Latin American mobile operator NII Holdings (which uses the Nextel brand) announced plans to cut more than a quarter of its headquarters workforce, as part of a plan to create “a more streamlined management structure that is expected to reduce costs and improve operational efficiency while retaining the company’s focus on accelerating subscriber growth”.
The move will also see “the elimination of over 1,400 positions in its market operations” (the company is present in Argentina, Brazil, Chile and Mexico). Charges related to the plan will be in the $25 million to $35 million range, with targeted cost savings of $50 million to $55 million annually.
It also said that it has modified its customer deactivation policy for inactive prepaid subscribers, which will lead to a higher level of prepaid subscriber losses in Mexico than previously estimated. It expects a net subscriber loss of around 400,000 subscribers in this country in the fourth quarter, but the policy change is “not expected to have an impact on net subscriber additions in Brazil or other markets”.
NII said its other “Project Accelerate” initiatives underway include an “aggressive” marketing campaign in its core markets that target growth on its new 3G networks, investments to expand the coverage and capacity of its 3G networks in Mexico and Brazil, and the expansion of its device range “to include a wider range of smartphones and other handsets that better serve the needs of customers”.
The company is also involved in a number of transactions designed to improve its position. Yesterday, it closed a deal to sell tower sites in Brazil to American Tower Corporation for around $348 million, which followed a similar $374 million transaction in Mexico.
It has also sold its Nextel Peru business to rival Entel for $410.6 million, as part of its plan to focus on Brazil and Mexico.
In the third quarter of 2013, the company reported a net loss of $299.9 million, compared with a prior year loss of $82.4 million, on revenue of $1.1 billion, down from $1.41 billion.
At this point, Steve Shindler, CEO of NII Holdings, said the company was “extremely disappointed” with the numbers.
“While we have met all of our network build goals, we did not effectively address challenges in Mexico associated with the iDEN shutdown in the US or prevent the deterioration of ARPU in Brazil,” he noted.