NII Holdings Inc NII Holdings, Inc. Q3 2017 Q3 2017 Earnings Presentation g November 9, 2017
Use of Non-GAAP Financial Measures This presentation includes certain financial information that is calculated and presented on the basis of methodologies that This presentation includes certain financial information that is calculated and presented on the basis of methodologies that are not in accordance with U.S. Generally Accepted Accounting Principles, or GAAP. Management, as well as certain investors, use these non-GAAP financial measures to evaluate NII Holdings’ current and future financial performance. The non-GAAP financial measures included in this presentation do not replace the presentation of NII Holdings’ GAAP financial results. These measurements provide supplemental information to assist investors in analyzing NII Holdings’ financial position and results of operations. NII Holdings has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations. Reconciliations of the non-GAAP financial measures provided in this presentation to the most directly comparable GAAP measures can be found in the appendix of this presentation and on NII Holdings’ Investor Relations link, at nii.com. 2
Safe harbor statement under the Private Securities Litigation Reform Act of 1995 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. This presentation includes “forward- "S f H b " St t t d th P i t S iti Liti ti R f A t f 1995 Thi t ti i l d “f d looking statements” within the meaning of the securities laws. The statements regarding the business and economic outlook, future performance, final approval and effectiveness of amendments to loan agreements, the completion of ice group’s, formerly AINMT, second investment, which is at ice group’s sole discretion, and guidance, as well as other statements that are not historical facts, are forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and projections reflecting management s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the receipt of approval of amendments by China's export and credit insurance corporation, ice group’s decision to exercise its investment option, the Company’s ability to fund the business and meet its business plans, customer growth and retention, pricing, network usage, operating costs, the timing of various events, the economic and regulatory environment and the foreign currency exchange rates that will prevail during 2017. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to: the impact of liquidity constraints, including the inability to access escrowed and pledged funds when expected, our ability to finalize the executed amendments to our financing arrangements, a decision by ice group not to exercise its option, failing to meet the closing conditions necessary to complete ice group’s investment the impact of more intense competitive conditions and changes in economic conditions in Brazil the investment, the impact of more intense competitive conditions and changes in economic conditions in Brazil, the performance of the Company’s networks, the Company’s ability to provide services that customers want or need, the ability of the Company to continue as a going concern, the Company’s ability to execute its business plan, and the additional risks and uncertainties that are described in NII Holdings' Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the period ended June 30, 2017, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. The tables below speak only as of their date, and NII Holdings NII Holdings with the Securities and Exchange Commission. The tables below speak only as of their date, and NII Holdings disclaims any duty to update the information herein. 3
Contents Earnings Overview Subscriber Overview NII Holdings, Inc. Results Q3’17 4
