e424b5
Filed Pursuant to Rule 424(b)(5)
Registration Statement #333-102077
Prospectus Supplement to Prospectus dated June 23, 2005.
5,000,000 Shares
Common Stock
Nextel Communications, Inc., identified in this prospectus
supplement as the selling stockholder or Nextel Communications,
is offering, through its subsidiary, 5,000,000 shares of
the common stock of NII Holdings, Inc. NII Holdings, Inc.
is not selling any shares of common stock under this prospectus
supplement and the accompanying prospectus and will not receive
any proceeds from the sale of the shares by the selling
stockholder.
The common stock is quoted on the Nasdaq National Market under
the symbol NIHD. The last reported sale price of the
common stock on September 7, 2005 was $79.00 per share.
See Risk Factors on page S-2 of this
prospectus supplement to read about factors you should consider
before buying shares of the common stock.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
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Per Share |
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Total |
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Initial price to public
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$ |
76.000 |
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$ |
380,000,000 |
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Underwriting discount
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$ |
0.875 |
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$ |
4,375,000 |
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Proceeds to the selling stockholder
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$ |
75.125 |
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$ |
375,625,000 |
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The initial price to public and underwriting discount above do
not reflect a commission equivalent the underwriters will
receive from investors in the amount of $0.05 for each
share of common stock sold to those investors in the offering.
The selling stockholder has granted the underwriter an option
through October 7, 2005 to purchase up to 750,000
additional shares of our common stock on the same terms and
conditions as set forth above, solely to cover over-allotments,
if any.
Bear, Stearns & Co. Inc. expects to deliver the shares
against payment in New York, New York on September 13, 2005.
Bear, Stearns & Co. Inc.
Prospectus Supplement dated September 7, 2005.
In this prospectus supplement, we use the terms NII
Holdings, we, us, our
and our company collectively to refer to NII
Holdings, Inc. and its operating companies.
Nextel, Nextel Direct Connect,
Nextel Online, Nextel Worldwide,
International Direct Connect, and
Push-To-Talk are trademarks or service marks of
Nextel Communications, Inc. in the United States and certain
other countries. Motorola, iDEN and
i2000 are trademarks or service marks of Motorola,
Inc.
RISK FACTORS
Before you invest in shares of our common stock, you should
be aware of various risks, including the risks described below.
Our business, financial condition or results of operations could
be materially adversely affected by any of these risks. The
trading price of our common stock could decline due to any of
these risks, and you may lose all or part of your investment.
Please note that additional risks not presently known to us or
that we currently deem immaterial may also impair our business
and operations. The risk factors in this prospectus supplement
update the corresponding risk factors in the accompanying
prospectus and the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus, and
supersede such earlier risk factors to the extent of any
conflict or inconsistency.
Risk Factors Relating to Our Company
We have a short history of profitable operations, which may
make it difficult for you to evaluate our business and the risks
of investing in our common stock.
Prior to giving effect to our reorganization and the application
of fresh start accounting to our financial statements as of
October 31, 2002, we had never been profitable. Because of
this limited profitable history and the incomparability of our
financial condition and results of operations prior to
October 31, 2002 and after October 31, 2002, it may be
difficult for you to evaluate our business.
If we are not able to compete effectively in the highly
competitive wireless communications industry, our future growth
and operating results will suffer.
Our success will depend on the ability of our operating
companies to compete effectively with other telecommunications
services providers, including wireline companies and other
wireless telecommunications companies, in the markets in which
they operate.
Some of our competitors are financially stronger than we are,
which may limit our ability to compete based on price.
Because of their resources, and in some cases ownership by
larger companies, some of our competitors may be able to offer
services to customers at prices that are below the prices that
our operating companies can offer for comparable services. If we
cannot compete effectively based on the price of our service
offerings, our results of operations may be adversely affected.
For example, many of our competitors are well-established
companies that have:
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substantially greater financial and marketing resources; |
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larger customer bases; |
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better name recognition; |
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bundled service offerings; |
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larger spectrum positions; and |
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larger coverage areas than those of our operating companies. |
Further, significant price competition could negatively impact
our operating results and our ability to attract and retain
customers. In addition, we anticipate that our operating
companies will continue to face
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market pressure to reduce the prices charged for their products
and services because of increased competition in our markets.
Our operating companies may face disadvantages when competing
against formerly government-owned incumbent wireline operators
or wireless operators affiliated with them.
In some markets, our operating companies may not be able to
compete effectively against a formerly government-owned monopoly
telecommunications operator which today enjoys a near monopoly
on the provision of wireline telecommunications services and may
have a wireless affiliate or may be controlled by shareholders
who also control a wireless operator. Our operating companies
may be at a competitive disadvantage in these markets because
formerly government-owned incumbents or affiliated competitors
may have:
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close ties with national regulatory authorities; |
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control over connections to local telephone lines; or |
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the ability to subsidize competitive services with revenues
generated from services they provide on a monopoly or
near-monopoly basis. |
These companies may also continue to enjoy the legacy of their
pre-privatization/pre-liberalization privileges. Our operating
companies may encounter obstacles and setbacks if local
governments adopt policies favoring these competitors or
otherwise afford them preferential treatment. As a result, our
operating companies may be at a competitive disadvantage to
incumbent providers, particularly as our operating companies
seek to offer new telecommunications services.
Our coverage is not as extensive as those of other wireless
service providers in our markets, which may limit our ability to
attract and retain customers.
Since our digital mobile networks do not offer nationwide
coverage in the countries in which we operate and our technology
limits our potential roaming partners, we may not be able to
compete effectively with cellular and personal communications
services providers in our markets. Many of the cellular and
personal communications services providers in our markets have
networks with substantially more extensive areas of service.
Additionally, many of these providers have entered into roaming
agreements with each other, which permit these providers to
offer coverage to their subscribers in each others
markets. The iDEN technology that we deploy is not compatible
with other wireless technologies such as digital cellular or
personal communications services technologies or with other iDEN
networks not operating in the 800 MHz spectrum. As a
result, with the exception of GSM 900 MHz systems, we
cannot enter into roaming agreements with the operators of these
other networks. Although the i2000 digital phone is compatible
with both iDEN 800 MHz and GSM 900 MHz systems, our
customers will not be able to roam on other iDEN 800 MHz or
GSM 900 MHz systems where we do not have a roaming
agreement. As a result, we will not be able to provide coverage
to our subscribers outside of our currently operating digital
markets until:
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other operators deploy iDEN 800 MHz or GSM 900 MHz
technology in markets outside of our coverage areas and we enter
into roaming agreements with those operators; or |
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handsets that can be used on both iDEN 800 MHz and non-GSM
900 MHz wireless communications networks become available
and we enter into roaming agreements with the operators of those
networks. |
If we do not keep pace with rapid technological changes, we
may not be able to attract and retain customers.
The wireless telecommunications industry is experiencing
significant technological change. Future technological
advancements may enable other wireless technologies to equal or
exceed our current level of service and render iDEN technology
obsolete. If Motorola, the sole supplier of iDEN technology, is
unable to upgrade or improve iDEN technology or develop other
technology to meet future advances in competing technologies on
a timely basis, or at an acceptable cost, we will be less able
to compete effectively and
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could lose customers to our competitors. In addition,
competition among the differing wireless technologies could:
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segment the user markets, which could reduce demand for our
technology; and |
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reduce the resources devoted by third-party suppliers, including
Motorola, which supplies all of our current digital mobile
technology, to developing or improving the technology or our
systems. |
If our wireless communications technology does not perform in
a manner that meets customer expectations, we will be unable to
attract and retain customers.
Customer acceptance of the services we offer is and will
continue to be affected by technology-based differences and by
the operational performance and reliability of system
transmissions on our digital mobile networks. We may have
difficulty attracting and retaining customers if we are unable
to address and resolve satisfactorily performance or other
transmission quality issues as they arise or if these issues:
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limit our ability to expand our network coverage or capacity as
currently planned; or |
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place us at a competitive disadvantage to other wireless service
providers in our markets. |
Our equipment is more expensive than that of some
competitors, which may affect our ability to establish and
maintain a significant subscriber base.
We currently market multi-function digital handsets, and
Motorola is the sole supplier of all our handsets. The higher
cost of our equipment may make it more difficult for us to
attract customers. In addition, the higher cost of our handsets
requires us to absorb a comparatively larger part of the cost of
offering handsets to new and existing customers. These higher
costs of handsets place us at a competitive disadvantage and may
reduce our growth and profitability.
We may lose a competitive advantage because our competitors
are providing two-way radio dispatch and other services.
We differentiate ourselves by providing two-way radio dispatch
push-to-talk services. Several of our competitors
have introduced PoC (Push-To-Talk over Cellular) service, which
is a walkie-talkie type of service similar to our Direct Connect
service. In addition, we do not have short messaging system
(SMS) interoperability agreements in all our markets.
Consequently, our competitive advantage may be impaired.
Because we rely on one supplier to implement our digital
mobile networks, any failure of that supplier to perform could
adversely affect our operations.
Motorola is currently our sole source for most of the digital
network equipment and all of the handsets used throughout our
markets. In addition, iDEN technology is a proprietary
technology of Motorola, meaning that there are no other
suppliers of this technology, and it is the only widespread,
commercially available digital technology that operates on
non-contiguous spectrum. Most of the spectrum that our operating
companies hold in each of the markets we serve is
non-contiguous. If Motorola fails to deliver system
infrastructure equipment and handsets or enhancements on a
timely, cost-effective basis, we may not be able to adequately
service our existing customers or add new customers. Nextel
Communications is the largest customer of Motorola with respect
to iDEN technology and provides significant support with respect
to new product development. Nextel Communications and Sprint
recently merged on August 12, 2005. The new combined
company had previously announced plans to migrate Nextels
push-to-talk services to a next generation CDMA network
platform. Nextel Communications has also announced an agreement
with Motorola for a three-year extension of its iDEN
infrastructure supply agreement and handset purchase agreement,
with certain modifications. Any decrease by Nextel
Communications in its use of iDEN technology could significantly
increase our costs for equipment and new developments and could
impact Motorolas decision to continue to support iDEN
technology. In the event Motorola determines not to continue
manufacturing, supporting or enhancing our iDEN based
infrastructure and handsets, because Nextel Communications
decreases its use of iDEN technology or otherwise, we may be
materially adversely affected. We expect to continue to rely
principally on Motorola
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for the manufacture of a substantial portion of the equipment
necessary to construct, enhance and maintain our digital mobile
networks and for the manufacture of handsets for the next
several years.
We operate exclusively in foreign markets, and our assets,
customers and cash flows are concentrated in Latin America,
which presents risks to our operating and financing plans.
We face political and economic risks in our markets, which
may limit our ability to implement our strategy and our
financial flexibility and may disrupt our operations.
The countries in which we operate are considered to be emerging
markets. Although political, economic and social conditions
differ in each country in which we currently operate, political
and economic developments in one country may affect our business
as a whole, including our access to international capital
markets. Negative developments or unstable conditions in the
countries in which we operate or in other emerging market
countries could have a material adverse effect on our financial
condition and results of operations. In Peru, for example, there
was significant terrorist activity in the 1980s and the early
1990s. During that time, anti-government groups escalated
violence against the government, the private sector and Peruvian
residents. Incidents of terrorist activity continue to occur.
Similar outbreaks of terrorism or political violence have
occurred in Mexico and other countries in which we operate. In
addition, in 2001, after prolonged periods of recession followed
by political instability, the Argentine government announced it
would not service its public debt. In order to address the
worsening economic and social crisis, the Argentine government
abandoned its decade-old fixed Argentine peso-U.S. dollar
exchange rate, allowing the currency to float to market levels.
We are unable to predict the impact that presidential or other
contested local or national elections and the associated
transfer of power from incumbent officials or political parties
to elected victors, may have on the local economy or the growth
and development of the local telecommunications industry.
Changes in leadership or in the ruling party in the countries in
which we operate may affect the economic programs developed
under the prior administration, which in turn may adversely
affect the economies in the countries in which we operate and
our business operations and prospects in these countries.
Due to our significant operations in Argentina and Brazil,
our business is particularly exposed to risks associated with
adverse economic and political conditions in those countries.
In recent years, both Argentina and Brazil have been negatively
affected by volatile economic and political conditions. These
volatile conditions pose risks for our business. In particular,
the volatility of the Argentine peso and the Brazilian real has
affected our recent financial results. The depreciation of the
currencies in Argentina and Brazil in 2002 had a material
negative impact on our financial results.
Argentina. After a prolonged period of recession,
followed by political instability, Argentina announced in
December 2001 that it would impose tight restrictions on bank
accounts, would not service its public sector debt and suspended
foreign currency trading. In January 2002, the Argentine
government abandoned its decade-old fixed Argentine
peso-U.S. dollar exchange rate. The resulting depreciation
of the Argentine peso against the U.S. dollar during the
2002 calendar year was 66%. A depreciation of the Argentine peso
generally affects our consolidated financial statements by
generating a foreign currency transaction loss on
U.S. dollar-denominated debt. Until October 31, 2002,
the liabilities of our Argentine operating company included
U.S. dollar-denominated secured debt, for which we
recognized foreign currency transaction losses of
$137.5 million for the ten months ended October 31,
2002. A depreciation of the Argentine peso also affects our
consolidated financial statements by reducing the translation
rate of all Argentine peso-denominated balances. To the extent
net income is generated by our Argentine operating company, the
amount would be reduced by a depreciation of the Argentine peso.
Brazil. The Brazilian economy has been characterized by
frequent and occasionally drastic intervention by the Brazilian
government and by volatile economic cycles. The Brazilian
government has often changed monetary, taxation, credit, tariff
and other policies to influence the course of Brazils
economy. In early 1999, the Brazilian government allowed the
Brazilian real to float freely, resulting in a
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32% devaluation against the U.S. dollar that year. In 2002,
the Brazilian real depreciated against the U.S. dollar by
18%. For the combined period ended December 31, 2002, we
recognized foreign currency transaction losses of
$26.2 million, primarily related to
U.S. dollar-denominated liabilities of our Brazilian
operating company.
The volatility of the Brazilian real and the Brazilian capital
markets is due, in part, to Brazilian economic performance and
related government policies. We cannot assure you that the
government will not implement policy changes that could
adversely affect our Brazilian operations. Changes in policy,
including tariffs, exchange controls or other factors, could
adversely affect our business and financial results, as could
inflation, further currency devaluation and other developments,
as well as the Brazilian governments response to them.
In addition, economic and market conditions in other emerging
markets can influence the perception of Brazils economic
and political situation.
Because wireless telecommunications services companies have a
limited history in our markets, acceptance of our services is
uncertain, and we may not be able to successfully implement our
business plan.
Due, in part, to the limited history of wireless communications
services in our existing and targeted markets, we face many
uncertainties in our markets that may affect our ability to grow
or implement our business plan. These uncertainties include:
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the size of the markets for wireless communications services; |
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the penetration rates of these markets; |
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the ability of potential subscribers to pay subscription and
other fees; |
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the extent and nature of the competitive environment in these
markets; and |
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the immediate and long-term commercial viability of wireless
communications services in these markets. |
As a result of these uncertainties, we may make significant
investments in developing a network and promoting our digital
mobile services in markets where we may not achieve significant
market acceptance for our services. If this occurs we may be
unable to recover our investment in these markets, which could
harm our financial condition and results of operations.
