NII Holdings Announces 2015 Fourth Quarter And Year-End Results

RESTON, Va., March 3, 2016 /PRNewswire/ -- NII Holdings, Inc. NIHD today announced its financial results for the fourth quarter and full year 2015. The Company reported net subscriber losses of 121,000 in the quarter as growth on its 3G network was more than offset by subscriber losses on its iDEN platform. For the quarter, the Company generated consolidated operating revenues of $245 million, an adjusted OIBDA loss of $11 million and an operating loss of $75 million. The Company's consolidated adjusted OIBDA excludes the impact of non-cash asset impairments, restructuring charges and other unusual items. Capital expenditures were $24 million for the quarter.

For the full year 2015, the Company reported net adds of 1,000, resulting in an ending subscriber base of 4.3 million, unchanged from the prior year. Financial results for the full year 2015 include operating revenues of $1.2 billion, an adjusted OIBDA loss of $148 million and an operating loss of $457 million. The Company's 3G subscriber base increased 1.1 million, or 65%, from the prior year resulting in a 44% increase in 3G revenues (an increase of 104% in local currency). Capital expenditures were $142 million for the year. The Company ended the year with $427 million in consolidated cash and short-term investments and $227 million in cash held in escrow.

"During the quarter, we achieved a $54 million reduction in operating expenses from last quarter as the cost savings initiatives that our Brazil team implemented started to take hold," said Steve Shindler, NII Holdings' chief executive officer. "As a result, we generated a $14 million improvement in adjusted OIBDA, despite pressure on our revenues from weaker economic conditions. We expect the macroeconomic environment and a more competitive landscape will continue to put pressure on our results in 2016. We are continuing to focus our efforts on achieving profitable 3G subscriber growth, while reducing our operating costs and preserving our liquidity to weather these challenges."

Nextel Brazil's average monthly service revenue per subscriber (ARPU) was $16 for the fourth quarter of 2015, down from $27 in the same quarter last year, due primarily to a 51% year-over-year decline in the average value of the Brazilian real. Nextel Brazil's average monthly churn rate for the quarter increased to 3.55 percent from 2.71 percent in the fourth quarter last year due to increases in both 3G and iDEN churn. Nextel Brazil's cost per gross addition (CPGA) was $92 for the fourth quarter of 2015, a $203 decrease from the year ago period, primarily due to an increase in new 3G postpaid subscribers in Brazil who use their own handsets rather than purchasing a new one from the Company. Nextel Brazil's cash cost per user (CCPU) was $15 for the fourth quarter, an $11 decrease from the same period last year primarily resulting from a decline in local currency exchange rates.

"We met our goal of significantly reducing cash burn this quarter, with cash spending of $35 million, a $176 million improvement from the third quarter," said Dan Freiman, NII Holdings' chief financial officer. "In 2016, we will continue to take steps to extend our liquidity runway, including efforts to capture further cost reductions and lower our capital expenditures."

Additional details regarding the Company's results, including a more detailed explanation on local currency operating metrics, are included in the Company's 2015 Annual Report on Form 10-K that was filed with the Securities and Exchange Commission today. During the year, the Company sold its operations in Mexico and Argentina, and all results presented in this press release reflect those markets as discontinued operations. 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 ARPU, 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.

In addition, the Company has announced that its 2016 annual meeting of stockholders will be held on May 25, 2016. Stockholder proposals intended for consideration for inclusion in the Company's proxy statement for the 2016 annual meeting of stockholders must be forwarded in writing and received at the Company's principal executive offices at 1875 Explorer Street, Suite 800, Reston, Virginia 20190 no later than April 1, 2016, directed to the attention of the Company's General Counsel.

About NII Holdings, Inc.

NII Holdings, Inc., a publicly held company based in Reston, Virginia, is a provider of differentiated mobile communication services for businesses and high value consumers in Brazil. NII Holdings, operating under the Nextel brand, offers fully integrated wireless communication tools with digital cellular voice services, data services and wireless Internet access. Visit the Company's website at www.nii.com.

Nextel, the Nextel logo and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc.

Visit NII Holdings' news room for news and to access our markets' news centers: 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 and forward-looking guidance, 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 meet its business plans, customer growth and retention, pricing, network usage, operating costs, the timing of various events, the economic and regulatory environment and the foreign currency exchange rates that will prevail during 2016. 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, the impact of more intense competitive conditions and changes in economic conditions in Brazil, the performance of the Company's networks, the Company's ability to provide services that customers want or need, the ability of the Company to continue as a going concern, 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, 2015, 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.

Media Contacts:

NII Holdings, Inc.
1875 Explorer Street, Suite 800
Reston, Virginia 20190
(703) 390-5100
www.nii.com

Investor and Media Relations: Tahmin Clarke
(703) 390-7174
tahmin.clarke@nii.com

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP RECONCILIATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2015 (SUCCESSOR COMPANY),
SIX MONTHS ENDED DECEMBER 31, 2015 (SUCCESSOR COMPANY),
SIX MONTHS ENDED JUNE 30, 2015 (PREDECESSOR COMPANY),
THREE MONTHS ENDED DECEMBER 31, 2014 (PREDECESSOR COMPANY) AND
YEAR ENDED DECEMBER 31, 2014 (PREDECESSOR COMPANY)
(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):

 

 

 

 

 

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):

 

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/unit, 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 twelve months ended December 31, 2014 compared to the three and combined twelve months ended December 31, 2015 by (i) adjusting the relevant measures for the three and twelve months ended December 31, 2014 to levels that would have resulted if the average foreign currency exchange rates for the three and twelve months ended December 31, 2014 were the same as the average foreign currency exchange rates that were in effect for the three and combined twelve months ended December 31, 2015; and (ii) comparing the actual and adjusted financial measures for the three and twelve months ended December 31, 2014 to the similar financial measures for the three and combined twelve months ended December 31, 2015 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 combined twelve months ended December 31, 2015 and the three and twelve months ended December 31, 2014. The average foreign currency exchange rate during the three and combined twelve months ended December 31, 2015 and the three and twelve months ended December 31, 2014 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 combined twelve months ended December 31, 2015 compared to the three and twelve months ended December 31, 2014 by removing the impact of the significant difference in the average foreign currency exchange rates in effect for those periods.

 

 

 

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SOURCE NII Holdings, Inc.