Nextel Peru: Emerging Market Cost of Capital

Case Solution

Luis M. Viceira, Joel L. Heilprin
HBS Brief Cases ()

NII Holdings, Inc. is a US company based in Reston, Virginia and wireless telephony operations under the Nextel brand in Argentina, Brazil, Chile, Mexico and Peru. In 2012, as the company struggled with a weak competitive position and the transition to a new 3G platform, its operating results suffered and several analysts were concerned about the company’s liquidity. With this in mind, NII decides to focus its activities in Mexico and Brazil. In April 2013, the company signed an agreement to sell Nextel Peru to Empresa Nacional de Telecomunicaciones S.A. (Entel) for $ 397 million to $ 415 million. With the help of Andean Capital Advisors and their first-year partner Rafael d’Anconia, the case aims to show concepts for deriving the cost of capital in an international environment. The case was designed for use in MBA courses in the first year, but can also be used for courses with a focus on international finance.

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