CRT NIHD the Last Great Wireless Restructuring_8.25.2014

Please find important disclosures on page 23 of this report.

Summary of Bonds Outstanding($ in millions) Amount Offer Workout CreationIssuer Coupon Security Maturity Outstanding MDY S&P Price IRR(1) Valuation

NII IT (Lux Co) 11.375% Sr. Notes 8/15/2019 900 Caa1 D 67.0 68% $2,522NII IT (Lux Co) 7.875% Sr. Notes 8/15/2019 700 Caa1 D 66.3 62% $2,498NI CC (Hold Co) 10.000% Sr. Notes 8/15/2016 800 Caa3 D 31.0 n/a $4,074NI CC (Hold Co) 8.875% Sr. Notes 12/15/2019 500 Caa3 D 31.0 n/a $4,074NI CC (Hold Co) 7.625% Sr. Notes 4/1/2021 1,450 Caa3 D 16.5 n/a $3,730

(1) estimated rate of return based on par + accrued recovery assuming a Sep-15 exit date.

Source: Bloomberg, SEC Filings and CRT Capital Group

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CRT Research | TelecomLance Vitanza, CFA(203) 569-4337 • [email protected] Director and PartnerBrad Tesoriero, CFA(203) 569-4376 • [email protected] Associate

NII Holdings Inc. (NIHD, NR, PT: None, Close: $0.16)

The Last Great Wireless Restructuring? August 25, 2014August 25, 2014

Nextel International ("Nextel" or the "Company") is aLATAM-focused mobile wireless carrier operating primarilyin Mexico and Brazil. While its overall market share is quitesmall (<5%), the Company continues to perform in thehigher-value post-paid / business class end of the market,in our view. As balance sheet issues finally come to a head,the Company's Lux Co bonds are in the 60s while Hold Cobonds trade in the mid-teens and low-30s. We see significantupside potential in each tranche but favor the Lux Co bonds.

● Recently-disclosed projections suggest a standalonevaluation of $4-$6 billion, in our view. With operationson the mend in Mexico and Brazil, management nowanticipates $1.1 billion of EBITDA by FY17 and $780 millionof unlevered cash flow by FY18.

● Nextel could be worth even more to in-marketcompetitors. With a favorable regulatory climate and $1billion of potential operating synergies across Mexico andBrazil, Nextel could be valued at $4-$5 billion by one ormore current or future in-market players. Nextel's favorablespectrum position relative to peers could add $2 billion ofincremental value, in our view.

● Restructuring plan likely announced by September 14, ifnot sooner. On August 15, Nextel went into the 30-daygrace period rather than make scheduled coupon paymentson $2.4 billion of bonds. We believe the Company isattempting to line up buyers for its operations in Mexicoand Brazil. But the clock is running out; if asset sales aren'tin place by the end of the grace period, we expect Nextel torevert to its "Plan B", likely a standalone plan in which LuxCo bonds are exchanged for new PIK notes; Hold Co bondsare exchanged into equity; and existing equity interests areeither exchanged into warrants or wiped out altogether.

Key DataRating Not Rated ("NR")Price Target NonePrice (08/22/2014 Close) $0.1652 Week High-Low $7.50 - $0.12Market Cap ($ mm) $28Shares Out (mm) 172.490-day Average Daily Vol 7.1MPublic Market Float 98%

FY December 2011A 2012A 2013A

Total Revenue $6,381 $5,743 $4,773 --EBITDA $1,555 $954 $324 --CAPEX 962 1,042 665 --Net Leverage 1.4x 3.4x 14.9x --EV/EBITDA 3.7x 4.3x 15.5x --

Source: Company Financials, Bloomberg LLP & CRT Estimates.

Financials$ in millions FY13A FY14E FY15E FY16E FY17E FY18ERevenue(1) $4,574 $3,578 $3,434 $4,222 $5,120 $5,862YoY change -16% -22% -4% 23% 21% 14%

EBITDA $188 ($327) $157 $611 $1,098 $1,504YoY change -70% -274% -148% 289% 80% 37%Margin 4% -9% 5% 14% 21% 26%

Unlevered Cash Flow(2) $547 ($1,266) ($291) ($61) $439 $783Margin 12% -35% -8% -1% 9% 13%

(1): Reflects "Service and Other" revenue only.

(2): EBITDA less capital expenditures, net working capital and taxes.Source: management projections dated August 14, 2014.

Valuation MethodologyNextel International is a distressed wireless telecom company; we thusemploy a variety of valuation techniques including a DCF analysis ofmanagement's consolidated financial projections; an M&A scenario analysisbased on potential available synergies; and a spectrum value analysis basedon estimated incremental earnings power on behalf of potential acquirers.

Valuation Summary

Methodology Potential Valuation, $ in millions(1)

Standalone Plan DCF $4.1 to $5.6 billionSale(s) to Strategic(s): Synergy Value $4.0 to $5.0 billionSale(s) to Strategic(s): Spectrum Value $2.5 to $5.0 billion

(1) asset valuation excluding excess cash, if any.Source: Company filings; IFT; INEGI; CRT estimates.

8.00

6.00

4.00

2.00

.00AUG-13 DEC-13 APR-14 AUG-14

100

80

60

40

20

0

$ Price Vol. (mm)

Investments Considerations

Nextel has struggled since Sprint shut downits old iDEN network in the United Stateslast year (the Company has since lost ~25%of its Mexican subscribers). Poor operatingperformance combined with heavy capitalspending requirements has led to significantcash burn and concerns about the Company'sability to continue operating independently.Despite these concerns we believe investorscould earn significant returns in certainportions of the Company's capital structuregiven:

● Compared to developed economies,wireless revenues in Latin America are arelatively small proportion of disposableincome, suggesting substantial marketgrowth is possible over the coming years.

● Recent regulatory actions in Mexico(favoring smaller players at the expenseof the market leader) should improve theCompany's operating momentum and mayencourage a takeout.

● Despite associated ongoing financial andbuild-out requirements, Nextel's strongspectrum position could attract strategicbuyers.

Risk Summary● Operations located exclusively in emerging

markets● Intense competition from well-capitalized

local competitors● No buyer may emerge for Nextel and its

assets● Significant near term capital spending

requirements● High degree of financial leverage / likely

near-term balance sheet restructuring

CRT Research | Telecom

August 25, 2014Telecom

Telecom

Management's recently-disclosed projections suggest that on a standalone basis,Nextel International could be worth $4-6 billion in net present value terms. Withoperations on the mend in Mexico and Brazil, management now anticipates $1.1billion of EBITDA by FY17 and $780 million of unlevered cash flow by FY18.

Our DCF analysis (see below) discounts back management's projected unleveredafter-tax cash flows along with our estimated terminal value based on a range ofdiscount rates and terminal EBITDA multiples. Aside from management's projections(see pp. 20-22), key inputs include a relatively high hurdle rate of around 20% anda conservative exit multiple of around 6x Adj. EBITDA. A relatively high hurdle rateis appropriate, in our view, given the high degree of risk and uncertainty associatedwith management's projections. Our exit multiple is high relative to mature playersin the marketplace but reflects management's considerably higher projected EBITDAgrowth rates, even at the end of the projection period.

Enterprise Value Sensitivity Table ($ in millions)Terminal EBITDA Multiple

5.00x 5.50x 6.00x 6.50x 7.00x25.0% $3,432 $3,750 $4,068 $4,385 $4,70322.5% $3,726 $4,069 $4,413 $4,756 $5,10020.0% $4,050 $4,422 $4,794 $5,166 $5,53817.5% $4,409 $4,813 $5,216 $5,619 $6,02215.0% $4,807 $5,245 $5,684 $6,122 $6,560

Source: Company filings; CRT estimates.

Dis

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Meaningful asset sales are not yet in sight. Nextel International has been activelyexploring asset sales for the past several months. The Company announced backon March 10 that it had retained UBS to advise on potential strategic opportunitiesincluding, inter alia, the sale of its assets and operations in Mexico and Brazil. At thesame time, Nextel announced that it had retained Rothschild to advise on a potentialbalance sheet restructuring. Ultimately we see a tremendous amount of strategicappeal for the Company's assets, but the clock is running out. With Nextel now inthe grace period on coupon payments associated with $2.4 billion of both Lux Co andHold Co bonds, we see little chance the Company is able to line up meaningful assetsales before it is forced to restructure its balance sheet.

Since hiring UBS, Nextel has announced only a single asset sale, and not a terriblymeaningful one at that. On August 14, the Company closed on the sale of its Chileanoperations to a foreign consortium for a de minimus amount. On the one hand,the price was quite low relative to press speculation suggesting $250 million ofcombined value for Chile and Argentina. On the other hand, the Chilean operationswere burning cash - we estimate a NEGATIVE $100 million Adj. EBITDA run-rate.Getting ANY amount of cash back for this albatross might be considered a positivedevelopment.



