UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2018
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37488

NII HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



Delaware		91-1671412
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)
12110 Sunset Hills Road, Suite 600 Reston, Virginia (Address of principal executive offices)		20190 (Zip Code)

(703) 390-5100

(Registrant's telephone number, including area code)

~~1875 Explorer Street, Suite 800~~

~~Reston, Virginia 20190~~Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



	Number of Shares Outstanding
Title of Class	on ~~November 3, 2017~~May 4, 2018
Common Stock, $0.001 par value per share	~~100,481,639~~100,477,687

NII HOLDINGS, INC. AND ~~SUBSIDIARES~~SUBSIDIARIES

INDEX



		Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)		3
	Condensed Consolidated Balance Sheets — As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	3
	Condensed Consolidated Statements of Comprehensive Loss — For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	4
	Condensed Consolidated Statement of Changes in Stockholders' ~~(Deficit) Equity~~Deficit — For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2018	5
	Condensed Consolidated Statements of Cash Flows — For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		1918
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3631
Item 4. Controls and Procedures		3631

Part II. Other Information		3732
Item 1. Legal Proceedings		3732
Item 1A. Risk Factors		3732
Item 2. ~~Issuer Purchases~~Unregistered Sales of Equity Securities and Use of Proceeds		3732
Item 6. Exhibits		3832

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par values) Unaudited	NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par values) Unaudited						NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par values) Unaudited

	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017

ASSETS
Current assets
Cash and cash equivalents	$	234,695		$	257,380		$	136,297		$	193,888
Short-term investments	24,889			73,859			50,250			16,711
Accounts receivable, net of allowance for doubtful accounts of $53,317 and $54,221	126,030			153,806
Accounts receivable, net of allowance for doubtful accounts of $31,510 and $42,011							109,462			106,715
Handset and accessory inventory	2,901			8,295			5,028			3,163
Prepaid expenses and other	229,968			280,145			237,001			254,461
Total current assets	618,483			773,485			538,038			574,938
Property, plant and equipment, net	107,526			129,475			119,845			117,262
Intangible assets, net	206,192			243,681			206,842			194,694
Other assets	251,373			271,868			256,773			218,204
Total assets	$	1,183,574		$	1,418,509		$	1,121,498		$	1,105,098

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
LIABILITIES AND STOCKHOLDERS’ DEFICIT							LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	48,698		$	69,186		$	51,283		$	42,284
Accrued expenses and other	280,925			271,899			309,252			308,129
Deferred revenues	7,677			11,614
Current portion of long-term debt	460,300			540,474			5,805			7,990
Total current liabilities	797,600			893,173			366,340			358,403
Long-term debt	216,020			215,842			639,620			647,717
Other long-term liabilities	230,604			143,472			229,114			220,925
Total liabilities	1,244,224			1,252,487			1,235,074			1,227,045
Contingencies (Note 7)
Stockholders’ (deficit) equity
NII Holdings stockholders' equity:
Contingencies (Note 8)
Stockholders’ deficit
Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding	—			—			—			—
Common stock, par value $0.001, 140,000 shares authorized, 100,384 shares issued and outstanding — 2017, 100,258 shares issued and outstanding — 2016	100			100
Common stock, par value $0.001, 140,000 shares authorized, 100,385 shares issued and outstanding — 2018, 100,384 shares issued and outstanding — 2017							100			100
Paid-in capital	2,139,814			2,076,612			2,139,885			2,139,299
Accumulated deficit	(2,079,455		)	(1,834,756		)	(2,133,384		)	(2,135,770		)
Accumulated other comprehensive loss	(59,297		)	(75,934		)	(45,306		)	(46,903		)
Total NII Holdings stockholders’ equity	1,162			166,022
Total NII Holdings stockholders’ deficit							(38,705		)	(43,274		)
Noncontrolling interest	(61,812		)	—			(74,871		)	(78,673		)
Total (deficit) equity	(60,650		)	166,022
Total liabilities and stockholders’ (deficit) equity	$	1,183,574		$	1,418,509
Total deficit							(113,576		)	(121,947		)
Total liabilities and stockholders’ deficit							$	1,121,498		$	1,105,098

The accompanying notes are an integral part of these condensed consolidated financial statements.

NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands, except per share amounts) Unaudited	NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands, except per share amounts) Unaudited												NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands, except per share amounts) Unaudited

	Three Months Ended						Nine Months Ended
	September 30,						September 30,						Three Months Ended
	2017			2016			2017			2016			March 31, 2018			March 31, 2017
Operating revenues
Service and other revenues	$	200,259		$	255,663		$	663,831		$	719,387		$	175,972		$	243,493
Handset and accessory revenues	4,549			5,173			17,066			17,219			5,041			7,462
	204,808			260,836			680,897			736,606			181,013			250,955
Operating expenses
Cost of service (exclusive of depreciation and amortization included below)	94,010			96,526			284,560			268,460			88,924			102,708
Cost of handsets and accessories	8,736			5,780			30,443			25,807			9,065			8,666
Selling, general and administrative	139,004			142,816			403,082			412,149			90,886			134,466
Impairment, restructuring and other charges	39,162			1,324,205			165,336			1,340,677
Impairment, restructuring and other (benefits) charges, net													(1,825		)	71,939
Depreciation	3,605			66,293			18,208			126,063			4,833			8,886
Amortization	3,663			11,912			11,420			32,961			3,591			4,139
	288,180			1,647,532			913,049			2,206,117			195,474			330,804
Operating loss	(83,372		)	(1,386,696		)	(232,152		)	(1,469,511		)	(14,461		)	(79,849		)
Other (expense) income
Interest expense, net	(33,278		)	(29,451		)	(91,245		)	(81,854		)	(26,606		)	(31,562		)
Interest income	19,012			9,199			35,956			29,725			5,386			9,136
Foreign currency transaction gains (losses), net	14,174			(5,221		)	12,197			77,777
Foreign currency transaction (losses) gains, net													(1,188		)	11,375
Other expense, net	(10,962		)	(2,073		)	(5,549		)	(7,015		)	(6,330		)	(1,775		)
	(11,054		)	(27,546		)	(48,641		)	18,633			(28,738		)	(12,826		)
Loss from continuing operations before reorganization items and income tax benefit	(94,426		)	(1,414,242		)	(280,793		)	(1,450,878		)
Reorganization items	(2		)	(150		)	445			(748		)
Income tax benefit	—			2,838			5,778			2,469
Loss from continuing operations before income taxes													(43,199		)	(92,675		)
Income taxes													—			—
Net loss from continuing operations	(94,428		)	(1,411,554		)	(274,570		)	(1,449,157		)	(43,199		)	(92,675		)
(Loss) income from discontinued operations, net of income taxes	(92		)	(7,389		)	2,567			(16,245		)
Loss from discontinued operations, net of income taxes													(121		)	(38		)
Net loss	(94,520		)	(1,418,943		)	(272,003		)	(1,465,402		)	(43,320		)	(92,713		)
Net loss attributable to noncontrolling interest	(27,304		)	—			(27,304		)	—			(11,606		)	—
Net loss attributable to NII Holdings	$	(67,216	)	$	(1,418,943	)	$	(244,699	)	$	(1,465,402	)	$	(31,714	)	$	(92,713	)

Net loss from continuing operations per common share, basic and diluted	$	(0.94	)	$	(14.10	)	$	(2.74	)	$	(14.49	)	$	(0.43	)	$	(0.92	)
Net (loss) income from discontinued operations per common share, basic and diluted	—			(0.07		)	0.03			(0.16		)
Net loss from discontinued operations per common share, basic and diluted													—			—
Net loss attributable to NII Holdings per common share, basic and diluted	$	(0.94	)	$	(14.17	)	$	(2.71	)	$	(14.65	)	$	(0.43	)	$	(0.92	)

Weighted average number of common shares outstanding, basic and diluted	100,383			100,143			100,314			100,054			100,385			100,259

Comprehensive loss, net of income taxes
Foreign currency translation adjustment	$	(9,516	)	$	(18,031	)	$	(4,698	)	$	170,962		$	1,597		$	(7,568	)
Other comprehensive (loss) income	(9,516		)	(18,031		)	(4,698		)	170,962
Other comprehensive income (loss)													1,597			(7,568		)
Net loss attributable to NII Holdings	(67,216		)	(1,418,943		)	(244,699		)	(1,465,402		)	(31,714		)	(92,713		)
Total comprehensive loss attributable to NII Holdings	$	(76,732	)	$	(1,436,974	)	$	(249,397	)	$	(1,294,440	)	$	(30,117	)	$	(100,281	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

��

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
(in thousands)
Unaudited

Common Stock Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss
Total NII Holdings Stockholders’
(Deficit) Equity
Noncontrolling Interest Total (Deficit) Equity
Shares Amount
Balance, December 31, 2016 100,258
$ 100
$ 2,076,612
$ (1,834,756 ) $ (75,934 ) $ 166,022
$ —
$ 166,022
Net loss —
—
—
(244,699 ) —
(244,699 ) (27,304 ) (272,003 )
Other comprehensive loss —
—
—
—
(4,698 ) (4,698 ) (3,708 ) (8,406 )
Share-based compensation activity 126
—
3,987
—
—
3,987
—
3,987
Sale of noncontrolling interest —
—
59,215
—
21,335
80,550
(30,800 ) 49,750
Balance, September 30, 2017 100,384
$ 100
$ 2,139,814
$ (2,079,455 ) $ (59,297 ) $ 1,162
$ (61,812 ) $ (60,650 )



NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (in thousands) Unaudited
	Common Stock			Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Deficit			Noncontrolling Interest			Total Deficit
	Shares	Amount		Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Deficit			Noncontrolling Interest			Total Deficit
Balance, January 1, 2018	100,384	$	100	$	2,139,299	$	(2,135,770	)	$	(46,903	)	$	(43,274	)	$	(78,673	)	$	(121,947	)
Net loss	—	—		—		(31,714		)	—			(31,714		)	(11,606		)	(43,320		)
Other comprehensive income	—	—		—		—			1,597			1,597			696			2,293
Share-based compensation activity	1	—		586		—			—			586			109			695
Implementation of revenue recognition accounting standard	—	—		—		34,100			—			34,100			14,603			48,703
Balance, March 31, 2018	100,385	$	100	$	2,139,885	$	(2,133,384	)	$	(45,306	)	$	(38,705	)	$	(74,871	)	$	(113,576	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Unaudited	NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Unaudited						NII HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Unaudited

	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Three Months Ended March 31, 2018			Three Months Ended March 31, 2017

Cash flows from operating activities:
Net loss	$	(272,003	)	$	(1,465,402	)	$	(43,320	)	$	(92,713	)
Adjustments to reconcile net loss to net cash used in operating activities:
(Income) loss from discontinued operations	(2,567		)	16,245
Amortization of debt premiums and financing costs	(1,139		)	(152		)
Loss from discontinued operations							121			38
Amortization of debt discounts (premiums) and financing costs							109			(1,646		)
Depreciation and amortization	29,628			159,024			8,424			13,025
Provision for losses on accounts receivable	63,527			58,616			12,917			20,879
Foreign currency transaction gains, net	(12,197		)	(77,777		)
Impairment charges and losses on disposals of fixed assets	63,274			1,329,140
Foreign currency transaction losses (gains), net							1,188			(11,375		)
Impairment charges, restructuring charges and losses on disposals of fixed assets							759			70,710
Share-based payment expense	3,951			4,576			611			1,573
Other, net	(2,165		)	(342		)	(919		)	(1,808		)
Change in assets and liabilities:
Accounts receivable	(31,859		)	(47,962		)	(16,023		)	(22,292		)
Prepaid value-added taxes	13,985			22,805			491			8,161
Handset and accessory inventory	4,554			13,714			(1,917		)	3,781
Prepaid expenses and other	12,103			(4,254		)	(12,692		)	(5,856		)
Other long-term assets	(25,991		)	(62,563		)	(4,970		)	(20,127		)
Accrued value-added taxes	7,642			(10,360		)	6,067			(5,912		)
Other long-term liabilities	94,739			14,817			(576		)	20,143
Accounts payable, accrued expenses, deferred revenues and other	(8,139		)	(25,033		)
Accounts payable, accrued expenses and other							5,065			(21,148		)
Net cash used in operating activities	(62,657		)	(74,908		)	(44,665		)	(44,567		)
Cash flows from investing activities:
Capital expenditures	(52,068		)	(47,541		)	(11,115		)	(27,567		)
Purchases of investments	(494,975		)	(810,838		)	(197,533		)	(208,281		)
Proceeds from sales of investments	548,265			888,509			162,624			272,825
Purchases of licenses	(1,329		)	(15,936		)
Change in restricted cash and other deposits	27,237			67,049
Change in deposits, net							41,309			(3,614		)
Other, net	240			(2,312		)	(1,518		)	(1,355		)
Total investing cash provided by continuing operations	27,370			78,931
Total investing cash provided by discontinued operations	53,308			17,957
Net cash provided by investing activities	80,678			96,888
Total investing cash (used in) provided by continuing operations							(6,233		)	32,008
Total investing cash provided by (used in) discontinued operations							14			(26		)
Net cash (used in) provided by investing activities							(6,219		)	31,982
Cash flows from financing activities:
Proceeds from partnership agreement	50,000			—
Repayments under equipment financing facility and local bank loans	(85,915		)	(71,433		)	(478		)	(42,134		)
Repayments under capital leases and other	(5,334		)	(1,424		)	(2,082		)	(930		)
Payments for costs related to debt amendments							(4,130		)	—
Net cash used in financing activities	(41,249		)	(72,857		)	(6,690		)	(43,064		)
Effect of exchange rate changes on cash and cash equivalents	543			(1,558		)
Net decrease in cash and cash equivalents	(22,685		)	(52,435		)
Cash and cash equivalents, beginning of period	257,380			342,184
Cash and cash equivalents, end of period	$	234,695		$	289,749
Effect of exchange rate changes on cash, cash equivalents and restricted cash							716			(145		)
Net decrease in cash, cash equivalents and restricted cash							(56,858		)	(55,794		)
Cash, cash equivalents and restricted cash, beginning of period							305,778			422,232
Cash, cash equivalents and restricted cash, end of period							$	248,920		$	366,438

The accompanying notes are an integral part of these condensed consolidated financial statements.

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note 1.	Basis of Presentation

Overview. Unless the context requires otherwise, "NII Holdings, Inc.," "NII Holdings," "we," "our," "us" and "the Company" refer to the combined businesses of NII Holdings, Inc. and its consolidated subsidiaries. Our unaudited condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission, or the SEC. While these financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, they reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for interim periods. In addition, the year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. We refer to our ~~wholly-owned~~majority-owned Brazilian operating company, Nextel Telecomunicações Ltda., as Nextel Brazil. ~~As of September 30, 2017, almost all of our financial and other resources are allocated to, and substantially all of our revenues are generated from, our operations in Brazil.~~

You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, ~~2016 and the condensed consolidated financial statements contained in our quarterly reports on Form 10-Q for the three months ended March 31, 2017 and for the three months ended June 30,~~ 2017. You should not expect results of operations for interim periods to be an indication of the results for a full year. Our consolidated results from continuing operations in this quarterly report on Form 10-Q include the results of operations of Nextel Brazil and our corporate headquarters.

Sources of Funding. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As of March 31, 2018, our consolidated sources of funding included $186.5 million in cash and short-term investments, and $110.0 million in cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico. Based on our business plan, we believe our current sources of funding described above will provide us with sufficient liquidity to fund our business through 2019.

Our business plan is based on a number of assumptions, including lower subscriber turnover and a decrease in certain costs compared to 2017. In addition, it assumes that we will recover substantially all of the amount held in escrow in a timely manner. If our actual results of operations differ from our business plan and/or the ultimate amount recovered from our cash held in escrow does not meet our current forecasted amount or is delayed for a significant period of time, our business could be negatively impacted, and we would need to obtain additional funding and/or significantly reduce our planned capital and operational spending to further preserve our liquidity. See Note 5 for more information regarding our recovery of cash held in escrow.

Partnership Agreement. On June 5, 2017, we and AINMT Holdings AB, or ice group, an international telecommunications company operating primarily in Norway under the "ice.net" brand, along with certain affiliates of ours and ice group, entered into an investment agreement to partner in the ownership of Nextel Brazil. On July 20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings S. à r.l., or Nextel Holdings, a newly formed subsidiary of NII that indirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initial investment, ice group received 50.0 million shares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of common stock in this entity. The investment agreement also provided ice group ~~is entitled to receive a 2% annual dividend on its cumulative preferred voting stock and will receive preference in the event of a liquidation. ice group also has~~with an option, exercisable on or before November 15, 2017, to invest an additional $150.0 million in Nextel Holdings for an additional 30% ownership. ~~On November 7, 2017, we were advised that~~ ice group ~~may~~did not exercise its option, ~~to make a second~~and on February 27, 2018, we terminated the investment by November 15, 2017, and the parties are currently discussing the terms of an extension of ice group's option. If ice group exercises this option and its second investment is finalized, ice group's $200.0 million total investment would result in ice group owning a 60% controlling stake in Nextel Holdings, andagreement. Since we ~~would hold a 40% stake.~~

Prior to the closing of the initial investment by ice group, we contributed $116.6 million in cash to Nextel Holdings. In connection with and subsequent to the closing of the initial investment, we contributed an additional $56.8 million to Nextel Holdings, representing all of our freely distributable cash outside of Nextel Brazil, including proceeds released from escrowed funds from the sale of Nextel Mexico received to date, less $50.0 million we retained for our expenses outside of the partnership. We have also agreed to contribute proceeds arising from the release of escrowed funds from the sale of Nextel Mexico from time to time as they are released.

