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NII Gains on $400 Million Sale of Peru Division to Entel

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April 5 (Bloomberg) -- NII Holdings Inc., which offers mobile-phone service under the Nextel brand in Latin America, rose to the highest price in more than a month after agreeing to sell its Peru unit for $400 million.

NII, based in Reston, Virginia, will use the proceeds of the sale to Chile’s Empresa Nacional de Telecomunicaciones SA to invest in Mexico and Brazil, its two largest markets, the company said yesterday in a statement. The transaction is expected to close in the second half of this year, it said.

The company is also considering selling businesses in Chile and Argentina, as well as assets such as its wireless towers, to focus on the larger countries. Peruvian service revenue fell 2.3 percent last year to $289.8 million as competition pushed customers’ monthly bills lower.

NII rose 21 percent to $5.48 in New York, the highest closing price since Feb. 22. Before today’s gain, the shares had fallen 36 percent this year, compared with a 9.4 percent increase in the Standard & Poor’s 500 Index.

The transaction values the Peru business at 25 cents per megahertz of capacity for each person covered, Chris King, a Stifel Nicolaus & Co. analyst, said in a research note last night. Assuming a similar value for NII’s other networks, the company should be worth $23 a share, he said.

“This asset sale is a key data point which validates what we believe to be the strong physical asset value of the company, which remains well above the company’s current enterprise value of approximately $4 billion,” he said. He advises buying the shares.

The transaction allows Entel, as the Chilean phone carrier is known, to build on its investments in its sole operation outside its home country. The Santiago-based company has a landline network and a call center in Peru.

Entel fell 3.2 percent to 9,489 pesos in Santiago.

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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