Telecom

The failure to announce more-meaningful sales of assets and operations in Mexicoand Brazil begs the question, why the delay? One obvious potential answer (bearish)is that the Company ran a process and received no bids, or received bids that wereunacceptably low. Another possible answer (bullish) as that the complexities ofthe process simply require more time. We have our own views on the matter, butwhatever the reason, bondholders must now come to grips with potential recoveriesbased on a standalone bankruptcy plan. Call it a "Plan B", in which Lux Co bonds areexchanged for new PIK notes; Hold Co bonds are exchanged into equity; and existingequity interests are either exchanged into warrants or wiped out altogether.

Below we lay out our estimated recovery analysis in the event of a standalone plan.As a starting point, we utilize our estimated net present value of the Company'sprojected after-tax unlevered cash flows, i.e., Adj. EBITDA less capital expenditures,taxes and net working capital. We assume the $950 million or so of cash onhand at Jun-14 is eaten up by professional fees and other administrative claims,an assumption that could prove conservative. In any case, the analysis suggestssubstantial upside is possible - over time - in even the less-than-desirable case inwhich Nextel continues to operate independently.

Recovery Analysis: Standalone Planin millions except per share data

Low Mid HighEstimated NPV of projected UCF(1) $4,072 $4,797 $5,622

plus: excess cash @ Jun-14(2) 747 747 747less: DIP / admin claims / prof. fees (1,000) (1,000) (1,000)less: back taxes in Brazil (450) (225) (150)less: 1st-priority debt (1,434) (1,434) (1,434)

Distributable value to Lux Co claims $1,934 $2,884 $3,784

Lux Co bonds $1,600 $1,600 $1,600plus: accrued interest through emergence(3) 256 256 256

Total Lux Co Claims $1,856 $1,856 $1,856recovery 100% 100% 100%

Distributable value to Hold Co claims $78 $1,028 $1,928

Hold Co debt $2,752 $2,752 $2,752plus: accrued interest through emergence(3) 353 353 353

Total Hold Co Claims $3,105 $3,105 $3,105recovery 3% 33% 62%

Distributable value to common equity $0 $0 $0$ per share NM NM NM

(1) reflects management's projected unlevered after-tax cash flows, i.e., EBITDA less Cap Ex, workingcapital & taxes. See sensitivity analysis on page 3.

(2) reflects an estimated $200 million necessary to run the business.(3) reflects an estimated Sep-15 emergence.Source: Company filings; CRT estimates.



Telecom

Nextel could be worth even more to one or more current of future in-marketcompetitors. Despite the absence of significant asset sales to date, we believeNextel's assets and operations in Mexico and Brazil have considerable strategic appealto current and prospective in-market competitors. While its overall market shareis small in each country (3% and 1%, respectively), the Company remains a leaderwithin the aspirational and business-class segment of the market, we believe. Unlikeits competitors, Nextel's business is predominantly post-paid, which historically hastranslated into higher ARPU and lower churn relative to peers. As its 3G rollout hasprogressed throughout the key Brazilian markets of Sao Paulo and Rio de Janeiro,Nextel has had the highest share postpaid net adds amongst its competitors. Its brandtook a hit in Mexico after Sprint shut down its iDEN network north of the border, butcustomer satisfaction has improved as of late.

Potential Cost Savings Suggest Significant Value to In-Market Peers($ in millions)

Mexico Brazil Total

Estimated revenue run-rate $1,550 $1,950 $3,500Cash operating expense 1,750 2,150 3,900Adj. EBITDA, pre-synergies ($200) ($200) ($400)

Potential % reduction in cash op ex 30% 30% 30%Potential synergies $525 $645 $1,170

Adj. EBITDA, post-synergies $325 $445 $770Buyer's multiple 6.0x 6.0x 6.0xPurchase price $1,950 $2,670 $4,620


While Nextel's operations in Mexico and Brazil currently generate substantial negativeEBITDA (run-rate of $196 million and $225 million, respectively), the combinedmarkets generate roughly $3.5 billion of service revenues (see table above). To one ormore in-market players, potential synergies could be $1 billion or more, per annum.These in-market competitors could thus view Nextel as a means toward acquiring$600-800 million of incremental pro forma Adj. EBITDA that might otherwise godisproportionately to competitors.

Nextel Valuation Based on Potential Sale to Strategic(s) ($ in millions)

Post-Synergy Acquisition Multiple##### 5.0x 5.5x 6.0x 6.5x 7.0x

20% $1,900 $2,090 $2,280 $2,470 $2,66025% $2,875 $3,163 $3,450 $3,738 $4,02530% $3,850 $4,235 $4,620 $5,005 $5,39035% $4,825 $5,308 $5,790 $6,273 $6,75540% $5,800 $6,380 $6,960 $7,540 $8,120

source: Company filings; CRT estimates.

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Nextel's corporate and capital structures are complex to say the least. In additionto substantial priority obligations at various local operating companies, Nextel hasissued bonds public bonds out of its domestic holding company (the "Hold Co bonds")as well as an intermediate holding company based in Luxembourg (the "Lux Cobonds"). The Lux Co bonds were designed to be structurally senior to the Hold Co's,though some Hold Co creditors have recently challenged the validity of that notion.These creditors argue, among other things, that certain subsidiary guarantees wereimproperly or fraudulently removed from the 10% and 8.875% Hold Co bonds. Whilewe have not engaged legal counsel and are not in a position to offer legal advice, wehave examined what we believe to be the relevant documents. Our personal view isthat the dissident creditor group is unlikely to win the argument on its merits, sincethe outstanding bonds were issued under a prospectus that seems to make clearwhich entities do and do not guarantee the obligations.

Nextel International: Capitalization at Jun-14$ in millions, except per share data

LQA FY15E(1) LQA FY15E(1) InterestFace ($548) $157 @ Market ($548) $157 Expense

Bank loans $443.9 $443.9 $50.4Equiment financing 713.0 713.0 22.5Cap leases 277.3 277.3 27.71st-priority obligations $1,434.1 -2.6x 9.1x $1,434.1 -2.6x 9.1x $100.6

7.875% NII IT (Lux Co) Sr. Notes due Aug-19(2) $700.0 67.0% $469.0 -4.6x 16.0x $55.111.375% NII IT (Lux Co) Sr. Notes due Aug-19(2) 900.0 66.3% 596.3 -4.5x 15.9x 102.4total Op Co debt $3,034.1 -5.5x 19.3x $2,499.4 -4.6x 15.9x $258.1

10% NII CC (Hold Co) Sr. Notes due Aug-16 $800.0 31.0% $248.0 -7.1x 24.8x $80.08.875% NII CC (Hold Co) Sr. Notes due Dec-19 500.0 31.0% 155.0 -7.1x 24.8x 44.47.625% NII CC (Hold Co) Sr. Notes due Apr-21 1,450.0 16.5% 239.3 -6.4x 22.2x 110.6Other 2.0 2.0 0.2total debt $5,786.1 -10.6x 36.9x $3,678.4 -6.7x 23.4x $493.2

Unrestricted cash $946.6 $946.6 ($4.7)net debt $4,839.5 -8.8x 30.8x $2,731.8 -5.0x 17.4x $488.4

Equity value ($583.5) 0.16$ $28.1total capitalization $4,256.0 $2,759.9 -5.0x 17.6x

net debt / sub 517$total debt / sub 618$adj. enterprise value / sub 520$

(1) reflects managements projected FY15 EBITDA.(2) subject to May-16 springing maturity to the extent Hold Co 10s of '16 not refinanced at or prior to their stated maturity.


Multiple of EBITDAMultiple of EBITDA

With substantial debt issued at the local level, i.e., in Mexico and Brazil, there is somerisk that foreign entities are brought into the bankruptcy process. The Company hasin fact disclosed that it is in default under local debt agreements in both Mexicoand Brazil. We believe the most-likely outcome is for the foreign entities to remainout of bankruptcy, with debtor subsidiaries limited to those domiciled in the US andLuxembourg. We note that the relevant indentures explicitly state that the Lux Cobonds will be governed by New York State law. See the Company's summary corporatestructure chart on p. 19 for more details.



Telecom

Market Overview: Mexico

Carlos Slim’s America Movil (which operates under the Telcel brand) is the clear market leader

with a dominant ~70% market share according to company filings. Overall, the country is about

90% penetrated, according to operator disclosures, suggesting there is still plenty of room for

industry growth (many countries are well-over 100% penetrated). Wireless penetration within the

country varies widely by region. Mexico City and its surrounding area as well as the northeastern

states of Coahuila, Nuevo León and Tamaulipas boast over 100% wireless penetration while

regions in the southwest only have penetration of around 65% according to the Mexican

regulators.

