NII Holdings Reports 2018 Third Quarter Results

RESTON, Va., Nov. 8, 2018 /PRNewswire/ -- NII Holdings, Inc. [NASDAQ: NIHD] today announced its financial results for the third quarter of 2018. For the quarter, the Company generated consolidated operating revenues of $142 million, consolidated operating income of $1 million and consolidated adjusted OIBDA of $8 million. The Company's consolidated adjusted OIBDA for the quarter excludes the impact of non-cash asset impairments and restructuring charges. Capital expenditures were $18 million for the quarter.

For the third quarter of 2018, Nextel Brazil, the Company's operating subsidiary in Brazil, reported 3G/4G net subscriber additions of 85,700 and 3G/4G churn of 2.68%, a 136-basis point decrease year-over-year. Additionally, for the third quarter of 2018, Nextel Brazil's average monthly service revenue per subscriber (ARPU) was $14, cost per gross addition (CPGA) was $55 and cash cost per user (CCPU) was $11.

"We reported strong operational and financial results as the momentum we built in the first half of the year continued this quarter," stated Roberto Rittes, Chief Executive Officer of Nextel Brazil. "The combination of subscriber growth and further cost reductions drove a significant improvement in adjusted OIBDA. With the iDEN wind down behind us, we are focused on continuing to execute on our 3G/4G growth plan and translating that growth into improving profitability."

At quarter-end, Nextel Brazil's sources of funding totaled $307 million, including $201 million of unrestricted cash and short-term investments and $106 million of cash held in escrow to secure indemnification obligations in connection with the sale of the Company's operations in Mexico.

"We are pleased with our results to date and the positive operating trends in our business. To prepare for continued growth next year, we decided to accelerate some capex planned for the first quarter of 2019, which will increase the amount of capex we will invest this year compared to plan. Otherwise we remain on track to meet or exceed our guidance for the year," stated Dan Freiman, NII's Chief Financial Officer. "Looking ahead, with a healthy liquidity position and improving business performance, we are well positioned to continue investing in our growth plan, while staying disciplined in our spending."

In September 2018, Access Industries, through its affiliate AI Media Holdings, acquired ice group's 30% equity interest in Nextel Holdings, which owns 100% of the equity interests of Nextel Brazil. The Company and AI Media are working together to review and agree on continued investments to support Nextel Brazil's growth plans.

Additional details regarding the Company's results, including a more detailed explanation on local currency operating metrics, are included in the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2018 filed with the Securities and Exchange Commission today. Additional operational and financial details, including a quarterly earnings presentation, are also available under the Company's Investor Relations link at www.nii.com.

In addition to the financial results prepared in accordance with accounting principles generally accepted in the United States (GAAP) provided throughout this press release and in the attached financial tables, NII Holdings has presented consolidated adjusted OIBDA, as well as Nextel Brazil's CCPU and CPGA. These measures are non-GAAP financial measures and should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial tables. To view these and other reconciliations of non-GAAP financial measures that the Company uses, visit the investor relations link at www.nii.com.

About NII Holdings, Inc.

NII Holdings, Inc., a publicly held company based in Reston, Virginia, is a provider of mobile communication services for individual consumers who use our services to meet both professional and personal needs in Brazil. NII Holdings, operating under the Nextel brand, offers fully integrated wireless communication tools with digital cellular voice services, data services, international voice and data roaming services and other value-added services. Visit NII Holdings' website at www.nii.com.

Visit NII Holdings' news room for news and to access our market's news center: nii.com/newsroom.

Safe Harbor Statement

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995.  This news release includes "forward-looking statements" within the meaning of the securities laws. The statements in this news release regarding the business and economic outlook, future performance, as well as other statements that are not historical facts, are forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the Company's ability to fund the business and meet its business plan, customer growth and retention, pricing, network usage, operating costs, the timing of various events, Access Industries' minority ownership in Nextel Brazil, the economic and regulatory environment and the foreign currency exchange rates that will prevail during the remainder of 2018. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to: the impact of liquidity constraints, including the inability to access escrowed funds when expected, the impact of more intense competitive conditions and changes in economic conditions in Brazil, the performance of the Company's network, the Company's ability to provide services that customers want or need, the Company's ability to execute its business plan, and the additional risks and uncertainties that are described in NII Holdings' Annual Report on Form 10-K for the year ended December 31, 2017 and in NII Holdings' Quarterly Report on Form 10-Q for the three months ended June 30, 2018, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. This press release speaks only as of its date, and NII Holdings disclaims any duty to update the information herein.