If ice group exercises its option, the closing of the second investment is subject to the satisfaction of certain conditions. These conditions include approval by our stockholders, receipt of required third party consents and regulatory approvals, transfer of certain guarantees to Nextel Holdings and amendment of each of Nextel Brazil's existing credit facilities. We will seek stockholder approval for the transactions contemplated by this second investment if ice group exercises its option. If the second investment is not completed by January 31, 2018, either party may terminate the option. Until the second investment closes, we will continue to have a controlling interest in Nextel Brazil, ~~and will continue to consolidate~~we have consolidated this entity and its subsidiaries.

Pursuant to the investment agreement, we have agreed to conduct Nextel Brazil's business in the ordinary course and use commercially reasonable efforts to maintain and preserve its business organization and preserve certain business relationships.

~~Going Concern.~~Recently Adopted Accounting Pronouncements. ~~The accompanying~~In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Codification, or ASC, No. 2014-09, “Revenue from Contracts with Customers,” or ASC 606, which provides us with a single revenue recognition model for recognizing revenue from contracts with customers and significantly expands the disclosure requirements for revenue arrangements. We implemented ASC 606 on January 1, 2018 using the modified retrospective method. We did not retroactively adjust prior periods. In utilizing the modified retrospective method, we are recognizing the cumulative effect of applying the standard at the date of initial application, and we will continue to disclose the results under both the new and old standards for the remainder of the first year after adoption. See Note 2 for more information surrounding the adoption of ASC 606.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18, which provides guidance regarding cash flow statement classification and presentation of changes in restricted cash. We implemented this new standard on January 1, 2018. As required, we provided a reconciliation of cash and cash equivalents as presented in our condensed consolidated ~~financial statements have been prepared on a going concern basis, which contemplates the realization of assets~~balance sheets to cash, cash equivalents and ~~satisfaction of liabilities~~restricted cash as presented in ~~the normal course of business. These~~our condensed consolidated ~~financial~~ statements ~~do not include any adjustments that might result from the occurrence~~ of ~~the uncertainties described below.~~

~~Over the course of the last two years, we have implemented changes~~cash flows for all periods presented in ~~our business to better align our organization and costs with our available sources of funding, as well as to respond to the impact of the current and expected economic and competitive~~Note 4.

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~conditions~~Reclassifications. We have reclassified some prior period amounts in ~~Brazil. These changes have included improvements~~our condensed consolidated financial statements to conform to our ~~operations and~~current presentation.


Note 2.	Revenue Recognition

On January 1, 2018, we implemented ASC 606 using the ~~implementation of cost savings measures, spending reductions and headcount reductions.~~

~~As of September 30, 2017,~~modified retrospective method. The primary change to our ~~consolidated sources of funding included $259.6 million of cash and short-term investments, $110.0 million in cash held in escrow~~revenue recognition policies relates to ~~secure our indemnification obligations~~contracts with customers where the customer purchases a discounted handset in connection with entering into a contract for telecommunications services. In accordance with ASC 606, we allocate revenue between the ~~sale~~handset and the service based on relative standalone selling price, which we refer to as SSP. We recognize revenue when we satisfy a performance obligation by providing services or transferring control of promised handsets and accessories, which are distinct to a customer. We recognize revenue in an amount that reflects the consideration to which we expect to be entitled for those performance obligations.

A description of the principal activities from which Nextel Mexico, and $51.8 million in cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our WCDMA spectrum in Brazil. Based on the weak economy and challenging competitive environment in Brazil ~~that we anticipate will continue,~~generates its revenue, as well as the ~~continued decline~~associated policies that govern the way in which we recognize these revenues, is as follows:

Service and Other Revenues. Nextel Brazil's wireless service revenues primarily consist of access charges for providing customers with voice, data or messaging services over the contract period. We recognize revenue related to access charges ratably over the contract period. The typical length of our ~~iDEN business, we expect that~~service contracts is 12 months for individual customers and 24 months for corporate customers. We elected the practical expedient to record all revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities.

Handset and Accessory Revenues. We recognize handset and accessory revenue when a subscriber takes possession of a device. The transaction price of the handset sold, if any, is billed at the time of sale. Although more than 90% of our ~~cash flow from operations will be negative for~~subscribers typically purchase services only and acquire a handset separately, the remainder of ~~2017.~~our subscriber base purchases a handset offered at a discounted price bundled with services. In these types of bundled sales, we allocate a portion of our future service billings to the handset and recognize revenue upon handset delivery at the inception of the contract, which results in a contract asset. We ~~expect~~determined that ~~our capital expenditures~~contracts with terms longer than one year that involve the sale of both a handset and related services generally do not include a significant financing component.

Significant Judgments and Estimates. Nextel Brazil's subscribers generally enter into service contracts with a commitment period in exchange for ~~2017 will~~discounts on handsets and/or service fees. The penalty applied upon early termination of a contract declines over time in proportion to the remaining commitment period. We concluded that the commitment period should be identical to the contract period since, at ~~levels similar~~any point, the early termination penalty is significant relative to ~~those experienced in 2016.~~the remaining monthly service fees under the contract.

In ~~February 2017, Nextel Brazil~~cases where a contract includes both a handset and ~~the lenders of our local bank loans entered into amendments to the loan agreements. The amendments provided, among other things,~~accessories, for which we recognize handset and accessory revenue at a ~~120-day standstill period, effective March 2, 2017, during~~point in time, and services, for which we recognize revenue ratably over time, ~~we were not~~judgment is required to ~~pay 84.4 million Brazilian reais, or an estimated $25.2 million based on current foreign currency exchange rates,~~determine the SSP for each distinct performance obligation in ~~principal related~~order to ~~Nextel Brazil's local bank loans. Prior~~allocate consideration properly. We use a range of amounts to ~~the end~~estimate SSP when we sell each of the ~~original standstill period, Nextel Brazil~~products and ~~the lenders~~services separately.

Remaining Performance Obligations. As of ~~our local bank loans agreed~~March 31, 2018, we have $360.4 million of remaining performance obligations under open service contracts. For these service contracts, we expect to ~~extensions of the previous standstill agreements through October 31, 2017. These extensions increased the amount of principal payments deferred to 168.9~~recognize $341.6 million ~~Brazilian reais for~~in operating revenues in the period from April 1, 2018 through March ~~2017 through October 2017. As a condition~~31, 2019 and $18.8 million thereafter.

Contract Assets and Liabilities. Contract assets primarily relate to the standstill extension, Nextel Brazil agreed that if the semi-annual principal payment due in August 2017 under the equipment financing facility was paid, Nextel Brazil would also make a proportional payment of 63.3 million Brazilian reais to the lenders of our local bank loans. In August 2017, Nextel Brazil made both the semi-annual principal payment and the proportional payment. This prepayment reduced the amount owed under the standstill agreement to 105.6 million Brazilian reais. In October 2017, Nextel Brazil and the lenders of our local bank loans signed fifth amendments to the loan agreements that provide for a new repayment schedule starting on January 31, 2018 that includes the repayment of the 105.6 million Brazilian reais in previously deferred principal on a pro rata basis over the remaining ~~terms of the loans. In connection with the fifth amendments, Nextel Brazil will grant additional security interests to each of its lenders in the form of preferential rights to amounts held in certain~~portion of Nextel Brazil's ~~bank accounts~~future service billings allocated to handsets and ~~will pledge certain~~recognized into revenue upon handset delivery at the inception of ~~its equipment~~the contract. As of March 31, 2018 and ~~property to these lenders.~~

~~In October 2017,~~January 1, 2018, Nextel Brazil ~~also entered into an amended~~had $5.7 million and ~~restated equipment financing facility~~$5.5 million in total contract assets, respectively, $4.5 million of which we classified as a component of prepaid expenses and ~~sixth amendments~~other in our condensed consolidated balance sheets for both periods. We transfer contract assets to receivables when Nextel Brazil's right to bill becomes unconditional.

Contract liabilities primarily relate to upfront fees for wireless services for which the ~~local bank loans, subject to approval by China's export~~services have not yet been provided. As of March 31, 2018 and ~~credit insurance corporation, or Sinosure. Among other changes, these amendments provide for the deferral of~~January 1, 2018, Nextel Brazil had $3.1 million and $1.7 million in total contract liabilities, respectively, substantially all ~~principal payments for the first 48 months from the date~~ of ~~effectiveness~~which we classified as a component of accrued expenses and a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. In addition, Nextel Holdings and certain of its subsidiaries have agreed to make equity contributions of existing cash on hand to Nextel Brazil. If and when these amendments become effective, Nextel Brazil will be subject to minimum cash and minimum receivable requirements. The amendments provide for a loan maturity date 98 months from the date the final amendments become effective.other in our condensed consolidated balance sheet.

The amended and restated equipment financing facility and the sixth amendments to the local bank loans remain subject to approval by Sinosure, and until such approval is received, these amendments are not effective. If we are successful in obtaining Sinosure approval and these amendments become effective, we believe our current sources of funding described above will provide us with sufficient liquidity to fund our business beyond 2018.

While we expect to receive Sinosure approval on or before December 31, 2017, there is no guarantee that we will receive the required approval for these amendments. If we do not receive the required approval, and therefore these amendments do not become effective, we may not be able to complete the second investment with ice group discussed above. Based on our projected cash flows, without (i) the deferral of principal payments until the end of 2021 that will be provided in conjunction with the approval of the amendments to Nextel Brazil's financing arrangements; (ii) the $150.0 million second investment by ice group; and (iii) potential reductions in spending, we believe that our current sources of funding are adequate to fund our business into the third quarter of 2018.

Our sources of funding assume the release of cash held in escrow and cash pledged to secure performance bonds. If the ultimate amount recovered from our cash held in escrow or our cash pledged to secure performance bonds does not meet our current forecasted amount or is delayed for a significant amount of time, our business could be negatively impacted, and we would need to obtain additional funding and/or significantly reduce our planned spending to preserve our liquidity.

Under the current agreements governing Nextel Brazil's equipment financing facility and local bank loans, we are required to meet certain financial covenants semiannually beginning on December 31, 2017. Based on our current outlook, which reflects significant uncertainty about the economic and competitive conditions in Brazil that are currently impacting our ability to increase our revenues and generate profitability, we believe it is unlikely that we will satisfy the applicable financial covenants included in both of Nextel Brazil's local bank loans and in its equipment financing facility as of the next measurement date at December

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The changes to both the contract asset and contract liability balances during the period, which include opening balances amortized into revenue, were not significant.

Cost to Obtain Contracts with Customers. We recognize an asset for the incremental costs of obtaining a contract with a customer. These costs include commissions and related benefits, payroll taxes for sales employees of Nextel Brazil, and commissions payable to our third party distribution channel partners. We amortize these types of costs ratably using the portfolio approach over the estimated customer relationship period, which includes expected future contract renewals. Under the previous accounting standard, we expensed commissions as incurred. As of March 31, ~~2017. If we are unable~~2018 and January 1, 2018, Nextel Brazil had $44.7 million and $42.8 million of deferred costs, respectively, related to expenses required to obtain ~~Sinosure approval~~or fulfill a contract. Of these total deferred costs, as of March 31, 2018 and January 1, 2018, we recorded $17.5 million and $16.3 million, respectively, as a component of prepaid expenses and other and the remaining $27.2 million and $26.5 million, respectively, as a component of other assets in our condensed consolidated balance sheet. In addition, Nextel Brazil recorded $4.1 million in total commissions expense during the three months ended March 31, 2018 as a component of selling, general and administrative expenses in our condensed consolidated statement of comprehensive loss.

Adoption Impact. Following is a comparison of our reported results of operations for the three months ended March 31, 2018 compared to amounts that we would have reported had we not adopted ASC 606 (in thousands):



	As Reported With ASC 606			Without ASC 606			Impact
Operating revenues
Service and other revenues	$	175,972		$	180,800		$	(4,828	)
Handset and accessory revenues	5,041			4,685			356
	181,013			185,485			(4,472		)
Operating expenses
Cost of service (exclusive of depreciation and amortization included below)	88,924			88,924			—
Cost of handsets and accessories	9,065			9,065			—
Selling, general and administrative	90,886			97,425			(6,539		)
Impairment, restructuring and other (benefits) charges, net	(1,825		)	(1,825		)	—
Depreciation	4,833			4,833			—
Amortization	3,591			3,591			—
	195,474			202,013			(6,539		)
Operating loss	$	(14,461	)	$	(16,528	)	$	2,067
Net loss	$	(43,320	)	$	(45,387	)	$	2,067

Components of Transition Adjustment. As of January 1, 2018, the cumulative impact of the ~~amendments~~implementation of ASC 606 included the recognition of contract assets and liabilities, as well as the capitalization of costs to the existing loan agreements discussed above that provide holidays for financial covenant compliance until June 30, 2020 or secure waivers from the lenders, we could be in default. If a default occurs, the lenders could require us to repay the amounts outstanding under these arrangements. In addition, these loan agreements contain cross-acceleration provisions. As of September 30, 2017, we had $208.0 million principal amount outstanding under Nextel Brazil's local bank loans and $244.6 million principal amount outstanding under Nextel Brazil's equipment financing facility. See Note 5 for more information.

~~Until we~~ obtain the required Sinosure approval to amend the terms of Nextel Brazil's financing arrangements and obtain access to a significant portion of the escrowed and pledged funds as anticipated in our business plan, substantial doubt continues to exist about our ability to continue as a going concern.

~~New Accounting Pronouncements.~~ In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2014-09, "Revenue from Contracts with Customers," which will provide us with a single revenue recognition model for recognizing revenue from contracts with ~~customers and significantly expand the disclosure requirements for revenue arrangements. The new standard, as amended, will be effective for interim and annual reporting periods beginning~~customer. In total, these effects resulted in a cumulative adjustment on January 1, 2018 ~~at which point we plan~~that was comprised of a $21.2 million increase to adopt the standard. The two permitted transition methods under the new standard are the full retrospective method, in which the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which the cumulative effect of applying the standard would be recognized at the date of initial application, with disclosure of results under the new and old standards for the first year of adoption. We expect to utilize the modified retrospective method.

We expect that the new guidance will have a material impact on our financial statements. Upon adoption, we expect that a portion of our revenues related to service plans that are sold concurrently with a subsidized handset will be reallocated from serviceprepaid expenses and other, ~~revenues~~a $26.8 million increase to ~~handset~~other assets, a $1.1 million increase to accrued expenses and ~~accessory revenues~~other and ~~that these revenues will be recognized at an earlier point in time compared~~a $1.8 million decrease to our current accounting under the existing authoritative guidance. We also expect that the timing of expense recognition related to certain of our contract acquisition costs, such as sales commissions, will be impacted as these expenses will be capitalized and amortized under the new standard.other long-term liabilities.


~~Note 2.~~	~~Impairment, Restructuring and Other Charges~~

~~Long-Lived Asset Impairments.~~

During the third quarter of 2016, we reviewed our Nextel Brazil segment for potential impairment and compared the then $1.7 billion carrying value of Nextel Brazil's long-lived assets to our estimate of undiscounted future cash flows. Based on our estimates, we determined that the carrying value of our Nextel Brazil segment was not fully recoverable. As a result, in the third quarter of 2016, we recorded a non-cash asset impairment charge of $1.31 billion to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. We allocated the non-cash asset impairment charge first to reduce the $36.8 million carrying value of our trademark intangible asset to zero, and the remainder between property, plant and equipment, and spectrum licenses on a pro rata basis.

During the first quarter of 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that the carrying value of this segment was not fully recoverable. As a result, during the nine months ended September 30, 2017, we recorded non-cash asset impairment charges of $56.5 million to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values and allocated these impairment charges on a pro rata basis between property, plant and equipment and spectrum licenses.

During the third quarter of 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that its carrying value was recoverable as of September 30, 2017 based on the equity valuation implied in connection with our partnership agreement with ice group. See Note 1 for more information related to this agreement.

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note 3.	Impairment, Restructuring and Other (Benefits) Charges

~~Other~~Long-Lived Asset ~~Impairments.~~

Impairment.

During the ~~three and nine months ended September 30,~~first quarter of 2017, we reviewed our Nextel Brazil ~~recognized $3.1 million~~segment for potential impairment and ~~$7.0 million~~determined that, as a result of the continued decline in ~~other~~share price, the carrying value of this segment was not fully recoverable. As a result, we recorded a non-cash asset impairment charge of $66.0 million to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. We estimated the fair value of our Nextel Brazil segment using a market approach and allocated these impairment charges ~~respectively.~~on a pro rata basis between property, plant and equipment and spectrum licenses.

Restructuring (Benefits) Charges.

