
|
(State or other jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
12110 Sunset Hills Road, Suite 600
Reston, Virginia
(Address of principal executive offices)
|
|
20190
(Zip Code)
|
Large accelerated filer
o
|
|
Accelerated filer
þ
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
Number of Shares Outstanding
|
Title of Class
|
on May 4, 2018
|
Common Stock, $0.001 par value per share
|
100,477,687
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
Unaudited
|
|||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
||||
ASSETS
|
|||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
136,297
|
|
|
$
|
193,888
|
|
Short-term investments
|
50,250
|
|
|
16,711
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $31,510 and $42,011
|
109,462
|
|
|
106,715
|
|
||
Handset and accessory inventory
|
5,028
|
|
|
3,163
|
|
||
Prepaid expenses and other
|
237,001
|
|
|
254,461
|
|
||
Total current assets
|
538,038
|
|
|
574,938
|
|
||
Property, plant and equipment, net
|
119,845
|
|
|
117,262
|
|
||
Intangible assets, net
|
206,842
|
|
|
194,694
|
|
||
Other assets
|
256,773
|
|
|
218,204
|
|
||
Total assets
|
$
|
1,121,498
|
|
|
$
|
1,105,098
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|||||||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
51,283
|
|
|
$
|
42,284
|
|
Accrued expenses and other
|
309,252
|
|
|
308,129
|
|
||
Current portion of long-term debt
|
5,805
|
|
|
7,990
|
|
||
Total current liabilities
|
366,340
|
|
|
358,403
|
|
||
Long-term debt
|
639,620
|
|
|
647,717
|
|
||
Other long-term liabilities
|
229,114
|
|
|
220,925
|
|
||
Total liabilities
|
1,235,074
|
|
|
1,227,045
|
|
||
Contingencies (Note 8)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
|
|
||
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, 100,385 shares issued and outstanding — 2018, 100,384 shares issued and outstanding — 2017
|
100
|
|
|
100
|
|
||
Paid-in capital
|
2,139,885
|
|
|
2,139,299
|
|
||
Accumulated deficit
|
(2,133,384
|
)
|
|
(2,135,770
|
)
|
||
Accumulated other comprehensive loss
|
(45,306
|
)
|
|
(46,903
|
)
|
||
Total NII Holdings stockholders’ deficit
|
(38,705
|
)
|
|
(43,274
|
)
|
||
Noncontrolling interest
|
(74,871
|
)
|
|
(78,673
|
)
|
||
Total deficit
|
(113,576
|
)
|
|
(121,947
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
1,121,498
|
|
|
$
|
1,105,098
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts)
Unaudited
|
|||||||
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
March 31, 2017
|
||||
Operating revenues
|
|
|
|
|
|||
Service and other revenues
|
$
|
175,972
|
|
|
$
|
243,493
|
|
Handset and accessory revenues
|
5,041
|
|
|
7,462
|
|
||
|
181,013
|
|
|
250,955
|
|
||
Operating expenses
|
|
|
|
|
|
||
Cost of service (exclusive of depreciation and amortization included below)
|
88,924
|
|
|
102,708
|
|
||
Cost of handsets and accessories
|
9,065
|
|
|
8,666
|
|
||
Selling, general and administrative
|
90,886
|
|
|
134,466
|
|
||
Impairment, restructuring and other (benefits) charges, net
|
(1,825
|
)
|
|
71,939
|
|
||
Depreciation
|
4,833
|
|
|
8,886
|
|
||
Amortization
|
3,591
|
|
|
4,139
|
|
||
|
195,474
|
|
|
330,804
|
|
||
Operating loss
|
(14,461
|
)
|
|
(79,849
|
)
|
||
Other (expense) income
|
|
|
|
|
|
||
Interest expense, net
|
(26,606
|
)
|
|
(31,562
|
)
|
||
Interest income
|
5,386
|
|
|
9,136
|
|
||
