NII Holdings, Inc. (NASDAQ:NIHD)
NII Holdings, Inc. (NASDAQ:NIHD) is teaming up with Norwegian telecommunications company AIMT to further bolster its Brazilian operations. The Brazilian subsidiary of Nextel is set to benefit from the Norwegian company’s telecom experience in addition to receiving financial backing.
AINMT-NII Holdings Partnership
Under the terms of the agreement, AINMT is to invest $50 million in NII Holdings for a 30% stake. AINMT has also been given the option of investing an additional $150 million in the subsidiary, which will give it a 60% controlling stake. The transaction is still subject to approval by AINMT shareholders.
“We are excited to partner with AINMT as it continues to export its customer-centric and LTE-driven model to highly populated emerging markets around the globe. We believe that gaining access to their differentiated approach and data-driven strategy will allow Nextel Brazil to significantly expand both its growth and profitability,” said NII CEO, Steve Shindler
The partnership comes on the heels of NII Holdings, Inc. (NASDAQ:NIHD) carrying out a massive restructuring of its Brazilian operations as it sought to stabilize Nextel operations. Improvements in cost structure as well as churn reduction have helped the subsidiary post five consecutive quarters of positive financials.
The climax of the restructuring will be AINMT invoking the $150 million investment option. Such a move would allow the unit to pursue new investments in key markets as it continues to explore ways of expanding its subscriber base.
A collaboration of NII Holdings, Inc. (NASDAQ:NIHD) and AINMT should be good news for Brazilian consumers given that the deal brings together two leading telecommunications companies. The merger should strengthen Nextel’s Brazilian market, allowing it to improve consumer experience.
Nextel’s competitive position is set to receive a major boost after the partnership between NII Holdings, Inc. (NASDAQ:NIHD) and AINMT. The company should soon be able to develop state of the art data-centric wireless networks expected to provide high spectrum with LTE capabilities. The company is also on course to receive over $200 million worth of new investments which should bolster its financial position in the industry.
NII Holdings, Inc. (NASDAQ:NIHD) stock was up by 30.58% on news of the AINMT Investment. The stock ended the day at $0.849 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.