In an effort to further reduce costs, in the first quarter of 2018, Nextel Brazil entered into arrangements with certain of its tower lessors for the right to exchange approximately 600 unused transmitter and receiver sites for other sites. During the three and nine months ended September 30, 2016, Nextel Brazil recognized $5.2 million and $13.4 million in other non-cash asset impairment charges, respectively. The charges recognized in all periods primarily related to the abandonmentfirst quarter of ~~certain~~2018, we identified approximately 250 transmitter and receiver sites that ~~were no longer required in Nextel Brazil's business.~~

~~Restructuring Charges.~~

During the third quarter of 2017, as a result of a change in the scope of Nextel Brazil's radio access network, or RAN, sharing implementation, Nextel Brazil determined that RAN sharing would no longer be utilized for approximately 800 transmitter and receiver sites.we plan to exchange. As a result, Nextel Brazil ~~recognized $34.2~~reversed $13.7 million in previously accrued restructuring costs, of which $17.5 million relates to the present value of future payments to which Nextel Brazil was committed and the remainder relates to the impairment of certain prepayments and other deferred costs attributable to these transmitter and receiver sites.charges.

~~During~~In addition, during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, Nextel Brazil recognized ~~$9.2~~$10.8 million and ~~$61.8~~$3.3 million in restructuring costs, respectively, the majority of which related to future lease costs for approximately ~~1,350~~150 iDEN-related transmitter and receiver sites ~~in low-usage areas in connection with Nextel Brazil's RAN sharing agreement. In addition, during the nine months ended September 30, 2017, Nextel Brazil recognized $4.9 million in severance~~ and ~~other related costs resulting from~~ the separation of ~~certain executive level~~approximately 75 employees.

During the nine months ended September 30, 2016, we recognized $3.4 million in severance and other related costs at the corporate level as a result of the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses. During the three and nine months ended September 30, 2016, Nextel Brazil recognized $6.2 million and $11.4 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required in its business and certain office closures.

Total impairment, restructuring and other (benefits) charges, net for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018			2017
Brazil	$	38,880	$	1,282,764	$	164,511	$	1,296,273	$	(2,146	)	$	71,693
Corporate	282		41,441		825		44,404		321			246
Total impairment, restructuring and other charges	$	39,162	$	1,324,205	$	165,336	$	1,340,677
Total impairment, restructuring and other (benefits) charges, net									$	(1,825	)	$	71,939

As of ~~September 30, 2017,~~March 31, 2018, total accrued restructuring charges were as follows (in thousands):

Balance, December 31, 2016 $ 24,103
  Restructuring charges 85,111
  Cash payments and other (490 )
  Foreign currency translation adjustment 1,036
Balance, September 30, 2017 $ 109,760



Balance, January 1, 2018	$	109,771
Restructuring benefits, net	(2,558		)
Cash payments and other	(9,979		)
Foreign currency translation adjustment	450
Balance, March 31, 2018	$	97,684

As of September 30, 2017, we classified $12.4 million of our total accrued restructuring charges as a component of accrued expenses and other, and we classified the remainder as a component of other long-term liabilities on our condensed consolidated balance sheet.

~~NII HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


Note 3.4.	Supplemental Financial Statement Information

Restricted Cash.

In November 2016, the FASB issued ASU 2016-18, which requires the condensed consolidated statements of cash flows to explain the change in restricted cash and restricted cash equivalents, in addition to the change in cash and cash equivalents as previously required. We adopted this ASU in the first quarter of 2018. As a result of this adoption, the cash and cash equivalents balances in our condensed consolidated statements of cash flows now include restricted cash of $112.6 million as of March 31, 2018, $111.9 million as of December 31, 2017, $165.6 million as of March 31, 2017 and $164.9 million as of December 31, 2016. Our restricted cash relates to cash held in escrow in connection with the sale of Nextel Mexico and certain judicial deposits of cash in Brazil related to litigation involving tax and other matters. In connection with the implementation of ASU 2016-18, a

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

reconciliation from cash and cash equivalents as presented in our condensed consolidated balance sheets to cash, cash equivalents and restricted cash as reported in our condensed consolidated statements of cash flows is as follows:



	March 31, 2018		December 31, 2017
	(in thousands)
Cash and cash equivalents	$	136,297	$	193,888
Cash in escrow (included in prepaid expenses and other)	110,038		110,024
Restricted cash (included in other assets)	2,585		1,866
Cash, cash equivalents and restricted cash	$	248,920	$	305,778

Prepaid Expenses and Other.

The components of our prepaid expenses and other current assets are as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(in thousands)				(in thousands)
Cash in escrow — Nextel Mexico sale	$	110,010	$	163,435
Cash in escrow					$	110,038	$	110,024
Brazil judicial deposits					54,443		43,648
Value-added taxes					28,657		27,635
Cash collateral related to performance bonds	48,552		30,928		715		50,340
Value-added taxes	30,066		29,829
Prepayment for roaming and radio access network, or RAN, sharing agreements	16,130		27,731
Other prepaid expenses	19,605		23,020		31,096		14,231
Other current assets	5,605		5,202		12,052		8,583
	$	229,968	$	280,145	$	237,001	$	254,461

Property, Plant and Equipment, Net.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ we capitalized immaterial amounts of interest. The components of our property, plant and equipment, net are as follows:


	September 30, 2017			December 31, 2016		March 31, 2018			December 31, 2017
	(in thousands)					(in thousands)
Land	$	510		$	675	$	486		$	489
Building and leasehold improvements	1,021			1,489		942			935
Network equipment, communication towers and network software	82,706			95,298		90,598			82,493
Software, office equipment, furniture and fixtures and other	13,251			10,952		25,932			22,498
Less: Accumulated depreciation	(8,174		)	—
Less: Accumulated depreciation and amortization						(16,166		)	(11,461		)
	89,314			108,414		101,792			94,954
Construction in progress	18,212			21,061		18,053			22,308
	$	107,526		$	129,475	$	119,845		$	117,262

Intangible Assets, Net.

Our intangible assets include the following:

September 30, 2017 December 31, 2016
Average Useful Life (Years)
Gross Carrying
Value

Accumulated
Amortization

Net Carrying
Value

Gross Carrying
Value

Accumulated
Amortization

Net Carrying
Value
(in thousands)
Amortizable intangible assets:

Licenses 26 $ 197,542
$ (3,776 ) $ 193,766
$ 226,426
$ —
$ 226,426
Customer relationships 4 15,976
(3,550 ) 12,426
17,255
—
17,255
$ 213,518
$ (7,326 ) $ 206,192
$ 243,681
$ —
$ 243,681

Based on the carrying amount of our intangible assets as of September 30, 2017 and current exchange rates, we estimate amortization expense for each of the next five years ending December 31 to be as follows (in thousands):

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Years Estimated Amortization Expense
2017 $ 15,188
2018 15,072
2019 11,521
2020 7,971
2021 7,971



		March 31, 2018							December 31, 2017
	Average Useful Life (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
		(in thousands)
Amortizable intangible assets:
Licenses	26	$	205,595	$	(7,213	)	$	198,382	$	189,920	$	(5,426	)	$	184,494
Customer relationships	4	15,227		(6,767		)	8,460		15,300		(5,100		)	10,200
		$	220,822	$	(13,980	)	$	206,842	$	205,220	$	(10,526	)	$	194,694

Based on the carrying amount of our intangible assets as of March 31, 2018 and current exchange rates, we estimate amortization expense for each of the next five years ending December 31 to be as follows (in thousands):



Years	Estimated Amortization Expense
2018	$	14,925
2019	11,728
2020	8,345
2021	8,345
2022	8,345

Actual amortization expense to be reported in future periods could differ from these estimates as a result of additional acquisitions of intangibles, as well as changes in foreign currency exchange rates and other relevant factors.

Other Assets.

The components of our other long-term assets are as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(in thousands)				(in thousands)
Brazil judicial deposits	$	146,802	$	85,123	$	115,807	$	110,758
Prepayment for roaming and RAN sharing agreements	16,916		56,523
Cash collateral related to performance bonds	3,231		37,433
Cash collateral related to contingencies					62,625		55,027
Other	84,424		92,789		78,341		52,419
	$	251,373	$	271,868	$	256,773	$	218,204

Accrued Expenses and Other.

The components of our accrued expenses and other are as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(in thousands)				(in thousands)
Contingencies	$	56,216	$	54,260	$	76,335	$	78,006
Network system and information technology	49,091		50,286
Network system and information technology expenses					66,121		48,702
Non-income based taxes					37,058		30,044
Payroll related items and commissions	36,268		45,187		26,584		32,613
Non-income based taxes	19,309		28,158
Capital expenditures	6,377		17,514
Other	113,664		76,494		103,154		118,764
	$	280,925	$	271,899	$	309,252	$	308,129

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Long-Term Liabilities.

The components of our other long-term liabilities are as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(in thousands)				(in thousands)
Accrued lease terminations and other restructuring charges	$	97,364	$	31,365
Accrued lease termination and other restructuring charges					$	80,448	$	92,463
Non-current withholding taxes	64,158		55,078		70,540		67,356
Other	69,082		57,029		78,126		61,106
	$	230,604	$	143,472	$	229,114	$	220,925

Accumulated Other Comprehensive Loss. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the tax impact on our accumulated other comprehensive loss was not material. In addition, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, all of our accumulated other comprehensive loss represented cumulative foreign currency translation adjustment.

Supplemental Cash Flow Information.


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
	(in thousands)						(in thousands)
Capital expenditures
Cash paid for capital expenditures, including capitalized interest on property, plant and equipment	$	52,068		$	47,541		$	11,115		$	27,567
Change in capital expenditures accrued and unpaid or financed, including interest capitalized	(21,968		)	(21,971		)	(2,824		)	(18,116		)
	$	30,100		$	25,570		$	8,291		$	9,451

In connection with the completion of the sale of Nextel Argentina in January 2016, the promissory note that was initially issued in connection with that transaction was canceled. In addition, as of September 30, 2016, we recorded $126.0 million as a component of current liabilities on our condensed consolidated balance sheet in connection with the signing of the license agreement related to our acquisition of 30 MHz of spectrum in the 1.8 GHz band in July 2016. Other than these two transactions, weWe did not have any significant non-cash investing or financing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.

Revenue-Based Taxes. ~~We record~~Prior to the implementation of ASC 606, we recorded certain revenue-based taxes on a gross ~~basis~~basis. For the three months ended March 31, 2017, we recognized $10.1 million in revenue-based taxes as a component of both service and other revenues and selling, general and administrative expenses in our condensed consolidated ~~financial statements. For~~statement of comprehensive loss. As a result of the ~~three and nine months ended September 30, 2017,~~adoption of ASC 606, we now record all revenue net of taxes collected from customers. If we had not implemented ASC 606 on January 1, 2018, we would have recognized ~~$6.0~~an additional $4.7 million ~~and $23.1 million, respectively,~~ in revenue-based ~~taxes. For the three~~taxes as a component of service and ~~nine months ended September 30, 2016, we recognized $11.5 million and $36.8 million, respectively,~~other revenues in ~~revenue-based taxes.~~our condensed consolidated statement of comprehensive loss.

~~Basic and~~ Diluted Net Loss Per Common Share. As presented for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, our calculation of basic net loss from continuing operations per common share includes $27.3 million in net loss attributable to noncontrolling interest but excludes $0.2 million related to undeclared dividends on ice group's preferred stock in Nextel Holdings.

~~As presented for the three and nine months ended September 30, 2017 and 2016,~~ our calculation of diluted net loss from continuing operations per common share is based on the weighted average number of common shares outstanding during those periods and does not include other potential common shares, including shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans or restricted common shares issued under those plans since their effect would have been antidilutive.

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, we did not include ~~3.7 million and 3.5~~3.3 million stock options ~~respectively,~~and 0.1 million restricted common shares in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. ~~For~~In addition, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, we did not include ~~0.1~~3.3 million stock options and ~~0.3~~0.5 million restricted common shares in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive.

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

common shares, respectively, in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. In addition, for the three and nine months ended September 30, 2016, we did not include 3.3 million and 3.5 million stock options, respectively, in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. For the three and nine months ended September 30, 2016, we did not include 0.7 million and 0.8 million restricted common shares, respectively, in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive.


Note 4.5.	Discontinued Operations

Sale of Nextel Mexico. On April 30, 2015, we, together with our wholly-owned subsidiary NIU Holdings LLC, completed the sale of our Mexican operations to New Cingular Wireless, an indirect subsidiary of AT&T. The transaction was structured as a sale of all of the outstanding stock of the parent company of Comunicaciones Nextel de Mexico, S.A. de C.V., or Nextel Mexico, for a purchase price of $1.875 billion, including $187.5 million deposited in escrow to satisfy potential indemnification claims. In 2016, we paid $4.0 million, plus interest, out of escrow to settle an indemnification claim. As of ~~September 30, 2017,~~March 31, 2018, $73.5 million of the cash held in escrow has been released to us and $110.0 million remains deposited in escrow related to certain potential tax indemnity claims made by New Cingular Wireless. While we are required to continue to indemnify New Cingular Wireless for any valid claims that arise in the future, New Cingular Wireless is not permitted to make any additional claims against the escrow ~~account other than for claims relating to the 2012 tax year totaling not more than $3.8 million.~~account.

The potential tax indemnity claims submitted by New Cingular Wireless purport to relate to various ongoing tax audits by the Mexican tax authorities for the years 2010 through 2014. Of the total potential tax claims, $12.2 million relates to actual assessments that Nextel Mexico has received. The remaining amounts relate to unassessed matters. New Cingular Wireless' claims include $35.5 million related to the audit of Nextel Mexico’s income tax return for 2010 and $36.9 million related to the audit of Nextel Mexico's income tax return for 2011. The remaining $37.6 million of potential tax claims relates primarily to non-income tax-based audits for the years 2011 through 2014.

~~In October 2017, we~~ We recently reached an agreement with the Mexican tax authorities related to the audits of Nextel Mexico's income tax returns for the years 2010 and 2011. Specifically, we agreed to incremental tax liabilities of $36.9 million to settle all open issues related to these tax years. We expect to utilize existing tax credits to settle these liabilities, although it is possible that we may need to settle a portion of these liabilities using cash that is currently held in escrow. We ~~expect~~are in the process of working with the Mexican tax authorities to ~~receive a release of~~finalize the ~~previously escrowed funds~~official process and file the necessary amended income tax returns in an effort to close the audits related to the years 2010 and 2011. As of March 31, 2018, we had $1.5 million accrued related to the 2011 income tax ~~audits, less any cash used to settle the claims, in the fourth quarter of 2017, and we~~audit. We are continuing to work with the Mexican tax authorities to settle the open non-income tax-based audits and accelerate the release of the remaining escrow. ~~We have not accrued any liabilities~~

New Cingular Wireless has recently indicated their views on certain aspects of the escrow and purchase agreements related to ~~any of~~ the ~~years under audit as~~release requirements for escrowed funds with which we do not ~~currently believe~~agree. This difference of interpretation could result in a delay of the ~~amounts are probable~~release of ~~loss.~~the remaining amount of cash in escrow.

There can be no assurance as to the outcome of the foregoing ~~remaining~~ tax audits or indemnity claims.

In connection with the sale of Nextel Mexico, as well as the sale of Nextel Argentina, Nextel Chile and Nextel Peru, which occurred in 2015, 2014 and 2013, respectively, we have reported the results of these operating companies as discontinued operations. Unless otherwise noted, amounts included in these notes to our condensed consolidated financial statements exclude amounts attributable to discontinued operations.


Note 6.	Debt

The components of our debt are as follows:



	March 31, 2018			December 31, 2017
	(in thousands)
Brazil equipment financing facility	$	243,000		$	242,883
Brazil bank loans	193,051			200,567
Brazil spectrum financing	121,332			122,044
Brazil capital lease and tower financing obligations	88,042			90,213
Total debt	645,425			655,707
Less: current portion	(5,805		)	(7,990		)
	$	639,620		$	647,717

Amendments to Equipment Financing Facility and Bank Loans. In October 2017, Nextel Brazil entered into an amended and restated equipment financing facility and sixth amendments to its two bank loans with Brazilian lenders. In January 2018, we received final approval for the amended and restated equipment financing facility, at which point all of these amendments became effective. We accounted for these amendments as a non-substantial modification of debt and capitalized $6.1 million of financing costs that will be amortized over the new term of the loans. As a result of the amendments, the material financing terms in all three facilities were aligned. Among other changes, loans under these agreements have a 48-month grace period from January 2018 for material repayments, a 50-month material repayment term that begins in January 2022 and a final maturity of January 2026 for

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


~~Note 5.~~	~~Debt~~

As a result of the implementation of fresh start accounting in connection with our emergence from Chapter 11, we remeasured the components of our debt to their fair values as of June 30, 2015. As a result, the carrying values of ourNextel Brazil's bank loans ~~do not represent the outstanding principal balances. The components of our debt are as follows:~~

September 30, 2017 December 31, 2016
(in thousands)
Brazil equipment financing facility $ 242,684
$ 291,597
Brazil bank loans 209,899
242,076
Brazil spectrum financing 127,689
125,684
Brazil capital lease and tower financing obligations 96,048
96,722
Other —
237
Total debt 676,320
756,316
Less: current portion (460,300 ) (540,474 )
$ 216,020
$ 215,842

~~Brazil Equipment Financing Facility.~~ ~~In December 2014, Nextel Brazil~~ and the lender under its equipment financing facility agreed to amend this facility to remove all financial covenants beginning with the December 31, 2014 measurement date through the June 30, 2017 measurement date so that the first measurement date under the amended facility will be December 31, 2017. In exchangeFebruary 2026 for that covenant relief, Nextel Brazil granted the lender preferential rights to the amounts held in certain bank accounts. Based on our current outlook, which reflects significant uncertainty about the economic and competitive conditions in Brazil that are currently impacting our ability to increase our revenues and generate profitability, we believe it is unlikely that we will satisfy the applicable financial covenants included in Nextel Brazil's equipment financing facility as of the next measurement date at December 31, 2017. As a result of this uncertainty, we have continued to classify the amount outstanding under this facility as a current liability in our condensed consolidated balance sheet as of September 30, 2017. As discussed below, in October 2017, Nextel Brazil entered into an amended and restated equipment financing facility, subject to approval by Sinosure. Among other changes, thesefacility. These amendments also provide for a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. As of September 30, 2017, we had $244.6 million in principal amount outstanding under Nextel Brazil's equipment financing facility. We do not have the ability to borrow additional amounts under this facility.