Foreign currency transaction (losses) gains, net
|
(1,188
|
)
|
|
11,375
|
|
||
Other expense, net
|
(6,330
|
)
|
|
(1,775
|
)
|
||
|
(28,738
|
)
|
|
(12,826
|
)
|
||
Loss from continuing operations before income taxes
|
(43,199
|
)
|
|
(92,675
|
)
|
||
Income taxes
|
—
|
|
|
—
|
|
||
Net loss from continuing operations
|
(43,199
|
)
|
|
(92,675
|
)
|
||
Loss from discontinued operations, net of income taxes
|
(121
|
)
|
|
(38
|
)
|
||
Net loss
|
(43,320
|
)
|
|
(92,713
|
)
|
||
Net loss attributable to noncontrolling interest
|
(11,606
|
)
|
|
—
|
|
||
Net loss attributable to NII Holdings
|
$
|
(31,714
|
)
|
|
$
|
(92,713
|
)
|
|
|
|
|
||||
Net loss from continuing operations per common share, basic and diluted
|
$
|
(0.43
|
)
|
|
$
|
(0.92
|
)
|
Net loss from discontinued operations per common share, basic and diluted
|
—
|
|
|
—
|
|
||
Net loss attributable to NII Holdings per common share, basic and diluted
|
$
|
(0.43
|
)
|
|
$
|
(0.92
|
)
|
|
|
|
|
||||
Weighted average number of common shares outstanding, basic and diluted
|
100,385
|
|
|
100,259
|
|
||
|
|
|
|
||||
Comprehensive loss, net of income taxes
|
|
|
|
||||
Foreign currency translation adjustment
|
$
|
1,597
|
|
|
$
|
(7,568
|
)
|
Other comprehensive income (loss)
|
1,597
|
|
|
(7,568
|
)
|
||
Net loss attributable to NII Holdings
|
(31,714
|
)
|
|
(92,713
|
)
|
||
Total comprehensive loss attributable to NII Holdings
|
$
|
(30,117
|
)
|
|
$
|
(100,281
|
)
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(in thousands)
Unaudited
|
||||||||||||||||||||||||||||||
|
Common Stock
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Deficit
|
|
Noncontrolling Interest
|
|
Total Deficit
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, January 1, 2018
|
100,384
|
|
|
$
|
100
|
|
|
$
|
2,139,299
|
|
|
$
|
(2,135,770
|
)
|
|
$
|
(46,903
|
)
|
|
$
|
(43,274
|
)
|
|
$
|
(78,673
|
)
|
|
$
|
(121,947
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,714
|
)
|
|
—
|
|
|
(31,714
|
)
|
|
(11,606
|
)
|
|
(43,320
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,597
|
|
|
1,597
|
|
|
696
|
|
|
2,293
|
|
|||||||
Share-based compensation activity
|
1
|
|
|
—
|
|
|
586
|
|
|
—
|
|
|
—
|
|
|
586
|
|
|
109
|
|
|
695
|
|
|||||||
Implementation of revenue recognition accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
34,100
|
|
|
—
|
|
|
34,100
|
|
|
14,603
|
|
|
48,703
|
|
|||||||
Balance, March 31, 2018
|
100,385
|
|
|
$
|
100
|
|
|
$
|
2,139,885
|
|
|
$
|
(2,133,384
|
)
|
|
$
|
(45,306
|
)
|
|
$
|
(38,705
|
)
|
|
$
|
(74,871
|
)
|
|
$
|
(113,576
|
)
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
|
|||||||
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(43,320
|
)
|
|
$
|
(92,713
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Loss from discontinued operations
|
121
|
|
|
38
|
|
||
Amortization of debt discounts (premiums) and financing costs
|
109
|
|
|
(1,646
|
)
|
||
Depreciation and amortization
|
8,424
|
|
|
13,025
|
|
||
Provision for losses on accounts receivable
|
12,917
|
|
|
20,879
|
|
||
Foreign currency transaction losses (gains), net
|
1,188
|
|
|
(11,375
|
)
|
||
Impairment charges, restructuring charges and losses on disposals of fixed assets
|
759
|
|
|
70,710
|
|
||
Share-based payment expense
|
611
|
|
|
1,573
|
|
||
Other, net
|
(919
|
)
|
|
(1,808
|
)
|
||
Change in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(16,023
