NII Holdings Profits Down 31% Due to Weakening Currencies

NII Holdings - which trades as Nextel International - has reported a 31% drop in its first-quarter profits due to currency fluctuations, although revenue was up by a third. For the first quarter of 2010, the company generated consolidated operating income of US$213 million and consolidated net income of US$48 million. The company lost US$25 million due to the weakening of currency exchange rates of the Brazilian Real against the US Dollar. Revenues were $1.28 billion.

During the quarter, the Company added 377,000 net subscribers to its network, bringing its ending subscriber base to over 7.7 million, a 20% increase in the ending subscriber base compared to the end of the first quarter of 2009.

The Company continued to invest in the expansion of the coverage and capacity of its networks reporting consolidated first quarter 2010 capital expenditures of $134 million, of which $85 million was invested in Brazil.

"We are off to a tremendous start for the year, delivering excellent financial and operational results highlighted by significant improvement in churn and a record level of OIBDA during the quarter," said Steve Dussek, NII Holdings' Chief Executive Officer. "The foundation for our first quarter results was created last year when we implemented strategies to enhance customer retention and improve the quality of our customer base. The success of these strategies is evidenced across all of our markets, where churn levels have improved substantially when compared to the first quarter of last year. These efforts have enabled us to keep our highest value subscribers and grow our business profitably," he added.

NII Holdings' consolidated average monthly service revenue per subscriber (ARPU) was $47 for the first quarter of 2010, up $5 when compared to the same period last year due primarily to strengthening of local currencies. The Company also reported churn of 1.69% for the first quarter, a 42 basis point improvement over the level reported in the same period last year. Consolidated cost per gross add, or CPGA, was $278 for the first quarter 2010, up $23 relative to the first quarter 2009, but a $27 decline over the fourth quarter of last year.

"Our balanced approach to growth and profitability drove our strong financial performance as we generated a 33% increase in revenue and a 39% increase in OIBDA over the first quarter of last year" said Gokul Hemmady, NII's Vice President and Chief Financial Officer. "Continued improvement in the economic conditions in our markets and our strong focus on customer retention resulted in solid net subscriber growth, driving a 20% increase in our consolidated subscriber base compared to the end of the first quarter of 2009. We believe that the investments that we have made and will continue to make in our business will enhance our position as one of the premier wireless providers in Latin America."

The Company ended the quarter with approximately $3.52 billion in total long-term debt and $2.7 billion in consolidated cash and short term investments, resulting in net debt at the end of the quarter of $841 million.