In July 2016, Nextel Brazil elected to accept the government-provided financing for the remaining amount due for spectrum we purchased in December 2015. In August 2017, Nextel Brazil secured waivers from the lender of its equipment financing facility for Nextel Brazil's incurrance and maintenance of the government-provided spectrum financing. In addition, in August 2017, Nextel Brazil secured waivers relating to an event of default that resulted from a failure to timely notify this lender of a permitted merger that occurred between two guarantors in Brazil.

~~Brazil Bank Loans.~~ In connection with the agreements governing Nextel Brazil's local bank loans, we are required to meet a net debt financial covenant semiannually. In February 2017, Nextel Brazil secured waivers from the lenders of its local bank loans related to this financial covenant for the December 31, 2016 measurement date. The waivers also provide for a "covenant holiday" inclusive of the June 30, 2017 testing period, during which time no compliance was required with respect to the net debt financial covenant. Starting on December 31, 2017, and on each six-month anniversary thereafter, Nextel Brazil must maintain a net debt to earnings before interest, taxes, depreciation and amortization, or EBITDA, ratio over the trailing 12 months of no greater than 2.5.

~~In February 2017, Nextel Brazil and the lenders of our local bank loans entered into amendments to~~ these loan agreements. The amendments provided, among other things, a 120-day standstill period, effective March 2, 2017, during which time no amortization payments were required with respect to the related loans. Prior to the end of the original standstill period, Nextel Brazil and the lenders of our local bank loans agreed to extensions of the previous standstill agreements through October 31, 2017. These extensions increased the amount of principal payments deferred to 168.9 million Brazilian reais for the period from March 2017 through October 2017. As a condition to the standstill extension, Nextel Brazil agreed that if the semi-annual principal payment due in August 2017 under the equipment financing facility was paid, Nextel Brazil would also make a proportional payment of 63.3 million Brazilian reais to the lenders of our local bank loans. In August 2017, Nextel Brazil made both the semi-annual principal payment and the proportional payment. This prepayment reduced the amount owed under the standstill agreement

~~NII HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

to 105.6 million Brazilian reais. In October 2017, Nextel Brazil and the lenders of our local bank loans signed fifth amendments to the loan agreements that provide for a new repayment schedule starting on January 31, 2018 that includes the repayment of the 105.6 million Brazilian reais in previously deferred principal on a pro rata basis over the remaining terms of the loans. In connection with the fifth amendments, Nextel Brazil ~~will grant~~granted additional security interests to each of its lenders in the form of preferential rights to amounts held in certain of Nextel Brazil's bank accounts and ~~will pledge certain of its~~pledged incremental equipment and property to these lenders.

In ~~October 2017,~~addition, Nextel Brazil ~~also entered into an amended and restated equipment financing facility and sixth amendments to its local bank loans,~~will be subject to ~~approval by Sinosure. Among other changes, these amendments provide for the deferral of substantially all principal payments for the first 48 months from the date of effectiveness~~monthly minimum cash and ~~a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. In addition,~~minimum receivable requirements. Nextel Holdings and certain of itits subsidiaries have agreed to make equity contributions ~~of existing cash on hand~~ to Nextel ~~Brazil. If and when these amendments become effective,~~Brazil over the next 48 months. As of March 31, 2018, Nextel Brazil will be subject to minimum cash and minimum receivable requirements. The amendments provide for a loan maturity date 98 months from the date the final amendments become effective. The amended and restatedhad $244.3 million in principal amount outstanding under its equipment financing facility and ~~the sixth amendments to the local bank loans remain subject to approval by Sinosure, and until such approval is received, these amendments are not effective.~~

~~Based on our current outlook, we believe it is unlikely that we will satisfy one of the applicable financial covenants currently included~~$197.9 million in both of Nextel Brazil's local bank loan agreements as of the next measurement date at December 31, 2017. If we are unable to obtain approval from Sinosure as described above in order to render the loan amendments and related covenant relief effective or secure waivers from the lenders, we could be in default. If a default occurs, the lenders could require us to repay the amounts outstanding under these arrangements. As a result of this uncertainty, we have continued to classify the amounts outstanding under Nextel Brazil's local bank loans as current liabilities in our condensed consolidated balance sheet as of September 30, 2017. As of September 30, 2017, we had $208.0 million principal amount outstanding under ~~Nextel Brazil's local~~its bank loans.


Note 6.7.	Fair Value Measurements

Financial Instruments.

Available-for-Sale Securities.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, available-for-sale securities held by Nextel Brazil included ~~$24.9~~$50.2 million and ~~$73.8~~$16.7 million, respectively, in investment funds. These funds ~~are invested~~invest primarily in Brazilian government bonds and long-term bank certificates of ~~deposit and Brazilian corporate debentures.~~deposit. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ we did not have any material unrealized gains or losses associated with these investments.

We account for our available-for-sale securities at fair value. ~~The fair value of our Brazilian certificates of deposit is based on their current redemption amount, and we classify these certificates of deposit within Level 2 of the fair value hierarchy.~~ The fair value of Nextel Brazil's investment funds is measured based on the funds' net asset value as a practical expedient, which is excluded from the fair value hierarchy.

Debt Instruments.

The carrying amounts and estimated fair values of our debt instruments are as follows:

September 30, 2017 December 31, 2016

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value
(in thousands)
Brazil equipment financing $ 242,684
$ 236,397
$ 291,597
$ 280,893
Brazil bank loans and other 209,899
195,203
242,313
221,458
Brazil spectrum financing 127,689
114,094
125,684
117,059
$ 580,272
$ 545,694
$ 659,594
$ 619,410

~~NII HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~



	March 31, 2018				December 31, 2017
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in thousands)
Brazil equipment financing	$	243,000	$	242,418	$	242,883	$	237,958
Brazil bank loans and other	193,051		142,480		200,567		144,312
Brazil spectrum financing	121,332		133,593		122,044		128,225
	$	557,383	$	518,491	$	565,494	$	510,495

We estimated the fair value of ~~the Brazil~~Nextel Brazil's bank loans, ~~as well as the fair value of our~~ equipment financing ~~facility in Brazil,~~and spectrum financing utilizing inputs such as U.S. Treasury security yield curves, prices of comparable bonds, LIBOR, U.S. Treasury bond rates and credit spreads on comparable publicly traded bonds. We consider ~~Nextel Brazil's equipment financing facility, bank loans and other and its spectrum financing~~these fair value measurements to be Level 3 in the fair value hierarchy.

Other Financial Instruments.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable contained in our condensed consolidated balance sheets approximate their fair values due to the short-term nature of these instruments.

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note 7.8.	Contingencies

Contingencies.

Nextel Brazil has received various assessment notices from municipal, state and federal Brazilian authorities asserting deficiencies in payments related primarily to value-added taxes ~~excise taxes on imported equipment~~ and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitions disputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. In other cases, Nextel Brazil's petitions have been denied, and Nextel Brazil is currently appealing those decisions. As of March 31, 2018 and December 31, 2017, Nextel Brazil also had contingencies related to certain ~~regulatory, civil~~consumer, contract and labor-related matters, assome of ~~September 30, 2017~~which are secured by judicial guarantees. Even in cases where there is no probable loss, Nextel Brazil may in the future be subject to litigation involving tax and ~~December 31, 2016.~~other matters requiring material judicial deposits of cash that will not be released until the pending matter is resolved.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, Nextel Brazil had accrued liabilities of ~~$97.9~~$94.4 million and $~~76.8~~81.2 million, respectively, related to contingencies, of which ~~$3.0~~$8.7 million and ~~$1.4~~$7.4 million related to unasserted claims, respectively. We currently estimate the reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be approximately ~~$620.0~~$810.0 million as of ~~September 30, 2017~~March 31, 2018. We continue to evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies. As a result, future increases or decreases to our accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.

Legal Proceedings.


Note 8.9.	Income Taxes

The realization of deferred tax assets is dependent on the generation of future taxable income sufficient to realize our tax loss carryforwards and other tax deductions. Valuation allowances are required to be recognized on deferred tax assets unless it is determined that it is “more-likely-than-not” that the asset will be realized. In ~~2016,~~2017, we ~~recorded~~maintained full valuation allowances on the deferred tax assets of our foreign operating companies, our U.S. parent company and subsidiaries and our foreign holding companies due to substantial negative evidence such as the recent history of cumulative losses and the projected losses for the remainder of ~~2017~~2018 and subsequent years. We maintained this same valuation allowance position through the ~~third~~first quarter of ~~2017~~2018.


Note 9.10.	Segment Reporting

We have determined our reportable segment based on our method of internal reporting, which disaggregates our business by geographic location. We evaluate performance and provide resources to it based on operating income before depreciation, amortization and impairment, restructuring and other charges, which we refer to as segment earnings. Nextel Brazil is our only reportable operating segment.

1716

NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Nextel Brazil			Corporate			Consolidated			Nextel Brazil			Corporate			Consolidated
	(in thousands)									(in thousands)
Three Months Ended September 30, 2017
Three Months Ended March 31, 2018
Operating revenues	$	204,784		$	24		$	204,808		$	180,992		$	21		$	181,013
Segment losses	$	(30,661	)	$	(6,281	)	$	(36,942	)	$	(3,600	)	$	(4,262	)	$	(7,862	)
Less:
Impairment, restructuring and other charges							(39,162		)
Impairment, restructuring and other benefits, net																1,825
Depreciation and amortization																(8,424		)
Foreign currency transaction losses, net																(1,188		)
Interest expense and other, net																(27,550		)
Loss from continuing operations before income taxes																$	(43,199	)
Capital expenditures										$	8,291		$	—		$	8,291

Three Months Ended March 31, 2017
Operating revenues										$	250,925		$	30		$	250,955
Segment earnings (losses)										$	12,373		$	(7,258	)	$	5,115
Less:
Impairment, restructuring and other charges, net																(71,939		)
Depreciation and amortization							(7,268		)							(13,025		)
Foreign currency transaction gains, net							14,174									11,375
Interest expense and other, net							(25,228		)							(24,199		)
Loss from continuing operations before reorganization items and income tax benefit							$	(94,426	)
Loss from continuing operations before income taxes																$	(92,673	)
Capital expenditures	$	11,661		$	—		$	11,661		$	9,451		$	—		$	9,451

Three Months Ended September 30, 2016
Operating revenues	$	260,798		$	38		$	260,836
Segment earnings (losses)	$	23,636		$	(7,922	)	$	15,714
Less:
Impairment, restructuring and other charges							(1,324,205		)
Depreciation and amortization							(78,205		)
Foreign currency transaction losses, net							(5,221		)
Interest expense and other, net							(22,325		)
Loss from continuing operations before reorganization items and income tax benefit							$	(1,414,242	)
Capital expenditures	$	14,439		$	—		$	14,439

Nine Months Ended September 30, 2017
Operating revenues	$	680,814		$	83		$	680,897
Segment losses	$	(15,208	)	$	(21,980	)	$	(37,188	)
Less:
Impairment, restructuring and other charges							(165,336		)
Depreciation and amortization							(29,628		)
Foreign currency transaction gains, net							12,197
Interest expense and other, net							(60,838		)
Loss from continuing operations before reorganization items and income tax benefit							$	(280,793	)
Capital expenditures	$	30,100		$	—		$	30,100

Nine Months Ended September 30, 2016
Operating revenues	$	736,469		$	137		$	736,606
Segment earnings (losses)	$	59,652		$	(29,462	)	$	30,190
Less:
Impairment, restructuring and other charges							(1,340,677		)
Depreciation and amortization							(159,024		)
Foreign currency transaction gains, net							77,777
Interest expense and other, net							(59,144		)
Loss from continuing operations before reorganization items and income tax benefit							$	(1,450,878	)
Capital expenditures	$	25,570		$	—		$	25,570

September 30, 2017
March 31, 2018
Identifiable assets	$	837,260		$	346,314		$	1,183,574		$	977,426		$	144,072		$	1,121,498
December 31, 2016
December 31, 2017
Identifiable assets	$	1,000,098		$	418,411		$	1,418,509		$	957,495		$	147,603		$	1,105,098

1817


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction	20
~~Partnership Agreement~~	2019
Nextel Brazil Business ~~Update~~Overview	2119
Critical Accounting Policies and Estimates	2220
Results of Operations	2321
a. Consolidated	2422
b. Nextel Brazil	2623
c. Corporate	3026
Liquidity and Capital Resources	3027
Future Capital Needs and Resources	3128
Effect of New Accounting Standards	3430
Forward-Looking and Cautionary Statements	3530

1918

Introduction

The following is a discussion and analysis of:

our consolidated financial condition as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 and our consolidated results of operations for the ~~three-~~three months ended March 31, 2018 and ~~nine-month periods ended September 30, 2017 and 2016;~~2017; and

significant factors that we believe could affect our prospective financial condition and results of operations.

You should read this discussion in conjunction with our ~~2016~~2017 annual report on Form 10-K, including, but not limited to, the discussion regarding our critical accounting policies and estimates, as described below. Historical results may not indicate future performance. See "Forward-Looking and Cautionary Statements" and "Item 1A. — Risk Factors" in our ~~2016~~2017 annual report on Form 10-K ~~and in our quarterly report on Form 10-Q for the three months ended June 30, 2017~~ for risks and uncertainties that may impact our future performance. We refer to our remaining operating company as Nextel Brazil.

Nextel Brazil Business Overview

We provide wireless communication services under the Nextel^TM brand in Brazil with our principal operations located in major urban and suburban centers with high population densities and related transportation corridors of that country where there is a concentration of Brazil’s population and economic activity, including primarily Rio de Janeiro and São Paulo. Nextel Brazil operates a wideband code division multiple access, or WCDMA, network, which has been upgraded to offer long-term evolution, or LTE, services in certain areas. Nextel Brazil's network enables us to offer a wide range of products and services supported by that technology. We are also a party to a roaming agreement that allows us to offer our subscribers nationwide voice and data services outside of our network's footprint. Our target market is individual consumers who use our services to meet both professional and personal needs. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. We believe our target market is attracted to the services and pricing plans we offer, as well as the quality of and data speeds provided by our network.

The services we currently offer include:

mobile telephone voice and wireless data services;

international voice and data roaming services;

application-based radio connection; and

value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and international WiFi hotspot networks.

In September 2017, Nextel Brazil decided to wind down its iDEN operations with a target to cease all iDEN services by the end of May 2018. As a result, Nextel Brazil has provided notice of the eventual shutdown to its remaining iDEN subscribers and is currently working to actively migrate the remainder of its legacy iDEN subscriber base to its WCDMA network by proactively promoting attractive service offerings. As of March 31, 2018, 7% of our subscribers remained on Nextel Brazil's iDEN network.

~~Partnership Agreement~~The majority of our subscribers purchase services from us by acquiring the SIM cards from us separately, and using the SIM cards in handsets that they acquire from other sources. As of March 31, 2018, Nextel Brazil had about 3.254 million total subscriber units in commercial service, which we estimate to be about 4% of total postpaid mobile handsets and other devices in commercial service in Brazil. We refer to these subscriber units in commercial service collectively as our subscriber base.

Our goal is to grow our subscriber base and revenues by providing differentiated wireless communications services that are valued by our existing and potential subscribers. We are also striving to manage our capital and operating expenditures in the near term and improve our profitability and cash flow over the long term. Our strategy for achieving these goals is based on several core principles, including:

offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;

continuing to implement cost reduction strategies and redesigning our network architecture in order to lower cash costs per user, outweigh scale disadvantages, create an agile organization and improve overall profitability;

focusing on higher value customer segments that generate higher ARPU and lower subscriber turnover; and

building on the strength of the unique positioning of the Nextel brand.

In addition, as a result of pressure on our capital resources, over the last several years, we have implemented changes in our business to better align our organization and costs with our operational and financial results. These changes have included reduced spending on subscriber growth, reductions in capital expenditures, significant reductions in our headquarters staff through the reorganization of certain roles and responsibilities between our Brazil and corporate teams, and headcount reductions in Brazil, all of which were designed to reduce costs while maintaining the support necessary to meet our subscribers' needs. Additionally, effective in January 2018, we entered into amendments to Nextel Brazil's equipment financing facility and two bank loans, which aligned the material financing terms in all three facilities. Among other changes, these amendments provide for the deferral of substantially all principal payments for the first 48 months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020.

We expect that, if we can continue to maintain current customer turnover levels, we will be able to grow our WCDMA subscriber base to generate higher revenues in the future. We will also continue to focus on opportunities to reduce operating expenses through operational improvements and cost reductions to preserve our liquidity. See “Liquidity and Capital Resources” and “Future Capital Needs and Resources” for more information.