|
)
|
|
(22,292
|
)
|
||
Prepaid value-added taxes
|
491
|
|
|
8,161
|
|
||
Handset and accessory inventory
|
(1,917
|
)
|
|
3,781
|
|
||
Prepaid expenses and other
|
(12,692
|
)
|
|
(5,856
|
)
|
||
Other long-term assets
|
(4,970
|
)
|
|
(20,127
|
)
|
||
Accrued value-added taxes
|
6,067
|
|
|
(5,912
|
)
|
||
Other long-term liabilities
|
(576
|
)
|
|
20,143
|
|
||
Accounts payable, accrued expenses and other
|
5,065
|
|
|
(21,148
|
)
|
||
Net cash used in operating activities
|
(44,665
|
)
|
|
(44,567
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(11,115
|
)
|
|
(27,567
|
)
|
||
Purchases of investments
|
(197,533
|
)
|
|
(208,281
|
)
|
||
Proceeds from sales of investments
|
162,624
|
|
|
272,825
|
|
||
Change in deposits, net
|
41,309
|
|
|
(3,614
|
)
|
||
Other, net
|
(1,518
|
)
|
|
(1,355
|
)
|
||
Total investing cash (used in) provided by continuing operations
|
(6,233
|
)
|
|
32,008
|
|
||
Total investing cash provided by (used in) discontinued operations
|
14
|
|
|
(26
|
)
|
||
Net cash (used in) provided by investing activities
|
(6,219
|
)
|
|
31,982
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments under equipment financing facility and local bank loans
|
(478
|
)
|
|
(42,134
|
)
|
||
Repayments under capital leases and other
|
(2,082
|
)
|
|
(930
|
)
|
||
Payments for costs related to debt amendments
|
(4,130
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(6,690
|
)
|
|
(43,064
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
716
|
|
|
(145
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(56,858
|
)
|
|
(55,794
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
305,778
|
|
|
422,232
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
248,920
|
|
|
$
|
366,438
|
|
Note 1.
|
Basis of Presentation
|
Note 2.
|
Revenue Recognition
|
|
As Reported With ASC 606
|
|
Without ASC 606
|
|
Impact
|
||||||
Operating revenues
|
|
|
|
|
|
|
|||||
Service and other revenues
|
$
|
175,972
|
|
|
$
|
180,800
|
|
|
$
|
(4,828
|
)
|
Handset and accessory revenues
|
5,041
|
|
|
4,685
|
|
|
356
|
|
|||
|
181,013
|
|
|
185,485
|
|
|
(4,472
|
)
|
|||
Operating expenses
|
|
|
|
|
|
|
|
||||
Cost of service (exclusive of depreciation and amortization included below)
|
88,924
|
|
|
88,924
|
|
|
—
|
|
|||
Cost of handsets and accessories
|
9,065
|
|
|
9,065
|
|
|
—
|
|
|||
Selling, general and administrative
|
90,886
|
|
|
97,425
|
|
|
(6,539
|
)
|
|||
Impairment, restructuring and other (benefits) charges, net
|
(1,825
|
)
|
|
(1,825
|
)
|
|
—
|
|
|||
Depreciation
|
4,833
|
|
|
4,833
|
|
|
—
|
|
|||
Amortization
|
3,591
|
|
|
3,591
|
|
|
—
|
|
|||
|
195,474
|
|
|
202,013
|
|
|
(6,539
|
)
|
|||
Operating loss
|
$
|
(14,461
|
)
|
|
$
|
(16,528
|
)
|
|
$
|
2,067
|
|
Net loss
|
$
|
(43,320
|
)
|
|
$
|
(45,387
|
)
|
|
$
|
2,067
|
|
Note 3.
|
Impairment, Restructuring and Other (Benefits) Charges
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Brazil
|
$
|
(2,146
|
)
|
|
$
|
71,693
|
|
Corporate
|
321
|
|
|
246
|
|
||
Total impairment, restructuring and other (benefits) charges, net
|
$
|
(1,825
|
)
|
|
$
|
71,939
|
|
Balance, January 1, 2018
|
$
|
109,771
|
|
Restructuring benefits, net
|
(2,558
|
)
|
|
Cash payments and other
|
(9,979
|
)
|
|
Foreign currency translation adjustment
|
450
|
|
|
Balance, March 31, 2018
|
$
|
97,684
|
|
Note 4.