Mexican Wireless Telecommunications Market Share, FY13

Source: Company filings and CRT estimates

Telcel’s dominance has drawn the ire of Mexican regulators who are working on ways to increase

competition within the country. Last December, the IFT (Mexico’s “FCC”) labeled America Movil a

“preponderant economic actor”. In an effort to increase both wireless and fixed line competition,

the IFT ultimately proposed a set of punitive regulations specific to America Movil, including

forced network sharing, disadvantageous roaming rate agreements, and so on. Rather than

submit to these disruptive regulations, Movil announced in early July its intention to reduce its

market share to under 50% via the sale of a portion of its operations to a “new, independent

competitor”. By reducing its market share to less than 50%, Movil expects that it would no longer

be labeled a “preponderant economic actor” and thus would no longer be subject to the proposed

asymmetric regulations. While few additional details are available, we expect the IFT will bless

whatever strategic transaction Movil might propose.

This recent turn of events is potentially quite positive for NIHD. In our view, the rest of the field

must consolidate if there’s to be a legitimate long-term alternative to America Movil. As it stands

right now, only Telefonica appears to be in a position to lead that consolidation, creating an

unfavorable dynamic for the market’s smaller players. A new competitor in the market would

improve those dynamics, as it too would likely be well-positioned to acquire smaller in-market

players like Nextel.

70%

19%

7%3%

Telcel (America Movil)

Movistar (Telefonica )

Iusacell (Televisa

50%/Grupo Salinas 50%)

Nextel International

Telcel’s dominance

has drawn the ire of

regulators

A new entrant

would improve

prospects for a

strategic takeout, in

our view



Telecom

Despite significant investment designed to improve its image, the Nextel Mexico brand has lost

much of its luster, in our view. Historically the brand was favored by businesses and individuals

who used Nextel’s push-to-talk (or “PTT”) feature to instantaneously and inexpensively

communicate with colleagues and relatives north of the border. In a pre-data, 2G world, this

popular feature earned Nextel a greater-than-average number of post-paid customers with higher

ARPU and lower churn relative to peers. Unfortunately for Nextel, Sprint shut down its iDEN

network in June 2013, rendering Nextel’s PTT functionality far less popular.

Sprint’s iDEN network shutdown was not a surprise. Sprint had been telling the market for over a

year that is was going to discontinue iDEN service. Unfortunately for Nextel stakeholders,

management did not take requisite pre-emptive steps to contain the fallout. From a network

standpoint, Nextel was left with relatively poor coverage and call quality, limited ability to offer

data services and no discernible competitive advantage, in our opinion. The rapid decline in

subscribers the Company has since reported should come as no surprise, in our view.

Total Number of NIHD Mexican Wireless Subscribers:


Nextel has a lot of work to do to turn things around. The Company has taken some positive first

steps with new apps that attempt to replicate the PTT functionality it previously featured. The

Company also launched a strategic plan dubbed “Project Accelerate” in order to change the

market perception of its brand. Nextel now accommodates the newest, top-of-the-line handsets

on its network. Customer service (which even Management admits is currently subpar) has

improved. Nextel has begun selectively rolling out 3G and even 4G LTE coverage in select

Mexican cities.

Success is far from guaranteed, in our opinion. Competitors are already ahead in providing 3G

coverage and rolling out 4G. Telcel, for example, already offers nationwide 3G coverage and its

rapidly-expanding 4G LTE network already covers ~65% of the Mexican population, it claims.

Nextel would have to spend billions over the next few years, we believe, in order to catch up – a

tall order, even in the context of a restructured balance sheet.

In the near term, the Company’s 3G roaming agreement with Telefonica (which covers Brazil as

well as Mexico) should alleviate the need to rapidly build out new network while slowing the pace

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

NIHD's Mexican Wireless Subscribers (in thousands)

Shut down of Sprint's IDEN network on Jun. 30, 2013

Rebuilding the

Nextel Mexico brand

would require

significant

investment in

network upgrades

and customer

service, we believe

The shutdown of

Sprint’s iDEN

network in the US

led to significant

subscriber losses at

Nextel Mexico



Telecom

of subscriber losses. But a roaming agreement is hardly a long-term solution, in our opinion. The

economics of such arrangements invariably favor the network owner at the expense of the

network “renter”.

Nextel has a strong position in wireless spectrum, in our view, with 30 MHz nationwide in the 1.7 /

2.1 GHz band to complement its 20 MHz (nationwide weighted average) in the 800 MHz band.

Compared to in-market competitors, Nextel has significantly more usable spectrum per

subscriber, according to our estimates. In fact with nearly two thousand MHz-POPs per

subscriber, Nextel has more than twice as much spectrum per subscriber as Iusacell and more

than four times as much as Telefonica. We recognize that to some extent, this represents the

silver lining of having too few subscribers on its network. But regardless, in-market players whose

networks are more congested would be well-served by gaining access to Nextel’s spectrum

assets, in our view.

It is important to note that some of Nextel’s spectrum rights require ongoing payments back to the

federal government, in addition to customary build-out requirements. For example the 30 MHz of

1.7 / 2.1 GHz spectrum the Company purchased in a July 2010 auction bears an ongoing

obligation to pay 18 billion pesos (~$1.4 billion) in spectrum fees over the 20-year life of the

concession. As such, some analysts have suggested the Nextel doesn’t really “own” its spectrum.

But wireless spectrum is never really owned privately – not in the United States, not in Mexico. In

our experience, spectrum always remains an asset of the federal government. Private companies

bid on the right to use the spectrum for a government-specified period of time, for a government-

specified purpose, subject to government-specified build-out requirements and / or other ongoing

expenses (clearing, guard bands, etc.). We are confident that 30 MHz of clean spectrum in the

1.7 / 2.1 GHz band is worth far more than $70 million per annum, and that any in-market player

would be envious of the Company’s rights in this regard. Underscoring our point, one in-market

player – Iusacell – sued the Mexican government in 2010, arguing that the arrangement was

wildly off-market in Nextel’s favor.

Nextel Mexico Spectrum Holdings by Region

in millions except per subscriber data

Estimated Spectrum

Population (MHz) MHz-POPs

Region 1 4.2 43.0 179.6

Region 2 5.5 52.5 290.1

Region 3 6.3 52.0 326.4

Region 4 10.3 62.0 635.7

Region 5 13.8 53.5 736.0

Region 6 13.6 53.0 721.4

Region 7 22.9 53.7 1,231.9

Region 8 11.7 55.5 650.4

Region 9 30.0 52.0 1,557.5

Total 6,328.9

NIHD Mexico Subscribers 3.3

MHz-POP per Subscriber 1,938.4

Source: IFETEL, Instituto Nacional de Estadística y Geografía,

Company Filings, CRT est.

Nextel Mexico has

many attributes that

make it an attractive

acquisition

candidate for in-

market peers – not

least of which is its

strong spectrum

position



Telecom

Mexico Spectrum Holdings by Region

Source: IFETEL, 2012

The chart above shows raw spectrum holdings by region for all four wireless carriers in the

Mexican marketplace. Regions are for the most part ordered by population, i.e., region 9 is

Mexico’s most-populated with roughly 29 million inhabitants vs. region 1, the least-populated with

only about 4 million inhabitants. The takeaway here is that while Nextel has relatively few

subscribers, it has access to roughly the same amount of raw spectrum as peers. As a result, its

spectrum position becomes a valuable strategic asset, in our view.

We think that Nextel’s spectrum rights in Mexico alone could be worth billions (US) to any number

of in-market players – notwithstanding the ongoing payment obligations and buildout

requirements that would be attached to any transfer. Consider one example, Telefonica with 20

million subscribers and roughly the same MHz of available spectrum as Nextel. From Telefonica’s

standpoint, acquiring Nextel would nearly double its spectrum holdings, while increasing its

subscriber base by only 15% or so. Put another way, its spectrum holdings per subscriber would

increase by roughly 60%. Increased spectrum per subscriber results in a better user experience,

with less congestion, enhanced access to high-speed data and fewer blocked / dropped calls, in

our opinion. This in turn translates into higher potential ARPU, lower churn and lower CPGA. As

the chart below indicates, we believe these favorable changes could be worth several billion

dollars to an acquirer like Telefonica, even net of the ongoing payment obligations it would have

to bear.



Telecom

While surviving as an independent company may not ultimately be feasible, we think Nextel’s

asset and operations in Mexico have tremendous strategic appeal. Recent regulatory

developments suggest a new openness toward consolidation, in our view. Telefonica recently

disclosed it was in negotiations with Iusacell regarding a potential merger, and we believe most

global telcos are taking a hard look at the $5 billion or so of business that Carlos Slim has

pledged to divest. Given its higher-end, post-paid focus and upwards of $500 million of potential

synergies, not to mention its strong spectrum position, Nextel could represent an attractive target

for would-be consolidators looking to give the mighty Movil a run for its money, in our opinion.

