NII Holdings, which provides mobile services in Latin America under the Nextel brand through subsidiaries, has signed wholesale deals with Telefonica that will give its customers in Brazil and Mexico access to nationwide 3G data and voice.
Under the terms of both agreements, which will be implemented as soon as possible say the two companies, Telefónica and NII’s subsidiaries will continue to manage their spectrum and network assets separately to provide competing services.
With regards to Brazil, where Telefonica has been under regulatory pressure to loosen its grip on the mobile market, an official statement says the “announcement demonstrates the commitment of both operators to create a dynamic competitive environment and is a natural step forward in the networks optimisation process”.
The statement adds that Vivo, owned by Telefonica, will now be able to deploy its network in Brazil more efficiently while providing Nextel customers with much broader coverage.
Nextel lags some way behind the big four operators in Brazil.
According to Q3 2013 figures from GSMA Intelligence, Vivo is out in front with 76.6 million connections, followed by TIM (72.9 million), Claro (67.4 million) and Oi (50 million).
Nextel Brazil has 3.9 million connections.
Likewise, in Mexico, Nextel struggles for market share. According to GSMA Intelligence figures for Q3 2013, Telcel (owned by Carlos Slim’s America Movil) is the runaway leader with 72.4 million connections, followed by Telefonica’s Movistar (19. 1 million) and lusacell (8.7 million).
Nextel Mexico has 3.6 million connections.
“The agreement allows both companies to capture the benefits derived from the optimisation of infrastructure investment while maintaining the current market structure in both Brazil and Mexico,” said Santiago Fernández Valbuena, CEO of Telefonica Latin America.
Telefonica adds that the agreements reached with Nextel are in line with other announcements the operator has made in recent months, such as the agreement signed with Millicom to deploy LTE networks in Colombia, the MVNO deals with Virgin Mobile in Mexico, Chile and Colombia, and the agreement with lusacell for reciprocal use of wholesale services in Mexico that started in 2012.
There is some analyst speculation that NII Holdings is vying for an eventual sale to Telefonica.
“The deal is also likely to make Telefonica a major creditor to NII Holdings going forward,” said Kevin Smithen, an analyst at Macquarie Securities in New York, in a research note quoted by Bloomberg. “This could mean that a Telefonica purchase is the end game for NII Holdings, even in the case of a restructuring.”
As well as Brazil and Mexico, NII provides mobile services in Argentina and Chile under the Nextel brand.