NII Holdings (NIHD) Stock Higher Following Telefonica (TEF) Deal

January 13, 2014 9:11 AM EST
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Telefonica (NYSE: TEF) and NII Holdings (NASDAQ: NIHD) have signed agreements whereby Telefonica will provide NII's subsidiaries, operating under the Nextel brand in Brazil and Mexico, nationwide voice and data coverage services on Telefonica's 3G wireless networks. When implemented, the agreements will expand the areas in which Nextel customers using 3G services in Brazil and Mexico can access voice and data services, supporting NII's growth strategy. Both companies will work closely to implement the agreements as soon as possible. Telefonica and NII's subsidiaries will continue to manage their spectrum and network assets separately to provide competing services.

In Brazil, the announcement demonstrates the commitment of both operators to create a dynamic competitive environment and is a natural step forward in the networks optimization process. This agreement will allow Vivo, Telefonica's commercial brand in Brazil, to more efficiently deploy its network while providing Nextel with access to a broader service area across Brazil. Nextel Brazil will continue to expand its own network while complying with the regulatory coverage requirements imposed by the Brazilian Telecommunications Regulator ("Anatel").

In Mexico, the commercial agreement will allow Movistar, Telefonica's commercial brand in the country, to leverage the capacity already deployed in its 3G network and will provide another lever for strengthening its wholesale strategy in the country. Additionally, it will allow Nextel Mexico to expand its network footprint beyond its current coverage. Moreover, it shows the commitment of both companies to efficiently provide additional services to the marketplace consistent with the goals of the telecommunications regulation reform initiatives that are being implemented in Mexico.

"The agreement allows both companies to capture the benefits derived from the optimization of infrastructure investment while maintaining the current market structure in both Brazil and Mexico," said Santiago Fernandez Valbuena, Chairman and CEO of Telefonica Latin America. "It is another example of Telefonica's effort to optimize resource usage, improve profitability of the businesses and increase financial flexibility."

"Our new agreements with Telefonica will enhance our service offerings by giving us the ability to provide our 3G customers in Brazil and Mexico with services in more areas in those markets," said Steve Shindler, NII Holdings' Chief Executive Officer. "Our access to Telefonica's networks under these agreements will also allow us to utilize Telefonica's networks as we continue to expand our own coverage footprint to provide our customers with service that meets their needs."

The agreements reached with Nextel are in line with other announcements that Telefonica has made in recent months, such as the agreement signed with Millicom to deploy 4G-LTE networks in Colombia, the MVNO deals with Virgin Mobile in Mexico, Chile and Colombia and the agreement with lusacell for reciprocal use of wholesale services in Mexico that started in 2012.

About Telefonica Telefonica is one of the largest telecommunications companies in the world in terms of market capitalisation and number of customers. From this outstanding position in the industry, and with its mobile, fixed and broadband businesses as the key drivers of its growth, Telefonica has focused its strategy on becoming a leading company in the digital world.

The company has a significant presence in 24 countries and a customer base that amounts more than 320 million accesses around the world. Telefonica has a strong presence in Spain, Europe and Latin America, where the company focuses an important part of its growth strategy.

Telefonica is a 100% listed company, with more than 1.5 million direct shareholders. Its share capital currently comprises 4.551.024.586 ordinary shares traded on the Spanish Stock Market (Madrid, Barcelona, Bilbao and Valencia) and on those in London, New York, Lima, and Buenos Aires.

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