NII Holdings, Inc. 06 ANNUAL REPORT ACCELERATING PROFITABLE GROWTH PEOPLE PERFORMANCE POTENTIAL

Transcription

1 NII Holdigs, Ic. 06 ANNUAL REPORT ACCELERATING PROFITABLE GROWTH PEOPLE PERFORMANCE POTENTIAL

2 NEXTEL MEXICO Populatio i licesed areas: 104 millio Covered populatio: 60 millio % GDP covered: 78% Average addressable market populatio: 17 millio 1 NEXTEL BRAZIL Populatio i licesed areas: 147 millio Covered populatio: 63 millio % GDP covered: 52% Average addressable market populatio: 12 millio 1 EXISTING FOOTPRINT NEXTEL PERU Populatio i licesed areas: 20 millio Covered populatio: 16 millio % GDP covered: 66% Average addressable market populatio: 3 millio 1 NEXTEL ARGENTINA Populatio i licesed areas: 21 millio Covered populatio: 21 millio % GDP covered: 77% Average addressable market populatio: 5 millio 1 MEXICO Acapulco Aguascalietes Cacú Ceyla Chihuahua Chilipacigo Ciudad Juarez Ciudad Obregó Colima Córdoba Cuautla Cueravaca Culiacá Eseada Guadalajara Hermosillo Irapuato Leó Mazaillo Matamoros Mazatlá Merida Mexicali Mexico City Mochis Moterrey Morelia Nuevo Laredo Pachuca Puebla Puerto Vallarta Querétaro Reyosa Salamaca Saltillo Sa Luis Potosí Tampico Tecate Tepic Tijuaa Toluca Torreó Veracruz BRAZIL Belo Horizote Brasília Campias Curitiba Floriaópolis Goiâia Joivile Pota Grossa Porto Alegre Ribeirão Preto Rio de Jaeiro Satos São José dos Campos São José do Rio Preto Local São Paulo Sorocaba Uberlâdia ARGENTINA Avellaeda Bueos Aires Córdoba Cerrito La Plata Mar del Plata Medoza Olivos Palestia Paseo Coló Rosario Sa Marti Sata Fe PERU Arequipa Chiclayo Chimbote Cusco Ica Lima Moquequa Piura Puo Taca Trujillo Tumbes CHILE Satiago 1 Based o compay estimates.

3 + Acceleratig Profitable Growth MILESTONE FINANCIAL AND OPERATIONAL PERFORMANCE IN 2006 $2.37 BILLION OPERATING REVENUES 36% icrease over 2005 $662 MILLION OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (OIBDA) 37% icrease over 2005 $460 MILLION IN OPERATING INCOME 30% icrease over 2005 $10 BILLION+ MARKET CAPITALIZATION CONTINUED FOCUS ON OPERATIONAL EXCELLENCE IN 2006 $58 AVERAGE SERVICE REVENUE PER UNIT (ARPU) Regioal idustry best $3,800 LIFETIME AVERAGE REVENUE PER SUBSCRIBER Regioal idustry best 1.5% AVERAGE MONTHLY CHURN: ANOTHER RECORD LOW Regioal idustry best RECORD GROWTH IN 2006 OVER 3.4 MILLION SUBSCRIBERS AS OF DECEMBER 31, ,300 et subscriber additios for the year 49% icrease i et subscriber additios over % icrease i the edig subscriber base over 2005 EXPANDING FOOTPRINT 160 millio people covered 2 78% GDP coverage i Mexico; 52% GDP coverage i Brazil Nearig completio of curret phase of our regio-wide build-out

4 NII Holdigs, Ic Aual Report + Chairma s Note. Acceleratig Profitable Growth. Dear Fellow Shareholder, For NII Holdigs, 2006 represeted the powerful covergece of people, performace ad potetial. A uwaverig commitmet to profitable growth from a team uequaled i our idustry, coupled with the foudatio we have worked so hard to put i place, fuctioed together as ever before to positio NII to pursue a future of log-term growth ad icreasig stakeholder value. NII delivered record results i Through cotiued solid executio of our profitable growth strategy, we exceeded early all of our fiacial ad operatioal targets, deliverig record high subscriber growth, total reveue, ad operatig icome before depreciatio ad amortizatio (OIBDA). We grew our subscriber base by more tha a third, while ehacig our leadership positio evideced agai by what we believe are the best metrics ad fudametals for wireless operators i Lati America. We surpassed 3.4 millio subscribers, lauched ew products ad services such as iter-carrier SMS ad the BlackBerry wireless solutio, ad climbed above $10 billio i market capitalizatio. We sigificatly expaded our coverage base, lauchig 47 ew cities coverig a additioal 19 millio people 1 throughout our markets, providig the opportuity to brig our products to more people i more places. We are proud ad excited to deliver these results to you. However, I would like to put our performace ito the proper perspective as we do every day by reviewig where we are as a compay ad what NII is all about. Over the past few years, our compay has bee hard at work settig the buildig blocks for profitable growth ad value. This is the solid foudatio that we have bee tellig you about ad the oe upo which we are buildig a very valuable busiess. To this ed, we have developed the right formula to expad our etworks ad to ehace our ifluece ad visibility i the markets we serve. We have faced ad met the may challeges previously before us. Whether it was securig additioal 800 MHz spectrum i Mexico, improvig the regulatory eviromet i Brazil, executig o our expasio pla, or acquirig a local cocessio i Mexico, we have successfully addressed every challege head o. 2 Poised ow to capitalize o the sigificat scale we have built ito our busiess, we expect to evolve ito a sigificat geerator of free cash flow. The motto we live by disciplied focus o profitable growth through solid executio is rigig true i all we do. It is reflected i our solid historical results ad will serve as a corerstoe of our strategy as we seek to cotiue to geerate strog results i the future.

