NIHD NII Holdings Inc

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PART I

Item 1.	Business

Corporate History

Overview. We were originally organized in 1995 as a holding company for the operations of Nextel Communications, Inc. in selected international markets. The corporation that is currently known as NII Holdings, Inc. was incorporated in Delaware in 2000 as Nextel International, Inc. In December 2001, we changed our name from Nextel International, Inc. to NII Holdings, Inc. Our principal executive office is located at 1875 Explorer Street, Suite 800, Reston, Virginia 20190. Our telephone number at that location is (703) 390-5100. 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. We refer to our wholly-owned Brazilian operating company, Nextel Telecomunicações Ltda., as Nextel Brazil. Nextel Brazil's operations are headquartered in São Paulo, with branch offices in Rio de Janeiro and various other cities in Brazil.

Except as otherwise indicated, all amounts are expressed in United States, or U.S., dollars and references to “dollars” and “$” are to U.S. dollars. All historical financial statements contained in this report are prepared in accordance with accounting principles generally accepted in the U.S.

Emergence from Chapter 11 Proceedings. On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and NII International Telecom, S.C.A., or NIIT, filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. In addition, subsequent to September 15, 2014, five additional subsidiaries of NII Holdings filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. We refer to the companies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Nextel Brazil and our previous other operating subsidiaries in Latin America were not Debtors in these Chapter 11 cases.

As described in more detail in Note 3 to our consolidated financial statements, on June 19, 2015, the Bankruptcy Court entered an order approving and confirming the Plan of Reorganization. On June 26, 2015, the conditions of the Bankruptcy Court's order and the Plan of Reorganization were satisfied, the Plan of Reorganization became effective, and we and the other Debtors emerged from the Chapter 11 proceedings.

In accordance with the requirements of reorganization accounting, NII Holdings adopted the provisions of fresh start accounting as of June 30, 2015 and became a new entity for financial reporting purposes. References to the "Successor Company" relate to NII Holdings on or subsequent to June 30, 2015. References to the "Predecessor Company" relate to NII Holdings prior to June 30, 2015. For purposes of comparison to the years ended December 31, 2016 and 2014, we combined the results of operations for the six months ended December 31, 2015 with the results of operations for the six months ended June 30, 2015. However, as a result of the application of fresh start accounting and other events related to our reorganization under Chapter 11, the Successor Company's financial results for the six months ended December 31, 2015 are prepared under a new basis of accounting and are not directly comparable to the Predecessor Company's financial results for the six months ended June 30, 2015. For the same reasons, our results of operations for the combined twelve-month period ended December 31, 2015 are not fully comparable to our results of operations for the years ended December 31, 2016 or 2014.

Divestitures. On January 27, 2016, two of our indirect subsidiaries completed the sale of our Argentine operations to Grupo Clarin. The transaction was structured as a sale of all of the outstanding equity interests of Nextel Communications Argentina, S.R.L., or Nextel Argentina, for an aggregate purchase price of $178.0 million .

On April 30, 2015, we, together with one of our wholly-owned subsidiaries, 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 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. The net proceeds of the sale were $1.448 billion after deducting Nextel Mexico's outstanding indebtedness and applying other specified price adjustments.

In August 2014, three of our wholly-owned subsidiaries completed the sale of all of the outstanding equity interests in our wholly-owned subsidiary Nextel Chile, S.A., or Nextel Chile, to Fucata, S.A., a venture comprised of Grupo Veintitres and Optimum Advisors for a de minimus amount.

In August 2013, two of our wholly-owned subsidiaries completed the sale of all of the outstanding equity interests in our wholly-owned subsidiary Nextel del Peru, S.A., or Nextel Peru, to Empresa Nacional de Telecomunicaciones S.A. and one of its subsidiaries, Entel Inversiones, S.A., which we refer to collectively as Entel.

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As a result of the sales of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru, we are allocating almost all of our financial and other resources to our operations in 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 we believe there is a concentration of Brazil’s business users and economic activity, including primarily Rio de Janeiro and São Paulo.

In the second half of 2013, Nextel Brazil commercially launched services on its wideband code division multiple access, or WCDMA, network in São Paulo, Rio de Janeiro and surrounding areas and extended those services to other areas in Brazil by expanding the coverage of its network and utilizing roaming services and network sharing arrangements pursuant to agreements that it reached with another network operator in Brazil. Our 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.

Prior to the deployment of our WCDMA network, our services were primarily targeted to meet the needs of business subscribers. With the deployment of our WCDMA network in Brazil, our target market has shifted to 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 starting in December 2016, in São Paulo, and we continue to provide services on our legacy iDEN network throughout various regions in Brazil. Our transition to standards-based technologies such as WCDMA also gives us more flexibility to offer subscribers the option of purchasing services by acquiring the subscriber identity module, or SIM, cards from us separately, and by providing the customer with the option to use the SIM cards in one or more devices that they acquire from us or 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 December 31, 2016 , Nextel Brazil had about 3.638 million total subscriber units in commercial service, which we estimate to be about 5% 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.

Operating Strategy

Our goal is to grow our WCDMA-based subscriber base and revenues and manage the decline of our iDEN-based 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:

•	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;

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•	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 that 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.

Our results are being pressured by subscriber losses on our legacy iDEN network, which does not support the high speed data applications sought by many of our current and potential subscribers. Our consolidated operating revenues declined by 19% from the combined period ended December 31, 2015 to 2016 due to a 15% decrease in our consolidated subscriber base during 2016, almost all of which was driven by the 47% decrease in our iDEN subscriber base, and a 5% decline in the value of the Brazilian real compared to the U.S. dollar over the same period. While we were able to reduce our operating expenses by 30% in 2016, we generated an operating loss for the period, primarily as a result of a $1.34 billion non-cash asset impairment charge we recorded in 2016 to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. We expect continued subscriber losses on our iDEN network and the current economic conditions in Brazil to continue to impact our results of operations for the foreseeable future.

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 changes to our leadership team in Brazil in 2015, lower investments in costs to support subscriber growth, significant reductions in our headquarters staff through the reorganization of the roles and responsibilities of both 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 ability to fund our business beyond the first quarter of 2018. As a result, in February 2017, we and the lenders of our local bank loans in Brazil entered into amendments to these loan agreements under which principal payments will be suspended for four months while we seek to obtain long-term modifications of the financing arrangements, including potential further extensions of the existing amortization relief. See " Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — D. Future Capital Needs and Resources — Covenants Under Financing Arrangements " for more information. In addition, last year, we hired a third party investment adviser to actively explore strategic options to provide sources of funding that will allow us to meet our future obligations or find a buyer for our company. While we continue to be focused on effectively managing our business in Brazil, the long-term viability of our business is dependent on the successful outcome of one or more of the external processes described above.

Economic Environment

Brazil continues to experience one of the worst economic recessions in its history. During 2016, the Brazilian economy contracted as domestic demand decreased due to a combination of relatively high inflation, high interest rates, growing unemployment, tighter credit conditions, a decline in business investments and political issues. According to reports issued by the International Monetary Fund, or the IMF, it is estimated that Brazil's gross domestic product, or GDP, fell about 3% in 2016 compared to 2015, and most economic forecasts currently project GDP growth of no more than 1% in 2017. In addition, the unemployment rate in Brazil was about 11% at the end of 2016. Real wages in Brazil have been falling since March 2015 and are expected to continue to fall. The foreign currency exchange rate in Brazil declined in value by almost 5% relative to the U.S. dollar from 2015 to 2016. These economic conditions are affecting the wireless telecommunications industry in Brazil, leading to lower customer credit and pressure on customer demand, pricing and customer turnover. Consumer confidence improved in late 2016 but remains at lower levels than those experienced in recent prior years.

Competitive Environment

We believe that the wireless communications industry in Brazil has been and will continue to be characterized by intense competition on the basis of price, the types of services offered, speed of data access and quality of service. In recent years, the prices we have been able to charge for services in Brazil have declined as a result of intensified price competition, including the introduction by our competitors of aggressive pricing promotions, such as plans that allow shared minutes between groups of callers. Beginning in the second half of 2015 and continuing in 2016, our competitors in Brazil began introducing even more aggressive pricing plans that provided more services and in some cases, unlimited calling, for lower rates than some of the plans we offer. This increased competition may continue to affect our ability to attract and retain subscribers in the future.

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We compete with large, well-capitalized competitors in Brazil that have substantial financial and other resources. Nextel Brazil's largest competitors are Vivo, which is owned by Spain's Telefonica and has the largest market share in the São Paulo metropolitan area and Rio de Janeiro; Claro, which is controlled by Mexico's America Movil; Telecom Italia Mobile, or TIM, a subsidiary of Italy's Telecom Italia; and TNL PCS S.A., a subsidiary of Telemar Norte Leste, Brazil's largest wireline incumbent, that offers its services under the brand name "Oi."

Many of our competitors have a larger spectrum position than ours, including more spectrum that can be used to support a wide range of wireless technologies, and have greater coverage areas and/or name recognition than we do, making it easier for them to expand into new markets and offer new products and services. Our competitors typically have more extensive distribution channels than ours or are able to use their scale advantages to acquire subscribers at a lower cost than we can, and most of them have implemented network technology upgrades, including both WCDMA and LTE, that support high speed data services. Some of these competitors also have the ability to offer bundled telecommunications services that include local, long distance, subscription television and data services, and can offer a larger variety of handsets and other devices with a wide range of prices, brands and features. In addition, the financial strength and operating scale of some of these competitors allows them to offer aggressive pricing plans, including those targeted at attracting our existing subscribers.

In recent years, our largest competitors have increasingly focused their marketing efforts on attracting postpaid subscribers within our target segments by, among other things, enhancing their network quality and their customer care functions, which may minimize the value of our network quality and speed (for our WCDMA network) and the quality of our customer service as points of differentiation. In addition, as we have pursued our plans to extend our target market to include more high-value consumers, we are increasingly competing more directly for subscribers that are also targeted by our largest competitors.

We compete with other communications service providers based primarily on our simple and attractive pricing plans, high quality customer experience and differentiated wireless service offerings. We are continuing to pursue our target market with an expanded message that focuses on our transition to a full service wireless operator capable of providing high quality and high speed data services supported by our WCDMA network. Since our legacy iDEN network does not support high speed data applications, we are experiencing higher levels of migrations to lower price rate plans both within our iDEN network and from our iDEN network to our WCDMA network.

We believe that the users who primarily make up our targeted subscriber base are likely to base their purchase decisions on network quality and quality of customer support, as well as on the availability of differentiated features and services that make it easier for them to communicate quickly, efficiently and economically. However, because pricing is one of a number of important factors in potential customers' purchasing decisions, and in light of the economic conditions discussed above, increased price competition in the customer segments we target could require us to decrease prices or increase service and product offerings, which would lower our revenues, increase our costs or both.

In response to recent trends in Brazil's competitive environment, as well as the current economic climate, we have been taking the following actions:

•	increasing our focus on high value customer segments in order to generate higher levels of ARPU;

•	launching a new fully digital distribution channel that enables subscribers to purchase, activate and customize their plans through an online application;

•	furthering cost reduction strategies in order to continue to lower cash costs per user and improve overall profitability;

•	continuing to streamline distribution channels, including closing unprofitable retail stores;

•	continuing to migrate subscribers from our legacy iDEN network to our WCDMA network;

•	reviewing commission and subsidy strategies;

•	eliminating non-critical capital expenditures;

•	further utilizing sales strategies that incentivize subscribers to use their existing handsets when purchasing our services to keep subscriber acquisition costs at manageable levels;

•	harvesting the profitability of our legacy iDEN network;

•	streamlining our headquarters operations; and

•	continuing to pursue initiatives to maintain and enhance our existing liquidity.

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Our Networks and Wireless Technologies

We currently offer services supported by a network that utilizes WCDMA technology. WCDMA is a standards-based technology being deployed by wireless carriers throughout the world that provides service capabilities such as high speed internet access, increased network capacity and reduced costs for voice and data services when compared to previous technologies.

In late 2010, Nextel Brazil participated in a series of spectrum auctions and was the successful bidder for 20 megahertz, or MHz, of spectrum in the 1.9/2.1 gigahertz, or GHz, spectrum bands in 11 of the 13 auction lots covering approximately 98% of the Brazlian population for $714.4 million based on foreign currency exchange rates at the time. Nextel Brazil also successfully bid on 20 MHz of spectrum in the 1.8 GHz band in Rio de Janeiro, Minas Gerais and some states in the north and northeast regions of Brazil for a total bid price of approximately $121.7 million. Nextel Brazil is utilizing this 1.9/2.1 GHz spectrum to support its WCDMA network and is utilizing the 1.8 GHz spectrum to support the deployment of the LTE-based network in Rio de Janeiro. The licenses relating to the spectrum won by Nextel Brazil in the auction were granted in June 2011 and have a term of 15 years. These licenses are renewable once for an additional 15-year period and require Nextel Brazil to meet specified network coverage construction requirements within specified timeframes. In December 2015, Nextel Brazil participated in a spectrum auction and was the successful bidder for 30 MHz of spectrum in the 1.8 GHz band for 455.0 million Brazilian reais, or approximately $116.7 million based on foreign currency exchange rates at the time. Nextel Brazil currently offers LTE services in Rio de Janeiro, and starting in December 2016, in São Paulo. These services are automatically available to subscribers with an existing mobile plan and compatible smartphone.

As we continue to transition from our legacy iDEN network to our WCDMA network, we will evaluate ways in which we can use our 800 MHz spectrum to support existing or new services. Our current 800 MHz spectrum holdings are largely contiguous, making it possible to use that spectrum to support future technologies, including LTE-based technologies, if certain technical, operational and regulatory requirements are met, including, for example, the availability of compatible network and subscriber equipment. The availability of that equipment will likely depend upon a number of factors, including the technology decisions made by other wireless carriers and the willingness of infrastructure and device manufacturers to produce the required equipment.

We also continue to offer services supported by our network that utilizes the legacy iDEN technology developed and designed by Motorola. The iDEN technology is a digital technology that is able to operate on non-contiguous spectrum frequencies, was previously usable only for two-way radio calls and is a proprietary technology that relies solely on the efforts of Motorola and any future licensees of this technology for product development and innovation. The iDEN technology is also based on an earlier technology platform that is not capable of transmitting the volume of data at speeds that are supported by current technologies like WCDMA. In addition, the more limited worldwide deployment of the iDEN technology makes services offered on the iDEN network less attractive to subscribers who travel internationally because most of the iDEN handsets that we offer are currently designed to roam only on iDEN wireless networks.

Sales and Distribution

Our target customers include consumer market segments that value our attractive pricing plans, high quality network and our superior level of customer service, as well as the small, medium and large business markets that value our differentiated wireless communications, including our push-to-talk services. We use a variety of distribution channels to reach our target customers, including direct sales representatives, indirect sales agents, retail stores and kiosks, and other subscriber-convenient sales channels such as online purchasing. Nextel Brazil is continuously optimizing the mix of sales channels to take into consideration the methods that best meet local subscriber preferences, most cost effectively sell and provide support to our different segments and facilitate our overall strategy of attracting and retaining subscribers in our targeted segments.

We employ sales representatives who market our services directly to potential and existing customers. The focus of our direct sales force is primarily on customers that value our industry expertise and differentiated services, as well as our ability to develop tailored custom communications capabilities that meet the specific needs of these customers. We also utilize indirect sales agents, which mainly consist of local and national non-affiliated dealers that solicit customers for our service and are generally paid through commissions. These dealers participate with Nextel Brazil's direct sales force in varying degrees in pursuing each of our targeted customer groups.

Our sales channels also include distribution through subscriber-convenient channels, including telesales and sales through our Nextel retail stores, shopping center kiosks and other locations. With the expansion of services on our WCDMA network, we have realigned these sales channels and locations and have also expanded our marketing through regional and national retailers with store kiosks and handset and prepaid card distribution offers. We also utilize our website as a marketing tool that allows subscribers to compare our various rate plans and research our suite of products and services, including handsets, accessories and special promotions. We use online purchases as an additional sales channel to allow subscribers to purchase our services directly. In December 2016, Nextel Brazil launched Happy, a digital platform that allows customers to customize each aspect of their plan. Happy provides for the sale of both broadband and voice mobile telecommunications services through one application without

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any interaction with a Nextel representative. Subscribers can purchase a subscriber identity module, or SIM, card at an accredited point of sale, install the SIM card on an Android or iOS smartphone, download the application, and activate and change rate plans.

Marketing

We are a full service provider of wireless services, offering our customers packages of services and features that combine multiple communications services in one handset, including voice and data services and our differentiated push-to-talk services. Since 2002, we have offered services under the Nextel brand under a trademark license agreement with Nextel Communications, Inc. In 2011, we launched a new brand identity, which we believe enhanced the recognition of our brand and unified our brand identity. As a result of our efforts, the Nextel brand is recognized in Brazil as standing for both quality of service and the differentiated services and customer support we provide. With the launch of services supported by our WCDMA and LTE network, our marketing strategy has focused on the availability of the broader range of services and features that appeal to a wider range of consumers. This positioning of our brand continues to focus on customers who are attracted to our differentiated services and our reputation for providing a high quality customer experience.

Regulation of SMR and PCS Operations

In Brazil, the wireless communications regulations are based on a concept called calling party pays, which requires the mobile carrier of the subscriber initiating a call to pay the mobile carrier of the party receiving the call when mobile calls occur between subscribers of different carriers. These calling party pays charges are based on rates that we refer to as mobile termination rates. In 2012, ANATEL, Brazil's telecommunications regulatory agency, approved regulations to implement a transition to a cost-based model for determining mobile termination rates. Under the current regulations, the mobile termination rates are being gradually reduced over a transition period ending in 2019, when cost-based rates will take effect. The transition rules also provide for a partial "bill and keep" settlement process that applies to the settlement of mobile termination charges between smaller operators like Nextel Brazil and its larger competitors (who are considered to hold significant market power under the Brazilian regulations), which further reduces mobile termination charges for smaller operators. The lower costs resulting from this partial bill and keep settlement process, which is similar to the settlement process that has historically applied to termination charges relating to Nextel Brazil’s iDEN services, decline as mobile termination rates are reduced during the transition period, with the bill and keep settlement process terminating when cost-based rates are implemented.

Under the rules adopted by ANATEL relating to interconnection charges, Nextel Brazil has negotiated agreements with all significant fixed line and wireless operators in Brazil to reflect the payments between carriers as a result of the calling party pays charges. Because Nextel Brazil's subscriber base is smaller than those of its competitors and its subscribers tend to make a higher number of calls terminating on other carriers' networks, these higher mobile termination rates result in substantial charges relating to the "off-net" termination of calls by our subscribers. To partially address this issue, ANATEL implemented the partial bill and keep settlement process described above. Since the adoption of this process, Nextel Brazil has recognized significant cost savings when terminating calls originated on its networks. In the past, these cost savings enabled Nextel Brazil to develop and offer attractive pricing plans that reduced or eliminated the significant differentiation in the cost of on-net and off-net calls that are common in Brazil due to the historically high mobile termination rates there, providing opportunities for Nextel Brazil to offer unique service plans. In connection with ANATEL’s transition plan, Nextel Brazil’s benefits under these partial bill and keep rules has declined, and recently, some of Nextel Brazil’s competitors have launched pricing plans with the same rates for on-net and off-net calls. In addition, in December 2015, two of Nextel Brazil’s competitors filed a lawsuit against ANATEL challenging the bill and keep rules. These competitors received an initial preliminary injunction, which was suspended after Anatel filed an appeal. A decision has not yet been made regarding the preliminary injunction or the lawsuit.

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Foreign Currency Controls, Dividends and Tax Regulation

The purchase and sale of foreign currency in Brazil continues to be subject to regulation by the Central Bank of Brazil despite regulatory changes enacted in 2005 that were designed to reduce the level of government regulation of foreign currency transactions. Exchange rates are freely negotiated by the parties, but purchase of currency for repatriation of capital invested in Brazil and for payment of dividends to foreign stockholders of Brazilian companies may only be made if the original investment of foreign capital and capital increases were registered with the Brazilian Central Bank. There are no significant restrictions on the repatriation of registered share capital and remittance of dividends. Nextel Brazil has registered substantially all of its investments with the Brazilian Central Bank.

Brazilian law provides that the Brazilian government may, for a limited period of time, impose restrictions on the remittance by Brazilian companies to foreign investors of the proceeds of investments in Brazil. These restrictions may be imposed whenever there is a material imbalance or a serious risk of a material imbalance in Brazil’s balance of payments. The Brazilian government may also impose restrictions on the conversion of Brazilian currency into foreign currency. These restrictions may hinder or prevent us from purchasing equipment required to be paid for in any currency other than Brazilian reais.

Employees

As of December 31, 2016 , we had 2,645 employees, of which 2,618 were employees of Nextel Brazil. Nextel Brazil is a party to a legally mandated collective bargaining agreement that covers most of its employees and expires on August 31, 2017. NII Holdings is not a party to any collective bargaining agreement. We believe that the relationship between us and our employees, and between Nextel Brazil and its employees, is good.

Access to Public Filings and Board Committee Charters

We maintain an internet website at www.nii.com. Information contained on our website is not part of this annual report on Form 10-K. Stockholders of the Company and the public may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed with or furnished to the SEC under the Securities Exchange Act of 1934, as amended, through the “investor relations” section of our website. This information is provided by a third party link to the SEC’s online EDGAR database, is free of charge and may be reviewed, downloaded and printed from our website at any time.

We also provide public access to our code of ethics, entitled the NII Holdings, Inc. Code of Conduct and Business Ethics, and the charters of the following committees of our Board of Directors: the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee. The committee charters may be viewed free of charge on the Investor Relations link of our website at the following address: www.nii.com. You may obtain copies of the committee charters and the Code of Conduct and Business Ethics free of charge by writing to: NII Holdings Investor Relations, 1875 Explorer Street, Suite 800, Reston, Virginia 20190. If a provision of our Code of Conduct and Business Ethics required under the Nasdaq Global Select Market corporate governance standards is materially modified, or if a waiver of our Code of Conduct and Business Ethics is granted to a director or executive officer, we will post a notice of such action on the Investor Relations link of our website at the following address: www.nii.com. Only the Board of Directors or the Audit Committee may consider a waiver of the Code of Business Conduct and Ethics for an executive officer or director.

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Item 1A.	Risk Factors

Investors should be aware that we and our business are subject to various risks, including the risks described below. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of any investment. Our actual results could differ materially from those anticipated in any forward-looking statements that we make as a result of a variety of factors, including the risks described below. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

Risks Relating to Our Business and Results

1.	Because our free cash flow was negative, and is expected to continue to be negative, we will likely need to meet our obligations and fund our working capital with cash on hand and through the recovery of amounts held in escrow and used to secure performance bonds.

Our free cash flow was negative in 2016, and based on our current plans, we expect our free cash flow to remain negative through at least 2017. Our current plans are based on a number of key assumptions relating to, among other things, our ability to manage our capital and operating expenses and to attract and retain customers. If any of our assumptions are not borne out or are otherwise not correct, our free cash flow could continue to be negative for an extended period of time. There can be no assurance that we will succeed in executing on our plans or that we will generate positive free cash flow in the future.

Our current sources of funding include our cash and short-term investments, cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, and 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, as well as the continued decline of our iDEN business, we expect that our cash flow from operations will be negative in 2017. In addition, we expect that our capital expenditures for 2017 will be at a similar level as 2016. During 2017, we are also required to pay an estimated $225.0 million for principal and interest in connection with our debt service obligations, including capital leases. As a result, we believe our current sources of funding may not be adequate to fund our business beyond the first quarter of 2018, and that we will need to obtain debt service relief from our lenders or to raise incremental capital to fund our business plan. We believe that the uncertainties relating to our business make it difficult for us to obtain new capital. Furthermore, if the ultimate amount recovered from our cash held in escrow or our cash pledged to secure performance bonds is not fully available to us or is delayed for a significant amount of time, we would need to obtain additional funding within the next six to twelve months and significantly reduce our planned spending to further preserve our liquidity. If we cannot reach an agreement with our lenders to modify the terms of our loans, obtain suitable financing if and when it is required, or obtain access to a significant portion of the escrowed funds as anticipated in our business plan, our results of operations and liquidity would be negatively impacted, and we may be unable to settle our obligations as they come due.