Partnership Agreement. On June 5, 2017, we and ~~AINMT Holdings AB, or~~ ice group, an international telecommunications company operating primarily in Norway under the ~~"ice.net"~~“ice.net” brand, along with certain affiliates of ours and ice group, entered into an investment agreement to partner in the ownership of Nextel Brazil. On July 20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings S.à r.l., or Nextel Holdings, a newly formed subsidiary of NII that indirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initial investment, ice group received 50.0 million shares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of common stock in this entity. The investment agreement also provided ice group ~~is entitled to receive a 2% annual dividend on its cumulative preferred voting stock and will receive preference in the event of a liquidation. ice group also has~~with an option, exercisable on or before November 15, 2017, to invest an additional $150.0 million in Nextel Holdings for an additional 30% ownership. ~~On November 7, 2017, we were advised that~~ ice group ~~may~~did not exercise its option, ~~to make a second~~and on February 27, 2018, we terminated the investment by November 15, 2017, and the parties are currently discussing the terms of an extension of ice group's option. If ice group exercises this option and its second investment is finalized, ice group's $200.0 million total investment would result in ice group owning a 60% controlling stake in Nextel Holdings, andagreement. Since we ~~would hold a 40% stake.~~

~~Nextel Brazil Business Update~~

~~Business Overview.~~ ~~We provide wireless communication services under the Nextel~~^TM brand in Brazil with our principal operations located in major urban and suburban centers with high population densities and related transportation corridors of that country where we believe there is a concentration of Brazil's business users and economic activity, including primarily Rio de Janeiro and São Paulo. Nextel Brazil's wideband code division multiple access, or WCDMA, network enables us to offer a wide range of products and services supported by that technology, including data services provided at substantially higher speeds than can be delivered on our legacy integrated digital enhanced network, or iDEN.

The target market for our WCDMA network is individual consumers who use our services to meet both professional and personal needs. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. We believe our target market is attracted to the services and pricing plans we offer, as well as the quality of and data speeds provided by our WCDMA network.

We also offer long-term evolution, or LTE, services in Rio de Janeiro and São Paulo, and we continue to provide services on our legacy iDEN network throughout various regions in Brazil. The majority of our subscribers purchase services from us by acquiring the subscriber identity module, or SIM, cards from us separately, and use the SIM cards in one or more devices that they acquire from other sources.

~~The services we currently offer include:~~

~~mobile telephone voice service;~~

~~wireless data services, including mobile internet services, text messaging services and email services;~~


•	~~push-to-talk services, including Direct Connect~~^®~~, Prip and International Direct Connect~~^® ~~services, which allow subscribers to talk to each other instantly;~~


•	other value-added services, including location-based services, which include the use of Global Positioning System, or GPS, technologies; digital media services; and a wide ranging set of applications available via our content management system, as well as the Android^TM ~~open application market;~~

~~business solutions, such as security, work force management, logistics support and other applications that help our business subscribers improve their productivity; and~~

~~voice and data roaming services outside of our coverage areas.~~

As of September 30, 2017, Nextel Brazil had about 3.296 million total subscriber units in commercial service, which we estimate to be about 4% of total postpaid mobile handsets and other devices in commercial service in Brazil. We refer to these subscriber units in commercial service collectively as our subscriber base.

Our goal is to grow our WCDMA-based subscriber base and revenues, as well as to promote the migration of our iDEN-based subscribers to our WCDMA-based subscriber base, by providing differentiated wireless communications services that are valued by our existing and potential subscribers. We are also striving to manage our capital and operating expenditures in the near term and improve our profitability and cash flow over the long term. Our strategy for achieving these goals is based on several core principles, including:

~~aligning our costs with our current business through continuous evaluation and streamlining of all capital and operating expenditures;~~

~~focusing on higher value customer segments that generate higher average revenue per user, or ARPU, and lower subscriber turnover;~~

~~utilizing the most profitable sales channels;~~

~~offering a unique and superior customer experience, including a reliable and high quality wireless network and online self-care and rate plan flexibility; and~~

~~building on the strength of the unique positioning of the Nextel brand.~~

To support our business plan, we have made significant capital and other investments as we deployed our WCDMA network and LTE upgrade. These investments have increased our costs and negatively impacted our profitability and are expected to continue to have that impact as we incur the fixed costs associated with our network while building the subscriber base it serves. However, we believe our investments have enhanced, and will continue to enhance, the competitiveness of our service offerings while continuing to support the differentiated services and superior customer service that have historically been significant factors supporting our business.

As a result of the weak economy and challenging competitive environment in Brazil, we implemented and will continue to implement changes in our business to better align our organization and costs with our operational and financial results. These have included lower investments in costs to support subscriber growth, reductions in capital expenditures, significant reductions in our headquarters staff through the reorganization of certain roles and responsibilities between our Brazil and corporate teams, and headcount reductions in Brazil, all of which are designed to reduce costs while maintaining the support necessary to meet our subscribers' needs. While some of these initiatives have led to better operating results, the challenges we face in Brazil, together with our debt service requirements, are placing significant pressure on our liquidity. See "~~Liquidity and Capital Resources~~ ~~and~~ ~~Future Capital Needs and Resources~~"~~for more information.~~

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Although we believe that our estimates, assumptions and judgments are reasonable, they are based on presently available information. Due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

As described in more detail in our ~~2016~~2017 annual report on Form 10-K under “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we consider the following accounting policies to be the most important to our financial position and results of operations or policies that require us to exercise significant judgment and/or estimates:

revenue recognition;

allowance for doubtful accounts;

depreciation of property, plant and equipment;

amortization of intangible assets;

valuation of long-lived assets;

foreign currency;

loss contingencies; and

income taxes.

~~There~~Change to Revenue Recognition Accounting Policy. As a result of the implementation of Accounting Standards Codification, or ASC, No. 606, or ASC 606, beginning January 1, 2018, we allocate revenue between the handset and the service based on relative standalone selling price, which we refer to as SSP. We recognize revenue when we satisfy a performance obligation by providing services or transferring control of promised handsets and accessories, which are distinct to a customer. We recognize revenue in an amount that reflects the consideration to which we expect to be entitled for those performance obligations.

We recognize revenue related to access charges ratably over the contract period and net of taxes collected from customers. We recognize handset and accessory revenue when a subscriber takes possession of a device. The transaction price of the handset sold, if any, is billed at the time of sale. Although more than 90% of our subscribers typically purchase services only and acquire

a handset separately, the remainder of our subscriber base purchases a handset offered at a discounted price bundled with services. In these types of bundled sales, we allocate a portion of our future service billings to the handset and recognize revenue upon handset delivery at the inception of the contract. We determined that contracts with terms longer than one year that involve the sale of both a handset and related services generally do not include a significant financing component.

Other than these changes to our revenue recognition policy, there have been no material changes to our critical accounting policies and estimates during the three months ended ~~September 30, 2017 compared to those discussed under “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 annual report on Form 10-K.~~March 31, 2018.

Results of Operations

In accordance with accounting principles generally accepted in the U.S., we translated the results of operations of our Brazilian operating segment into U.S. dollars using the average foreign currency exchange rates for the applicable period. The following table presents the average foreign currency exchange ~~rates~~rate we used to translate Nextel Brazil's results of operations, as well as ~~changes~~the change from the average foreign currency exchange ~~rates~~rate utilized in the prior period.

Three Months Ended September 30, Actual Percent Change From Prior Year
2017 2016
Brazilian real 3.16
3.25
3 %



	Three Months Ended March 31,		Actual Percent Change From Prior Year
	2018	2017	Actual Percent Change From Prior Year
Brazilian real	3.24	3.13	(4	)%

Nine Months Ended September 30, Actual Percent Change From Prior Year
2017 2016
Brazilian real 3.17
3.56
11 %

During 2016, foreign currency exchange rates in Brazil generally appreciated in value relative to the U.S. dollar. During the first nine months of 2017, the foreign currency exchange rates experienced a slight appreciation compared to the rate in effect at the end of the prior year. The following table presents the foreign currency exchange rates in effect at the end of each of the quarters in ~~2016,~~2017, as well as at the end of the first ~~three quarters~~quarter of ~~2017.~~2018.

2016 2017
March June September December March June September
Brazilian real 3.56
3.21
3.25
3.26
3.13
3.31
3.17



	2017				2018
	March	June	September	December	March
Brazilian real	3.13	3.31	3.17	3.31	3.32

ToThe percentage amounts presented in the “Actual Change from Previous Year” and the “Constant Currency Change from Previous Year” columns in the tables below reflect the positive (better, or B,) or negative (worse, or W,) growth rates for each of the line items. In addition, to provide better ~~insight~~transparency into Nextel Brazil's results of operations, we present the year-over-year percentage change in each of the line items presented on a consolidated basis and for Nextel Brazil on a constant currency basis in the "Constant Currency Change from Previous Year" columns in the tables below. The comparison of results for these line items on a constant currency basis shows the impact of changes in foreign currency exchange rates (i) by adjusting the relevant measures for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 to amounts that would have resulted if the average foreign currency exchange ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2016 were~~March 31, 2017 was the same as the average foreign currency exchange ~~rates~~rate that ~~were~~was in effect for the three ~~and nine~~ months ended ~~September 30, 2017;~~March 31, 2018; and (ii) by comparing the constant currency financial measures for the three ~~and nine~~ months period ended ~~September 30, 2016~~March 31, 2017 to the actual financial measures for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2018. This constant currency comparison applies consistent exchange rates to the operating revenues earned in Brazilian reais and to the other components of segment earnings for the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2017. The constant currency information reflected in the tables below is not a measurement under accounting principles generally accepted in the U.S. and should be considered in addition to, but not as a substitute for, the information contained in our results of operations.

a. Consolidated


	September 30, 2017			September 30, 2016				Actual Change from Previous Year							Constant Currency Change from Previous Year		Three Months Ended March 31, 2018				Three Months Ended March 31, 2017			Actual Change from Previous Year							Constant Currency Change from Previous Year
	September 30, 2017						Dollars				Percent			Percent						Dollars				B(W) Change			B(W) Change
	(dollars in thousands)																Three Months Ended March 31, 2018	(dollars in thousands)
Three Months Ended				September 30, 2016
Brazil segment (losses) earnings	$	(30,661	)	$	23,636			$	(54,297	)		(230	)%		(226	)%	(3,600		)		Three Months Ended March 31, 2017		12,373			(15,973		)		(129	)%		(130	)%
Corporate segment losses	(6,281		)	(7,922		)		1,641				(21	)%		(21	)%	(4,262		)		(7,258		)	2,996				41	%		41	%
Consolidated segment (losses) earnings	(36,942		)	15,714				(52,656		)		(335	)%		(252	)%	(7,862		)		5,115			(12,977		)		(254	)%		(267	)%
Impairment, restructuring and other charges	(39,162		)	(1,324,205		)		1,285,043				(97	)%		(97	)%
Impairment, restructuring and other benefits (charges), net																	1,825				(71,939		)	73,764				103	%		103	%
Depreciation and amortization	(7,268		)	(78,205		)		70,937				(91	)%		(91	)%	(8,424		)		(13,025		)	4,601				35	%		33	%
Operating loss	(83,372		)	(1,386,696		)		1,303,324				(94	)%		(94	)%	(14,461		)		(79,849		)	65,388				82	%		81	%
Interest expense, net	(33,278		)	(29,451		)		(3,827		)		13	%		8	%	(26,606		)		(31,562		)	4,956				16	%		11	%
Interest income	19,012			9,199				9,813				107	%		101	%	5,386				9,136			(3,750		)		(41	)%		(39	)%
Foreign currency transaction gains (losses), net	14,174			(5,221		)		19,395				NM			NM
Foreign currency transaction (losses) gains, net																	(1,188		)		11,375			(12,563		)		(110	)%		(111	)%
Other expense, net	(10,962		)	(2,073		)		(8,889		)		NM			NM		(6,330		)		(1,775		)	(4,555		)		(257	)%		(270	)%
Loss from continuing operations before reorganization items and income tax benefit	(94,426		)	(1,414,242		)		1,319,816				(93	)%		(94	)%
Reorganization items	(2		)	(150		)		148				(99	)%		(99	)%
Income tax benefit	—			2,838				(2,838		)		(100	)%		(100	)%
Loss from continuing operations before income taxes																	(43,199		)		(92,675		)	49,476				53	%		52	%
Income taxes																	—				—			—				NM			NM
Net loss from continuing operations	(94,428		)	(1,411,554		)		1,317,126				(93	)%		(93	)%	(43,199		)		(92,675		)	49,476				53	%		52	%
Loss from discontinued operations, net of income taxes	(92		)	(7,389		)		7,297				(99	)%		(99	)%	(121		)		(38		)	(83		)		(218	)%		(218	)%
Net loss	(94,520		)	(1,418,943		)		1,324,423				(93	)%		(94	)%	(43,320		)		(92,713		)	49,393				53	%		51	%
Net loss attributable to noncontrolling interest	(27,304		)	—				(27,304		)		NM			NM		(11,606		)		—			(11,606		)		NM			NM
Net loss attributable to NII Holdings	$	(67,216	)	$	(1,418,943	)		$	1,351,727			(95	)%		(95	)%	$	(31,714	)		$	(92,713	)	$	60,999			66	%		64	%

Nine Months Ended
Brazil segment (losses) earnings	$	(15,208	)	$	59,652			$	(74,860	)		(125	)%		(123	)%
Corporate segment losses	(21,980		)	(29,462		)		7,482				(25	)%		(25	)%
Consolidated segment (losses) earnings	(37,188		)	30,190				(67,378		)		(223	)%		(156	)%
Impairment, restructuring and other charges	(165,336		)	(1,340,677		)		1,175,341				(88	)%		(89	)%
Depreciation and amortization	(29,628		)	(159,024		)		129,396				(81	)%		(83	)%
Operating loss	(232,152		)	(1,469,511		)		1,237,359				(84	)%		(86	)%
Interest expense, net	(91,245		)	(81,854		)		(9,391		)		11	%		(6	)%
Interest income	35,956			29,725				6,231				21	%		8	%
Foreign currency transaction gains, net	12,197			77,777				(65,580		)		(84	)%		(86	)%
Other expense, net	(5,549		)	(7,015		)		1,466				(21	)%		(29	)%
Loss from continuing operations before reorganization items and income tax benefit	(280,793		)	(1,450,878		)		1,170,085				(81	)%		(83	)%
Reorganization items	445			(748		)		1,193				(159	)%		(159	)%
Income tax benefit	5,778			2,469				3,309				134	%		134	%
Net loss from continuing operations	(274,570		)	(1,449,157		)		1,174,587				(81	)%		(83	)%
Income (loss) from discontinued operations, net of income taxes	2,567			(16,245		)		18,812				(116	)%		(116	)%
Net loss	(272,003		)	(1,465,402		)		1,193,399				(81	)%		(83	)%
Net loss attributable to noncontrolling interest	(27,304		)	—				(27,304		)		NM			NM
Net loss attributable to NII Holdings	$	(244,699	)	$	(1,465,402	)		$	1,220,703			(83	)%		(85	)%

NM-Not Meaningful

We define segment ~~(losses)~~ earnings as operating ~~loss~~income (loss) before depreciation, amortization and net impairment, restructuring and other (benefits) charges. We recognized consolidated segment losses of ~~$36.9 million and $37.2~~$7.9 million during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to consolidated segment earnings of ~~$15.7 million and $30.2~~$5.1 million during the same ~~periods~~period in ~~2016.~~2017. Our consolidated results include the results of operations of our Brazil segment and our corporate operations in the sections that follow.


1.	Impairment, restructuring and other charges

Consolidated impairment, restructuring and other (benefits) charges, net recognized in the ~~three~~first quarter of 2018 primarily consisted of the following:

the reversal of $13.7 million in previously accrued restructuring charges related to approximately 250 transmitter and ~~nine months ended September 30, 2017 included $34.2~~receiver sites that Nextel Brazil has identified as sites that it plans to exchange with certain of its tower lessors; mostly offset by

$10.8 million in restructuring costs, ~~related to a change in~~ the ~~scope of Nextel Brazil's radio access network, or RAN, sharing implementation, as well as $9.2 million and $61.8 million in other restructuring costs, respectively, most~~majority of which related to future lease costs for ~~certain~~approximately 150 iDEN-related transmitter and receiver sites and the separation of approximately 75 employees.

In the first quarter of 2017, we determined that ~~are no longer required in~~the carrying value of our Nextel ~~Brazil's business and $3.1 million and $7.0 million in other non-cash asset impairment charges, respectively, primarily related to the abandonment~~Brazil segment was not fully recoverable. As a result of certain transmitter and receiver sites that were no longer required in Nextel Brazil's business. Consolidated impairment, restructuring and other charges recognized in the nine months ended September 30, 2017 also includedthis determination, we recorded a ~~$56.5~~$66.0 million non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair ~~values and $4.9 million in severance and other related costs resulting from the separation of certain executive level employees in Brazil.~~

During the third quarter of 2016, we determined that the carrying value of our Nextel Brazil segment is not fully recoverable. As a result of this determination, we recorded a $1.31 billion non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values, as well as to impair our trademark intangible asset and other property, plant and equipment at the corporate level.values. Consolidated impairment, restructuring and other charges recognized in the ~~three and nine months ended September 30, 2016~~first quarter of 2017 also included ~~$5.2~~$3.3 million ~~and $13.4 million, respectively,~~ in ~~non-cash asset impairment charges primarily~~restructuring costs related to the ~~abandonment~~early termination of ~~transmitter and receiver sites in Brazil and $6.2 million and $11.4 million, respectively, in restructuring charges primarily related to future lease costs~~certain leases for ~~certain~~ transmitter and receiver sites that are no longer required in Nextel Brazil's business and ~~office closures. In the nine months ended September 30, 2016, these charges also included $3.4~~$2.3 million in ~~severance~~other non-cash asset impairment charges, the majority of which related to the abandonment of certain transmitter and ~~other related costs at the corporate level as a result of the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses.~~receiver sites.