Market Overview: Brazil

Compared to Mexico, the Brazilian wireless market is much more competitive. Key players Telefonica, Telecom Italia, America Movil and Oi have roughly equivalent pieces of the ~$32 billion market. NIHD represents only a small fraction of the overall market, but this is somewhat misleading, as Nextel has much greater market share in key cities including Sao Paulo and Rio de Janeiro. The overall market has a wireless penetration rate of ~136%, according to data from regulators, suggesting that most Brazilians who want a mobile phone have access to at least one.

Brazilian Wireless Telecom Market Share, FY13

*Oi and Portugal Telecom are in the process of merging


Within Brazil, Nextel has focused its network roll-out in the highly populated Sao Paolo and Rio de Janeiro areas. The Company is focused on the higher-ARPU postpaid Brazilian consumer who values fast data access and top-of-the-line handsets. Currently the Company’s subscriber base is 100% postpaid which makes it unique amongst Brazilian wireless providers (the Brazilian market as a whole is 79% prepaid and only 21% postpaid).

Compared to the four largest market competitors, we view Nextel’s network position as relatively weak. Due to past reliance on PTT functionality as a differentiator, the Company until recently neglected to upgrade its network to competitive 3G speeds. Nextel is playing “catch up”, building out 3G coverage in major cities and starting to roll out 4G LTE coverage in select cities. Meanwhile, competitors already have near-nationwide 3G coverage and are working on expanding 4G LTE coverage. The Company’s roaming agreement with Telefonica was an important positive development for NIHD. As mentioned previously, Nextel announced in this past January that it reached an agreement with Telefonica to allow NIHD customers to roam on Telefonica’s much more extensive 3G wireless network. Normally we look askance at network sharing deals, as the economics tend to favor network owners over network “renters”. In this instance, the roaming agreement is a significant positive for Nextel, with enhanced customer retention, financial liquidity and preservation of capital as the Company builds out its own network capacity.

29%

27%

25%

18%

1%

Vivo (Telefonica)

TIM Brasil (Telecom Italia)

Claro (America Movil)

Oi (Portugal Telecom*)

Nextel International

3G roaming deal

with Telefonica

helps, but Nextel

still needs to make

large investments in

its network – if it is

to continue as an

independent player

Unlike Mexico, the

Brazilian market is

divided much more

evenly among four

key players



Telecom

Nextel has also taken steps to improve the competitiveness of its handset offerings. Given that its focus on the higher end of the market, Nextel can’t get away with offering last year’s handsets. This past January, the Company finally signed an agreement with Apple to bring the iPhone 5s and 5c to its network. The iPhone will supplement the new Samsung Galaxy phones that Nextel also makes available. New handset offerings are an incremental positive, in our view, that should make the Company’s Brazilian product offering more competitive. The proof appears to be in the pudding: year to date in Sao Paulo and Rio, Nextel has captured more 3G post-paid net adds than any of its competitors.

Even as Nextel upgrades its network and product offerings, the competitive landscape could change dramatically over the coming year. Last December, Brazil’s anti-trust regulator (CADE) notified Telefonica that it must either sell its ownership stake in Telecom Italia (parent of TIM Brasil) or find a strategic partner to buy 50% of Telefonica’s Brazilian operations (Vivo). The regulatory body also fined Telefonica R$15 million (~$6.4 million) for violations of a 2010 agreement the Company signed to preserve competition in the Brazilian telecommunications market.

These regulatory actions came about due to Telefonica’s September 2013 purchase of a larger stake in Telco S.p.A. (a holding company that effectively controls the composition of the majority of seats on Telecom Italia’s board through its 22% ownership stake of the Company). As of January 2014, Telefonica can effectively control almost 65% of Telco S.p.A (subject to regulatory approval). CADE’s ruling indicates Brazilian regulators believe this control over Telecom Italia, and thus TIM Brasil, hurts Brazilian consumers. In addition, Brazil’s telecom regulator Anatel has according to news accounts stated that it would scrutinize any merger which would result in a smaller number of major mobile phone carriers, in order to keep the Brazilian wireless market competitive.

Regulators appear to be pressuring Telefonica to reduce its stake in Vivo or dispose of its interests in TIM Brasil. Meanwhile, Telecom Italia is currently pursuing a deal with Vivendi that would merge its wireless TIM Brasil operations with Vivendi’s wireline-focused Brazilian GVT subsidiary. While these dramatic events may or may not change the likelihood that Nextel is ultimately acquired, they highlight that a variety of global telecommunications companies consider Brazil an important market.

In addition to a merger or sale to an in-market competitor, we see some chance that Nextel is ultimately sold to a buyer not yet involved in the Brazilian market. In fact Joao Rezende, the President of Anatel, has been quoted in news reports as saying Brazil may gain a fifth major competitor either through an expansion of Nextel or the arrival of a new foreign participant in the upcoming 4G spectrum auction, set to begin end of next month. We find it unlikely that Nextel could become a real threat to current market leaders on a stand-alone basis, but the Company could certainly pose a future threat after a sale to, or merger with, a well-capitalized foreign peer.

In Brazil, an evolving

competitive

landscape, as

Telefonica responds

to regulatory

concerns

New handsets are

an incremental

positive



Telecom

Mexican and Brazilian Markets Remain Attractive

Irrespective of the changing competitive landscape, we believe the Company remains an attractive potential takeover candidate due to its exposure to the Mexican and Brazilian markets. The wireless communications market in both Brazil and Mexico is poised for extensive growth over the coming years, in our view. While the population of Brazil and Mexico combined is roughly equivalent to that of the United States, spending on wireless telecommunications services is significantly lower. According to Kagan estimates, US wireless service revenue was ~$196 billion in 2013 vs. just ~$46 billion for Mexico and Brazil combined. To the extent these developing economies narrow the GDP gap, wireless services revenues will likely grow much more quickly than in the US. Simply put, Mexico and Brazil have yet to undergo the “data revolution” that has transformed developing economies. We think most global telcos will want a piece of the action.

GDP per capita (US$)

Source: World Bank

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2004 2005 2006 2007 2008 2009 2010 2011 2012

Brazil

Mexico

By operating in the

attractive Mexican

and Brazilian

markets, NIHD could

find itself with many

potential bidders, in

our view



Telecom

Nextel International: Historical Financial Data

$ in millions, except per share data

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Subscribers

Brazil 4,227 4,230 4,138 3,846 3,885 3,880 3,888 3,958 4,129 4,188

Mexico 3,759 3,819 3,861 3,902 3,918 3,939 3,655 3,265 3,052 2,930

Argentina 1,447 1,598 1,692 1,756 1,819 1,888 1,965 2,023 1,997 1,976

Peru 1,449 1,443 1,515 1,660 1,669 n/a n/a n/a n/a n/a

Chile 90 117 153 198 192 208 228 244 259 266

Total 10,972 11,207 11,359 11,362 11,483 9,914 9,736 9,489 9,437 9,361

Revenue

Brazil $824.3 $712.5 $693.2 $672.3 $635.9 $578.6 $491.0 $502.6 $461.2 $479.4

Mexico 544.5 521.1 523.2 520.8 514.0 502.7 442.0 414.0 381.8 366.8

Argentina 168.5 165.1 178.5 173.0 167.0 164.0 158.2 147.3 112.7 108.1

Peru(1)88.8 86.4 84.5 83.6 82.6 n/a n/a n/a n/a n/a

Chile & eliminations 7.1 10.7 12.5 15.8 13.9 14.3 10.1 17.1 14.5 14.5

Total $1,633.1 $1,495.8 $1,491.9 $1,465.6 $1,413.4 $1,259.6 $1,101.3 $1,080.9 $970.2 $968.8

Cost of service 443.0 421.3 398.7 427.4 425.8 393.0 364.4 364.1 337.6 366.9

Cost of handsets & accessories 228.7 234.3 232.9 219.2 222.4 233.9 203.0 254.3 265.8 274.1

Gross profit $961.4 $840.2 $860.3 $819.0 $765.1 $632.7 $533.9 $462.5 $366.8 $327.8

Selling, general & admin 561.0 586.0 598.5 602.9 517.2 497.7 456.5 478.3 422.3 438.7

Provision for doubtul accounts 45.5 43.0 43.9 88.2 18.0 34.1 25.9 40.2 28.5 44.8

Adj. EBITDA, as reported $354.9 $211.3 $217.9 $127.9 $230.0 $100.9 $51.6 ($56.0) ($83.9) ($137.1)

Cash op ex $1,278.2 $1,284.6 $1,274.0 $1,337.7 $1,183.4 $1,158.7 $1,049.7 $1,136.9 $1,054.1 $1,105.8

Adj. EBITDA ex-Peru $347.9 $225.9 $239.4 $140.8 $227.9 $100.9 $51.6 ($56.0) ($83.9) ($137.1)

(1) Nextel Peru sold to Entel on Aug. 20, 2013 (announced April 4, 2013) for $400mm or ~$240 / sub.