2.	There is substantial doubt regarding our ability to continue as a going concern.

Our results of operations, including our operating revenues and operating cash flows, have been negatively affected by a number of factors, including significant deterioration in economic conditions in Brazil, increased competitive pressure, the overall depreciation of the value of the Brazilian real relative to the U.S. dollar, and the decline in our iDEN subscriber base resulting from the limited digital services available on our legacy iDEN network. These and other factors resulted in a reduction in our subscriber growth and revenues at a time when our costs reflected the operation of both of our networks and had a significant negative impact on our results and our ability to grow our revenue base to a level sufficient to reach the scale required to generate positive operating income.

We believe that the wireless communications industry in Brazil has been and will continue to be characterized by intense competition on the basis of price; the types of services offered; variety, features and pricing of handsets; speed of data access; and quality of service. In recent years, the prices we have been able to charge for services in Brazil have declined as a result of intensified price competition, including the introduction by our competitors of aggressive pricing promotions, such as plans that allow shared minutes between groups of callers and even more aggressive pricing plans that provide more services for lower rates than some of the plans we offer, which together with the impact of deteriorating economic conditions, reduced the number of new subscribers we added to our network in 2016. This increased competition may continue to affect our ability to attract and retain subscribers in the future.

The negative impact of the factors discussed above on our results of operations may also adversely affect our ability to comply with certain financial covenants in our existing debt obligations. In connection with the agreements governing Nextel

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Brazil's local bank loans, we are required to meet a net debt financial covenant semiannually. In August 2016, Nextel Brazil secured waivers from the lenders of its local bank loans related to this financial covenant for the June 30, 2016 measurement date. In February 2017, Nextel Brazil secured additional waivers from the lenders of these loans related to this financial covenant as of December 31, 2016. The waivers also provide for a "covenant holiday" inclusive of the June 30, 2017 testing period, during which time no compliance will be required with respect to the net debt financial covenant. The next measurement date for this financial covenant will be December 31, 2017. Likewise, in connection with the agreement and related amendments governing Nextel Brazil's equipment financing facility, 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 31, 2017. If we are unable to negotiate amendments to the existing loan agreements 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. In February 2017, Nextel Brazil and the lenders of our local bank loans entered into amendments to these loan agreements. The amendments provide, among other things, a 120-day standstill period, effective March 2, 2017, during which time no amortization payments will be required with respect to the related loans while Nextel Brazil seeks to negotiate long-term modifications of the financing arrangements, including potential further extensions of the existing amortization relief. To the extent Nextel Brazil is unable to agree on long-term amendments by July 2017, we will be required to make catch-up principal payments totaling 84.4 million Brazilian reais, or approximately $25.2 million based on current foreign currency exchange rates, followed by the resumption of the amortization schedule contained in the second amendment. See Note 7 to our consolidated financial statements for more information.

In December 2015, Nextel Brazil participated in a spectrum auction and was the successful bidder for 30 MHz of spectrum in the 1.8 GHz band for 455 million Brazilian reais, or approximately $116.7 million based on foreign currency exchange rates at the time. In July 2016, Nextel Brazil paid 45.5 million Brazilian reais, or approximately $14.0 million based on foreign currency exchange rates at the time, in connection with the signing of this license agreement. Nextel Brazil elected to accept the government-provided spectrum financing for the remaining amount due under this spectrum financing. In connection with the foregoing, we are in the process of securing waivers from the lender of Nextel Brazil's equipment financing facility to permit Nextel Brazil to incur and maintain this spectrum financing. In addition, we have requested waivers of 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. As a result of either of these events of default, the lender of Nextel Brazil's equipment financing facility could provide notice to declare the amounts outstanding under this facility due and payable. All of the conditions described above create uncertainty regarding our ability to continue as a going concern.

If we cannot obtain waivers for the existing events of default under Nextel Brazil's equipment financing facility and for the applicable financial covenants we are required to meet as of the December 31, 2017 measurement date, modify the repayment terms of our loans, obtain suitable financing if and when it is required, or obtain access to a significant portion of the escrowed funds as anticipated in our business plan, our results of operations and liquidity would be negatively impacted, and we may be unable to settle our obligations as they come due. As a result of these conditions, our independent registered public accounting firm has included a statement with respect to our ability to continue as a going concern in its report on our consolidated financial statements for the year ended December 31, 2016. However, our financial statements have been prepared assuming we will continue to operate as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The reaction of investors and others to the inclusion of a going concern statement by our auditors, our results of operations and questions regarding our potential inability to continue as a going concern may cause others to choose not to conduct business with us due to concerns about our ability to meet our contractual obligations and may materially adversely affect our share price and our ability to continue to execute our business plans, raise new capital and/or make our scheduled debt payments on a timely basis or at all.

3.	If we are not able to compete effectively in the highly competitive wireless communications industry, our future growth and operating results will suffer.

Our business involves selling wireless communications services to subscribers, and as a result, our economic success is based on our ability to attract new subscribers and retain current subscribers. Our success will depend on Nextel Brazil's ability to compete effectively with other telecommunications services providers, including other wireless telecommunications companies, internet and cable service providers and providers of fixed wireline services, in Brazil. Our ability to compete successfully will depend on our ability to anticipate and respond to various competitive factors affecting the telecommunications industry in Brazil, including the availability of new services, features and technologies; changes in consumer preferences, demographic trends and economic conditions; our ability to fund our operations; and our competitors' pricing strategies.

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a.	The wireless industry in Brazil is highly competitive, making it difficult for us to attract and retain customers. If we are unable to attract and retain customers, our financial performance will be impaired.

Competition among telecommunications service providers in Brazil is intense as multiple carriers seek to attract and retain customers. Some of the factors contributing to this competitive environment include the current economic environment in Brazil; a higher relative penetration of wireless services compared to historic levels, which drives more aggressive competition as competitors seek to attract and retain customers that support the growth of their businesses in a more saturated market; the development and availability of new products and services, including services supported by new technologies; and the entry of new competitors. We also expect the current trend of alliances, cost-sharing arrangements and consolidation in the wireless and communications industries to continue as companies respond to the need for cost reduction and additional spectrum. This trend may result in the creation of larger and more efficient competitors with greater financial, technical, promotional and other resources to compete with our businesses. In addition, as we continue to pursue our plans to expand our marketing and sales focus on consumers, we will be increasingly seeking to attract customers in segments that have historically been predominantly served by our competitors, many of which are larger companies with more extensive networks, financial resources and benefits of scale that allow them to spend more money on marketing and advertising than us and to exploit scale advantages that allow them to offer products and services at a lower cost.

In order to obtain a competitive advantage, our competitors have, among other things:

• provided discounted or free airtime or other services;

• provided increased handset subsidies;

• offered higher commissions to distributors;

• offered a broader range of handsets and, in some cases, offered those handsets through exclusivity periods;

• expanded their networks to provide more extensive network coverage;

• developed and deployed networks that use new technologies and support new or improved services;

• offered incentives to larger customers to switch service providers, including reimbursement of cancellation fees; and

• offered bundled telecommunications services that include local, long distance and data services.

In addition, number portability requirements, which enable customers to switch wireless providers without changing their wireless numbers, have been implemented in Brazil, making it easier for wireless providers to effectively target and attract their competitors' customers.

The competitive environment in Brazil and competitive strategies of our competitors, including recent price competition, will put pressure on the prices we can charge for our services and for handsets and other devices that we sell in connection with our service offerings. These developments and actions by our competitors could continue to negatively impact our ARPU, our operating results and our ability to attract and retain customers. If we are unable to respond to competition and compensate for declining prices by adding new customers, increasing usage and offering new services, our revenues and profitability could continue to decline.

b.

Competition and technological changes in the market for wireless services, including competition driven by our competitors' deployment of long-term evolution or other advanced technologies, could negatively affect our average revenue per subscriber, customer turnover, operating costs and our ability to attract new subscribers, resulting in adverse effects on our revenues, future cash flows, growth and profitability. If we do not keep pace with rapid technological changes or if we fail to offer new services in a manner that delivers a quality customer experience, we may not be able to attract and retain customers.

The wireless telecommunications industry is experiencing significant technological change. Spending by our competitors on new wireless services and network improvements could enable them to obtain a competitive advantage with new technologies or enhancements that we do not offer. Rapid change in technology may lead to the development of wireless communications technologies that support products or services that consumers prefer over the products or services that we offer. If we are unable to keep pace with future advances in competing technologies on a timely basis, or at an acceptable cost, we may not be able to compete effectively and could lose subscribers to our competitors.

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While we have deployed and are offering services on our WCDMA network in Brazil and are continuing to expand and supplement that network, including by offering services utilizing LTE technologies in São Paulo and Rio de Janeiro, our competitors in Brazil have launched nationwide new or upgraded networks that use WCDMA and/or LTE technology and offer services that use high speed data transmission capabilities, including internet access and video telephony. These and other future technological advancements may enable competitors to offer features or services we cannot provide or exceed the quality of services we offer, thereby making our services less competitive. In addition, we may not be able to accurately predict technological trends or the success of new services in the market. If our services fail to gain acceptance in the marketplace in the near term, or if costs associated with implementation and completion of the introduction of these services materially increase, our ability to retain and attract customers could continue to be adversely affected.

In Brazil, our current 800 MHz spectrum holdings are largely contiguous, making it possible to use that spectrum to support future technologies, if certain technical, operational and regulatory requirements are met, including, for example, the availability of compatible network and subscriber equipment. Although our spectrum holdings in Brazil are contiguous, they are not located in the same portion of the 800 MHz spectrum band that is currently being used to support LTE network deployments elsewhere in the world including in the United States. Accordingly, it may be necessary to seek regulatory changes and to reconfigure the spectrum band and our spectrum holdings for them to be used to efficiently support LTE technologies.

c.	Most of our competitors are financially stronger than we are, which limits our ability to compete based on price.

Because of their size, scale and resources, our competitors may be able to offer services to subscribers at prices that are below the prices that we can offer for comparable services. Many of our competitors are well-established companies that have:

• substantially greater financial and marketing resources;

• larger customer bases;

• larger spectrum positions; 

• higher profitability and positive free cash flow;

• more access to funding, lower leverage and lower cost of financing; and

• larger service coverage areas than those of our operating companies.

If we cannot compete effectively based on the price of our service offerings and related cost structure, our results of operations may be adversely affected.

d.	We are dependent on our competitors for support services that are critical to our operations.

We rely on our competitors for certain support services that are critical to our operations. For example, the services that we provide on our WCDMA network require significantly greater data capacity than our iDEN network, and this higher capacity demand has made it necessary for us to obtain wireline or other connecting circuits between elements of our network such as switches and transmitter and receiver sites that are capable of transporting a significantly higher volume of data traffic. In some instances, the availability of those higher capacity circuits is limited, and in many cases, our access to those circuits is controlled by entities that are affiliated with our competitors. Similarly, we have entered into roaming arrangements with one of our competitors that allow us to expand the coverage of our WCDMA network in Brazil by allowing our subscribers to roam on that competitor's network in areas outside our coverage area. Likewise, we have entered into a 10-year radio access network, or RAN, sharing agreement with the same competitor under which we are permitted to use its tower and equipment infrastructure to transmit telecommunications signals on Nextel Brazil's spectrum. As a result, we are dependent on entities that are or are affiliated with our competitors to provide us with the data transport services needed to support our networks and services, roaming services and infrastructure that enhance our coverage area. Our ability to offer services and our results of operations could be adversely affected if those entities were to allocate limited transport or network capacity to other customers including their wireless affiliates or otherwise make it more difficult for us to obtain the necessary transport and roaming capacity to support our networks and services.

e.	If there is a substantial increase in our customer turnover rate, our business could be negatively affected.

In recent years, we have experienced higher customer turnover rates compared to earlier periods, which resulted primarily from the combined impact of weaker economic conditions and a more competitive sales environment in Brazil. In addition, there has been a significant increase in our customer turnover rate for subscribers to services on our iDEN network as customers

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increasingly prefer services that are supported by high speed data capabilities including services on smartphones. Likewise, WCDMA subscriber turnover increased significantly as a result of more intense competition in the wireless market and the economic factors discussed above.

In addition, we have broadened our target market to include customers that have typically demonstrated a willingness to change service providers more frequently and have increased our usage of control plan payment terms as part of our service plans in order to attract more price sensitive customers. These and other changes in our marketing strategies and the types of customers we target have recently had a negative impact on our consolidated customer turnover rate and could continue to have that impact in the future. Subscriber losses adversely affect our business and results of operations because these losses result in lost revenues and cash flow, drive higher bad debt expenses and require us to attract replacement customers and incur the related sales commissions and other costs. Although attracting new subscribers and retaining existing subscribers are both important to the financial viability of our business, there is an added focus on retaining existing subscribers because the average cost of acquiring a new subscriber is higher. Accordingly, increased levels of subscriber deactivations have had and could continue to have a negative impact on our results, even if we are able to attract new subscribers at a rate sufficient to offset those deactivations. If we experience further increases in our customer turnover rate, or if the higher customer turnover rates we are currently experiencing do not decline, our results of operations could be adversely affected.

f.	If our networks do not perform in a manner that meets subscriber expectations, we will be unable to attract and retain customers.

Customer acceptance of the services we offer on our networks is and will continue to be affected by technology-based differences and by the operational performance and reliability of these networks. We may have difficulty attracting and retaining customers if: we are unable to satisfactorily address and resolve performance or other transmission quality issues as they arise; these issues limit our ability to deploy or expand our network capacity as currently planned; or these issues place us at a competitive disadvantage to other wireless providers.

g.	Customer concerns about our financial condition, ability to continue as a going concern and ability to implement our business plan, including our network development and deployment efforts, may have an additional adverse effect on our ability to attract and retain customers.

When deciding whether to continue or begin service with us, our customers may take our medium- to long-term operating and financial outlook, particularly to the extent that it is perceived to impact our network deployment and development, into account. If customers or potential customers who are aware of our recent results of operations, or of current and future adjustments to our business in response to those results, become concerned that we will be unable to continue to provide service to them at a quality level that meets their needs, customer deactivations could increase and new subscribers could decrease. We assume that customers will find our services attractive and that we will be able to increase our subscriber base. However, given the factors that have negatively affected our business and the difficulties associated with predicting our ability to overcome these factors, there can be no assurance that these assumptions will prove to be correct. Increases in customer deactivations and decreases in new subscribers would adversely affect our revenues and our ability to generate the cash needed to fund our business and meet our other obligations.

4.	We operate exclusively in Brazil, and our assets, subscribers and cash flows are concentrated in Brazil, which presents risks to our operating plans.

As a holding company with operations solely in Brazil, our growth and operating results are dependent on the strength and stability of the economic, political and regulatory environments in that country. Changes in the economic, political and regulatory environment or foreign currency exchange rates in Brazil will have a more significant impact on our operating results than has been the case historically when we held operations in multiple Latin American markets. As a result, our business and operations will be subject to a higher degree of risk and volatility due to the impact of the risks described below.

a.	A decline in the foreign exchange rate of the Brazilian real may adversely affect our growth and our operating results.

Historically, the value of the Brazilian real relative to the U.S. dollar has been volatile. Recent weakness in the economy in Brazil has led to increased volatility in the real compared to the U.S. dollar. Nearly all of our revenues are earned in Brazilian reais, but we report our results in U.S. dollars. As a result, fluctuations in foreign currency exchange rates have had and can have a significant impact on our reported results that may not reflect the operating trends in our business. In addition, all of our outstanding debt is owed by Nextel Brazil, and 39% of the principal amount of our total debt outstanding is denominated in U.S. dollars. A decline in the value of the Brazilian real makes it more costly for us to service our U.S. dollar-denominated debt obligations and affects our operating results because we generate nearly all of our revenues in Brazilian reais, but we pay for some of our operating

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expenses and capital expenditures in U.S. dollars. Further, because we report our results of operations in U.S. dollars, a decline in the value of the Brazilian real relative to the U.S. dollar result in reductions in our reported revenues, as well as a reduction in the carrying value of our assets, including the value of cash investments held in Brazilian reais. Depreciation of the Brazilian real also results in increased costs to us for imported equipment. Historically, we have entered into some limited hedging arrangements to mitigate short-term volatility in foreign exchange rates, but have not hedged against long-term movements in foreign exchange rates because the alternatives currently available for hedging against those movements are limited and costly. As a result, if the value of the Brazilian real continues to depreciate relative to the U.S. dollar, we would expect our reported operating results in future periods, and the value of our assets held in Brazilian reais, to be adversely affected.

b.	We face economic and political risks operating in Brazil, which may limit our ability to implement our strategy and could negatively impact our financial flexibility, including our ability to repatriate and redeploy profits, and may disrupt our operations or hurt our performance.

Our operations depend on the economy in Brazil, which is considered to be an emerging market and has historically been subject to volatile economic cycles. More recently, Brazil has experienced one of the worst economic recessions in its history. As a result, the economic environment in Brazil is characterized by significant and rapid fluctuation in terms of commodity prices, local consumer prices, employment levels, gross domestic product, interest rates and inflation rates. These economic conditions are affecting the wireless telecommunications industry in Brazil, leading to lower customer credit and pressure on customer demand, pricing and customer turnover, and are negatively impacting our ability to attract and retain subscribers. During 2016, the Brazilian economy contracted as domestic demand decreased due to a combination of relatively high inflation, high interest rates, growing unemployment, tighter credit conditions, a decline in business investments and political issues. It is estimated that Brazil's GDP fell about 3% in 2016 compared to 2015, and most economic forecasts currently project GDP growth of no more than 1% in 2017. The unemployment rate in Brazil was about 11% at the end of 2016. Real wages in Brazil have been falling since March 2015 and are expected to continue to fall. The foreign currency exchange rate in Brazil declined in value by almost 5% relative to the U.S. dollar from 2015 to 2016. If the current economic conditions continue or worsen, the economic environment in Brazil may negatively impact our ability to meet our business plan.

In addition, in some instances, the economy in Brazil has also been negatively affected by other factors, including volatile political conditions. We are unable to predict the impact that local or national elections and the associated transfer of power from incumbent officials or political parties to newly elected officials or parties may have on the local economy or the growth and development of the local telecommunications industry. Changes in leadership or in the ruling party in Brazil may affect the economic programs developed under the prior administration, which in turn, may adversely affect the economy there. Other risks associated with political instability could include the risk of expropriation or nationalization of our assets by the government. We expect political, economic and social conditions in Brazil to affect our business, including our access to capital markets to obtain funding needed for our business or to refinance our existing indebtedness.

c.	Our operating company is subject to local laws and government regulations, and we are subject to U.S. laws and regulations, which could limit our growth and strategic plans and negatively impact our financial results.

Our operations are subject to local laws and regulations in Brazil, which may differ substantially from those in the U.S., and we could become subject to penalties if we do not comply with those local laws and regulations. In addition, we are subject to U.S. laws and regulations, such as the Foreign Corrupt Practices Act, or the FCPA. The FCPA prohibits us from providing anything of value to foreign officials for the purpose of influencing official decisions or obtaining or retaining business. Our employees and agents interact with government officials on our behalf, including interactions necessary to obtain licenses and other regulatory approvals necessary to operate our business and through contracts to provide wireless service to government entities, creating a risk that actions may occur that could violate the FCPA. Although we have implemented policies and procedures designed to ensure compliance with local laws and regulations as well as U.S. laws and regulations, including the FCPA, there can be no assurance that all of our employees, consultants, contractors and agents will abide by our policies. The penalties for violating the FCPA can be severe. Any violations of law, even if prohibited by our policies, could have a material adverse effect on our business.

In addition, in Brazil, government regulatory agencies regulate the licensing, construction, acquisition, ownership and operation of our wireless communications systems, as well as the granting, maintenance and renewal of licenses to use spectrum and radio frequencies. Adoption of new regulations, changes in the current telecommunications laws or regulations or changes in the manner in which they are interpreted or applied could adversely affect our operations by increasing our costs, reducing our revenues or making it more difficult for us to compete. Our business may be negatively impacted if changes are implemented that:

•	affect the terms of interconnection arrangements that allow our subscribers to complete calls to our competitors’ subscribers, including the charges imposed for the completion of those calls;

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•	establish restrictions that limit or otherwise affect the deployment of transmitter and receiver sites needed to support the coverage and capacity of our networks;

•	establish minimum network construction, coverage or quality of service obligations that can result in increased capital investments or require other changes to our business;

•	establish prices Nextel Brazil is required to charge for its services or impose other terms of service that can affect our revenues or costs; or

•	impose foreign ownership limitations on telecommunications providers that may affect our ability to own and operate our business.

There has also been an increased focus on service and quality standards in Brazil as the local government monitors telecommunications providers' voice quality, customer complaints, call failure rates, capacity to handle call traffic levels in peak calling periods and failed interconnection of calls, which could potentially increase our operating costs and affect rates charged to subscribers. In addition, regulations in Brazil permit third parties, including our competitors, to challenge our actions or decisions of the regulators that potentially benefit us, such as decisions regarding the allocation and licensing of spectrum. If our competitors are successful in pursuing claims such as these, or if the regulators in Brazil take actions against us in response to actions initiated by our competitors, our ability to grow our business and improve our results of operations could be adversely affected.

Finally, rules and regulations affecting placement and construction of our transmitter and receiver sites affect our ability to deploy and operate our networks, and therefore impact our business strategies. In some instances, local governments have adopted very stringent rules and regulations related to the placement and construction of wireless towers, which can significantly impede the planned expansion of our service coverage area or require us to remove or modify existing towers, which can result in unplanned costs, negatively impact network performance and impose new and onerous taxes and fees. Compliance with such laws, rules and regulations could increase the time and costs associated with our planned network deployments. The propagation characteristics of the spectrum bands being used to support our WCDMA network in Brazil and the coverage requirements associated with the spectrum licenses being utilized in Brazil, require substantially more transmitter and receiver sites to meet the minimum coverage requirements of those licenses and to provide coverage to the areas needed to provide competitive services. In addition, our licenses in Brazil require us to build our networks within prescribed time periods, and failure to meet the requirements may result in enforcement of performance bonds related to the licenses, forfeiture of the channels and revocation of licenses. Rules and regulations affecting tower placement and construction could make it difficult to meet our build requirements in a timely manner or at all, which could lead us to incur unplanned costs or result in fines or, in some instances, the loss of spectrum licenses. We expect that when we complete the implementation of our radio access network, or RAN, sharing agreement with Telefonica, under which Telefonica permits Nextel Brazil to use some of its tower and equipment infrastructure to transmit telecommunications signals on Nextel Brazil's spectrum, Nextel Brazil will be in compliance with the applicable operational requirements of its licenses in all material respects.

d.	We pay significant import duties on our network equipment and handsets, and any increases could impact our financial results.

Our operations are highly dependent upon the successful and cost-efficient importation of network equipment and handsets and other devices from locations outside Brazil. Network equipment and handsets may be subject to significant import duties and other taxes. Any significant increase in import duties in the future could significantly increase our costs. To the extent we cannot pass these costs on to our customers, our financial results will be negatively impacted.

e.	We are subject to taxes, which may reduce the revenues of our operating subsidiary in Brazil, reduce the amounts we receive from Nextel Brazil or may increase our tax costs.

The government in Brazil, including the local municipalities, has increasingly turned to new taxes, as well as aggressive interpretations of current tax law, as a method of increasing revenue. For example, Nextel Brazil is required to pay two types of income taxes, which include a corporate income tax and a social contribution tax, and is subject to various types of non-income related taxes, including value-added tax, excise tax, service tax, importation tax and property tax. In addition, the reduction in tax revenues resulting from the economic downturn that has occurred in the last several years has led to proposals and new laws that increase the taxes imposed on sales of handsets and on telecommunications services. The provisions of new tax laws may attempt to prohibit us from passing these taxes on to our customers or our ability to do so may be limited by competitive conditions. These taxes may reduce the amount of earnings that we can generate from our services or in some cases may result in operating losses.

Distributions of earnings and other payments, including interest, received from Nextel Brazil may be subject to withholding taxes imposed by Brazil. Any of these taxes will reduce the amount of after-tax cash we can receive from our operations.

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In general, a U.S. corporation may claim a foreign tax credit against its federal income tax expense for foreign withholding taxes and, under certain circumstances, for its share of foreign income taxes paid directly by foreign corporate entities in which the company owns 10% or more of the voting stock. Our ability to claim foreign tax credits is, however, subject to numerous limitations, and we may incur incremental tax costs as a result of these limitations or because we do not have U.S. Federal taxable income.

We may also be required to include in our income for U.S. Federal income tax purposes our proportionate share of specified earnings of our foreign corporate subsidiaries that are classified as controlled foreign corporations, without regard to whether distributions have been actually received from these subsidiaries.

f.	We have entered into a number of agreements that are subject to enforcement in foreign countries, which may limit efficient dispute resolution.