2.	~~Depreciation and amortization~~

The $70.9 million, or 91%, and $129.4 million, or 81%, decreases in consolidated depreciation and amortization on a reported basis, and 91% and 83% decreases on a constant currency basis, in the three and nine months ended September 30, 2017 compared to the same periods in 2016 resulted primarily from the $1.31 billion non-cash asset impairment charge we recognized in the third quarter of 2016.


3.	~~Interest expense, net~~

Consolidated net interest expense increased $3.8 million, or 13%, on a reported basis, and 8% on a constant currency basis, during the three months ended September 30, 2017 compared to the same period in 2016 primarily due to interest incurred under Nextel Brazil's spectrum financing arrangement. Consolidated net interest expense increased $9.4 million, or 11%, on a reported basis during the nine months ended September 30, 2017 compared to the same period in 2016 as a result of the impact of the appreciation in the Brazilian real on our reported results. Consolidated net interest expense decreased 6% on a constant currency basis over the same period primarily due to principal payments under Nextel Brazil's equipment financing facility and local bank loans, partially offset by interest incurred under Nextel Brazil's spectrum financing arrangement.


4.	Foreign currency transaction (losses) gains, ~~(losses),~~ net

Consolidated foreign currency transaction gains of ~~$14.2~~$11.4 million ~~and $12.2 million recognized in~~during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 were primarily the result ~~of the impact~~ of the appreciation in the value of the Brazilian real relative to the U.S. dollar during those periods on Nextel Brazil's U.S. dollar-denominated net liabilities.

~~Consolidated foreign currency transaction losses of $5.2 million during the three months ended September 30, 2016 were primarily due to the depreciation in the~~

b. Nextel Brazil



	Three Months Ended March 31, 2018			% of Nextel Brazil’s Operating Revenues		Three Months Ended March 31, 2017			% of Nextel Brazil’s Operating Revenues		Actual Change from Previous Year					Constant Currency Change from Previous Year
	Three Months Ended March 31, 2018			% of Nextel Brazil’s Operating Revenues		Three Months Ended March 31, 2017			% of Nextel Brazil’s Operating Revenues		Dollars			B(W) Change		B(W) Change
	(dollars in thousands)
Service and other revenues	$	175,951		97	%	$	243,463		97	%	$	(67,512	)	(28	)%	(25	)%
Handset and accessory revenues	5,041			3	%	7,462			3	%	(2,421		)	(32	)%	(30	)%
Cost of handsets and accessories	(9,065		)	(5	)%	(8,666		)	(3	)%	(399		)	(5	)%	(8	)%
Handset and accessory net subsidy	(4,024		)	(2	)%	(1,204		)	—		(2,820		)	(234	)%	(246	)%
Cost of service (exclusive of depreciation and amortization)	(88,924		)	(49	)%	(102,708		)	(41	)%	13,784			13	%	10	%
Selling and marketing expenses	(21,231		)	(12	)%	(27,184		)	(11	)%	5,953			22	%	19	%
General and administrative expenses	(65,372		)	(36	)%	(99,994		)	(40	)%	34,622			35	%	32	%
Segment (losses) earnings	$	(3,600	)	(2	)%	$	12,373		5	%	$	(15,973	)	(129	)%	(130	)%

The average value of the Brazilian real relative to the U.S. dollar on Nextel Brazil's U.S. dollar-denominated net liabilities during that period. Foreign currency transaction gains of $77.8 million during the nine months ended September 30, 2016 were primarily due to the appreciation in the value of the Brazilian real relative to the U.S. dollar on Nextel Brazil's U.S. dollar-denominated net liabilities during the first half of 2016, partially offset by a decline in its valuedepreciated relative to the U.S. dollar during the three months ended ~~September 30, 2016.~~

~~b. Nextel Brazil~~

September 30, 2017
% of
Nextel Brazil’s
Operating Revenues
September 30, 2016
% of
Nextel Brazil’s
Operating Revenues

Actual Change from
Previous Year
Constant Currency Change from Previous Year
Dollars Percent Percent
(dollars in thousands)
Three Months Ended ��
Service and other revenues $ 200,235
98 % $ 255,625
98 % $ (55,390 ) (22 )% (24 )%
Handset and accessory revenues 4,549
2 % 5,173
2 % (624 ) (12 )% (14 )%
Cost of handsets and accessories (8,736 ) (4 )% (5,780 ) (2 )% (2,956 ) 51 % 47 %
Handset and accessory net subsidy (4,187 ) (2 )% (607 ) —
(3,580 ) NM
NM
Cost of service (exclusive of
depreciation and amortization)
(94,010 ) (46 )% (96,526 ) (37 )% 2,516
(3 )% (5 )%
Selling and marketing expenses (28,275 ) (14 )% (30,439 ) (12 )% 2,164
(7 )% (10 )%
General and administrative expenses (104,424 ) (51 )% (104,417 ) (40 )% (7 ) —
(3 )%
Segment (losses) earnings $ (30,661 ) (15 )% $ 23,636
9 % $ (54,297 ) (230 )% (226 )%

Nine Months Ended
Service and other revenues $ 663,748
97 % $ 719,250
98 % $ (55,502 ) (8 )% (18 )%
Handset and accessory revenues 17,066
2 % 17,219
2 % (153 ) (1 )% (12 )%
Cost of handsets and accessories (30,443 ) (4 )% (25,807 ) (3 )% (4,636 ) 18 % 5 %
Handset and accessory net subsidy (13,377 ) (2 )% (8,588 ) (1 )% (4,789 ) 56 % 39 %
Cost of service (exclusive of
depreciation and amortization)
(284,560 ) (42 )% (268,460 ) (37 )% (16,100 ) 6 % (6 )%
Selling and marketing expenses (78,843 ) (11 )% (80,491 ) (11 )% 1,648
(2 )% (13 )%
General and administrative expenses (302,176 ) (44 )% (302,059 ) (41 )% (117 ) —
(11 )%
Segment (losses) earnings $ (15,208 ) (2 ) $ 59,652
8 % $ (74,860 ) (125 )% (123 )%

~~NM-Not Meaningful~~

~~The average value of the Brazilian real appreciated relative to the U.S. dollar during the three and nine months ended September 30, 2017~~March 31, 2018 by ~~3% and 11%, respectively,~~4% compared to the average value that prevailed during the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2017. As a result, the components of Nextel Brazil's results of operations for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, after translation into U.S. dollars, reflect ~~higher~~lower revenues and expenses in U.S. dollars than would have occurred if the Brazilian real had not ~~appreciated~~depreciated relative to the U.S. dollar. To the extent the value of the Brazilian real depreciates further relative to the U.S. dollar, Nextel Brazil's future reported results of operations will be adversely affected.

We use the term "subscriber unit," which we also refer to as a subscriber, to represent an active SIM card, which is the level at which we track subscribers. The table below provides an overview of Nextel Brazil's subscriber units in commercial service on both its iDEN and WCDMA networks, as well as Nextel Brazil's subscriber turnover rates for each of the quarters in ~~2016~~2017 and for the first ~~three quarters~~quarter of ~~2017.~~2018. We calculate subscriber turnover by dividing subscriber deactivations for the period by the average number of subscriber units during that period.

2623


	Three Months Ended														Three Months Ended
	March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016		March 31, 2017		June 30, 2017		September 30, 2017		March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017		March 31, 2018
	(subscribers in thousands)														(subscribers in thousands)
iDEN subscriber units	1,552.0		1,315.1		1,127.8		962.1		822.7		686.3		563.3		822.7		686.3		563.3		449.7		349.6
WCDMA subscriber units	2,744.7		2,708.7		2,717.1		2,746.3		2,815.2		2,874.6		2,864.8		2,815.2		2,874.6		2,864.8		2,845.8		2,896.1
Total subscriber units in commercial service — beginning of period	4,296.7		4,023.8		3,844.9		3,708.4		3,637.9		3,560.9		3,428.1		3,637.9		3,560.9		3,428.1		3,295.5		3,245.7

iDEN net subscriber losses	(195.2	)	(149.7	)	(130.8	)	(110.1	)	(115.4	)	(103.5	)	(100.3	)	(115.4	)	(103.5	)	(100.3	)	(76.6	)	(84.4	)
WCDMA net subscriber (losses) additions	(77.7	)	(29.2	)	(5.7	)	39.6		38.4		(29.3	)	(32.3	)
Total net subscriber losses	(272.9	)	(178.9	)	(136.5	)	(70.5	)	(77.0	)	(132.8	)	(132.6	)
WCDMA net subscriber additions (losses)															38.4		(29.3	)	(32.3	)	26.8		92.9
Total net subscriber (losses) additions															(77.0	)	(132.8	)	(132.6	)	(49.8	)	8.5

Migrations from iDEN to WCDMA	41.7		37.6		34.9		29.3		21.0		19.5		13.3		21.0		19.5		13.3		23.5		34.8

iDEN subscriber units	1,315.1		1,127.8		962.1		822.7		686.3		563.3		449.7		686.3		563.3		449.7		349.6		230.4
WCDMA subscriber units	2,708.7		2,717.1		2,746.3		2,815.2		2,874.6		2,864.8		2,845.8		2,874.6		2,864.8		2,845.8		2,896.1		3,023.8
Total subscriber units in commercial service — end of period	4,023.8		3,844.9		3,708.4		3,637.9		3,560.9		3,428.1		3,295.5		3,560.9		3,428.1		3,295.5		3,245.7		3,254.2

Total subscriber turnover	4.34	%	3.99	%	3.99	%	3.65	%	3.71	%	3.95	%	4.47	%	3.71	%	3.95	%	4.47	%	3.83	%	3.02	%
iDEN subscriber turnover	4.80	%	4.46	%	4.65	%	4.71	%	5.52	%	5.88	%	6.89	%	5.52	%	5.88	%	6.89	%	6.36	%	9.67	%
WCDMA subscriber turnover	4.10	%	3.78	%	3.73	%	3.31	%	3.23	%	3.53	%	4.04	%	3.23	%	3.53	%	4.04	%	3.47	%	2.37	%

Nextel Brazil's WCDMA subscriber turnover steadily decreased throughout 2016 as a result of various actions Nextel Brazil implemented in an effort to retain existing subscribers. These actions included the implementation of new simplified rate plans, the issuance of loyalty discounts and customer care credits, more customer self-care offerings, better delivery of service and other actions to improve our customers' overall experience. During the second and third quarters of 2017, Nextel Brazil's WCDMA subscriber turnover increased as a result of the introduction of unlimited voice offerings by competitors and the tightening of certain credit and collections policies induring the first ~~nine months~~three quarters of 2017. In addition, the increase in Nextel Brazil's WCDMA subscriber turnover in the third quarter of 2017 was partially caused by a significant number of customer contract expirations. In August 2017, Nextel Brazil ~~introduced similar types of~~began offering unlimited voice ~~offerings~~rate plans in response to the increasingly competitive ~~environment and is actively working~~environment. As a result of its efforts to migrate ~~its~~ existing customers to these types of unlimited rate ~~plans. We expect~~plans, as well as other targeted efforts to promote customer loyalty and improve collections, Nextel Brazil's WCDMA subscriber turnover ~~to decline~~began declining in the fourth quarter of 2017 ~~as a result~~and decreased further in the first quarter of ~~these efforts.~~2018.

The following table represents Nextel Brazil's ARPU for subscribers on both its iDEN and WCDMA networks for each of the quarters in ~~2016,~~2017, as well as for the first ~~three quarters~~quarter of ~~2017,~~2018, in both U.S. dollars (US$) and in Brazilian reais (BR). We calculate service ARPU by dividing service revenues per period by the weighted average number of subscriber units in commercial service during that period.


	Three Months Ended							Three Months Ended
	March 31, 2016	June 30, 2016	September 30, 2016	December 31, 2016	March 31, 2017	June 30, 2017	September 30, 2017	March 31, 2017	June 30, 2017	September 30, 2017	December 31, 2017	March 31, 2018
Total service ARPU (US$)	16	19	21	20	21	19	19	21	19	19	18	17
WCDMA service ARPU (US$)	16	20	21	21	22	20	19	22	20	19	18	18
iDEN service ARPU (US$)	15	16	19	18	17	15	15	17	15	15	14	12

Total service ARPU (BR)	62	66	67	67	65	62	59	65	62	59	57	56
WCDMA service ARPU (BR)	64	70	69	69	68	65	61	68	65	61	58	58
iDEN service ARPU (BR)	57	56	60	59	54	49	47	54	49	47	47	38

During the first half of 2017, Nextel Brazil's WCDMA service ARPU in Brazilian reais decreased ~~over the course of the first two quarters in 2017 compared to recent prior quarters~~ as ~~the~~a result of a higher volume of discounts to retain existing customers and slightly lower loading ARPU in an effort to attract new customers. Nextel Brazil's WCDMA service ARPU in Brazilian reais continued to decrease in the ~~third quarter~~second half of 2017 due primarily to price deterioration in ~~part to~~the overall wireless market and new types of unlimited rate plans ~~being~~that were introduced in response to the competitive ~~environment as these~~environment. These types of plans remove many of the usage-based fees that Nextel Brazil charged in previous quarters, which resulted in less revenue per customer. Nextel ~~Brazil is taking actions~~Brazil's WCDMA service ARPU began to stabilize in the first quarter of 2018 as a

result of an increased focus on high value customer segments and the expansion of its addressable market. However, overall market pricing in Brazil has been declining over time and could put pressure on our WCDMA service ARPU in the ~~remainder of 2017.~~future.

Nextel ~~Brazil continues to offer services on its~~Brazil's iDEN network ~~which~~ does not support data services that are competitive with the higher speed data services offered by its competitors or that are available on its WCDMA network. As a result, Nextel Brazil has had to offer iDEN service plans with lower ARPU levels to retain subscribers on its iDEN network and offer incentives to transition those subscribers to services on its WCDMA network. Nextel Brazil has experienced net subscriber losses and overall declines in its iDEN service ARPU. ~~Nextel Brazil's iDEN service ARPU increased in the third quarter of 2016 as the result of an annual inflationary price adjustment.~~ In response to continued subscriber losses on its iDEN network, in September 2017, Nextel Brazil ~~made a decision~~decided to wind down its iDEN operations with a target to cease all iDEN services by the ~~second quarter~~end of May 2018. As a result, Nextel Brazil has provided notice of the eventual shutdown to its remaining iDEN subscribers and is ~~currently~~actively working to ~~actively~~ migrate the remainder of its legacy iDEN subscriber base to its WCDMA ~~network. As a result of this decision, we expect a significant decrease in iDEN-based operating revenue from 2017 to 2018 with minimal associated cost savings.~~network by proactively promoting attractive service offerings.

Results Overview.

~~Until recently,~~Recently, Brazil ~~was experiencing~~experienced one of the worst economic recessions in its ~~history. As a result, the economic environment in Brazil has been~~history, characterized by years of negative real wage growth, a net loss of jobs, higher unemployment and lower consumer confidence. These economic conditions and trends ~~have~~ resulted in a decline in the amount of consumer disposable income that is available to purchase telecommunications services and ~~have had an adverse impact on our ability to attract and retain subscribers and on our collection rates. We expect that these economic conditions will continue to have a negative impact on~~negatively impacted Nextel Brazil's ~~reported~~ results of operations for recent prior years. Although recent data indicates that Brazil's economy is beginning to recover, the ~~remainder of 2017.~~

Over the course of the last two years, we have made adjustments to our business plan to reflect our available cash resources and the impact of the current and expected economic and competitive conditions in Brazil on both our subscriber growth ~~and revenues, and have aligned our costs~~is slow with this revised outlook. As a result, we are not aggressively investing in subscriber growth, but are focusing on attracting high value subscribers while simultaneously reducing operating expenses, handset subsidies and customer turnover.gradual improvements.

Nextel Brazil's segment earnings decreased ~~$54.3~~$16.0 million, or ~~230%, and $74.9 million, or 125%~~129%, on a reported basis, and ~~226% and 123%~~130% on a constant currency basis, induring the ~~three and nine months ended September 30, 2017~~first quarter of 2018 compared to the same ~~periods~~period in ~~2016~~2017 primarily as a result of a decline in operating revenues, partially offset by lower operating expenses, as follows:


1.	Service and other revenues

Service and other revenues decreased ~~$55.4~~$67.5 million, or ~~22%, and $55.5 million, or 8%~~28%, on a reported basis, and ~~24% and 18%~~25% on a constant currency basis, during the ~~three and nine months ended September 30, 2017~~first quarter of 2018 compared to the same ~~periods~~period in ~~2016~~2017 as a result of the decline in Nextel Brazil's iDEN subscriber base, as well as the ~~decreases~~decrease in service ARPU discussed above.