|
Supplemental Financial Statement Information
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
136,297
|
|
|
$
|
193,888
|
|
Cash in escrow (included in prepaid expenses and other)
|
110,038
|
|
|
110,024
|
|
||
Restricted cash (included in other assets)
|
2,585
|
|
|
1,866
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
248,920
|
|
|
$
|
305,778
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Cash in escrow
|
$
|
110,038
|
|
|
$
|
110,024
|
|
Brazil judicial deposits
|
54,443
|
|
|
43,648
|
|
||
Value-added taxes
|
28,657
|
|
|
27,635
|
|
||
Cash collateral related to performance bonds
|
715
|
|
|
50,340
|
|
||
Other prepaid expenses
|
31,096
|
|
|
14,231
|
|
||
Other current assets
|
12,052
|
|
|
8,583
|
|
||
|
$
|
237,001
|
|
|
$
|
254,461
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Land
|
$
|
486
|
|
|
$
|
489
|
|
Building and leasehold improvements
|
942
|
|
|
935
|
|
||
Network equipment, communication towers and network software
|
90,598
|
|
|
82,493
|
|
||
Software, office equipment, furniture and fixtures and other
|
25,932
|
|
|
22,498
|
|
||
Less: Accumulated depreciation and amortization
|
(16,166
|
)
|
|
(11,461
|
)
|
||
|
101,792
|
|
|
94,954
|
|
||
Construction in progress
|
18,053
|
|
|
22,308
|
|
||
|
$
|
119,845
|
|
|
$
|
117,262
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
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
|
|
$
|
205,595
|
|
|
$
|
(7,213
|
)
|
|
$
|
198,382
|
|
|
$
|
189,920
|
|
|
$
|
(5,426
|
)
|
|
$
|
184,494
|
|
Customer relationships
|
4
|
|
15,227
|
|
|
(6,767
|
)
|
|
8,460
|
|
|
15,300
|
|
|
(5,100
|
)
|
|
10,200
|
|
||||||
|
|
|
$
|
220,822
|
|
|
$
|
(13,980
|
)
|
|
$
|
206,842
|
|
|
$
|
205,220
|
|
|
$
|
(10,526
|
)
|
|
$
|
194,694
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Brazil judicial deposits
|
$
|
115,807
|
|
|
$
|
110,758
|
|
Cash collateral related to contingencies
|
62,625
|
|
|
55,027
|
|
||
Other
|
78,341
|
|
|
52,419
|
|
||
|
$
|
256,773
|
|
|
$
|
218,204
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Contingencies
|
$
|
76,335
|
|
|
$
|
78,006
|
|
Network system and information technology expenses
|
66,121
|
|
|
48,702
|
|
||
Non-income based taxes
|
37,058
|
|
|
30,044
|
|
||
Payroll related items and commissions
|
26,584
|
|
|
32,613
|
|
||
Other
|
103,154
|
|
|
118,764
|
|
||
|
$
|
309,252
|
|
|
$
|
308,129
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Accrued lease termination and other restructuring charges
|
$
|
80,448
|
|
|
$
|
92,463
|
|
Non-current withholding taxes
|
70,540
|
|
|
67,356
|
|
||
Other
|
78,126
|
|
|
61,106
|
|
||
|
$
|
229,114
|
|
|
$
|
220,925
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in thousands)
|
||||||
Capital expenditures
|
|
|
|
|
|
|||
Cash paid for capital expenditures, including capitalized interest on property, plant and equipment
|
|
$
|
11,115
|
|
|
$
|
27,567
|
|
Change in capital expenditures accrued and unpaid or financed, including interest capitalized
|
|
(2,824
|
)
|
|
(18,116
|
)
|
||
|
|
$
|
8,291
|
|
|
$
|
9,451
|
|
Note 5.
|
Discontinued Operations
|
Note 6.