Telecom

Nextel International: Historical Financial Data, continued

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Subscriber growth rates, q/q

Brazil 2.7% 0.1% (2.2%) (7.0%) 1.0% (0.1%) 0.2% 1.8% 4.3% 1.4%

Mexico 1.7% 1.6% 1.1% 1.1% 0.4% 0.5% (7.2%) (10.7%) (6.5%) (4.0%)

Argentina 4.2% 10.4% 5.9% 3.8% 3.6% 3.8% 4.1% 3.0% (1.3%) (1.0%)

Peru 1.0% (0.4%) 5.0% 9.5% 0.6% n/a n/a n/a n/a n/a

Chile 14.9% 30.0% 30.8% 29.7% (3.1%) 8.2% 9.6% 6.8% 6.4% 2.9%

Total (pro forma) 2.4% 2.1% 1.4% 0.0% 1.1% 1.0% (1.8%) (2.5%) (0.5%) (0.8%)

ARPU 42$ 41$ 40$ 36$ 35$ 36$ 31$ 31$ 29$ 28$

CCPU 20$ 19$ 19$ 19$ 19$ 21$ 19$ 22$ 21$ 23$

Monthly contribution per sub 22$ 22$ 21$ 17$ 16$ 15$ 12$ 9$ 8$ 5$

Churn 2.1% 2.2% 2.5% 3.4% 2.6% 2.7% 3.6% 3.9% 3.4% 3.4%

Average life (months) 48.3 46.3 39.4 29.4 38.6 37.5 27.9 26.0 29.2 29.5

Lifetime contribution per sub 1,043$ 995$ 845$ 501$ 625$ 559$ 322$ 241$ 225$ 153$

CPGA 276$ 301$ 319$ 260$ 240$ 276$ 245$ 344$ 290$ 296$

LCPS / CPGA 3.8x 3.3x 2.6x 1.9x 2.6x 2.0x 1.3x 0.7x 0.8x 0.5x

Revenue growth rates, y/y

Brazil (17.6%) (22.9%) (18.8%) (29.2%) (25.3%) (27.5%) (17.2%)

Mexico 0.8% (5.6%) (3.5%) (15.5%) (20.5%) (25.7%) (27.0%)

Argentina 1.7% (0.9%) (0.7%) (11.4%) (14.9%) (32.5%) (34.1%)

Total (8.4%) (13.5%) (10.6%) (21.7%) (21.8%) (27.1%) (23.1%)

Cash op ex 2.0% (7.4%) (9.8%) (17.6%) (15.0%) (10.9%) (4.6%)

Adj. EBITDA(1)

(55.5%) (34.5%) (55.3%) (78.5%) nm nm nm

(1) data for 1Q13, 2Q13 and 3Q13 are pro forma for Peru disposition.




Telecom

NII HOLDINGS (NIHD)Operating Model

($ in millions except subscriber data which is in thousands and per share data)

FY10A(1) FY11A(1) 1Q12A(1) 2Q12A(1) 3Q12A(1) 4Q12A(1) FY12A(1) 1Q13A(1) 2Q13A 3Q13A 4Q13A FY13A 1Q14A 2Q14A

SUBSCRIBER METRICS

Gross subscriber adds 2,750 3,077 796 865 830 853 3,345 823 891 880 863 3,457 918 879

Argentina 333 461 123 242 217 226 808 220 261 280 281 1,042 224 239

Brazil 1,303 1,498 364 294 271 276 1,205 309 309 371 355 1,344 461 409

Mexico 1,078 1,092 289 289 251 281 1,110 260 275 186 190 911 195 197

Other 36 26 20 40 91 70 222 34 46 43 37 160 38 34

Disconnects 1,395 1,699 550 624 749 996 2,920 711 791 1,058 1,110 3,670 970 956

Argentina 209 227 64 91 122 162 440 157 193 202 223 775 250 259

Brazil 467 702 252 291 363 568 1,474 270 314 362 285 1,232 290 350

Mexico 704 757 226 229 209 241 904 244 254 470 580 1,548 407 320

Other 15 13 8 13 55 25 102 40 30 24 22 116 23 27

Net adds 1,355 1,378 246 241 81 (143) 425 112 101 (178) (247) (213) (52) (77)

Argentina 124 234 59 150 95 64 368 64 68 78 58 268 (26) (20)

Brazil 836 796 112 3 (92) (292) (269) 38 (5) 9 70 112 171 59

Mexico 374 335 63 60 42 41 206 16 22 (284) (390) (637) (212) (123)

Other 21 13 12 27 36 45 120 (6) 16 19 15 44 15 7

Total Subscribers 7,899 9,277 9,523 9,764 9,845 9,702 9,702 9,814 9,914 9,736 9,489 9,489 9,437 9,361

Argentina 1,154 1,388 1,447 1,598 1,693 1,756 1,756 1,819 1,888 1,965 2,023 2,023 1,997 1,976

Brazil 3,319 4,115 4,227 4,230 4,138 3,846 3,846 3,885 3,880 3,888 3,958 3,958 4,129 4,188

Mexico 3,361 3,696 3,759 3,819 3,861 3,902 3,902 3,918 3,939 3,655 3,265 3,265 3,052 2,930

Other 65 78 90 117 153 198 198 192 208 228 244 244 259 266

Churn(2) 1.61% 1.65% 1.95% 2.16% 2.55% 3.40% 2.56% 2.43% 2.67% 3.59% 3.85% 3.19% 3.42% 3.39%

Argentina 1.59% 1.49% 1.50% 2.00% 2.48% 3.14% 2.33% 2.92% 3.47% 3.50% 3.73% 3.42% 4.15% 4.35%

Brazil 1.34% 1.57% 2.01% 2.29% 2.89% 4.74% 3.09% 2.33% 2.70% 3.11% 2.42% 2.63% 2.39% 2.81%

Mexico 1.85% 1.79% 2.02% 2.01% 1.81% 2.07% 1.98% 2.08% 2.15% 4.13% 5.59% 3.60% 4.30% 3.57%

Other 2.32% 1.47% 3.18% 4.20% 13.60% 4.84% 6.14% 6.82% 5.01% 3.67% 3.11% 4.38% 3.05% 3.43%

ARPU $58.46 $59.01 $51.86 $46.42 $45.61 $44.96 $47.99 $43.83 $41.03 $35.77 $35.45 $39.72 $32.19 $31.67

Argentina $43.00 $42.55 $36.75 $33.61 $33.78 $97.66 $33.75 $28.54 $26.82 $24.52 $22.01 $25.38 $16.74 $16.22

Brazil $74.57 $77.50 $62.09 $53.49 $52.63 $53.44 $57.70 $53.18 $48.01 $39.95 $39.77 $45.05 $35.10 $34.38

Mexico $55.49 $53.13 $46.72 $44.14 $43.74 $43.39 $44.60 $42.71 $41.81 $37.99 $39.15 $42.62 $39.40 $39.44

Other $31.91 $29.94 $26.94 $29.39 $25.43 $24.35 $23.60 $21.10 $21.93 $21.98 $23.10 $21.24 $18.48 $17.23

CPGA $310 $347 $297 $301 $319 $315 $308 $277 $276 $245 $344 $286 $290 $296

Argentina $217 $197 $171 $112 $106 $107 $118 $94 $82 $81 $83 $84 $66 $72

Brazil $250 $284 $223 $256 $264 $293 $256 $204 $207 $185 $334 $234 $272 $291

Mexico $395 $413 $392 $431 $464 $455 $435 $487 $505 $568 $729 $559 $578 $575

CCPU $23.78 $23.93 $22.19 $20.95 $19.70 $20.23 $20.65 $20.68 $21.18 $19.73 $19.77 $20.94 $21.25 $22.73

Argentina $19.31 $18.02 $16.40 $15.03 $13.26 $12.26 $12.68 $11.43 $11.37 $11.28 $6.95 $9.53 $7.13 $7.25

Brazil $28.56 $28.68 $24.75 $22.14 $21.72 $21.47 $24.27 $23.11 $21.05 $21.44 $21.73 $21.45 $23.07 $24.42

Mexico $20.85 $20.60 $20.73 $20.76 $18.39 $20.51 $19.61 $21.46 $24.36 $21.44 $23.94 $26.33 $27.24 $30.32

Other $29.72 $45.80 $57.34 $66.34 $72.60 $64.32 $41.44 $41.83 $52.35 $34.00 $34.46 $35.09 $29.67 $26.63

(1) Pro forma for sale of Nextel Peru which was completed in August, 2013.