Nextel Brazil's WCDMA subscriber base grew from ~~2.7~~2.9 million subscribers as of the end of the ~~third~~first quarter of ~~2016~~2017 to ~~2.8~~3.0 million subscribers as of the end of the ~~third~~first quarter of ~~2017.~~2018. Despite the overall growth in its WCDMA subscriber base, Nextel Brazil's WCDMA-based service and other revenues decreased ~~10%~~14% on a reported basis and ~~4%, respectively,~~11% on a constant currency basis from the ~~three and nine months ended September 30, 2016~~first quarter of 2017 to the same ~~periods~~period in ~~2017~~2018 due to a decrease in local currency WCDMA service ARPU.

In connection with the decision to wind down its iDEN operations discussed above, Nextel Brazil's iDEN-based service and other revenues decreased ~~$42.3~~$39.8 million, or ~~59%, and $97.2 million, or 44%~~77%, from the ~~three and nine months ended September 30, 2016~~first quarter of 2017 to the same ~~periods~~period in ~~2017,~~2018, or ~~61% and 51%~~76% on a constant currency basis, as a result of a 66% decrease in Nextel Brazil's iDEN subscriber base from ~~1.0 million~~686 thousand subscribers as of the end of the ~~third~~first quarter of ~~2016~~2017 to ~~0.4 million~~230 thousand subscribers as of the end of the ~~third~~first quarter of 2018, as well as the decline in local currency iDEN service ARPU.

As a result of the adoption of ASC 606, we recognized all revenue-based taxes on a net basis in 2018 rather than on a gross basis as we did in 2017. Service and other revenues would have been $4.8 million higher in the first quarter of 2018 without the implementation of ASC 606.


2.	Handset and accessory net subsidy

Nextel Brazil recognized $4.2 million and $13.4 million in handset and accessory net subsidy in the three and nine months ended September 30, 2017 compared to $0.6 million and $8.6 million in the same periods in 2016.

During the ~~periods presented,~~first quarters of 2018 and 2017, approximately 95% and 93%, respectively, of ~~our~~Nextel Brazil's new WCDMA gross ~~subscriber additions~~subscribers represented subscribers who utilized their existing handsets rather than purchasing a new handset from Nextel Brazil, resulting in relatively low levels of handset and accessory net subsidy.


3.	Cost of service

Cost of service decreased ~~$2.5~~$13.8 million, or 3%13%, on a reported basis during the ~~three months ended September 30, 2017~~first quarter of 2018 compared to the same period in ~~2016. Cost of service increased $16.1 million, or 6%, on a reported basis during the nine months ended September 30, 2017 compared to the same period in 2016.~~2017. On a constant currency basis, Nextel Brazil's cost of service decreased ~~5% and 6% during the three and nine months ended September 30, 2017 compared to~~10% over the same ~~periods in 2016~~period mainly due to lower transmitter and receiver site ~~maintenance~~rent and ~~utility~~maintenance costs, a reduction in the volume of calls on Nextel Brazil's iDEN network and lower mobile termination rates, partially offset by expenses related to Nextel Brazil's RAN sharing agreement. Nextel Brazil will continue to incur ~~certain~~ rent expenses related to iDEN transmitter and receiver sites subsequent to their shutdown until these ~~sites are dismantled or the lease ends.~~leases end.


4.	Selling and marketing expenses

Selling and marketing expenses decreased ~~$2.2~~$6.0 million, or ~~7%, and $1.6 million, or 2%~~22%, on a reported basis, and 19% on a constant currency basis, during the ~~three and nine months ended September 30, 2017~~first quarter of 2018 compared to the same ~~periods~~period in ~~2016. On~~2017 primarily as a ~~constant currency basis, Nextel Brazil's~~result of the impact of implementing ASC 606. The adoption of ASC 606 resulted in the capitalization of both direct and indirect commissions beginning on January 1, 2018 compared to the expensing of these types of commissions during the first quarter of 2017. If we had not implemented ASC 606 on January 1, 2018, we would have recognized an additional $1.8 million in selling and marketing expenses ~~decreased 10% and 13%, respectively,~~ in the ~~three and the nine months ended September 30, 2017 compared to the same periods in 2016 as a result~~first quarter of ~~a change in the mix between direct and indirect commissions to less costly channels, as well as lower advertising expenses due to fewer television marketing campaigns.~~2018.


5.	General and administrative expenses

General and administrative expenses ~~remained relatively stable~~decreased $34.6 million, or 35%, on a reported basis, and ~~decreased 3% and 11%~~32% on a constant currency basis, during the ~~three and nine months ended September 30, 2017~~first quarter of 2018 compared to the same ~~periods~~period in ~~2016~~2017 primarily resulting from ~~decreases in consulting costs, partially offset by slight increases~~a decrease in bad debt expense as a result of ~~lower~~improvements in collections, ~~due to~~as well as a decrease in customer care-related expenses. In connection with the ~~challenging macroeconomic environment.~~implementation of ASC 606, we recognized revenue-based taxes on a net basis in 2018 rather than on a gross basis in 2017. If we had not implemented ASC 606 on January 1, 2018, we would have recognized an additional $4.7 million in general and administrative expenses in the first quarter of 2018.

c. Corporate


	September 30, 2017			September 30, 2016				Change from Previous Year						Three Months Ended March 31, 2018				Three Months Ended March 31, 2017				Change from Previous Year
	September 30, 2017						Dollars				Percent						Dollars					B(W) Change
	(dollars in thousands)													Three Months Ended March 31, 2018	(dollars in thousands)
Three Months Ended				September 30, 2016
Service and other revenues	$	24		$	38			$	(14	)		(37	)%	$	21			Three Months Ended March 31, 2017		$	30			$	(9	)		(30	)%
General and administrative expenses	(6,305		)	(7,960		)		1,655				(21	)%	(4,283		)		(7,288		)		3,005				41	%
Segment losses	$	(6,281	)	$	(7,922	)		$	1,641			(21	)%	$	(4,262	)		$	(7,258	)		$	2,996			41	%

Nine Months Ended
Service and other revenues	$	83		$	137			$	(54	)		(39	)%
General and administrative expenses	(22,063		)	(29,599		)		7,536				(25	)%
Segment losses	$	(21,980	)	$	(29,462	)		$	7,482			(25	)%

Segment losses decreased ~~$1.6~~$3.0 million, or ~~21%, and $7.5 million, or 25%~~41%, in the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the same ~~periods~~period in ~~2016~~2017 primarily due ~~to reductions~~a reduction in payroll costs resulting from fewer general and administrative personnel following reductions in force, as well as lower rent expense and lower information technology costs resulting from the reorganization of certain roles and responsibilities between our Brazil and corporate teams. General and administrative expenses for the three and nine months ended September 30, 2017 included approximately $0.4 million and $2.0 million, respectively, of transaction costs related to our partnership agreement with ice group.a decrease in professional fees.

Liquidity and Capital Resources

As of ~~September 30, 2017,~~March 31, 2018, we had a working capital ~~deficit~~ of ~~$179.1~~$171.7 million, a $44.8 million decrease compared to a working capital ~~deficit~~ of ~~$119.7~~$216.5 million as of December 31, ~~2016. As of September 30,~~ 2017, due to cash used in our operations. Our working capital included ~~$234.7~~$136.3 million in cash and cash equivalents, of which ~~$2.0~~$0.9 million was held by Nextel Brazil in Brazilian reais, and ~~$24.9~~$50.2 million in short-term investments, which was also held in Brazilian reais. ~~During the second quarter of 2017, we recovered $41.7 million in cash securing performance bonds.~~ As of September 30, 2017, we had $51.8 million of cash collateral securing the remaining performance bonds, of which we recorded $48.6 million as a component of prepaid expenses and other and the remaining $3.2 million as a component of other assets in our condensed consolidated balance sheet. As of September 30, 2017,March 31, 2018, we also had $110.0 million in cash held in escrow in connection with the sale of Nextel Mexico, which we classified as a component of prepaid expenses and other in our condensed consolidated balance sheet. In October 2017, we reached an agreement with the Mexican tax authorities related to the audits of Nextel Mexico's income tax returns for the years 2010 and 2011. Specifically, we agreed to incremental tax liabilities of $36.9 million to settle all open issues related to these tax years. We expect to utilize existing tax credits to settle these liabilities, although it is possible that we may need to settle a portion of these liabilities using cash that is currently held in escrow. We expect to receive a release of the previously escrowed funds related to the 2010 and 2011 income tax audits, less any cash used to settle the claims, in the fourth quarter of 2017. See Note 4 to our condensed consolidated financial statements for more information.

A substantial portion of our U.S. dollar-denominated cash, cash equivalents and short-term investments is held in bank deposits, and our cash, cash equivalents and short-term investments held in Brazilian reais are typically maintained in ~~a combination of~~ money market funds ~~highly liquid overnight securities and fixed income investments.~~that have daily liquidity. The values of our cash, cash equivalents and short-term investments that are held in Brazilian reais will fluctuate in U.S. dollars based on changes in the exchange rate of the Brazilian real relative to the U.S. dollar.

Cash Flows

Nine Months Ended
September 30, 2017 September 30, 2016

Cash and cash equivalents, beginning of period $ 257,380
$ 342,184
Net cash used in operating activities (62,657 ) (74,908 )
Net cash provided by investing activities 80,678
96,888
Net cash used in financing activities (41,249 ) (72,857 )
Effect of exchange rate changes on cash and cash equivalents 543
(1,558 )
Cash and cash equivalents, end of period $ 234,695
$ 289,749



	Three Months Ended
	March 31, 2018			March 31, 2017

Cash, cash equivalents and restricted cash, beginning of period	$	305,778		$	422,232
Net cash used in operating activities	(44,665		)	(44,567		)
Net cash (used in) provided by investing activities	(6,219		)	31,982
Net cash used in financing activities	(6,690		)	(43,064		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	716			(145		)
Cash, cash equivalents and restricted cash, end of period	$	248,920		$	366,438

The following is a discussion of the primary sources and uses of cash in our operating, investing and financing activities.

We used ~~$62.7~~$44.7 million and $44.6 million of cash in our operating activities, respectively, during the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017 ~~a $12.3 million decrease from the nine months ended September 30, 2016, largely resulting from efforts~~primarily to ~~reduce~~fund operating ~~costs~~losses and ~~lower interest. During the nine months ended September 30, 2017~~working capital and ~~2016, cash used in our operating activities included $75.3 million~~to make interest payments under Nextel Brazil's equipment financing and ~~$80.0 million, respectively, in cash paid for interest.~~bank loans.

We used $6.2 million of cash in our investing activities during the three months ended March 31, 2018, primarily due to $34.9 million in net purchases of short-term investments in Brazil and $11.1 million in cash capital expenditures, partially offset by a $41.3 million net return of deposits, which included the release of substantially all of the cash securing certain performance bonds relating to our obligations to deploy spectrum in Brazil. Our investing activities provided us with ~~$80.7~~$32.0 million of cash during the ~~nine~~three months ended ~~September 30,~~March 31, 2017, primarily due to ~~$53.5 million in cash released from escrow, $31.3 million of net cash returned to us from the release of performance bonds and $53.3~~$64.5 million in net proceeds received from maturities of our short-term investments in Brazil, partially offset by ~~$52.1~~$27.6 million in cash capital expenditures. Our investing activities provided us with $96.9 million of cash during the nine months ended September 30, 2016, primarily due to $81.1 million of net cash returned to us from the release of performance bonds, $16.0 million in cash released from escrow and $77.7 million in net proceeds received from maturities of our short-term investments in Brazil and at the corporate level, partially offset by $47.5 million in cash capital expenditures and $14.1 million paid for judicial deposits.

We used ~~$41.2~~$6.7 million of cash in financing activities during the three months ended March 31, 2018, primarily due to $4.1 million of financing costs incurred in connection with the amendments to Nextel Brazil's equipment financing facility and bank loans. We used $43.1 million of cash in our financing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2017, primarily due to ~~$48.9~~a $24.6 million in semi-annual principal ~~payments~~payment under Nextel Brazil's equipment financing facility and ~~$36.5~~$17.5 million in principal payments under Nextel Brazil's local bank loans, partially offset by $50.0 million in cash we received in connection with our partnership agreement with ice group. We used $72.9 million of cash in our financing activities during the nine months ended September 30, 2016, primarily due to $48.9 million in semi-annual principal payments under Nextel Brazil's equipment financing facility and $23.0 million in principal payments in total under our local bank loans.

Future Capital Needs and Resources

Capital Resources. Our ongoing capital resources depend on a variety of factors, including our existing cash, cash equivalents and investment balances, cash flows generated by our operating activities, cash that we recover from the amounts held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, ~~the return of cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our spectrum in Brazil,~~ external financial sources, other financing arrangements and the availability of cash proceeds from the sale of assets. In addition, in connection with the partnership agreement we entered into with ice group in June 2017, ice group may elect to invest an additional $150.0 million in our business by exercising its option by November 15, 2017. On November 7, 2017, we were advised that ice group may not exercise its option to make a second investment by November 15, 2017, and the parties are currently discussing the terms of an extension of ice group's option.

Our ability to generate sufficient net cash from our operating activities in the future is dependent upon, among other things:

the amount of revenue we are able to generate and collect from our subscribers, including our ability to increase the size of our subscriber base;

the amount of operating expenses required to provide our services;

the cost of acquiring and retaining subscribers, including the subsidies we incur to provide handsets to both our new and existing subscribers; and

changes in foreign currency exchange rates.

~~Due to the impact of our recent and projected results of operations and other factors, we expect our access to the capital markets in the near term may be limited. See "— Future Outlook, Liquidity and Going Concern~~"~~for more information.~~

Capital Needs and Contractual Obligations. We currently anticipate that our future capital needs will principally consist of funds required for:

operating expenses and capital expenditures relating to our existing network and the continued deployment of LTE in ~~other commercial areas in Brazil;~~São Paulo;

payments in connection with previous spectrum purchases and ongoing spectrum license fees;

debt service requirements;

obligations relating to our tower financing arrangements and capital lease obligations;

cash taxes; and

other general corporate expenditures.

There were no material changes to our total contractual obligations during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 as described in our annual report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Capital Expenditures. Our capital expenditures, including capitalized interest, were ~~$30.1~~$8.3 million and ~~$25.6~~$9.5 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. ~~Compared to recent prior years, we have reduced~~We expect our ~~investments in~~ capital expenditures ~~including making substantial reductions~~for 2018 to ~~our investments~~be similar to the levels experienced in ~~network development and deployment. We~~2017. In addition, we expect to continue ~~these~~our efforts to conserve our cash resources while simultaneously meeting the capacity needs of our network.

Our capital spending and related expenses are expected to be driven by several factors, including:

the amount we spend to enhance our WCDMA network ~~in Brazil~~ and deploy ~~LTE;~~LTE in certain areas;

the extent to which we expand the coverage of our network in new or existing market areas;

the number of additional transmitter and receiver sites we build in order to increase system capacity, maintain system quality and meet our regulatory requirements, as well as the costs associated with the installation of network infrastructure and switching equipment; and

the costs we incur in connection with non-network related information technology projects.

Our future capital expenditures may also be affected by future technology improvements, technology choices and our available capital.

~~Covenants Under Financing Agreements.~~ As of September 30, 2017, we had $208.0 million principal amount outstanding under Nextel Brazil's local bank loans. As discussed in more detail in Note 1 and Note 5 to our condensed consolidated financial statements, we are required to meet a net debt financial covenant semiannually in connection with the agreements governing Nextel Brazil's local bank loans. The next measurement date for this financial covenant will be December 31, 2017. Based on our current outlook, which reflects significant uncertainty about the economic and competitive conditions in Brazil that are currently impacting our ability to increase our revenues and generate profitability, we believe it is unlikely that we will satisfy one of the applicable financial covenants included in both of Nextel Brazil's local bank loan agreements as of the next measurement date at December 31, 2017. As a result of this uncertainty, we have continued to classify the amounts outstanding under Nextel Brazil's local bank loans as current liabilities in our condensed consolidated balance sheet as of September 30, 2017. In addition, Nextel Brazil's local bank loans and its equipment financing facility each contain cross-acceleration provisions.

We are also required to meet certain financial covenants semiannually in connection with the agreement governing Nextel Brazil's equipment financing facility. Based on our current outlook, we believe it is unlikely that we will satisfy the applicable financial covenants included in Nextel Brazil's equipment financing facility as of the next measurement date at December 31, 2017. As a result of this uncertainty, we have continued to classify the amount outstanding under this facility as a current liability in our condensed consolidated balance sheet as of September 30, 2017. As of September 30, 2017, we had $244.6 million principal amount outstanding under Nextel Brazil's equipment financing facility.

As discussed below, in October 2017, Nextel Brazil entered into an amended and restated equipment financing facility and sixth amendments to the local bank loans, subject to approval by China's export and credit insurance corporation, or Sinosure.

Among other changes, these amendments provide for a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. Until the required Sinosure approval is received, these amendments are not effective.

Future ~~Outlook, Liquidity and Going Concern.~~Outlook. As of ~~September 30, 2017,~~March 31, 2018, our consolidated sources of funding included ~~$259.6~~$186.5 million in cash and short-term investments, and $110.0 million in cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel ~~Mexico, and $51.8 million in cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our WCDMA spectrum in Brazil.~~Mexico. Based on the ~~weak economy and~~recent challenging competitive environment in Brazil that we anticipate will continue, as well as the ~~continued decline~~loss of revenues associated with the shutdown of our iDEN business, we expect that our cash flow from operations will continue to be negative for the remainder of ~~2017. We expect that our capital expenditures for 2017 will be at levels similar to those experienced in 2016.~~2018.

