NII Holdings Inc.
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Kþ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017oro TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37488NII HOLDINGS, INC.(Exact name of registrant as specified in its charter)Delaware 91-1671412(State or other jurisdiction of (I.R.S. Employer Identification No.)incorporation or organization) 12110 Sunset Hills Road, Suite 600Reston, Virginia (Address of principal executive offices) 20190 (Zip Code)(703) 390-5100(Registrant's telephone number, including area code)1875 Explorer Street, Suite 800Reston, Virginia 20190(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)Securities registered pursuant to Section 12(b) of the Act:Common Stock, par value $0.001 per shareIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes þ No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of“large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o Emerging growth company o (Do not check if a smallerreporting company) If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þState the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was lastsold, or the average bid and asked price of such common equity, as of June 30, 2017: $55,808,063Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No oIndicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Number of Shares OutstandingTitle of Classon March 7, 2018Common Stock, $0.001 par value per share100,479,833Documents Incorporated By ReferencePortions of the registrant's proxy statement for the 2018 annual meeting of stockholders are incorporated by reference into Part III hereof. NII HOLDINGS, INC.TABLE OF CONTENTSItemDescriptionPagePART I1.Business31A.Risk Factors91B.Unresolved Staff Comments212.Properties213.Legal Proceedings224.Mine Safety Disclosures22 PART II5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities236.Selected Financial Data257.Management’s Discussion and Analysis of Financial Condition and Results of Operations277A.Quantitative and Qualitative Disclosures About Market Risk508.Financial Statements and Supplementary Data509.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure509A.Controls and Procedures519B.Other Information52 PART III10.Directors, Executive Officers of the Registrant and Corporate Governance5311.Executive Compensation5312.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters5313.Certain Relationships and Related Transactions, and Director Independence5314.Principal Accountant Fees and Services53 PART IV15.Exhibits, Financial Statement Schedules5416.Form 10-K Summary562 PART IItem 1.BusinessCorporate HistoryWe were originally organized in 1995 as a holding company for the operations of Nextel Communications, Inc. in selected international markets. Thecorporation that is currently known as NII Holdings, Inc. was incorporated in Delaware in 2000 as Nextel International, Inc. In December 2001, we changedour name from Nextel International, Inc. to NII Holdings, Inc. Our principal executive office is located at 12110 Sunset Hills Road, Suite 600, 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 Brazilian operatingcompany, Nextel Telecomunicações Ltda., as Nextel Brazil. Nextel Brazil's operations are headquartered in São Paulo, with branch offices in Rio de Janeiroand 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. Allhistorical financial statements contained in this report are prepared in accordance with accounting principles generally accepted in the U.S. Nextel Brazil Business OverviewWe provide wireless communication services under the NextelTM brand in Brazil with our principal operations located in major urban and suburbancenters with high population densities and related transportation corridors of that country where there is a concentration of Brazil’s population and economicactivity, including primarily Rio de Janeiro and São Paulo. Nextel Brazil operates a wideband code division multiple access, or WCDMA, network, which hasbeen upgraded to offer long-term evolution, or LTE, services in certain areas. Nextel Brazil's network enables us to offer a wide range of products and servicessupported by that technology. We are also a party to a roaming agreement that allows us to offer our subscribers nationwide voice and data services outside ofour network's footprint. Our target market is individual consumers who use our services to meet both professional and personal needs. Our target subscribersgenerally exhibit above average usage, revenue and loyalty characteristics. We believe our target market is attracted to the services and pricing plans weoffer, as well as the quality of and data speeds provided by our network.The services we currently offer include:•mobile telephone voice and wireless data services;•international voice and data roaming services;•application-based radio connection; and•value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and internationalWiFi hotspot networks.In September 2017, Nextel Brazil decided to wind down its integrated digital enhanced network, or iDEN, operations with a target to cease all iDENservices in mid-2018. As a result, Nextel Brazil has provided notice of the eventual shutdown to its remaining iDEN subscribers and is currently working toactively migrate the remainder of its legacy iDEN subscriber base to its WCDMA network by proactively promoting attractive service offerings. As ofDecember 31, 2017, 11% of our subscribers were on Nextel Brazil's iDEN network.The majority of our subscribers purchase services from us by acquiring the subscriber identity module, or SIM, cards from us separately, and using theSIM cards in handsets that they acquire from other sources. As of December 31, 2017, Nextel Brazil had 3.246 million total subscriber units in commercialservice, which we estimate to be about 4.2% of total postpaid mobile handsets and other devices in commercial service in Brazil. We refer to these subscriberunits in commercial service collectively as our subscriber base.3 Operating StrategyOur goal is to grow our subscriber base and revenues by providing differentiated wireless communications services that are valued by our existing andpotential subscribers. We are also striving to manage our capital and operating expenditures in the near term and improve our profitability and cash flow overthe long term. Our strategy for achieving these goals is based on several core principles, including:•offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;•continuing to implement cost reduction strategies and redesigning our network architecture in order to lower cash costs per user, outweigh scaledisadvantages, create an agile organization and improve overall profitability;•focusing on higher value customer segments that generate higher average revenue per user, or ARPU, and lower subscriber turnover; and•building on the strength of the unique positioning of the Nextel brand.During 2017, our results of operations were pressured by subscriber losses on our legacy iDEN network, which does not support the high speed dataapplications sought by many of our current and potential subscribers. Our consolidated operating revenues declined by 12% from 2016 to 2017 due to an11% decrease in our consolidated subscriber base during 2017, almost all of which was driven by a 58% decrease in our iDEN subscriber base. As a result, ouriDEN-based operating revenues decreased from $278.2 million in 2016 to $148.7 million in 2017. While we were able to reduce our cost of revenues andselling, general and administrative expenses by 3% in 2017 to offset a portion of the decline, we generated an operating loss for the period, partially as aresult of $179.7 million in impairment, restructuring and other charges we recognized in 2017. As a result of Nextel Brazil's decision to wind down its iDENnetwork, we expect a significant decrease in iDEN-based operating revenues from 2017 to 2018, which will have a negative impact on operating income in2018.In addition, as a result of pressure on our capital resources, over the last several years, we have implemented changes in our business to better align ourorganization and costs with our operational and financial results. These changes have included