The company will keep a base in Brazil after it quits operations in Chile, Peru
Nextel operator NII Holdings is in talks to sell its Argentine unit this year as it steps up investment in Brazil, which will be its sole Latin American operation after closing operations in Argentina, the company’s chief operating officer said yesterday.
The confirmation of the upcoming sale corresponds to the difficult financial scenario faced by NII Holdings and after strong rumours in February that the funds Optimum Capital and Kingsley Capital were interested in purchasing the local unit.
Nextel is the fourth-largest mobile phone operator in Argentina with two million clients, largely exceeded by Movistar, Personal and Claro.
“We have no intention of selling our operation in Brazil. We will have left five countries, when we sell Argentina, to stay in one,” Nextel Brazil president Gokul Hemmady said yesterday. “Having said that, there is always a price for every sale.”
The downsized company will plow into Brazil a good part of the resources generated by the recent US$1.8 billion sale of its Mexican operations to AT&T. Virginia-based NII Holdings has sold its operations in Chile and Peru and is in talks to sell its Argentine unit this year, leaving Brazil as its sole Latin American operation. Hemmady dismissed speculation that his company, which is expected to emerge from bankruptcy protection within weeks, also plans to exit Brazil.
Market sources told the Herald that “so far there’s nothing to report” on the sale of the Argentine unit, recalling that NII Holdings had already announced its intent was to sell or to partner up in its branches in Peru, Chile and Argentina.
The possible buyers
So far, the only companies rumoured to be interested in purchasing the Argentine unit of NII Holdings are Optimum Capital and Kingsley Capital, which would also seek to purchase a part of the 3G and 4G spectrum in the country. Nextel now doesn’t have either as it uses a network based on the so-called Integrated Digital Enhanced Network (iDEN) technology.
Licences to operate the 4G and part of the 3G spectrum were given last year to Claro (which belongs to Mexican tycoon Carlos Slim), Personal (Telecom Italia-Fintech-Telefónica) and Movistar (Telefónica) and Airlink, the only national company. Optimum Capital and Kingsley Capital were rumoured to be negotiating with the government to purchase Airlink licenses as part of the Nextel transaction.
After purchasing Nextel Chile last year, Grupo Veintitrés — owned by Matías Garfunkel and Sergio Szpolski — and investment funds ISM Capital of the United Kingdom and Optimum Advisors of the United States are said to be interested in buying the Argentine unit but the transaction ultimately didn’t move forward.
Plans in Brazil
Nextel will launch more competitive packages next week for voice and data customers in Brazil, said Hemmady, who did not give a dollar number for the planned investment.
Despite a slowdown that is pushing Brazil into recession, Nextel’s Brazilian unit turned a profit of US$3.5 million in the first quarter, compared to a US$49.3 million loss a year earlier.
Nextel’s network has not attracted potential buyers in the recent wave of telecom mergers in Brazil because much of it still works on decades-old radio technology that lets customers use their cell phones like walkie-talkies. Modern smartphones have an array of instant messaging options that have made the push-to-talk function obsolete.
By moving to a network built on smartphones, Nextel has begun to gain subscribers for its 3G plans in Brazil, while the number of radio users has declined. Of its 4.2 million customers in Brazil today, more than half are on voice and data plans.
To expand its 4G network from Rio de Janeiro to Sao Paulo, its largest market, Nextel will need to buy spectrum in the 1.8 GHz frequency that the government plans to auction this year, the company’s marketing and sales vice president George Dolce said.
Nextel is Brazil’s fifth operator with just 0.67 percent of the wireless market. Grupo Oi SA, America Movil SAB de CV, TIM Participações SA, which is controlled by Telecom Italia SpA, and Telefonica Brasil SA each have between 18 and 29 percent.
Source: Buenos Aires Herald