5 + Leadig performace i the Lati America wireless idustry. + I 2006, NII agai geerated strog shareholder returs by doig what we have cosistetly doe best: provide high value products ad services, uderstad customers eeds, ad deliver superior customer service. Our differetiated offerig of a itegrated commuicatios service that combies Nextel s Direct Coect, Iteratioal Direct Coect ȚM voice, ad wireless data commuicatios, backed with the regio s leadig quality customer support, drew over 934,000 et ew subscribers to our etwork i 2006, a curret record for NII ad a 49% icrease i et subscriber additios over At year ed, our total subscriber base had surpassed 3.44 millio, a icrease of 37% over the year before. True to our strategy ad our commitmet to our stakeholders, our strog subscriber growth did ot dilute our best-i-class operatioal metrics. NII geerated all-time highs of $2.37 billio of total operatig reveues, a 36% year-over-year icrease; $662 millio i OIBDA, a icrease of 37% over 2005; ad $460 millio i operatig icome, a 30% icrease over Superior customer satisfactio combied with our itegrated wireless solutio resulted i strog mothly average service reveue per uit (ARPU) of $58 for the year, agai the best i the regio for our idustry. At the same time, our ability to attract ad retai the most loyal ad most valuable customers throughout Lati America drove our mothly chur rate dow to 1.5%, which traslates ito a idustry leadig lifetime reveue per subscriber of $3,800, up from $3,400 a year ago ad well above that of our competitors. Cosiderig that throughout 2006 NII was pursuig its largest-ever etwork expasio, these record-breakig results are all the more remarkable. Our performace also cotiues to attract the attetio ad recogitio of the ivestmet commuity ad busiess media. BusiessWeek magazie raked NII i the top 10 of its aual Fast Growth 50 list ad oe of oly ie techology gems its term for lesser kow techology ivestmets offerig attractive growth prospects. Ad while we take great pride i what we have accomplished, it is our corporate culture to be proud but ever satisfied, meaig that what we have accomplished i the past is ever as importat to us or our stakeholders as what we will accomplish i the future. Realizig full potetial. Realizig our compay s full potetial requires that we put i place all of the buildig blocks o which to base our future growth. That is why completig a major portio of our etwork expasio pla was a primary focus for Acceleratig the costructio of our etwork i key ew markets resulted i the extesio of our etwork coverage to a additioal 19 millio people. We expect to complete this phase of our curret expasio pla addig coverage for a additioal 9 millio people alog with key trasportatio corridors by the middle of By the ed of 2007, we expect our etwork to cover approximately 170 millio potetial subscribers, providig a sigificat opportuity for future growth. 3

6 NII Holdigs, Ic Aual Report Nearly all of our 7,500 dedicated wireless professioals ot oly work i our local markets, but are from our local markets, helpig us to better uderstad local market coditios, seize opportuities, ad avigate + We also completed two other importat trasactios i 2006 that are expected to have a positive impact o the log-term future of our busiess. First, we reewed ad expaded our log-term techology purchase ad supply agreemet with Motorola through This agreemet serves as a strog idicator of our compaies mutual commitmet ad partership to further iden platform developmet, iovatio, ad ivestmet. The other key trasactio was Nextel Mexico s acquisitio of Cosmofrecuecias i Mexico. This trasactio provides Nextel Mexico with a local cocessio that is expected to provide both operatioal cost savigs ad ehaced flexibility for additioal reveue streams, ad provide us with a 50 MHz atiowide block of spectrum i the 3.4GHz frequecy bad. The best people i the busiess. What is it that places NII above other highly regarded compaies? It is our people ad our local maagemet teams. Nearly all of our 7,500 dedicated wireless professioals ot oly work i our local markets, but are from our local markets. This meas that our Nextel compaies i Mexico, Brazil, Argetia, Peru, ad Chile are all locally maaged ad staffed, helpig us to better uderstad local market coditios, seize opportuities, ad avigate cultural, political, ad regulatory issues i order to brig relevat wireless services that meet the eeds of our customers. Furthermore, our corporate maagemet team has remaied largely itact for the past eight years providig much eeded leadership cosistecy. The results from this approach are just oe of the reasos why NII was amed Best Multiatioal Compay at the 2006 Iteratioal Busiess Awards. Our people have eared recogitio for operatig the most highly regarded busiesses i our markets: cultural, political, ad regulatory issues. Nextel Mexico raked amog Mudo Ejecutivo s 50 Most Socially Resposible Compaies. Nextel Brazil was raked amog the Top 150 Compaies to Work For by Você S/A / Exame magazie. Nextel Argetia received the Silver recogitio from the Ibero-America Quality Award for outstadig overall quality. 4

7 + The opportuity ahead. While receivig these awards is gratifyig, we recogize that the cotiued positive results from outstadig performace are what really matter. That s why our umber oe priority for may years has bee the successful executio of our profitable growth pla. Goig forward, you should expect us to focus o cotiued solid executio, cosistet with our goal of ehacig the value of NII over the log term. We will cotiue to emphasize the importace of profitable growth by maximizig the value of our expasio pla, offerig ew high value products ad services, ad capitalizig o ew opportuities throughout the regio. With a approximate 7% peetratio of our addressable customer base the segmet i which we believe NII has a competitive advatage we are well positioed to sigificatly grow our subscriber base while maitaiig our focus o the highest quality customers. I summary, 2006 was aother record year for NII, ot oly from the perspective of our operatioal ad fiacial achievemets, but also i how we met the challeges ecessary to solidify the foudatio for our compay s future. I am proud of NII s accomplishmets over the past five years deliverig profitable growth, maximizig our differetiatio, ad positioig ourselves to build icreasig value for the loger term. I am especially proud of our employees for maitaiig the etrepreeurial spirit that is so crucial to our success. As I metioed earlier, it is what we will build ad deliver i the future that is importat. We pla o spedig the ext five years buildig upo the foudatio that we have worked so hard to put i place, acceleratig profitable growth, ad capitalizig o the umerous opportuities i frot of us all toward maximizig log-term value for all of our stakeholders. Thak you for your cotiued trust ad support. Sicerely, SENIOR Executive team pictured from top left to right: Ala Strauss VP ad Chief Techology Officer Greg Satoro VP ad Chief Strategy ad Marketig Officer Miguel Rivera Presidet Nextel Peru Daya Parker VP of Huma Resources Joh M. McMaho VP of Busiess Operatios Robert J. Gilker VP of Regulatory Affairs Jose Felipe Presidet Mercosur Daiel E. Freima VP ad Cotroller Peter Foyo Presidet Nextel Mexico Gary Begema VP ad Geeral Cousel Steve M. Shidler Chairma ad CEO Lo va Gemert Presidet ad Chief Operatig Officer Steve M. Shidler Chairma ad Chief Executive Officer Byro R. Siliezar VP ad Chief Fiacial Officer Catherie E. Neel VP ad Treasurer 5