reduced spending on subscriber growth, reductions in capitalexpenditures, significant reductions in our headquarters staff through the reorganization of certain roles and responsibilities between our Brazil and corporateteams, and headcount reductions in Brazil, all of which were designed to reduce costs while maintaining the support necessary to meet our subscribers' needs.Additionally, during 2017, we reached agreement with our bank lenders to obtain amortization and covenant relief.Effective in January 2018, we entered into amendments to Nextel Brazil's equipment financing facility and its bank loans with Brazilian lenders, whichaligned the material financing terms in all three facilities. Among other changes, these amendments provide for the deferral of substantially all principalpayments for the first 48 months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and aholiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. See Note 7 to our consolidated financialstatements for more information on these financing arrangements.Partnership AgreementOn June 5, 2017, we and AINMT Holdings AB, or ice group, an international telecommunications company operating primarily in Norway under the“ice.net” brand, along with certain affiliates of ours and ice group, entered into an investment agreement to partner in the ownership of Nextel Brazil. On July20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings S.à r.l., or Nextel Holdings, a newly formed subsidiary of NII thatindirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initial investment, ice group received 50.0 millionshares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of common stock in this entity. The investmentagreement also provided ice group with an option, exercisable on or before November 15, 2017, to invest an additional $150.0 million in Nextel Holdings foran additional 30% ownership. ice group did not exercise its option, and on February 27, 2018, we terminated the investment agreement. Since we continue tohave a controlling interest in Nextel Brazil, we have consolidated this entity and its subsidiaries.4 Prior to the closing of the initial investment by ice group, we contributed $116.6 million in cash to Nextel Holdings. In connection with and subsequentto the closing of the initial investment, we contributed an additional $56.8 million to Nextel Holdings, representing all of our freely distributable cashoutside of Nextel Brazil, including proceeds released from escrowed funds from the sale of Nextel Mexico received to date, less $50.0 million we retained forour expenses outside of the partnership. The investment agreement provided for, after ice group’s initial investment, our contribution of proceeds arising fromthe release of escrowed funds through a 115 account, which is a contribution without the issuance of additional equity. We do not believe that thisrequirement survives the termination of the investment agreement and intend for all future contributions by us to Nextel Holdings to be made through capitalcontributions with additional equity being issued to us. ice group has notified us that it believes future escrow proceeds received by us from the escrowaccount must be contributed to Nextel Holdings through the 115 account without the issuance of equity.Economic EnvironmentRecently, Brazil has experienced one of the worst economic recessions in its history, characterized by years of negative real wage growth, a net loss ofjobs, higher unemployment and lower consumer confidence. These economic conditions and trends have resulted in a decline in the amount of consumerdisposable income that is available to purchase telecommunications services, leading to lower customer credit and pressure on customer demand, pricing andturnover. According to reports issued by the International Monetary Fund, or the IMF, it is estimated that Brazil's gross domestic product, or GDP, fell about3% from 2015 to 2016. In addition, Brazil's unemployment rate was about 11% at the end of 2016. In 2017, Brazil's GDP improved by about 1% compared to2016, but unemployment reached the highest it had been in decades at 12% at the end of 2017. Real wages in Brazil fell in the first half of 2017, but grewsteadily in the second half of 2017. In addition, the foreign currency exchange rate in Brazil appreciated in value by almost 9% relative to the U.S. dollarduring 2017. Although consumer confidence improved by the end of 2017, it remains at lower levels than those experienced in recent prior years. Mosteconomists expect that lower inflation and interest rates at the end of 2017 will help to accelerate growth in Brazil's economy in 2018.Competitive EnvironmentWe believe that the wireless communications industry in Brazil has been and will continue to be characterized by intense competition on the basis ofprice, 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 Brazilhave declined as a result of intensified price competition, including the introduction by our competitors of aggressive pricing promotions, such as plans thatallow shared minutes between groups of callers and plans that provide more services and in many cases, unlimited calling, for lower rates than some of theplans we offer. In the third quarter of 2017, Nextel Brazil began offering similar types of unlimited voice rate plans in response to the increasinglycompetitive environment and is actively working to migrate its existing customers to these types of unlimited rate plans and implement other targeted effortsto promote customer loyalty.We compete with large, well-capitalized competitors in Brazil that have substantial financial and other resources. Nextel Brazil's largest competitors areVivo, 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 controlledby Mexico's America Movil; TIM, or Telecom Italia Mobile, 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 wirelesstechnologies, and have greater coverage areas and/or name recognition than we do, making it easier for them to expand into new markets and offer newproducts and services. Our competitors typically have more extensive distribution channels than ours or are able to use their scale advantages to acquiresubscribers at a lower cost than we can, and they have implemented network technology upgrades, including both WCDMA and LTE, that support highspeed 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. Inaddition, the financial strength and operating scale of some of these competitors allows them to offer aggressive pricing plans, including those targeted atattracting our existing subscribers.In recent years, our largest competitors have increasingly focused their marketing efforts on attracting postpaid subscribers within our target segmentsby, among other things, enhancing their network quality and their customer care functions, which may minimize the value of our network quality and speedand the quality of our customer service as points of differentiation. In addition, as we have extended 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.5 We compete with other communications service providers based primarily on our simple and attractive pricing plans, high quality customer experienceand wireless service offerings. We are continuing to pursue our target market with an expanded message that focuses on our transition to a full servicewireless operator capable of providing high quality and high speed data services supported by our WCDMA and LTE 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 qualityof customer support, as well as on the availability of differentiated features and services that make it easier for them to communicate quickly, efficiently andeconomically. However, because pricing is one of a number of important factors in potential customers' purchasing decisions, and in light of Brazil'srecovering economy discussed above, increased price competition in the customer segments we target could require us to decrease prices or increase serviceand product offerings, which would lower our revenues, increase our costs or both.In response to the aggressive nature of Brazil's competitive environment, as well as its recent economic climate, we have taken and are continuing totake the