NII Holdings' liquidity outlook under "significant pressure" following disappointing results

NII Holdings' (Nasdaq: NIHD) disappointing results and additional investments to stabilize operations are putting "significant pressure" on the company's liquidity outlook beyond 2014, despite the significant level of cash recorded on the company's 2013 balance sheet, CEO Steven Shindler said in a conference call with investors.

The telco is evaluating a range of operational and financial options to preserve liquidity, but must also invest in order to return to growth and profitability, he added.

Despite suffering significant net losses during recent quarters as it continues to transition from iDEN to 3G and 4G networks, NII Holdings has been able to main a relatively solid liquidity position, with the sale and leaseback of towers in Brazil and Mexico, and the divestment of its Peruvian operations giving the firm some breathing room.

The operator believes that it has sufficient funding for 2014, but will need to significantly improve its operating performance and consider other actions to enhance liquidity in order to meet its financial obligations from 2015 onwards, CFO Juan Figuereo said.

These options could include pursuing a more moderate growth strategy, reducing investments in networks, selling assets, or seeking additional capital, he added.

NII Holdings is continuing to consider "strategic options" for its operations in Chile and Argentina following the sale of its Peruvian unit to Chilean telco Entel last year.

The telco expects to invest some US$600mn-700mn this year in capex, and will continue to expand network coverage in 2014, rolling out LTE infrastructure and services in key cities in both Mexico and Brazil, building on the core 3G infrastructure which is already installed in those markets, Shindler said.

Meanwhile, NII is aiming to "stabilize" operations in Mexico, where it has been strongly affected by the iDEN network shutdown in the US last year. It will also aim to change negative perceptions regarding the company's network quality in the country.

With 3G penetration still below 40% in Mexico and Brazil, and generally low levels of customer satisfaction with mobile service providers, there is still a "significant opportunity" to grow in these markets, the executive added.

NII is not providing guidance on revenue or subscriber growth for this year, but expects to see improving quarter-over-quarter subscriber growth in Brazil, while Mexico's contributions to subscriber growth will be smaller, Figuereo said.

When asked if the company would consider selling core assets in Mexico or Brazil to maintain liquidity, Shindler said that while there are no specific discussions to sell those assets at this point, the operator is open to do "what's necessary to maintain...long term value creation."