A number of the agreements that we and our subsidiaries enter into with third parties are governed by the laws of, and are subject to dispute resolution in the courts of or through arbitration proceedings in, the countries or regions in which the operations are located. We cannot accurately predict whether these forums will provide effective and efficient means of resolving disputes that may arise. Even if we are able to obtain a satisfactory decision through arbitration or a court proceeding, we could have difficulty enforcing any award or judgment on a timely basis. Our ability to obtain or enforce relief in the U.S. is also uncertain.

5.	The costs we incur to connect our networks with those of other carriers are subject to local laws and may increase, which could adversely impact our financial results.

Nextel Brazil must connect its telecommunication networks with those of other carriers in order to provide the services we offer. We incur costs relating to these interconnection arrangements and for local, long distance and data transport services relating to the connection of our transmitter sites and other network equipment. These costs include interconnection charges and fees, charges for terminating calls on the other carriers’ networks and transport costs, most of which are measured based on the level of our use of the related services. We are able to recover a portion of these costs through revenues earned from charges we are entitled to bill other carriers for terminating calls on our network, but because users of mobile telecommunications services who purchase those services under contract generally, and business customers like ours in particular, tend to make more calls that terminate on other carriers’ networks and because we have a smaller number of customers than most other carriers, we incur more charges than we are entitled to receive under these arrangements. The terms of the interconnection and transport arrangements, including the rates that we pay, are subject to varying degrees of local regulation, and often require us to negotiate agreements with the other carriers, most of which are our competitors, in order to provide our services. Our costs relating to these interconnection and transport arrangements are subject to fluctuation both as a result of changes in regulations and the negotiations with the other carriers. Changes in our customers’ calling patterns that result in more of our customers’ calls terminating on our competitors’ networks and changes in the interconnection arrangements either as a result of regulatory changes or negotiated terms that are less favorable to us could result in increased costs for the related services that we may not be able to recover through increased revenues, which could adversely impact our financial results.

6.	Our failure to maintain effective internal controls over financial reporting may adversely affect the accuracy and timeliness of our financial reporting.

As described in "Part II. Item 9A. Controls and Procedures," included in this annual report on Form 10-K, we disclosed a material weakness in internal control over financial reporting related to Nextel Brazil's control environment and information and communication processes. Nextel Brazil's control environment was not effective because an appropriate tone at the top was not established at Nextel Brazil. In addition, the information and communication process was not effective because we did not identify information necessary to account for leases, certain accrued liabilities and operating expenses. As a result, we did not design and operate effective process level controls over the completeness and accuracy of data and assumptions used to support accounting analyses and reconciliations for the related accounts. Management is committed to remediating the material weakness in Nextel Brazil's internal control over financial reporting.

Our inability to maintain effective internal control over financial reporting, as described above, combined with issues or delays in implementing improvements, could result in a material misstatement to our financial statements or other disclosures, which could have an adverse effect on our business, financial condition or results of operations.

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7.	Our business could be negatively impacted by our reliance on indirect distribution channels for a significant portion of our sales.

Our business depends upon third party distribution channels for securing a portion of the new customers to our services. In some instances, we rely on these third party dealers and retailers to serve as the primary contact between us and the customer and to interact with other third parties on our behalf. As a result, there may be risks associated with the actions taken by our distributors or the operators of our other retail channels, including potential risks associated with the failure of our distributors or other retail channels to follow regulatory requirements. The volume of our new customer additions, our ability to retain customers and our profitability could also be adversely affected if these third party dealers or retailers terminate their relationship with us, if there are adverse changes in our relationships with them, if we alter our compensation arrangements with these dealers or retailers or if the financial condition of these dealers or retailers deteriorates.

8.	If our licenses to provide mobile services are not renewed, or are modified or revoked, our business may be restricted.

Wireless communications licenses and spectrum allocations are subject to ongoing review and, in some cases, to modification or early termination for failure to comply with applicable regulations. If Nextel Brazil fails to comply with the terms of its licenses and other regulatory requirements, including installation deadlines and minimum loading or service availability requirements, they could be fined or their licenses could be revoked. This is particularly true with respect to the grants of licenses for spectrum we use to support our WCDMA network in Brazil, which impose strict deadlines for the construction of network infrastructure and supporting systems as a condition of the license. We expect that when we complete the implementation of our RAN sharing agreement with Telefonica, Nextel Brazil will be in compliance with the applicable operational requirements of its licenses in all material respects. Further, compliance with these requirements is a condition for eligibility for license renewal. Most of our wireless communications licenses have fixed terms and are not renewed automatically. Because governmental authorities have discretion to grant or renew licenses, our licenses may not be renewed or, if renewed, renewal may not be on acceptable economic terms. In addition, regulations in Brazil permit third parties, including our competitors, to challenge the award and use of our licenses. If our competitors are successful in pursuing claims such as these, or if regulators in Brazil take actions modifying or revoking our licenses in response to these claims, our ability to grow our business and improve our results of operations could be materially adversely affected.

9.	If we are not able to manage changes to our business, our operating results will suffer.

Our ability to achieve our long-range business goals and to grow profitably is dependent on our ability to manage changes to our business model and cost structure that are necessary to allow us to pursue our plans to expand both our service offerings and our targeted customer segments, including by implementing new and more efficient supporting business systems and processes. Our inability to complete these efforts in a timely fashion, or to manage the related costs, could have an adverse impact on our business.

a.	We may be limited in our ability to grow unless we successfully expand network capacity and launch competitive services.

To continue to successfully retain our existing customers, increase our customer base and grow our business, we must economically:

• expand the capacity and coverage of our network in Brazil;

•	secure sufficient transmitter and receiver sites at appropriate locations to meet planned system coverage and capacity targets;

• obtain adequate quantities of base radios and other system infrastructure equipment; and

• obtain an adequate volume and mix of handsets to meet customer demand.

In particular, the deployment and expansion of the coverage and capacity of our WCDMA network and the deployment of LTE technology in Brazil has required us to deploy new transmitter and receiver sites in order to meet the expanded coverage and capacity requirements for those networks resulting from differences in our commercial strategies, differences in the propagation characteristics of the spectrum bands being used to support our network in Brazil and the coverage requirements associated with the spectrum licenses being utilized to support our services. In some areas that we serve, individuals and governments are opposing new tower construction and supporting laws restricting the construction of towers and other transmitter and receiver sites. Compliance with such laws could increase the time and costs associated with our planned network deployments. The effort required

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to locate and build a significant number of additional transmitter sites to support our services in coming years will be substantial, and our failure to meet this demand could adversely affect our business.

In addition, as we launch a broader array of services on our network in Brazil, we must develop, test and deploy new supporting technologies, software applications and systems intended to enhance our competitiveness both by supporting existing and new services and features, and by reducing the costs associated with providing those services. Successful deployment and implementation of new services and technology depend, in part, on the willingness and ability of third parties to develop new handsets and applications that are attractive to our customers and that are available in a timely manner. We may not be able to successfully expand our new network in Brazil as needed or complete the development and deployment of competitive services. Failure to successfully expand our network coverage and capacity and the services we offer could also be expected to result in subscriber dissatisfaction that could affect our ability to retain subscribers and could have an adverse effect on our results of operations and growth prospects. If this occurs, we may be unable to recover the substantial investment we have made in our new networks and the related costs we have incurred and will continue to incur to offer these new services.

b.	Failure to successfully implement core information technology and operating systems may adversely affect our business operations.

Our business strategy envisions growing our business by successfully building and expanding our new network in Brazil, expanding our product and service offerings and expanding our target customer base. Even if we do expand our business, if we fail to manage our growth effectively, our financial results could be adversely affected. Separately, growth may place a strain on our management systems and resources. We must continue to refine and expand our business development and sales capabilities; our network operations and information technology infrastructure; and the hardware, software, systems, processes and people to effectively support current and future sales, customer service and information requirements of our business in an efficient and cost-effective manner. In addition, failure to prioritize technology initiatives and effectively allocate resources in order to achieve our strategic goals could result in a failure to realize those goals, including the expected benefits of our growth, and could negatively affect our financial results.

Changes to our networks and business strategies require us to implement new operating and supporting systems to improve our ability to address the needs of our customers, as well as to create additional efficiencies and strengthen our internal controls over financial reporting. We may not be able to successfully implement these new systems in an effective or timely manner or we could fail to complete all necessary data reconciliation or other conversion controls when implementing the new systems. In addition, we may incur significant increases in costs and encounter extensive delays in the implementation and rollout of these new systems. Failure to effectively implement our new operating systems may adversely affect our results of operations, customer perceptions and internal controls over financial reporting.

As our business evolves, we must continue to hire, train, supervise and manage new employees. We cannot assure you that we will be able to allocate our human resources optimally or identify and hire qualified employees or retain valued employees. If we are unable to manage our operations, our results of operations could be adversely affected.

10.	Any modification or termination of our trademark license with Nextel Communications could increase our costs.

Nextel Communications, Inc., or Nextel Communications, has licensed to us the right to use “Nextel” and other of its trademarks on a perpetual basis in Latin America. However, Nextel Communications may terminate the license on 60 days’ notice if we commit one of several specified defaults (namely, unauthorized use, failure to maintain agreed quality controls or a change in control of NII Holdings). If there is a change in control of one of our subsidiaries, upon 90 days’ notice, Nextel Communications may terminate the sublicense granted by us to the subsidiary with respect to the licensed marks. The loss of the use of the “Nextel” name and trademark could require us to incur significant costs to establish a new brand, which could have a material adverse effect on our operations.

11.	Our business could be negatively impacted by security threats and other material disruptions of our wireless networks.

Major equipment failures and the disruption of our wireless networks as a result of natural disasters, severe weather, terrorist attacks, acts of war, cyber attacks or other breaches of network or information technology security, even for a limited period of time, may result in significant expenses, result in a loss of subscribers or impair our ability to attract new subscribers, which in turn could have a material adverse effect on our business, results of operations and financial condition. In the past, more stringent network performance standards and reporting obligations have been adopted by the government in Brazil in order to ensure quality of service during unforeseen disturbances. We could be required to make significant investments in our existing networks in order to comply with these types of network performance standards. In addition, while we maintain information security policies and procedures designed to comply with relevant privacy and security laws and restrictions, if we suffer a security breach of customer

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or employee confidential data, we may be subject to significant legal and financial exposure, damage to our reputation, and loss of confidence in the security of our products and services.

Risks Relating to Our Common Stock

12.	There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of other stockholders.

Funds associated with Capital World Investors, subsidiaries of BlackRock, Inc. and subsidiaries of The Vanguard Group currently own approximately 25.5%, 11.5% and 10.2%, respectively, of our outstanding common stock. Two of our stockholders also have certain additional rights under our registration rights agreement dated June 26, 2015. Circumstances may arise in which these stockholders may have an interest in pursuing or preventing acquisitions, divestitures or other transactions, including the issuance of additional shares or debt, that, in their judgment, could enhance their investment in us or another company in which they invest. Such transactions might adversely affect us or other holders of our common stock. In addition, our significant concentration of share ownership may adversely affect the trading price of our common shares because investors may perceive disadvantages in owning shares in companies with significant stockholders.

13.	The price of our common stock may be volatile.

The price of our common stock may fluctuate due to a variety of factors, including:

•	concentration of our business operations in Brazil;

•	low trading volumes for our common stock and the inability to sustain an active trading marketing for our common stock;

•	actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

•	industry cycles and trends;

•	mergers and strategic alliances in the telecommunications industry;

•	changes in government regulation;

•	potential or actual military conflicts or acts of terrorism;

•	the failure of securities analysts to publish research about us, or shortfalls in our operating results from levels forecast by securities analysts;

•	future sales of our common stock by our stockholders, including in particular, those stockholders whose shares were included in our Registration Statement on Form S-3;

•	announcements concerning us or our competitors; and

•	the general state of the securities market.

As a result of these factors, investors in our common stock may not be able to resell their stock at or above the price they paid or at all. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.

14.	Certain provisions of our certificate of incorporation and our bylaws may make it difficult for stockholders to change the composition of our Board and may discourage, delay or prevent a merger or acquisition that some stockholders may consider beneficial.

Certain provisions of our Amended and Restated Certificate of Incorporation (the “Charter”) and our Fifth Amended and Restated Bylaws (the “Bylaws”) may have the effect of delaying or preventing changes in control if our Board determines that such changes in control are not in the best interests of the Company and our stockholders. The provisions in our Charter and Bylaws include, among other things, those that:

•	provide for a classified board of directors until the 2017 annual meeting;

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•	authorize our Board to issue preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval;

•	establish advance notice procedures for nominating directors or presenting matters at stockholder meetings; and

•	limit the persons who may call special meetings of stockholders.

While these provisions have the effect of encouraging persons seeking to acquire control of our Company to negotiate with our Board, they could enable the Board to hinder or frustrate a transaction that some, or a majority, of the stockholders may believe to be in their best interests and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board, which is responsible for appointing the members of our management.

Item 1B.	Unresolved Staff Comments

None.

Item 2.	Properties

Our principal executive and administrative offices are located in Reston, Virginia, where we lease about 26,000 square feet of office space under a lease expiring in January 2020. In addition, Nextel Brazil leases office space in São Paulo and Rio de Janeiro. Nextel Brazil also leases transmitter and receiver sites under various individual site leases. As of December 31, 2016 , Nextel Brazil had 10,031 constructed sites at leased and owned locations, including those constructed for its networks. In addition, Nextel Brazil also had 1,172 radio access network, or RAN, sharing sites, 507 global system for mobile, or GSM, sites and 484 indoor sites as of December 31, 2016.

Item 3.	Legal Proceedings

We are subject to other 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. See Note 9 to our consolidated financial statements at the end of this annual report on Form 10-K for more information.

Item 4.	Mine Safety Disclosures

Not applicable.

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PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

1.	Market for Common Stock

In connection with our Chapter 11 proceedings, all shares of our common stock that were outstanding prior to our emergence from Chapter 11 were canceled on June 26, 2015. On July 6, 2015, our common stock was listed on the Nasdaq Global Select Market (NASDAQ) under the symbol “NIHD.” The following table sets forth on a per share basis the reported high and low sale prices for our common stock, as reported on the market at the time, since July 6, 2015.

	Price Range of Common Stock
	High		Low
2015
Third Quarter	$16.88		$6.21
Fourth Quarter	7.81		4.43
2016
First Quarter	$5.72		$3.01
Second Quarter	5.65		2.64
Third Quarter	3.63		2.05
Fourth Quarter	3.33		1.70

2.	Number of Stockholders of Record

As of March 3, 2017, there were approximately 95 holders of record of our common stock, including the Depository Trust Corporation, which acts as a clearinghouse for multiple brokerage and custodial accounts.

3.	Dividends

We have not paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future. We anticipate that for the foreseeable future any cash flow generated from our operations will be used to develop and expand our business and operations and make contractual payments under our debt facilities in accordance with our business plan.

4.	Issuer Purchases of Equity Securities

(b) The following table presents information related to repurchases of our common stock during the three months ended December 31, 2016:

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
October 1, 2016 - October 31, 2016		20,283		(1)	$	3.23			20,283
November 1, 2016 - November 30, 2016		20,929		(1)	2.50				20,929
December 1, 2016 - December 31, 2016		—			—				—
Total		41,212		(1)	2.86				41,212			$	—

(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.

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Performance Graph

The following graph presents the cumulative total stockholder return on our common stock as listed on the Nasdaq Global Select Market from July 6, 2015 through December 31, 2016. This graph also compares our common stock to the cumulative total stockholder return on the Nasdaq 100 Index, the common stock of Oi S.A. and Telefônica Brasil S.A. The graph assumes an initial investment of $100 in our common stock as of July 6, 2015 and in each of the comparative indices or peer issuers, and that all dividends were reinvested.

I ndex	7/6/2015				9/30/2015				12/31/2015				3/31/2016				6/30/2016				9/30/2016				12/31/2016
NII Holdings	$	100.00			$	38.57			$	29.92			$	32.76			$	18.84			$	19.73			$	12.74
Nasdaq 100	$	100.00			$	94.73			$	104.42			$	102.25			$	100.44			$	111.63			$	110.28
Oi S.A.	$	100.00			$	42.39			$	28.80			$	18.64			$	23.72			$	51.17			$	39.81
Telefônica Brasil S.A.	$	100.00			$	65.39			$	65.22			$	90.33			$	99.32			$	106.84			$	96.03

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Item 6.	Selected Financial Data

On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and NIIT filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. In addition, subsequent to September 15, 2014, five additional subsidiaries of NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. We refer to the companies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Nextel Brazil and our previous other operating subsidiaries in Latin America were not Debtors in these Chapter 11 cases.

On June 19, 2015, the Bankruptcy Court entered an order approving and confirming the First Amended Joint Plan of Reorganization Proposed by the Plan Debtors and the Official Committee of Unsecured Creditors, dated April 20, 2015. We refer to this plan, as amended, as the Plan of Reorganization. On June 26, 2015, the conditions of the Bankruptcy Court's order and the Plan of Reorganization were satisfied, the Plan of Reorganization became effective, and we and the other Debtors emerged from the Chapter 11 proceedings. We refer to June 26, 2015 as the Emergence Date.

In connection with our emergence from Chapter 11, we were required to apply the provisions of fresh start accounting to our financial statements. Because our results of operations during the period from June 26, 2015 to June 30, 2015 were not material, we applied fresh start accounting to our consolidated financial statements as of the close of business on June 30, 2015. As a result of the application of fresh start accounting and other events related to our reorganization under Chapter 11, the Successor Company's financial results for the six months ended December 31, 2015 are prepared under a new basis of accounting and are not directly comparable to the Predecessor Company's financial results for the six months ended June 30, 2015.

The tables below set forth selected consolidated financial data for the periods or as of the dates indicated and should be read in conjunction with the consolidated financial statements and notes thereto in Item 8 of this report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this report. The selected consolidated financial data presented below includes the results of Nextel Brazil and our corporate headquarters. In connection with the sales of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru, we have included the results of these former operating companies for all periods presented as discontinued operations in the tables below. For more information regarding material uncertainties in our business, see Note 1 and Note 9 to our consolidated financial statements.

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014				2013				2012
	(in thousands, except per share data)
Consolidated Statement of Operations Data:
Operating revenues	$	985,046			$	529,434				$	683,711			$	1,848,954			$	2,203,040			$	2,898,461
Impairment, restructuring and other charges	$	1,384,811			$	32,308				$	36,792			$	105,664			$	121,578			$	29,889
Foreign currency transaction gains (losses), net	$	76,615			$	(99,737	)			$	(63,948	)		$	(51,149	)		$	(92,456	)		$	(25,946	)
Net (loss) income from continuing operations	$	(1,533,879	)		$	(292,491	)			$	1,519,401			$	(1,224,671	)		$	(1,200,425	)		$	(362,939	)
Net (loss) income from continuing operations per common share, basic	$	(15.32	)		$	(2.93	)			$	8.73			$	(7.11	)		$	(6.98	)		$	(2.12	)
Net (loss) income from continuing operations per common share, diluted	$	(15.32	)		$	(2.93	)			$	8.71			$	(7.11	)		$	(6.98	)		$	(2.12	)

	Successor Company									Predecessor Company
	December 31,									December 31,
	2016				2015					2014				2013				2012
	(in thousands)
Consolidated Balance Sheet Data:
Total assets	$	1,418,509			$	2,729,908				$	5,374,034			$	8,679,954			$	9,223,078
Long-term debt, including current portion	$	756,316			$	665,067				$	925,271			$	5,298,412			$	4,066,487
Liabilities subject to compromise	$	—			$	—				$	4,593,493			$	—			$	—

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Impairment, Restructuring and Other Charges. During 2016, we reviewed our Nextel Brazil segment for potential impairment. While we are focused on effectively managing our business in Brazil, we are also considering potential strategic alternatives with third parties. Taking into consideration the current macroeconomic conditions in Brazil, our history of operating losses and the available sources of capital to fund our business plan, we currently believe that the most likely outcome for the future of our business is the sale of Nextel Brazil. During 2016, we compared the carrying value of Nextel Brazil's long-lived assets to our estimate of undiscounted future cash flows. Our estimate of undiscounted future cash flows was probability-weighted and took into consideration our ability to obtain capital necessary to fund our business plan. In addition, we assumed that the proceeds from any potential sale of Nextel Brazil would be significantly less than its carrying value. Based on our estimates, we determined that the carrying value of our Nextel Brazil segment was not fully recoverable. As a result, we recorded a non-cash asset impairment charge of $1.34 billion to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. During the six months ended December 31, 2015 and the six months ended June 30, 2015, we recognized $32.3 million and $36.8 million, respectively, in impairment, restructuring and other charges primarily related to the shutdown or abandonment of certain transmitter and receiver sites in Brazil, retail store closures related to the realignment of distribution channels and restructuring charges incurred in connection with the realignment of our organization and staffing structure. During 2014, we recognized $105.7 million in impairment, restructuring and other charges primarily related to the discontinuation of certain projects related to the next generation of our push-to-talk services, restructuring charges incurred in connection with the realignment of our organization and staffing structure, and other asset impairment charges related to store closures and the shutdown or abandonment of transmitter and receiver sites in Brazil.

Foreign Currency Transaction Gains (Losses), Net.   Consolidated foreign currency transaction gains during the year ended December 31, 2016 were primarily due to the appreciation in the value of the Brazilian real relative to the U.S. dollar during 2016 on Nextel Brazil's U.S. dollar-denominated net liabilities. Consolidated foreign currency transaction losses for each of the remaining periods presented primarily relate to the impact of the depreciation in the value of the Brazilian real relative to the U.S. dollar on Nextel Brazil's assets and liabilities. See “Critical Accounting Policies and Estimates — Foreign Currency. ” for more information.

Net (Loss) Income From Continuing Operations. For the year ended December 31, 2016, net loss from continuing operations included the $1.34 billion non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values discussed above. For the six months ended June 30, 2015, net income from continuing operations included $1,956.9 million in reorganization items, which represented a $1,775.8 million gain we recognized in connection with the settlement of our liabilities subject to compromise upon our emergence from Chapter 11 and a $261.8 million gain we recognized as a result of the implementation of fresh start accounting, partially offset by professional fees and other costs incurred in connection with our Chapter 11 filing.

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Item 7.	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
Forward Looking and Cautionary Statements	27
Introduction	28
A. Executive Overview	28
B. Results of Operations	33
1. Year Ended December 31, 2016 vs. Combined Period Ended December 31, 2015	34
a. Consolidated	34
b. Nextel Brazil	36
c. Corporate	40
2. Combined Period Ended December 31, 2015 vs. Year Ended December 31, 2014	41
a. Consolidated	41
b. Nextel Brazil	43
c. Corporate	44
C. Liquidity and Capital Resources	45
D. Future Capital Needs and Resources	46
E. Effect of Inflation and Foreign Currency Exchange	49
F. Effect of New Accounting Standards	50

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Forward-Looking and Cautionary Statements

This annual report on Form 10-K 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 annual report on Form 10-K, 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 customers;

•	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 proceeds from the sale of Nextel Mexico held in escrow and proceeds derived from other asset sales;

•	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;

•	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 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;

•	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;

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•	our ability to successfully manage and support our legacy iDEN network 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 this annual report on Form 10-K and, from time to time, in our other reports filed with the SEC.

Introduction

The following is a discussion and analysis of:

•	our consolidated financial condition as of December 31, 2016 and 2015 and our consolidated results of operations for the year ended December 31, 2016, for the six-month periods ended December 31, 2015 and June 30, 2015, for the combined twelve-month period ended December 31, 2015 and for the year ended December 31, 2014; and

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

Historical results may not indicate future performance. See “Item 1A. — Risk Factors” for risks and uncertainties that may impact our future performance.

We refer to our wholly-owned Brazilian operating company, Nextel Telecomunicações Ltda., as Nextel Brazil.

A.    Executive Overview

Business Update

Leading up to 2014, our results of operations, including our operating revenues and operating cash flows, were negatively affected by a number of factors, including significant deterioration in economic conditions in Brazil, increased competitive pressure, the overall depreciation of the value of the Brazilian real relative to the U.S. dollar, and the decline in our iDEN subscriber base resulting from the limited digital services available on our legacy iDEN network. These and other factors resulted in a reduction in our subscriber growth and revenues at a time when our costs reflected the operation of both of our networks and had a significant negative impact on our results and our ability to grow our revenue base to a level sufficient to reach the scale required to generate positive operating income.