following actions:•offering flexible rate plans in order to meet our customers' individualized needs, including various unlimited voice rate plans at competitiveprices;•increased our focus on high value customer segments in order to generate higher levels of ARPU;•expanding our addressable market;•providing a superior customer-centric experience that cultivates a long-term relationship with our customers;•streamlining distribution channels, including closing unprofitable retail stores;•migrating subscribers from our legacy iDEN network to our WCDMA network; and•reviewing commission and subsidy strategies.As a result of these and other initiatives, in the fourth quarter of 2017, Nextel Brazil had 325,400 WCDMA gross subscriber additions, 26,800 WCDMAnet subscriber additions and WCDMA subscriber turnover of 3.47%.Our Networks and Wireless TechnologiesWe currently offer services supported by a network that utilizes WCDMA and LTE technology. WCDMA is a standards-based technology beingdeployed by wireless carriers throughout the world that provides service capabilities such as high speed internet access, increased network capacity andreduced 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 the1.9/2.1 gigahertz, or GHz, spectrum bands in 11 of the 13 auction lots covering approximately 98% of the Brazilian population for $714.4 million based onforeign 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 Geraisand 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 GHzspectrum to support its WCDMA network and is utilizing the 1.8 GHz spectrum to support its LTE-based network. The licenses relating to the spectrum wonby 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 andrequire Nextel Brazil to meet specified network coverage construction requirements within specified timeframes. In December 2015, Nextel Brazilparticipated 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, orapproximately $116.7 million based on foreign currency exchange rates at the time. Nextel Brazil currently offers LTE services in Rio de Janeiro and SãoPaulo. These services are automatically available to subscribers with an existing mobile plan and compatible smartphone.We continue to evaluate ways in which we can use our 800 MHz spectrum to support existing or new services. Our current 800 MHz spectrum holdingsare 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 availabilityof that equipment will likely depend upon a number of factors, including the technology decisions made by other wireless carriers and the willingness ofinfrastructure and device manufacturers to produce the required equipment.6 Sales and DistributionOur target customers include consumer market segments that value our attractive pricing plans, high quality network and our superior level of customerservice, as well as the small, medium and large business markets that value our wireless services. We use a variety of distribution channels to reach our targetcustomers, including direct sales representatives, indirect sales agents, retail stores and kiosks, and other subscriber-convenient sales channels such as onlinepurchasing. Nextel Brazil is continuously optimizing the mix of sales channels to take into consideration the methods that best meet local subscriberpreferences, most cost effectively sell and provide support to our different segments and facilitate our overall strategy of attracting and retaining subscribersin 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 oncustomers that value our industry expertise and services, as well as our ability to develop tailored custom communications capabilities that meet the specificneeds of these customers. We also utilize indirect sales agents, which mainly consist of local and national non-affiliated dealers that solicit customers for ourservice and are generally paid through commissions. These dealers participate with Nextel Brazil's direct sales force in varying degrees when pursuing each ofour 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. We have realigned these sales channels and locations and have also expanded our marketing through regionaland national retailers with store kiosks and handset and prepaid card distribution offers. We also utilize our website as a marketing tool that allowssubscribers to compare our various rate plans and research our suite of products and services, including handsets, accessories and special promotions. We usea digital platform and other online purchase tools as additional sales channels to allow subscribers to purchase our services directly without any interactionwith a Nextel representative. Subscribers can purchase a 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.MarketingWe are a full service provider of wireless services, offering our customers packages of services and features that combine multiple communicationsservices in one handset, including voice and data services. Since 2002, we have offered services under the Nextel brand under a trademark license agreementwith Nextel Communications, Inc. In 2011, we launched a new brand identity, which we believe enhanced the recognition of our brand. As a result of ourefforts, the Nextel brand is recognized in Brazil as standing for both quality of service and the customer support we provide. Our marketing strategy isfocused on the availability of the broad range of services and features offered by our WCDMA and LTE networks that we believe appeals to a wide range ofconsumers. The positioning of our brand continues to focus on customers who are attracted to our services and our reputation for providing a high qualitycustomer experience.Regulation of SMR and PCS OperationsIn Brazil, the wireless communications regulations are based on a concept called calling party pays, which requires the mobile carrier of the subscriberinitiating a call to pay the mobile carrier of the party receiving the call when mobile calls occur between subscribers of different carriers. These calling partypays charges are based on rates that we refer to as mobile termination rates. In 2012, ANATEL, Brazil's telecommunications regulatory agency, approvedregulations to implement a transition to a cost-based model for determining mobile termination rates, and under the current regulations, the mobiletermination rates are being gradually reduced over a transition period ending in 2019, when cost-based rates will take effect and we will likely pay the samerates as our competitors.Foreign Currency Controls, Dividends and Tax RegulationThe purchase and sale of foreign currency in Brazil continues to be subject to regulation by the Central Bank of Brazil despite regulatory changesenacted in 2005 that were designed to reduce the level of government regulation of foreign currency transactions. The purchase of currency for repatriation ofcapital invested in Brazil and for payment of dividends to foreign stockholders of Brazilian companies may only be made if the original investment offoreign capital and capital increases were registered with the Brazilian Central Bank. Nextel Brazil has registered substantially all of its investments with theBrazilian Central Bank.7 Brazilian law provides that the Brazilian government may, for a limited period of time, impose restrictions on the remittance by Brazilian companies toforeign investors of the proceeds of investments in Brazil whenever there is a material imbalance or a serious risk of a material imbalance in Brazil’s balanceof payments. The Brazilian government may also impose restrictions on the conversion of Brazilian currency into foreign currency.EmployeesAs of December 31, 2017, we had 2,288 employees, of which 2,273 were employees of Nextel Brazil. Nextel Brazil is a party to a legally mandatedcollective bargaining agreement that covers most of its employees and expires on August 31, 2018. NII Holdings is not a party to any collective bargainingagreement. 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 ChartersWe 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 ofthe 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 tothese reports filed with or furnished to the SEC under the Securities Exchange Act of 1934, as amended, through the “investor relations” section of ourwebsite. 