We are subject to fluctuations in currency exchange rates and
limitations on the expatriation or conversion of currencies,
which may result in significant financial charges, increased
costs of operations or decreased demand for our products and
services.
Nearly all of our revenues are earned in
non-U.S. currencies, while a significant portion of our
capital and operating expenditures, including imported network
equipment and handsets, and substantially all of our outstanding
debt, is priced in U.S. dollars. Accordingly, fluctuations
in exchange rates relative to the U.S. dollar could have a
material adverse effect on our earnings or assets. For example,
the 1999 and 2002 currency devaluations in Brazil resulted in
significant charges against our earnings in 1999 and 2002 and
negative adjustments to the carrying value of our assets in
Brazil. The economic upheaval in Argentina in 2002 led to the
unpegging of the Argentine peso to the U.S. dollar exchange
rate and the subsequent significant devaluation of the Argentine
peso.
Any depreciation of local currencies in the countries in which
our operating companies conduct business may result in increased
costs to us for imported equipment and may, at the same time,
decrease demand for our products and services in the affected
markets. If our operating companies distribute dividends in
local currencies in the future, the amount of cash we receive
will also be affected by fluctuations in exchange rates and
currency devaluations. In addition, some of the countries in
which we have operations do or may restrict the expatriation or
conversion of currency.
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Our operating companies are subject to fluctuating economic
conditions in the local markets in which they operate, which
could hurt their performance.
Our operations depend on the economies of the markets in which
our operating companies conduct business. These markets are in
countries with economies in various stages of development or
structural reform, some of which are subject to rapid
fluctuations in terms of consumer prices, employment levels,
gross domestic product, interest rates and inflation rates. If
these fluctuations have an effect on the ability of customers to
pay for our products and services, our business may be adversely
affected. As a result, our operating companies may experience
lower demand for their products and services and a decline in
the growth of their customer base and in revenues.
Some of our operating companies conduct business in countries
where the rate of inflation is significantly higher than in the
United States. Any significant increase in the rate of inflation
in any of these countries may not be completely or partially
offset by corresponding price increases implemented by our
operating companies, even over the long term.
We pay significant import duties on our network equipment and
handsets, and any increases could impact our financial
results.
Our operations are highly dependent upon the successful and
cost-efficient importation of network equipment and handsets
from North America and, to a lesser extent, from Europe and
Asia. Any significant increase in import duties in the future
could significantly increase our costs. To the extent we cannot
pass these costs on to our customers, our financial results will
be negatively impacted. In the countries in which our operating
companies conduct business, network equipment and handsets are
subject to significant import duties and other taxes that can be
as high as 50% of the purchase price.
We are subject to foreign taxes in the countries in which we
operate, which may reduce amounts we receive from our operating
companies or may increase our tax costs.
Many of the foreign countries in which we operate have
increasingly turned to new taxes, as well as aggressive
interpretations of current taxes, as a method of increasing
revenue. For instance, Brazil has a tax on financial
transactions, certain provinces in Argentina adopted higher tax
rates on telecommunications services in 2001 and Argentina
adopted a federal universal service tax in 2001. The provisions
of the new tax laws may prohibit us from passing these taxes on
to our customers. These taxes may reduce the amount of earnings
that we can generate from our services.
Distributions of earnings and other payments, including
interest, received from our operating companies may be subject
to withholding taxes imposed by some countries in which these
entities operate. Any of these taxes will reduce the amount of
after-tax cash we can receive from those operating companies.
In general, a U.S. corporation may claim a foreign tax
credit against its federal income tax expense for foreign
withholding taxes and, under certain circumstances, for its
share of foreign income taxes paid directly by foreign corporate
entities in which the company owns 10% or more of the voting
stock. Our ability to claim foreign tax credits is, however,
subject to numerous limitations, and we may incur incremental
tax costs as a result of these limitations or because we do not
have U.S. federal taxable income.
We may also be required to include in our income for United
States federal income tax purposes our proportionate share
of specified earnings of our foreign corporate subsidiaries that
are classified as controlled foreign corporations, without
regard to whether distributions have been actually received from
these subsidiaries.
Nextel Brazil has received tax assessment notices from state and
federal Brazilian tax authorities asserting deficiencies in tax
payments related primarily to value added taxes, import duties
and matters surrounding the definition and classification of
equipment and services. Nextel Brazil has filed various
petitions disputing these assessments. In some cases we have
received favorable decisions, which are
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currently being appealed by the respective governmental
authorities. In other cases our petitions have been denied and
we are currently appealing those decisions.
We have entered into a number of agreements that are subject
to enforcement in foreign countries, which may limit efficient
dispute resolution.
A number of the agreements that we and our operating companies
enter into with third parties are governed by the laws of, and
are subject to dispute resolution in the courts of or through
arbitration proceedings in, the countries or regions in which
the operations are located. We cannot accurately predict whether
these forums will provide effective and efficient means of
resolving disputes that may arise. Even if we are able to obtain
a satisfactory decision through arbitration or a court
proceeding, we could have difficulty enforcing any award or
judgment on a timely basis. Our ability to obtain or enforce
relief in the United States is also uncertain.
Government regulations determine how we operate in various
countries, which could limit our growth and strategy plans.
In each market in which we operate, one or more regulatory
entities regulate the licensing, construction, acquisition,
ownership and operation of our wireless communications systems.
Adoption of new regulations, changes in the current
telecommunications laws or regulations or changes in the manner
in which they are interpreted or applied could adversely affect
our operations. Because of the uncertainty as to the
interpretation of regulations in some countries in which we
operate, we may not always be able to provide the services we
have planned in each market. In some markets, we are unable, or
have limitations on our ability, to offer some services, such as
interconnection to other telecommunications networks and
participation in calling party pays programs, which may increase
our costs. Further, the regulatory schemes in the countries in
which we operate allow third parties, including our competitors,
to challenge our actions. For instance, some of our competitors
have challenged the validity of some of our licenses or the
scope of services we provide under those licenses, in
administrative or judicial proceedings, particularly in Chile.
It is possible that, in the future, we may face additional
regulatory prohibitions or limitations on our services.
Inability to provide planned services could make it more
difficult for us to compete in the affected markets. Further,
some countries in which we conduct business impose foreign
ownership limitations upon telecommunications companies.
Finally, in some of our markets, local governments have adopted
very stringent rules and regulations related to the placement
and construction of wireless towers, which can significantly
impede the planned expansion of our service coverage area,
eliminate existing towers and impose new and onerous taxes and
fees. These issues affect our ability to operate in each of our
markets, and therefore impact our business strategies. For
additional information, see the Regulatory and Legal
Overview discussion for each operating company under
Business of our 2004 annual report on Form 10-K,
which is incorporated by reference into this prospectus
supplement and the accompanying prospectus.
If our licenses to provide mobile services are not renewed,
or are modified or revoked, our business may be restricted.
Wireless communications licenses and spectrum allocations are
subject to ongoing review and, in some cases, to modification or
early termination for failure to comply with applicable
regulations. If our operating companies fail to comply with the
terms of their licenses and other regulatory requirements,
including installation deadlines and minimum loading or service
availability requirements, their licenses could be revoked.
Further, compliance with these requirements is a condition for
eligibility for license renewal. Most of our wireless
communications licenses have fixed terms and are not renewed
automatically. Because governmental authorities have discretion
as to the grant or renewal of licenses, our licenses may not be
renewed or, if renewed, renewal may not be on acceptable
economic terms. For example, under existing regulations, our
licenses in Brazil and Peru are renewable once, but no
regulations presently exist regarding how or whether additional
renewals will be granted.
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Any modification or termination of our license or roaming
agreements with Nextel Communications could increase our
costs.
Nextel Communications has licensed to us the right to use
Nextel and other of its trademarks on a royalty-free
basis in Latin America. Nextel Communications may terminate the
license on 60 days notice if we commit one of several
specified defaults (namely, failure to maintain agreed quality
controls or a change in control of NII Holdings). If there is a
change in control of one of our subsidiaries, upon 30 days
notice, Nextel Communications may terminate the sublicense
granted by us to the subsidiary with respect to the licensed
marks. The loss of the use of the Nextel tradename
could have a material adverse effect on our operations. We also
depend upon our roaming agreements with Nextel Communications
for access to its iDEN network in the United States.
We have identified material weaknesses in our internal
control over financial reporting.
As required by Section 404 of the Sarbanes-Oxley Act of
2002, our management has conducted an assessment of our internal
control over financial reporting. As defined under the rules
implementing Section 404, internal control over financial
reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. To
evaluate the effectiveness of our internal control over
financial reporting, management uses the criteria described in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
In our 2004 annual report on Form 10-K and our quarterly
reports on Form 10-Q for the quarters ended March 31,
2005 and June 30, 2005, all of which are incorporated by
reference into this prospectus supplement and the accompanying
prospectus, we provided a detailed description of two material
weaknesses over internal control over financial reporting we had
identified at the time. A material weakness is a significant
deficiency or a combination of significant deficiencies that
results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will
not be prevented or detected. Based on the material weaknesses
we identified, and in accordance with the PCAOB standards, we
concluded that our internal control over financial reporting was
not effective as of the dates of the applicable quarterly and
annual reports.
We are in the process of developing and implementing remedial
measures to address the material weaknesses in our internal
control over financial reporting. We have extensive work
remaining to test the remedial measures and to remedy these
material weaknesses. There can be no assurance as to when the
remediation plan will be implemented and successfully tested.
Until our remedial efforts are completed, we will continue to
incur the expenses and management burdens associated with the
manual procedures and additional resources required to prepare
our consolidated financial statements.
If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial
results or prevent fraud. As a result, current and potential
stockholders could lose confidence in our financial reporting,
which would harm our business and the trading price of our
stock.
Effective internal controls are necessary for us to provide
reliable financial reports and effectively prevent fraud.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
We have in the past discovered, and may in the future discover,
areas of our internal controls that need improvement. As
initially discussed in our 2004 annual report on Form 10-K
and which continued to be discussed in our quarterly reports on
Form 10-Q for the quarters ended March 31, 2005 and
June 30, 2005, all of which are incorporated by reference
into this prospectus supplement and the accompanying prospectus,
we identified two material weaknesses as a result of our
assessment of internal controls over financial reporting. We
restated certain of our previously issued financial statements
in order to correct these errors in the periods in which they
occurred. We are continuing to work to improve our internal
controls. We cannot be certain that these measures will ensure
S-9
that we implement and maintain adequate controls over our
financial processes and reporting in the future. Any failure to
implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations.
Inadequate internal controls could also cause investors to lose
confidence in our reported financial information, which could
have a negative effect on the trading price of our stock.
Our debt limits our flexibility and increases our risk of
default.
Our debt could have important consequences to you, such as:
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limiting our flexibility in planning for, or reacting to,
changes in our business and the industries in which we compete
and increasing our vulnerability to general adverse economic and
industry conditions; and |
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limiting our ability to obtain additional financing that we may
need to fund future working capital, capital expenditures,
product development, acquisitions or other corporate
requirements. |
As of June 30, 2005, the book value of our total debt was
$781.3 million, including $300.0 million of our
2.875% convertible notes due 2034, $91.5 million of
our 3.5% convertible notes due 2033, $251.9 million of
our syndicated loan facility, $126.1 million in obligations
associated with the sale and leaseback of communication towers
and $11.7 million in capital lease obligations, and our
stockholders equity was $648.0 million. On
August 15, 2005, we issued $350.0 million of our 2.75%
convertible notes due 2025.
Our ability to meet our debt obligations and to reduce our
indebtedness will depend on our future performance. Our
performance, to a certain extent, is subject to general economic
conditions and financial, business, political and other factors
that are beyond our control. We cannot assure you that we will
continue to generate cash flow from operations at or above
current levels, that we will be able to meet our cash interest
payments on all of our debt or that the related assets currently
owned by us can be sustained in the future.
If our business plans change, including as a result of changes
in technology, or if general economic, financial or political
conditions in any of our markets or competitive practices in the
mobile wireless telecommunications industry change materially
from those currently prevailing or from those now anticipated,
or if other presently unexpected circumstances arise that have a
material effect on the cash flow or profitability of our mobile
wireless business, the anticipated cash needs of our business
could change significantly. Any of these events or circumstances
could involve significant additional funding needs in excess of
the identified currently available sources, and could require us
to raise additional capital to meet those needs. However, our
ability to raise additional capital, if necessary, is subject to
a variety of additional factors that we cannot presently predict
with certainty, including the commercial success of our
operations, the volatility and demand of the capital and lending
markets and the future market prices of our securities. We
cannot assure you that we will be able to raise additional
capital on satisfactory terms or at all.
If we are unable to generate cash flow from operations in the
future to service our debt, we may try to refinance all or a
portion of our debt. We cannot assure you that sufficient future
borrowings will be available to pay or refinance our debt.
Our financing agreements have and may contain covenants that
limit how we conduct our business, which may affect our ability
to grow as planned.
As a result of restrictions that have been contained in certain
of our financing agreements and may be contained in future
financing agreements, we may be unable to raise additional
financing, compete effectively or take advantage of new business
opportunities. This may affect our ability to generate revenues
and profits. Our current financing agreements have, and any
future financing agreements may contain, covenants that limit
how we conduct business by restricting our ability to:
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incur or guarantee additional indebtedness; |
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pay dividends and make other distributions; |
S-10
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prepay subordinated indebtedness; |
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make investments and other restricted payments; |
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create liens; |
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sell assets; and |
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engage in transactions with affiliates. |
We have significant intangible assets that are not likely to
generate adequate value to satisfy our obligations in the event
of liquidation.
If we were liquidated, the value of our assets likely would not
be sufficient to satisfy our obligations. We have a significant
amount of intangible assets, such as licenses. The value of
these licenses will depend significantly upon the success of our
digital mobile network business and the growth of the
specialized mobile radio and wireless communications industries
in general. Moreover, the transfer of licenses in liquidation
would be subject to governmental or regulatory approvals that
may not be obtained or that may adversely impact the value of
such licenses. Our net tangible book value was
$571.4 million as of June 30, 2005.
The selling shareholder may be able to influence our business
and affairs.
After giving effect to the sale of shares in this offering,
assuming no exercise of the underwriters over-allotment
option, Nextel Communications will beneficially own about 9.7%
of our outstanding common stock. Despite this decrease in
ownership, we and Nextel Communications continue to have
significant technology and marketing relationships. For example,
Nextel Communications provides significant support with respect
to the development of iDEN technology, and it has licensed to us
certain trademark rights. Because of these relationships, Nextel
Communications may be able to continue to exert certain
influence over our business and affairs. The loss of these
relationships could adversely affect our operations.
Agreements with Motorola reduce our operational flexibility
and may adversely affect our growth or operating results.
We have entered into agreements with Motorola that impose
limitations and conditions on our ability to use other
technologies that would displace our existing iDEN digital
mobile networks. These agreements may delay or prevent us from
employing new or different technologies that perform better or
are available at a lower cost because of the additional economic
costs and other impediments to change arising under the Motorola
agreements. For example, our equipment purchase agreements with
Motorola provide that we must provide Motorola with notice of
our determination that Motorolas technology is no longer
suited to our needs at least six months before publicly
announcing or entering into a contract to purchase equipment
utilizing an alternate technology.