As a result, in 2014, we concluded that we were not able to maintain sufficient liquidity to support our business plan and repay our debts when they come due, including $4.35 billion of senior notes issued by NII International Telecom, S.C.A., or NIIT, and NII Capital Corp. On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. Subsequent to September 15, 2014, five additional subsidiaries filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. On June 26, 2015, we and the other Debtors emerged from the Chapter 11 proceedings. Our operating subsidiaries in Brazil, Mexico and Argentina were not debtors in the Chapter 11 cases. See Note 3 to our consolidated financial statements for more information regarding the impact of the implementation of the Plan of Reorganization.

In accordance with the requirements of reorganization accounting, NII Holdings adopted the provisions of fresh start accounting as of June 30, 2015 and became a new entity for financial reporting purposes. References to the "Successor Company" relate to NII Holdings on or subsequent to June 30, 2015. References to the "Predecessor Company" relate to NII Holdings prior to June 30, 2015.

On January 27, 2016, two of our indirect subsidiaries completed the sale of our Argentine operations to Grupo Clarin. The transaction was structured as a sale of all of the outstanding equity interests of Nextel Communications Argentina, S.R.L., or Nextel Argentina, for an aggregate purchase price of $178.0 million , including $6.0 million deposited in escrow to satisfy potential indemnification claims. In the second half of 2016, $5.4 million of the escrow was released back to us, and we have no further obligations in connection with this transaction.

On April 30, 2015, we, together with one of our wholly-owned subsidiaries, 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 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. The net proceeds of the sale were $1.448 billion after deducting Nextel Mexico's outstanding indebtedness and applying other specified price adjustments.

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In August 2014, three of our wholly-owned subsidiaries completed the sale of all of the outstanding equity interests in our wholly-owned subsidiary Nextel Chile, S.A., or Nextel Chile, to Fucata, S.A., a venture comprised of Grupo Veintitres and Optimum Advisors for a de minimus amount.

In August 2013, two of our wholly-owned subsidiaries completed the sale of all of the outstanding equity interests in our wholly-owned subsidiary Nextel del Peru, S.A., or Nextel Peru, to Empresa Nacional de Telecomunicaciones S.A. and one of its subsidiaries, Entel Inversiones, S.A., which we refer to collectively as Entel.

As a result of the sales of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru, we have presented the results of these operating companies for all periods as discontinued operations in this annual report on Form 10-K. In addition, as a result of these sales, we are allocating almost all of our financial and other resources to our operations in 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 we believe there is a concentration of Brazil’s business users and economic activity, including primarily Rio de Janeiro and São Paulo.

In the second half of 2013, Nextel Brazil commercially launched services on its WCDMA network in São Paulo, Rio de Janeiro and surrounding areas and extended those services to other areas in Brazil by expanding the coverage of its network and utilizing roaming services and network sharing arrangements pursuant to agreements that it reached with another network operator in Brazil. Our 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 iDEN network.

Prior to the deployment of our WCDMA network, our services were primarily targeted to meet the needs of business subscribers. With the deployment of our WCDMA network in Brazil, our target market has shifted to 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 starting in December 2016, in São Paulo, and we continue to provide services on our legacy iDEN network throughout various regions in Brazil. Our transition to standards-based technologies such as WCDMA also gives us more flexibility to offer subscribers the option of purchasing services by acquiring SIM cards from us separately, and by providing the customer with the option to use the SIM cards in one or more devices that they acquire from us or 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 December 31, 2016 , Nextel Brazil had about 3.638 million total subscriber units in commercial service, which we estimate to be about 5% 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 and manage the decline of our iDEN-based 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:

•	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;

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•	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 that 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 changes to our leadership team in Brazil in 2015, lower investments in costs to support subscriber growth, significant reductions in our headquarters staff through the reorganization of the roles and responsibilities of both 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 ability to fund our business beyond the first quarter of 2018. As a result, in February 2017, we and the lenders of our local bank loans in Brazil entered into amendments to these loan agreements under which principal payments will be suspended for four months while we seek to obtain long-term modifications of the financing arrangements, including potential further extensions of the existing amortization relief. In addition, last year, we hired a third party investment adviser to actively explore strategic options to provide sources of funding that will allow us to meet our future obligations or find a buyer for our company. While we continue to be focused on effectively managing our business in Brazil, the long-term viability of our business is dependent on the successful outcome of one or more of the external processes described above.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. We consider the accounting policies and estimates addressed below to be the most important to our financial position and results of operations, either because of the significance of the financial statement item or because they require the exercise of significant judgment and/or use of significant estimates. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

Revenue Recognition.   While our revenue recognition policy does not require the exercise of significant judgment or the use of significant estimates, we believe that our policy is significant as revenue is a key component of our results of operations.

Operating revenues primarily consist of wireless service revenues and revenues generated from the sale of handsets and accessories. We present our operating revenues net of value-added taxes, but we include certain revenue-based taxes that are our primary obligation.

Service revenues primarily consist of fixed monthly access charges. Other components of service revenue include revenues from calling party pays programs, variable charges for usage in excess of plan minutes or data in excess of plan limits, long-distance charges, international roaming revenues derived from calls placed by our subscribers on other carriers’ networks and revenues generated from broadband data services we provide on our WCDMA network. We recognize service revenue as service is provided, net of credits and adjustments for service discounts and value-added taxes. We recognize excess usage, local, long distance and calling party pays revenue at contractual rates per minute as minutes are used. We record cash received in excess of revenues earned as deferred revenues. We recognize handset revenue when title and risk of loss passes to the customer.

Other revenues primarily include amounts generated from our handset maintenance programs, roaming revenues generated from other companies’ subscribers that roam on our networks and co-location rental revenues from third party tenants that rent space on our transmitter and receiver sites, which we also refer to as communication towers or towers, although in some instances these towers are located on rooftops and other structures. We recognize revenue generated from our handset maintenance programs on a monthly basis at fixed amounts over the service period. We recognize roaming revenues at contractual rates per minute as minutes are used. We recognize co-location revenues from third party tenants on a monthly basis based on the terms set by the underlying agreements.

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Allowance for Doubtful Accounts.   We establish an allowance for doubtful accounts receivable sufficient to cover probable and reasonably estimable losses. We estimate this allowance based on historical experience, aging of accounts receivable and collections trends. Actual write-offs in the future could be impacted by general economic and business conditions, as well as fluctuations in subscriber deactivations, that are difficult to predict and therefore may differ from our estimates. A 10% increase in our consolidated allowance for doubtful accounts as of December 31, 2016 would have resulted in $5.4 million of additional bad debt expense for the year ended December 31, 2016.

Depreciation of Property, Plant and Equipment.   We record our network assets and other improvements that extend the useful lives of the underlying assets at cost and depreciate those assets over their estimated useful lives with the exception of property, plant and equipment owned as of the date of our implementation of fresh start accounting. As of June 30, 2015, as a result of the application of fresh start accounting in connection with our emergence from Chapter 11, we adjusted all existing property, plant and equipment to its estimated fair value and revised the associated depreciable lives. See Note 3 to our consolidated financial statements for more information. We calculate depreciation using the straight-line method based on estimated useful lives ranging from 3 to 30 years for network equipment, communication towers and network software and 3 to 10 years for software, office equipment, furniture and fixtures, and other, which includes non-network internal use software. We amortize leasehold improvements over the shorter of the lease terms or the useful lives of the improvements. Our networks are highly complex and, due to constant innovation and enhancements, certain components of those networks may lose their utility sooner than expected. We periodically reassess the economic life of these components and make adjustments to their useful lives after considering historical experience and capacity requirements, consulting with the vendor and assessing new product and market demands and other factors. When our assessment indicates that the economic life of a network component is shorter than originally anticipated, we depreciate its remaining book value over its revised useful life. Further, the deployment of any new technologies could adversely affect the estimated remaining useful lives of our network assets, which could significantly impact future results of operations.

Amortization of Intangible Assets.   Prior to the implementation of fresh start accounting in connection with our emergence from Chapter 11, our intangible assets primarily consisted of our telecommunications licenses. As a result of the implementation of fresh start accounting in connection with our emergence from Chapter 11, we recorded our intangible assets, which consisted of our telecommunications licenses, our exclusive right to use the Nextel tradename in Brazil and our customer relationships, at their estimated fair values. We calculate amortization on our licenses and our tradename using the straight-line method based on estimated useful lives of 26 to 30 years. We calculate amortization on our customer relationships using the straight-line method based on an estimated useful life of 4 years. While the terms of our licenses, including renewals, range from 10 to 40 years, the political and regulatory environment in Brazil is continuously changing and, as a result, the cost of renewing our licenses beyond that range could be significant. In addition, the wireless telecommunications industry is experiencing significant technological change, and the commercial life of any particular technology is difficult to predict. In light of these uncertainties, we classify our licenses as definite lived intangible assets. Many of our licenses are subject to renewal after the initial term, provided that we have complied with applicable rules and policies in each of our markets. We intend to comply, and believe we have complied, with these rules and policies in all material respects as they relate to licenses that are material to our business. However, because governmental authorities have discretion as to the renewal of licenses, our licenses may not be renewed or we may be required to pay significant renewal fees, either of which could have a significant impact on the estimated useful lives of our licenses, which could significantly impact future results of operations. As a result of the implementation of fresh start accounting, we revised the remaining estimated useful lives of our licenses to include renewal periods in cases where it is probable that a renewal will occur.

Valuation of Long-Lived Assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying value of our assets, we recognize a loss for the difference between the estimated fair value and the carrying value of the assets. 

During 2016, we reviewed our Nextel Brazil segment for potential impairment. While we are focused on effectively managing our business in Brazil, we are also considering potential strategic alternatives with third parties. Taking into consideration the current macroeconomic conditions in Brazil, our history of operating losses and the available sources of capital to fund our business plan, we currently believe that the most likely outcome for the future of our business is the sale of Nextel Brazil. During 2016, we compared the carrying value of Nextel Brazil's long-lived assets to our estimate of undiscounted future cash flows. Our estimate of undiscounted future cash flows was probability-weighted and took into consideration our ability to obtain capital necessary to fund our business plan. In addition, we assumed that the proceeds from any potential sale of Nextel Brazil would be significantly less than its carrying value. Based on our estimates, we determined that the carrying value of our Nextel Brazil segment was not fully recoverable.

As a result, in 2016, we recorded a non-cash asset impairment charge of $1.34 billion 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. While we may ultimately complete a sale with a third party that is valued at more or less than our current market value, we estimated the fair value of our equity based on our market capitalization and combined it with the fair value of our outstanding debt obligations to determine the impairment charge. See Note 8 to our consolidated financial statements for more information

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on our estimate of the fair value of our debt obligations. 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.

Foreign Currency.   We translate Nextel Brazil's results of operations from the Brazilian real to the U.S. dollar using average exchange rates for the relevant period. We translate assets and liabilities using the exchange rate in effect at the relevant reporting date. We report the resulting gains or losses from translating foreign currency financial statements as other comprehensive income or loss. Because we translate Nextel Brazil's operations using average exchange rates, its operating trends may be impacted by the translation.

We report the effect of changes in exchange rates on U.S. dollar-denominated assets and liabilities held by Nextel Brazil as foreign currency transaction gains or losses. We report the effect of changes in exchange rates on intercompany transactions of a long-term investment nature as part of the cumulative foreign currency translation adjustment in our consolidated financial statements. The intercompany transactions that, in our view, are of a long-term investment nature include certain intercompany loans and advances from our U.S. and Luxembourg subsidiaries to Nextel Brazil. In contrast, we report the effect of exchange rates on U.S. dollar-denominated intercompany loans and advances to our foreign subsidiaries that are due, or for which repayment is anticipated in the foreseeable future, as foreign currency transaction gains or losses in our consolidated statements of comprehensive loss. As a result, our determination of whether intercompany loans and advances are of a long-term investment nature can have a significant impact on how we report foreign currency transaction gains and losses in our consolidated financial statements.

Loss Contingencies.   We account for and disclose loss contingencies such as pending litigation and actual or possible claims and assessments in accordance with the FASB’s authoritative guidance on accounting for contingencies. We accrue for loss contingencies if it is probable that a loss will occur and if the loss can be reasonably estimated. We disclose, but do not accrue for, material loss contingencies if it is reasonably possible that a loss will occur or if the loss cannot be reasonably estimated. We do not accrue for or disclose loss contingencies if there is only a remote possibility that the loss will occur. The FASB’s authoritative guidance requires us to make judgments regarding future events, including an assessment relating to the likelihood that a loss may occur and an estimate of the amount of such loss. In assessing loss contingencies, we often seek the assistance of our legal counsel and in some instances, of third party legal counsel. As a result of the significant judgment required in assessing and estimating loss contingencies, actual losses realized in future periods could differ significantly from our estimates.

Income Taxes.   We account for income taxes using the asset and liability method, under which we recognize deferred income taxes for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. We recognize the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. We provide a valuation allowance against deferred tax assets if, based upon the weight of available evidence, we do not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized.

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. As of December 31, 2016 ,  w e recorded full valuation allowances on the deferred tax assets of Nextel Brazil, our U.S. parent company and subsidiaries and our foreign holding companies due to  substantial negative evidence, including the recent history of cumulative losses and the projected losses for 2017 and subsequent years. As a result, the valuation allowance on our deferred tax assets increased by $1.7 billion during 2016. We do not anticipate that we will recognize significant tax benefits with respect to our deferred tax assets.

We are subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which we operate. Certain of our entities are under examination by the relevant taxing authorities for various tax years. We regularly assess the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes. We have only recorded financial statement benefits for tax positions that we believe reflect the “more-likely-than-not” criteria of the FASB’s authoritative guidance on accounting for uncertainty in income taxes, and we have established income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, we adjust it only when there is more information available or when an event occurs necessitating a change. While we believe that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on our consolidated financial statements or may exceed the current income tax reserves in amounts that could be material.

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B.	Results of Operations

For purposes of comparison to the year ended December 31, 2016, we combined the results of operations for the six months ended December 31, 2015 with the results of operations for the six months ended June 30, 2015. However, as a result of the application of fresh start accounting and other events related to our reorganization under Chapter 11, the Successor Company's financial results for the six months ended December 31, 2015 are prepared under a new basis of accounting and are not directly comparable to the Predecessor Company's financial results for the six months ended June 30, 2015. For the same reasons, our results of operations for the combined twelve-month period ended December 31, 2015 are not fully comparable to our results of operations for the year ended December 31, 2016 or 2014.

In accordance with accounting principles generally accepted in the U.S., we translated the results of operations of our Brazilian operating segment using the average exchange rates for the years ended December 31, 2016 and 2014 and for the combined twelve-month period ended December 31, 2015. The following table presents the average exchange rates we used to translate Nextel Brazil's results of operations, as well as changes from the average exchange rates utilized in prior periods.

	Successor Company							Predecessor Company			Combined			Predecessor Company
	Year Ended December 31, 2016			Six Months Ended December 31, 2015				Six Months Ended June 30, 2015			Year Ended December 31, 2015			Year Ended December 31, 2014			2015 to 2016 Percent Change			2014 to 2015 Percent Change
Brazilian real	3.49			3.70				2.97			3.33			2.35			(4.8	)%		(41.7	)%

The following table presents the currency exchange rates in effect at the end of 2014, as well as the end of each of the quarters in 2015 and 2016. If the values of these exchange rates depreciate further relative to the U.S. dollar, our future operating results and the values of our assets held in local currencies will be adversely affected.

	Successor Company																			Predecessor Company
	2016												2015													2014
	December			September			June			March			December			September				June			March			December
Brazilian real	3.26			3.25			3.21			3.56			3.90			3.97				3.10			3.21			2.66

To provide better insight into Nextel Brazil's results, 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 combined twelve-month period ended December 31, 2015 to amounts that would have resulted if the average foreign currency exchange rates for the combined twelve-month period ended December 31, 2015 were the same as the average foreign currency exchange rates that were in effect for the year ended December 31, 2016; and (ii) by comparing the constant currency financial measures for the combined twelve-month period ended December 31, 2015 to the actual financial measures for the year ended December 31, 2016. This constant currency comparison applies consistent exchange rates to the operating revenues earned in foreign currencies and to the other components of segment earnings for the combined twelve-month period ended December 31, 2015. 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.

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1.	Year Ended December 31, 2016 vs. Combined Period Ended December 31, 2015

a.	Consolidated

	Successor Company									Predecessor Company				Combined
	Year Ended December 31, 2016				Six Months Ended December 31, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				Actual Change from Previous Year							Constant Currency Change from Previous Year
																		Dollars				Percent			Percent
														(dollars in thousands)
Brazil segment earnings (losses)	$	67,186			$	(15,925	)			$	(75,234	)		$	(91,159	)		$	158,345			(174	)%		(177	)%
Corporate segment losses and eliminations	(36,821		)		(26,100		)			(37,982		)		(64,082		)		27,261				(43	)%		(43	)%
Consolidated segment earnings (losses)	30,365				(42,025		)			(113,216		)		(155,241		)		185,606				(120	)%		(120	)%
Impairment, restructuring and other charges	(1,384,811		)		(32,308		)			(36,792		)		(69,100		)		(1,315,711		)		NM			NM
Depreciation and amortization	(172,383		)		(85,364		)			(153,878		)		(239,242		)		66,859				(28	)%		(25	)%
Operating loss	(1,526,829		)		(159,697		)			(303,886		)		(463,583		)		(1,063,246		)		229	%		242	%
Interest expense, net	(113,732		)		(55,563		)			(82,820		)		(138,383		)		24,651				(18	)%		(13	)%
Interest income	37,689				17,200					15,327				32,527				5,162				16	%		21	%
Foreign currency transaction gains (losses), net	76,615				(99,737		)			(63,948		)		(163,685		)		240,300				(147	)%		(149	)%
Other expense, net	(9,711		)		(1,176		)			(137		)		(1,313		)		(8,398		)		NM			NM
Loss from continuing operations before reorganization items and income tax benefit (provision)	(1,535,968		)		(298,973		)			(435,464		)		(734,437		)		(801,531		)		109	%		118	%
Reorganization items	(803		)		1,467					1,956,874				1,958,341				(1,959,144		)		(100	)%		(100	)%
Income tax benefit (provision)	2,892				5,015					(2,009		)		3,006				(114		)		(4	)%		6	%
Net (loss) income from continuing operations	(1,533,879		)		(292,491		)			1,519,401				1,226,910				(2,760,789		)		(225	)%		(222	)%
(Loss) income from discontinued operations, net of income taxes	(19,994		)		11,608					221,114				232,722				(252,716		)		(109	)%		(109	)%
Net (loss) income	$	(1,553,873	)		$	(280,883	)			$	1,740,515			$	1,459,632			$	(3,013,505	)		(206	)%		(204	)%

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NM-Not Meaningful

We define segment earnings (losses) as operating loss before depreciation, amortization and impairment, restructuring and other charges. We recognized consolidated segment earnings of $30.4 million in 2016 compared to consolidated segment losses of $155.2 million in the combined period ended December 31, 2015. 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

In 2016, we determined that the carrying value of our Nextel Brazil segment was not fully recoverable. As a result of this determination, we recorded a $1.34 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. See Note 4 to our consolidated financial statements for more information on this impairment charge. Consolidated impairment, restructuring and other charges recognized in 2016 also included the following:

•	$21.4 million in restructuring charges related to the early termination of leases for approximately 600 transmitter and receiver sites in connection with the RAN sharing agreement Nextel Brazil entered into with Telefonica Brazil, S.A., or Telefonica, in May 2016;

•	$11.0 million in non-cash asset impairment charges primarily related to the abandonment of transmitter and receiver sites in Brazil;

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•	$10.8 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required in Nextel Brazil's business and office closures; and

•	$3.2 million in severance and other related costs at the corporate level as a result of the separation of employees in an effort to further streamline our organizational structure and reduce general and administrative expenses.

In addition, in connection with the RAN sharing agreement mentioned above, Nextel Brazil expects to use this agreement to fulfill the regulatory coverage obligations under its spectrum licenses rather than utilizing its own network. We expect to incur restructuring costs of approximately $30.0 million in 2017 in connection with the termination of an additional 1,400 transmitter and receiver sites in low-usage areas.

A portion of the restructuring charges described above relates to the removal of certain iDEN transmitter and receiver sites in locations where we have excess capacity in an effort to reduce iDEN-related costs. We plan to continue to remove iDEN transmitter and receiver sites that are no longer necessary, which will result in additional restructuring charges.

Consolidated impairment, restructuring and other charges recognized for the combined period ended December 31, 2015 primarily related to the following:

•	$43.7 million in non-cash asset impairment charges, the majority of which related to the shutdown or abandonment of transmitter and receiver sites and the discontinuation of certain information technology projects in Brazil;

•	$14.4 million in severance and other related costs incurred in Brazil and at the corporate level resulting from the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses; and

•	$8.4 million in restructuring charges in Brazil related to future lease costs for certain transmitter and receiver sites that are no longer necessary in our business plan.

2.	Depreciation and amortization

The $66.9 million, or 28%, decrease in consolidated depreciation and amortization on a reported basis, and the 25% decrease on a constant currency basis, for 2016 compared to the combined period ended December 31, 2015 was principally the result of a decrease in the value of Nextel Brazil's property, plant and equipment in connection with the implementation of fresh start accounting in 2015 and the $1.34 billion non-cash asset impairment charge we recognized in 2016. As a result of the impairment charge we recognized in 2016, we expect consolidated depreciation and amortization to continue to decrease in future periods relative to 2016. See Note 4 to our consolidated financial statements for more information on this impairment charge.

3.	Interest expense, net

Consolidated net interest expense decreased $24.7 million, or 18%, on a reported basis, and 13% on a constant currency basis, for 2016 compared to combined period ended December 31, 2015 primarily as a result of principal payments related to Nextel Brazil's equipment financing facility and local bank loans, and the revaluation of some of our capital leases in connection with the implementation of fresh start accounting.

4.	Foreign currency transaction gains (losses), net

Consolidated foreign currency transaction gains of $76.6 million during the year ended December 31, 2016 were primarily due to the appreciation in the value of the Brazilian real relative to the U.S. dollar during 2016 on Nextel Brazil's U.S. dollar-denominated net liabilities.

Consolidated foreign currency transaction losses of $163.7 million during the combined period ended December 31, 2015 were largely the result of the impact of the depreciation in the value of the Brazilian real relative to the U.S. dollar during the combined period ended December 31, 2015 on Nextel Brazil's U.S. dollar-denominated net liabilities.

5.	Reorganization items

Reorganization items of $1,958.3 million in 2015 were primarily related to the $1,775.8 million gain we recognized in connection with the settlement of our liabilities subject to compromise upon our emergence from Chapter 11 and a $261.8 million

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gain as a result of the implementation of fresh start accounting, partially offset by professional fees and other costs incurred in connection with our Chapter 11 filing.

b.	Nextel Brazil

	Successor Company												Predecessor Company				Combined
	Year Ended December 31, 2016				% of Nextel Brazil’s Operating Revenues			Six Months Ended December 31, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				% of Nextel Brazil’s Operating Revenues			Actual Change from Previous Year							Constant Currency Change from Previous Year
																								Dollars				Percent			Percent
																	(dollars in thousands)
Service and other revenues	$	963,041			98	%		$	501,028				$	643,804			$	1,144,832			94	%		$	(181,791	)		(16	)%		(12	)%
Handset and accessory revenues	21,837				2	%		28,304					39,807				68,111				6	%		(46,274		)		(68	)%		(66	)%
Cost of handsets and accessories	(29,273		)		(3	)%		(46,904		)			(121,143		)		(168,047		)		(14	)%		138,774				(83	)%		(82	)%
Handset and accessory net subsidy	(7,436		)		(1	)%		(18,600		)			(81,336		)		(99,936		)		(8	)%		92,500				(93	)%		(92	)%
Cost of service (exclusive of depreciation and amortization)	(364,648		)		(37	)%		(212,866		)			(256,153		)		(469,019		)		(39	)%		104,371				(22	)%		(19	)%
Selling and marketing expenses	(116,538		)		(12	)%		(71,557		)			(105,357		)		(176,914		)		(15	)%		60,376				(34	)%		(31	)%
General and administrative expenses	(407,233		)		(41	)%		(213,930		)			(276,192		)		(490,122		)		(40	)%		82,889				(17	)%		(13	)%
Segment earnings (losses)	$	67,186			7	%		$	(15,925	)			$	(75,234	)		$	(91,159	)		(8	)%		$	158,345			(174	)%		(177	)%

The average value of the Brazilian real depreciated relative to the U.S. dollar during the year ended December 31, 2016 by 5% compared to the average value that prevailed during the year ended December 31, 2015. As a result, the components of Nextel Brazil's results of operations for 2016, after translation into U.S. dollars, reflect lower revenues and expenses in U.S. dollars than would have occurred if the Brazilian real had not depreciated relative to the U.S. dollar. If the value of the Brazilian real depreciates 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 subscriber identity module, or 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 2015 and 2016. We calculate subscriber turnover by dividing subscriber deactivations for the period by the average number of subscriber units during that period.