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 andprinted 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 thefollowing committees of our Board of Directors: the Audit Committee, the Compensation Committee, and the Corporate Governance and NominatingCommittee. The committee charters may be viewed free of charge on the Investor Relations link of our website at the following address: www.nii.com. Youmay obtain copies of the committee charters and the Code of Conduct and Business Ethics free of charge by writing to: NII Holdings Investor Relations,12110 Sunset Hills Road, Suite 600, Reston, Virginia 20190. If a provision of our Code of Conduct and Business Ethics required under the Nasdaq GlobalSelect Market corporate governance standards is materially modified, or if a waiver of our Code of Conduct and Business Ethics is granted to a director orexecutive 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 ofDirectors or the Audit Committee may consider a waiver of the Code of Business Conduct and Ethics for an executive officer or director.8 Item 1A.Risk FactorsInvestors should be aware that we and our business are subject to various risks, including the risks described below. Our business, financial condition orresults 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 theserisks, and investors may lose all or part of any investment. Our actual results could differ materially from those anticipated in any forward-looking statementsthat 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 wecurrently deem immaterial may also impair our business and operations.Risks Relating to Our Business and Results1.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 workingcapital with cash on hand and through the recovery of amounts held in escrow.Our free cash flow was negative in 2016 and 2017, and based on our current plans, we expect our free cash flow to remain negative through at least2018. Our current plans are based on a number of key assumptions relating to, among other things, our ability to manage our capital and operating expensesand 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 negativefor 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 thefuture.Our current sources of funding include our cash and short-term investments, cash held in escrow to secure our indemnification obligations inconnection with the sale of Nextel Mexico, and cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy ourWCDMA spectrum in Brazil. We recovered substantially all of our cash pledged to secure performance bonds in January 2018.Based on the challenging competitive environment in Brazil that we anticipate will continue, as well as the loss of revenues associated with theshutdown of our iDEN business, we expect that our cash flow from operations will be negative in 2018. In addition, we expect that our capital expendituresfor 2018 will be at similar levels to those experienced in 2017. If we do not execute on our business plan, we may need to raise incremental capital to fundour business plan. Furthermore, if the ultimate amount recovered from our cash held in escrow does not meet our current forecasted amount or is delayed for asignificant amount of time, we would need to obtain additional funding and/or significantly reduce our planned spending to further preserve our liquidity. Ifwe cannot obtain access to a significant portion of the escrowed funds as anticipated in our business plan and execute on our business plan, or obtain suitablefinancing if and when it is required, our results of operations and liquidity would be negatively impacted, and we may be unable to settle our obligations asthey come due.2.If we are not able to compete effectively in the highly competitive wireless communications industry, our future growth and operating results willsuffer.Our business involves selling wireless communications services to subscribers, and as a result, our economic success is based on our ability to attractnew subscribers and retain current subscribers. Our success will depend on Nextel Brazil's ability to compete effectively with other telecommunicationsservices providers, including other wireless telecommunications companies, internet and cable service providers and providers of fixed wireline services, inBrazil. Our ability to compete successfully will depend on our ability to anticipate and respond to various competitive factors affecting thetelecommunications industry in Brazil, including the availability of new services, features and technologies; changes in consumer preferences, demographictrends and economic conditions; our ability to fund our operations; and our competitors' pricing strategies.Over the past two years, our results of operations, including our operating revenues and operating cash flows, have been negatively affected by anumber of factors, including significant deterioration in economic conditions in Brazil that have recently begun a slow recovery, increased competitivepressure, the overall depreciation of the value of the Brazilian real relative to the U.S. dollar from 2015 to 2016, and the decline in our iDEN subscriber baseresulting from the limited digital services available on our legacy iDEN network. These and other factors resulted in a reduction in our subscriber growth andrevenues at a time when our costs reflected the operation of two networks and had a significant negative impact on our results and our ability to grow ourrevenue base to a level sufficient to reach the scale required to generate positive operating income.9 We believe that the wireless communications industry in Brazil has been and will continue to be characterized by intense competition on the basis ofprice; 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 havebeen able to charge for services in Brazil have declined as a result of intensified price competition, including the introduction by our competitors ofaggressive pricing promotions, such as plans that allow shared minutes between groups of callers and even more aggressive pricing plans that provide moreservices for lower rates than the plans we offer, which together with the impact of deteriorating economic conditions, reduced the number of new subscriberswe added to our network in 2016 and 2017. This increased competition may continue to affect our ability to attract and retain subscribers in the future, whichcould impact our ability to execute on our business plan and negatively impact our operating results.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 retaincustomers, 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 thefactors contributing to this competitive environment include the current economic environment in Brazil; a higher relative penetration of wireless servicescompared to historic levels, which drives more aggressive competition as competitors seek to attract and retain customers that support the growth of theirbusinesses 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 andcommunications industries to continue as companies respond to the need for cost reduction and additional spectrum. This trend may result in the creation oflarger and more efficient competitors with greater financial, technical, promotional and other resources to compete with our businesses. In addition, as wecontinue to pursue our plans to expand our marketing and sales focus on consumers, we will be increasingly seeking to attract customers in segments thathave historically been predominantly served by our competitors, many of which are larger companies with more extensive networks, financial resources andbenefits 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 productsand 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 beenimplemented 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 theprices we can charge for our services and for handsets and other devices that we sell in connection with our service offerings. These developments and actionsby our competitors could continue to negatively impact our ARPU, our operating results and our ability to attract and retain customers. If we are unable torespond to competition and compensate for declining prices by adding new customers, increasing usage and offering new services, our revenues andprofitability could continue to decline.10 b.Competition and technological changes in the market for wireless services, including competition driven by our competitors' deployment of long-termevolution or other advanced technologies, could negatively affect our average revenue per subscriber, customer turnover, operating costs and ourability to attract new subscribers, resulting in adverse effects on our revenues, future cash flows, growth and profitability. If we do not keep pace withrapid 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 attractand retain customers.The wireless telecommunications industry is experiencing significant technological change. Spending by our competitors on new wireless services andnetwork improvements could enable them to obtain a competitive advantage with new technologies or enhancements that we do not offer. Rapid change intechnology may lead to the development of wireless communications technologies that support products or services that consumers prefer over the productsor 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 notbe able to compete effectively and could lose subscribers to our competitors.