AINMT and NII Holdings announce partnership to invest in Nextel Brazil’s growth strategy

Stockholm, 6 June 2017 – AINMT Holdings AB (“AINMT”) and NII Holdings, Inc. (“NII”) (NASDAQ: NIHD) announced today that they have entered into an agreement to jointly own and operate Brazilian mobile telecommunications company Nextel Brazil, a wholly owned subsidiary of NII. Initially and subject to certain conditions, AINMT will invest $50 million for a 30% stake in Nextel Holdings S.à r.l. (the “Company”). AINMT will have the option to invest an additional $150 million in the Company. If such option is exercised, AINMT’s total $200 million new equity investment would result in a 60% controlling stake in the Company. NII will contribute capital in accordance with the Investment Sequencing described below and retain a 40% stake in the Company if AINMT exercises its option.

  • AINMT expands its emerging market footprint by entering one of the world’s largest economies with a population of approximately 200 million people
  • Gives AINMT instant access to 2.9 million 3G/4G subscribers with highest ARPU in Brazil
  • The partnership is expected to provide Nextel Brazil with increased liquidity to revitalize the business
  • A new data-centric growth strategy for Nextel Brazil, building on the strengths of both parties
  • Strong brand position, top net promoter score rankings and highly valuable assets enable Nextel to generate profitable growth
  • AINMT brings seasoned operating telecom team and successful business model
  • AINMT’s share issue is fully underwritten by existing shareholders

Stockholm, 6 June 2017 – AINMT Holdings AB (“AINMT”) and NII Holdings, Inc. (“NII”) (NASDAQ: NIHD) announced today that they have entered into an agreement to jointly own and operate Brazilian mobile telecommunications company Nextel Brazil, a wholly owned subsidiary of NII. Initially and subject to certain conditions, AINMT will invest $50 million for a 30% stake in Nextel Holdings S.à r.l. (the “Company”). AINMT will have the option to invest an additional $150 million in the Company. If such option is exercised, AINMT’s total $200 million new equity investment would result in a 60% controlling stake in the Company. NII will contribute capital in accordance with the Investment Sequencing described below and retain a 40% stake in the Company if AINMT exercises its option.

The newly formed partnership will benefit from AINMT’s significant experience in the telecom space and financial backing from AINMT’s shareholders, including Access Industries, a global technology, media and telecom and industrial group. The partnership is expected to provide Nextel Brazil with a significant increase in capital to revitalize the business and enable it to pursue a growth strategy that NII could not fund alone.

Given Nextel’s available funds and assuming AINMT’s option to make the additional $150 million investment is exercised, Nextel Brazil would have an enhanced financial profile to pursue a newly developed commercial strategy that contemplates continued investments in Nextel Brazil’s key markets with a focus on expanding its subscriber base.

Brazilian consumers will benefit from the combination of two leading telecommunications companies focused on the consumer experience and enhanced offerings in an evolving data-driven wireless market. A stronger Nextel Brazil will be able to provide consumers with more alternatives, better service and best practices currently being deployed by AINMT in Scandinavia, where AINMT is the parent of the fastest growing operator in Norway, ice.net.

In announcing the transaction, AINMT’s CEO, JD Fouchard, said, "We have been exploring business opportunities in Brazil for several years, and Nextel Brazil offers ideal conditions for AINMT to implement its successful operating model. The spectrum holdings at multiple frequencies and the 2.9 million 3G/LTE subscribers Nextel already has in Brazil provide a solid foundation of assets on which to build, expanding the LTE network footprint and profitably growing the subscriber base. Our investment in Nextel Brazil represents a great opportunity and we welcome our new partnership with NII. We believe in the power of mobile broadband and associated services to bring fresh innovation, growth and development to the Brazilian market. We are always striving to improve and make a positive difference to the lives of our customers and the economic well-being of the communities we serve.”

AINMT invests in Nextel Brazil through AINMT International Holdings BV, which is a wholly owned subsidiary of AINMT Holdings AB.

Steve Shindler, NII's CEO said “We are excited to partner with AINMT as it continues to export its customer-centric and LTE-driven model to highly populated emerging markets around the globe. We believe that gaining access to their differentiated approach and data-driven strategy will allow Nextel Brazil to significantly expand both its growth and profitability.”

NII has undergone numerous transformational initiatives in the past 18 months to turn around and stabilize Nextel Brazil’s operations through improvements in its cost structure and a significant reduction in churn. As a result of these actions, Nextel Brazil has delivered five consecutive quarters of positive adjusted OIBDA[1].

Newly appointed CEO of Nextel Brazil, Roberto Rittes, said, “We welcome this investment, which will significantly strengthen our strategic and operational options and capabilities. It also enables a renewed focus on growing our 3G and LTE business by attracting and retaining customers who value the high quality wireless services we offer.”

The new partnership between NII and AINMT will enhance the trajectory of the business, offering a number of advantages to improve its competitive position:

  • newly developed and state-of-the-art data-centric wireless networks;
  • high quality spectrum position with LTE capabilities in Rio de Janeiro and São Paulo;
  • an attractive subscriber base with the highest ARPU in Brazil;
  • a well-known, respected brand with leading Net Promoter Score[2];
  • over $200 million in new growth capital, assuming both stages of AINMT’s investments are completed;
  • backing of AINMT’s majority shareholder, Access Industries; and
  • the addition of AINMT team members with extensive telecom expertise and a track record of turnarounds.