In addition, if Motorola manufactures, or elects to manufacture,
the equipment utilizing the alternate technology that we elect
to deploy, we must give Motorola the opportunity to supply 50%
of our infrastructure requirements for the equipment utilizing
the alternate technology for three years. This may limit our
ability to negotiate with an alternate equipment supplier.
Finally, if we do switch to an alternate technology and we do
not maintain Motorola infrastructure equipment at the majority
of our transmitter and receiver sites that are deployed at the
time the switch is first publicly announced any equipment
financing outstanding by Motorola or its affiliates to us shall
become immediately due and payable upon written notice from
Motorola.
We may not be able to finance a change of control offer.
Upon the occurrence of certain kinds of change of control
events, we may be required to repurchase 100% of the
principal amount of all of our outstanding $350.0 million
aggregate principal amount 2.75% convertible notes due 2025, all
of our outstanding $300.0 million aggregate principal
amount 2.875% convertible notes due 2034 and all of our
outstanding $91.5 million aggregate principal amount
S-11
3.5% convertible notes due 2033. However, it is possible
that we will not have sufficient funds at the time of the change
of control to make the required repurchase of our convertible
notes.
Concerns about health risks associated with wireless
equipment may reduce the demand for our services.
Portable communications devices have been alleged to pose health
risks, including cancer, due to radio frequency emissions from
these devices. The actual or perceived risk of mobile
communications devices could adversely affect us through
increased costs of doing business, additional governmental
regulation that sets emissions standards or otherwise limits or
prohibits our devices from being marketed and sold, a reduction
in subscribers, reduced network usage per subscriber or reduced
financing available to the mobile communications industry.
Further research and studies are ongoing, and we cannot be sure
that these studies will not demonstrate a link between radio
frequency emissions and health concerns.
Historical financial information may not be comparable to
results reported in the future.
As a result of the November 2002 consummation of our Revised
Third Amended Joint Plan of Reorganization and the transactions
contemplated thereby, we are operating our existing business
under a new capital structure. In addition, we were subject to
fresh-start accounting rules. Accordingly, our consolidated
financial condition and results of operations from and after our
reorganization are not comparable to our consolidated financial
condition or results of operations reflected in our financial
statements for periods prior to our reorganization, which are
included in our 2004 annual report on Form 10-K and
incorporated by reference into this prospectus supplement and
the accompanying prospectus.
Risk Factors Relating to the Common Stock
The market price of our common stock may be volatile, which
could cause the value of your investment in us to decline.
Any of the following factors could affect the market price of
our common stock:
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general market, political and economic conditions; |
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changes in earnings estimates and recommendations by financial
analysts; |
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our failure to meet financial analysts performance
expectations; |
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legislative and regulatory developments; |
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conditions and trends in the telecommunications industry; and |
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conditions in the local markets or regions in which we operate. |
In addition, many of the risks described elsewhere in this
Risk Factors section could materially and adversely
affect our stock price. The stock markets have experienced price
and volume volatility that has affected many companies
stock prices. Many companies have experienced wide stock price
fluctuations that have often been unrelated to the operating
performance of those companies. Fluctuations such as these may
affect the market price of our common stock.
Sales or issuances of large amounts of our common stock, or
the perception that sales or issuances could occur, may depress
our stock price.
Even if our business is doing well, the market price of our
common stock could drop if any of our significant stockholders
decides to sell additional shares. After the offering and sale
of common stock by Nextel Communications under this prospectus
supplement and the accompanying prospectus, assuming no exercise
of the underwriters over-allotment option, Nextel
Communications will continue to own about 9.7% of the
outstanding shares of our common stock. In addition, based on
public filings, four other stockholders hold 13.3%, 9.3%, 5.5%
and 5.1% of our outstanding common stock, respectively. The
market price could drop significantly if Nextel Communications
or any of our other significant stockholders sells additional
shares or other investors perceive sales by any significant
stockholder to be imminent.
S-12
A substantial number of our shares issuable under our option
plans will be freely tradeable. Sales of substantial amounts of
these shares could also cause the market price to drop
significantly. As of June 30, 2005, 13,419,800 shares
of common stock were available for grant under our stock option
plan and options to purchase 6,194,488 shares of our
common stock were outstanding (259,190 of which were
exercisable). The issuance or sale or the availability for sale
of a large number of shares of our common stock in the public
market could adversely affect the price of our common stock.
In addition, our 3.5% convertible notes due 2033, our 2.875%
convertible notes due 2034 and our 2.75% convertible notes due
2025 are convertible, subject to certain conditions, into
3,432,075, 5,634,900 and 3,494,225 shares of our common
stock, respectively, based on the current conversion rate of
such notes. In connection with the issuance of such notes, we
entered into registration rights agreements with the initial
purchasers of such notes. Pursuant to the terms of the
registration rights agreements, we have filed or will file a
registration statement to register the notes and the common
stock issuable upon the conversion of the notes that will cover
sales to third parties by the holders of such notes or common
stock. The conversion of the notes and the sale of the
underlying shares of common stock could adversely affect the
market price of our common stock.
Neither we nor our officers or directors have entered into any
lock-up agreements in connection with this offering.
We have not paid dividends on our common stock.
We have never paid a cash dividend on our common stock and do
not plan to pay dividends on our common stock for the
foreseeable future. As a holding company, our ability to pay
dividends depends on a number of factors, including the earnings
of, and cash flow available from, our operating companies. Our
operating companies are subject to legal and contractual
restrictions on the payment of dividends to us. Some of the
financing documents into which we may enter may prohibit us from
paying dividends. In addition, some provisions of our financing
agreements limit, or may in the future limit, the amount of cash
available to make dividends, loans and cash distributions to us
from our operating companies.
We anticipate that for the foreseeable future any cash flow
generated from our operations will be used to develop and expand
our business and operations and make contractual payments on our
debt in accordance with our business plan. Any future
determination as to the payment of dividends on our common stock
will be at the discretion of our board of directors and will
depend upon our operating results, financial condition and
capital requirements, contractual restrictions, general business
conditions and other factors as our board of directors deems
relevant. We cannot assure you that we will pay dividends on our
common stock at any time in the future.
Some provisions of our restated certificate of incorporation
and Delaware law could make it more difficult for a third party
to acquire us even if doing so would be in your interest.
Even if an offer to acquire our company included a premium on
the common stock or presented long-term benefits or would
otherwise be in your interest, a third party could find it
difficult to make such an acquisition. Provisions of our
restated certificate of incorporation and of Delaware law that
could make it more difficult to acquire us include:
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the ability of our board of directors to issue shares of
preferred stock on terms that can be set by our board of
directors in its sole discretion; and |
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provisions of Delaware law that impose restrictions on mergers
and business combinations between us and a holder of 15% or more
of our common stock, other than Nextel Communications or a
subsidiary of Nextel Communications. |
S-13
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
We caution you that this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus include
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and are subject
to the safe harbor created by that act. Among other things,
these statements relate to our financial condition, results of
operations and business. When used in this prospectus
supplement, the accompanying prospectus and the documents
incorporated by reference in this prospectus supplement and the
accompanying prospectus, these forward-looking statements are
generally identified by the words or phrases would
be, will allow, expects to,
will continue, is anticipated,
estimate, project or similar expressions.
While we provide forward-looking statements to assist in the
understanding of our anticipated future financial performance,
we caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date that
we make them. Forward-looking statements are subject to
significant risks and uncertainties, many of which are beyond
our control. It is routine for our internal projections and
expectations to change, and therefore it should be clearly
understood that the internal projections, beliefs and
assumptions upon which we base our expectations may change prior
to the end of each quarter or the year. Although these
expectations may change, we may not inform you if they do.
Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of the
assumptions could prove to be inaccurate. Actual results may
differ materially from those contained in or implied by these
forward-looking statements for a variety of reasons.
We have included risk factors and uncertainties that might cause
differences between anticipated and actual future results in the
Risk Factors section of this prospectus supplement
and the accompanying prospectus. We have attempted to identify,
in context, some of the factors that we currently believe may
cause actual future experience and results to differ from our
current expectations regarding the relevant matter or subject
area. The operation and results of our wireless communications
business also may be subject to the effects of other risks and
uncertainties, including, but not limited to:
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our ability to meet the operating goals established by our
business plan; |
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general economic conditions in Latin America and in the market
segments that we are targeting for our digital mobile services; |
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the political and social conditions in the countries in which we
operate, including political instability, which may affect the
economies of our markets and the regulatory schemes in these
countries; |
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substantive terms of any international financial aid package
that may be made available to any country in which our operating
companies conduct business; |
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the impact of foreign exchange volatility in our markets as
compared to the U.S. dollar and related currency devaluations in
countries in which our operating companies conduct business; |
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reasonable access to and the successful performance of the
technology being deployed in our service areas, and improvements
thereon, including technology deployed in connection with the
introduction of digital two-way mobile data or Internet
connectivity services in our markets; |
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the availability of adequate quantities of system infrastructure
and subscriber equipment and components to meet our service
deployment and marketing plans and customer demand; |
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the success of efforts to improve and satisfactorily address any
issues relating to our digital mobile network performance; |
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future legislation or regulatory actions relating to our
specialized mobile radio services, other wireless communication
services or telecommunications generally; |
S-14
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the ability to achieve and maintain market penetration and
average subscriber revenue levels sufficient to provide
financial viability to our digital mobile network business; |
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the quality and price of similar or comparable wireless
communications services offered or to be offered by our
competitors, including providers of cellular services and
personal communications services; |
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market acceptance of our new service offerings, including
International Direct Connect; |
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our ability to access sufficient debt or equity capital to meet
any future operating and financial needs; and |
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other risks and uncertainties described from time to time in our
reports filed with the Securities and Exchange Commission,
including our 2004 Annual Report on Form 10-K and our
subsequent quarterly reports on Form 10-Q, which we have
incorporated by reference in this prospectus supplement and the
accompanying prospectus. |
S-15
THE SELLING STOCKHOLDER
The selling stockholder is Nextel Communications. We believe
that Nextel Communications has sole voting and investment power
with respect to the shares of common stock it is offering. The
common stock being offered by Nextel Communications was issued
on November 12, 2002 upon our emergence from Chapter 11
proceedings. In connection with that issuance, Nextel
Communications, along with others who are not participating in
this offering, was granted registration rights under a
registration rights agreement covering the shares of our common
stock issued to Nextel Communications.
In addition to Nextel Communications ownership of our
common stock, described below, Nextel Communications held an
aggregate principal amount, at maturity, of $65.7 million of our
senior secured discount notes issued in connection with our
emergence from Chapter 11 proceedings. These notes were
purchased by us in March 2004. Also, one former member of our
board of directors, Timothy M. Donahue, is President and
Chief Executive Officer of Nextel Communications.
Mr. Donahue resigned from our board of directors on
March 10, 2004.
Share Ownership
Nextel Communications currently owns, either directly or through
a subsidiary, 12,356,064 shares of our common stock, which
represents approximately 16.4% of our issued and outstanding
shares of common stock. Following Nextel Communications
sale of 5,000,000 shares of our common stock in this offering,
and assuming no exercise of the underwriters
over-allotment option, Nextel Communications will own, either
directly or through a subsidiary, 7,356,064 shares of our common
stock, which will represent approximately 9.7% of our issued and
outstanding shares of common stock. Assuming full exercise of
the underwriters over-allotment option, Nextel
Communications will own, either directly or through a
subsidiary, 6,606,064 shares of our common stock, which
will represent approximately 8.7% of our issued and outstanding
shares of common stock. On August 12, 2005 Nextel
Communications completed a merger with a subsidiary of Sprint
Corporation and upon consummation of the merger Sprint was
renamed Sprint Nextel Corporation. As a result of the merger,
Sprint Nextel may be deemed to share beneficial ownership of the
shares held by Nextel Communications.
S-16
USE OF PROCEEDS
The selling stockholder is offering certain of its shares of our
common stock in this offering and will receive all of the
proceeds from its sale. We will not receive any of the proceeds
from the selling stockholders sale of shares of our common
stock in this offering.
PRICE RANGE OF COMMON STOCK
Prior to November 12, 2002, the date that our former common
stock and other equity interests were cancelled in connection
with our emergence from Chapter 11 proceedings, there was
no public trading market for our former common stock. Our new
common stock issued on November 12, 2002 began trading on
the Over-the-Counter (OTC) Bulletin Board effective
November 20, 2002 under the trading symbol
NIHD. On February 28, 2003, our new common
stock began trading on the Nasdaq National Market under the
trading symbol NIHD.
The following table sets forth on a per share basis the reported
high and low sales prices for our common stock, based on
published financial sources, for the quarters indicated. All
amounts have been adjusted to reflect a three-for-one stock
split of our common stock effected in the form of a stock
dividend in March 2004.
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Price Range of |
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Common Stock |
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High |
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Low |
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2003
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First Quarter
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$ |
8.95 |
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$ |
3.87 |
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Second Quarter
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13.29 |
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7.90 |
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Third Quarter
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22.20 |
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12.50 |
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Fourth Quarter
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26.87 |
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20.02 |
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2004
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First Quarter
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$ |
37.00 |
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$ |
24.77 |
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Second Quarter
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41.95 |
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31.25 |
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Third Quarter
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43.85 |
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33.07 |
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Fourth Quarter
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47.76 |
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40.55 |
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2005
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First Quarter
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$ |
61.47 |
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$ |
47.18 |
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Second Quarter
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64.41 |
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47.98 |
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Third Quarter (through September 7, 2005)
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81.78 |
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63.07 |
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On September 7, 2005, the reported last sale price for our
common stock on the Nasdaq National Market was $79.00 per share.
Investors should obtain current market quotations before making
any decision with respect to an investment in our common stock.
At September 1, 2005, there were 75,539,178 shares of our
common stock outstanding, held by approximately six stockholders
of record. These stockholders included The Depository Trust
Corporation, which acts as a clearinghouse for multiple
brokerage and custodial accounts.
S-17
DESCRIPTION OF CAPITAL STOCK
The following description is a summary of the material
provisions of our Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws. Copies of the
Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws have been filed with the Securities and
Exchange Commission.
General
As of September 1, 2005, NII Holdings had
310,000,000 shares of capital stock authorized. This
authorized capital stock consisted of:
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300,000,000 shares of common stock, par value
$0.001 per share, 75,539,178 of which were
outstanding; and |
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10,000,000 shares of undesignated preferred stock, par
value $0.001 per share, which we refer to as our
Undesignated Preferred Stock, none of which are currently
outstanding. |
Common Stock
Voting
Subject to the rights of the holder of any preferred stock
outstanding at the time, each share of our common stock entitles
its holder to one vote on all matters submitted to a vote of our
stockholders on which the holders of the common stock are
entitled to vote. Holders of the common stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the corporation generally. The common stock does
not have cumulative voting rights in connection with the
election of directors.
Dividends
Subject to the preferences of any preferred stock then
outstanding, the holders of common stock are entitled to receive
dividends and other distributions in cash, property or shares of
stock of the corporation as may be declared thereon by the
corporations board of directors from time to time out of
assets or funds of the corporation legally available therefor.
Liquidation
If we are liquidated (either partial or complete), dissolved or
wound up, whether voluntarily or involuntarily, the holders of
the common stock shall be entitled to share ratably in our net
assets remaining after payment of all liquidation preferences,
if any, applicable to any outstanding preferred stock. There are
no redemption or sinking fund provisions applicable to the
common stock.