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9 Helpig people commuicate more effectively. NII has become a top performig wireless compay i Lati America by providig the right customers with the right products i the right places, all supported by the right service. This has prove to be a truly differetiatig formula for success. Ad the differece at every stage is people. Start with our customers ad markets. We serve the best customers i the Lati America wireless idustry: primarily high value busiess, corporate, ad idividual customers i Mexico, Brazil, Argetia, Peru, ad Chile. I every market, these customers cout o us for high-quality post-paid wireless commuicatios services that are attractively priced ad custom-tailored ito cost-effective voice ad data solutios based o our i-depth uderstadig of their eeds. We support them with a level of proactive ad persoalized customer care that is umatched i our markets. Because of our high value products, customer lifecycle approach, ad expadig etwork footprit, more ad more customers are choosig our services. Our expadig loyal customer base is rewardig us with a idustry-leadig $58 ARPU ad stayig with us a average of 5½ years resultig i $3,800 of lifetime reveue per subscriber a best amog carriers i our markets. All of this is possible oly because of the exceptioal quality of our people. Local maagemet teams ad staff i each market provide us valuable isight ito customer expectatios ad requiremets. Our people are the competitive stregth ad uequaled resource that led to NII beig amed Best Multiatioal Compay at the 2006 Iteratioal Busiess Awards. Because our employees value our busiess approach ad ethical stadards as much as our customers do, Lati Trade magazie icluded Nextel i its aual listig of Where to Work i Lati America ad Why. Our people are the competitive stregth ad uequaled resource that led to NII beig amed Best Multiatioal Compay at the 2006 Iteratioal Busiess Awards. 7

10 NII Holdigs, Ic Aual Report BlackBerry 7520 TM BlackBerry 7100i TM i930 i880 i870 i835 8

11 Performace that icreases customer success ad stakeholder value. Customers who eed to get busiess doe more efficietly kow they ca cout o the performace ad quality of NII s products, services, ad etworks. Every hadset we offer delivers our fully itegrated wireless commuicatios solutio that combies digital cellular voice service, data services, wireless Iteret access, ad the gold stadard i digital two-way radio: Nextel Direct Coect ad Iteratioal Direct Coect. Our differetiated iteratioal walkie-talkie service gives customers the ability to istatly coect with over 25 millio NII, Sprit Nextel, ad TELUS users i ad betwee Mexico, Brazil, Argetia, Peru, the Uited States, ad Caada. I 2006, we provided customers eve more ways to access the people ad iformatio they deped o. We itroduced five ew hadsets i 2006 icludig the Motorola i880, a Global Positioig System (GPS)-eabled camera phoe with Bluetooth techology ad MP3 music player with stereo speakers offerig customers a elegat balace of productivity ad etertaimet. We also lauched the dual-mode i930 smart phoe that lets customers utilize oe phoe umber to globally roam ad stay coected o both iden ad GSM etworks. For professioals who eed to stay coected with the office, the i930 also features Microsoft Widows Mobile techology to sychroize with their Outlook , ibox, cotacts, ad caledar while also providig the ability to display HTML formatted Web sites. I 2006, Nextel Mexico ad Nextel Peru lauched the BlackBerry 7100i, providig our customers with istat mobile , locatio-based capabilities, iden-based Direct Coect istat two-way radio commuicatios, ad cellular phoe services. I early 2007, we expaded our lieup with the GPS-eabled BlackBerry 7520 i Mexico, Brazil, ad Argetia. Our future hadset lieup is beig desiged to bled ew ehaced features ad higher data processig speeds. All of the ew hadsets we offer are equipped with GPS capabilities that support locatio based services. New GPS services lauched i 2006 icluded Localizador, ilocator, ad ifollow that eable secure real-time locatio of employees ad work groups with Nextel hadsets over the Iteret. i880 We expaded our customers messagig optios by iitiatig iter-carrier short messagig services i Mexico ad Brazil. Besides beefitig wireless users, this cooperative effort reiforces our commitmet to the developmet of Mexico s ad Brazil s telecommuicatios idustries. Because whe busiess eeds to commuicate, NII performs. 9