NON-GAAP AND OTHER RECONCILIATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(UNAUDITED)

Consolidated OIBDA and Consolidated Adjusted OIBDA

Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated adjusted operating income before depreciation and amortization, or adjusted OIBDA, represents consolidated operating income before depreciation expense, amortization expense, material asset impairments, severance costs associated with publicly announced restructuring plans and other material non-recurring or unusual charges. Consolidated OIBDA and consolidated adjusted OIBDA are not measurements under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA and consolidated adjusted OIBDA measures of other companies and should be considered in addition to, but not as substitutes for, the information contained in our statements of operations. We believe that consolidated OIBDA and consolidated adjusted OIBDA provide useful information to investors because they are indicators of our operating performance, especially in a capital intensive industry such as ours, since they exclude items that are not directly attributable to ongoing business operations. Consolidated OIBDA and consolidated adjusted OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):

Cost per Gross Add (CPGA)

Cost per gross add, or CPGA, is an industry term that is calculated by dividing our selling, marketing and handset and accessory subsidy costs, excluding costs unrelated to initial customer acquisition, by our new subscribers during the period, or gross adds.  CPGA is not a measurement under accounting principles generally accepted in the United States, may not be similar to CPGA measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations.  We believe CPGA is a measure of the relative cost of customer acquisition.  CPGA can be calculated as follows (in millions, except CPGA):

Cash Cost per Handset/User

Cash cost per handset/user, or CCPU, represents the sum of cost of service, general and administrative expenses and customer retention and other costs divided by average handsets in service during the period and divided by the number of months in the period. CCPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to CCPU measures of other companies and should not be considered in addition to, but not as a substitute for, the information contained in our statements of operations.  We believe CCPU is a measure of the recurring costs we incur on a monthly basis to provide service to our subscribers. The CCPU calculation excludes material asset impairments, severance costs associated with publicly announced restructuring plans and other material non-recurring or unusual charges and is calculated as follows (in thousands, except CCPU):

Impact of Foreign Currency Fluctuations

The following table shows the impact of changes in foreign currency exchange rates on certain financial measures for the three and nine months ended September 30, 2017 compared to the same periods in 2018 by (i) adjusting the relevant measures for the three and nine months ended September 30, 2017 to levels that would have resulted if the average foreign currency exchange rates for the three and nine months ended September 30, 2017 were the same as the average foreign currency exchange rates that were in effect for the three and nine months ended September 30, 2018; and (ii) comparing the actual and adjusted financial measures for the three and nine months ended September 30, 2017 to the similar financial measures for the three and nine months ended September 30, 2018 to show the percentage change in those measures before and after taking those adjustments into account. The amounts reflected in the following table for operating income before depreciation and amortization on a consolidated basis and segment earnings for Nextel Brazil, before the adjustments for changes in foreign currency exchange rates, are based on the calculations contained elsewhere in these non-GAAP reconciliations for the three and nine months ended September 30, 2018 and 2017. The average foreign currency exchange rates for each of the relevant currencies during each of the three and nine months ended September 30, 2018 and 2017 are included in the notes to the table below. The information reflected in the following table is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that these calculations provide useful information concerning our relative performance for the three and nine months ended September 30, 2018 compared to the same periods in 2017 by removing the impact of the significant difference in the average foreign currency exchange rates in effect for those periods.

_______________________________________

Additional Information

Average Monthly Revenue Per Handset/Unit in Service (ARPU)

Average monthly revenue per subscriber unit in service, or ARPU, is an industry term that measures service revenues, which we refer to as subscriber revenues, per period from our customers divided by the weighted average number of subscriber units in commercial service during that period. ARPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to ARPU measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. Other revenue includes revenues for such services as roaming, handset maintenance, cancellation fees, analog and other.  ARPU can be calculated as follows (in millions, except ARPU):

SOURCE NII Holdings, Inc.

Related Links

http://www.nii.com

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