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 orupgraded networks that use WCDMA and/or LTE technology and offer services that use high speed data transmission capabilities, including internet accessand video telephony. These and other future technological advancements may enable competitors to offer features or services we cannot provide or exceedthe quality of services we offer, thereby making our services less competitive. In addition, we may not be able to accurately predict technological trends orthe 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 implementationand 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, ifcertain 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 usedto support LTE network deployments elsewhere in the world including in the United States. Accordingly, it may be necessary to seek regulatory changes andto 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 offerfor 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 adverselyaffected.11 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 WCDMAnetwork require significant data capacity, and this capacity demand has made it necessary for us to obtain wireline or other connecting circuits betweenelements of our network such as switches and transmitter and receiver sites that are capable of transporting a significantly higher volume of data traffic. Insome instances, the availability of those higher capacity circuits is limited, and in many cases, our access to those circuits is controlled by entities that areaffiliated with our competitors. Similarly, we have entered into roaming arrangements with one of our competitors that allow us to expand the coverage of ourWCDMA network in Brazil by allowing our subscribers to roam on that competitor's network in areas outside our coverage area. Likewise, we have enteredinto a 10-year radio access network, or RAN, sharing agreement with the same competitor under which we are permitted to use its tower and equipmentinfrastructure to transmit telecommunications signals on Nextel Brazil's spectrum. As a result, we are dependent on entities that are or are affiliated with ourcompetitors to provide us with the data transport services needed to support our networks and services, roaming services and infrastructure that enhance ourcoverage area. Our ability to offer services and our results of operations could be adversely affected if those entities were to allocate limited transport ornetwork capacity to other customers including their wireless affiliates or otherwise make it more difficult for us to obtain the necessary transport and roamingcapacity 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 ofweaker economic conditions and a more competitive sales environment in Brazil. In addition, there has been a significant increase in our customer turnoverrate for subscribers to services on our iDEN network as customers increasingly prefer services that are supported by high speed data capabilities includingservices on smartphones. Likewise, WCDMA subscriber turnover increased significantly as a result of more intense competition in the wireless market and theeconomic factors discussed above.In addition, we have broadened our target market to include customers that have typically demonstrated a willingness to change service providers morefrequently and have increased our usage of control plan payment terms as part of our service plans in order to attract more price sensitive customers. Theseand other changes in our marketing strategies and the types of customers we target have recently had a negative impact on our consolidated customerturnover rate and could continue to have that impact in the future. Subscriber losses adversely affect our business and results of operations because theselosses result in lost revenues and cash flow, drive higher bad debt expenses and require us to attract replacement customers and incur the related salescommissions and other costs. Although attracting new subscribers and retaining existing subscribers are both important to the financial viability of ourbusiness, there is an added focus on retaining existing subscribers because the average cost of acquiring a new subscriber is higher. Accordingly, increasedlevels 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 ratesufficient to offset those deactivations. If we experience increases in our customer turnover rate, 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 theoperational performance and reliability of these networks. We may have difficulty attracting and retaining customers if: we are unable to satisfactorilyaddress and resolve performance or other transmission quality issues as they arise; these issues limit our ability to deploy or expand our network capacity ascurrently planned; or these issues place us at a competitive disadvantage to other wireless providers.g.Customer concerns about our financial condition and ability to implement our business plan, including our network development and deploymentefforts, 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 areaware 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 beunable to continue to provide service to them at a quality level that meets their needs, customer deactivations could increase and new subscribers coulddecrease. We assume that customers will find our services attractive and that we will be able to increase our subscriber base. However, given the factors thathave negatively affected our business and the difficulties associated with predicting our ability to overcome these factors, there can be no assurance thatthese assumptions will prove to be correct. Increases in customer deactivations and decreases in new12 subscribers would adversely affect our revenues and our ability to generate the cash needed to fund our business and meet our other obligations.3.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 inBrazil will have a more significant impact on our operating results than has been the case historically when we held operations in multiple Latin Americanmarkets. 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 increasedvolatility 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 inour business. In addition, all of our outstanding debt is owed by Nextel Brazil, and 36% of the principal amount of our total debt outstanding is denominatedin 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 ouroperating results because we generate nearly all of our revenues in Brazilian reais, but we pay for some of our operating expenses and capital expenditures inU.