Yesterday we contributed an article here on SA about NII Holdings (NASDAQ:NIHD) which focused on the tower assets the company has been working on monetizing. We had written previous Instablogs on it, so we know the question of a spin-off to shareholders had been out in the public domain and certainly in the minds of management. The article was published in the last several minutes of the conference call, but the question had already been asked....and answered on the call by the time it was published as we reread the transcript of the call now and here is the answer:
"Richard H. Prentiss - Raymond James & Associates, Inc., Research Division
A couple of questions. First, appreciate the update on the tower sale, wanted to get into a little more color there. When you think about what's taking longer than your self-imposed midyear kind of timeline, can you kind of help us understand, is it FX related? Is it related to terms and conditions, such as rent price or savings space for 4G or rent pass-through, land lease pass through? Just trying to understand what might be causing it to drag on because we've seen a lot of tower sales around the world lately.
Steven M. Shindler - Chief Executive Officer, Director, Member of Finance Committee and Member of Risk Committee
Rick, this is Steve. So if I look back on the comments we made the last quarter, we sent the message, I believe that we would get it done by midyear. I might have been a little overly optimistic or we shouldn't have pointed to a specific date. The most important thing for us now is to get the right deal. This is a long range deal for us, and we want to make sure that every component, the financial end and the operational end, are correct. So there's really not additional color related to the individual components at this point that we would provide. We're not pointing to anything that's blocking our ability to get it done. We're very focused on moving to complete a deal that will be the right one for us, and we'll look to share the details of that with you when we have the deal ready to announce."
This tells us everything we need to know, namely that they recognize that the value of these assets are tremendous and that creating a deal that will benefit both the shareholders and the company going forward with flexibility and cash is key, and a carefully planned spin off can do just that. In fact, investment bankers will love this deal as well because it will have both an IPO component and most probably a high yield debt underwriting as well, which will get cash back in the hands of NIHD operations. We think that the next thing we hear from the company will be the announcement of the spinoff and the underwriters helping with it. With regards to the rest of the call, we have to give management an A+ for honesty and transparency as well as their hard work getting the transition of their properties implemented. Revenues missed primarily from currency devaluations which is completely out of their control. The DSO improved by 20 days, a huge correction from the prior quarter. And at the current price of $6.71, the $.21 per mhz pop valuation we calculated before has now dropped closer to $.19, which is less than 1/11 of the price paid per mhz pop for the Leap Wireless (LEAP) purchase by AT&T (NYSE:T). At the end of the day, do you think there will be more people using the NIHD network to connect their wireless devices or less? We know the difficulty of getting spectrum licenses and building a network. It;s hard work, and NIHD has done all of that plus the tower assets as well. Now shareholders will get two bites at the apple.
Disclosure: I am long NIHD.