Undesignated Preferred Stock
The board of directors is granted the authority to from time to
time issue the Undesignated Preferred Stock as preferred stock
of one or more series and in connection with the creation of any
such series to fix by resolution the designation, voting powers,
preferences, and relative, participating, optional, or other
special rights of such series, and the qualifications,
limitations, or restrictions thereof. The rights, preferences,
privileges and restrictions or qualifications of different
series of preferred stock may differ with respect to dividend
rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and other
matters. The issuance of preferred stock could decrease the
amount of earnings and assets available for distribution to
holders of common stock, adversely affect the rights and powers,
including voting rights, of holders of common stock, and have
the effect of delaying, deterring or preventing a change in
control of us.
S-18
Preemptive Rights
No holder of any share of our capital stock has any preemptive
right to subscribe to an additional issue of our capital stock
or to any security convertible into such stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
EquiServe Trust Company, N.A.
Certain Provisions of Our Certificate of Incorporation,
Bylaws and Delaware Law
General
Our Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws contain provisions that could make
more difficult an acquisition of us by means of a tender offer,
a proxy contest or otherwise. These provisions are expected to
discourage specific types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to
acquire control to first negotiate with us. Although these
provisions may have the effect of delaying, deferring or
preventing a change in control, we believe that the benefits of
increased protection through the potential ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure the company outweigh the disadvantages of
discouraging these proposals because, among other things,
negotiation of such proposals could result in an improvement of
their terms.
Board of
Directors
According to our Amended and Restated Bylaws, the board of
directors must be composed of at least one and no more than
twelve directors. Our board currently consists of nine
directors. The number of directors may be changed from time to
time by resolution of the board of directors. Directors need not
be stockholders of the corporation. According to our Amended and
Restated Certificate of Incorporation, we have a board of
directors consisting of three classes, with the term of office
of one class expiring each year. The three directors of the
first class hold office until the next annual meeting or until a
successor is duly elected and qualified, the three directors of
the second class will hold office until the next succeeding
annual meeting or until a successor is duly elected and
qualified, and the three directors of the third class will hold
office until the next thereafter succeeding annual meeting or
until a successor is duly elected and qualified. Commencing with
the next annual meeting, each class of directors whose term
shall then or thereafter expire will be elected to hold office
for a three-year term.
Stockholder Actions
and Special Meetings
In accordance with Delaware law, any action required or
permitted to be taken at a stockholders meeting may be
taken without a meeting or a vote if the action is consented to
in writing by holders of outstanding stock having the votes
necessary to authorize the action. Our Amended and Restated
Bylaws provide that the chairman of the board and chief
executive officer may call special meetings of the stockholders
for any purpose at any time. Further, the Amended and Restated
Bylaws provide that a special meeting shall be called by the
secretary upon the written request of a majority of the board of
directors or of stockholders holding a majority of the entire
capital stock issued and outstanding and entitled to vote. This
request must state the purposes of the proposed meeting.
Anti-Takeover
Statute
Generally, section 203 of the Delaware general corporation
law prohibits a publicly held Delaware company from engaging in
a business combination with an interested stockholder for a
period of three years after the time the stockholder became an
interested stockholder. However, the interested stockholder
S-19
may engage in a business combination if specified conditions are
satisfied. Thus, it may make acquisition of control of our
company more difficult. The prohibitions in section 203 do
not apply if:
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before the stockholder became an interested stockholder, the
board of directors approved either the business combination or
the transaction that resulted in the stockholder becoming an
interested stockholder; |
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upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock outstanding
at the time the transaction began; or |
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at or after the time the stockholder became an interested
stockholder, the business combination is approved by the board
of directors and authorized by the affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the
interested stockholder. |
Under section 203 of the Delaware general corporation law,
a business combination includes:
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any merger or consolidation of the corporation with the
interested stockholder; |
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, except proportionately as a stockholder of such
corporation, to or with the interested stockholder of assets of
the corporation having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of
the corporation or the aggregate market value of all its
outstanding stock; |
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transactions resulting in the issuance or transfer by the
corporation of stock of the corporation to the interested
stockholder; |
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transactions involving the corporation, which have the effect of
increasing the proportionate share of the corporations
stock of any class or series that is owned by the interested
stockholder; or |
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transactions in which the interested stockholder receives
financial benefits provided by the corporation. |
Under section 203 of the Delaware general corporation law,
an interested stockholder generally is
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any person that owns 15% or more of the outstanding voting stock
of the corporation; |
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any person that is an affiliate or associate of the corporation
and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within the three-year period
immediately before the date on which it is sought to be
determined whether or not that person is an interested
stockholder; and |
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the affiliates or associates of either of the above categories
of persons. |
Under some circumstances, section 203 of the Delaware
general corporation law makes it more difficult for an
interested stockholder to effect various business combinations
with us for a three-year period, although our stockholders may
elect to exclude us from the restrictions imposed under this
section.
S-20
UNDERWRITING
NII Holdings, the selling stockholder and Bear,
Stearns & Co. Inc. have entered into an underwriting
agreement with respect to the shares being offered. Subject to
certain conditions, Bear, Stearns & Co. Inc. has agreed
to purchase all of the 5,000,000 shares offered hereby.
Bear, Stearns & Co. Inc. is committed to take and pay for
all of the shares being offered, if any are taken, other than
those shares covered by the over-allotment option described
below.
Shares sold by Bear, Stearns & Co. Inc. to the public
will initially be offered on the terms set forth on the cover of
this prospectus supplement. If all the shares are not sold at
the initial price to public, Bear, Stearns & Co. Inc.
may change the offering price and the other selling terms.
The selling stockholder has granted to the underwriter an
option, exercisable on or prior to October 7, 2005, to
purchase up to a total of 750,000 additional shares of common
stock to cover over-allotments, if any, at the public offering
price less the underwriting discount. If the underwriter
exercises the over-allotment option to purchase any of the
additional 750,000 shares of common stock, these additional
shares will be sold by the underwriter on the same terms as
those on which the shares offered hereby are being sold. The
underwriter may exercise the over-allotment option only to cover
over-allotments made in connection with the sale of the shares
of common stock offered in this offering.
The following table shows the public offering price,
underwriting discounts and proceeds to the selling stockholder
from the sale of common stock. Such amounts are shown assuming
both no exercise and full exercise of the underwriters
over-allotment option to purchase additional shares.
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Total |
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Without |
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With |
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Per Share |
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over-allotment |
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over-allotment |
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Public offering price
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$ |
76.000 |
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$ |
380,000,000 |
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$ |
437,000,000 |
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Underwriting discount
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$ |
0.875 |
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$ |
4,375,000 |
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$ |
5,031,250 |
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Proceeds to the selling stockholder
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$ |
75.125 |
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$ |
375,625,000 |
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$ |
431,968,750 |
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The initial price to public and underwriting discount above do
not reflect a commission equivalent the underwriters will
receive from investors in the amount of $0.05 for each
share of common stock sold to those investors in the offering.
The selling stockholder has agreed with Bear, Stearns &
Co. Inc. not to dispose of or hedge any of NII Holdings
common stock or any securities convertible into or exchangeable
for shares of such common stock during the period from the date
of this prospectus supplement continuing through the date
30 days after the date of this prospectus supplement,
except with the prior written consent of Bear, Stearns & Co.
Inc. The restrictions contained in the preceding sentence shall
not apply to the shares sold pursuant to this offering.
In connection with the offering, Bear, Stearns & Co.
Inc. may purchase and sell shares of common stock in the
open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by Bear,
Stearns & Co. Inc. of a greater number of shares
than it is required to purchase in the offering.
Covered short sales are sales of shares made in an
amount up to the number of shares represented by the
underwriters over-allotment option. In determining the
source of shares to close out the covered short position, the
underwriter will consider, among other things, the price of
shares available for purchase in the open market as compared to
the price at which the underwriter may purchase shares through
the over-allotment option. Transactions to close out the covered
short involve either purchases of the common stock in the open
market after the distribution has been completed or the exercise
of the over-allotment option. The underwriter may also make
naked short sales of shares in excess of the
over-allotment option. The underwriter must close out any naked
short position by purchasing shares of common stock in the open
S-21
market. A naked short position is more likely to be created if
the underwriter is concerned that there may be downward pressure
on the price of the common stock in the open market after
pricing that could adversely affect investors who purchase in
the offering. Stabilizing transactions consist of various bids
for or purchases of common stock made by Bear, Stearns & Co.
Inc. in the open market prior to the completion of the offering.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or retarding a decline in the
market price of NII Holdings stock, and may stabilize,
maintain or otherwise affect the market price of the common
stock. As a result, the price of the common stock may be higher
than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued at any
time. These transactions may be effected on NASDAQ, in the
over-the-counter market or otherwise.
The underwriter has represented, warranted and agreed that:
(i) it has not offered or sold and, prior to the expiry of
a period of six months from the closing date, will not offer or
sell any shares to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it
has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning
of section 21 of the Financial Services and Markets Act 2000
(FSMA)) received by it in connection with the issue
or sale of any shares in circumstances in which section 21(1) of
the FSMA does not apply to NII Holdings; and (iii) it has
complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the
shares in, from or otherwise involving the United Kingdom.
NII Holdings will pay all of the expenses of this offering,
other than underwriting discounts and commissions. NII Holdings
estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately
$300,000.
NII Holdings and the selling stockholder have agreed to
indemnify Bear, Stearns & Co. Inc. against certain
liabilities, including liabilities under the Securities Act of
1933.
Bear, Stearns & Co. Inc. and its affiliates have,
from time to time, performed, and may in the future perform,
various financial advisory and investment banking services for
NII Holdings, for which they received or will receive customary
fees and expenses.
S-22
LEGAL MATTERS
Certain legal matters in connection with the shares of common
stock offered by this prospectus supplement and the accompanying
prospectus will be passed upon for us by Williams Mullen,
Richmond, Virginia. Davis Polk & Wardwell, New York,
New York, will pass upon certain legal matters for the
underwriter in connection with the shares of common stock
offered by this prospectus supplement and the accompanying
prospectus.
EXPERTS
On May 19, 2003, we dismissed Deloitte & Touche
LLP as our independent registered public accounting firm and
engaged PricewaterhouseCoopers LLP as our independent registered
public accounting firm. In connection with its audits for the
two most recent fiscal years and through May 19, 2003,
there had been no disagreements with Deloitte & Touche
LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of
Deloitte & Touche LLP would have caused them to make
reference thereto in their report on the Companys
consolidated financial statements for such years. Our change in
independent registered public accounting firm was reported on a
Current Report on Form 8-K filed with the SEC on
May 23, 2003.
The consolidated balance sheets as of December 31, 2002
(Successor Company consolidated balance sheet), and the related
consolidated statements of operations, changes in
stockholders (deficit) equity and cash flows for the
two months ended December 31, 2002 (Successor Company
consolidated operations) and the ten months ended
October 31, 2002 (Predecessor Company consolidated
operations), and the financial statement schedule, incorporated
in this prospectus by reference from the Companys Annual
Report on Form 10-K for the year ended December 31,
2004, have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in
their report dated March 7, 2003 (March 17, 2005 as to
the effects of the restatement discussed in Note 20), which
is incorporated herein by reference, (which report expresses an
unqualified opinion and includes explanatory paragraphs
referring to NII Holdings, Inc.s reorganization under
Chapter 11 of the United States Bankruptcy Code in 2002,
the adoption of AICPA Statement of Position 90-7,
Financial Reporting for Entities in Reorganization Under
the Bankruptcy Code, in 2002 and the adoption of Emerging
Issues Task Force Issue No. 00-21, Accounting for
Revenue Arrangements with Multiple Deliverables, on
November 1, 2002 and the restatement of the consolidated
financial statements for the two months ended December 31,
2002 (Successor Company) and for the ten months ended
October 31, 2002 (Predecessor Company)) and have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The consolidated financial statements as of December 31,
2004 and 2003 and for the years then ended and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2004 (which is
included in Managements Report on Internal Control over
Financial Reporting) incorporated in this prospectus supplement
and the accompanying prospectus by reference to the Annual
Report on Form 10-K for the year ended December 31,
2004 have been so incorporated in reliance on the report (which
contains an adverse opinion on the effectiveness of internal
control over financial reporting and an explanatory paragraph
relating to the Companys change in method of accounting
for the financial results of its foreign operating companies
from a one-month lag reporting basis to a current period basis,
consistent with the Companys fiscal reporting period, as
described in Note 2 to the consolidated financial
statements) of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of
said firm as experts in auditing and accounting.
INCORPORATION OF INFORMATION THAT WE FILE WITH THE SEC
This prospectus supplement incorporates by reference important
business and financial information that we file with the SEC and
that we are not including in or delivering with this prospectus
supplement
S-23
or the accompanying prospectus. As the SEC allows, incorporated
documents are considered part of this prospectus supplement and
the accompanying prospectus, and we can disclose important
information to you by referring you to those documents.
We incorporate by reference the documents listed below, to the
extent they have been filed with the SEC:
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our Annual Report on Form 10-K for the year ended
December 31, 2004; |
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the portions of our definitive Proxy Statement for the Annual
Meeting of Stockholders held on April 27, 2005 that have
been incorporated by reference into our Annual Report on
Form 10-K for the year ended December 31, 2004; |
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our Quarterly Reports on Form 10-Q for the periods ended
March 31, 2005 and June 30, 2005; and |
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our Current Reports on Form 8-K filed March 7, 2005,
March 21, 2005, March 22, 2005, April 1, 2005,
May 17, 2005, May 27, 2005, June 10, 2005,
June 21, 2005, August 9, 2005, August 10, 2005
and August 16, 2005. |
We also incorporate by reference all documents to the extent
they have been filed with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(1) after the date of this prospectus supplement and
(2) until this offering has been completed. Information in
this prospectus supplement supersedes related information in the
documents listed above, and information in subsequently filed
documents supersedes related information in both this prospectus
supplement and the incorporated documents.
We will promptly provide, without charge to you, upon written or
oral request, a copy of any or all of the documents incorporated
by reference in this prospectus supplement, other than exhibits
to those documents, unless the exhibits are specifically
incorporated by reference in those documents. Requests should be
directed to:
Robert J. Gilker
Vice President and General Counsel
NII Holdings, Inc.
10700 Parkridge Boulevard, Suite 600
Reston, Virginia 20191
(703) 390-5100
S-24
12,356,064 Shares of Common Stock
The selling security holder identified in this prospectus is
offering up to 12,356,064 shares of the common stock, par
value $0.001 per share, of NII Holdings, Inc. The
shares of common stock are being offered on a continuous basis
until at least November 12, 2007 or the earlier sale of the
shares of common stock.
NII Holdings, Inc. emerged from Chapter 11 bankruptcy
proceedings on November 12, 2002, and the selling security
holder acquired its shares in connection with the consummation
of NII Holdings, Inc.s Revised Third Amended Joint
Plan of Reorganization. NII Holdings, Inc. has agreed to
register the shares issued to certain of such holders who have
entered into a registration rights agreement with
NII Holdings, Inc.
The selling security holder will receive all of the net proceeds
from the sale of the shares. This security holder will pay all
underwriting discounts and selling commissions, if any,
applicable to the sale of their shares. NII Holdings, Inc.
is not offering any shares of common stock for sale under this
prospectus and will not receive any of the proceeds from the
sale of these securities by the selling security holder.