(2) Churn may not foot to Company disclosures due to lack of publicly-available monthly data.



Telecom




OPERATIONS

Argentina 517.5 596.6 156.3 153.5 166.7 160.2 636.7 153.1 149.1 141.7 131.7 575.5 100.9 96.6

Brazil 2,504.5 3,293.9 776.9 678.6 660.6 640.0 2,756.1 616.6 559.2 465.5 468.0 2,109.4 425.8 429.0

Mexico 2,023.1 2,165.6 522.5 501.7 503.9 505.2 2,033.3 501.0 492.7 432.7 406.4 1,832.7 373.3 354.0

Other 21.3 25.5 6.8 9.1 10.3 12.8 39.0 12.3 13.2 14.4 16.3 56.2 13.9 13.6

Service & other revenue $5,066 $6,082 $1,462 $1,342.9 $1,341.5 $1,318.2 $5,465.1 $1,283.1 $1,214.2 $1,054.2 $1,022.4 $4,573.9 $913.9 $893.1

Argentina 46.0 52.3 12.2 11.6 11.8 12.8 48.5 13.9 14.9 16.5 15.6 60.9 11.8 11.5

Brazil 91.3 162.9 47.4 33.9 32.6 32.3 146.3 19.2 19.4 25.4 34.5 98.7 35.5 50.4

Mexico 90.7 83.8 22.0 19.4 19.3 15.6 76.3 13.0 10.0 9.3 7.6 40.0 8.6 12.9

Other (0.5) 0.2 0.3 1.5 2.1 3.0 7.0 1.6 1.1 (4.3) 0.7 (0.9) 0.5 0.9

Handset & accessory revenue $227 $299 $82 $66.5 $65.9 $63.7 $278.0 $47.8 $45.4 $47.0 $58.5 $198.7 $56.3 $75.6

Argentina 563.5 648.9 168.5 165.1 178.5 173.0 685.2 167.0 164.0 158.2 147.3 636.4 112.7 108.1

Brazil 2,595.8 3,456.8 824.3 712.5 693.2 672.3 2,902.4 635.9 578.6 491.0 502.6 2,208.0 461.2 479.4

Mexico 2,113.8 2,249.4 544.5 521.1 523.2 520.8 2,109.6 514.0 502.7 442.0 414.0 1,872.7 381.8 366.8

Other 20.8 25.7 7.1 10.7 12.5 15.8 46.0 13.9 14.3 10.1 17.1 55.4 14.5 14.5

TOTAL OPERATING REVENUE $5,293.79 $6,380.82 $1,544.4 $1,409.4 $1,407.4 $1,381.9 $5,743.1 $1,330.8 $1,259.6 $1,101.3 $1,081 $4,772.6 $970.2 $968.8

Argentina 178.3 186.7 49.4 48.6 46.5 43.2 187.6 40.1 41.3 40.5 18.4 140.4 26.9 26.6

Brazil 820.9 1,024.7 250.7 225.8 222.7 210.8 909.9 217.4 205.0 182.0 163.5 767.9 168.2 192.3

Mexico 391.7 436.0 103.1 103.6 83.3 123.3 413.5 123.1 124.5 122.1 114.6 484.4 124.8 129.6

Other 13.7 34.3 11.7 13.9 17.6 20.2 63.3 18.5 22.1 19.8 19.3 79.7 17.7 18.3

Cost of service $1,404.56 $1,681.69 $414.9 $391.9 $370.1 $397.4 $1,574.3 $399.1 $393.0 $364.4 $316 $1,472.3 $337.6 $366.9

Argentina 74.8 88.1 20.3 20.0 19.0 20.2 79.6 21.2 21.9 24.7 23.1 90.9 16.1 16.6

Brazil 173.3 254.8 58.9 55.1 49.9 46.3 210.3 50.6 40.2 67.8 92.2 250.7 111.8 112.3

Mexico 402.7 436.2 128.7 132.3 128.5 115.5 505.0 128.5 162.5 122.1 133.9 547.1 133.3 142.5

Other 5.7 5.0 2.8 6.7 11.9 13.7 35.0 6.0 9.3 2.5 5.1 22.9 4.7 2.7

Cost of handsets & accessories $656.41 $784.07 $210.7 $214.1 $209.3 $195.8 $829.9 $206.3 $233.9 $217.1 $254 $911.6 $265.8 $274.1

SG&A 1,740.1 2,201.1 526.1 535.4 545.6 560.7 2,167.7 481.0 497.7 456.4 478.3 1,913.5 422.3 438.7

Provision for doubtful accounts 73.5 159.2 44.8 42.1 43.1 87.3 217.3 16.5 34.1 25.9 40.2 116.6 28.5 44.8

Impairment & restructuring 0.0 0.0 (0.0) 9.3 14.0 306.5 329.8 124.6 1.3 21.3 23.8 171.0 (2.5) 160.3

Depreciation 469.9 551.5 142.0 144.3 150.7 164.7 601.8 167.5 166.1 162.7 138.0 634.2 140.6 170.3

Amortization 32.3 36.7 9.0 8.6 14.4 15.8 47.8 15.4 15.5 16.2 17.1 64.1 17.1 18.0

TOTAL OPERATING EXPENSE $4,376.8 $5,414.2 $1,347.6 $1,345.7 $1,347.1 $1,728.1 $5,768.5 $1,410.4 $1,341.6 $1,264.0 $1,267.5 $5,283.4 $1,209.3 $1,473.1

Operating Income 917.0 966.6 196.8 63.7 60.3 (346.2) (25.4) (79.5) (82.0) (162.8) (186.6) (510.9) (239.1) (504.4)

plus D&A 502.2 588.2 151.0 152.9 165.1 180.4 649.5 182.8 181.6 178.9 155.1 698.3 157.7 188.4

plus non-cash asset impairment 0.0 0.0 0.0 9.3 14.0 298.8 322.2 85.3 0.0 5.9 0.0 91.2 0.0 135.0

plus restructuring and other 0.0 0.0 0.0 0.0 0.0 7.6 7.6 39.3 1.3 29.5 (24.5) 45.6 (2.5) 43.9

OIBDA $1,419.2 $1,554.8 $347.9 $226.0 $239.4 $140.7 $953.9 $227.9 $100.9 $51.6 ($56.0) $324.3 ($83.9) ($137.1)

SEGMENT OIBDA

Argentina 148.9 168.8 46.7 35.2 50.0 48.9 181.0 52.3 41.8 36.5 48.7 179.4 27.0 21.3

Brazil 814.2 1,047.3 238.0 183.5 162.9 90.3 674.6 157.6 107.3 56.7 3.6 325.3 (29.1) (56.2)

Mexico 745.2 747.2 168.7 128.6 147.8 115.9 561.1 101.2 39.4 32.1 7.1 179.9 (12.5) (49.1)

Other (289.1) (408.6) (105.6) (121.4) (121.4) (114.4) (462.7) (83.3) (87.7) (73.7) (115.5) (360.3) (69.2) (53.1)

(1) Pro forma for sale of Nextel Peru which was completed in August, 2013.



Telecom




NET INCOME CALCULATOR

Operating Income 917.0 966.6 196.8 63.7 60.3 (346.2) (25.4) (79.5) (82.0) (162.8) (186.6) (510.9) (239.1) (504.4)

Interest expense (335.9) (311.7) (82.7) (80.8) (103.9) (98.2) (365.5) (109.7) (150.2) (135.0) (144.3) (539.2) (140.2) (120.4)

Interest income 28.3 34.1 6.1 5.9 13.2 8.6 33.9 6.5 9.0 9.3 18.6 43.4 20.1 12.8

Foreign currency transaction gain 52.4 (37.3) (14.6) (38.8) 10.7 (11.4) (54.0) 23.2 (104.5) (4.8) (57.6) (143.7) (7.2) 9.7

Other income(expense) (18.7) (37.8) (9.2) (5.7) (7.3) (6.1) (28.3) (4.8) (8.3) 4.5 (4.4) (13.0) (4.7) 1.7

Income tax provisions (269.9) (351.2) (70.7) (29.7) (34.7) (23.0) (158.1) (21.6) (48.8) (4.3) (371.3) (446.1) (5.0) (28.7)

Net income (loss) from cont'd ops 373.3 262.7 25.8 (85.3) (61.7) (476.4) (597.5) (185.8) (384.9) (293.1) (745.6) (1,609.4) (376.1) (629.2)

Loss from discont'd ops NA (37.5) (12.3) (18.2) (20.7) (116.5) (167.8) (21.7) (11.5) (6.8) (0.2) (40.2) 0.0 5.9

