| Basis of Presentation | Basis of Presentation Overview. Unless the context requires otherwise, "NII Holdings, Inc.," "NII Holdings," "NII," "we," "our," "us" and "the Company" refer to the combined businesses of NII Holdings, Inc. and its consolidated subsidiaries. Our unaudited condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission, or the SEC. While these financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, they reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for interim periods. In addition, the year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. We conduct substantially all of our business through our majority-owned Brazilian operating company, Nextel Telecomunicações Ltda., which we refer to as Nextel Brazil. You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2018 and the condensed consolidated financial statements and notes contained in our quarterly reports on Form 10-Q for the periods ended March 31, 2019 and June 30, 2019. You should not expect results of operations for interim periods to be an indication of the results for a full year. On June 27, 2019, NII Holdings' stockholders approved the sale of Nextel Brazil. See discussion below for more information regarding this pending sale. As a result of this stockholder approval, we have reported Nextel Brazil as a discontinued operation in this quarterly report on Form 10-Q. Accordingly, we have reclassified Nextel Brazil's results of operations for all periods presented to reflect Nextel Brazil as a discontinued operation. Unless otherwise noted, amounts included in this quarterly report on Form 10-Q exclude amounts attributable to the discontinued operations of Nextel Brazil. Our consolidated results from continuing operations in this quarterly report on Form 10-Q solely include the results of operations of our corporate headquarters. Pending Sale of Nextel Brazil. On March 18, 2019, NII Holdings and NII International Holdings S.à r.l., or NIIH, a wholly-owned subsidiary of NII Holdings, entered into a purchase agreement with América Móvil, S.A.B. de C.V., or AMX, and AI Brazil Holdings B.V., or AI Brazil Holdings, pursuant to which NII Holdings and AI Brazil Holdings will sell their jointly-owned wireless operations in Brazil. Specifically, NIIH will sell all of the issued and outstanding shares of NII Brazil Holdings S.à r.l., or NIIBH, to AMX. We refer to this transaction as the Nextel Brazil transaction. Also pursuant to the purchase agreement, concurrent to, and as a condition of, the consummation of the Nextel Brazil transaction, AI Brazil Holdings will sell all of its interests in Nextel Holdings S.à r.l., or Nextel Holdings, to NIIBH. We refer to this transaction as the AI Brazil Holdings transaction. At the closing of the Nextel Brazil transaction and the AI Brazil Holdings transaction, AMX will indirectly own all of the issued and outstanding shares of Nextel Brazil. Under the terms of the purchase agreement, AMX will acquire all of the issued and outstanding shares of NIIBH for an aggregate purchase price of $905.0 million , less net debt and subject to certain adjustments at closing, including reimbursement for capital expenditures up to a budgeted amount from March 1, 2019 to closing, a working capital adjustment (subject, in the case of an increase in net working capital, to a cap based on budgeted changes in working capital through the earlier of closing or December 31, 2019), and a deduction for the amount, if any, by which certain budgeted selling and marketing costs exceed actual spending on such costs from March 1, 2019 to closing. NII Holdings will receive its pro rata share of the net purchase price after deducting a preferred return due to AI Brazil Holdings and deducting certain transaction expenses and increases in accrued tax contingencies, if any. AMX will place $30.0 million of NII Holdings' portion of the net proceeds into an 18 -month escrow account to secure NII Holdings’ indemnification obligations under the purchase agreement. In addition, in connection with the Nextel Brazil transaction, NII Holdings and AI Brazil Holdings have entered into an agreement relating to the Nextel Brazil transaction that includes the resolution of a dispute regarding the investment of funds into Nextel Holdings from an escrow related to NII Holdings' sale of its operations in Mexico, or the Mexico escrow. Under this agreement, the parties have agreed that AI Brazil Holdings will receive, after the closing of the Nextel Brazil transaction, the first $10.0 million recovered from the Mexico escrow followed by 6% of the value of additional funds recovered from the Mexico escrow, in both cases, if and when funds are released. NII Holdings has also agreed to indemnify AI Brazil Holdings for damages that may arise from certain tax contingencies, transaction expenses, transaction-related litigation and other matters in connection with its participation in the Nextel Brazil transaction. The closing of the transactions contemplated by the purchase agreement are subject to the satisfaction of customary conditions, including approval by NII Holdings' stockholders, the receipt of required regulatory and antitrust approvals without the imposition of a burdensome condition (as defined in the purchase agreement) and either an amendment eliminating certain successor obligations contemplated under, or an escrow agreement providing for a deposit in accordance with, NII Holdings’ indenture with respect to our 4.25% convertible senior notes due 2023. The purchase agreement includes certain termination rights for each party and provides that, in specified circumstances, NII Holdings is required to pay a termination fee of $25.0 million . The purchase agreement contains customary representations, warranties and covenants made by NII Holdings, NIIH, AMX and AI Brazil Holdings. Among other things, NIIH has agreed to conduct NIIBH’s and each of its subsidiaries’ business