|
Debt
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Brazil equipment financing facility
|
$
|
243,000
|
|
|
$
|
242,883
|
|
Brazil bank loans
|
193,051
|
|
|
200,567
|
|
||
Brazil spectrum financing
|
121,332
|
|
|
122,044
|
|
||
Brazil capital lease and tower financing obligations
|
88,042
|
|
|
90,213
|
|
||
Total debt
|
645,425
|
|
|
655,707
|
|
||
Less: current portion
|
(5,805
|
)
|
|
(7,990
|
)
|
||
|
$
|
639,620
|
|
|
$
|
647,717
|
|
Note 7.
|
Fair Value Measurements
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Brazil equipment financing
|
$
|
243,000
|
|
|
$
|
242,418
|
|
|
$
|
242,883
|
|
|
$
|
237,958
|
|
Brazil bank loans and other
|
193,051
|
|
|
142,480
|
|
|
200,567
|
|
|
144,312
|
|
||||
Brazil spectrum financing
|
121,332
|
|
|
133,593
|
|
|
122,044
|
|
|
128,225
|
|
||||
|
$
|
557,383
|
|
|
$
|
518,491
|
|
|
$
|
565,494
|
|
|
$
|
510,495
|
|
Note 8.
|
Contingencies
|
Note 9.
|
Income Taxes
|
Note 10.
|
Segment Reporting
|
|
Nextel Brazil
|
|
Corporate
|
|
Consolidated
|
||||||
|
(in thousands)
|
||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
180,992
|
|
|
$
|
21
|
|
|
$
|
181,013
|
|
Segment losses
|
$
|
(3,600
|
)
|
|
$
|
(4,262
|
)
|
|
$
|
(7,862
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other benefits, net
|
|
|
|
|
1,825
|
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(8,424
|
)
|
|||
Foreign currency transaction losses, net
|
|
|
|
|
|
|
(1,188
|
)
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(27,550
|
)
|
|||
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
$
|
(43,199
|
)
|
||
Capital expenditures
|
$
|
8,291
|
|
|
$
|
—
|
|
|
$
|
8,291
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
250,925
|
|
|
$
|
30
|
|
|
$
|
250,955
|
|
Segment earnings (losses)
|
$
|
12,373
|
|
|
$
|
(7,258
|
)
|
|
$
|
5,115
|
|
Less:
|
|
|
|
|
|
|
|
|
|||
Impairment, restructuring and other charges, net
|
|
|
|
|
(71,939
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
|
|
(13,025
|
)
|
|||
Foreign currency transaction gains, net
|
|
|
|
|
|
|
11,375
|
|
|||
Interest expense and other, net
|
|
|
|
|
|
|
(24,199
|
)
|
|||
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
$
|
(92,673
|
)
|
||
Capital expenditures
|
$
|
9,451
|
|
|
$
|
—
|
|
|
$
|
9,451
|
|
|
|
|
|
|
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|||
Identifiable assets
|
$
|
977,426
|
|
|
$
|
144,072
|
|
|
$
|
1,121,498
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|||
Identifiable assets
|
$
|
957,495
|
|
|
$
|
147,603
|
|
|
$
|
1,105,098
|
|
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 March 31, 2018 and December 31, 2017 and our consolidated results of operations for the three months ended March 31, 2018 and 2017; and
|
•
|
significant factors that we believe could affect our prospective financial condition and results of operations.
|
•
|
mobile telephone voice and wireless data services;
|
•
|
international voice and data roaming services;
|
•
|
application-based radio connection; and
|
•
|
value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and international WiFi hotspot networks.