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	Predecessor Company							Successor Company
	Three Months Ended							Three Months Ended
	March 31, 2015			June 30, 2015				September 30, 2015			December 31, 2015			March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
	(subscribers in thousands)
iDEN subscriber units	2,667.5			2,414.5				2,166.2			1,842.0			1,552.0			1,315.1			1,127.8			962.1
WCDMA subscriber units	1,672.2			1,970.4				2,254.2			2,597.7			2,744.7			2,708.7			2,717.1			2,746.3
Total subscriber units in commercial service — beginning of period	4,339.7			4,384.9				4,420.4			4,439.7			4,296.7			4,023.8			3,844.9			3,708.4
iDEN net subscriber losses	(194.7	)		(189.0	)			(208.1	)		(211.5	)		(195.2	)		(149.7	)		(130.8	)		(110.1	)
WCDMA net subscriber additions (losses)	239.9			224.5				227.3			68.5			(77.7	)		(29.2	)		(5.7	)		39.6
Total net subscriber additions (losses)	45.2			35.5				19.2			(143.0	)		(272.9	)		(178.9	)		(136.5	)		(70.5	)
Migrations from iDEN to WCDMA	58.3			59.3				116.2			78.5			41.7			37.6			34.9			29.3
iDEN subscriber units	2,414.5			2,166.2				1,842.0			1,552.0			1,315.1			1,127.8			962.1			822.7
WCDMA subscriber units	1,970.4			2,254.2				2,597.7			2,744.7			2,708.7			2,717.1			2,746.3			2,815.2
Total subscriber units in commercial service — end of period	4,384.9			4,420.4				4,439.7			4,296.7			4,023.8			3,844.9			3,708.4			3,637.9
Total subscriber turnover	3.15	%		3.34	%			3.54	%		3.74	%		4.34	%		3.99	%		3.99	%		3.65	%
iDEN subscriber turnover	3.25	%		3.54	%			3.94	%		4.48	%		4.80	%		4.46	%		4.65	%		4.71	%
WCDMA subscriber turnover	2.99	%		3.13	%			3.21	%		3.27	%		4.10	%		3.78	%		3.73	%		3.31	%

The following table represents Nextel Brazil's average monthly revenue per subscriber, or ARPU, for subscribers on both its iDEN and WCDMA networks for each of the quarters in 2015 and 2016 in both U.S. dollars (US$) and in Brazilian reais (BRL). We calculate service ARPU by dividing service revenues per period by the weighted average number of subscriber units in commercial service during that period.

	Predecessor Company							Successor Company						Combined			Successor Company
	Three Months Ended							Three Months Ended						Year Ended			Three Months Ended												Year Ended
	March 31, 2015			June 30, 2015				September 30, 2015			December 31, 2015			December 31, 2015			March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016			December 31, 2016
Total service ARPU (US$)	23			20				18			16			19			16			19			21			20			19
WCDMA service ARPU (US$)	25			22				19			17			20			16			20			21			21			20
iDEN service ARPU (US$)	22			19				17			15			19			15			16			19			18			16
Total service ARPU (BRL)	66			62				62			62			63			62			66			67			67			65
WCDMA service ARPU (BRL)	70			66				66			65			67			64			70			69			69			68
iDEN service ARPU (BRL)	62			59				58			58			59			57			56			60			59			58

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Results Overview.

Brazil continues to experience one of the worst economic recessions in its history. As a result, the economic environment in Brazil is characterized by negative real wage growth, a net loss of jobs, higher unemployment and lower consumer confidence. Consumers in Brazil are also being impacted by rising costs of food and other essentials, with the inflation of food costs significantly exceeding both inflation levels experienced in prior years and the consumer price index. These 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 the current economic conditions will continue to have a negative impact on Nextel Brazil's reported results of operations in 2017.

Nextel Brazil began offering a full range of voice and data services on its WCDMA network in late 2013 and experienced subscriber growth on its WCDMA network and an increase in its WCDMA service ARPU in Brazilian reais through the end of 2014. Nextel Brazil's WCDMA subscriber units increased from 337.9 thousand subscribers as of January 1, 2014 to 2.8 million subscribers as of December 31, 2016. Nextel Brazil's WCDMA service ARPU in Brazilian reais decreased throughout the course of 2015 and into the first quarter of 2016, and its WCDMA subscriber turnover increased significantly in the first quarter of 2016 compared to 2015 as a result of more intense competition in the wireless market and the economic factors discussed above. Beginning in the second quarter of 2016, WCDMA subscriber turnover decreased as a result of various loyalty actions Nextel Brazil implemented in an effort to retain existing subscribers at the end of 2015 and into the early part of 2016 .

In the second quarter of 2015, Nextel Brazil implemented several new rate plans and promotions to improve the attractiveness of its service offerings, expand targeted customer segments and provide economic incentives to attract new subscribers and retain existing subscribers. These new simplified rate plans further incentivize subscribers to utilize their existing handsets when purchasing Nextel Brazil's services, which generally result in similar or higher service ARPU levels. During the fourth quarter of 2015, Nextel Brazil launched promotions to increase prices on certain rate plans, which resulted in higher service ARPU levels for new WCDMA subscribers during 2016 compared to the levels experienced during the fourth quarter of 2015. In addition, during the second quarter of 2016, Nextel Brazil modified its billing process, which allows Nextel Brazil to retain a larger portion of its customer billings. This modification resulted in decreases in certain revenue-based taxes and contributed to the improvement in Nextel Brazil's service ARPU in 2016.

Nextel Brazil continues to offer services on its iDEN network, which does not support data services that are competitive with the higher speed data services offered by its competitors or 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; however, Nextel Brazil's iDEN service ARPU increased in the third quarter of 2016 as the result of an annual inflationary price adjustment.

In connection with our emergence from Chapter 11 in 2015, we made a number of changes within our senior management team and modified 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 aligned our costs with this revised outlook. As a result, we targeted less aggressive subscriber growth in 2016 than in prior years with a focus on attracting high value subscribers while simultaneously reducing operating expenses and handset subsidies.

In May 2016, Nextel Brazil entered into an amendment to a nationwide roaming voice and data services agreement with Telefonica to reduce the usage rates for roaming traffic. Concurrently, Nextel Brazil entered into a 10-year RAN sharing agreement with Telefonica under which Telefonica will permit Nextel Brazil to use some of its tower and equipment infrastructure to transmit telecommunications signals on Nextel Brazil's spectrum. Nextel Brazil expects to use this RAN sharing agreement to fulfill the regulatory coverage obligations under its spectrum licenses rather than utilizing its own network. These agreements require Nextel Brazil to meet certain minimum annual commitments over a five-year period totaling 800 million Brazilian reais, or approximately $246.2 million based on foreign currency exchange rates at the time, which replaced the remaining commitments under the original roaming agreement. Nextel Brazil was required to prepay 250 million Brazilian reais, or approximately $76.9 million based on foreign currency exchange rates at the time, shortly after the agreements became effective with receipt of regulatory approvals, which occurred in August 2016. We are allocating the aggregate 800 million Brazilian reais in minimum payments on a relative fair value basis to the services being received. We are recognizing approximately 318 million Brazilian reais on a ratable basis over a period of five years for the amended roaming agreement, which began in August 2016, and approximately 482 million Brazilian reais over a period of approximately eight years for the RAN sharing agreement, which began in October 2016.

In the fourth quarter of 2016, Nextel Brazil negotiated the early termination of leases for approximately 600 transmitter and receiver sites in connection with this agreement and recognized $21.4 million in restructuring costs that we expect to be disbursed over the next eight years. We expect to incur restructuring costs of approximately $30.0 million in 2017 in connection with the termination of an additional 1,400 transmitter and receiver sites in low-usage areas, which would reduce future operating expenses from savings in rent, maintenance and energy costs. The actual amount of future savings will depend on our ability to early terminate

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the remaining leases and related agreements, among other factors. In addition, Nextel Brazil is foregoing the construction of approximately 700 new transmitter and receiver sites, which is allowing us to avoid approximately $50.0 million in capital expenditures that we would otherwise have incurred through the end of 2017, as well as related future operating expenses.

Despite decreases in local currency operating revenues, Nextel Brazil recognized segment earnings of $67.2 million, and a segment earnings margin of 7%, during 2016 as a result of the execution of initiatives to reduce operating expenses included in our business plan. Nextel Brazil recognized segment earnings of $67.2 million during 2016 compared to segment losses of $91.2 million during the combined period ended December 31, 2015 as a result of the following:

1.	Service and other revenues

The $181.8 million, or 16%, decrease in service and other revenues on a reported basis in 2016 compared to the combined period ended December 31, 2015 is primarily the result of the decline in Nextel Brazil's subscriber base and the impact of weaker foreign currency exchange rates on our reported results. On a constant currency basis, Nextel Brazil's service and other revenues decreased 12% in 2016 compared to the combined period ended December 31, 2015.

Nextel Brazil's WCDMA subscriber base grew slightly from 2.7 million subscribers as of the end of 2015 to 2.8 million subscribers as of the end of 2016. Nextel Brazil has continued to strategically facilitate the migration of iDEN subscribers to its WCDMA network, which resulted in 144 thousand migrations during 2016. As a result of the increase in its WCDMA service ARPU and the overall growth in its WCDMA subscriber base, Nextel Brazil's WCDMA-based service and other revenues increased $91.8 million, or 15%, from the combined period ended December 31, 2015 to 2016, or 21% on a constant currency basis. This increase was offset by a $273.6 million, or 50%, decrease in Nextel Brazil's iDEN-based service and other revenues from the combined period ended December 31, 2015 to 2016, or 47% on a constant currency basis, driven by a decrease in Nextel Brazil's iDEN subscriber base from 1.6 million subscribers as of the end of 2015 to 0.8 million subscribers as of the end of 2016.

2.	Handset and accessory net subsidy

The $92.5 million, or 93%, decrease in handset and accessory net subsidy on a reported basis from the combined period ended December 31, 2015 to 2016 is largely related to an increased emphasis on new service plans under which services are provided to new subscribers using their existing handsets, as well as lower subsidies per handset. As a result of the new service plans, during 2016, 89% of Nextel Brazil's new WCDMA subscribers represented subscribers who utilized their existing handsets rather than purchasing one from Nextel Brazil compared to 70% during 2015. The decrease in handset and accessory net subsidy from the combined period ended December 31, 2015 to 2016 was also impacted by a $25.3 million charge that Nextel Brazil recognized in the second quarter of 2015 related to certain tax credits generated as a result of handset purchases that we estimated were not probable of being recovered. During 2016, we recovered $20.8 million of these credits and expect to recover the remaining portion in the first quarter of 2017. On a constant currency basis, Nextel Brazil's handset and accessory net subsidy decreased 92% in 2016 compared to the combined period ended December 31, 2015.

3.	Cost of service

The $104.4 million, or 22%, decrease in cost of service on a reported basis from the combined period ended December 31, 2015 to 2016 is primarily the result of a $57.2 million, or 34%, decrease in interconnect costs related to the reduced volume of calls on Nextel Brazil's iDEN network and lower mobile termination rates, and a $41.2 million, or 15%, decrease in site and switch costs over the same period. The decrease in cost of service was also partially the result of the reversal of $8.1 million in certain non-income based tax-related contingent liabilities in the second quarter of 2016 based on a change in estimate. On a constant currency basis, Nextel Brazil's cost of service decreased 19% from the combined period ended December 31, 2015 to 2016.

In 2012, ANATEL approved regulations to implement a transition to a cost-based model for determining mobile termination rates. Under the current regulations, the mobile termination rates are being gradually reduced over a transition period ending in 2019, when cost-based rates will take effect. The transition rules also provide for a partial "bill and keep" settlement process that applies to the settlement of mobile termination charges between smaller operators like Nextel Brazil and its larger competitors (who are considered to hold significant market power under the Brazilian regulations), which further reduces mobile termination charges for smaller operators. The lower costs resulting from this partial bill and keep settlement process, which is similar to the settlement process that has historically applied to termination charges relating to our iDEN services, decline as mobile termination rates are reduced during the transition period, with the bill and keep settlement process terminating when cost-based rates are implemented.

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4.	Selling and marketing expenses

The $60.4 million, or 34%, decrease in selling and marketing expenses on a reported basis during 2016 compared to the combined period ended December 31, 2015 is primarily due to a reduction in sales and marketing personnel, lower advertising and media expenses resulting from cost reductions and retail store closures, and lower commissions due to a decrease in gross subscriber additions. Most of these cost reductions were the result of our efforts to align our costs with our business plan. On a constant currency basis, Nextel Brazil's selling and marketing expenses decreased 31% during 2016 compared to the combined period ended December 31, 2015.

5.	General and administrative expenses

The $82.9 million, or 17%, decrease in general and administrative expenses on a reported basis during 2016 compared to the combined period ended December 31, 2015 is primarily the result of lower customer care expenses related to a decrease in the number of calls Nextel Brazil has received in its call centers, a reduction in payroll costs resulting from fewer general and administrative personnel following reductions in force and a decrease in bad debt expense primarily resulting from higher levels in 2015 caused by deteriorating macroeconomic conditions in Brazil. These decreases were partially offset by increases in certain consulting expenses. On a constant currency basis, Nextel Brazil's general and administrative expenses decreased 13% during 2016 compared to the combined period ended December 31, 2015.

c.	Corporate

	Successor Company									Predecessor Company				Combined
	Year Ended December 31, 2016				Six Months Ended December 31, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				Actual Change from Previous Year
																		Dollars				Percent
Service and other revenues	$	168			$	116				$	168			$	284			$	(116	)		(41	)%
Selling, general and administrative expenses	(36,989		)		(26,216		)			(39,071		)		(65,287		)		28,298				(43	)%
Segment losses	$	(36,821	)		$	(26,100	)			$	(38,903	)		$	(65,003	)		$	28,182			(43	)%

Segment losses decreased $28.2 million, or 43%, in 2016 compared to the combined period ended December 31, 2015 primarily due to a reduction in payroll costs resulting from fewer general and administrative personnel following reductions in force, lower consulting expenses and lower information technology costs.

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2.	Combined Period Ended December 31, 2015 vs. Year Ended December 31, 2014

a.	Consolidated

	Successor Company					Predecessor Company				Combined				Predecessor Company
	Six Months Ended December 31, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				Year Ended December 31, 2014				Actual Change from Previous Year							Constant Currency Change from Previous Year
																		Dollars				Percent			Percent
	(dollars in thousands)
Brazil segment losses	$	(15,925	)			$	(75,234	)		$	(91,159	)		$	(133,691	)		$	42,532			(32	)%		(58	)%
Corporate segment losses and eliminations	(26,100		)			(37,982		)		(64,082		)		(123,141		)		59,059				(48	)%		(48	)%
Consolidated segment losses	(42,025		)			(113,216		)		(155,241		)		(256,832		)		101,591				(40	)%		(27	)%
Impairment, restructuring and other charges	(32,308		)			(36,792		)		(69,100		)		(105,664		)		36,564				(35	)%		(26	)%
Depreciation and amortization	(85,364		)			(153,878		)		(239,242		)		(394,061		)		154,819				(39	)%		(15	)%
Operating loss	(159,697		)			(303,886		)		(463,583		)		(756,557		)		292,974				(39	)%		(21	)%
Interest expense, net	(55,563		)			(82,820		)		(138,383		)		(372,904		)		234,521				(63	)%		(59	)%
Interest income	17,200					15,327				32,527				38,345				(5,818		)		(15	)%		19	%
Foreign currency transaction losses, net	(99,737		)			(63,948		)		(163,685		)		(51,149		)		(112,536		)		220	%		NM
Other expense, net	(1,176		)			(137		)		(1,313		)		(5,829		)		4,516				(77	)%		(65	)%
Loss from continuing operations before reorganization items and income tax benefit (provision)	(298,973		)			(435,464		)		(734,437		)		(1,148,094		)		413,657				(36	)%		(21	)%
Reorganization items	1,467					1,956,874				1,958,341				(71,601		)		2,029,942				NM			NM
Income tax benefit (provision)	5,015					(2,009		)		3,006				(4,976		)		7,982				(160	)%		(161	)%
Net (loss) income from continuing operations	(292,491		)			1,519,401				1,226,910				(1,224,671		)		2,451,581				(200	)%		(221	)%
Income (loss) from discontinued operations, net of income taxes	11,608					221,114				232,722				(733,027		)		965,749				(132	)%		(135	)%
Net (loss) income	$	(280,883	)			$	1,740,515			$	1,459,632			$	(1,957,698	)		$	3,417,330			(175	)%		(187	)%

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NM-Not Meaningful

We define segment losses as operating loss before depreciation, amortization and impairment, restructuring and other charges. Consolidated segment losses decreased $101.6 million, or 40%, for the combined period ended December 31, 2015 compared to 2014 and 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 charges recognized for the combined period ended December 31, 2015 primarily consisted of the following:

•	$43.7 million in non-cash asset impairment charges, the majority of which related to the shutdown or abandonment of transmitter and receiver sites and the discontinuation of certain information technology projects in Brazil;

•	$14.4 million in severance and other related costs incurred in Brazil and at the corporate level resulting from the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses; and

•	$8.4 million in restructuring charges in Brazil related to future lease costs for certain transmitter and receiver sites that are no longer necessary in our business plan.

Consolidated impairment, restructuring and other charges recognized in 2014 primarily related to the following:

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•	a $42.8 million non-cash asset impairment charge related to our decision to cease further development on one of the strategic options for the next generation of our push-to-talk services;

•	$27.7 million in severance and related costs incurred at the corporate level and in Brazil from the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses; and

•	$21.9 million in other non-cash asset impairment charges, the majority of which related to the shutdown or abandonment of certain transmitter and receiver sites in Brazil and certain retail store closures in Brazil related to the realignment of our distribution channels.

2.	Depreciation and amortization

The $154.8 million, or 39%, decrease in consolidated depreciation and amortization on a reported basis, and the 15% decrease on a constant currency basis, for the combined period ended December 31, 2015 compared to 2014 was principally the result of a decrease in the value of Nextel Brazil's property, plant and equipment resulting from the implementation of fresh start accounting. See Note 3 to our consolidated financial statements for more information.

3.	Interest expense, net

Consolidated net interest expense decreased $234.5 million, or 63%, on a reported basis, and 59% on a constant currency basis, for the combined period ended December 31, 2015 compared to 2014 primarily as a result of the suspension of interest on all series of our senior notes in connection with our Chapter 11 filing and subsequent cancellation of these notes in connection with our emergence from Chapter 11. See Note 3 to our consolidated financial statements for more information.

4.	Reorganization items

Reorganization items of $1,958.3 million in 2015 were primarily related to the $1,775.8 million gain we recognized in connection with the settlement of our liabilities subject to compromise upon our emergence from Chapter 11 and a $261.8 million gain as a result of the implementation of fresh start accounting, partially offset by professional fees and other costs incurred in connection with our Chapter 11 filing.

Reorganization items of $71.6 million in 2014 were related to the write-off of discounts, premiums and unamortized financing costs associated with our NII Capital Corp. and NIIT senior notes, as well as professional fees and other costs incurred in connection with our Chapter 11 filing.

5.	Income tax benefit (provision)

The $8.0 million, or 160%, change in the consolidated income tax provision from 2014 to the combined period ended December 31, 2015 is primarily due to the reversal of a liability for uncertain tax positions due to the expiration of certain statutes of limitations in Brazil and the reduction of the valuation allowance.

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b.    Nextel Brazil

	Successor Company					Predecessor Company				Combined							Predecessor Company
	Six Months Ended December 30, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				% of Nextel Brazil’s Operating Revenues			Year Ended December 31, 2014				% of Nextel Brazil’s Operating Revenues			Actual Change from Previous Year							Constant Currency Change from Previous Year
																								Dollars				Percent			Percent
										(dollars in thousands)
Service and other   revenues	$	501,028				$	643,804			$	1,144,832			94	%		$	1,694,181			92	%		$	(549,349	)		(32	)%		(4	)%
Handset and   accessory revenues	28,304					39,807				68,111				6	%		154,737				8	%		(86,626		)		(56	)%		(38	)%
Cost of handsets and   accessories	(46,904		)			(121,143		)		(168,047		)		(14	)%		(415,082		)		(22	)%		247,035				(60	)%		(60	)%
Handset and accessory net subsidy	(18,600		)			(81,336		)		(99,936		)		(8	)%		(260,345		)		(14	)%		160,409				(62	)%		(67	)%
Cost of service (exclusive   of depreciation and   amortization)	(212,866		)			(256,153		)		(469,019		)		(39	)%		(693,004		)		(38	)%		223,985				(32	)%		(4	)%
Selling and marketing   expenses	(71,557		)			(105,357		)		(176,914		)		(15	)%		(267,574		)		(14	)%		90,660				(34	)%		(6	)%
General and administrative   expenses	(213,930		)			(276,192		)		(490,122		)		(40	)%		(606,949		)		(33	)%		116,827				(19	)%		14	%
Segment losses	$	(15,925	)			$	(75,234	)		$	(91,159	)		(8	)%		$	(133,691	)		(7	)%		$	42,532			(32	)%		(58	)%

Nextel Brazil’s segment losses decreased $42.5 million, or 32%, on a reported basis, and 58% on a constant currency basis, for the combined period ending December 31, 2015 compared to the year ended December 31, 2014, as a result of the following:

1.	Service and other revenues

The $549.3 million, or 32%, decrease in service and other revenues on a reported basis in the combined period ended December 31, 2015 compared to 2014 is primarily the result of the impact of weaker foreign currency exchange rates on our reported results and the decline in ARPU discussed above. On a constant currency basis, Nextel Brazil's service and other revenues decreased 4% in the combined period ended December 31, 2015 compared to 2014.

Nextel Brazil's WCDMA subscriber base grew from 1.7 million subscribers as of the end of 2014 to 2.8 million subscribers as of the end of 2015. During 2015, Nextel Brazil strategically facilitated the migration of iDEN subscribers to its WCDMA network, which resulted in 312 thousand migrations during the combined period ended December 31, 2015. As a result of these migrations and the overall growth in its WCDMA subscriber base, Nextel Brazil's WCDMA-based service and other revenues increased $245.4 million, or 71%, from 2014 to the combined period ended December 31, 2015. This increase was offset by a $794.8 million, or 59%, decrease in Nextel Brazil's iDEN-based service and other revenues from 2014 to the combined period ended December 31, 2015 driven by a decrease in Nextel Brazil's iDEN subscriber base from 2.7 million subscribers as of the end of 2014 to 1.6 million subscribers as of the end of 2015 and a decline in its iDEN-based average revenue per subscriber from $30 for 2014 to $17 for the combined period ended December 31, 2015. On a constant currency basis, Nextel Brazil's WCDMA-based service and other revenues increased 142% from 2014 to the combined period ended December 31, 2015 and its iDEN-based service and other revenues decreased 42% over the same period.

2.	Handset and accessory net subsidy

The $160.4 million, or 62%, decrease in handset and accessory net subsidy on a reported basis from 2014 to the combined period ended December 31, 2015 is largely related to an increased emphasis on new service plans under which services are provided to new subscribers using their existing handsets, as well as lower subsidies per handset. As a result of the new service plans, 70% of Nextel Brazil's new WCDMA subscribers during the combined period ended December 31, 2015 represented customers who

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utilized their existing handsets compared to 34% of new WCDMA subscribers utilizing their existing handsets during 2014. This decrease in handset and accessory net subsidy was partially offset by a $25.3 million charge recognized in the second quarter of 2015 related to certain tax credits that we did not believe were probable of being recovered. On a constant currency basis, Nextel Brazil's handset and accessory net subsidy decreased 67% for the combined period ended December 31, 2015 compared to 2014.

3.	Cost of service

The $224.0 million, or 32%, decrease in cost of service on a reported basis for the combined period ended December 31, 2015 compared to 2014 is primarily caused by the impact of weaker foreign currency exchange rates described above. On a constant currency basis, Nextel Brazil's cost of service decreased 4% from 2014 to the combined period ended December 31, 2015 primarily as the result of a decrease in interconnect costs related to the changes in the regulated interconnect cost structure described above. In addition, on a constant currency basis, Nextel Brazil recognized significant cost savings in the combined period ended December 31, 2015 compared to 2014 as a result of insourcing certain engineering functions that were previously performed by third party service providers. Also, with the continuing decline in the number of iDEN subscribers in Nextel Brazil's subscriber base, Nextel Brazil's service and repair costs related to its iDEN handset maintenance program continued to decrease. These decreases were partially offset by an increase in costs related to our nationwide roaming arrangement, as well as an increase in direct switch and transmitter and receiver site costs on a local currency basis resulting from an 8% increase in the number of sites in service from December 31, 2014 to December 31, 2015. 