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 inreductions 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 hedgingarrangements to mitigate short-term volatility in foreign exchange rates, but have not hedged against long-term movements in foreign exchange rates becausethe alternatives currently available for hedging against those movements are limited and costly. As a result, if the value of the Brazilian real continues todepreciate 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 beadversely affected.b.We face economic and political risks operating in Brazil, which may limit our ability to implement our strategy and could negatively impact ourfinancial 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 economiccycles. Recently, Brazil has experienced one of the worst economic recessions in its history. As a result, the economic environment in Brazil has beenimpacted by years of 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 have affected the wireless telecommunications industry in Brazil, leading to lower customercredit and pressure on customer demand, pricing and customer turnover, and negatively impacting our ability to attract and retain subscribers. It is estimatedthat Brazil's GDP fell about 3% from 2015 to 2016, but improved by about 1% in 2017 compared to 2016. Brazil's unemployment rate was about 11% at theend of 2016 and reached the highest it had been in decades at 12% at the end of 2017. Real wages in Brazil fell in the first half of 2017, but grew steadily inthe second half of 2017. If the current economic conditions worsen, the economic environment in Brazil may negatively impact our ability to meet ourbusiness plan.In addition, in some instances, the economy in Brazil has also been negatively affected by other factors, including volatile political conditions. We areunable to predict the impact that local or national elections and the associated transfer of power from incumbent officials or political parties to newly electedofficials or parties may have on the local economy or the growth and development of the local telecommunications industry. Changes in leadership or in theruling 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 expectpolitical, economic and social conditions in Brazil to affect our business, including our access to capital markets to obtain funding needed for our business orto refinance our existing indebtedness.13 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 ourgrowth 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 topenalties 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 CorruptPractices Act, or the FCPA. The FCPA prohibits us from providing anything of value to foreign officials for the purpose of influencing official decisions orobtaining or retaining business. Our employees and agents interact with government officials on our behalf, including interactions necessary to obtainlicenses and other regulatory approvals necessary to operate our business and through contracts to provide wireless service to government entities, creating arisk that actions may occur that could violate the FCPA. Although we have implemented policies and procedures designed to ensure compliance with locallaws and regulations as well as U.S. laws and regulations, including the FCPA, there can be no assurance that all of our employees, consultants, contractorsand 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, couldhave a material adverse effect on our business.In addition, in Brazil, government regulatory agencies regulate the licensing, construction, acquisition, ownership and operation of our wirelesscommunications 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 ouroperations by increasing our costs, reducing our revenues or making it more difficult for us to compete. In order to maintain our licenses, we are required touse the related spectrum in an efficient manner. In connection with the shutdown of our iDEN network, we believe we have a plan to meet our spectrum userequirements for the 800 MHz spectrum underlying that network. If ANATEL does not agree that we are meeting our requirements, we could be required toreturn our 800 MHz spectrum before its expiration. In addition, ANATEL is considering pricing for a conversion of our 800 MHz spectrum from a trunkinglicense for radio services as private systems to public systems. If we are unwilling or unable to pay the conversion price set by ANATEL, we will be unable torenew the spectrum licenses for our 800 MHz spectrum, if a renewal becomes available, and could be subject to forfeiture of this spectrum. Our business maybe 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 chargesimposed for the completion of those calls;•establish restrictions that limit or otherwise affect the deployment of transmitter and receiver sites needed to support the coverage and capacity ofour networks;•establish minimum network construction, coverage or quality of service obligations that can result in increased capital investments or require otherchanges 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' voicequality, customer complaints, call failure rates, capacity to handle call traffic levels in peak calling periods and failed interconnection of calls, which couldpotentially increase our operating costs and affect rates charged to subscribers. In addition, regulations in Brazil permit third parties, including ourcompetitors, to challenge our actions or decisions of the regulators that potentially benefit us, such as decisions regarding the allocation and licensing ofspectrum. If our competitors are successful in pursuing claims such as these, or if the regulators in Brazil take actions against us in response to actionsinitiated 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 ournetworks, and therefore impact our business strategies. In some instances, local governments have adopted very stringent rules and regulations related to theplacement and construction of wireless towers, which can significantly impede the planned expansion of our service coverage area or require us to remove ormodify existing towers, which can result in unplanned costs, negatively impact network performance and impose new and onerous taxes and fees.14 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 fromlocations outside Brazil. Network equipment and handsets may be subject to significant import duties and other taxes. Any significant increase in importduties in the future could significantly increase our costs. To the extent we cannot pass these costs on to our customers, our financial results will benegatively 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,increase our tax costs and impact our cash flows.The government in Brazil, including the local municipalities, has increasingly turned to new taxes, as well as aggressive interpretations of current taxlaw, 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 asocial contribution tax, and is subject to various types of non-income related taxes, including value-added tax, excise tax, service tax, importation tax andproperty tax. In addition, the reduction in tax revenues resulting from the economic downturn that has occurred in the last several years has led to proposalsand new laws that increase the taxes imposed on sales of handsets and on telecommunications services. The provisions of new tax laws may attempt toprohibit 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 amountof earnings that we can generate from our services or in some cases may result in operating losses.In addition, Nextel Brazil has received various assessment notices from municipal, state and federal Brazilian authorities asserting deficiencies inpayments related primarily to value-added taxes and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitionsdisputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respectivegovernmental authority. In other cases, Nextel Brazil's petitions have been denied, and Nextel Brazil is currently appealing those decisions. In connectionwith these petitions, Nextel Brazil is regularly required to make a judicial guarantee through a deposit of cash to cover the amount in dispute in order to fileand/or appeal claims. These judicial guarantees are not released until a pending matter is resolved. Future judicial guarantees could be material and couldnegatively impact our cash flows.