Net income(loss) $373.3 $225.2 $13.6 ($103.5) ($82.4) ($592.9) ($765.2) ($207.5) ($396.4) ($299.9) ($745.8) ($1,649.6) ($376.1) ($623.3)

Shares outstanding 169.7 171.2 171.8 171.5 171.6 171.7 171.7 172.0 172.4 172.4 172.1 172.1 172.4 172.4

Earnings per share $2.20 $1.32 $0.08 ($0.60) ($0.48) ($3.45) ($4.46) ($1.21) ($2.30) ($1.74) ($4.33) ($9.58) ($2.18) ($3.62)

PER SUB ECONOMICS

Monthly contribution per sub $34.68 $35.09 $29.68 $25.47 $25.91 $24.73 $27.34 $23.15 $19.85 $16.04 $15.68 $18.79 $10.94 $8.94

Average life (months) 62.1 60.7 51.2 46.4 39.3 29.4 39.0 41.2 37.4 27.8 26.0 31.4 29.3 29.5

Lifetime contribution per sub (LCPS) $2,155 $2,128 $1,520 $1,181 $1,017 $728 $1,066 $953 $743 $447 $407 $589 $320 $264

LCPS/CPGA 6.9x 6.1x 5.1x 3.9x 3.2x 2.3x 3.5x 3.4x 2.7x 1.8x 1.2x 2.1x 1.1x 0.9x

Subscriber Growth Rates (Y/Y)

Gross subscriber adds 9% 3% 3% 6% 1% 3% 12% -1%

Argentina 75% 79% 8% 29% 24% 29% 2% -8%

Brazil -20% -15% 5% 37% 29% 12% 49% 32%

Mexico 2% -10% -5% -26% -32% -18% -25% -28%

Other 765% 69% 14% -53% -47% -28% 12% -26%

Disconnects 72% 29% 27% 41% 11% 26% 36% 21%

Argentina 93% 145% 111% 66% 37% 76% 60% 34%

Brazil 110% 7% 8% 0% -50% -16% 7% 11%

Mexico 19% 8% 11% 125% 141% 71% 67% 26%

Other 704% 399% 131% -56% -14% 14% -42% -10%

Total Subscribers 5% 3% 2% -1% -2% -2% -4% -6%

Argentina 27% 26% 18% 16% 15% 15% 10% 5%

Brazil -7% -8% -8% -6% 3% 3% 6% 8%

Mexico 6% 4% 3% -5% -16% -16% -22% -26%

Other 154% 114% 78% 49% 23% 23% 35% 28%

Operating Growth Rates (Y/Y)

Argentina 6% -1% -1% -11% -15% -7% -33% -34%

Brazil -16% -23% -19% -29% -25% -24% -27% -17%

Mexico -6% -6% -4% -16% -21% -11% -26% -27%

Other 79% 97% 34% -19% 8% 20% 4% 1%

Total Operating Revenue -10% -14% -11% -22% -22% -17% -27% -23%

Argentina 7% 12% 19% -27% 0% -1% -48% -49%

Brazil -36% -34% -41% -65% -96% -52% nm nm

Mexico -25% -40% -69% -78% -94% -68% nm nm

Total Adjusted OIBDA -39% -34% -55% -78% nm -66% nm nm

Argentina 5% -6% -6% -5% -21% -9% -25% -29%

Brazil -8% -18% -11% -18% -14% -15% 3% 14%

Mexico 3% 10% 18% 9% 0% 9% -4% -10%

Total Cash Opex -1% -8% -2% -10% -8% -7% -4% -5%

(1) Pro forma for sale of Nextel Peru which was completed in August, 2013



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Organizational Chart:

Overview of preliminary debt, cash and intercompany balances as of June 30, 2014(1),(2)

($ in '000s)

Note: Overview only includes, and total balances only reflect, net balances greater than $25 million.

Source: Reproduced from Company disclosures.



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Management Projections: Consolidated(1)

(in millions)

FY13A(2) FY14E FY15E FY16E FY17E FY18EEOP Subscribers 9.5 7.4 8.8 10.9 12.8 14.5

Total Revenue(3) $4,574 $3,578 $3,434 $4,222 $5,120 $5,862y/y growth -16% -22% -4% 23% 21% 14%

Cash Operating Expenses 4,386 3,905 3,277 3,611 4,022 4,358EBITDA $188 ($327) $157 $611 $1,098 $1,504

margin 4% -9% 5% 14% 21% 26%

CapEx and spectrum ($884) ($622) ($646) ($620) ($547) ($490)Changes in Working Capital (4) 63 (347) 254 25 (9) (66)VAT, Other & LT/Assets/Liabilities(5) 1,244 65 (55) (58) (58) (58)Taxes (64) (35) 0 (17) (45) (107)Unlevered free cash flow $547 ($1,266) ($291) ($61) $439 $783Net interest expense (574) (367) (195) (194) (180) (129)Free cash flow before financing ($27) ($1,633) ($486) ($255) $259 $654Debt repayments(6) (964) (84) (24) (94) (248) (325)Debt financing 1,911 59 162 0 0 0Free cash flow after financing $920 ($1,657) ($348) ($349) $11 $329

Beginning cash $1,592 $2,443 $786 $438 $89 $100plus free cash flow after financing 920 (1,657) (348) (349) 11 329

Ending cash(7) $2,443 $786 $438 $89 $100 $429

(1) projections as of 18-Jun-14, except for Nextel Mexico which is as of 14-Aug-14.

(2) excludes Nextel Peru.

(3) reflects service and other revenue, excluding handset and accessories.

(4) reflects $192M deposit securing certain performance bonds relating to obligations to deploy spectrum in Brazil in FY14.

A portion of deposit will be returned when certain performance requirements are certified by Anatel; any remaining

requirements for cash collateral are expected to be eliminated when the performance bonds are renewed in 2015.

(5) consolidated cash flow adjustment of $65M in 2014 consists of: (a) net proceeds from the sale of Argentina and Chile,

(b) changes in working capital from long-term asset and liability accounts, and (c) other expenses and non-cash income that

include restructuring fees not included in EBITDA, intercompany transactions, and loss on the exit from the jet lease

(6) assumes cessation of payment of cash interest on, or equitization of, senior notes as a result of restructuring of such notes

(7) includes $69M cash outflow to Nextel Peru in 2013 prior to disposal

Source: company filings.



Telecom

Management Projections: Nextel Mexico(1)

(in millions)

FY13A FY14E FY15E FY16E FY17E FY18EEOP Subscribers 3.3 2.8 3.4 4.7 5.8 6.9

Total Revenue(2) $1,833 $1,377 $1,345 $1,747 $2,191 $2,534y/y growth -10% -25% -2% 30% 25% 16%

Cash Operating Expenses 1,692 1,498 1,469 1,598 1,718 1,866EBITDA $141 ($121) ($124) $149 $473 $668

margin 8% nm nm 9% 22% 26%

CapEx and spectrum ($358) ($247) ($163) ($203) ($243) ($246)Changes in Working Capital 66 18 (22) 14 28 (34)VAT, Other & LT/Assets/Liabilities 287 60 (4) (7) (7) (7)Taxes (7) (10) 0 0 0 (0)Unlevered free cash flow $129 ($300) ($313) ($47) $252 $381Net interest expense (68) (75) (91) (89) (84) (63)Free cash flow before financing $61 ($375) ($404) ($136) $168 $318Debt repayments(3) (336) (14) (16) (19) (64) (100)Debt financing 166 45 29 0 0 0Intercompany funding(4)

323 54 350 155 0 0Free cash flow after financing $214 ($289) ($41) $0 $103 $219

Beginning cash $216 $430 $141 $100 $100 $203plus free cash flow after financing 214 (289) (41) 0 103 219

Ending cash $430 $141 $100 $100 $203 $422

(1) reflects exchange rate of 12.92 MXN/USD in 2H14, 12.50 MXN/USD in 2015, 12.60 MXN/USD in 2016, 12.80 MXN/USD in 2017 and 12.90 MXN/USD in 2018. Projections as of 14-Aug-14 and reflect 2Q14 actual results.(2) reflects service and other revenue, excluding handset and accessories(3) assumes restructuring of obligations under local debt facilities(4) projections contemplate intercompany funding from LuxCo in form of equity contributionsSource: company filings.



