The Endgame for NII Holdings Nears

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NII Holdings Inc. (NASDAQ: NIHD) is not trading like a company that simply reported a wider loss than expected. The Latin American wireless Nextel telecom provider i sin trouble and signaled that it will have liquidity issues if improvements are not made immediately. This stock even hit an all-time low on the same day that the S&P 500 hit yet another all-time high. In short, the future owners may only be the owners of the current debt.

Keep in mind that Macquarie just downgraded this stock from Outperform to Neutral this week ahead of earnings. That was on the heels of its business development head leaving the company.

The net loss came to $745.8 million, which is a much larger loss than its nominal share price. NII Holdings had $5.8 billion in debt and $2.4 billion in cash and investments at the end of 2013 – and now its market cap is a mere $215 million. Management even admitted to having a much shorter runway to implement its operational turnaround. A focus on growth efforts in Brazil may or may not pan out.

The risk here is that NII Holdings may not be able to fund its obligations beyond this year. Investors have known for some time that this company was full of risk – and now the stock is down 87% from its 52-week high. This also appears to have hit a new low for its common stock.

NII Holdings had a net loss of 213,000 subscribers during all of 2013, resulting in a total subscriber base of 9.5 million subscribers. Its monthly average revenue per user has fallen to $34 in the last quarter from $42 a year ago. The company had previously announced a restructuring effort last December as well.

A report from Bloomberg also showed that the value of its corporate bond issues trading at less than 40 cents and under 50 cents on the dollar, depending upon the maturity dates and structure.

NII Holdings has been reduced to a shadow of its former size in value. In 2013, During 2013, the company sold its towers in Brazil and Mexico and sold its Peru market. Now it plans to keep pursuing other strategies to improve its liquidity, which includes strategic opportunities around Chile and Argentina.

Frankly, a 51% drop to $1.25 is getting close to this company being considered a write-off as well. The good news is that there are still many assets it can cash in on, but the falling revenues and disappointing metrics simply do not look like anywhere close to enough of a situation to easily turn the boat around here.

After today’s drop, the new 52-week range is $1.21 to $9.82.

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