Latin American mobile operator NII Holdings, which operates under the Nextel brand, has disclosed further details related to its recently announced ‘Accelerate’ project. In connection with Project Accelerate, Nextel will implement a restructuring and organizational realignment plan designed to simplify the roles and responsibilities of its headquarters and market organizations and better align its costs and organizational structure with its growth strategy. The plan includes reductions of over 25 percent of Nextel’s headquarters' staff and the elimination of over 1,400 positions in its market operations.
Nextel expects to incur cash costs related to employee severance in the range of USD 25 million to USD 35 million in connection with the plan, which include USD 8.6 million in charges related to restructuring activities at the company's Mexico operating subsidiary that were accounted for in the company's third quarter 2013 results. Most of the remaining costs are expected to be accounted for in Nextel’s results for the fourth quarter of 2013. The company expects to realize annualized cost savings of USD 50 million to USD 55 million as a result of these actions.
Additionally, Nextel has changed its customer deactivation policy for inactive prepaid subscribers. As a result, the company expects a higher level of prepaid subscriber deactivations in Mexico than previously estimated. Following this adjustment, Nextel expects a net subscriber loss of approximately 400,000 subscribers in Mexico for this year’s fourth quarter. This policy change is not expected to have an impact on net subscriber additions in Brazil or other markets, the company said.
Other Project Accelerate initiatives that are currently underway include the deployment of marketing campaigns in the operator’s 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 expansion of its device portfolio to include a wider range of smartphones and other handsets.