Q3'17 Earnings Overview On the top line, operating revenue was $205M, down $20M compared to Q2’17 primarily due to lower O th t li ti $205M d $20M d t Q2’17 i il d t l iDEN operating revenues and the introduction of new 3G/4G unlimited voice offers with lower ARPU Operating expenses increased $12M compared to Q2’17 primarily due to certain non-cash contingency expenses and higher advertising/marketing expenses. Excluding contingencies and other non-recurring items operating expenses would have decreased in Q3’17 items, operating expenses would have decreased in Q3’17. Consolidated adjusted OIBDA was ($37M) in Q3’17 We ended the quarter with a subscriber base of 3.30M, down 4% from Q2’17, primarily due to iDEN net subscriber losses b ib l • 3G/4G subscribers represent 86% of the base at 2.85M, up from 84% in Q2’17 • 3G/4G net subscriber losses of 32K in Q3’17 due to an increase in churn • 3G/4G churn expected to decrease in Q4’17 as we add and transition more subscribers to our new offers Total liquidity was down only $22M from Q2’17 primarily due to $70M of principal and interest payments, partially offset by $50M from ice group’s Step 1 Investment We ended the quarter with $260M of cash and short term investments and $110M of restricted cash held in escrow held in escrow We are focused on protecting our subscriber and revenue base while operating our business in a prudent manner to reduce costs and preserve our liquidity p p q y 5
Consolidated Q3’17 Results % Change % Change Q3'17 Q3 17 % Change % Change $ $m Q3'17 Q3'17 Q2'17 Q2'17 Q3'16 Q3'16 B/(W) % Rev B/(W) Operating revenue 205 225 (9%) 100% 261 (21%) Cost of revenue C t f 103 103 101 101 (2%) (2%) 50% 50% 102 102 (0%) (0%) General and administrative expenses 111 106 (4%) 54% 112 1% Selling and marketing expenses S lli d k ti 28 28 23 23 (21%) (21%) 14% 14% 30 30 7% 7% Consolidated Adjusted OIBDA (Loss) (37) (5) (589%) (18%) 16 (335%) Service ARPU 19 19 (5%) nm 21 (10%) Total ARPU 20 21 (4%) nm 23 (12%) CCPU 20 19 (10%) nm 19 (10%) CPGA 100 103 3% nm 93 (8%) Average FX Rate (Real) 3.2 3.2 2% nm 3.2 3% nm = Not Meaningful Key Consolidated Adjusted OIBDA decrease of $32M compared to Q2’17 due primarily to lower operating revenue resulting primarily from wind down of iDEN operations and an increase in points SG&A expenses SG&A expenses 6
Brazil Q3’17 Results in Local Currency % Change % Change Q3'17 Q3 17 % Change % Change R$m Q3'17 Q2'17 Q3'16 B/(W) % Rev B/(W) Operating revenue 648 723 (10%) 100% 847 (23%) Cost of revenue 325 323 (0%) 50% 332 2% General and administrative expenses 330 314 (5%) 51% 339 3% Selling and marketing expenses 89 75 (19%) 14% 99 10% Adjusted OIBDA (96) 11 (963%) (15%) 77 (226%) Service ARPU Service ARPU 59 59 62 62 (6%) (6%) nm nm 67 67 (12%) (12%) Total ARPU 63 67 (6%) nm 73 (14%) CCPU 63 57 (10%) nm 58 (8%) CPGA 316 331 4% nm 301 (5%) nm = Not Meaningful Higher general and administrative expenses due to non-cash contingency costs recognized Key in Q3’17, which offset decreases in other costs points Higher selling and marketing expenses due to increased advertising and marketing costs related to the launch of new offers in Q3’17 related to the launch of new offers in Q3 17 7
Q3'17 Brazil Operating Revenue in Local Currency Brazil Operating Revenue and Total ARPU B il O i R d T l ARPU (Operating Revenue in millions R$) 621M 618M 615M / 4G 593M 557M Brazil 3G / R$69 R$69 R$67 R$64 R$62 847M 818M 789M Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 B 723M Operating Revenue Service ARPU R$73 R$73 648M R$71 R$67 R$63 R$67 R$67 R$65 232M R$62 R$59 197M 171M zil iDEN 130M 91M R$60 R$59 R$54 Braz R$49 R$47 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Operating Revenue Total ARPU Service ARPU Operating Revenue Service ARPU 8
Segment Earnings* Trend Brazil Segment Earnings Trend B il S E i T d (in millions $) Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Operating Revenue 261 248 251 225 205 Cost of Revenue 102 100 111 101 103 General and administrative expenses 104 105 100 98 104 Selling and marketing expenses 30 36 27 23 28 Brazil Segment Earnings (Loss) Brazil Segment Earnings (Loss) 24 24 8 8 12 12 3 3 (31) (31) HQ Segment Earnings Trend** (in millions $) Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Operating Revenue - - - - - Cost of Revenue - - - - - General and administrative expenses 8 7 7 8 6 Selling and marketing expenses - - - - - (8) (7) (7) (8) HQ Segment Loss (6) * Segment earnings is defined as operating income before depreciation, amortization, impairment, restructuring costs and other ** Includes the impact of intercompany eliminations and discontinued operations 9
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