The transaction will take place in two key steps (“Investment Sequencing”):

Step 1:

AINMT will conduct a share issue of $50-75 million, underwritten by AINMT’s existing shareholders, including Access Industries, to fund the initial investment. By the first closing, NII will have contributed to the Company all of its freely distributable cash and all proceeds from the return of its escrow from the sale of Nextel Mexico (“Mexico Escrow”), except for approximately $50 million in cash that will remain at NII. NII has also agreed to contribute future proceeds from the Mexico Escrow. NII will retain a 70% interest in the Company and AINMT will hold a 30% interest.

Closing of Step 1 is subject to (a) approval by AINMT and AINMT AS shareholders, (b) contribution to the Company of the assets of NII International Mobile S. à r.l. and confirmation of the tax treatment of such contribution, (c) Brazilian antitrust approval, and (d) reasonable acceptance by AINMT of updated disclosure schedules.

AINMT’s share issuance is fully underwritten at a share price of NOK 110. AINMT will invite existing AINMT AS shareholders and other investors to participate in the contemplated equity issue. More details on the contemplated transaction to follow during the next few days. DNB Markets and Pareto Securites are engaged as financial advisors in the contemplated equity issue.

After receipt of ANATEL approval, AINMT will appoint two directors and one observer to a new five-person Board of Directors.

AINMT will have certain minority protective rights if it does not exercise its right to pursue Step 2 and remains a minority shareholder.

Step 2:

In a second step, AINMT will have an option, exercisable by November 15, 2017 to invest an additional $150 million to increase its ownership in the Company to 60%. The option is conditioned upon receiving certain concessions from Nextel Brazil’s lenders. If AINMT elects to exercise its option, NII will ask its shareholders to vote in favor of the transaction. The second step of the transaction must be completed by January 31, 2018, and the Company anticipates the transaction to close by the first quarter of 2018. At that time, NII stockholders are expected to hold a 40% stake in the Company.

Closing of the transaction is subject to amendment of Nextel Brazil's credit facilities and release and substitution of certain existing guarantees as well as other customary closing conditions, including regulatory and antitrust approvals, approval from NII’s stockholders and third-party approvals.

AINMT was advised by Weil, Gotshal & Manges and Mundie Advogados.

*****

This press release includes a statement on OIBDA, which is a financial metric calculated and presented on the basis of methodologies that are not in accordance with U.S. Generally Accepted Accounting Principles, or GAAP. Management, as well as certain investors, use non-GAAP financial measures to evaluate NII Holdings’ current and future financial performance. The non-GAAP financial measure included in this press release does not replace the presentation of NII Holdings’ GAAP financial results. OIBDA provides supplemental information to assist investors in analyzing NII Holdings’ financial position and results of operations. NII Holdings has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations. Reconciliations of the non-GAAP financial measure provided in this release to the most directly comparable GAAP measures are provided in below. To view this and other reconciliations of non-GAAP financial measures that NII Holdings uses, visit the investor relations link at www.nii.com.

Investor Call

NII and AINMT will host a joint investor conference call to discuss the partnership and new equity investment at 11:00am EST on June 6th, 2017. Participants may dial the following access numbers: US: 800-768-3395 | Brazil: 0800-038-5060 | Norway: 8001-9903 | Sweden: 02079-6588 | UK: 0800-496-0495 | Password: NII

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 voice services, data services and wireless Internet access. Visit NII's website at www.nii.com.

Visit NII Holdings' news room for news and to access our market’s news center: nii.com/newsroom.

About Nextel Brazil

Nextel Brazil provides wireless communication services under the NextelTM brand in Brazil with principal operations located in major urban and suburban centers with high population densities and related transportation corridors of the country where there is a concentration of Brazil’s business users and economic activity, notably Rio de Janeiro and São Paulo.

About AINMT

AINMT is an international telecommunications company. Its focus is wireless data communication services, the fastest growing business segment within the telecom sector. AINMT’s Norwegian operation, ice.net, is Norway’s third largest mobile network operator and fastest growing provider of voice and wireless data services operating on 4G-only networks for smartphones and mobile broadband. Today, the company is well established in Scandinavia (Norway, Sweden and Denmark) and has recently launched 4G networks in Indonesia and the Philippines. For more information, visit www.ainmt.com

About Access Industries

Access Industries is a privately held, U.S.-based industrial group with global strategic investments. Founded in 1986 by Len Blavatnik, an American entrepreneur and philanthropist, the group is headquartered in New York, with offices in London and Moscow. Access invests in industries where it can maximize long-term value by developing regional and global leaders. Its industrial focus spans four key sectors: natural resources and chemicals; media and telecommunications; real estate and hospitality; and venture capital. For more information, visit www.accessindustries.com.

Media Contacts:

AINMT Investor Relations:
Johan Michelsen
Deputy CEO, AINMT
+47 410 87 000

AINMT media contact:
Endre Aaberg Johansen, Corporate Communications AS, tel: +47 41 61 06 05, email: endre.johansen@corpcom.no

NII Holdings, Inc.

1875 Explorer Street, Suite 800

Reston, VA. 20190

(703) 390-5100

www.nii.com

NII Investor and Media Relations:

Dan Freiman

Chief Financial Officer, NII

703-547-5209

[1] Defined as operating income before depreciation expense, amortization expense, material non-cash asset impairments, severance costs associated with publicly announced restructuring plans and other material non-recurring or unusual charges

[2] Based on Worthix market intelligence (methodology analogous to Net Promoter Score)