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.In general, a U.S. corporation may claim a foreign tax credit against its Federal income tax expense for foreign withholding taxes and, under certaincircumstances, 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 orbecause 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 foreigncorporate subsidiaries that are classified as controlled foreign corporations, without regard to whether distributions have been actually received from thesesubsidiaries.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 resolutionin the courts of or through arbitration proceedings in, the countries or regions in which the operations are located. We cannot accurately predict whether theseforums will provide effective and efficient means of resolving disputes that may arise. Even if we are able to obtain a satisfactory decision through arbitrationor 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 alsouncertain.15 4.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 ourfinancial results.Nextel Brazil must connect its telecommunication networks with those of other carriers in order to provide the services we offer. We incur costs relatingto these interconnection arrangements and for local, long distance and data transport services relating to the connection of our transmitter sites and othernetwork 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 fromcharges we are entitled to bill other carriers for terminating calls on our network, but because users of mobile telecommunications services who purchasethose services under contract generally, and our customers in particular, tend to make more calls that terminate on other carriers’ networks and because wehave 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 theinterconnection and transport arrangements, including the rates that we pay, are subject to varying degrees of local regulation, and often require us tonegotiate agreements with the other carriers, most of which are our competitors, in order to provide our services. Our costs relating to these interconnectionand transport arrangements are subject to fluctuation both as a result of changes in regulations and the negotiations with the other carriers. Changes in ourcustomers’ calling patterns that result in more of our customers’ calls terminating on our competitors’ networks and changes in the interconnectionarrangements either as a result of regulatory changes or negotiated terms that are less favorable to us could result in increased costs for the related servicesthat we may not be able to recover through increased revenues, which could adversely impact our financial results.5.We own Nextel Brazil through a partnership with ice group.On June 5, 2017, we and ice group entered into an investment agreement to partner in the ownership of Nextel Brazil. On July 20, 2017, ice groupcompleted its initial investment of $50.0 million in Nextel Holdings, which indirectly owns Nextel Brazil, in exchange for 30% ownership in NextelHoldings. The investment agreement also provided ice group with an option, exercisable on or before November 15, 2017, to invest an additional $150.0million in Nextel Holdings for an additional 30% ownership. ice group did not exercise its option, and on February 27, 2018, we terminated the investmentagreement with ice group, which remains a minority investor in Nextel Brazil.a.Our interests and the interests of our stockholders may not align with the interests of ice group, and actions by ice group could negatively impact ourperformance.ice group currently owns 30% of Nextel Holdings, which indirectly owns Nextel Brazil. Pursuant to our shareholders agreement with ice group, theBoard of Managers of Nextel Holdings is comprised of five members, with three members appointed by us and, after regulatory approval and as long as icegroup maintains at least a 30% stake in Nextel Holdings, two nominees and one observer from ice group. In addition, the shareholders agreement with icegroup provides for certain minority protective rights relating to certain significant actions of Nextel Holdings and Nextel Brazil. Consequently, we and ourstockholders have less influence on the management and policies of Nextel Brazil after ice group's initial investment than we previously had. ice group mayat any time have economic or business interests or goals which are, or which become, inconsistent with the business interests or goals of us and ourstockholders, and could attempt to influence or take actions that are contrary to our requests, policies or objectives. The shareholders agreement remains ineffect, and we intend to continue to meet all of our obligations in the shareholders agreement.In addition, our partnership with ice group carries additional risks, including the possibility that:•we may incur liabilities as a result of an action taken by ice group;•disputes between us and ice group could arise which could distract management from focusing time and efforts on our business, result in an impasseor ultimately in litigation or arbitration or otherwise have a negative influence on our partnership and our ability to successfully operate NextelBrazil; and•the transfer restrictions, rights of first refusal, and “tag along” and “drag along” rights contained in our agreements with ice group could restrict ouror ice group's ability to exit the joint venture if desired or discourage a third party transaction that might be in the best interests of stockholders.Any of the foregoing could have a material adverse effect on our stock price, business and cash flows, financial condition and results of operations.16 b.ice group's second investment in Nextel Holdings was not completed, which could negatively impact us.On July 20, 2017, we and ice group completed ice group's initial $50.0 million investment in Nextel Holdings. In the second stage of the transaction,ice group had an option to invest an additional $150.0 million in Nextel Holdings, which would have increased its ownership to 60%. ice group's option tomake this second investment was discretionary, and it chose not to exercise this option prior to its expiration. ice group's decision not to exercise its optionmay result in various negative consequences, including the potential need to obtain additional funding in the future. If we are unsuccessful in raisingadditional capital, if and when needed, our results of operations and liquidity, as well as our ability to invest in and grow our business, could be negativelyimpacted, which could negatively impact future operating results.In addition, our business may have been adversely affected by the failure to pursue other beneficial opportunities due to the focus of management onour partnership with ice group. We have incurred substantial expenses in connection with the negotiation and completion of the ice group investment, andwe may not realize the full expected benefits of our partnership with ice group. In addition, ice group has a significant influence over Nextel Holdings'operations and certain rights pursuant to the shareholders agreement, which could make it more difficult to pursue another transaction or obtain additionalfunding. ice group's failure to complete the second investment may also result in negative reactions from the financial markets or from our customers, vendorsand employees, which could have a material adverse effect on our stock price, business and cash flows, financial condition and results of operations.6.Our failure to maintain effective internal controls over financial reporting may adversely affect the accuracy and timeliness of our financialreporting.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 internalcontrol over financial reporting due to a continuing material weakness in our information and communication process and our control environment. During2017, we did not have a sufficient number of experienced resources at Nextel Brazil, which impacted, among other things, our ability to reach timelyconclusions and validate the completeness and accuracy of information used to support various accounting analyses, which resulted in immaterialmisstatements, some of which were corrected, and control deficiencies across multiple accounts. Management is committed to dedicating the resourcesnecessary to ensure sustained effective control design and operation is achieved, and will continue to work to ensure we maintain sufficient experiencedresources, automate processes, and monitor risks related to new accounting requirements or changes that could place an unmanageable strain on ourresources.Our inability to maintain effective internal control over financial reporting, as described above, combined with issues or delays in implementingimprovements, 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.