|
•
|
offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;
|
•
|
continuing to implement cost reduction strategies and redesigning our network architecture in order to lower cash costs per user, outweigh scale disadvantages, create an agile organization and improve overall profitability;
|
•
|
focusing on higher value customer segments that generate higher ARPU and lower subscriber turnover; 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 March 31,
|
|
Actual Percent Change From Prior Year
|
|||||
|
2018
|
|
2017
|
|
||||
Brazilian real
|
3.24
|
|
|
3.13
|
|
|
(4
|
)%
|
|
2017
|
|
2018
|
|||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
|
March
|
|||||
Brazilian real
|
3.13
|
|
|
3.31
|
|
|
3.17
|
|
|
3.31
|
|
|
3.32
|
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||
|
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||
Brazil segment (losses) earnings
|
(3,600
|
)
|
|
12,373
|
|
|
(15,973
|
)
|
|
(129
|
)%
|
|
(130
|
)%
|
|||
Corporate segment losses
|
(4,262
|
)
|
|
(7,258
|
)
|
|
2,996
|
|
|
41
|
%
|
|
41
|
%
|
|||
Consolidated segment (losses) earnings
|
(7,862
|
)
|
|
5,115
|
|
|
(12,977
|
)
|
|
(254
|
)%
|
|
(267
|
)%
|
|||
Impairment, restructuring and other benefits (charges), net
|
1,825
|
|
|
(71,939
|
)
|
|
73,764
|
|
|
103
|
%
|
|
103
|
%
|
|||
Depreciation and amortization
|
(8,424
|
)
|
|
(13,025
|
)
|
|
4,601
|
|
|
35
|
%
|
|
33
|
%
|
|||
Operating loss
|
(14,461
|
)
|
|
(79,849
|
)
|
|
65,388
|
|
|
82
|
%
|
|
81
|
%
|
|||
Interest expense, net
|
(26,606
|
)
|
|
(31,562
|
)
|
|
4,956
|
|
|
16
|
%
|
|
11
|
%
|
|||
Interest income
|
5,386
|
|
|
9,136
|
|
|
(3,750
|
)
|
|
(41
|
)%
|
|
(39
|
)%
|
|||
Foreign currency transaction (losses) gains, net
|
(1,188
|
)
|
|
11,375
|
|
|
(12,563
|
)
|
|
(110
|
)%
|
|
(111
|
)%
|
|||
Other expense, net
|
(6,330
|
)
|
|
(1,775
|
)
|
|
(4,555
|
)
|
|
(257
|
)%
|
|
(270
|
)%
|
|||
Loss from continuing operations before income taxes
|
(43,199
|
)
|
|
(92,675
|
)
|
|
49,476
|
|
|
53
|
%
|
|
52
|
%
|
|||
Income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|||
Net loss from continuing operations
|
(43,199
|
)
|
|
(92,675
|
)
|
|
49,476
|
|
|
53
|
%
|
|
52
|
%
|
|||
Loss from discontinued operations, net of income taxes
|
(121
|
)
|
|
(38
|
)
|
|
(83
|
)
|
|
(218
|
)%
|
|
(218
|
)%
|
|||
Net loss
|
(43,320
|
)
|
|
(92,713
|
)
|
|
49,393
|
|
|
53
|
%
|
|
51
|
%
|
|||
Net loss attributable to noncontrolling interest
|
(11,606
|
)
|
|
—
|
|
|
(11,606
|
)
|
|
NM
|
|
|
NM
|
|
|||
Net loss attributable to NII Holdings
|
$
|
(31,714
|
)
|
|
$
|
(92,713
|
)
|
|
$
|
60,999
|
|
|
66
|
%
|
|
64
|
%
|
1.
|
Impairment, restructuring and other charges
|
•
|
the reversal of
$13.7 million
in previously accrued restructuring charges related to approximately 250 transmitter and receiver sites that Nextel Brazil has identified as sites that it plans to exchange with certain of its tower lessors; mostly offset by
|
•
|
$10.8 million
in restructuring costs, the majority of which related to future lease costs for approximately
150
iDEN-related transmitter and receiver sites and the separation of approximately
75
employees.
|
2.