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13 Realizig the potetial to accelerate profitable growth. I 2006, NII seized upo opportuities to brig our differetiated products ad services to more people i more places ad stregthe our competitive positio for the future. We cotiued our accelerated etwork expasio, extedig coverage to 26 ew major cities i Mexico, Brazil, Argetia, Peru, ad Chile. By the middle of 2007, our curret expasio pla will largely be complete, icreasig our estimated average addressable etwork coverage base to over 43 millio people. With our 3.4 millio subscribers represetig a estimated 7% peetratio of our addressable customer base, greater opportuities are clearly ahead of us. Icreasig these opportuities was the 2006 lauch of a small scale etwork i Chile. NII s services will be offered i the coutry s mai busiess corridor, icludig metropolita areas of Satiago, Viña del Mar, ad Valparaíso ad the primary trasportatio corridors coectig them. Besides extedig NII products to Chilea subscribers, lauch of coverage there provides roamig services to our customers from other markets who travel to Chile, especially those who live i Argetia, Brazil, ad Peru. Two other sigificat developmets i 2006 are expected to solidify ad accelerate our log-term operatioal mometum. First, we exteded our supply agreemet for a additioal five year period with our techology parter Motorola. Through this agreemet, we are committig to yearly icreases i hadset purchases to support our growth while Motorola is committig to further ivest i the developmet of the iden platform that provides our customers superior all digital voice ad data services as well as our istat Direct Coect ad Iteratioal Direct Coect push-to-talk feature. The other key trasactio was Nextel Mexico s acquisitio of Cosmofrecuecias. This trasactio provides Nextel Mexico with a local cocessio that is expected to provide both operatioal cost savigs ad ehaced flexibility that will allow Nextel Mexico to pursue additioal reveue streams from ew features such as callig party pays ad data services. It also provides Nextel Mexico with a 50 MHz atiowide block of spectrum i the 3.4GHz frequecy bad available for developmet if ad whe our customers demad high-speed data applicatios. With this foudatio of expadig coverage, high value service, ad iovative techology, our team at NII is focused o geeratig more of what we have i the past: acceleratig profitable growth ad deliverig value to our customers ad stakeholders for years to come. 11

14 NII Holdigs, Ic Aual Report Operatig the most highly regarded busiesses i Lati America. mexico brazil argetia peru 12

15 Nextel Mexico Growth Leader Nextel Mexico remais a egie of growth ad profitability for NII, geeratig strog OIBDA results while achievig a record 49% growth i et subscribers i 2006, brigig its subscriber base to over 1.5 millio. Nextel Mexico geerated a OIBDA margi of 40% durig a period of tremedous subscriber growth addig 140,000 more subscribers tha a year ago ad durig the most aggressive period of its etwork expasio pla. This positios Nextel Mexico to capture future scale beefits as we capitalize o opportuities to reduce itercoectio costs ad maximize the value of ew products ad services such as the BlackBerry 7100i, the high-tier i885 special editio, Push to Mail, ad iter-carrier SMS that we lauched i For the secod cosecutive year, Nextel Mexico was raked as a Top 10 Lati America Telecom Operator by Frecuecia magazie. I additio, Nextel Mexico raked as oe of the Top 100 Multi Natioal Compaies i Mexico by Expasio magazie, ad was recogized for the third cosecutive year as a Socially Resposible Compay by the Mexica Ceter for Philathropy (El Cetro Mexicao para Filatropía) ad AliaRSE (Alliace for Eterprise Social Resposibility) for their Mucho Más por los Niños (Much More for the Childre) alliace with UNICEF. COMUNICACIONES NEXTEL DE MEXICO S.A. DE C.V. Chief Executive Officer: Peter Foyo Number of Employees: 3,337 Covered Populatio: 60 millio PERFORMANCE HIGHLIGHTS Year Eded December Reveue (i millios) $1,341 $1,013 OIBDA (i millios) $530.7 $399.7 Subscribers 1,544,600 1,119,800 Net subscriber additios 424, ,600 Average mothly chur 1.6% 1.7% Primary Cities of Operatio: Acapulco, Aguascalietes, Allede, Cacú, Celaya, Ceyla, Chihuahua, Chilpacigo, Ciudad Cuauhtémoc, Ciudad Guzmá, Ciudad Juárez, Ciudad Obregó, Ciudad Victoria, Colima, Córdoba, Cuautla, Cueravaca, Culiacá, Delicias, El Fuerte, Eseada, Guadalajara, Guamuchil, Guaajuato, Guasave, Guaymas, Hermosillo, Irapuato, La Piedad, Lagos de Moreo, Leó, Liares, Los Mochis, Mazaillo, Matamoros, Mazatlá, Mérida, Mexicali, México, Motemorelos, Moterrey, Morelia, Navojoa, Novolato, Nogales, Nuevo Laredo, Oaxtepec, Orizaba, Pachuca de Soto, Puebla, Puerto Vallarta, Querétaro, Reyosa, Salamaca, Saltillo, Sa Jua del Río, Sa Luis Potosí, Sa Miguel de Allede, Tampico, Tecate, Tepic, Tequila, Tijuaa, Tizayuca, Tlazcala, Toluca, Torreó, Tula, Valle de Bravo, Veracruz, Xalapa, Yautepec. Executive Team (Pictured from top left to right): Roberto Gallardo VP Iteral Audit, Gustavo Catú VP Busiess Developmet, Public Affairs & Public Relatios, Raúl Ramírez Chief Techical Officer, Jua Erich Chief Fiacial Officer, Luis García Chief Huma Resources Officer, Omar Arvayo Chief Commercial Officer, Atoio Garza Geeral Cousel, Víctor Tiburcio Chief Marketig Officer, Gabriela Soriao Chief Customer Operatios Officer, Peter Foyo Chief Executive Officer, Susaa Cadii VP Busiess Operatios 13extel mexico

