NII To Cut Over 25% Of Headquarters' Staff As Part Of Restructuring - Update

(RTTNews) - NII Holdings, Inc. (NIHD), a holding company for the operations of Nextel Communications, Inc. in selected International markets, Monday announced a restructuring and organizational realignment plan that includes reduction of over 25 percent of the company's headquarters' staff and the elimination of over 1,400 positions in its market operations.

The plan is in connection with its recently announced Project Accelerate, and is designed to simplify the roles and responsibilities of its headquarters and market organizations. It also aims at better aligning its costs and organizational structure with its growth strategy.

According to the company, the realignment would result in a more streamlined management structure, which is expected to reduce costs and improve operational efficiency while retaining the company's focus on accelerating subscriber growth.

NII expects to incur cash costs related to employee severance of $25 million to $35 million in connection with the plan. This includes $8.6 million in charges related to restructuring activities at the company's Mexico operating subsidiary that were accounted for in the third-quarter results.

Most of the remaining costs are expected to be accounted for in the fourth-quarter results. NII expects to realize annualized cost savings of $50 million to $55 million as a result of these actions.

Separately, NII has modified its customer deactivation policy for inactive prepaid subscribers. As a result, the company expects a higher level of prepaid subscriber deactivations in Mexico than previously estimated.

Considering this adjustment, NII expects a net subscriber loss of about 400,000 subscribers in Mexico for the fourth quarter. This policy change is not expected to have an impact on net subscriber additions in Brazil or other markets.

Steve Shindler, CEO, said, "The structural changes we are announcing today support our accelerated growth strategy. By realigning our business and refocusing our teams on our growth goals, we can further simplify and streamline operations, reduce costs and free up resources."

Other Project Accelerate initiatives underway include the deployment of aggressive marketing campaigns in the company's core markets. These campaigns target growth on its new 3G networks, investments to expand the coverage and capacity of its 3G networks in Mexico and Brazil, and expansion of its device portfolio.

NIHD closed up 6.5 percent at $2.64 on Friday.