|
Foreign currency transaction (losses) gains, net
|
|
Three Months Ended March 31, 2018
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Three Months Ended March 31, 2017
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||
|
|
|
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||
Service and other revenues
|
$
|
175,951
|
|
|
97
|
%
|
|
$
|
243,463
|
|
|
97
|
%
|
|
$
|
(67,512
|
)
|
|
(28
|
)%
|
|
(25
|
)%
|
Handset and accessory revenues
|
5,041
|
|
|
3
|
%
|
|
7,462
|
|
|
3
|
%
|
|
(2,421
|
)
|
|
(32
|
)%
|
|
(30
|
)%
|
|||
Cost of handsets and accessories
|
(9,065
|
)
|
|
(5
|
)%
|
|
(8,666
|
)
|
|
(3
|
)%
|
|
(399
|
)
|
|
(5
|
)%
|
|
(8
|
)%
|
|||
Handset and accessory net subsidy
|
(4,024
|
)
|
|
(2
|
)%
|
|
(1,204
|
)
|
|
—
|
|
|
(2,820
|
)
|
|
(234
|
)%
|
|
(246
|
)%
|
|||
Cost of service (exclusive of
depreciation and amortization)
|
(88,924
|
)
|
|
(49
|
)%
|
|
(102,708
|
)
|
|
(41
|
)%
|
|
13,784
|
|
|
13
|
%
|
|
10
|
%
|
|||
Selling and marketing expenses
|
(21,231
|
)
|
|
(12
|
)%
|
|
(27,184
|
)
|
|
(11
|
)%
|
|
5,953
|
|
|
22
|
%
|
|
19
|
%
|
|||
General and administrative expenses
|
(65,372
|
)
|
|
(36
|
)%
|
|
(99,994
|
)
|
|
(40
|
)%
|
|
34,622
|
|
|
35
|
%
|
|
32
|
%
|
|||
Segment (losses) earnings
|
$
|
(3,600
|
)
|
|
(2
|
)%
|
|
$
|
12,373
|
|
|
5
|
%
|
|
$
|
(15,973
|
)
|
|
(129
|
)%
|
|
(130
|
)%
|
|
Three Months Ended
|
|||||||||||||
|
March 31, 2017
|
|
June 30,
2017
|
|
September 30, 2017
|
|
December 31, 2017
|
|
March 31, 2018
|
|||||
|
(subscribers in thousands)
|
|||||||||||||
iDEN subscriber units
|
822.7
|
|
|
686.3
|
|
|
563.3
|
|
|
449.7
|
|
|
349.6
|
|
WCDMA subscriber units
|
2,815.2
|
|
|
2,874.6
|
|
|
2,864.8
|
|
|
2,845.8
|
|
|
2,896.1
|
|
Total subscriber units in commercial service —
beginning of period
|
3,637.9
|
|
|
3,560.9
|
|
|
3,428.1
|
|
|
3,295.5
|
|
|
3,245.7
|
|
|
|
|
|
|
|
|
|
|
|
|||||
iDEN net subscriber losses
|
(115.4
|
)
|
|
(103.5
|
)
|
|
(100.3
|
)
|
|
(76.6
|
)
|
|
(84.4
|
)
|
WCDMA net subscriber additions (losses)
|
38.4
|
|
|
(29.3
|
)
|
|
(32.3
|
)
|
|
26.8
|
|
|
92.9
|
|
Total net subscriber (losses) additions
|
(77.0
|
)
|
|
(132.8
|
)
|
|
(132.6
|
)
|
|
(49.8
|
)
|
|
8.5
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Migrations from iDEN to WCDMA
|
21.0
|
|
|
19.5
|
|
|
13.3
|
|
|
23.5
|
|
|
34.8
|
|
|
|
|
|
|
|
|
|
|
|
|||||
iDEN subscriber units
|
686.3
|
|
|
563.3
|
|
|
449.7
|
|
|
349.6
|
|
|
230.4
|
|
WCDMA subscriber units
|
2,874.6
|
|
|
2,864.8
|
|
|
2,845.8
|
|
|
2,896.1
|
|
|
3,023.8
|
|
Total subscriber units in commercial service —
end of period
|
3,560.9
|
|
|
3,428.1
|
|
|
3,295.5
|
|
|
3,245.7
|
|
|
3,254.2
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total subscriber turnover
|
3.71
|
%
|
|
3.95
|
%
|
|
4.47
|
%
|
|
3.83
|
%
|
|
3.02
|
%
|
iDEN subscriber turnover
|
5.52
|
%
|
|
5.88
|
%
|
|
6.89
|
%
|
|
6.36
|
%
|
|
9.67
|
%
|
WCDMA subscriber turnover
|
3.23
|
%
|
|
3.53
|
%
|
|
4.04
|
%
|
|
3.47
|
%
|
|
2.37
|
%
|
|
Three Months Ended
|
|||||||||||||
|
March 31, 2017
|
|
June 30,
2017
|
|
September 30, 2017
|
|
December 31, 2017
|
|
March 31, 2018
|
|||||
Total service ARPU (US$)
|
21
|
|
|
19
|
|
|
19
|
|
|
18
|
|
|
17
|
|
WCDMA service ARPU (US$)
|
22
|
|
|
20
|
|
|
19
|
|
|
18
|
|
|
18
|
|
iDEN service ARPU (US$)
|
17
|
|
|
15
|
|
|
15
|
|
|
14
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total service ARPU (BR)
|
65
|
|
|
62
|
|
|
59
|
|
|
57
|
|
|
56
|
|
WCDMA service ARPU (BR)
|
68
|
|
|
65
|
|
|
61
|
|
|
58
|
|
|
58
|
|
iDEN service ARPU (BR)
|
54
|
|
|
49
|
|
|
47
|
|
|
47
|
|
|
38
|
|
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