The selling security holder and participating brokers or dealers
may be deemed to be underwriters within the meaning of the
Securities Act of 1933, in which event any profit on the sale of
the shares by the selling security holder and any commissions or
discounts received by those brokers or dealers may be deemed to
be underwriting compensation under the Securities Act.
NII Holdings, Inc. common stock is currently listed on the
NASDAQ National Market under the symbol NIHD. On
May 31, 2005, the closing price of the common stock was
$59.60 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK. SEE RISK FACTORS BEGINNING ON PAGE 4 FOR
A DISCUSSION OF SOME IMPORTANT RISKS YOU SHOULD CONSIDER BEFORE
BUYING ANY SHARES OF COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Prospectus dated June 23, 2005.
TABLE OF CONTENTS
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Page | |
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CERTAIN DEFINITIONS
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1 |
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FORWARD-LOOKING AND CAUTIONARY STATEMENTS
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1 |
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PROSPECTUS SUMMARY
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2 |
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RISK FACTORS
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4 |
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USE OF PROCEEDS
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14 |
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SELLING SECURITY HOLDER
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14 |
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PLAN OF DISTRIBUTION
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16 |
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DESCRIPTION OF CAPITAL STOCK
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18 |
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LEGAL MATTERS
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21 |
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EXPERTS
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INCORPORATION OF INFORMATION THAT WE FILE WITH THE SEC
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WHERE YOU CAN FIND MORE INFORMATION
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i
CERTAIN DEFINITIONS
Unless the context requires otherwise, NII Holdings,
Inc., NII Holdings, we,
our, us and the Company
refer to the combined businesses of NII Holdings, Inc. and
its consolidated subsidiaries. NII Holdings, Inc., formerly
known as Nextel International, Inc., was incorporated in
Delaware in 2000.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Certain statements made in this prospectus are not historical or
current facts, but deal with potential future circumstances and
developments. They can be identified by the use of
forward-looking words such as believes,
expects, intends, plans,
may, will, would,
could, should or anticipates
or other comparable words, or by discussions of strategy that
involve risks and uncertainties. We caution you that these
forward-looking statements are only predictions, which are
subject to risks and uncertainties, including technical
uncertainties, financial variations, changes in the regulatory
environment, industry growth and trend predictions. We have
attempted to identify, in context, some of the factors that we
currently believe may cause actual future experience and results
to differ from our current expectations regarding the relevant
matter or subject area. The operation and results of our
wireless communications business also may be subject to the
effects of other risks and uncertainties in addition to the
other qualifying factors identified in the Risk
Factors section below, including, but not limited to:
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our ability to meet the operating goals established by our
business plan; |
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general economic conditions in Latin America and in the market
segments that we are targeting for our digital mobile services; |
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the political and social conditions in the countries in which we
operate, including political instability, which may affect the
economies of our markets and the regulatory schemes in these
countries; |
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substantive terms of any international financial aid package
that may be made available to any country in which our operating
companies conduct business; |
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the impact of foreign exchange volatility in our markets as
compared to the U.S. dollar and related currency
devaluations in countries in which our operating companies
conduct business; |
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reasonable access to and the successful performance of the
technology being deployed in our service areas, and improvements
thereon, including technology deployed in connection with the
introduction of digital two-way mobile data or Internet
connectivity services in our markets; |
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the availability of adequate quantities of system infrastructure
and subscriber equipment and components to meet our service
deployment and marketing plans and customer demand; |
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the success of efforts to improve and satisfactorily address any
issues relating to our digital mobile network performance; |
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future legislation or regulatory actions relating to our
specialized mobile radio services, other wireless communication
services or telecommunications generally; |
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the ability to achieve and maintain market penetration and
average subscriber revenue levels sufficient to provide
financial viability to our digital mobile network business; |
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the quality and price of similar or comparable wireless
communications services offered or to be offered by our
competitors, including providers of cellular services and
personal communications services; |
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market acceptance of our new service offerings, including
International Direct Connect; |
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our ability to access sufficient debt or equity capital to meet
any future operating and financial needs; and |
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other risks and uncertainties described from time to time in our
reports filed with the Securities and Exchange Commission. |
1
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. It does not contain all of the information that is
important to you. We encourage you to read this prospectus in
its entirety.
ABOUT NII HOLDINGS
We provide digital wireless communication services targeted at
meeting the needs of business customers through operating
companies located in selected Latin American markets. Our
principal operations are in major business centers and related
transportation corridors of Mexico, Brazil, Argentina and Peru.
We also provide analog specialized mobile radio services in
Mexico, Brazil and Peru, as well as in Chile. Our markets are
generally characterized by high population densities and, we
believe, a concentration of the countrys business users
and economic activity. In addition, vehicle traffic congestion,
low landline penetration and unreliability of the land-based
telecommunications infrastructure encourage the use of mobile
wireless communications services in these areas.
We use a transmission technology called integrated digital
enhanced network, or iDEN®, developed by Motorola, Inc., to
provide our digital mobile services on 800 MHz spectrum
holdings in all of our digital markets. This technology allows
us to use our spectrum more efficiently and offer multiple
digital wireless services integrated on one digital handset
device. We are designing our digital mobile networks to support
multiple digital wireless services, including:
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digital mobile telephone service, including advanced calling
features such as speakerphone, conference calling, voice-mail,
call forwarding and additional line service; |
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Nextel Direct Connect® service, which allows subscribers
anywhere on our network in the same country to talk to each
other instantly, on a push-to-talk basis, on a
private one-to-one call or on a group call; |
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International Direct Connect® service, in partnership with
Nextel Communications and Nextel Partners, which allows
subscribers to communicate instantly across national borders
with our subscribers in Mexico, Brazil, Argentina and Peru and
with Nextel Communications and Nextel Partners subscribers in
the United States; |
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Internet services, mobile messaging services, e-mail and
advanced
Javatm
enabled business applications, which are marketed as
Nextel
Onlinesm
services; and |
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international roaming capabilities, which are marketed as
Nextel
Worldwidesm. |
Our principal executive office is located at
10700 Parkridge Boulevard, Suite 600, Reston, Virginia
20191. Our telephone number at that location is
(703) 390-5100.
2
SUMMARY OF THE OFFERING
The selling security holder identified in this prospectus is
offering up to 12,356,064 shares of the common stock, par
value $0.001 per share, of NII Holdings, Inc. We are not
issuing any shares under this prospectus.
NII Holdings is authorized to issue a total of
300,000,000 shares of common stock, par value
$0.001 per share. As of May 31, 2005, there were
71,706,188 shares of NII Holdings common stock
outstanding.
See additional discussion of our common stock under
Description of Capital Stock appearing in this
prospectus.
3
RISK FACTORS
Investing in the common stock offered by the selling security
holder involves a high degree of risk. You should carefully
consider the risks described below, as well as all the other
information in this prospectus including the
consolidated financial statements and related notes
before investing in the common stock.
Risk Factors Relating to Our Company
We have a short history of
profitable operations, which may make it difficult for you to
evaluate our business and the risks of investing in our common
stock.
Prior to giving effect to our reorganization and the application
of fresh start accounting to our financial statements as of
October 31, 2002, we had never been profitable. Because of
this limited profitable history and the incomparability of our
financial condition and results of operations prior to
October 31, 2002 and after October 31, 2002, it may be
difficult for you to evaluate our business.
If we are not able to
compete effectively in the highly competitive wireless
communications industry, our future growth and operating results
will suffer.
Our success will depend on the ability of our operating
companies to compete effectively with other telecommunications
services providers, including wireline companies and other
wireless telecommunications companies, in the markets in which
they operate.
Some of our competitors are financially stronger than we are,
which may limit our ability to compete based on price.
Because of their resources, and in some cases ownership by
larger companies, some of our competitors may be able to offer
services to customers at prices that are below the prices that
our operating companies can offer for comparable services. If we
cannot compete effectively based on the price of our service
offerings, our revenues may be adversely affected. For example,
many of our competitors are well-established companies that have:
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substantially greater financial and marketing resources; |
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larger customer bases; |
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better name recognition; |
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bundled service offerings; |
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larger spectrum positions; and |
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larger coverage areas than those of our operating companies. |
Further, significant price competition could negatively impact
our operating results and our ability to attract and retain
customers. In addition, we anticipate that our operating
companies will continue to face market pressure to reduce the
prices charged for their products and services because of
increased competition in our markets.
Our operating companies may face disadvantages when competing
against formerly government-owned incumbent wireline operators
or wireless operators affiliated with them.
In some markets, our operating companies may not be able to
compete effectively against a formerly government-owned monopoly
telecommunications operator which today enjoys a near monopoly
on the provision of wireline telecommunications services and may
have a wireless affiliate or may be controlled by shareholders
who also control a wireless operator. Our operating companies
may be at a competitive disadvantage in these markets because
formerly government-owned incumbents or affiliated competitors
may have:
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close ties with national regulatory authorities; |
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control over connections to local telephone lines; or |
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the ability to subsidize competitive services with revenues
generated from services they provide on a monopoly or
near-monopoly basis. |
These companies may also continue to enjoy the legacy of their
pre-privatization/pre-liberalization privileges. Our operating
companies may encounter obstacles and setbacks if local
governments adopt policies favoring these competitors or
otherwise afford them preferential treatment. As a result, our
operating companies may be at a competitive disadvantage to
incumbent providers, particularly as our operating companies
seek to offer new telecommunications services.
Our coverage is not as extensive as those of other wireless
service providers in our markets, which may limit our ability to
attract and retain customers.
Since our digital mobile networks do not offer nationwide
coverage in the countries in which we operate and our technology
limits our potential roaming partners, we may not be able to
compete effectively with cellular and personal communications
services providers in our markets. Many of the cellular and
personal communications services providers in our markets have
networks with substantially more extensive areas of service.
Additionally, many of these providers have entered into roaming
agreements with each other, which permit these providers to
offer coverage to their subscribers in each others
markets. The iDEN technology that we deploy is not compatible
with other wireless technologies such as digital cellular or
personal communications services technologies or with other iDEN
networks not operating in the 800 MHz spectrum. As a
result, with the exception of GSM 900 MHz systems, we
cannot enter into roaming agreements with the operators of these
other networks. Although the i2000 digital phone is compatible
with both iDEN 800 MHz and GSM 900 MHz systems, our
customers will not be able to roam on other iDEN 800 MHz or
GSM 900 MHz systems where we do not have a roaming
agreement. As a result, we will not be able to provide coverage
to our subscribers outside of our currently operating digital
markets until:
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other operators deploy iDEN 800 MHz or GSM 900 MHz
technology in markets outside of our coverage areas and we enter
into roaming agreements with those operators; or |
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handsets that can be used on both iDEN 800 MHz and non-GSM
900 MHz wireless communications networks become available
and we enter into roaming agreements with the operators of those
networks. |
If we do not keep pace with rapid technological changes, we
may not be able to attract and retain customers.
The wireless telecommunications industry is experiencing
significant technological change. Future technological
advancements may enable other wireless technologies to equal or
exceed our current level of service and render iDEN technology
obsolete. If Motorola, the sole supplier of iDEN technology, is
unable to upgrade or improve iDEN technology or develop other
technology to meet future advances in competing technologies on
a timely basis, or at an acceptable cost, we will be less able
to compete effectively and could lose customers to our
competitors. In addition, competition among the differing
wireless technologies could:
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segment the user markets, which could reduce demand for our
technology; and |
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reduce the resources devoted by third-party suppliers, including
Motorola, which supplies all of our current digital mobile
technology, to developing or improving the technology or our
systems. |
If our wireless communications technology does not perform in
a manner that meets customer expectations, we will be unable to
attract and retain customers.
Customer acceptance of the services we offer is and will
continue to be affected by technology-based differences and by
the operational performance and reliability of system
transmissions on our digital mobile networks. We may have
difficulty attracting and retaining customers if we are unable
to address and resolve satisfactorily performance or other
transmission quality issues as they arise or if these issues:
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limit our ability to expand our network coverage or capacity as
currently planned; or |
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place us at a competitive disadvantage to other wireless service
providers in our markets. |
5
Our equipment is more expensive than that of some
competitors, which may affect our ability to establish and
maintain a significant subscriber base.
We currently market multi-function digital handsets, and
Motorola is the sole supplier of all our handsets. The higher
cost of our equipment may make it more difficult for us to
attract customers. In addition, the higher cost of our handsets
requires us to absorb a comparatively larger part of the cost of
offering handsets to new and existing customers. These higher
costs of handsets place us at a competitive disadvantage and may
reduce our growth and profitability.
We may lose a competitive advantage because our competitors
are providing two-way radio dispatch and other services.
We differentiate ourselves by providing two-way radio dispatch
push-to-talk services. Several of our competitors
have introduced PoC (Push-To-Talk over Cellular) service, which
is a walkie-talkie type of service similar to our Direct Connect
service. In addition, we do not have short messaging system
(SMS) interoperability agreements in all our markets.
Consequently, our competitive advantage may be impaired.
Because we rely on one supplier to implement our digital
mobile networks, any failure of that supplier to perform could
adversely affect our operations.
Motorola is currently our sole source for most of the digital
network equipment and all of the handsets used throughout our
markets. In addition, iDEN technology is a proprietary
technology of Motorola, meaning that there are no other
suppliers of this technology, and it is the only widespread,
commercially available digital technology that operates on
non-contiguous spectrum. We have some non-contiguous spectrum in
each of the markets we serve. If Motorola fails to deliver
system infrastructure equipment and handsets or enhancements on
a timely, cost-effective basis, we may not be able to adequately
service our existing customers or add new customers. Nextel
Communications is the largest customer of Motorola with respect
to iDEN technology and provides significant support with respect
to new product development. Nextel Communications and Sprint
recently announced that they would merge and that the new
combined company plans to migrate Nextels push-to-talk
services to a next generation CDMA network platform. After
announcing their merger plans, Nextel Communications also
announced an agreement with Motorola for a three-year extension
of its iDEN infrastructure supply agreement and handset purchase
agreement, with certain modifications. Any decrease by Nextel
Communications in its use of iDEN technology could significantly
increase our costs for equipment and new developments and could
impact Motorolas decision to continue to support iDEN
technology. In the event Motorola determines not to continue
manufacturing, supporting or enhancing our iDEN based
infrastructure and handsets, because Nextel Communications
decreases its use of iDEN technology or otherwise, we may be
materially adversely affected. We expect to continue to rely
principally on Motorola for the manufacture of a substantial
portion of the equipment necessary to construct, enhance and
maintain our digital mobile networks and for the manufacture of
handsets for the next several years.
We operate exclusively in foreign markets, and our assets,
customers and cash flows are concentrated in Latin America,
which presents risks to our operating and financing
plans.
We face political and economic risks in our markets, which
may limit our ability to implement our strategy and our
financial flexibility and may disrupt our operations.
The countries in which we operate are considered to be emerging
markets. Although political, economic and social conditions
differ in each country in which we currently operate, political
and economic developments in one country may affect our business
as a whole, including our access to international capital
markets. Negative developments or unstable conditions in the
countries in which we operate or in other emerging market
countries could have a material adverse effect on our financial
condition and results of operations. In Peru, for example, there
was significant terrorist activity in the 1980s and the early
1990s. During that time, anti-government groups escalated
violence against the government, the private sector and Peruvian
residents. Incidents of terrorist activity continue to occur.
