- The Washington Times - Monday, November 6, 2006

NII Holdings Inc. of Reston added wireless subscribers during the third quarter, underscoring continued success as the telecommunications company expands its reach throughout Mexico and Brazil.

NII, which provides mobile services to Latin American business customers in Mexico, Brazil, Argentina and Peru, added 266,600 net new subscribers in the third quarter ended Sept. 30, mainly because of a large increase in net subscribers in Mexico.

The overall net additions — a 46 percent increase over last year’s third quarter — brings the company’s total subscribers to nearly 3.2 million.

“Accelerating subscriber growth and improving metrics were the result of solid execution of our profitable growth strategy and the positive impact of our expanding network,” Steve Shindler, the company’s chairman and chief executive officer, said in a statement. “We are well positioned to complete another record-setting year in 2006 and continue this momentum into 2007.”

During the third quarter, NII improved operating revenue by 36 percent to $616 million. Profits climbed 32 percent to $66 million (38 cents per diluted share).

Analysts polled by Thomson Financial were expecting earnings of $611.2 million and 41 cents per share.

The company has an industry-high average lifetime revenue per user of $3,800. During the quarter, it lowered its customer churn rate — the percentage of customers that disconnect the service — from 1.7 percent to a record-low 1.5 percent.

“I think they’re in a sweet spot from a market standpoint,” said Christopher C. King, a telecommunications analyst with Stifel Nicolaus & Co. Inc. “Latin America has overall wireless penetration of less than 50 percent — there’s a lot more room to grow down there” compared with the United States, where 72 percent of citizens are wireless customers.

Mr. King, whose firm has a business relationship with NII, said the company has about 7 or 8 percent of the market, a number he predicts could grow from 20 percent to 25 percent in the next few years.

During the quarter, the company expanded into 24 new cities in Mexico and Brazil. It also acquired Mexican telecom provider Cosmofrecuencias S.A. de C.V. for $200 million.

NII differentiates itself from competitors through its push-to-talk Nextel handsets, said Mr. King, who rates the stock as his top pick. More significant, however, is the company’s reputation for excellent customer service, which fosters loyalty and reduces churn.

In addition, Mr. King added, unlike many of its Latin American competitors, the company targets businesses as opposed to consumers.

“No one else is really focusing on that niche,” he said.

The company is on track to meet its expansion goals by the middle of next year and is moving up its debut into the Cabo San Lucas, Mexico, market from early next year to the end of this year in order to benefit from seasonal traffic.

About 9.5 percent of NII Holdings, formerly Nextel International, is owned by Sprint-Nextel Corp., also of Reston.

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