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
|
Change from
Previous Year
|
|||||||||
|
|
|
Dollars
|
|
B(W) Change
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||
Service and other revenues
|
$
|
21
|
|
|
$
|
30
|
|
|
$
|
(9
|
)
|
|
(30
|
)%
|
General and administrative expenses
|
(4,283
|
)
|
|
(7,288
|
)
|
|
3,005
|
|
|
41
|
%
|
|||
Segment losses
|
$
|
(4,262
|
)
|
|
$
|
(7,258
|
)
|
|
$
|
2,996
|
|
|
41
|
%
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
March 31, 2017
|
||||
|
|
|
|
||||
Cash, cash equivalents and restricted cash, beginning of period
|
$
|
305,778
|
|
|
$
|
422,232
|
|
Net cash used in operating activities
|
(44,665
|
)
|
|
(44,567
|
)
|
||
Net cash (used in) provided by investing activities
|
(6,219
|
)
|
|
31,982
|
|
||
Net cash used in financing activities
|
(6,690
|
)
|
|
(43,064
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
716
|
|
|
(145
|
)
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
248,920
|
|
|
$
|
366,438
|
|
•
|
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 continued deployment of LTE in São Paulo;
|
•
|
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 and deploy LTE in certain areas;
|
•
|
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;
|
•
|
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.
|
•
|
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 we are subject to litigation involving tax and other matters requiring material judicial deposits of cash that will not be released until the pending matter is resolved;
|
•
|
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, such as contingencies.
|
•
|
our ability to attract and retain subscribers;
|
•
|
our ability to satisfy the requirements of 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 timely receipt of proceeds from the sale of Nextel Mexico held in escrow;
|
•
|
risks associated with our partnership with ice group;
|
•
|
general economic 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 digital two-way mobile data or internet connectivity services in Brazil;
|
•
|
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 network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that we 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 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 wind down our legacy iDEN network in Brazil and migrate our iDEN subscriber base to our WCDMA network;
|
•
|
a requirement to provide material judicial deposits of cash that will not be released until the pending matter is resolved in order for litigation involving tax and other matters to be heard by the courts 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, 2017 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
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||
January 1, 2018 - January 31, 2018
|
|
126
|
|
(1)
|
$
|
0.68
|
|
|
126
|
|
|
|
||
February 1, 2018 - February 28, 2018
|
|
135
|
|
(1)
|
0.64
|
|
|
135
|
|
|
|
|||
March 1, 2018 - March 31, 2018
|
|
192
|
|
(1)
|
1.71
|
|
|
192
|
|
|
|
|||
Total
|
|
453
|
|
(1)
|
1.10
|
|
|
453
|
|
|
$
|
—
|
|
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Incorporated by Reference Filing Date
|
31.1
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
101
|
|
The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Loss, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
By:
|
/s/ TIMOTHY M. MULIERI
|
|
|
|
|
|
|
Timothy M. Mulieri
|
|
|
Vice President, Corporate Controller
|
|
|
(on behalf of the registrant and as Principal Accounting Officer)
|
1 Year NII Chart |
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