The Brazilian unit of indebted telco NII Holdings has agreed a R$1.04bn (US$470m) transaction with Telefonica Brasil to lease network space for five years.
Telefonica will act as wholesaler and allow Nextel Brazil to offer 2G and 3G services using its…
The Brazilian unit of indebted telco NII Holdings has agreed a R$1.04bn (US$470m) transaction with Telefonica Brasil to lease network space for five years.
Telefonica will act as wholesaler and allow Nextel Brazil to offer 2G and 3G services using its network, beginning on 31 July.
Following Telefonica’s announcement NII’s share price fell 8.47% to US$0.55 – the lowest its stock has traded at since it floated more than 10 years ago.
In a disclosure to the local bourse, Telefonica said the contract was part of its strategy to increase the efficiency and development of its 3G network.
The agreement covers 3,259 municipalities, according to local newspaper Folha De Sao Paulo.
In its Q1 results call in mid-May Gokul Hemmady, NII’s COO and the president of Nextel Brazil, said that its 3G network covered 59 million people across Brazil; a country of more than 200 million people.
NII has recently invested in its networks in Brazil and Mexico, but is also in financial difficulties. In March it mandated UBS to advise it on strategic alternatives, and Rothschild to improve its capital structure as it looked to arrest its slump.
UBS will look at selling or merging some of NII’s four units – based in Brazil, Mexico, Chile and Argentina – or perhaps even find a buyer for the whole group.
In its Q1 results NII disclosed US$970m in operating revenues – a 27% decline on Q1 2013. The company has US$4.2bn in net debt and a market capitalisation of US$94.6m.