16 NII Holdigs, Ic Aual Report Nextel Brazil Superior Service Customer satisfactio cotiues to be a focal poit for Nextel Brazil, which i 2006 reduced subscriber chur to 1.4%, a improvemet of 50 basis poits over Eve more impressive was the compay s fourth quarter chur of 1.3%, a idustry best i Brazil, ad the additio of more tha 261,000 ew subscribers, a 67% icrease from ARPU was strog for the year while OIBDA jumped by 161% to $115 millio, with a 21% OIBDA margi, early double that of extel brazil New product lauches for Nextel Brazil iclude the Bluetooth-eabled i870 multimedia phoe ad dual-mode i930 smart phoe from Motorola ad the BlackBerry Nextel Brazil also lauched Web Direct Coect that lets users place calls to Nextel hadsets ad other users from their computers ad iitiated iter-carrier SMS coectivity with other operators. The compay s outstadig performace eared regioal otice ad recogitio, icludig the Master i Sciece ad Techology Award grated by the Istituto de Estudos e Pesquisas da Qualidade (Istitute of Quality Studies ad Research), ad rakig amog the Top 150 Best Compaies to Work For by Você S/A / Exame magazie. NEXTEL TELECOMUNICAÇÕES LTDA. Presidet Mercosur: Jose Felipe Presidet Brazil: Sergio Borges Chaia Number of Employees: 2,146 Covered Populatio: 63 millio PERFORMANCE HIGHLIGHTS Year Eded December Reveue (i millios) $537.0 $347.5 OIBDA (i millios) $115.1 $44.2 Subscribers 899, ,600 Net subscriber additios 261, ,900 Average mothly chur 1.4% 1.9% Primary Cities of Operatio: Belo Horizote, Brasília, Campias, Cotagem, Curitiba, Duque de Caxias, Goiâia, Guarulhos, Nova Iguaçu, Osasco, Porto Alegre, Ribeirão Preto, Rio de Jaeiro, Sato Adré, São Berardo do Campo, Satos, São Goçalo, São José dos Campos, São Paulo, Sorocaba, Uberlâdia. 14 Executive Team (Pictured from top left to right): João Marcos Cerqueira VP Fiace, Fracisco Neves VP Huma Resources, Alejadro Raposo VP Customer Operatios, Mario Carotti VP Marketig, Dushyat Gadhi VP Egieerig & IT, Ubirata Valadè VP Commercial Sales, Alfredo Ferrari VP Legal & Regulatory, Sergio Borges Chaia Presidet ad CEO

17 Nextel Argetia Buildig Mometum Nextel Argetia geerated strog performace i 2006, drivig a 30% icrease i its subscriber base, a 28% icrease i reveues, ad a impressive 40% icrease i OIBDA over New product ad service lauches i 2006 icluded the Motorola i275, i760, i870 ad i930 phoes, ad Net Dispatch Service. Icreasig the beefits to customers of choosig Nextel, the compay lauched Club Nextel, offerig customers exclusive discouts o diig, apparel, ad other purchases ad services. The compay s performace ad mometum did ot go without otice, as Nextel Argetia gaied listig i the Rakig Clari de Prestigio, which raks compaies o criteria such as fiacial stability, creativity, strategic visio, ad customer service. Nextel Argetia received Silver recogitio i the Ibero-America Quality Awards for outstadig overall quality ad was raked i Apertura magazie as oe of the Compaies with the Best Image i Argetia. NEXTEL COMMUNICATIONS ARGENTINA S.A. Presidet Mercosur: Jose Felipe Presidet Argetia: Rube Butvilofsky Number of Employees: 1,197 Covered Populatio: 21 millio PERFORMANCE HIGHLIGHTS Year Eded December Reveue (i millios) $345.0 $269.6 OIBDA (i millios) $99.0 $70.8 Subscribers 650, ,200 Net subscriber additios 150, ,500 Average mothly chur 1.3% 1.2% Primary Cities of Operatio: Atlatic Coast from Sa Clemete to Villa Gesell, Bueos Aires City Ad Greater Bueos Aires, Northwest Regio Of Bueos Aires Provice, Córdoba, La Plata, Mar Del Plata, Medoza, Rosario, Sa Jua, Sa Luis, Sata Fe. Executive Team (Pictured from top left to right): Oscar Baioco Sales Director, Pablo Semarti Admiistratio & Fiace Director, Gustavo Torrico Huma Resources Director, Erique Barilaro IT & Egieerig Director, Ferado Guerrero Legal & Istitutioal Affairs Director, Rube Butvilofsky Presidet, Clelio Remodio Customer Service Director (Not Pictured) 15extel argetia

18 NII Holdigs, Ic Aual Report Nextel Peru Outstadig Quality I 2006, Nextel Peru agai delivered solid results, lifted by across-the-board fourth-quarter improvemets. Subscriber growth remaied solid for the year, with a 52% lift i et subscribers drivig a 28% icrease i reveue. Nextel Peru geerated solid operatioal metrics, highlighted by a improvemet i cost per gross add (CPGA). extel peru Nextel Peru exteded digital service to the cities of Arequipa, Tumbes, Moquegua, Taca, Cusco, ad Puo. New product lauches for 2006 icluded the BlackBerry 7100i ad the i870 multimedia phoe ad i830 hadset desiged to appeal to wome. At the ed of 2006, Nextel Peru acquired Millicom Peru, a wireless access provider. NEXTEL DEL PERU Presidet Peru: Miguel Rivera Number Of Employees: 864 Covered Populatio: 16 millio PERFORMANCE HIGHLIGHTS Year Eded December Reveue (i millios) $146.4 $114.2 OIBDA (i millios) $26.1 $26.4 Subscribers 345, ,500 Net subscriber additios 96,700 63,600 Average mothly chur 1.8% 1.9% Primary Cities of Operatio: Arequipa, Barraca, Bayovar, Calca, Cañete, Casma, Catacaos, Chacay, Chepe, Chicama, Chiclayo, Chimbote, Chicha, Cusco, Desaguadero, Gra Lima, Huacho, Huachaco, Huaral, Huarmey, Ica, Juli, Juliaca, La Uio, Lambayeque, Los Palos, Mácora, Matarai, Mejía, Moche, Mocupe, Molledo, Moquegua, Ollataytambo, Pacasmayo, Paita, Paracas, Paramoga, Pisac, Pisco, Piura, Puerto Ilave, Puo, Puta de Bombó, Puta Sal, Salaverry, Sechura, Sullaa, Supe, Taca, Talara, Trujillo, Tumbes, Urubamba. 16 Executive Team (Pictured from top left to right): Harry Thorberry VP Egieerig, Alfoso de Orbegoso VP Geeral Cousel, José Luis Tejada VP Systems, Mario Arrús Chief Fiacial Officer, Mariao Orihuela VP Marketig, Jey García Chief Operatig Officer, Julio Balestrii VP Huma Resources & Admiistratio, Miguel Rivera Presidet