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Management Projections: Nextel Brazil(1)

(in millions)

FY13A FY14E FY15E FY16E FY17E FY18EEOP Subscribers 4.0 4.6 5.5 6.2 7.0 7.7

Total Revenue(2) $2,109 $1,800 $2,089 $2,474 $2,929 $3,328y/y growth -23% -15% 16% 18% 18% 14%

Cash Operating Expenses 1,822 1,856 1,724 1,929 2,221 2,409EBITDA $287 ($56) $365 $545 $708 $919

margin 14% nm 17% 22% 24% 28%

CapEx and spectrum ($430) ($307) ($469) ($404) ($290) ($230)Changes in Working Capital (3) 16 (302) 270 11 (36) (32)VAT, Other & LT/Assets/Liabilities 354 (28) (51) (51) (51) (51)Taxes (1) (0) 0 (17) (45) (107)Unlevered free cash flow $228 ($693) $115 $84 $285 $499Net interest expense (158) (130) (107) (106) (96) (66)Free cash flow before financing $70 ($823) $8 ($22) $189 $433Debt repayments(4) (435) (34) (8) (75) (184) (225)Debt financing 145 14 133 0 0 0Intercompany funding(5)

426 515 0 0 0 0Free cash flow after financing $206 ($328) $133 ($97) $6 $208

Beginning cash $222 $428 $100 $233 $136 $141plus free cash flow after financing 206 (328) 133 (97) 6 208

Ending cash $428 $100 $233 $136 $141 $349

(1) reflects exchange rate of 2.38 BRL/USD. Forecast was built in 2Q14 and was based on 1Q14 actual results.(2) service and other revenue, excluding handset and accessories.(3) reflects $192M deposit securing certain performance bonds relating to obligations to deploy spectrum in Brazil in FY14. A portion of deposit will be returned when certain performance requirements are certified by Anatel; any remaining requirements for cash collateral are expected to be eliminated when the performance bonds are renewed in 2015.(4) assumes restructuring of obligations under local debt facilities.(5) Business Plan assumes intercompany funding from LuxCo in form of intercompany notesSource: Company filings.



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Key Investment Risks

Nextel's balance sheet is significantly over-leveraged; near-term bankruptcy filing likely. With negative EBITDA and roughly $5.8 billion of on-balancesheet debt, Nextel recently entered the grace period rather than make scheduled coupon payments on $2.4 billion of bonds. We expect the Company toannounce a pre-negotiated bankruptcy plan by the end of the grace period (September 14, 2014). A freefall bankruptcy cannot be ruled out.

Nextel conducts its operations exclusively in developing markets: Mexico, Brazil and Argentina. Nextel is thus exposed to all manner of Emerging Marketrisk including foreign currency fluctuations, capital controls, political risk and heightened regulatory risk, relative to the United States. We expect US- andLuxembourg-based holding companies to file for bankruptcy in US courts, but local operating companies could be forced to file for bankruptcy in LatinAmerican markets. Such a development would create additional risks for US-based creditors, in our view, and would likely become a major deterrent toprospective US-based investors.

Nextel faces intense competition from larger, well-capitalized competitors. Even with a restructured balance sheet, the Company may not be able tosurvive on a standalone basis.

Nextel will likely be forced to adopt a standalone restructuring plan. Although management and its advisors have been exploring strategic optionsincluding potential sales of its primary assets and operations, we have seen no evidence suggesting credible buyers are preparing to bid.

A standalone plan would require significant capital investment and generate substantial near-term cash burn. Continued investment in network upgradesand improved customer service may not yield substantial or even positive return on invested capital.

REQUIRED DISCLOSURESThe recommendations and guidance expressed in this research report accurately reflect the personal recommendations and guidance of the researchanalyst principally responsible for the preparation of this report

No part of the compensation received by the analyst principally responsible for the preparation of this report was, is or will be directly or indirectlyrelated to the specific recommendations and guidance expressed in this report. Direct or indirect analyst compensation may be based on performance-related considerations associated with the recommendations and guidance expressed by the analyst in this report

The research analyst primarily responsible for the preparation of this report received compensation that is based upon CRT Capital Group LLC’s totalbusiness revenues, including revenues derived from CRT’s investment banking business

Rating MeaningBuy Expected rate of return on investment at current prices levels is above that rate required,

in CRT's view, to undertake the attendant risks perceived- positive risk/reward investmentbalance.

Fair Value Expected rate of return on investment at current prices levels is in line with that raterequired, in CRT's view, to undertake the attendant risks perceived- equitable/rewardinvestment balance.

Sell Expected rate of return on investment at current prices levels is below that rate required,in CRT's view, to undertake the attendant risks perceived- negative risk/reward investmentbalance.

As of the time of this publication, CRT Capital Group LLC makes a market in the securities of NII Holdings Inc..



Telecom

Ratings PercentagesAs of August 25, 2014

Percentage of Banking Clients Within Each Rating CategoryAs of August 25, 2014

Buy 62.69% 5.95%Fair Value 35.82% 0.00%Sell 1.49% 0.00%

Valuations are based on estimates using traditional industry methods including, inter alia, analysis of earnings multiples, discounted cash flow calculationsand net asset value assessments. Price targets should be considered in the context of all prior CRT research published in connection with the subjectissuer, which may or may not have included price targets, as well as developments relating to the company, its industry and financial markets. Risks thatmay impede achievement of the stated price target, if any, include, but are not limited to, broad market and macroeconomic fluctuations and unforeseenchanges in the subject company’s fundamentals or business trends.

OTHER DISCLOSURES

This report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. This report is publishedsolely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Thesecurities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. This report is based on information obtainedfrom sources believed to be reliable but is neither guaranteed to be accurate nor intended to be a complete statement or summary of the securities,markets or developments referred to in the report. Recipients should not use this report as a substitute for the prudent exercise of their own judgment.Any opinions expressed in this report are subject to change without notice and CRT is under no obligation to update or keep current the informationcontained herein. CRT and/or its directors, officers and employees may have or may have had interests or long or short positions in, and may at any timemake purchases and/or sales as principal or agent, or may have acted or may act in the future as market maker in the relevant securities or related financialinstruments discussed in this report. CRT may rely on informational barriers such as “Chinese Walls” to control the flow of information situated in one ormore areas within CRT into other units, divisions or groups within CRT.

Past performance is not necessarily indicative of future results. Options, derivative products and futures are not suitable for all investors due to the highdegree of risk associated with trading these instruments. Foreign currency rates of exchange may adversely effect the value, price or income of any securityor related instrument described in this report.

CRT accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. CRT specifically prohibits there-distribution of this report by third parties, via the internet or otherwise, and accepts no liability whatsoever for the actions of such third parties in thisrespect. Additional information is available upon request. Clients who wish to effect transactions should contact their sales representative.

©2014 CRT Capital Group LLC. All rights Reserved. The Copyright Act of 1976 prohibits the reproduction by photocopy machine or any other means of allor any portion of this issue except with permission of the publisher. 262 Harbor Drive, Stamford, CT 06902



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Analyst Phone Email Coverage Universe

Shagun Singh Chadha, Senior Vice President (203) 569-4345 [email protected] Medical Technology

Jack Chan, Research Associate (203) 569-4351 [email protected] Generalist, Distressed, High-Yield, Special Situations

Tim Chiang, Managing Director (203) 569-4355 [email protected] Specialty/Generic Pharmaceuticals

Michael Derchin, Managing Director (203) 569-4354 [email protected] Airlines, Aerospace, Transportation

Neil Doshi, Managing Director Robert Coolbrith, Vice President & Associate

(203) 548-8245 (203) 548-8246

[email protected] [email protected]

Internet & Interactive Media

David Epstein, CFA, Managing Director (203) 569-4328 [email protected] Convertible Specialist

Lee J. Giordano, CFA, Managing Director Michael Gunther, Research Associate

(203) 569-4350 (203) 569-4322


Consumer/Staples & Consumer Discretionary/Retail

Michael Kim, Managing Director and Partner (203) 569-4368 [email protected] REITs, Homebuilders, Building Products

Kirk Ludtke, Managing Director and Co-Head of Research Scott Petralia, Research Associate

(203) 569-4361

(203) 569-4381

[email protected]

[email protected] Autos, Industrials, Specialty Finance

Patrick Marshall, Research Associate (203) 569-4373 [email protected]

Brian Ruttenbur, Managing Director Corey Allen, Research Associate

(203) 569-4363 (203) 569-4313


Security, Space, and Defense Technology

Kevin Starke, CFA, Managing Director (203) 569-6421 [email protected] Generalist, Distressed, High-Yield, Special Situations

Amer Tiwana, Managing Director (203) 569-4318 [email protected] Generalist, Distressed, High-Yield, Special Situations

Lance Vitanza, CFA, Managing Director and Partner Brad Tesoriero, CFA, Research Associate

(203) 569-4337 (203) 569-4376


Media and Telecom

Jim von Riesemann, Managing Director Kevin Prior, Research Associate

(203) 569-4336 (203) 569-4375


Utilities

Carol Werther, Managing Director (203) 569-4325 [email protected] Biotechnology



Telecom

CRT NIHD the Last Great Wireless Restructuring_8.25.2014

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