4.	Selling and marketing expenses

The $90.7 million, or 34%, decrease in selling and marketing expenses on a reported basis during the combined period ended December 31, 2015 compared to 2014 is largely due to the impact of weaker foreign currency exchange rates described above. On a constant currency basis, Nextel Brazil's selling and marketing expenses decreased 6% in the combined period ended December 31, 2015 compared to 2014 as a result of a reduction in sales and marketing personnel and reduced advertising and media expenses.

5.	General and administrative expenses

The $116.8 million, or 19%, decrease in general and administrative expenses on a reported basis for the combined period ended December 31, 2015 compared to 2014 is primarily due to the impact of weaker foreign currency exchange rates described above. On a constant currency basis, Nextel Brazil's general and administrative expenses increased 14% over the same period primarily as a result of an increase in bad debt expense caused by a significant decrease in collections related to deteriorating economic conditions in Brazil and higher costs related to civil contingencies initiated by customers. These increases were partially offset by a decrease in payroll and related expenses on a local currency basis resulting from workforce reductions, as well as lower customer care expenses on a local currency basis resulting from the outsourcing of Nextel Brazil's customer care function and a reduction in the volume of customer care calls received.

c.	Corporate

	Successor Company					Predecessor Company				Combined				Predecessor Company
	Six Months Ended December 31, 2015					Six Months Ended June 30, 2015				Year Ended December 31, 2015				Year Ended December 31, 2014				Actual Change from Previous Year
																		Dollars				Percent
Service and other revenues	$	116				$	168			$	284			$	351			$	(67	)		(19	)%
Selling, general and administrative expenses	(26,216		)			(39,071		)		(65,287		)		(128,604		)		63,317				(49	)%
Segment losses	$	(26,100	)			$	(38,903	)		$	(65,003	)		$	(128,253	)		63,250				(49	)%

Segment losses decreased $63.3 million, or 49%, in the combined period ended December 31, 2015 compared to 2014 primarily due to reduced payroll costs resulting from fewer general and administrative personnel following reductions in force that we implemented in 2014 and 2015, lower consulting expenses, lower information technology costs and $22.6 million in professional fees incurred in 2014 in connection with the preparation of our Chapter 11 filing.

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C.	Liquidity and Capital Resources

As of December 31, 2016, we had a working capital deficit of $119.7 million compared to a working capital deficit of $177.4 million as of December 31, 2015. As of December 31, 2016, our working capital included $257.4 million in cash and cash equivalents, of which $3.5 million was held by Nextel Brazil in Brazilian reais, and $73.9 million in short-term investments, the majority of which was held in Brazilian reais. In addition, as of December 31, 2016, we had $87.4 million of cash collateral securing certain performance bonds relating to our obligations to deploy spectrum in Brazil, of which we recorded $56.5 million as a component of other assets and the remaining $30.9 million of which we recorded as a component of prepaid expenses and other in our consolidated balance sheet. As of December 31, 2016, we also had $163.4 million in cash held in escrow in connection with the sale of Nextel Mexico and $85.1 million in judicial deposits in Brazil, both of which we classified as restricted cash.

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. 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

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Combined Year Ended December 31,				Year Ended December 31,
	2016				2015					2015				2015				2014
Cash and cash equivalents, beginning of period	$	342,184			$	423,135				$	334,194			$	334,194			$	1,147,682
Net cash used in operating activities	(45,205		)		(78,485		)			(254,757		)		(333,242		)		(628,716		)
Net cash provided by (used in) investing activities	54,450				(976		)			1,027,821				1,026,845				(347,538		)
Net cash used in financing activities	(93,004		)		(25,068		)			(778,231		)		(803,299		)		(128,272		)
Effect of exchange rate changes on cash and cash equivalents	(1,045		)		916					(9,152		)		(8,236		)		(55,657		)
Change in cash and cash equivalents related to discontinued operations	—				22,662					103,260				125,922				346,695
Cash and cash equivalents, end of period	$	257,380			$	342,184				$	423,135			$	342,184			$	334,194

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

We used $45.2 million of cash in our operating activities during 2016, which represents a $288.0 million improvement from the combined year ended December 31, 2015, largely caused by lower operating losses resulting from cost reduction efforts and the sale of our operations in Mexico, partially offset by a $76.9 million upfront payment related to Nextel Brazil's roaming and RAN sharing agreements with Telefonica. We used $78.5 million and $254.8 million of cash in our operating activities during the six months ended December 31, 2015 and June 30, 2015, respectively, primarily to fund operating losses and interest expense. We used $176.3 million less cash during the six months ended December 31, 2015 compared to the six months ended June 30, 2015 primarily as a result of lower operating losses in Brazil and cash conservation efforts both in Brazil and at the corporate level. We used $628.7 million of cash in our operating activities during 2014, primarily due to operating losses, interest expense and the prepayment of certain costs associated with a roaming arrangement in Brazil.

Our investing activities provided us with $54.5 million of cash during 2016, primarily due to $81.1 million of net cash returned to us from the release of performance bonds and $27.4 million in net proceeds from maturities of our short-term investments in Brazil and at the corporate level, partially offset by $61.3 million in cash capital expenditures and $13.2 million we paid for judicial deposits.

We used $1.0 million of cash in our investing activities during the six months ended December 31, 2015, primarily due to $76.6 million in cash capital expenditures and $50.5 million in deposits to secure certain performance bonds relating to our obligations to deploy spectrum in Brazil, offset by net cash proceeds of $153.8 million that we received in connection with the sale of Nextel Argentina (excluding $18.1 million of U.S. treasury notes received as part of the proceeds). Our investing activities provided us with $1,027.8 million in cash during the six months ended June 30, 2015, primarily due to the sale of Nextel Mexico

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for which we received net proceeds of $1.448 billion, including $187.5 million in cash deposited in escrow. The net proceeds from the sale of Nextel Mexico were partially offset by $88.5 million in cash capital expenditures and $20.0 million in deposits to secure certain performance bonds relating to our obligations to deploy spectrum in Brazil.

We used $347.5 million of cash in our investing activities during 2014, primarily due to $372.7 million in cash used in our discontinued operations, $326.2 million in cash capital expenditures and $119.7 million in deposits to secure certain performance bonds relating to our obligation to deploy spectrum in Brazil, partially offset by $499.2 million in net proceeds received from maturities of our short-term investments in Brazil and at the corporate level.

We used $93.0 million of cash in our financing activities during 2016, primarily due to $48.4 million in semi-annual principal payments under Nextel Brazil's equipment financing facility and $42.5 million in principal payments under Nextel Brazil's local bank loans.

We used $25.1 million of cash in our financing activities during the six months ended December 31, 2015, largely due to a principal repayment under Nextel Brazil's equipment financing facility. We used $778.2 million of cash in our financing activities during the six months ended June 30, 2015, largely due to $745.2 million of cash distributions paid in settlement of certain claims in connection with our emergence from Chapter 11.

We used $128.3 million of cash in our financing activities during 2014, largely due to $107.1 million in repayments of bank loans, capital leases and other borrowings, partially offset by $14.6 million in borrowings under Nextel Brazil's equipment financing facility and other borrowings.

D.	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.

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, our access to the capital markets in the near term is 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 deployment of LTE in other commercial areas in Brazil;

•	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.

The following table sets forth the amounts and timing of contractual payments for our most significant contractual obligations determined as of December 31, 2016. The information included in the table below reflects future unconditional payments and is based upon, among other things, the current terms of the relevant agreements and certain assumptions, such as future interest rates.

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Most of the amounts included in the table below will be settled in Brazilian reais. Future events could cause actual payments to differ significantly from these amounts. See “Forward-Looking and Cautionary Statements.”

	Payments due by Period
	Less than												More than
C ontractual Obligations	1 Year				1-3 Years				3-5 Years				5 Years				Total
	(in thousands)
Capital leases and tower financing obligations (1)	$	55,708			$	88,666			$	83,132			$	631,216			$	858,722
Operating leases (2)	126,011				215,698				179,885				203,718				725,312
Purchase obligations (3)	276,207				87,953				74,960				—				439,120
Equipment financing (4)	303,303				15,871				9,472				2,285				330,931
Bank loans (5)	269,847				20,082				—				—				289,929
Spectrum financing (6)	—				30,695				69,783				125,654				226,132
Other long-term obligations (7)	17,641				3,006				984				155,321				176,952
Total contractual commitments	$	1,048,717			$	461,971			$	418,216			$	1,118,194			$	3,047,098

_______________________________________

(1)	These amounts represent principal and interest payments due under our co-location agreements, our tower financing arrangements and our sale of towers in Brazil in 2013, which are guaranteed by NIIT.

(2)	These amounts principally include future lease costs related to our transmitter and receiver sites and switches, as well as our office facilities.

(3)	These amounts include maximum contractual purchase obligations under various agreements with our vendors, including the roaming and RAN sharing agreements that Nextel Brazil entered into with Telefonica in May 2016. See Note 9 to our consolidated financial statements for more information regarding these agreements.

(4)

These amounts include a loan agreement with the China Development Bank in Brazil to finance infrastructure equipment, which is guaranteed by NII Holdings. These amounts also include future interest payments to which we are contractually obligated in the periods in which they are due. As a result of certain events of default related to this facility, we classified the principal amount outstanding under this facility as due in less than one year. We are contractually obligated to make principal payments of $48.9 million in less than one year, $97.9 million in one to three years, $97.9 million in three to five years and the remaining $48.9 million in more than five years under this equipment financing facility.

(5)

These amounts represent principal and interest payments associated with our local bank loans in Brazil and include future interest payments to which we are contractually obligated in the periods in which they are due. Because it is unlikely that we will be able to satisfy one of the applicable financial covenants included in this loan agreement as of the next measurement date at December 31, 2017, we classified the principal amount outstanding under these local bank loans as due in less than one year. Based on foreign currency exchange rates in effect as of December 31, 2016, we are contractually obligated to make principal payments of $79.5 million in less than one year and the remaining $157.9 million in one to three years under these local bank loans.

(6)	These amounts represent principal and interest payments in connection with the signing of the license agreement related to our acquisition of 30MHz of spectrum in the 1.8 GHz band in July 2016.

(7)	These amounts include our current estimates of asset retirement obligations based on our expectations as to future retirement costs, inflation rates and timing of retirements, as well as amounts related to our uncertain income tax positions.

Capital Expenditures.   Our capital expenditures, including capitalized interest, were $51.3 million for the year ended December 31, 2016, $72.6 million for the six months ended December 31, 2015, $69.2 million for the six months ended June 30, 2015 and $233.4 million for the year ended December 31, 2014. We have reduced our investments in capital expenditures, including making substantial reductions to our investments in network development and deployment. We expect to continue these 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;

•	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.

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

Covenants Under Financing Agreements. As of December 31, 2016, we had $237.4 million principal amount outstanding under Nextel Brazil's local bank loans. As discussed in more detail in Note 1 and Note 7 to our 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. In August 2016, Nextel Brazil secured waivers from the lenders of its local bank loans related to this financial covenant for the June 30, 2016 measurement date. In February 2017, Nextel Brazil secured additional waivers from the lenders of these loans related to this financial covenant as of December 31, 2016. The waivers also provide for a "covenant holiday" inclusive of the June 30, 2017 testing period, during which time no compliance will be required with respect to the net debt financial covenant. 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. If we are unable to negotiate amendments to the existing loan agreements 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 consolidated balance sheet as of December 31, 2016. In addition, Nextel Brazil's local bank loans and its equipment financing facility each contain cross-acceleration provisions.

In February 2017, Nextel Brazil and the lenders of our local bank loans entered into amendments to these loan agreements. The amendments provide, among other things, a 120-day standstill period, effective March 2, 2017, during which time no amortization payments will be required with respect to the related loans while Nextel Brazil seeks to negotiate long-term modifications of the financing arrangements, including potential further extensions of the existing amortization relief. To the extent Nextel Brazil is unable to agree on long-term amendments by July 2017, we will be required to make catch-up principal payments totaling 84.4 million Brazilian reais, or approximately $25.2 million based on current foreign currency exchange rates, followed by the resumption of the amortization schedule contained in the amended agreements.

In December 2014, Nextel Brazil and the lender under the 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. 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 of December 31, 2016, we had $293.6 million principal amount outstanding under Nextel Brazil's equipment financing facility. As a result of the events of default described below, we have continued to classify the amount outstanding under this facility as a current liability in our consolidated balance sheet as of December 31, 2016.

In December 2015, Nextel Brazil participated in a spectrum auction and was the successful bidder for 30 MHz of spectrum in the 1.8 GHz band for 455 million Brazilian reais, or approximately $116.7 million based on foreign currency exchange rates at the time. In July 2016, Nextel Brazil paid 45.5 million Brazilian reais, or approximately $14.0 million based on foreign currency exchange rates at the time, in connection with the signing of this license agreement. Nextel Brazil elected to accept the government-provided spectrum financing for the remaining amount due under this spectrum financing. In connection with the foregoing, we are in the process of securing waivers from the lender of Nextel Brazil's equipment financing facility to permit Nextel Brazil to incur and maintain this spectrum financing. In addition, we have requested waivers of 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. As a result of either of these events of default, the lender of Nextel Brazil's equipment financing facility could provide notice to declare the amounts outstanding under this facility due and payable.

Future Outlook, Liquidity and Going Concern.   Our current sources of funding include $331.2 million in cash and short-term investments, $163.4 million in cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, and $87.4 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, as well as the continued decline of our iDEN business, we expect that our cash flow from operations will be negative in 2017. In addition, we expect that our capital expenditures for 2017 will be at a similar level as 2016. During 2017, we are also required to pay an estimated $225.0 million for principal and interest in connection with our debt service obligations, including capital leases. As a result, we believe our current sources of funding may not be adequate to fund our business beyond the first quarter of 2018, and that we will need to obtain debt service relief from our lenders or to raise incremental capital to fund our business plan. We believe that the uncertainties relating to our business make it difficult for us to obtain new capital. Furthermore, if the ultimate amount recovered from our cash held in escrow or our cash pledged to secure performance bonds is not fully

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available to us or is delayed for a significant amount of time, we would need to obtain additional funding within the next six to twelve months and significantly reduce our planned spending to further preserve our liquidity.

If we cannot obtain waivers for the existing events of default under Nextel Brazil's equipment financing facility and for the applicable financial covenants we are required to meet as of the December 31, 2017 measurement date, modify the repayment terms of our loans, obtain suitable financing if and when it is required, or obtain access to a significant portion of the escrowed funds as anticipated in our business plan, our results of operations and liquidity would be negatively impacted, and we may be unable to settle our obligations as they come due. The combination of these conditions continues to raise substantial doubt about our ability to continue as a going concern.

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:

•	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 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.

E.	Effect of Inflation and Foreign Currency Exchange

Our net assets are subject to foreign currency exchange risks since they are primarily maintained in Brazilian reais. Additionally, some of Nextel Brazil's debt is denominated entirely in U.S. dollars, which exposes us to foreign currency exchange risks. We conduct business solely in Brazil where the rate of inflation has historically been significantly higher than that of the U.S. We seek to protect our earnings from inflation and possible currency depreciation by periodically adjusting the local currency prices charged by Nextel Brazil for sales of handsets and services to its subscribers. We routinely monitor our foreign currency exposure and the cost effectiveness of hedging instruments.

Inflation is not currently a material factor affecting our business, although rates of inflation in Brazil have been historically volatile. General operating expenses such as salaries, employee benefits and lease costs are, however, subject to normal inflationary pressures. From time to time, we may experience price changes in connection with the purchase of system infrastructure equipment and handsets, but we do not currently believe that any of these price changes will be material to our business.

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F.	Effect of New Accounting Standards

In November 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standard Update, or ASU, No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which provides guidance regarding cash flow statement classification and presentation of changes in restricted cash. The new standard will be effective for interim and annual reporting periods beginning on January 1, 2018, with early adoption permitted. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile this total to amounts on the consolidated balance sheet and disclose the nature of the restrictions. We are currently evaluating the timing of adoption, as well as the effect ASU No. 2016-18 will have on our consolidated statement of cash flows.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which replaces existing leasing rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements. ASU No. 2016-02 will require lessees to recognize most leases on their balance sheet as liabilities, with corresponding "right-of-use" assets, and is effective for interim and annual reporting periods beginning after December 15, 2018, subject to early adoption. The new standard allows us to make an accounting policy election not to recognize lease assets and liabilities on the balance sheet for leases with a term of 12 months or less. The accounting applied by a lessor is largely unchanged from previous guidance. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. We are currently evaluating the timing of adoption, as well as the effect ASU No. 2016-02 will have on our consolidated financial statements.

In May 2014, the FASB issued 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 case 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 are in the process of evaluating the available adoption methods.

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

Our revenues are primarily denominated in Brazilian reais, while a portion of our operations are financed in U.S. dollars. As a result, fluctuations in the Brazilian real relative to the U.S. dollar expose us to foreign currency exchange risks. These risks include the impact of translating our local currency reported earnings into U.S. dollars when the U.S. dollar strengthens against the Brazilian real. In addition, Nextel Brazil pays the purchase price for some of its capital assets and a portion of its handsets in U.S. dollars, but generates revenue from its operations in local currency.

We occasionally enter into derivative transactions for hedging or risk management purposes. We have not and will not enter into any derivative transactions for speculative or profit generating purposes. During the years ended December 31, 2016 and 2014, as well as during the six months ended December 31, 2015 and the six months ended June 30, 2015, Nextel Brazil entered into hedge agreements to manage foreign currency risk on certain forecasted transactions. The fair values of these instruments are not material.

Interest rate changes expose our fixed rate long-term borrowings to changes in fair value and expose our variable rate long-term borrowings to changes in future cash flows. As of December 31, 2016, approximately 30% of our consolidated principal amount of debt was fixed rate debt, and the remaining 70% of our total consolidated debt was variable rate debt.

The table below presents projected principal amounts, related interest rates by year of maturity and aggregate amounts as of December 31, 2016 for both our fixed and variable rate debt obligations, all of which have been determined at their fair values. See Note 3 to our consolidated financial statements for more information. Because it is unlikely that we will be able to satisfy one of the applicable financial covenants included in Nextel Brazil's local bank loans as of the next measurement date at December 31, 2017, and as a result of certain events of default related to Nextel Brazil's equipment financing facility, we classified the principal amounts outstanding under these facilities as current liabilities in our consolidated balance sheet as of December 31, 2016. The changes in the fair values of our debt obligations compared to their fair values as of December 31, 2015 reflect changes in applicable market conditions and changes in other company-specific conditions during 2016. In addition, the interest rates presented below reflect the impact of the implementation of fresh start accounting on our capital lease obligations. All of the information in the table is presented in U.S. dollar equivalents, which is our reporting currency. The actual cash flows associated with our debt obligations are denominated in U.S. dollars (US$) and Brazilian reais (BRL).

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	Successor Company																																	Predecessor Company
	Year of Maturity																								2016									2015
	1 Year				2 Years				3 Years				4 Years				5 Years				Thereafter				Total				Fair Value					Total				Fair Value
																	(dollars in thousands)
Fixed Rate (BRL)	$	5,187			$	4,129			$	21,961			$	22,836			$	23,833			$	144,843			$	222,789			$	214,164				$	85,055			$	85,055
Average Interest Rate	93.8		%		99.2		%		21.4		%		23.1		%		26.2		%		47.3		%		42.1		%							74.5		%
Variable Rate (US$)	$	293,550			$	—			$	—			$	—			$	—			$	—			$	293,550			$	280,893				$	342,475			$	340,189
Average Interest Rate	3.5		%		—				—				—				—				—				3.5		%							3.0		%
Variable Rate (BRL)	$	237,235			$	—			$	—			$	—			$	—			$	—			$	237,235			$	221,075				$	233,559			$	228,606
Average Interest Rate	19.1		%		—				—				—				—				—				19.1		%							19.7		%

Item 8.	Financial Statements and Supplementary Data

We have listed the consolidated financial statements required under this Item in Part IV, Item 15(a)(1) of this annual report on Form 10-K. We have also listed the financial statement schedules required under Regulation S-X in Part IV, Item 15(a)(2) of this annual report on Form 10-K. The financial statements and schedules appear following the signature page of this annual report on Form 10-K.

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.	Controls and Procedures

Evaluation of 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 chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of December 31, 2016, 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 chief executive officer and chief financial officer. Based on and as of the date of such evaluation, our chief 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 the Company's internal control over financial reporting in Brazil, as described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, that creates a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

We performed procedures to mitigate the impact of these deficiencies on our consolidated financial statements, including reviews and validations performed by staff at our headquarters office who were not part of the financial close process in Brazil. Based on these procedures, management believes that the consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles, and present fairly, in all material respects, the financial position, results of operations and cash flows of the Company, as of and for the periods presented.

Changes in Internal Control over Financial Reporting

Over the course of 2016, we took a number of actions to improve the control environment and risk assessment processes. Specifically, we:

•	enhanced the formal monthly processes that exist to improve communication between Nextel Brazil’s accounting function and other functional areas throughout the organization;

•	performed a redesigned and enhanced financial reporting risk assessment and mapping of key controls;

•	increased the level of accountability for performance of internal controls and for remediation of control deficiencies;

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•	replaced Nextel Brazil’s controller and improved the number and quality of other key individuals within Nextel Brazil’s accounting function;

•	provided continued training to Nextel Brazil personnel on U.S. generally accepted accounting principles;

•	made design improvements to numerous process level controls including those over revenue, accounts receivable, and bad debt expense; and

•	implemented new contract and purchase order review controls.

As a result of these actions, we believe that we have remediated the control deficiencies pertaining to the previously disclosed material weakness related to an organizational structure with insufficiently trained resources where supervisory roles, responsibilities and monitoring activities were not aligned with financial reporting objectives. However, as described below, a material weakness in internal control over financial reporting continues to exist as of December 31, 2016.

In addition, we completed a financial reporting risk assessment for recent significant and unusual transactions, and as a result, we implemented or enhanced existing controls related to the completeness and accuracy of inputs to asset impairment calculations and the accounting for Nextel Brazil’s roaming and RAN sharing agreements.

These changes, as well as those discussed below, have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934, as amended). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In order to evaluate the effectiveness of internal control over financial reporting, management conducted an assessment using the criteria established in  Internal Control - Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2016 due to a material weakness in Nextel Brazil’s control environment and information and communication processes. Specifically:

•	The control environment was not effective because an appropriate tone at the top was not established at Nextel Brazil, which could result in management override of internal control over financial reporting.

•

The information and communication process was not effective because we did not identify information necessary to account for leases, certain accrued liabilities and operating expenses. As a result, we did not design and operate effective process level controls over the completeness and accuracy of data and assumptions used to support accounting analyses and reconciliations for the related accounts.

The control deficiencies described above resulted in certain immaterial misstatements to the consolidated financial statements and create a reasonable possibility that a material misstatement to our consolidated financial statements will not be prevented or detected on a timely basis.

KPMG LLP, an independent registered public accounting firm, has expressed an adverse report in the operating effectiveness of our internal control over financial reporting as of December 31, 2016. KPMG LLP’s report appears on Page F-2 of this annual report on Form 10-K.

Plan for Remediation of Nextel Brazil’s Material Weakness

Management is committed to remediating the material weakness in Nextel Brazil's internal control over financial reporting. We have modified the reporting structure between Nextel Brazil and our corporate headquarters and provided training to senior leadership in Nextel Brazil related to Sarbanes-Oxley and other SEC rules and regulations, and we are continuing to reinforce compliance with our code of conduct. Also, we will implement controls to identify and evidence the completeness and accuracy of data and assumptions used to support accounting analyses and reconciliations.

Item 9B.	Other Information

None.

52

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PART III

Item 10.	Directors, Executive Officers of the Registrant and Corporate Governance

The information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders, which we expect will be held on May 24, 2017.

Item 11.	Executive Compensation

The information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders.

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders.

Item 13.	Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders.

Item 14.	Principal Accountant Fees and Services

The information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders.

53

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PART IV

Item 15.	Exhibits, Financial Statement Schedules.