19 + Fiacial Highlights 06 Strog Fiacial Results Operatig reveues of $2.37 billio 36% year-over-year growth OIBDA of $662 millio 37% year-over-year growth Operatig icome of $460 millio 30% year-over-year growth Leadig Operatioal Metrics IN LATIN AMERICA Average service reveue per uit (ARPU) of $58 Average mothly chur of 1.5% Lifetime reveue per subscriber of over $3,800 by year ed Lifetime OIBDA per subscriber of $1,800 by year ed Healthy Capital Structure Cosolidated year-ed cash ad cash equivalets of $709 millio $3.3 billio i total assets Net debt of $426 millio ad year-ed ratio of et debt to 2006 OIBDA of 0.6 times $10 billio+ market cap

20 NII Holdigs, Ic Aual Report Maximizig log-term value for our shareholders. + Acceleratig profitable growth disciplied focus with solid executio. We sigificatly accelerated subscriber growth, expaded coverage for a additioal 19 millio pops, ad, with our disciplied focus o profitable growth, agai delivered record settig operatioal ad fiacial results. NII delivered record settig results i We sigificatly accelerated subscriber growth, expaded coverage for a additioal 19 millio people, ad, with our disciplied focus o profitable growth, agai delivered record settig operatioal ad fiacial results. We grew our total reveues to $2.37 billio, a 36% icrease over More importatly we grew profitably, geeratig $662 millio i cosolidated OIBDA, a 37% icrease over Cosolidated OIBDA for the full year 2006 icluded approximately $34 millio of o-cash stock optio compesatio expese as required by SFAS 123R, which we bega recogizig effective Jauary 1, Therefore, OIBDA before ocash stock optio compesatio expese was $696 millio, a 44% icrease over Notwithstadig our strog subscriber growth ad etwork expasio, we delivered et icome of $294 millio, or $1.91 per basic share, a 68% icrease compared to We maitaied a healthy capital structure with a strog balace sheet ad solid liquidity positio. We eded the year with $709 millio i cash ad cash equivalets. At year-ed 2006, log-term debt stood at $1.13 billio, cosistig of $650 millio i covertible otes with a bleded coupo of less tha 3%, a $279 millio Mexica credit facility ad $205 millio i local currecy-based tower fiacig ad other debt obligatios. Net debt, which we calculate by subtractig cash ad cash equivalets from log-term debt, was $426 millio, resultig i a ratio of et debt to 2006 OIBDA of about 0.6. Also durig the year, shareholders equity icreased to approximately $1.35 billio, drive primarily by icreased earigs ad the coversio of the remaiig portio of the 3.5% covertible otes. 18

21 3500 3, $2, $662 subscribers (i thousads) ,464 1,879 2, reveues (i millios) $939 $1,280 $1, OIBDA (i millios) $247 $349 $

22 NII Holdigs, Ic Aual Report Lifetime reveue per subscriber (for three moths eded December 31) $2,510 $3,278 $3,764 $3, Fiacial Ratios x 11.4x 10.8x 9.3x 8.0% 5.5% 5.8% 4.8% 0.5x 0.7x 0.5x 0.6x OIBDA/Cash Iterest Cost of Debt (pre-tax) NetDebt/Full Year OIBDA 20

23 + Operatioal excellece a leader i the Lati America wireless idustry. Leadig with a metrics-first approach is paramout to our core strategy of disciplied focus o profitable growth. This approach, coupled with our focus o customers who use our service i their busiesses, which we believe is the most profitable customer segmet, agai yielded the best operatioal results i the Lati America wireless idustry. Durig 2006, we maitaied a healthy level of ARPU while cotiuig to lower chur. For the fourth quarter, cosolidated ARPU was $59, while chur improved to 1.5%, both bests i the Lati America market. This disciplied focus o the fudametals of our busiess has resulted i record lifetime reveue per subscriber of $3,800 for the year. Similarly, our lifetime OIBDA per subscriber of $1,800 is ot oly the best i the Lati America regio, but it s the best by a factor of six. Our accelerated subscriber growth throughout the year was drive by the cotiued strog demad for our high value products ad services, our expadig busiess etworks, ad our icreasig coverage footprit. The growth of our customer base is resultig i stroger commercial relatioships ad our expadig footprit, coupled with ivestmets i our customer care programs, is resultig i improved customer satisfactio. For the year, we added 934,000 et subscribers to our etwork, a 49% icrease over the et subscriber additios for This strog growth led to a 2006 edig subscriber base of over 3.44 millio, a 37% year-over-year icrease. + Poised to accelerate profitable growth. Over the past few years, we have worked hard to lay a foudatio to deliver sustaiable growth ad value. To date, we have put together the right formula i which to expad our busiess ad we are well positioed to make the most of our icreasig presece as a result of the ivestmets i our etworks, products ad services. Now, we believe that the opportuities for NII to deliver log term profitable growth are eve more abudat tha ever before. As we ear the completio of our curret etwork expasio pla, we are well positioed to cotiue to deliver strog growth, while garerig the beefits of scale i our busiess. The two trasactios that we completed i 2006, amely the supply extesio agreemet with our parter Motorola ad the Cosmofrecuecias acquisitio i Mexico, both improve the log term outlook for our compay. All of these factors, coupled with a dedicated maagemet team agaist a backdrop of a rapidly growig wireless market, give us cofidece that we are poised to accelerate profitable growth. For a complete review of NII s audited fiacial results, please refer to NII Holdigs Aual Report o Form 10-K for the fiscal year eded December 31,