Similar outbreaks of terrorism or political violence have
occurred in Mexico and other countries in which we operate. In
addition, in 2001, after prolonged periods of
6
recession followed by political instability, the Argentine
government announced it would not service its public debt. In
order to address the worsening economic and social crisis, the
Argentine government abandoned its decade-old fixed Argentine
peso-U.S. dollar exchange rate, allowing the currency to
float to market levels.
We are unable to predict the impact that presidential or other
contested local or national elections and the associated
transfer of power from incumbent officials or political parties
to elected victors, may have on the local economy or the growth
and development of the local telecommunications industry.
Changes in leadership or in the ruling party in the countries in
which we operate may affect the economic programs developed
under the prior administration, which in turn may adversely
affect the economies in the countries in which we operate and
our business operations and prospects in these countries.
Due to our significant operations in Argentina and Brazil,
our business is particularly exposed to risks associated with
adverse economic and political conditions in those countries.
In recent years, both Argentina and Brazil have been negatively
affected by volatile economic and political conditions. These
volatile conditions pose risks for our business. In particular,
the volatility of the Argentine peso and the Brazilian real has
affected our recent financial results. The depreciation of the
currencies in Argentina and Brazil in 2002 had a material
negative impact on our financial results.
Argentina. After a prolonged period of recession,
followed by political instability, Argentina announced in
December 2001 that it would impose tight restrictions on bank
accounts, would not service its public sector debt and suspended
foreign currency trading. In January 2002, the Argentine
government abandoned its decade-old fixed Argentine
peso-U.S. dollar exchange rate. The resulting depreciation
of the Argentine peso against the U.S. dollar during the
2002 calendar year was 66%. A depreciation of the Argentine peso
generally affects our consolidated financial statements by
generating a foreign currency transaction loss on
U.S. dollar-denominated debt. Until October 31, 2002,
the liabilities of our Argentine operating company included
U.S. dollar-denominated secured debt, for which we
recognized foreign currency transaction losses of
$137.5 million for the ten months ended October 31,
2002. A depreciation of the Argentine peso also affects our
consolidated financial statements by reducing the translation
rate of all Argentine peso-denominated balances. To the extent
net income is generated by our Argentine operating company, the
amount would be reduced by a depreciation of the Argentine peso.
Brazil. The Brazilian economy has been characterized by
frequent and occasionally drastic intervention by the Brazilian
government and by volatile economic cycles. The Brazilian
government has often changed monetary, taxation, credit, tariff
and other policies to influence the course of Brazils
economy. In early 1999, the Brazilian government allowed the
Brazilian real to float freely, resulting in a 32% devaluation
against the U.S. dollar that year. In 2002, the Brazilian
real depreciated against the U.S. dollar by 18%. For the
combined period ended December 31, 2002, we recognized
foreign currency transaction losses of $26.2 million,
primarily related to U.S. dollar-denominated liabilities of
our Brazilian operating company.
The volatility of the Brazilian real and the Brazilian capital
markets is due, in part, to Brazilian economic performance and
related government policies. We cannot assure you that the new
government will not implement policy changes that could
adversely affect our Brazilian operations. Changes in policy,
including tariffs, exchange controls or other factors, could
adversely affect our business and financial results, as could
inflation, further currency devaluation and other developments,
as well as the Brazilian governments response to them.
In addition, economic and market conditions in other emerging
markets can influence the perception of Brazils economic
and political situation.
7
Because wireless telecommunications services companies have a
limited history in our markets, acceptance of our services is
uncertain, and we may not be able to successfully implement our
business plan.
Due, in part, to the limited history of wireless communications
services in our existing and targeted markets, we face many
uncertainties in our markets that may affect our ability to grow
or implement our business plan. These uncertainties include:
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the size of the markets for wireless communications services; |
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the penetration rates of these markets; |
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the ability of potential subscribers to pay subscription and
other fees; |
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the extent and nature of the competitive environment in these
markets; and |
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the immediate and long-term commercial viability of wireless
communications services in these markets. |
As a result of these uncertainties, we may make significant
investments in developing a network and promoting our digital
mobile services in markets where we may not achieve significant
market acceptance for our services. If this occurs we may be
unable to recover our investment in these markets, which could
harm our financial condition and results of operations.
We are subject to fluctuations in currency exchange rates and
limitations on the expatriation or conversion of currencies,
which may result in significant financial charges, increased
costs of operations or decreased demand for our products and
services.
Nearly all of our revenues are earned in
non-U.S. currencies, although a significant portion of our
capital and operating expenditures, including imported network
equipment and handsets, and substantially all of our outstanding
debt, is priced in U.S. dollars. Accordingly, fluctuations
in exchange rates relative to the U.S. dollar could have a
material adverse effect on our earnings or assets. For example,
the 1999 and 2002 currency devaluations in Brazil resulted in
significant charges against our earnings in 1999 and 2002 and
negative adjustments to the carrying value of our assets in
Brazil. The economic upheaval in Argentina in 2002 led to the
unpegging of the Argentine peso to the U.S. dollar exchange
rate and the subsequent significant devaluation of the Argentine
peso.
Any depreciation of local currencies in the countries in which
our operating companies conduct business may result in increased
costs to us for imported equipment and may, at the same time,
decrease demand for our products and services in the affected
markets. If our operating companies distribute dividends in
local currencies in the future, the amount of cash we receive
will also be affected by fluctuations in exchange rates and
currency devaluations. In addition, some of the countries in
which we have operations do or may restrict the expatriation or
conversion of currency.
Our operating companies are subject to fluctuating economic
conditions in the local markets in which they operate, which
could hurt their performance.
Our operations depend on the economies of the markets in which
our operating companies conduct business. These markets are in
countries with economies in various stages of development or
structural reform, some of which are subject to rapid
fluctuations in terms of consumer prices, employment levels,
gross domestic product, interest rates and inflation rates. If
these fluctuations have an effect on the ability of customers to
pay for our products and services, our business may be adversely
affected. As a result, our operating companies may experience
lower demand for their products and services and a decline in
the growth of their customer base and in revenues.
Some of our operating companies conduct business in countries
where the rate of inflation is significantly higher than in the
United States. Any significant increase in the rate of inflation
in any of these countries may not be completely or partially
offset by corresponding price increases implemented by our
operating companies, even over the long term.
8
We pay significant import duties on our network equipment and
handsets, and any increases could impact our financial
results.
Our operations are highly dependent upon the successful and
cost-efficient importation of network equipment and handsets
from North America and, to a lesser extent, from Europe and
Asia. Any significant increase in import duties in the future
could significantly increase our costs. To the extent we cannot
pass these costs on to our customers, our financial results will
be negatively impacted. In the countries in which our operating
companies conduct business, network equipment and handsets are
subject to significant import duties and other taxes that can be
as high as 50% of the purchase price.
We are subject to foreign taxes in the countries in which we
operate, which may reduce amounts we receive from our operating
companies or may increase our tax costs.
Many of the foreign countries in which we operate have
increasingly turned to new taxes, as well as aggressive
interpretations of current taxes, as a method of increasing
revenue. For instance, Brazil has a tax on financial
transactions, and certain provinces in Argentina adopted higher
tax rates on telecommunications services in 2001. In addition,
in 2002 Mexico adopted a new tax on telecommunications services.
The provisions of the new tax laws may prohibit us from passing
these taxes on to our customers. These taxes may reduce the
amount of earnings that we can generate from our services.
Distributions of earnings and other payments, including
interest, received from our operating companies may be subject
to withholding taxes imposed by some countries in which these
entities operate. Any of these taxes will reduce the amount of
after-tax cash we can receive from those operating companies.
In general, a U.S. corporation may claim a foreign tax
credit against its federal income tax expense for foreign
withholding taxes and, under certain circumstances, for its
share of foreign income taxes paid directly by foreign corporate
entities in which the company owns 10% or more of the voting
stock. Our ability to claim foreign tax credits is, however,
subject to numerous limitations, and we may incur incremental
tax costs as a result of these limitations or because we do not
have U.S. federal taxable income.
We may also be required to include in our income for
U.S. federal income tax purposes our proportionate share of
specified earnings of our foreign corporate subsidiaries that
are classified as controlled foreign corporations, without
regard to whether distributions have been actually received from
these subsidiaries.
Nextel Brazil has received tax assessment notices from state and
federal Brazilian tax authorities asserting deficiencies in tax
payments related primarily to value added taxes, import duties
and matters surrounding the definition and classification of
equipment and services. Nextel Brazil has filed various
petitions disputing these assessments. In some cases we have
received favorable decisions, which are currently being appealed
by the respective governmental authorities. In other cases our
petitions have been denied and we are currently appealing those
decisions.
We have entered into a number of agreements that are subject
to enforcement in foreign countries, which may limit efficient
dispute resolution.
A number of the agreements that we and our operating companies
enter into with third parties are governed by the laws of, and
are subject to dispute resolution in the courts of or through
arbitration proceedings in, the countries or regions in which
the operations are located. We cannot accurately predict whether
these forums will provide effective and efficient means of
resolving disputes that may arise. Even if we are able to obtain
a satisfactory decision through arbitration or a court
proceeding, we could have difficulty enforcing any award or
judgment on a timely basis. Our ability to obtain or enforce
relief in the United States is also uncertain.
Government regulations determine how we operate in various
countries, which could limit our growth and strategy
plans.
In each market in which we operate, one or more regulatory
entities regulate the licensing, construction, acquisition,
ownership and operation of our wireless communications systems.
Adoption of new regulations, changes in the current
telecommunications laws or regulations or changes in the manner
in which they are
9
interpreted or applied could adversely affect our operations.
Because of the uncertainty as to the interpretation of
regulations in some countries in which we operate, we may not
always be able to provide the services we have planned in each
market. In some markets, we are unable, or have limitations on
our ability, to offer some services, such as interconnection to
other telecommunications networks and participation in calling
party pays programs, which may increase our costs. Further, the
regulatory schemes in the countries in which we operate allow
third parties, including our competitors, to challenge our
actions. For instance, some of our competitors have challenged
the validity of some of our licenses or the scope of services we
provide under those licenses, in administrative or judicial
proceedings, particularly in Chile. It is possible that, in the
future, we may face additional regulatory prohibitions or
limitations on our services. Inability to provide planned
services could make it more difficult for us to compete in the
affected markets. Further, some countries in which we conduct
business impose foreign ownership limitations upon
telecommunications companies. Finally, in some of our markets,
local governments have adopted very stringent rules and
regulations related to the placement and construction of
wireless towers, which can significantly impede the planned
expansion of our service coverage area, eliminate existing
towers and impose new and onerous taxes and fees. These issues
affect our ability to operate in each of our markets, and
therefore impact our business strategies. For additional
information, see the Regulatory and Legal Overview
discussion for each operating company under Business
of our 2004 annual report on Form 10-K, which is
incorporated by reference into this prospectus.
If our licenses to provide mobile services are not
renewed, or are modified or revoked, our business may be
restricted.
Wireless communications licenses and spectrum allocations are
subject to ongoing review and, in some cases, to modification or
early termination for failure to comply with applicable
regulations. If our operating companies fail to comply with the
terms of their licenses and other regulatory requirements,
including installation deadlines and minimum loading or service
availability requirements, their licenses could be revoked.
Further, compliance with these requirements is a condition for
eligibility for license renewal. Most of our wireless
communications licenses have fixed terms and are not renewed
automatically. Because governmental authorities have discretion
as to the grant or renewal of licenses, our licenses may not be
renewed or, if renewed, renewal may not be on acceptable
economic terms. For example, under existing regulations, our
licenses in Brazil and Peru are renewable once, but no
regulations presently exist regarding how or whether additional
renewals will be granted.
Any modification or termination of our license or roaming
agreements with Nextel Communications could increase our
costs.
Nextel Communications has licensed to us the right to use
Nextel and other of its trademarks on a royalty-free
basis in Latin America. Nextel Communications may terminate the
license on 60 days notice if we commit one of several
specified defaults (namely, failure to maintain agreed quality
controls, a change in control of NII Holdings, or certain
other material defaults under the New Spectrum Use and Build-Out
Agreement) and fail to cure the default within the 60 day
period. If there is a change in control of one of our
subsidiaries, upon 30 days notice, Nextel Communications
may terminate the sublicense granted by us to the subsidiary
with respect to the licensed marks. The loss of the use of the
Nextel tradename could have a material adverse
effect on our operations. We also depend upon our roaming
agreements with Nextel Communications for access to its iDEN
network in the United States.
If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial
results or prevent fraud. As a result, current and potential
stockholders could lose confidence in our financial reporting,
which would harm our business and the trading price of our
stock.
Effective internal controls are necessary for us to provide
reliable financial reports and effectively prevent fraud.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
We have in the past discovered, and may in the future discover,
areas of our internal controls that need improvement. As
discussed in our 2004 annual report on Form 10-K and our
quarterly report on Form 10-Q for the quarter ended
March 31, 2005, both of which are incorporated by
10
reference into this prospectus, we identified two material
weaknesses as a result of our assessment of internal controls
over financial reporting. As a result of these errors, we
restated certain of our previously issued financial statements
in order to correct these errors in the periods in which they
occurred. We are continuing to work to improve our internal
controls. We cannot be certain that these measures will ensure
that we implement and maintain adequate controls over our
financial processes and reporting in the future. Any failure to
implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations.
Inadequate internal controls could also cause investors to lose
confidence in our reported financial information, which could
have a negative effect on the trading price of our stock.
Our debt limits our flexibility and increases our risk of
default.
Our debt could have important consequences to you, such as:
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limiting our flexibility in planning for, or reacting to,
changes in our business and the industries in which we compete
and increasing our vulnerability to general adverse economic and
industry conditions; and |
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limiting our ability to obtain additional financing that we may
need to fund future working capital, capital expenditures,
product development, acquisitions or other corporate
requirements. |
As of March 31, 2005, the book value of our long-term debt
was $607.0 million, including $300.0 million of our
2.875% convertible notes due 2034, $180.0 million of
our 3.5% convertible notes due 2033, $117.7 million in
obligations associated with a sale and leaseback of
communication towers and $9.3 million in capital lease
obligations, and our stockholders equity was
$461.0 million.
Our ability to meet our debt obligations and to reduce our
indebtedness will depend on our future performance. Our
performance, to a certain extent, is subject to general economic
conditions and financial, business, political and other factors
that are beyond our control. We cannot assure you that we will
continue to generate cash flow from operations at or above
current levels, that we will be able to meet our cash interest
payments on all of our debt or that the related assets currently
owned by us can be sustained in the future.
If our business plans change, including as a result of changes
in technology, or if general economic, financial or political
conditions in any of our markets or competitive practices in the
mobile wireless telecommunications industry change materially
from those currently prevailing or from those now anticipated,
or if other presently unexpected circumstances arise that have a
material effect on the cash flow or profitability of our mobile
wireless business, the anticipated cash needs of our business
could change significantly. Any of these events or circumstances
could involve significant additional funding needs in excess of
the identified currently available sources, and could require us
to raise additional capital to meet those needs. However, our
ability to raise additional capital, if necessary, is subject to
a variety of additional factors that we cannot presently predict
with certainty, including the commercial success of our
operations, the volatility and demand of the capital and lending
markets and the future market prices of our securities. We
cannot assure you that we will be able to raise additional
capital on satisfactory terms or at all.
If we are unable to generate cash flow from operations in the
future to service our debt, we may try to refinance all or a
portion of our debt. We cannot assure you that sufficient future
borrowings will be available to pay or refinance our debt.