in the ordinary course, use reasonable best efforts to operate its business in accordance with its budget for the year 2019 and the year 2020, if applicable, and use commercially reasonable efforts to maintain and preserve its business organization and preserve certain business relations. In connection with the pending sale of Nextel Brazil, NII Holdings' Board of Directors approved a plan to dissolve and wind up its operations following the completion of this transaction. On June 27, 2019, NII Holdings' stockholders approved the sale of Nextel Brazil and the plan of dissolution. On September 30, 2019, we also received the required approval of the sale from the National Telecommunications Agency, or ANATEL, which is Brazil's telecommunications regulatory agency. On September 9, 2019, we received the required clearance of the sale from the General Superintendent of the Administrative Council for Economic Defense, or CADE, which is Brazil's national competition regulator, subject to a 15-day appeal period that started on October 8, 2019. On October 22, 2019, TIM, S.A., or TIM, a wireless telecommunications provider in Brazil, filed an appeal with CADE challenging the General Superintendent's clearance decision on the sale. On October 31, 2019, CADE agreed to hear TIM's appeal. CADE is required to rule on the merits of TIM's appeal by January 26, 2020, which in limited circumstances could be extended one time for up to 90 days. The parties to the purchase agreement believe that TIM's appeal is without merit and are working to contest TIM's appeal and receive a final approval from CADE as quickly as possible. To the extent that CADE imposes conditions on the transaction in resolving the appeal, it could have the effect of delaying or preventing completion of the transaction. If the sale transaction has not closed by December 31, 2019, AMX, AI Brazil Holdings and NII Holdings must agree on a 2020 operating budget for Nextel Brazil to extend the purchase agreement to March 31, 2020. Minority Investment. On June 5, 2017, NII Holdings and AINMT Holdings AB, or ice group, an international telecommunications company operating primarily in Norway under the "ice.net" brand, along with certain affiliates of the Company and ice group, entered into an investment agreement and a shareholders agreement to partner in the ownership of Nextel Brazil. On July 20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings, a subsidiary of NII Holdings that indirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initial investment, ice group received 50.0 million shares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of common stock in this entity. The investment agreement also provided ice group with an option, exercisable on or before November 15, 2017, to invest an additional $150.0 million in Nextel Holdings for an additional 30% ownership. ice group did not exercise its option, and on February 27, 2018, we terminated the investment agreement. In September 2018, ice group completed a sale of its 30% ownership interest in Nextel Holdings by selling the shares of its intermediary holding company, AI Brazil Holdings, to AI Media Holdings (NMT) LLC ( 90% ) and Bridford Music B.V. ( 10% ). During 2018, AI Brazil Holdings made an additional $15.9 million investment in Nextel Holdings to maintain its 30% ownership level. During the second quarter of 2019, NII Holdings contributed $15.3 million to Nextel Holdings, and AI Brazil Holdings contributed $2.7 million to Nextel Holdings, which increased NII Holdings' ownership to 70.70% and reduced AI Brazil Holdings' ownership from 30% to 29.30% . As a result of this change in ownership, we reclassified $4.7 million of losses from noncontrolling interest to total NII Holdings' stockholders' deficit in the second quarter of 2019. In addition, during the third quarter of 2019, NII Holdings contributed $24.3 million to Nextel Holdings, which increased NII Holdings' ownership to 72.43% and further reduced AI Brazil Holdings' ownership to 27.57% . As a result of this further change in ownership, we reclassified $11.9 million of losses from noncontrolling interest to total NII Holdings' stockholders' deficit in the third quarter of 2019. The investment agreement provided for, after ice group’s initial investment, the Company's contribution of proceeds arising from the release of funds deposited in escrow in connection with the sale of our Mexican operations through a 115 account, which is a contribution without the issuance of additional equity. See Note 3 for more information regarding escrowed funds. We do not believe that this requirement survives the termination of the investment agreement and intend for all future contributions by NII Holdings to Nextel Holdings to be made through capital contributions with additional equity being issued to us. ice group and AI Brazil Holdings notified the Company that they believe future escrow proceeds received by NII Holdings from the escrow account must be contributed to Nextel Holdings through the 115 account without the issuance of equity, which would result in a portion of the disputed escrow being subject to AI Brazil Holdings' non-controlling interest. Although our aforementioned agreement with AI Brazil Holdings resolves this dispute, to the extent the Nextel Brazil transaction is not completed and the related settlement between us and AI Brazil Holdings is not consummated, AI Brazil Holdings’ non-controlling interest in future escrow proceeds received by NII Holdings would remain in dispute. Going Concern. As of September 30, 2019, our consolidated sources of funding included $29.3 million in cash and cash equivalents, $103.4 million in cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico and $51.5 million in cash and short-term investments held for sale. As long as the closing of the sale of Nextel Brazil occurs by the end of the first quarter of 2020, we believe we have sufficient