24 NII Holdigs, Ic Aual Report RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (1) 1 OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (OIBDA) For the Year Eded December 31 NII Holdigs, Ic. (dollars i millios, except metrics) Cosolidated operatig icome... $ 168 $ 250 $ 355 $ 460 Cosolidated depreciatio ad amortizatio Cosolidated operatig icome before depreciatio ad amortizatio... $ 247 $ 349 $ 485 $ 662 No-cash stock optio compesatio expese Cosolidated operatig icome before depreciatio ad amortizatio ad before o-cash stock optio compesatio expese... $ 247 $ 349 $ 485 $ 696 Cosolidated operatig icome before depreciatio ad amortizatio per subscriber... $ 19 Cosolidated operatig icome per subscriber... $ 13 Cosolidated lifetime operatig icome before depreciatio ad amortizatio per subscriber... $ 1,787 (2) Cosolidated lifetime operatig icome per subscriber... $ AVERAGE MONTHLY REVENUE PER UNIT (ARPU) For the Year Eded December 31 For the Three Moths Eded December 31 NII Holdigs, Ic. (dollars i millios, except metrics) Digital service ad other reveues... $ 2,280 $ 650 Less: aalog reveues... (8) (2) Less: other reveues... (222) $ (64) Total subscriber reveues... $ 2,050 $ 584 ARPU calculated with subscriber reveues... $ 58 $ 59 ARPU calculated with digital service ad other reveues... $ 65 $ 65 3 LIFETIME REVENUE PER SUBSCRIBER (LRS) For the Year Eded For the Three Moths Eded December 31 December 31 NII Holdigs, Ic Lifetime subscriber reveue per subscriber... $ 2,510 $ 3,278 $ 3,764 $ 3,810 $ 3,438 $ 3,772 Lifetime digital service ad other reveue per subscriber... $ 2,749 $ 3,600 $ 4,298 $ 4,242 $ 3,825 $ 4,239 4 OIBDA TO CASH INTEREST For the Year Eded December 31 NII Holdigs, Ic Cosolidated operatig icome before depreciatio ad amortizatio to cash iterest x 11.4x 12.0x 10.8x Cosolidated operatig icome to cash iterest x 8.1x 8.8x 7.5x 5 NET DEBT TO OIBDA As of December 31 NII Holdigs, Ic. (dollars i millios) Total log-term debt... $ 535 $ 601 $ 1,149 $ 1,134 Less: cash, cash equivalets ad short-term ivestmets... (405) (369) (885) (708) Net debt... $ 130 $ 232 $ 264 $ 426 Net debt to cosolidated operatig icome before depreciatio ad amortizatio x 0.7x 0.5x 0.6x Net debt to cosolidated operatig icome x 0.9x 0.7x 0.9x 22 NOTE: (1) For more iformatio about our NON-GAAP fiacial measures please visit our ivestor relatios sectio at NII.com. (2) I the fourth quarter of 2006, we chaged our method of calculatig cosolidated lifetime OIBDA per subscriber to the followig: the differece betwee cosolidated ARPU calculated with digital services ad other reveue ad cosolidated cash cost per user, multiplied by the iverse of our cosolidated chur rate, less cost per gross add. We believe this defiitio is a more meaigful measure of the future OIBDA we will ear from our subscribers.

25 Awards + Recogitio 06 DECEMBER NII Holdigs received the Best of Resto Award for outstadig commuity service NII Holdigs listed amog the Top 10 of BusiessWeek s Fast Growth 50 List NII Holdigs recogized as a expected top techology earer ad profitable compay for 2006 BusiessWeek NII Holdigs amed oe of BusiessWeek s Where to Ivest: Midig the Numbers rakig NII Holdigs omiated by employees as oe of the Top Compaies i Lati Trade s Power Employers of 2006 listig NOVEMBER NII Holdigs recogized as a Global Opportuity compay by Forbes magazie Nextel Argetia received the Silver recogitio from the Ibero-America Quality Award Nextel Argetia raked fourth i Great Places to Work 60 Best Compaies to Work for i Argetia list Clari ewspaper Nextel Mexico raked 187th amog Mexico s 1000 Most Importat Compaies Mudo Ejecutivo Nextel Mexico amed oe of the 50 Most Socially Resposible Compaies i the coutry Mudo Ejecutivo OCTOBER NII Holdigs listed amog Deloitte s 2006 Virgiia Fast 50 Nextel Argetia amed oe of the 100 Most Prestigious Compaies i the coutry by Clari de Prestigio 2006 SEPTEMBER Nextel Mexico listed amog Top 100 Multi Natioal Compaies i Mexico Expasio magazie AUGUST Nextel Brazil amed oe of the Top 150 Compaies to Work For Você S/A / Exame magazie JULY NII Holdigs listed amog the Iformatio Techology 100 BusiessWeek Nextel Mexico amed as oe of the Top 500 Compaies i Lati America América Ecoomía Nextel Mexico listed amog Lati Trade s 500 Largest Compaies i Lati America JUNE NII Holdigs received the Iteratioal Busiess Awards / Stevie s Best Multiatioal Compay Award NII Holdigs received the Iteratioal Busiess Awards / Stevie s Best Ivestor Relatios Award Nextel Brazil recogized with the Master em Ciêcia e Tecologia Award Istituto de Estudos e Pesquisas da Qualidade for the compay s techology cotributio Nextel Mexico listed amog The 500 Most Importat Compaies i the coutry Expasio magazie Nextel Mexico amed as oe of the Top 10 Lati America Telecom Operators Frecuecia magazie APRIL NII Holdigs was idexed i the Fortue 500 Listigs where it raked 20th out of 21 compaies total i the Telecommuicatios List ad 26 out of 30 i the State List MARCH Nextel Argetia received the CTIA Wireless 2006 Wireless e-tech award i the Locatio Based Services category Nextel Argetia listed amog the Top 100 Compaies with the Best Image Apertura magazie Nextel Brazil fialist i the CTIA Wireless 2006 Wireless e-tech award i the ROI category Nextel Mexico recogized for the secod cosecutive year as a Socially Resposible Compay Mexica Ceter for Philathropy ad AliaRSE FEBRUARY NII Holdigs listed amog The Wall Street Joural s Five Top-Performig Compaies i a three year time period 23

