AINMT buys 30% of Nextel Brazil, may raise it to 60%

AINMT Holdings said it has reached an agreement with NII Holdings under which AINMT will buy 30 percent of Nextel Brazil for USD 50 million. It would fund this by issuing USD 50-75 million in new shares, underwritten at NOK 110 each by existing shareholders including Access Industries. AINMT will have the option to invest another USD 150 million in Nextel Brazil by 15 November to raise its stake to 60 percent, in which case NII would retain the other 40 percent by contributing capital.

By the first closing, NII will have contributed all of its freely distributable cash and all proceeds from the return of its escrow from the sale of Nextel Mexico, except for about USD 50 million in cash that will remain at NII. NII has also agreed to contribute future proceeds from the Mexico escrow. NII will retain the other 70 percent of Nextel Brazil at the end of AINMT’s initial investment.

The second step of the transaction, to raise AINMT’s stake in Nextel Brazil to 60 percent, would have to be completed by 31 January 2018, and the company anticipates the transaction would close by the first quarter of 2018.

The deal would give AINMT instant access to 2.9 million subscribers of 3G and LTE services, with the highest ARPU in Brazil. The partnership is expected to provide Nextel Brazil with increased liquidity to revitalise the business and would lead to a data-centric growth strategy, building on the strengths of both parties.

Nextel Brazil, which already went through bankruptcy proceedings in 2015, would have an enhanced financial profile, said AINMT. It aims 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. A stronger Nextel Brazil will be able to provide consumers with more alternatives, they said, as well as better service and best practices currently deployed by AINMT in Scandinavia, where AINMT is the parent of the fastest growing operator in Norway, ice.net.

AINMT CEO JD Fouchard said that the company has been exploring business opportunities in Brazil for several years. AINMT is carrying out the investment in Nextel Brazil through AINMT International Holdings BV, which is a wholly owned subsidiary of AINMT Holdings AB.

NII has undergone several initiatives in the past eighteen months to turn around and stabilise Nextel Brazil’s operations through improvements in its cost structure and a significant reduction in churn. As a result, Nextel Brazil has delivered five consecutive quarters of positive adjusted OIBDA.