sources of liquidity to fund our business. However, if the pending sale of Nextel Brazil is ultimately not completed or if the closing of the sale is delayed beyond the end of the first quarter of 2020, we would need to alter our business plan to significantly reduce spending or obtain additional funding. To the extent the sale of Nextel Brazil does not close or if we do not recover sufficient cash from escrow prior to the end of the first quarter of 2020, substantial doubt exists about our ability to continue as a going concern. Diluted Net (Loss) Income from Continuing Operations Per Common Share. As presented for the three and nine months ended September 30, 2019 and 2018, our calculation of diluted net (loss) income from continuing operations per common share is based on the weighted average number of common shares outstanding during those periods and includes other potential common shares, including common shares resulting from the potential conversion of our convertible senior notes, common shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans or restricted common shares issued under those plans when those shares are dilutive. For the nine months ended September 30, 2019, we did not include 18.5 million common shares related to the potential conversion of our convertible senior notes, 1.7 million stock options and 1.9 million restricted common shares in our calculation of diluted net income from continuing operations per common share because their effect would have been antidilutive. For the three months ended September 30, 2019, we did not include 18.5 million common shares related to the potential conversion of our convertible senior notes, 2.6 million stock options and 1.6 million restricted common shares in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. In addition, for the three and nine months ended September 30, 2018, we did not include 18.5 million common shares related to the potential conversion of our convertible senior notes because their effect would have been antidilutive. For the same periods, we did not include 3.5 million and 3.4 million stock options, respectively, as well as 1.4 million and 0.7 million restricted common shares, respectively, in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. Cash, Cash Equivalents and Restricted Cash. Our restricted cash represents cash held in escrow in connection with the sale of Nextel Mexico. Cash held by discontinued operations relates to cash held by Nextel Brazil and certain judicial deposits of cash in Brazil related to litigation involving tax and other matters. A reconciliation from cash and cash equivalents as presented in our condensed consolidated balance sheets to cash, cash equivalents and restricted cash as reported in our condensed consolidated statements of cash flows is as follows: September 30, December 31, 2019 2018 2018 2017 (in thousands) Cash and cash equivalents $ 29,331 $ 131,479 $ 93,881 $ 34,553 Cash in escrow 103,435 106,071 106,089 110,024 Cash and cash equivalents included in current assets held for sale 2,684 21,233 48,605 159,335 Restricted cash included in non-current assets held for sale 2,177 2,021 2,164 1,866 Cash, cash equivalents and restricted cash $ 137,627 $ 260,804 $ 250,739 $ 305,778 Recently Adopted Accounting Standards. In February 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2016-02, "Leases," which we refer to as ASC 842. ASC 842 replaced existing leasing rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements. We implemented ASC 842 on January 1, 2019 using the modified retrospective method. We did not retroactively adjust prior periods. In utilizing the modified retrospective method, we recognized the cumulative effect of applying the standard at the date of initial application. See Note 2 for more information regarding the adoption of ASC 842. Recently Issued Accounting Pronouncements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” which amends the scope and transition requirements of ASU 2016-13. The standard requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount. This standard will become effective beginning January 1, 2020 and will require a modified retrospective approach, which will result in a cumulative effect adjustment to accumulated deficit as of the beginning of the first reporting period in which the guidance is effective. We are currently evaluating the impact this guidance will have on our condensed consolidated financial statements. Securities Litigation. On July 8, 2019, a purported stockholder class action was filed against the Company and the Company's directors in the Court of Chancery of the State of Delaware by Matis Nayman. The lawsuit is captioned Matis Nayman v. Kevin L. Beebe, James V. Continenza, Howard S. Hoffmann, Ricardo Knoepfelmacher, Christopher T. Rogers, Robert A. Schriesheim, Steven M. Shindler, and NII Holdings, Inc. , C.A. No. 2019-0525-JTL. The complaint alleges, among other things, that the Company and its directors breached their fiduciary duties by failing to take steps to maximize the Company's value to its public stockholders and failing to disclose certain information in the proxy statement issued in connection with the Company's purchase agreement with AMX and AI Brazil Holdings and the Company's planned liquidation and dissolution. The relief the plaintiff seeks includes enjoining the sale of Nextel Brazil and the dissolution of NII Holdings, and the recovery of unspecified damages. On September 16, 2019, the defendants filed a motion to dismiss, and on October 16, 2019, the plaintiff filed an amended complaint. The Company and the named individuals intend to vigorously defend themselves in this matter. In addition, we are subject to other claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows. Reclassifications. We have reclassified some prior period amounts in our condensed consolidated financial statements to conform to our current presentation. |