26 NII Holdigs, Ic Aual Report BOARD OF DIRECTORS George A. Cope Presidet ad Chief Operatig Officer Bell Caada Joh M. Doova Executive Vice Presidet Worldwide Sales ad Services Verisig, Ic. Steve P. Dussek Presidet ad Chief Executive Officer Dobso Commuicatios Corporatio Neal P. Goldma Parter Brigade Capital Maagemet LLC Charles M. Herigto Seior Vice Presidet, Lati America Avo Lati America Caroly F. Katz Former Fiacial Aalyst ad Ivestmet Baker Icludig Providece Equity Parters ad Goldma Sachs Doald E. Morga Fouder ad Parter Brigade Capital Maagemet LLC Joh W. Riser Presidet Childre s Tumor Foudatio SENIOR MANAGEMENT TEAM Steve M. Shidler Chairma ad Chief Executive Officer Lo va Gemert Presidet ad Chief Operatig Officer Byro R. Siliezar VP ad Chief Fiacial Officer Robert J. Gilker VP of Regulatory Affairs Gary Begema VP ad Geeral Cousel Ala Strauss VP ad Chief Techology Officer Joh M. McMaho VP of Busiess Operatios Greg Satoro VP ad Chief Strategy ad Marketig Officer Daiel E. Freima VP ad Cotroller Catherie E. Neel VP ad Treasurer Daya Parker VP of Huma Resources COUNTRY PRESIDENTS Peter Foyo Presidet Nextel Mexico Sergio Borges Chaia Presidet Nextel Brazil Rube Butvilofsky Presidet Nextel Argetia Jose Felipe Presidet Mercosur Miguel Rivera Presidet Nextel Peru Steve M. Shidler Chairma ad Chief Executive Officer NII Holdigs, Ic Based o compay estimates 2 Covered populatio figures as of pritig date 2007 NII Holdigs, Ic. All rights reserved. Nextel, the Nextel logo, Direct Coect ad Iteratioal Direct Coect are trademarks ad/or service marks of Nextel Commuicatios, Ic. iden is a trademark of Motorola. MOTOROLA ad the Stylized M Logo are registered i the U.S. Patet & Trademark Office. The BlackBerry ad RIM families of related marks, images ad symbols are the exclusive properties ad trademarks of Research I Motio Limited. TELUS is a trademark of TELUS Corporatio. All other product or service ames are the property of their respective owers.

27 SHAREHOLDER INFORMATION Shareholder Meetig May 16, 2007, 10:00 am Sherato Resto Hotel Surise Valley Drive Resto, VA Uited States Idepedet Certified Accoutats PricewaterhouseCoopers LLP Trasfer Aget/Registrats Computershare Trust Compay, N.A. Stock Listed NASDAQ: Natioal Market Symbol NIHD Ivestor Relatios Tim Perrott VP of Ivestor Relatios & Corporate Commuicatios tel Safe Harbor Statemet uder the Private Securities Litigatio Reform Act of A umber of the matters ad subject areas discussed i this Aual Report that are ot historical or curret facts deal with potetial future circumstaces ad developmets. Specifically, we have icluded guidace regardig our expected operatioal results i relatio to certai performace measures for 2007 that are forward lookig i ature. The discussio of such matters ad subject areas is qualified by the iheret risks ad ucertaities surroudig future expectatios geerally, ad also may materially differ from NII Holdigs actual future experiece ivolvig ay oe or more of such matters ad subject areas. NII Holdigs has attempted to idetify, i cotext, certai of the factors that it curretly believes may cause actual future experiece ad results to differ from NII Holdigs curret expectatios regardig the relevat matter or subject area. Such risks ad ucertaities iclude the ucertaity relatig to our ability to achieve the operatig results described i our 2007 guidace, ecoomic coditios i the markets i which we operate, performace of our techologies, timely developmet ad delivery of ew techologies, competitive coditios, market acceptace of our services, ad the additioal risks ad ucertaities that are described from time to time i NII Holdigs Aual Report o Form 10-K for the fiscal year eded December 31, 2006, which the Compay filed o February 27, 2007, ad i other reports filed from time to time by NII Holdigs with the Securities ad Exchage Commissio. The 2006 Aual Report speaks oly as of its date, ad NII Holdigs disclaims ay duty to update the iformatio herei. Copies of our Aual Report o Form 10-K may be obtaied without charge by writig to: NII Holdigs, Ic Parkridge Boulevard, Suite 600 Resto, Virgiia Attetio: Tim Perrott, VP of Ivestor Relatios & Corporate Commuicatios

28 CORPORATE HEADQUARTERS NII Holdigs, Ic Parkridge Boulevard, Suite 600 Resto, Virgiia USA tel ii.com OPERATING SUBSIDIARIES Nextel Commuicatios Argetia S.A. Olga Cossettii 360/363 Dique 4 Complejo Puerto Madero Cetro C1107CCG Bueos Aires Argetia tel extel.com.ar Nextel Brazil Nextel Telecomuicações Ltda. Rua Bela Citra, Sao Paulo SP Brasil tel extel.com.br Nextel Chile Av. Maquehue Sur # 520 Las Codes, Satiago Codigo Postal: Chile tel extel.cl Nextel de Mexico S.A. de C.V. Blvd. Mauel Avila Camacho No Piso Coloia Lomas de Chapultepec 11000, México, D.F. tel extel.com.mx Nextel del Peru Los Nardos 1018 Piso 7 Sa Isidro, Lima 27 Peru tel extel.com.pe