In February 2017, Nextel Brazil and the lenders of our local bank loans entered into amendments to the loan agreements. The amendments provided, among other things, a 120-day standstill period, effective March 2, 2017, during which time we were not required to pay 84.4 million Brazilian reais, or an estimated $25.2 million based on current foreign currency exchange rates, in principal related to Nextel Brazil's local bank loans. Prior to the end of the original standstill period, Nextel Brazil and the lenders of our local bank loans agreed to extensions of the previous standstill agreements through October 31, 2017. These extensions increased the amount of principal payments deferred to 168.9 million Brazilian reais for the period from March 2017 to October 2017. As a condition to the standstill extension, Nextel Brazil agreed that if the semi-annual principal payment due in August 2017 under the equipment financing facility was paid, Nextel Brazil would also make a proportional payment of 63.3 million Brazilian reais to the lenders of our local bank loans. In August 2017, Nextel Brazil made both the semi-annual principal payment and the proportional payment. This prepayment reduced the amount owed under the standstill agreement to 105.6 million Brazilian reais. In October 2017, Nextel Brazil and the lenders of our local bank loans signed fifth amendments to the loan agreements that provide for a new repayment schedule starting on January 31, 2018 that includes the repayment of the 105.6 million Brazilian reais in previously deferred principal on a pro rata basis over the remaining terms of the loans. In connection with the fifth amendments, Nextel Brazil will grant additional security interests to each of its lenders in the form of preferential rights to amounts held in certain of Nextel Brazil's bank accounts and will pledge certain of its equipment and property to these lenders.

In October 2017, Nextel Brazil ~~also~~ entered into an amended and restated equipment financing facility and sixth amendments to ~~the local~~its two bank loans ~~subject to~~with Brazilian lenders. In January 2018, we received the final approval ~~by Sinosure.~~from the China Export and Credit

Insurance Corporation, or Sinosure, for the amended and restated equipment financing facility, at which point all of these amendments became effective. As a result of the amendments, the material financing terms in all three facilities were aligned. Among other changes, these amendments provide for the deferral of substantially all principal payments for the first 48 months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. ~~In addition, Nextel Holdings and certain~~

As a result of ~~its subsidiaries have agreed to make equity contributions of existing cash on hand to Nextel Brazil. If and when~~ these amendments, ~~become effective, Nextel Brazil will be subject to minimum cash~~our liquidity forecast has substantially improved, and ~~minimum receivable requirements. The amendments provide for a loan maturity date 98 months from the date the final amendments become effective.~~

The amended and restated equipment financing facility and the sixth amendments to the local bank loans remain subject to approval by Sinosure, and until such approval is received, these amendments are not effective. If we are successful in obtaining Sinosure approval and these amendments become effective,based on our business plan, we believe our current sources of funding described ~~below~~above will provide us with sufficient liquidity to fund our business ~~beyond 2018.~~

~~While we expect~~through 2019. Our business plan is based on a number of assumptions, including lower subscriber turnover and a decrease in certain costs compared to ~~receive Sinosure approval on or before December 31, 2017, there is no guarantee~~2017. In addition, it assumes that we will ~~receive~~recover substantially all of the ~~required approval~~amount held in escrow in a timely manner. New Cingular Wireless has recently indicated their views on certain aspects of the escrow and purchase agreements related to the release requirements for ~~these amendments. If~~escrowed funds with which we do not receive the required approval, and therefore these amendments do not become effective, we may not be able to complete the second investment with ice group. Based on our projected cash flows, without (i) the deferralagree. This difference of ~~principal payments until the end~~interpretation could result in a delay of 2021 that will be provided in conjunction with the approval of the amendments to Nextel Brazil's financing arrangements; (ii) the $150.0 million second investment by ice group; and (iii) potential reductions in spending, we believe that our current sources of funding are adequate to fund our business into the third quarter of 2018.

~~Our sources of funding assume~~ the release of the remaining amount of cash ~~held~~ in ~~escrow and cash pledged to secure performance bonds.~~escrow. If our actual results of operations differ from our business plan and/or the ultimate amount recovered from our cash held in escrow ~~or our cash pledged to secure performance bonds~~ does not meet our current forecasted amount or is delayed for a significant ~~amount~~period of time, our business could be negatively impacted, and we would need to obtain additional funding and/or significantly reduce our ~~planned~~capital and operational spending to further preserve our liquidity.

~~Until~~ As a result, we ~~obtain the required Sinosure approval~~are currently exploring options for additional funding to, ~~amend the terms of Nextel Brazil's financing arrangements and obtain access to a significant portion of the escrowed and pledged funds as anticipated in~~among other things, reduce our ~~business plan, substantial doubt continues to exist about our ability to continue as a going concern.~~liquidity risk.

In making the assessment of our funding needs and the adequacy of our current sources of funding, we have considered:

cash and cash equivalents on hand and short-term investments available to fund our operations;

restricted cash currently held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico;

~~the future return of cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our spectrum in Brazil;~~

expected cash flows from our operations in Brazil;

the timing of spectrum payments, including ongoing fees for spectrum use;

our anticipated level of capital expenditures;

our scheduled debt service obligations;

our other contractual obligations; and

cash income and other taxes.

In addition to the factors described above, the anticipated cash needs of our business, as well as the conclusions presented herein regarding our liquidity needs, could change significantly:

~~if ice group exercises its option to invest an additional $150.0 million in Nextel Holdings;~~

based on the continued development of our business plans and strategy;

if currency values in Brazil depreciate or appreciate relative to the U.S. dollar in a manner that is more significant than we currently expect and assume as part of our plans;

if economic conditions in Brazil do not improve or worsen;

if we are subject to litigation involving tax and other matters requiring material judicial deposits of cash that will not be released until the pending matter is resolved;

if competitive practices in the mobile wireless telecommunications industry in Brazil change materially from those currently prevailing or from those now anticipated; or

if other presently unexpected circumstances arise that have a material effect on the cash flow or profitability of our ~~business.~~

~~Effect of New Accounting Standards~~

In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2014-09, "Revenue from Contracts with Customers," which will provide us with a single revenue recognition model for recognizing revenue from contracts with customers and significantly expand the disclosure requirements for revenue arrangements. The new standard, as amended, will be effective for interim and annual reporting periods beginning on January 1, 2018, at which point we plan to adopt the standard. The two permitted transition methods under the new standard are the full retrospective method, in which the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which the cumulative effect of applying the standard would be recognized at the date of initial application, with disclosure of results under the new and old standards for the first year of adoption. We expect to utilize the modified retrospective method.

We expect that the new guidance will have a material impact on our financial statements. Upon adoption, we expect that a portion of our revenues related to service plans that are sold concurrently with a subsidized handset will be reallocated from service and other revenues to handset and accessory revenues and that these revenues will be recognized at an earlier point in time compared to our current accounting under the existing authoritative guidance. We also expect that the timing of expense recognition related to certain of our contract acquisition costs,business, such as ~~sales commissions, will be impacted as these expenses will be capitalized and amortized under the new standard.~~

contingencies.

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Effect of Recently Adopted Accounting Standards

See Note 1 to our condensed consolidated financial statements for disclosures concerning recently adopted accounting standards.

Forward-Looking and Cautionary Statements

This quarterly report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Statements regarding expectations, including forecasts regarding operating results, performance assumptions and estimates relating to capital requirements, as well as other statements that are not historical facts, are forward-looking statements. These forward-looking statements are generally identified by such words or phrases as “we expect,” “we believe,” “would be,” “will allow,” “expects to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions. These forward-looking statements involve risk and uncertainty, and a variety of facts could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law.

While we provide forward-looking statements to assist in the understanding of our anticipated future financial performance, we caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date that we make them. Forward-looking statements are based on current expectations and assumptions that are subject to significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Except as otherwise required by law, we undertake no obligation to publicly release any updates to forward-looking statements to reflect events after the date of this quarterly report on Form 10-Q, including unforeseen events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our operations and results of our business include, but are not limited to:

our ability to attract and retain subscribers;

~~Sinosure's approval of the amendments to Nextel Brazil's financing arrangements;~~

our ability to satisfy the requirements of ~~or obtain relief under~~ our debt obligations;

our ability to access sufficient debt or equity capital to meet any future operating and financial needs;

our ability to meet established operating goals and generate cash flow;

the availability of other funding sources, including the timely receipt of proceeds from the sale of Nextel Mexico held in ~~escrow, proceeds derived from other asset sales and proceeds derived from an equity investment by ice group;~~escrow;

risks associated with our partnership with ice group;

~~our ability to complete the ice group investment in a timely fashion or at all;~~

~~the impact of business uncertainties in connection with the pending ice group investment;~~

general economic ~~conditions in Brazil and in the market segments that we are targeting for our services;~~

~~the political and social~~ conditions in Brazil, including political instability, which may affect Brazil's economy and the regulatory environment there;

the impact of foreign currency exchange rate volatility in the local currency in Brazil when compared to the U.S. dollar and the impact of related currency depreciation in Brazil;

our having reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon, including technology deployed in connection with ~~the introduction of~~ digital two-way mobile data or internet connectivity services in ~~our markets;~~Brazil;

the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our service deployment and marketing plans and customer demand;

risks related to the operation and expansion of our ~~WCDMA~~ network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that ~~new services supported by the WCDMA network~~we will not attract enough subscribers to support the related costs of deploying or operating the network;

our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth as necessary, increased system usage rates and growth or to successfully deploy new systems that support those functions;

future legislation or regulatory actions relating to our services, other wireless communications services or telecommunications generally and the costs and/or potential customer impacts of compliance with regulatory mandates;

3530

the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our ~~network~~ business;

the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers of cellular services and personal communications services;

market acceptance of our new service offerings;

our ability to successfully wind down our legacy iDEN network in Brazil and migrate our iDEN subscriber base to ~~WCDMA;~~our WCDMA network;

a requirement to provide material judicial deposits of cash that will not be released until the pending matter is resolved in order for litigation involving tax and other matters to be heard by the courts in Brazil;

equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; and

other risks and uncertainties described in Part I, Item 1A. "Risk Factors," in our annual report on Form 10-K for the year ended December 31, ~~2016, in Part II, Item 1A. "Risk Factors," in our quarterly report on Form 10-Q for the three months ended June 30,~~ 2017 and, from time to time, in our other reports filed with the SEC.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, there were no material changes to our market risk policies or our market risk sensitive instruments and positions as described in our annual report on Form 10-K for the year ended December 31, ~~2016.~~

2017.


Item 4.	Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to the Company's management, including our principal executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of ~~September 30, 2017,~~March 31, 2018, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of our management teams in the United States and Brazil, including our principal executive officer and chief financial officer. Based on ~~and as of the date of~~ such evaluation, our principal executive officer and chief financial officer concluded that the design and operation of our disclosure controls and procedures were not effective due to a material weakness in ~~Nextel Brazil's~~the Company's internal control ~~environment and information and communication processes.~~over financial reporting. This material weakness is fully described in "Item 9A. Controls and Procedures" of our annual report on Form 10-K for the year ended December 31, ~~2016.~~2017.

~~We have been implementing and monitoring improved controls in order~~Our remediation efforts related to ~~remediate~~ this material ~~weakness. In April 2017~~weakness are ongoing. Management is committed to dedicating the resources necessary to ensure sustained effective control design and ~~September 2017, respectively, Nextel Brazil hired a new principal executive officer~~operation is achieved, and ~~a new chief financial officer, both of whom~~will continue to ~~enhance the monitoring of compliance with internal control objectives by formalizing internal control accountability measures across the organization in Brazil. As a result of these~~work to ensure we maintain sufficient experienced resources, automate processes such as lease accounting, and ~~other actions demonstrating~~monitor risks related to new accounting requirements or changes that could place an ~~increased commitment to establishing an appropriate tone at the top in Nextel Brazil, we believe the control deficiencies underlying the control environment component of~~unmanageable strain on our ~~material weakness have been addressed. We plan to finalize our evaluation of this component of our material weakness by December 31, 2017.~~

In addition, to address the information and communication component of our material weakness, we are designing and implementing controls to identify and evidence the completeness and accuracy of data and assumptions used to support accounting analyses and reconciliations. These design and implementation efforts are ongoing.resources.

Changes in Internal Control over Financial Reporting

~~In connection with the Company's implementation of ASU No. 2014-09, "Revenue from Contracts with Customers," the Company is reviewing its control framework for any new internal~~We have implemented and will continue to implement controls related to ~~revenue recognition that will be required, as well as any~~our adoption of ASC 606 on January 1, 2018. These changes to existing internal controls. We expect that the implementation of ASU No. 2014-09 will result in substantial incremental efforts to adhere to the requirements of the new accounting standard. Other than as described above, there have been no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

3631

PART II - OTHER INFORMATION


Item 1.	Legal Proceedings

We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows. For information on our various loss contingencies, see Note 78 to our condensed consolidated financial statements above.


Item 1A.	Risk Factors

There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, ~~2016 and in our quarterly report on Form 10-Q for the three months ended June 30,~~ 2017.


Item 2.	~~Issuer Purchases~~Unregistered Sales of Equity Securities and Use of Proceeds

~~(b)~~ (c) Issuer Purchases of Equity Securities. The following table presents information related to repurchases of our common stock during the three months ended ~~September 30, 2017:~~March 31, 2018:

Period Total Number of Shares Purchased Average Price Per Share Total Number of Shares Purchased as Part of Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1, 2017 - July 31, 2017 10
⁽¹⁾
$ 0.65
10

August 1, 2017 - August 31, 2017 194
⁽¹⁾
0.54
194

September 1, 2017 - September 30, 2017 44
⁽¹⁾
0.60
44

Total 248
⁽¹⁾
0.56
248
$ —



Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
January 1, 2018 - January 31, 2018	126	⁽¹⁾	$	0.68	126
February 1, 2018 - February 28, 2018	135	⁽¹⁾	0.64		135
March 1, 2018 - March 31, 2018	192	⁽¹⁾	1.71		192
Total	453	⁽¹⁾	1.10		453	$	—

(1) Pursuant to a general authorization, which was not publicly announced, whereby we are authorized to repurchase shares of our common stock to satisfy employee withholding tax obligations related to stock-based compensation.

Item 6. Exhibits

Exhibit Number Exhibit Description Form Exhibit Incorporated by Reference Filing Date Filed Herewith
10.1
Amended and Restated Credit Agreement, dated October 31, 2017, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank, as Lender, Administrative Agent and Arranger (Sinosure).
8-K 10.1 11/01/2017
10.2
Amended and Restated Credit Agreement, dated October 31, 2017, among Telecomunicações Ltda., the Guarantors and China Development Bank, as Lender, Administrative Agent and Arranger (Non-Sinosure).
8-K 10.2 11/01/2017
10.3
Termination Agreement, dated October 31, 2017, between NII Holdings, as Existing Parent Guarantor, and China Development Bank, as Administrative Agent under the Sinosure Credit Agreement and Non-Sinosure Credit Agreement.
8-K 10.3 11/01/2017
10.4
Guaranty Agreement, dated October 31, 2017, between Nextel Holdings S.à r.l., as Parent Guarantor, and China Development Bank, as Administrative Agent under the Sinosure Credit Agreement and Non-Sinosure Credit Agreement.
8-K 10.4 11/01/2017
10.5
Amendment No. 5 to Bank Credit Certificate, dated October 31, 2017, between Nextel Telecomunicações Ltda. and Banco do Brasil S.A.
8-K 10.5 11/01/2017
10.6
Amendment No. 6 to Bank Credit Certificate, dated October 31, 2017, between Nextel Telecomunicações Ltda. and Banco do Brasil S.A.
8-K 10.6 11/01/2017
10.7
Amendment No. 5 to Bank Credit Certificate, dated October 31, 2017, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal.
8-K 10.7 11/01/2017
10.8
Amendment No. 6 to Bank Credit Certificate, dated October 31, 2017, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal.
8-K 10.8 11/01/2017
31.1
Statement of Principal Executive Officer Pursuant to Rule 13a-14(a).
*
31.2
Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
*
32.1
Statement of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.
*
32.2
Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
*
101 The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Loss, (iii) Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements. *



Exhibit Number	Exhibit Description	Form	Exhibit	Incorporated by Reference Filing Date
31.1	Statement of Chief Executive Officer Pursuant to Rule 13a-14(a).
31.2	Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
32.1	Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2	Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101	The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Loss, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.

3832

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



By:		/s/ TIMOTHY M. MULIERI

		Timothy M. Mulieri
		Vice President, Corporate Controller
		(on behalf of the registrant and as Principal Accounting Officer)

Date: ~~November 9, 2017~~May 8, 2018

3933



Balance, December 31, 2016	$	24,103
Restructuring charges	85,111
Cash payments and other	(490		)
Foreign currency translation adjustment	1,036
Balance, September 30, 2017	$	109,760



Period	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1, 2017 - July 31, 2017	10	⁽¹⁾	$	0.65	10
August 1, 2017 - August 31, 2017	194	⁽¹⁾	0.54		194
September 1, 2017 - September 30, 2017	44	⁽¹⁾	0.60		44
Total	248	⁽¹⁾	0.56		248	$	—