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UPDATE 1-NII to cut jobs, expects higher prepaid user losses in Mexico

Monday, 9 Dec 2013 | 8:41 AM ET

Dec 9 (Reuters) - NII Holdings Inc, which provides telecom services under the Nextel brand in Latin America, said it would cut more than 1,400 jobs in its market operations and over 25 percent of the workforce at its Virginia headquarters.

NII shares fell 7 percent in premarket trading.

The company said it expected to incur employee severance costs of $25 million to $35 million, most of which would be accounted for in the fourth quarter.

NII, which operates in Mexico, Brazil, Argentina and Chile, had about 16,100 employees as of December 2012.

The company said it expected annual cost savings of $50 million to $55 million from the job cuts, which are a part of a restructuring plan announced in October to regain market share from bigger rivals.

Under the plan, the company will also launch aggressive marketing campaigns and pricing plans, and offer smartphones such as Samsung Electronics' Galaxy S4, HTC's HTC One.

Telefonica Brasil SA and billionaire Carlos Slim-controlled America Movil have been luring NII's higher-paying business customers with their unlimited call plans and faster and bigger networks.

NII also said on Monday that it expected higher prepaid subscriber deactivations in Mexico than estimated previously as it had modified its policy for inactive prepaid users.

The company forecast a net subscriber loss of about 400,000 in Mexico for the fourth quarter ending December. NII had a total subscriber base of 9.7 million as of September, including 3.7 million users in Mexico.

The company said in October that it would miss its full-year profit forecast, mainly due to subscriber losses in Mexico and higher investments in its 4G network.

NII shares have dropped 45 percent since then. The stock was trading at $2.40 before the bell on Monday.

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