(a)(1) Financial Statements. Consolidated financial statements and reports of independent registered public accounting firms filed as part of this report are listed below:

	Page
Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets — As of December 31, 2016 (Successor Company) and December 31, 2015 (Successor Company)	F-4
Consolidated Statements of Comprehensive (Loss) Income — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months Ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-5
Consolidated Statement of Changes in Stockholders' Equity — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months Ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-6
Consolidated Statements of Cash Flows — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months Ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-7
Notes to Consolidated Financial Statements	F-8

(2)	Financial Statement Schedules. The following financial statement schedules are filed as part of this report. Schedules other than the schedules listed below are omitted because they are either not required or not applicable.

	Page
Schedule I — Condensed Financial Information of Registrant	F-43
Schedule II — Valuation and Qualifying Accounts	F-47

(3)	List of Exhibits. The exhibits filed as part of this report are listed in the Exhibit Index, which is incorporated in this item by reference.

54

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

NII HOLDINGS, INC.

	By:	/s/  TIMOTHY M. MULIERI
		Timothy M. Mulieri Vice President, Corporate Controller (on behalf of the registrant and as Principal Accounting Officer)

March 9, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 9, 2017 .

S ignature		T itle
/s/  Steven M. Shindler		Chief Executive Officer and Director
Steven M. Shindler
/s/  Daniel E. Freiman		Chief Financial Officer (Principal Financial Officer)
Daniel E. Freiman
/s/  Kevin L. Beebe		Chairman of the Board of Directors
Kevin L. Beebe
/s/  James V. Continenza		Director
James V. Continenza
/s/  Howard S. Hoffmann		Director
Howard S. Hoffmann
/s/  Ricardo Knoepfelmacher		Director
Ricardo Knoepfelmacher
/s/ Christopher T. Rogers		Director
Christopher T. Rogers
/s/  Robert A. Schriesheim		Director
Robert A. Schriesheim

55

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NII HOLDINGS, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets — As of December 31, 2016 (Successor Company) and December 31, 2015 (Successor Company)	F-4
Consolidated Statements of Comprehensive (Loss) Income — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-5
Consolidated Statements of Stockholders' Equity — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months Ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-6
Consolidated Statements of Cash Flows — For the Year Ended December 31, 2016 (Successor Company), For the Six Months Ended December 31, 2015 (Successor Company), For the Six Months Ended June 30, 2015 (Predecessor Company) and For the Year Ended December 31, 2014 (Predecessor Company)	F-7
Notes to Consolidated Financial Statements	F-8
FINANCIAL STATEMENT SCHEDULES
Schedule I — Condensed Financial Information of Registrant	F-43
Schedule II — Valuation and Qualifying Accounts	F-47

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

NII Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of NII Holdings, Inc. and subsidiaries (the Company) as of December 31, 2016 and 2015 (Successor), and the related consolidated statements of comprehensive (loss) income, changes in stockholders’ equity, and cash flows for the year ended December 31, 2016 (Successor), for the six month periods ended December 31, 2015 (Successor) and June 30, 2015 (Predecessor) and for the year ended December 31, 2014 (Predecessor). In connection with our audits of the consolidated financial statements, we also have audited financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NII Holdings, Inc. and subsidiaries as of December 31, 2016 and 2015 (Successor), and the results of their operations and their cash flows for the year ended December 31, 2016 (Successor), for the six month periods ended December 31, 2015 (Successor) and June 30, 2015 (Predecessor) and for the year ended December 31, 2014 (Predecessor), in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements and financial statement schedules have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company believes that if it cannot obtain waivers for the existing events of default under Nextel Brazil's equipment financing facility and for the applicable financial covenants it is required to meet as of the December 31, 2017 measurement date, modify the repayment terms on its loans, obtain suitable financing if and when it is required, or obtain access to a significant portion of certain escrowed funds as anticipated in its business plan, the Company’s results of operations and liquidity would be negatively impacted, and the Company may be unable to settle its obligations as they come due. The combination of these conditions continues to raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 3 to the consolidated financial statements, on June 26, 2015, the Company satisfied the conditions to emerge from Chapter 11 bankruptcy proceedings. Accordingly, the accompanying consolidated financial statements as of and for the year ended December 31, 2016 (Successor) and for the six month period ended June 30, 2015 (Successor) have been prepared in accordance with Accounting Standards Codification Topic 852, Reorganizations . The Company applied fresh-start reporting as of June 30, 2015 and recognized net assets at fair value, resulting in a lack of comparability with the consolidated financial statements of the Predecessor.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), NII Holdings, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 9, 2017 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

McLean, Virginia

March 9, 2017

F-2

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

NII Holdings, Inc.:

We have audited NII Holdings, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control ‑ Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NII Holdings, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to an ineffective tone at the top at Nextel Brazil which could result in management override of internal control over financial reporting and an ineffective information and communication process related to the identification of information necessary to account for leases, certain accrued liabilities and operating expenses resulting in ineffective process-level controls over the completeness and accuracy of data and assumptions used to support accounting analyses and reconciliations for the related accounts was identified and included in management’s assessment. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of NII Holdings, Inc. and subsidiaries as of December 31, 2016 and 2015 (Successor), and the related statements of comprehensive (loss) income, changes in stockholders' equity, and cash flows for the year ended December 31, 2016 (Successor), for the six month periods ended December 31, 2015 (Successor) and June 30, 2015 (Predecessor) and for the year ended December 31, 2014 (Predecessor). The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2016 consolidated financial statements, and this report does not affect our report dated March 9, 2017, which expressed an unqualified opinion on those consolidated financial statements.

In our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, NII Holdings, Inc. has not maintained effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

McLean, Virginia

March 9, 2017

F-3

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NII HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except par values)
	Successor Company
	December 31, 2016				December 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	257,380			$	342,184
Short-term investments	73,859				84,317
Accounts receivable, net of allowance for doubtful accounts of $54,221 and $39,033	153,806				144,629
Handset and accessory inventory	8,295				24,358
Prepaid expenses and other	280,145				132,534
Total current assets	773,485				728,022
Property, plant and equipment, net	129,475				555,023
Intangible assets, net	243,681				892,622
Other assets	271,868				554,241
Total assets	$	1,418,509			$	2,729,908
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	69,186			$	43,765
Accrued expenses and other	271,899				268,858
Deferred revenues	11,614				10,386
Current portion of long-term debt	540,474				582,420
Total current liabilities	893,173				905,429
Long-term debt	215,842				82,647
Other long-term liabilities	143,472				197,837
Total liabilities	1,252,487				1,185,913
Commitments and contingencies (Note 9)
Stockholders’ equity
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, 100,258 shares issued and   outstanding — 2016, 100,001 shares issued and outstanding — 2015	100				100
Paid-in capital	2,076,612				2,070,497
Accumulated deficit	(1,834,756		)		(280,883		)
Accumulated other comprehensive loss	(75,934		)		(245,719		)
Total stockholders’ equity	166,022				1,543,995
Total liabilities and stockholders’ equity	$	1,418,509			$	2,729,908

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NII HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands, except per share amounts)
	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Operating revenues
Service and other revenues	$	963,209			$	501,130				$	643,904			$	1,691,849
Handset and accessory revenues	21,837				28,304					39,807				157,105
	985,046				529,434					683,711				1,848,954
Operating expenses
Cost of service (exclusive of depreciation and amortization   included below)	364,648				212,852					256,085				692,601
Cost of handsets and accessories	29,273				46,904					121,143				415,450
Selling, general and administrative	560,760				311,703					419,699				997,735
Impairment, restructuring and other charges	1,384,811				32,308					36,792				105,664
Depreciation	135,429				64,108					126,789				340,159
Amortization	36,954				21,256					27,089				53,902
	2,511,875				689,131					987,597				2,605,511
Operating loss	(1,526,829		)		(159,697		)			(303,886		)		(756,557		)
Other (expense) income
Interest expense, net	(113,732		)		(55,563		)			(82,820		)		(372,904		)
Interest income	37,689				17,200					15,327				38,345
Foreign currency transaction gains (losses), net	76,615				(99,737		)			(63,948		)		(51,149		)
Other expense, net	(9,711		)		(1,176		)			(137		)		(5,829		)
	(9,139		)		(139,276		)			(131,578		)		(391,537		)
Loss from continuing operations before reorganization items and income tax benefit (provision)	(1,535,968		)		(298,973		)			(435,464		)		(1,148,094		)
Reorganization items (Note 3)	(803		)		1,467					1,956,874				(71,601		)
Income tax benefit (provision) (Note 11)	2,892				5,015					(2,009		)		(4,976		)
Net (loss) income from continuing operations	(1,533,879		)		(292,491		)			1,519,401				(1,224,671		)
(Loss) income from discontinued operations, net of income taxes   (Note 6)	(19,994		)		11,608					221,114				(733,027		)
Net (loss) income	$	(1,553,873	)		$	(280,883	)			$	1,740,515			$	(1,957,698	)
Net (loss) income from continuing operations per common share,   basic	$	(15.32	)		$	(2.93	)			$	8.73			$	(7.11	)
Net (loss) income from discontinued operations per common   share, basic	(0.20		)		0.12					1.27				(4.25		)
Net (loss) income per common share, basic	$	(15.52	)		$	(2.81	)			$	10.00			$	(11.36	)
Net (loss) income from continuing operations per common share,   diluted	$	(15.32	)		$	(2.93	)			$	8.71			$	(7.11	)
Net (loss) income from discontinued operations per common share, diluted	(0.20		)		0.12					1.27				(4.25		)
Net (loss) income per common share, diluted	$	(15.52	)		$	(2.81	)			$	9.98			$	(11.36	)
Weighted average number of common shares outstanding, basic	100,098				100,000					172,363				172,283
Weighted average number of common shares outstanding, diluted	100,098				100,000					172,691				172,283
Comprehensive (loss) income, net of income taxes
Foreign currency translation adjustment	$	169,785			$	(248,781	)			$	(205,899	)		$	(340,847	)
Reclassification adjustment for sale of Nextel Argentina, Nextel Mexico and Nextel Chile (Note 6)	—				(1,672		)			421,953				(33,885		)
Other	—				4,734					2,956				(544		)
Other comprehensive income (loss)	169,785				(245,719		)			219,010				(375,276		)
Net (loss) income	(1,553,873		)		(280,883		)			1,740,515				(1,957,698		)
Total comprehensive (loss) income	$	(1,384,088	)		$	(526,602	)			$	1,959,525			$	(2,332,974	)

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NII HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands)
	Common Stock							Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Total Stockholders’ Equity
	Shares			Amount
Balance, January 1, 2014 — Predecessor Company	172,105			$	172			$	1,504,258			$	(192,966	)		$	(956,077	)		$	355,387
Net loss	—			—				—				(1,957,698		)		—				(1,957,698		)
Other comprehensive loss	—			—				—				—				(375,276		)		(375,276		)
Share-based compensation activity	258			—				12,823				—				—				12,823
Balance, December 31, 2014 — Predecessor Company	172,363			172				1,517,081				(2,150,664		)		(1,331,353		)		(1,964,764		)
Net income	—			—				—				1,740,515				—				1,740,515
Other comprehensive income	—			—				—				—				219,010				219,010
Share-based compensation activity	—			—				5,239				—				—				5,239
Balance, June 30, 2015 — Predecessor Company	172,363			172				1,522,320				(410,149		)		(1,112,343		)		—
Elimination of Predecessor Company's equity	(172,363	)		(172		)		(1,522,320		)		410,149				1,112,343				—
Issuance of Successor Company's common stock	100,000			100				2,067,565				—				—				2,067,665
Balance, July 1, 2015 — Successor Company	100,000			100				2,067,565				—				—				2,067,665
Net loss	—			—				—				(280,883		)		—				(280,883		)
Other comprehensive loss	—			—				—				—				(245,719		)		(245,719		)
Share-based compensation activity	1			—				2,932				—				—				2,932
Balance, December 31, 2015 — Successor Company	100,001			100				2,070,497				(280,883		)		(245,719		)		1,543,995
Net loss	—			—				—				(1,553,873		)		—				(1,553,873		)
Other comprehensive income	—			—				—				—				169,785				169,785
Share-based compensation activity	257			—				6,115				—				—				6,115
Balance, December 31, 2016 — Successor Company	100,258			$	100			$	2,076,612			$	(1,834,756	)		$	(75,934	)		$	166,022

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•	mobile telephone voice service;

•	wireless data services, including text messaging services, mobile internet 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.

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2015, in connection with the implementation of fresh start accounting, we adjusted our AROs to their estimated fair value.

As of December 31, 2016 and 2015 , our asset retirement obligations were as follows (in thousands):

Balance, January 1, 2015 — Predecessor Company		19,177
New asset retirement obligations		350
Accretion		1,321
Settlement of asset retirement obligations		(168		)
Foreign currency translation and other		(2,011		)
Balance, June 30, 2015 — Predecessor Company		18,669
Fresh start adjustments		5,024
Balance, July 1, 2015 — Successor Company		23,693
New asset retirement obligations		547
Accretion		1,688
Settlement of asset retirement obligations		(1,337		)
Foreign currency translation and other		(4,949		)
Balance, December 31, 2015 — Successor Company		19,642
New asset retirement obligations		198
Change in assumptions		(1,619		)
Accretion		2,552
Settlement of asset retirement obligations		(441		)
Foreign currency translation and other		7,274
Balance, December 31, 2016 — Successor Company		$	27,606

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•	NII Holdings canceled all shares of its common stock, preferred stock and other equity interests that existed prior to June 26, 2015;

•	NII Holdings amended and restated its Bylaws and filed an Amended and Restated Certificate of Incorporation authorizing the Company to issue up to 140,000,000 shares of common stock, par value $0.001 per share, and up to 10,000,000 shares of undesignated preferred stock, par value $0.001 per share;

•	NII Holdings issued 99,999,992 shares of new common stock, with a per share value of $20.68 , and distributed cash of $776.3 million to the holders of claims and service providers in comprehensive settlement of numerous integrated claims and disputes approved by the Bankruptcy Court in connection with the confirmation of the Plan of Reorganization;

•	In accordance with the Plan of Reorganization, all of the obligations of the Debtors with respect to the following indebtedness were canceled:

•	$700.0 million aggregate principal amount of 7.875% senior notes due 2019 issued by NIIT pursuant to an indenture, dated as of May 23, 2013, among NIIT (as issuer), the Company (as guarantor), and Wilmington Trust National Association (as trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•	$900.0 million aggregate principal amount of 11.375% senior notes due 2019 issued by NIIT pursuant to an indenture, dated as of February 19, 2013, among NIIT (as issuer), the Company (as guarantor), and Wilmington Trust National Association (as trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•	$1.45 billion aggregate principal amount of 7.625% senior notes due 2021 issued by NII Capital Corp. pursuant to an indenture, dated as of March 29, 2011, among NII Capital Corp. (as issuer), each of the guarantors party thereto and Wilmington Savings Fund Society, FSB (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•	$500.0 million aggregate principal amount of 8.875% senior notes due 2019 issued by NII Capital Corp. pursuant to an indenture, dated as of December 15, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto and U.S. Bank National Association (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof; and

•	$800.0 million aggregate principal amount of 10.0% senior notes due 2016 issued by NII Capital Corp. pursuant to an indenture, dated as of August 18, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto and Wilmington Savings Fund Society, FSB (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof.

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Fair value of Successor Company's common stock	$	2,067,665
Fair value of debt	774,616
Fair value of other liabilities	638,916
Reorganization value of Successor Company's assets	$	3,481,197

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Predecessor Company				Reorganization Adjustments				Fresh Start Adjustments				Successor Company
	June 30, 2015												July 1, 2015
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	1,199,441			$	(776,306	)	(a)	$	—			$	423,135
Short-term investments	97,395				—				—				97,395
Accounts receivable, net	174,649				—				—				174,649
Handset and accessory inventory	49,835				—				—				49,835
Prepaid expenses and other	159,346				—				(19,494		)	(d)	139,852
Assets related to discontinued operations	242,487				—				—				242,487
Total current assets	1,923,153				(776,306		)		(19,494		)		1,127,353
Property, plant and equipment, net	1,079,947				—				(376,519		)	(e)	703,428
Intangible assets, net	571,076				—				562,702			(f)	1,133,778
Other assets	516,235				—				(18,739		)	(g)	497,496
Assets related to discontinued operations	32,246				—				(13,104		)	(h)	19,142
Total assets	$	4,122,657			$	(776,306	)		$	134,846			$	3,481,197
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Liabilities not subject to compromise
Current liabilities
Accounts payable	$	102,317			$	—			$	—			$	102,317
Accrued expenses and other	323,480				—				(2,677		)	(i)	320,803
Deferred revenues	17,908				—				(1,805		)	(j)	16,103
Current portion of long-term debt	667,617				—				2,616			(k)	670,233
Liabilities related to discontinued operations	96,161				—				(1,727		)	(h)	94,434
Total current liabilities	1,207,483				—				(3,593		)		1,203,890
Long-term debt	176,738				—				(72,355		)	(k)	104,383
Other long-term liabilities	149,632				—				(56,541		)	(l)	93,091
Liabilities related to discontinued operations	5,763				—				6,405			(h)	12,168
Total liabilities not subject to compromise	1,539,616				—				(126,084		)		1,413,532
Liabilities subject to compromise	4,591,452				(4,591,452		)	(b)	—				—
Stockholders’ (deficit) equity
Undesignated preferred stock - Successor Company	—				—				—				—
Undesignated preferred stock - Predecessor Company	—				—				—				—
Common stock - Successor Company	—				100			(b)	—				100
Common stock - Predecessor Company	172				(172		)	(c)	—				—
Paid-in capital - Successor Company	—				2,067,565			(b)	—				2,067,565
Paid-in capital - Predecessor Company	1,522,320				(1,522,320		)	(c)	—				—
Accumulated deficit	(2,418,560		)		3,269,973			(c)	(851,413		)	(m)	—
Accumulated other comprehensive loss	(1,112,343		)		—				1,112,343			(m)	—
Total stockholders’ (deficit) equity	(2,008,411		)		3,815,146				260,930				2,067,665
Total liabilities and stockholders’ (deficit) equity	$	4,122,657			$	(776,306	)		$	134,846			$	3,481,197

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(a)	Reflects cash payments made in connection with the implementation of the Plan of Reorganization (in thousands):

Claims paid to senior noteholders	$	745,221
Payments to other creditors	2,779
Total claims paid	748,000
Reorganization-related professional fees	28,306
Total cash payments	$	776,306

(b)

Represents the cancellation of debt and related transactions in connection with the implementation of the Plan of Reorganization on the Emergence Date. In accordance with the Plan of Reorganization, we distributed cash and shares of new common stock to holders of claims. The following table reflects the calculation of the total gain on the settlement of our liabilities subject to compromise (in thousands):

Total Predecessor Company liabilities subject to compromise	$	4,591,452
Less: Common stock, Successor (at par)	(100		)
Paid-in-capital, Successor	(2,067,565		)
Total claims paid	(748,000		)
Gain on settlement of liabilities subject to compromise	$	1,775,787

(c)	Reflects the cumulative impact of the reorganization adjustments discussed above. Additionally, these adjustments reflect the cancellation of the Predecessor Company's common stock and paid-in capital to accumulated deficit (in thousands):

Gain on settlement of liabilities subject to compromise	$	1,775,787
Reorganization-related professional fees	(28,306		)
Net gain on reorganization adjustments	1,747,481
Cancellation of Predecessor Company equity	1,522,492
Net impact to accumulated deficit	$	3,269,973

(d)	Represents the write-off of unamortized debt issuance costs primarily related to Nextel Brazil's equipment financing facility and local bank loans.

(e)

Reflects the impact of fresh start adjustments on property, plant and equipment in Nextel Brazil and our corporate segment. We measured the fair value of property, plant and equipment using the cost approach as the primary method. The cost approach is based on the premise that a prudent investor would pay no more for an asset than its replacement or reproduction cost. The cost to replace the asset would include the cost of constructing a similar asset of equivalent utility at prices applicable at the time of the valuation analysis. The replacement or reproduction cost estimates were adjusted by losses in value attributable to physical deterioration, as well as functional and economic obsolescence. The following reflects the impact of fresh start adjustments (in thousands):

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Consolidated
	Predecessor Company				Fresh Start Adjustments				Successor Company
Land	$	3,341			$	—			$	3,341
Leasehold improvements	35,515				(20,188		)		15,327
Network equipment, communication towers and network software	1,819,759				(1,291,712		)		528,047
Software, office equipment, furniture and fixtures and other	342,210				(261,342		)		80,868
Less: Accumulated depreciation and amortization	(1,207,834		)		1,207,834				—
	992,991				(365,408		)		627,583
Construction in progress	86,956				(11,111		)		75,845
	$	1,079,947			$	(376,519	)		$	703,428

(f)	Reflects the impact of fresh start adjustments on our intangible assets (in thousands):

	Nextel Brazil
	Predecessor Company				Fresh Start Adjustments				Successor Company
Licenses	$	553,076			$	513,002			$	1,066,078
Customer relationships	—				29,000				29,000

	Corporate
	Predecessor Company			Fresh Start Adjustments			Successor Company
Trade name	18,000			20,700			38,700

(g)	Represents a $13.5 million decrease in non-income based tax assets to reduce their values to their estimated fair values based on discounted cash flows to reflect the timing of their anticipated realization and a $5.2 million write-off of prepaid rent.

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(h)	Represents the net change in assets and liabilities related to Nextel Argentina as a result of remeasurement to their respective fair values.

(i)	Represents the write-off of unamortized deferred gains related to the 2013 tower transactions.

(j)	Represents the revaluation of deferred revenues to the fair value of related future performance obligations.

(k)	Adjustments to Nextel Brazil's debt balances related to the remeasurement of its equipment financing facility, local bank loans, tower financings and capital lease obligations to their fair values were as follows (in thousands):

	Nextel Brazil
	Predecessor Company				Fresh Start Adjustments				Successor Company
Brazil equipment financing	$	366,937			$	(2,989	)		$	363,948
Brazil bank loans	294,322				9,987				304,309
Brazil capital lease and tower financing obligations	182,108				(76,737		)		105,371
Other	988				—				988
Total debt	844,355				(69,739		)		774,616
Less: current portion	(667,617		)		(2,616		)		(670,233		)
	$	176,738			$	(72,355	)		$	104,383

(l)	Primarily represents the $61.3 million write-off of unamortized deferred gains related to the 2013 tower transactions and a $5.4 million increase related to the remeasurement of asset retirement obligations to their fair values.

(m)	Reflects the cumulative impact of all fresh start adjustments and the elimination of the Predecessor Company’s accumulated other comprehensive loss as follows (in thousands):

Intangible asset fair value adjustment	$	562,702
Property, plant and equipment fair value adjustment	(376,519		)
Debt fair value adjustment	69,739
Write-off of unamortized deferred gains on 2013 tower transactions	63,940
Other	(58,090		)
Net gain on fresh start fair value adjustments	261,772
Tax impact of fresh start adjustments	(842		)
Elimination of Predecessor Company's accumulated other comprehensive loss	(1,112,343		)
Net impact on accumulated deficit	$	(851,413	)

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reorganization Items.

The components of our reorganization items were as follows (in thousands):

	Successor Company									Predecessor Company
	Year Ended				Six Months Ended					Six Months Ended				Year Ended
	December 31, 2016				December 31, 2015					June 30, 2015				December 31, 2014
Gain on settlement of liabilities subject to compromise	$	—			$	—				$	1,775,787			$	—
Net gain on fresh start fair value adjustments	—				—					261,772				—
Reorganization-related professional fees and other costs	(803		)		1,467					(80,685		)		(71,601		)
Total reorganization items	$	(803	)		$	1,467				$	1,956,874			$	(71,601	)

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•	approximately 45 employees at the corporate level, all of whom were notified in the fourth quarter of 2015 of their severance date; and

•	approximately 700 employees in Brazil, all of whom were severed in the second half of 2015.

•	approximately 85 employees at the corporate level, all of whom were severed in the second quarter of 2014; and

•	approximately 800 employees in Brazil, all of whom were severed in the third quarter of 2014.

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Brazil	$	1,340,610			$	23,968				$	28,072			$	42,271
Corporate	44,201				8,340					8,720				63,393
Total impairment, restructuring and other charges	$	1,384,811			$	32,308				$	36,792			$	105,664

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Balance, January 1, 2016 — Successor Company	$	16,859
Restructuring and other charges	35,358
Cash payments	(30,569		)
Foreign currency translation adjustment	2,455
Balance, December 31, 2016 — Successor Company	$	24,103

Prepaid Expenses and Other.

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

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Cash in escrow	$	163,435			$	6,000
Cash collateral related to performance bonds	30,928				47,450
Value-added taxes	29,829				33,467
Prepayment for roaming and RAN sharing agreements	27,731				20,556
Other prepaid assets	23,020				11,934
Other current assets	5,202				13,127
	$	280,145			$	132,534

Property, Plant and Equipment, Net.