Our financing agreements
have and may contain covenants that limit how we conduct our
business, which may affect our ability to grow as
planned.
As a result of restrictions that have been contained in certain
of our agreements and may be contained in future financing
agreements, we may be unable to raise additional financing,
compete effectively or take advantage of new business
opportunities. This may affect our ability to generate revenues
and profits. Our
11
future financing agreements have, and may in the future, contain
covenants that limit how we conduct business by restricting our
ability to:
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incur or guarantee additional indebtedness; |
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pay dividends and make other distributions; |
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prepay subordinated indebtedness; |
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make investments and other restricted payments; |
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enter into sale and leaseback transactions; |
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create liens; |
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sell assets; and |
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engage in transactions with affiliates. |
We have significant
intangible assets that are not likely to generate adequate value
to satisfy our obligations in the event of liquidation.
If we were liquidated, the value of our assets likely would not
be sufficient to satisfy our obligations. We have a significant
amount of intangible assets, such as licenses. The value of
these licenses will depend significantly upon the success of our
digital mobile network business and the growth of the
specialized mobile radio and wireless communications industries
in general. Moreover, the transfer of licenses in liquidation
would be subject to governmental or regulatory approvals that
may not be obtained or that may adversely impact the value of
such licenses. Our net tangible book value was
$390.2 million as of March 31, 2005.
Our significant stockholder
is able to influence our business and affairs.
As of May 31, 2005, Nextel Communications beneficially
owned about 17.2% of our outstanding common stock and was our
single largest stockholder. Because of their stock ownership,
Nextel Communications may be able to exert significant influence
over our business and affairs. Nextel Communications is also a
party to a standstill agreement with us and certain other
parties which prohibits it from exercising voting control over
more than 49.9% of our outstanding common stock.
Agreements with Motorola
reduce our operational flexibility and may adversely affect our
growth or operating results.
We have entered into agreements with Motorola that impose
limitations and conditions on our ability to use other
technologies that would displace our existing iDEN digital
mobile networks. These agreements may delay or prevent us from
employing new or different technologies that perform better or
are available at a lower cost because of the additional economic
costs and other impediments to change arising under the Motorola
agreements. For example, our equipment purchase agreements with
Motorola provide that we must provide Motorola with notice of
our determination that Motorolas technology is no longer
suited to our needs at least six months before publicly
announcing or entering into a contract to purchase equipment
utilizing an alternate technology.
In addition, if Motorola manufactures, or elects to manufacture,
the equipment utilizing the alternate technology that we elect
to deploy, we must give Motorola the opportunity to supply 50%
of our infrastructure requirements for the equipment utilizing
the alternate technology for three years. This may limit our
ability to negotiate with an alternate equipment supplier.
Finally, if we do switch to an alternate technology and we do
not maintain Motorola infrastructure equipment at the majority
of our transmitter and receiver sites that are deployed at the
time the switch is first publicly announced.
12
We may not be able to
finance a change of control offer.
Upon the occurrence of certain kinds of change of control
events, we may be required to repurchase 100% of the
principal amount of all of our outstanding $300.0 million
aggregate principal amount 2.875% convertible notes due
2034 and all of our outstanding $180.0 million
3.5% convertible notes due 2033. However, it is possible
that we will not have sufficient funds at the time of the change
of control to make the required repurchase of our convertible
notes.
Concerns about health risks
associated with wireless equipment may reduce the demand for our
services.
Portable communications devices have been alleged to pose health
risks, including cancer, due to radio frequency emissions from
these devices. The actual or perceived risk of mobile
communications devices could adversely affect us through
increased costs of doing business, additional governmental
regulation that sets emissions standards or otherwise limits or
prohibits our devices from being marketed and sold, a reduction
in subscribers, reduced network usage per subscriber or reduced
financing available to the mobile communications industry.
Further research and studies are ongoing, and we cannot be sure
that these studies will not demonstrate a link between radio
frequency emissions and health concerns.
Historical financial
information may not be comparable to results reported in the
future.
As a result of the November 2002 consummation of our Revised
Third Amended Joint Plan of Reorganization and the transactions
contemplated thereby, we are operating our existing business
under a new capital structure. In addition, we were subject to
fresh-start accounting rules. Accordingly, our consolidated
financial condition and results of operations from and after our
reorganization are not comparable to our consolidated financial
condition or results of operations reflected in our financial
statements for periods prior to our reorganization, which are
included in our 2004 annual report on Form 10-K and
incorporated by reference into this prospectus.
Risk Factors Relating to the Common Stock
The market price of our
common stock may be volatile, which could cause the value of
your investment in us to decline.
Any of the following factors could affect the market price of
our common stock:
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general market, political and economic conditions; |
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changes in earnings estimates and recommendations by financial
analysts; |
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our failure to meet financial analysts performance
expectations; |
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legislative and regulatory developments; |
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conditions and trends in the telecommunications
industry; and |
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conditions in the local markets or regions in which we operate. |
In addition, many of the risks described elsewhere in this
Risk Factors section could materially and adversely
affect our stock price. The stock markets have experienced price
and volume volatility that has affected many companies
stock prices. Many companies have experienced wide stock price
fluctuations that have often been unrelated to the operating
performance of those companies. Fluctuations such as these may
affect the market price of our common stock.
We have not paid dividends
on our common stock.
We have never paid a cash dividend on our common stock and do
not plan to pay dividends on our common stock for the
foreseeable future. As a holding company, our ability to pay
dividends depends on a number of factors, including the earnings
of, and cash flow available from, our operating companies. Our
operating companies are subject to legal and contractual
restrictions on the payment of dividends to us. Some
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of our financing documents prohibit, and are expected to
continue to prohibit, us from paying dividends. In addition,
some of the collateral security mechanisms and related
provisions associated with our financing agreements limit the
amount of cash available to make dividends, loans and cash
distributions to us from our operating companies and provide
that, in the event we default under those financing agreements,
any dividends must be paid to the collateral agent.
We anticipate that for the foreseeable future any cash flow
generated from our operations will be used to develop and expand
our business and operations and make contractual payments on our
debt in accordance with our business plan. Any future
determination as to the payment of dividends on our common stock
will be at the discretion of our board of directors and will
depend upon our operating results, financial condition and
capital requirements, contractual restrictions, general business
conditions and other factors as our board of directors deems
relevant. We cannot assure you that we will pay dividends on our
common stock at any time in the future.
Some provisions of our
restated certificate of incorporation and Delaware law could
make it more difficult for a third party to acquire us even if
doing so would be in your interest.
Even if an offer to acquire our company included a premium on
the common stock or presented long-term benefits or would
otherwise be in your interest, a third party could find it
difficult to make such an acquisition. Provisions of our
restated certificate of incorporation and of Delaware law that
could make it more difficult to acquire us include:
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the ability of our board of directors to issue shares of
preferred stock on terms that can be set by our board of
directors in its sole discretion; and |
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provisions of Delaware law that impose restrictions on mergers
and business combinations between us and a holder of 15% or more
of our common stock, other than Nextel Communications or a
subsidiary of Nextel Communications. |
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common
stock by the selling security holder under this prospectus.
SELLING SECURITY HOLDER
General
The shares of common stock offered under this prospectus were
issued on November 12, 2002 under our Revised Third Amended
Joint Plan of Reorganization upon emergence from Chapter 11
bankruptcy proceedings. In connection with that issuance, the
selling security holder was granted registration rights covering
the common stock under a registration rights agreement. This
registration statement is intended to satisfy such registration
rights.
Ownership
The following table provides information with respect to the
common stock held by the selling security holder. The table is
based on information provided by or on behalf of the selling
security holder. Because the selling security holder may sell
all or some part of the common stock which it holds under this
prospectus, no estimate can be given as to the amount of common
stock that will be held by the selling security holder upon
termination of this offering. See Plan of
Distribution below. The selling security holder may from
time to
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time offer and sell any or all of the common stock under this
prospectus. The term selling security holder
includes its transferees, pledgees or donees or their successors.
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Name and Address of |
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Nextel Communications, Inc.
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12,356,064 |
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17.2 |
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2001 Edmund Halley Drive |
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Reston, Virginia 20191 |
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Certain Relationships and Related Transactions
In connection with our emergence from Chapter 11
reorganization on November 12, 2002, Nextel Communications
purchased, through a rights offering, $50.9 million new
notes of NII Holdings (Cayman) and 17,089,563 shares of the
common stock issued, together with 4,266,501 shares of
common stock that NII Holdings issued to Nextel Communications
in connection with the cancellation of our senior redeemable
notes and in satisfaction of claims by Nextel Communications
under our 1997 tax sharing agreement. As of May 31, 2005,
Nextel Communications owned about 17.2% of our issued and
outstanding shares of common stock. The following are
descriptions of other significant transactions consummated with
Nextel Communications on November 12, 2002 under our
confirmed plan of reorganization.
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New Spectrum Use and Build-Out Agreement |
On November 12, 2002, we and Nextel Communications entered
into a new spectrum use and build-out agreement. Under this
agreement, certain of our subsidiaries committed to complete the
construction of our network in the Baja region of Mexico, in
exchange for proceeds from Nextel Communications of
$50.0 million, of which $25.0 million was received in
each of 2002 and 2003. We recorded the $50.0 million as
deferred revenues and expect to recognize the revenue ratably
over 15.5 years, the remaining useful life of our licenses
in Tijuana. As of December 31, 2004 and 2003, we had
recorded $45.7 million and $49.2 million,
respectively, of deferred revenues related to this agreement, of
which $42.5 million and $46.0 million are classified
as long-term, respectively. We commenced service on our network
in the Baja region of Mexico in September 2003. As a result,
during each of the years ended December 31, 2004 and 2003,
we recognized $3.5 million and $0.8 million,
respectively, in revenues related to this arrangement.
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Tax Cooperation Agreement with Nextel
Communications |
We had a tax sharing agreement with Nextel Communications, dated
January 1, 1997, which was in effect through
November 11, 2002. On November 12, 2002, we terminated
the tax sharing agreement and entered into a tax cooperation
agreement with Nextel Communications under which Nextel
Communications and we agreed to retain, for 20 years
following the effective date of our plan of reorganization,
books, records, accounting data and other information related to
the preparation and filing of consolidated tax returns filed for
Nextel Communications consolidated group.
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Amended and Restated Overhead Services Agreement with
Nextel Communications |
We had an overhead services agreement with Nextel Communications
in effect through November 11, 2002. On November 12,
2002, we entered into an amended and restated overhead services
agreement, under which Nextel Communications will provide us,
for agreed upon service fees, certain (i) information
technology services, (ii) payroll and employee benefit
services, (iii) procurement services, (iv) engineering
and technical services, (v) marketing and sales services,
and (vi) accounts payable services. Either Nextel
Communications or we can terminate one or more of the other
services at any time with 30 days advance notice. Effective
January 1, 2003, we no longer use Nextel
Communications payroll and employee benefit services,
procurement services or accounts payable services.
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Third Amended and Restated Trademark License Agreement
with Nextel Communications |
On November 12, 2002, we entered into a third amended and
restated trademark license agreement with Nextel Communications,
which superseded a previous trademark license agreement. Under
the new agreement, Nextel Communications granted to us an
exclusive, royalty-free license to use within Latin America,
excluding Puerto Rico, certain trademarks, including but not
limited to the mark Nextel. The license agreement
continues indefinitely unless terminated by Nextel
Communications upon 60 days notice if we commit any one of
several specified defaults and fail to cure the default within a
60 day period. Under a side agreement, until the sooner of
November 12, 2007 or the termination of the new agreement,
Nextel Communications agreed to not offer iDEN service in Latin
America, other than in Puerto Rico, and we agreed to not offer
iDEN service in the United States.
As part of our Revised Third Amended Joint Plan of
Reorganization, we, Nextel Communications and certain of our
noteholders entered into a Standstill Agreement, pursuant to
which Nextel Communications and its affiliates agreed not to
purchase (or take any other action to acquire) any of our equity
securities, or other securities convertible into our equity
securities, that would result in Nextel Communications and its
affiliates holding, in the aggregate, more than 49.9% of the
equity ownership of us on a fully diluted basis, which we refer
to as the standstill percentage, without prior
approval of a majority of the non-Nextel Communications members
of the Board of Directors. We agreed not to take any action that
would cause Nextel Communications to hold more than 49.9% of our
common equity on a fully diluted basis. If, however, we take
action that causes Nextel Communications to hold more than 49.9%
of our common equity, Nextel is required to vote all shares in
excess of the standstill percentage in the same proportions as
votes are cast for such class or series of our voting stock by
stockholders other than Nextel Communications and its affiliates.
During the term of the Standstill Agreement, Nextel
Communications and its controlled affiliates have agreed not to
nominate to our Board of Directors, nor will they vote in favor
of the election to the Board of Directors, any person that is an
affiliate of Nextel Communications if the election of such
person to the Board of Directors would result in more than two
affiliates of Nextel Communications serving as directors. Nextel
Communications has also agreed that if at any time during the
term of the Standstill Agreement more than two of its affiliates
are directors, it will use its reasonable efforts to cause such
directors to resign to the extent necessary to reduce the number
of directors on our Board of Directors that are affiliates of
Nextel Communications to two.
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Registration Rights Agreement |
In connection with our emergence from Chapter 11
reorganization in November 2002, we entered into a Registration
Rights Agreement with Nextel Communications and certain of our
other security holders. Under the terms of the Registration
Rights Agreement, we agreed to register with the Securities and
Exchange Commission, in the aggregate, 34,383,849 shares of
our common stock and $294,659,970 principal amount of our
13% senior secured discount notes due 2009, of which Nextel
Communications owned 21,356,064 shares of the common stock
and $152,700,000 principal amount of the notes. In accordance
with the Registration Rights Agreement and the related
registration statement, Nextel Communications sold
9,000,000 shares of common stock in a fully underwritten
registered offering in November 2003. During 2004, we purchased
or defeased all of our 13% senior secured discount notes
due 2009.
PLAN OF DISTRIBUTION
This prospectus covers the sale of the shares of common stock by
the selling security holder. As used in this prospectus,
selling security holder will also include donees and
pledgees selling securities received from
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a named selling security holder after the date of this
prospectus. The selling security holder may sell their shares of
common stock under this prospectus:
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through one or more broker-dealers acting as either principal or
agent; |
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through underwriters; |
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directly to investors; or |
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through any combination of these methods. |
The selling security holder will fix a price or prices, and it
may change the price, of the shares of common stock offered
based upon:
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market prices prevailing at the time of sale; |
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prices related to those market prices; or |
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negotiated prices. |
These sales may be effected in one or more of the following
transactions (which may involve crosses and block transactions):
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on any securities exchange or U.S. inter-dealer system of a
registered national securities association on which the common
stock may be listed or quoted at the time of sale; |
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in the over-the-counter market; |
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in private transactions; |
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through the writing of options, whether the options are listed
on an option exchange or otherwise; or |
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through the settlement of short sales. |
The selling security holder may also enter into derivative or
other hedging transactions with financial institutions. These
financial institutions may in turn engage in sales of common
stock to hedge their position, deliver this prospectus in
connection with some or all of those sales and use the shares
covered by this prospectus to close out any short position
created in connection with those sales. The selling security
holder may also sell shares of common stock short using this
prospectus and deliver common stock covered by this prospectus
to close out such short positions, or loan or pledge common
stock to financial institutions that in turn may sell the shares
of common stock using this prospectus. The selling security
holder may pledge or grant a security interest in some or all of
the common stock covered by this prospectus to support a
derivative or hedging position or other obligation and, if it
defaults in the performance of our obligations, the pledgees or
secured parties may offer and sell the common stock from time to
time pursuant to this prospectus.
