Growing Debts Push Nextel Closer to Filing for Bankruptcy

Latin American telecom carrier NII Holdings is likely to file for bankruptcy as the company ended the second quarter with a net debt of US$4.8 billion. The carrier …

Latin American telecom carrier NII Holdings is likely to file for bankruptcy as the company ended the second quarter with a net debt of US$4.8 billion.

The carrier has until August 15 to certify to banks that it’s complying with its debt covenants, after which the lenders can declare a default, reported Bloomberg, quoting its filing in the stock exchange.

The Reston, Va.-based company, which operates under the Nextel brand in Latin America, warned in February that it was facing long-term liquidity issues.

Nextel is struggling to compete in Mexico and Brazil, and reports say the operator lost 77,000 subscribers in the quarter ended June 30. Telefonica and America Movil are its main rivals in Latin America.

In April last year, NII Holding sold its Nextel Peru to Entel for approximately US$400 million. The company said it would use the proceeds to bolster its operations in Brazil and Mexico.

The number of subscribers in Brazil stands at 4.188 million, up from 3.879 million at mid-2013, while in Mexico subscriptions fell 26% year-on-year to 2.930 million (including 1.691 million 3G) and Nextel Argentina users grew 5% to 1.976 million.

The carrier reported consolidated operating revenues of US$968.8 million for the second quarter of 2014, a decrease of 23% from US$1.26 billion from the same period last year.

“Despite the actions we’ve taken to improve our operational performance, we have fallen short in our efforts, leaving the company with a liquidity position that is not sufficient to support the business,” Chief Executive Steve Shindler said in a statement.

“As a result, we will need to make some key decisions in the short term to address our liquidity situation in an effort to secure the best possible path forward for our stakeholders.”

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