The components of our property, plant and equipment, net are as follows:

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Land	$	675			$	2,655
Building and leasehold improvements	1,489				11,765
Network equipment, communication towers and network software	95,298				492,814
Software, office equipment, furniture and fixtures and other	10,952				65,747
Less: Accumulated depreciation and amortization	—				(59,987		)
	108,414				512,994
Construction in progress	21,061				42,029
	$	129,475			$	555,023

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets, Net.

Our intangible assets, net include the following:

			Successor Company
			December 31, 2016												December 31, 2015
	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		$	226,426			$	—			$	226,426			$	850,818			$	(16,314	)		$	834,504
Tradename	26		—				—				—				38,700				(744		)		37,956
Customer relationships	4		17,255				—				17,255				23,042				(2,880		)		20,162
			$	243,681			$	—			$	243,681			$	912,560			$	(19,938	)		$	892,622

Y ears	Estimated Amortization Expense
2017	$	15,922
2018	15,922
2019	12,471
2020	9,020
2021	9,020

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Contingencies	$	54,260			$	49,507
Network system and information technology	50,286				32,079
Payroll related items and commissions	45,187				31,734
Non-income based taxes	28,158				33,097
Capital expenditures	17,514				25,182
Other	76,494				97,259
	$	271,899			$	268,858

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Assets.   

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

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Restricted cash	$	85,123			$	275,235
Cash collateral related to performance bonds	56,523				94,236
Prepayment for roaming and RAN sharing agreements	37,433				—
Equity interest in Nextel Argentina	—				108,148
Other	92,789				76,622
	$	271,868			$	554,241

Restricted Cash.   

The components of our restricted cash are as follows:

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Cash in escrow —  Nextel Mexico sale	$	163,435			$	186,593
Brazil judicial deposits	85,123				54,289
Cash in escrow — Nextel Peru sale	—				34,353
Cash in escrow — Nextel Argentina sale	—				6,000
	$	248,558			$	281,235

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Cash Flow Information.

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
	(in thousands)
Capital expenditures
Cash paid for capital expenditures, including capitalized interest	$	61,291			$	76,630				$	88,485			$	326,246
Change in capital expenditures accrued and unpaid or financed, including accreted interest capitalized	(9,984		)		(4,018		)			(19,282		)		(92,884		)
	$	51,307			$	72,612				$	69,203			$	233,362
Interest costs
Interest expense, net	$	113,732			$	55,563				$	82,820			$	372,904
Interest capitalized	283				2,142					2,556				27,712
	$	114,015			$	57,705				$	85,376			$	400,616
Cash paid for interest, net of amounts capitalized	$	105,636			$	59,914				$	65,598			$	261,161

•	$2,067.7 million in Successor Company common stock that we issued in partial satisfaction of certain claims that were settled in connection with our emergence from Chapter 11 (see Note 3 for more information); and

•	$187.5 million in restricted cash that we received, which represents cash placed in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico.

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Operating revenues	$	—			$	75,450				$	599,038			$	1,878,362
Operating expenses	—				(60,863		)			(675,245		)		(2,423,218		)
Other income (expense), net	—				1,159					(49,974		)		(148,641		)
Income (loss) before income tax provision	—				15,746					(126,181		)		(693,497		)
Income tax provision	—				(4,770		)			(8,065		)		(69,115		)
	—				10,976					(134,246		)		(762,612		)
(Loss) income on disposal of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru	(19,994		)		632					355,360				29,585
(Loss) income from discontinued operations, net of income taxes	$	(19,994	)		$	11,608				$	221,114			$	(733,027	)

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Brazil equipment financing	$	291,597			$	339,850
Brazil bank loans	242,076				240,396
Brazil spectrum financing	125,684				—
Brazil capital lease and tower financing obligations	96,722				84,295
Other	237				526
Total debt	756,316				665,067
Less: current portion	(540,474		)		(582,420		)
	$	215,842			$	82,647

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Year	Principal Repayments
2017	$	535,972
2018	4,129
2019	21,961
2020	22,836
2021	23,833
Thereafter	144,843
Total	$	753,574

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	December 31,
	2016								2015
	Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
	(in thousands)
Brazil equipment financing	$	291,597			$	280,893			$	339,850			$	340,189
Bank loans and other	242,313				221,458				240,922				229,366
Brazil spectrum financing	125,684				117,059				—				—
	$	659,594			$	619,410			$	580,772			$	569,555

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Capital Leases				Operating Leases				Total
2017	$	55,708			$	126,011			$	181,719
2018	47,269				112,167				159,436
2019	41,397				103,531				144,928
2020	41,613				94,241				135,854
2021	41,519				85,644				127,163
Thereafter	631,216				203,718				834,934
Total minimum lease payments	858,722				725,312				1,584,034
Less: imputed interest	(762,000		)		—				(762,000		)
Total	$	96,722			$	725,312			$	822,034

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    Income Taxes

The components of (loss) income from continuing operations before income taxes and the related income tax benefit (provision) are as follows (in thousands):

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
U.S.	$	(53,843	)		$	(1,820	)			$	1,745,628			$	(340,545	)
Non-U.S.	(1,482,928		)		(295,686		)			(224,218		)		(879,150		)
Total	$	(1,536,771	)		$	(297,506	)			$	1,521,410			$	(1,219,695	)

	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Current:
Federal	$	—			$	—				$	—			$	—
Foreign	(291		)		2,502					(1,104		)		(2,924		)
Total current income tax (provision) benefit	(291		)		2,502					(1,104		)		(2,924		)
Deferred:
Federal	2,864				(403		)			(814		)		(1,846		)
State, net of Federal tax benefit (provision)	319				(45		)			(91		)		(206		)
Foreign	—				2,961					—				—
Total deferred income tax benefit (provision)	3,183				2,513					(905		)		(2,052		)
Total income tax benefit (provision)	$	2,892			$	5,015				$	(2,009	)		$	(4,976	)

	Successor Company					Predecessor Company
	Year Ended December 31,		Six Months Ended December 31,			Six Months Ended June 30,		Year Ended December 31,
	2016		2015			2015		2014
Statutory Federal tax rate	35%		35%			35%		35%
Reorganization items	—		—			(46)		—
Effect of foreign operations	(2)		(12)			—		(2)
Change in deferred tax asset valuation allowance	(32)		(20)			9		(35)
Other, net	(1)		(1)			2		2
Effective tax rate	—		2%			—		—

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of our deferred tax assets and liabilities consist of the following:

	Successor Company
	December 31,
	2016				2015
	(in thousands)
Deferred tax assets:
Net operating losses and capital loss carryforwards	$	6,363,915			$	5,094,306
Allowance for doubtful accounts	17,867				13,644
Accrued expenses	54,263				54,823
Accrual for contingent liabilities	24,669				18,413
Intangible assets	130,983				—
Property, plant and equipment	253,882				147,774
Leasing related activity	25,822				3,543
Equity compensation	1,182				701
Long term debt	53,159				68,159
Inventory reserve	1,729				1,982
Other	17,573				34,033
	6,945,044				5,437,378
Valuation allowance	(6,945,044		)		(5,290,813		)
Total deferred tax asset	—				146,565
Deferred tax liabilities:
Intangible assets	—				149,749
Total deferred tax liability	—				149,749
Net deferred tax liability	$	—			$	(3,184	)

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Successor Company
	2016				2015
	(in millions)
Brazil	$	1,089.9			$	500.8
U.S.	367.2				359.8
Luxembourg	5,275.9				4,216.0
Spain	212.0				214.2
Total	$	6,945.0			$	5,290.8

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	Number of Options			Weighted Average Exercise Price per Option				Weighted Average Remaining Life		Aggregate Intrinsic Value
Outstanding, December 31, 2015	3,627,489			$	11.53
Granted	553,280			$	3.83
Exercised	—			—
Forfeited	(904,664	)		$	11.86
Outstanding, December 31, 2016	3,276,105			$	10.14			7.74		—
Exercisable, December 31, 2016	997,926			$	10.80			6.94		—

	Successor Company
	Year Ended	Period from June 26, 2015
	December 31, 2016	to December 31, 2015
Risk free interest rate	1.53% - 1.90%	1.71% - 2.05%
Expected stock price volatility	40.71% - 40.87%	31.73% - 41.92%
Expected term in years	5.16	5.16 - 6.00
Expected dividend yield	—	—

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	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Restricted stock awards as of December 31, 2015	997,444			$11.71
Granted	—			—
Vested	(347,618	)		$11.73
Forfeited	(127,384	)		$12.88
Restricted stock awards as of December 31, 2016	522,442			$10.65

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Brazil				Corporate and Eliminations				Consolidated
	(in thousands)
Year Ended December 31, 2016 - Successor Company
Operating revenues	$	984,878			$	168			$	985,046
Segment earnings (losses)	$	67,186			$	(36,821	)		$	30,365
Less:
Impairment, restructuring and other charges									(1,384,811		)
Depreciation and amortization									(172,383		)
Foreign currency transaction gains, net									76,615
Interest expense and other, net									(85,754		)
Loss from continuing operations before reorganization items and income tax provision									$	(1,535,968	)
Capital expenditures	$	51,307			$	—			$	51,307
Six Months Ended December 31, 2015 - Successor Company
Operating revenues	$	529,332			$	102			$	529,434
Segment losses	$	(15,925	)		$	(26,100	)		$	(42,025	)
Less:
Impairment, restructuring and other charges									(32,308		)
Depreciation and amortization									(85,364		)
Foreign currency transaction losses, net									(99,737		)
Interest expense and other, net									(39,539		)
Loss from continuing operations before reorganization items and income tax provision									$	(298,973	)
Capital expenditures	$	72,112			$	500			$	72,612
Six Months Ended June 30, 2015 - Predecessor Company
Operating revenues	$	683,611			$	100			$	683,711
Segment losses	$	(75,234	)		$	(37,982	)		$	(113,216	)
Less:
Impairment, restructuring and other charges									(36,792		)
Depreciation and amortization									(153,878		)
Foreign currency transaction losses, net									(63,948		)
Interest expense and other, net									(67,630		)
Loss from continuing operations before reorganization items and income tax provision									$	(435,464	)
Capital expenditures	$	68,385			$	818			$	69,203
Year Ended December 31, 2014 - Predecessor Company
Operating revenues	$	1,848,918			$	36			$	1,848,954
Segment losses	$	(133,691	)		$	(123,141	)		$	(256,832	)
Less:
Impairment, restructuring and other charges									(105,664		)
Depreciation and amortization									(394,061		)
Foreign currency transaction losses, net									(51,149		)
Interest expense and other, net									(340,388		)
Loss from continuing operations before reorganization items and income tax provision									$	(1,148,094	)
Capital expenditures	$	218,855			$	14,507			$	233,362
December 31, 2016 - Successor Company
Identifiable assets	$	1,000,098			$	418,411			$	1,418,509
December 31, 2015 - Successor Company
Identifiable assets	$	1,989,753			$	740,155			$	2,729,908

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NII HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.    Quarterly Financial Data (Unaudited)

	Successor Company
	First				Second				Third				Fourth
	(in thousands, except per share amounts)
2016
Operating revenues	$	226,557			$	249,213			$	260,836			$	248,440
Operating loss	(54,064		)		(28,751		)		(1,386,696		)		(57,318		)
Net loss from continuing operations	(32,807		)		(4,796		)		(1,411,554		)		(84,722		)
Net loss from discontinued operations	(3,781		)		(5,075		)		(7,389		)		(3,749		)
Net loss from continuing operations, per common share, basic	$	(0.33	)		$	(0.05	)		$	(14.10	)		$	(0.84	)
Net loss from discontinued operations, per common share, basic	$	(0.04	)		$	(0.05	)		$	(0.07	)		$	(0.04	)
Net loss from continuing operations, per common share, diluted	$	(0.33	)		$	(0.05	)		$	(14.10	)		$	(0.84	)
Net loss from discontinued operations, per common share, diluted	$	(0.04	)		$	(0.05	)		$	(0.07	)		$	(0.04	)

	Predecessor Company									Successor Company
	First				Second					Third				Fourth
	(in thousands, except per share amounts)
2015
Operating revenues	$	363,409			$	320,302				$	284,652			$	244,782
Operating loss	(105,811		)		(198,075		)			(77,652		)		(82,045		)
Net (loss) income from continuing operations	(218,407		)		1,737,808					(201,949		)		(90,542		)
Net (loss) income from discontinued operations	(91,111		)		312,225					12,528				(920		)
Net (loss) income from continuing operations, per common share, basic	$	(1.27	)		$	10.04				$	(2.02	)		$	(0.90	)
Net (loss) income from discontinued operations, per common share, basic	$	(0.53	)		$	1.80				$	0.12			$	(0.01	)
Net (loss) income from continuing operations, per common share, diluted	$	(1.27	)		$	10.03				$	(2.02	)		$	(0.90	)
Net (loss) income from discontinued operations, per common share, diluted	$	(0.53	)		$	1.80				$	0.12			$	(0.01	)

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NII HOLDINGS, INC. AND SUBSIDIARIES

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

NII HOLDINGS, INC. CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) (in thousands)
	Successor Company
	December 31, 2016				December 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	54,101			$	56,011
Short-term intercompany receivables	1,242				1,202
Prepaid expenses and other	—				61
Total current assets	55,343				57,274
Intangible assets, net	—				37,956
Long-term intercompany receivables	3,146				281
Investment in subsidiaries	112,503				4,752,755
Total assets	$	170,992			$	4,848,266
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term intercompany payables	$	4,570			$	4,570
Total current liabilities	4,570				4,570
Long-term intercompany payables	—				3,296,117
Other long-term liabilities	400				3,584
Total liabilities	4,970				3,304,271
Total stockholders’ equity	166,022				1,543,995
Total liabilities and stockholders’ equity	$	170,992			$	4,848,266

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NII HOLDINGS, INC. AND SUBSIDIARIES

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

NII HOLDINGS, INC. CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (PARENT COMPANY ONLY) (in thousands)
	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Operating revenues	$	—			$	—				$	—			$	—
Operating expenses
Selling, general and administrative	—				—					429				2,145
Impairment, restructuring and other charges	36,839				—					—				—
Depreciation and amortization	1,116				744					—				—
	37,955				744					429				2,145
Operating loss	(37,955		)		(744		)			(429		)		(2,145		)
Other (expense) income
Interest expense, net	—				—					(119		)		(570		)
Intercompany interest expense	(117,078		)		(118,365		)			(159,117		)		(165,324		)
Interest income	—				—					37				691
Intercompany interest income	197				97					125				—
Equity in (loss) income of affiliates	(1,401,998		)		(167,324		)			1,793,151				(1,805,438		)
Other (expense) income, net	(206		)		(3		)			995				8,212
	(1,519,085		)		(285,595		)			1,635,072				(1,962,429		)
(Loss) income before reorganization items   and income tax benefit	(1,557,040		)		(286,339		)			1,634,643				(1,964,574		)
Reorganization items	—				(373		)			68,355				(291		)
Income tax benefit (provision)	3,183				(448		)			(1,002		)		7,167
Net (loss) income from continuing operations	(1,553,857		)		(287,160		)			1,701,996				(1,957,698		)
(Loss) income from discontinued operations, net of income taxes	(16		)		6,277					38,519				—
Net (loss) income	$	(1,553,873	)		$	(280,883	)			$	1,740,515			$	(1,957,698	)
Comprehensive (loss) income, net of income   taxes
Foreign currency translation adjustment	$	169,785			$	(248,781	)			$	(205,899	)		$	(340,847	)
Reclassification adjustment for sale of Nextel Argentina, Nextel Mexico and Nextel Chile	—				(1,672		)			421,953				(33,885		)
Other	—				4,734					2,956				(544		)
Other comprehensive income (loss)	169,785				(245,719		)			219,010				(375,276		)
Net (loss) income	(1,553,873		)		(280,883		)			1,740,515				(1,957,698		)
Total comprehensive (loss) income	$	(1,384,088	)		$	(526,602	)			$	1,959,525			$	(2,332,974	)

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NII HOLDINGS, INC. CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in thousands)
	Successor Company									Predecessor Company
	Year Ended December 31,				Six Months Ended December 31,					Six Months Ended June 30,				Year Ended December 31,
	2016				2015					2015				2014
Cash flows from operating activities:
Net (loss) income	$	(1,553,873	)		$	(280,883	)			$	1,740,515			$	(1,957,698	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities	1,554,075				280,910					(1,735,521		)		1,861,773
Net cash provided by (used in) operating   activities	202				27					4,994				(95,925		)
Cash flows from investing activities:
Changes in restricted cash and escrow accounts	—				—					—				25,300
Investments in subsidiaries	(36,356		)		(29,690		)			(61,405		)		(180,712		)
Return of investments in subsidiaries	34,260				35,315					23				—
Other, net	(16		)		—					—				1,856
Net cash (used in) provided by investing   activities	(2,112		)		5,625					(61,382		)		(153,556		)
Cash flows from financing activities:
Other, net	—				—					—				(86		)
Net cash used in financing activities	—				—					—				(86		)
Net (decrease) increase in cash and cash equivalents	(1,910		)		5,652					(56,388		)		(249,567		)
Cash and cash equivalents, beginning of period	56,011				50,359					106,747				356,314
Cash and cash equivalents, end of period	$	54,101			$	56,011				$	50,359			$	106,747

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NII HOLDINGS, INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

	Balance at Beginning of Period				Charged to Costs and Expenses				Deductions and Other Adjustments (1)				Balance at End of Period
Year Ended December 31, 2016 —   Successor Company
Allowance for doubtful accounts	$	39,033			$	77,883			$	(62,695	)		$	54,221
Valuation allowance for deferred tax assets	$	5,290,813			$	1,555,006			$	99,225			$	6,945,044
Six Months Ended December 31, 2015 —   Successor Company
Allowance for doubtful accounts	$	—			$	32,279			$	6,754		(2)	$	39,033
Valuation allowance for deferred tax assets	$	4,388,792			$	1,010,438			$	(108,417	)		$	5,290,813
Six Months Ended June 30, 2015 —   Predecessor Company
Allowance for doubtful accounts	$	30,749			$	65,396			$	(96,145	)	(3)	$	—
Valuation allowance for deferred tax assets	$	4,447,133			$	22,828			$	(81,169	)		$	4,388,792
Year Ended December 31, 2014 — Predecessor Company
Allowance for doubtful accounts	$	35,458			$	57,418			$	(62,127	)		$	30,749
Valuation allowance for deferred tax assets	$	4,145,002			$	340,425			$	(38,294	)		$	4,447,133

_______________________________________

(1)	Includes the impact of foreign currency translation adjustments.

(2)	Includes the impact of cash collections subsequent to the implementation of fresh start accounting.

(3)	Includes the impact of a $50.6 million reduction to allowance for doubtful accounts resulting from the application of fresh start accounting.

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EXHIBIT INDEX

Exhibit Number		Exhibit Description		Form		Exhibit		Incorporated by Reference Filing Date		Filed Herewith
2.1		First Amended Joint Plan of Reorganization Proposed by the Debtors and Debtors in Possession and the Official Committee of Unsecured Creditors		8-K		2.1		06/22/15
3.1		Amended and Restated Certificate of Incorporation of NII Holdings.		S-8		3.1		06/26/15
3.2		Fifth Amended and Restated Bylaws of NII Holdings.		S-8		3.2		06/26/15
4.1		Registration Rights Agreement, dated June 26, 2015, by and among NII Holdings and the stockholders party thereto.		8-K		10.1		06/30/15
10.1		Fourth Amended and Restated Trademark License Agreement, dated July 27, 2011, between Nextel Communications, Inc. and NII Holdings.		10-Q		10.1		11/08/11
10.2		Amendment No. 3 to Fourth Amended and Restated Trademark License Agreement with Nextel Communications, Inc. and NII Holdings, dated June 1, 2015.		10-K		10.2		03/03/16
10.3		Purchase and Sale Agreement, dated as of January 26, 2015, between New Cingular Wireless Services, Inc., NIHD Telecom Holdings, B.V., NIU Holdings LLC, Comunicaciones de Mexico S.A. de C.V., Nextel International (Uruguay) LLC, NII International Telecom S.C.A., NII International Holdings S.à r.l., NII Global Holdings, Inc., NII Capital Corp. and NII Holdings.		8-K		10.1		01/26/15
10.4		Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure).		10-K		99.3		02/28/14
10.5		Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure).		10-K		99.4		02/28/14
10.6		Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure).		10-K/A		99.9		02/28/14
10.7		Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure).		10-K/A		99.10		02/28/14
10.8		Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure).		10-K		99.13		03/10/15
10.9		Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure).		10-K		99.14		03/10/15
10.10		Parent Guaranty, dated April 20, 2012, between NII Holdings, as Parent Guarantor, and China Development Bank Corporation, as Administrative Agent under the Sinosure Credit Agreement and Non-Sinosure Credit Agreement.		10-K		10.14		03/03/16
10.11		Amendment to Parent Guaranty, dated December 5, 2014, between NII Holdings, as Parent Guarantor, and China Development Bank Corporation, as Administrative Agent under the Sinosure Credit Agreement and Non-Sinosure Credit Agreement.		8-K		10.10		06/30/15

F-48

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10.12		Shareholder Undertaking Agreement, dated April 20, 2012, between NII Holdings, as Parent Guarantor, and China Development Bank Corporation (as Sinosure Administrative Agent and Non-Sinosure Administrative Agent).		10-K		10.16		03/03/16
10.13		Bank Credit Certificate, dated November 8, 2011, between Nextel Telecomunicações Ltda., and Caixa Econômica Federal.		10-K		99.5		02/28/14
10.14		Amendment No. 1 to Bank Credit Certificate, dated February 13, 2015, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal.		8-K		10.6		06/30/15
10.15		Amendment No. 2 to Bank Credit Certificate, dated January 25, 2015, between Nextel Telecomunicações Ltda. and Caixa Economica Federal.		8-K		10.7		06/30/15
10.16		Amendment No. 3 to the Bank Credit Certificate, dated February 24, 2017, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal.		8-K		10.1		03/01/17
10.17		Waiver Letter, dated February 24, 2017, among Nextel Telecomunicações Ltda. and Caixa Economica Federal.		8-K		10.3		03/01/17
10.18		Bank Credit Certificate, dated December 31, 2012, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A.		10-K		99.6		02/28/14
10.19		Amendment No. 1 to Bank Credit Certificate, dated February 13, 2015, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A.		8-K		10.8		06/30/15
10.20		Amendment No. 2 to Bank Credit Certificate, dated June 25, 2015, between Nextel Telecomunicações Ltda., and Banco do Brasil, S.A.		8-K		10.9		06/30/15
10.21		Amendment No. 3 to the Bank Credit Certificate, dated February 24, 2017, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A.		8-K		10.2		03/01/17
10.22		Wavier Letter, dated February 24, 2017, among Nextel Telecomunicações Ltda., and Banco do Brasil, S.A.		8-K		10.4		03/01/17
10.23(+)		NII Holdings Severance Plan.		10-K		10.16		02/28/13
10.24(+)		NII Holdings Change of Control Severance Plan.		8-K		10.2		12/22/15
10.25(+)		NII Holdings 2015 Incentive Compensation Plan.		S-8		4.1		06/26/15
10.26(+)		Form of Restricted Stock Award Agreement (Employees).		8-K		10.3		06/30/15
10.27(+)		Form of Nonqualified Stock Option Agreement (Employees).		8-K		10.4		06/30/15
10.28(+)		Form of Restricted Stock Award Agreement (Directors).		10-Q		10.4		11/05/15
10.29(+)		Form of Separation and Release Agreement for Certain Executives.								*
10.30(+)		Offer Letter for Steven M. Shindler, dated April 30, 2013.		8-K		10.1		05/02/13
10.31(+)		Form of Director and Executive Officer Indemnification Agreement.		10-K		10.32(+)		03/03/16
10.32(+)		Employment Agreement between Nextel Telecomunicações Ltda. and Francisco Tosta Valim Filho, dated August 25, 2015.		10-K		10.37(+)		03/03/16
16.1		PricewaterhouseCoopers LLP Letter of Concurrence, dated March 4, 2014.		8-K		16.1		03/05/14
21.1		Subsidiaries of NII Holdings.								*
23.1		Consent of KPMG LLP.								*
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.								*

F-49

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101		The following materials from the NII Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2016 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive (Loss) Income, (iii) Consolidated Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.								*

_______________________________________

+	Indicates Management Compensatory Plan, Contract or Arrangement.

F-50