Broker-dealers, underwriters or agents may receive compensation
in the form of discounts, concessions or commissions from the
selling security holder or the purchasers. These discounts,
concessions or commissions may be more than those customary for
the transaction involved. If any broker-dealer purchases the
shares of common stock as principal, it may effect sales of the
shares through other broker-dealers, and other broker-dealers
may receive compensation from the purchasers for whom they act
as agents.
To comply with the securities laws of some states, if
applicable, the securities may be sold in these jurisdictions
only through registered or licensed brokers or dealers. In
addition, in some states the securities may not be sold unless
they have been registered or qualified for sale or an exemption
from registration or qualification requirements is available and
is complied with.
The selling security holder, and any underwriters,
broker-dealers or agents that participate in the sale of the
securities may be deemed to be underwriters within
the meaning of the Securities Act of 1933. Any discounts,
commissions, concessions or profits they earn on any sale of the
shares may be underwriting discounts and commissions under the
Securities Act. A selling security holder who is deemed to be an
underwriter within the meaning of the Securities Act
will be subject to the prospectus delivery requirements of the
Securities Act.
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Any securities covered by this prospectus which qualify for sale
under Rule 144 of the Securities Act may be sold under
Rule 144 rather than under this prospectus or pursuant to
another available exemption.
To the extent required, the specific securities to be sold, the
names of the selling security holders, the respective purchase
prices and public offering prices, the names of any agent,
dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which
this prospectus is a part.
We may suspend the use of this prospectus in certain
circumstances because of pending corporate developments or a
need to file a post-effective amendment. In any such event, we
will use our reasonable efforts to ensure that the use of the
prospectus is resumed as soon as practicable.
Under the registration rights agreement with the selling
security holder, we have agreed to indemnify the selling
security holder and each underwriter, if any, against certain
liabilities, including under the Securities Act, or will
contribute to payments the selling security holder or
underwriters may be required to make in respect of those
liabilities.
We have agreed to pay substantially all of the expenses in
connection with the registration, offering and sale of the
securities covered by this prospectus, other than commissions,
fees or discounts of underwriters, brokers, dealers and agents.
We have agreed to keep the registration statement, of which this
prospectus is a part, effective from the time this registration
statement becomes effective until the earlier of
November 12, 2007 or that time when all securities covered
by this registration statement have been sold.
DESCRIPTION OF CAPITAL STOCK
The following description is a summary of the material
provisions of our Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws. Copies of the
Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws have been filed with the Securities and
Exchange Commission and are incorporated into the registration
statement of which this prospectus is a part.
General
As of May 31, 2005, NII Holdings had
310,000,000 shares of capital stock authorized. This
authorized capital stock consisted of:
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300,000,000 shares of common stock, par value
$0.001 per share, 71,706,188 of which were
outstanding; and |
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10,000,000 shares of undesignated preferred stock, par
value $0.001 per share, which we refer to as our
Undesignated Preferred Stock, none of which are currently
outstanding. |
Common Stock
Subject to the rights of the holder of any preferred stock
outstanding at the time, each share of our common stock entitles
its holder to one vote on all matters submitted to a vote of our
stockholders on which the holders of the common stock are
entitled to vote. Holders of the common stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the corporation generally. The common stock does
not have cumulative voting rights in connection with the
election of directors.
Subject to the preferences of any preferred stock then
outstanding, the holders of common stock are entitled to receive
dividends and other distributions in cash, property or shares of
stock of the corporation as
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may be declared thereon by the corporations board of
directors from time to time out of assets or funds of the
corporation legally available therefor.
If we are liquidated (either partial or complete), dissolved or
wound up, whether voluntarily or involuntarily, the holders of
the common stock shall be entitled to share ratably in our net
assets remaining after payment of all liquidation preferences,
if any, applicable to any outstanding preferred stock. There are
no redemption or sinking fund provisions applicable to the
common stock.
Undesignated Preferred Stock
The board of directors is granted the authority to from time to
time issue the Undesignated Preferred Stock as preferred stock
of one or more series and in connection with the creation of any
such series to fix by resolution the designation, voting powers,
preferences, and relative, participating, optional, or other
special rights of such series, and the qualifications,
limitations, or restrictions thereof. The rights, preferences,
privileges and restrictions or qualifications of different
series of preferred stock may differ with respect to dividend
rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and other
matters. The issuance of preferred stock could decrease the
amount of earnings and assets available for distribution to
holders of common stock, adversely affect the rights and powers,
including voting rights, of holders of common stock, and have
the effect of delaying, deterring or preventing a change in
control of us.
Preemptive Rights
No holder of any share of our capital stock has any preemptive
right to subscribe to an additional issue of our capital stock
or to any security convertible into such stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
EquiServe Trust Company, N.A.
Certain Provisions of Our Certificate of Incorporation,
Bylaws and Delaware Law
Our Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws contain provisions that could make
more difficult an acquisition of us by means of a tender offer,
a proxy contest or otherwise. These provisions are expected to
discourage specific types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to
acquire control to first negotiate with us. Although these
provisions may have the effect of delaying, deferring or
preventing a change in control, we believe that the benefits of
increased protection through the potential ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure the company outweigh the disadvantages of
discouraging these proposals because, among other things,
negotiation of such proposals could result in an improvement of
their terms.
According to our Amended and Restated Bylaws, the board of
directors must be composed of at least one and no more than
twelve directors. Our board currently consists of nine
directors. The number of directors may be changed from time to
time by resolution of the board of directors. Directors need not
be stockholders of the corporation. According to our Amended and
Restated Certificate of Incorporation, we have a board of
directors consisting of three classes, with the term of office
of one class expiring each year. The three directors of the
first class hold office until the next annual meeting or until a
successor is duly elected and qualified, the three directors of
the second class will hold office until the next succeeding
annual meeting or until a successor is duly elected and
qualified, and the three directors of the third class will hold
office until the next thereafter succeeding annual meeting or
until a successor is duly elected and qualified. Commencing with
the next
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annual meeting, each class of directors whose term shall then or
thereafter expire will be elected to hold office for a
three-year term.
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Stockholder Actions and Special Meetings |
In accordance with Delaware law, any action required or
permitted to be taken at a stockholders meeting may be
taken without a meeting or a vote if the action is consented to
in writing by holders of outstanding stock having the votes
necessary to authorize the action. Our Amended and Restated
Bylaws provide that the chairman of the board and chief
executive officer may call special meetings of the stockholders
for any purpose at any time. Further, the Amended and Restated
Bylaws provide that a special meeting shall be called by the
secretary upon the written request of a majority of the board of
directors or of stockholders holding a majority of the entire
capital stock issued and outstanding and entitled to vote. This
request must state the purposes of the proposed meeting.
Generally, section 203 of the Delaware general corporation
law prohibits a publicly held Delaware company from engaging in
a business combination with an interested stockholder for a
period of three years after the time the stockholder became an
interested stockholder. However, the interested stockholder may
engage in a business combination if specified conditions are
satisfied. Thus, it may make acquisition of control of our
company more difficult. The prohibitions in section 203 do
not apply if:
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before the stockholder became an interested stockholder, the
board of directors approved either the business combination or
the transaction that resulted in the stockholder becoming an
interested stockholder; |
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upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock outstanding
at the time the transaction began; or |
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at or after the time the stockholder became an interested
stockholder, the business combination is approved by the board
of directors and authorized by the affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the
interested stockholder. |
Under section 203 of the Delaware general corporation law,
a business combination includes:
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any merger or consolidation of the corporation with the
interested stockholder; |
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, except proportionately as a stockholder of such
corporation, to or with the interested stockholder of assets of
the corporation having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of
the corporation or the aggregate market value of all its
outstanding stock; |
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transactions resulting in the issuance or transfer by the
corporation of stock of the corporation to the interested
stockholder; |
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transactions involving the corporation, which have the effect of
increasing the proportionate share of the corporations
stock of any class or series that is owned by the interested
stockholder; or |
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transactions in which the interested stockholder receives
financial benefits provided by the corporation. |
Under section 203 of the Delaware general corporation law,
an interested stockholder generally is
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any person that owns 15% or more of the outstanding voting stock
of the corporation; |
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any person that is an affiliate or associate of the corporation
and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within the three-year period
immediately before the date on which it is sought to be
determined whether or not that person is an interested
stockholder; and |
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the affiliates or associates of either of the above categories
of persons. |
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Under some circumstances, section 203 of the Delaware
general corporation law makes it more difficult for an
interested stockholder to effect various business combinations
with us for a three-year period, although our stockholders may
elect to exclude us from the restrictions imposed under this
section.
LEGAL MATTERS
Williams Mullen, Richmond, Virginia, our counsel, will pass upon
the validity of the shares of our common stock.
EXPERTS
On May 19, 2003, we dismissed Deloitte & Touche
LLP as our independent registered public accounting firm and
engaged PricewaterhouseCoopers LLP as our independent registered
public accounting firm. In connection with its audits for the
two most recent fiscal years and through May 19, 2003,
there had been no disagreements with Deloitte & Touche
LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of
Deloitte & Touche LLP would have caused them to make
reference thereto in their report on the Companys
consolidated financial statements for such years. Our change in
independent registered public accounting firm was reported on a
Current Report on Form 8-K filed with the SEC on
May 23, 2003.
The consolidated balance sheets as of December 31, 2002
(Successor Company consolidated balance sheet), and the related
consolidated statements of operations, changes in
stockholders (deficit) equity and cash flows for the
two months ended December 31, 2002 (Successor Company
consolidated operations) and the ten months ended
October 31, 2002 (Predecessor Company consolidated
operations), and the financial statement schedule, incorporated
in this prospectus by reference from the Companys Annual
Report on Form 10-K for the year ended December 31,
2004, have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in
their report dated March 7, 2003 (March 17, 2005 as to
the effects of the restatement discussed in Note 20), which
is incorporated herein by reference, (which report expresses an
unqualified opinion and includes explanatory paragraphs
referring to NII Holdings, Inc.s reorganization under
Chapter 11 of the United States Bankruptcy Code in 2002,
the adoption of AICPA Statement of Position 90-7,
Financial Reporting for Entities in Reorganization Under
the Bankruptcy Code, in 2002 and the adoption of Emerging
Issues Task Force Issue No. 00-21, Accounting for
Revenue Arrangements with Multiple Deliverables, on
November 1, 2002 and the restatement of the consolidated
financial statements for the two months ended December 31,
2002 (Successor Company) and for the ten months ended
October 31, 2002 (Predecessor Company)) and have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The consolidated financial statements as of December 31,
2004 and 2003 and for the years then ended and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2004 (which is
included in Managements Report on Internal Control over
Financial Reporting) incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year
ended December 31, 2004 have been so incorporated in
reliance on the report (which contains an explanatory paragraph
relating to the Companys change in method of accounting
for the financial results of its foreign operating companies
from a one-month lag reporting basis to a current period basis,
consistent with the Companys fiscal reporting period) of
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts
in auditing and accounting.
INCORPORATION OF INFORMATION THAT WE FILE WITH THE SEC
This prospectus incorporates by reference important business and
financial information that we file with the SEC and that we are
not including in or delivering with this prospectus. As the SEC
allows, incorporated
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documents are considered part of this prospectus, and we can
disclose important information to you by referring you to those
documents.
We incorporate by reference the documents listed below, to the
extent they have been filed with the SEC:
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our Annual Report on Form 10-K for the year ended
December 31, 2004; |
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the portions of our definitive Proxy Statement for the Annual
Meeting of Stockholders held on April 27, 2005 that have
been incorporated by reference into our Form 10-K for the
year ended December 31, 2004; |
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our Quarterly Report on Form 10-Q for the period ended
March 31, 2005; |
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our Current Reports on Form 8-K filed March 7, 2005,
March 21, 2005, March 22, 2005, April 1, 2005,
May 17, 2005 and May 27, 2005; and |
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the description of our common stock as set forth on
Form 8-K filed on July 14, 2004. |
We also incorporate by reference all documents to the extent
they have been filed with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(1) after the date of this prospectus and (2) until
this offering has been completed. Information in this prospectus
supersedes related information in the documents listed above,
and information in subsequently filed documents supersedes
related information in both this prospectus and the incorporated
documents.
We will promptly provide, without charge to you, upon written or
oral request, a copy of any or all of the documents incorporated
by reference in this prospectus, other than exhibits to those
documents, unless the exhibits are specifically incorporated by
reference in those documents. Requests should be directed to:
Robert J. Gilker
Vice President and General Counsel
NII Holdings, Inc.
10700 Parkridge Boulevard, Suite 600
Reston, Virginia 20191
(703) 390-5100
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities
Exchange Act of 1934, and we file annual, quarterly and current
reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any
document that we file at the SECs public reference room
facility located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
room. The SEC maintains an Internet site at http://www.sec.gov
that contains reports, proxy and information statements and
other information regarding issuers, including us, that file
documents with the SEC electronically through the SECs
electronic data gathering, analysis and retrieval system known
as EDGAR.
Our common stock is listed on the Nasdaq National Market under
the symbol NIHD. Our reports, proxy statements and
other information may also be reviewed at the offices of the
National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington D.C. 20006.
This prospectus is part of a registration statement filed by us
with the SEC. Because the rules and regulations of the SEC allow
us to omit certain portions of the registration statement from
this prospectus, this prospectus does not contain all the
information set forth in the registration statement. You may
review the registration statement and the exhibits filed with
the registration statement for further information regarding us
and the shares of our common stock being sold by this
prospectus. The registration statement and its exhibits may be
inspected at the public reference facilities of the SEC at the
addresses set forth above.
22
No dealer, salesperson or
other person is authorized to give any information or to
represent anything not contained in this prospectus supplement
or the accompanying prospectus. You must not rely on any
unauthorized information or representations. This prospectus
supplement is an offer to sell only the shares offered hereby,
but only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this prospectus
supplement and the accompanying prospectus is current only as of
its date.
TABLE OF CONTENTS
Prospectus Supplement
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Page |
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Risk Factors
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S-2 |
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Forward-Looking and Cautionary Statements
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S-14 |
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The Selling Stockholder
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S-16 |
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Use of Proceeds
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S-17 |
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Price Range of Common Stock
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S-17 |
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Description of Capital Stock
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S-18 |
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Underwriting
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S-21 |
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Legal Matters
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S-23 |
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Experts
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S-23 |
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Incorporation of Information that We File with the SEC
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S-23 |
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Prospectus |
Certain Definitions
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1 |
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Forward-Looking and Cautionary Statements
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1 |
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Prospectus Summary
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2 |
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Risk Factors
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4 |
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Use of Proceeds
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14 |
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Selling Security Holders
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14 |
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Plan of Distribution
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16 |
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Description of Capital Stock
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18 |
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Legal Matters
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21 |
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Experts
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21 |
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Incorporation of Information that We File with the SEC
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21 |
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Where You Can Find More Information
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22 |
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5,000,000 Shares
NII Holdings, Inc.
Common Stock
Bear, Stearns & Co. Inc.