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 onthese 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 aresult, there may be risks associated with the actions taken by our distributors or the operators of our other retail channels, including potential risks associatedwith the failure of our distributors or other retail channels to follow regulatory requirements. The volume of our new customer additions, our ability to retaincustomers and our profitability could also be adversely affected if these third party dealers or retailers terminate their relationship with us, if there are adversechanges in our relationships with them, if we alter our compensation arrangements with these dealers or retailers or if the financial condition of these dealersor retailers deteriorates.17 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 forfailure to comply with applicable regulations. If Nextel Brazil fails to comply with the terms of its licenses and other regulatory requirements, includinginstallation deadlines and minimum loading or service availability requirements, they could be fined or their licenses could be revoked. We believe thatNextel Brazil is in compliance with the applicable operational requirements of its licenses in all material respects. Further, compliance with theserequirements is a condition for eligibility for license renewal. Most of our wireless communications licenses have fixed terms and are not renewedautomatically. Because governmental authorities have discretion to grant or renew licenses, our licenses may not be renewed or, if renewed, renewal may notbe on acceptable economic terms. In addition, regulations in Brazil permit third parties, including our competitors, to challenge the award and use of ourlicenses. If our competitors are successful in pursuing claims such as these, or if regulators in Brazil take actions modifying or revoking our licenses inresponse 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 andcost structure that are necessary to allow us to pursue our plans to expand both our service offerings and our targeted customer segments, including byimplementing new and more efficient supporting business systems and processes. Our inability to complete these efforts in a timely fashion, or to manage therelated 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 Brazilhas required us to deploy new transmitter and receiver sites in order to meet the expanded coverage and capacity requirements for those networks resultingfrom differences in our commercial strategies, differences in the propagation characteristics of the spectrum bands being used to support our network in Braziland the coverage requirements associated with the spectrum licenses being utilized to support our services. In some areas that we serve, individuals andgovernments 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 to locate and build asignificant number of additional transmitter sites to support our services in coming years will be substantial, and our failure to meet this demand couldadversely 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, softwareapplications and systems intended to enhance our competitiveness both by supporting existing and new services and features, and by reducing the costsassociated with providing those services. Successful deployment and implementation of new services and technology depend, in part, on the willingness andability 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 beable to successfully expand our new network in Brazil as needed or complete the development and deployment of competitive services. Failure tosuccessfully expand our network coverage and capacity and the services we offer could also be expected to result in subscriber dissatisfaction that couldaffect 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 torecover 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 newservices.18 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 network in Brazil, expanding our product andservice offerings and expanding our target customer base. Even if we do expand our business, if we fail to manage our growth effectively, our financial resultscould be adversely affected. Separately, growth may place a strain on our management systems and resources. We must continue to refine and expand ourbusiness 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 resultin 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 theneeds of our customers, as well as to create additional efficiencies and strengthen our internal controls over financial reporting. We may not be able tosuccessfully implement these new systems in an effective or timely manner or we could fail to complete all necessary data reconciliation or other conversioncontrols when implementing the new systems. In addition, we may incur significant increases in costs and encounter extensive delays in the implementationand rollout of these new systems. Failure to effectively implement our new operating systems may adversely affect our results of operations, customerperceptions 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 allocateour human resources optimally or identify and hire qualified employees or retain valued employees. If we are unable to manage our operations, our results ofoperations 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 inLatin 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 ofthe 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 onour operations.11.Our reputation and business could be negatively impacted by cyber security threats and other material disruptions of our wireless networks.Our information technology and other systems, including those of our third party service providers, that maintain and transmit our proprietaryinformation and our subscribers’ information, including credit card information, location data, or other personal information may be compromised by amalicious third party penetration of our network security or impacted by advertent or inadvertent actions or inactions by our employees and agents. As aresult, our subscribers’ information may be lost, disclosed, accessed, used, corrupted, destroyed, or taken without the subscribers’ consent. Cyber attacks, suchas the use of malware, computer viruses, denial of service attacks, or other means for disruption or unauthorized access, have increased in frequency, scope,and potential harm in recent years. We also purchase equipment and software from third parties that could contain software defects, Trojan horses, malware, orother means by which third parties could access our network or the information stored or transmitted on such network or equipment.While to date we have not been subject to cyber attacks or other cyber incidents that, individually or in the aggregate, have been material to ouroperations or financial condition, the preventive actions we take to reduce the risk of cyber incidents and protect our information technology and networksmay not be sufficient to repel a cyber attack in the future. In addition, the costs of such preventative actions may be significant, which may adversely affectour results of operations. While we maintain information security policies and procedures designed to comply with relevant privacy and security laws andrestrictions, any major compromise of our data or network security; failure to prevent or mitigate a loss of our services or network, our proprietaryinformation, or our subscribers’ information; and delays in detecting any such compromise or loss, could disrupt our operations, impact our reputation andsubscribers’ willingness to purchase our service, and subject us to significant additional expenses, including lost revenues from business interruption, ransomand litigation, which could be material.19 In addition to cyber attacks, major equipment failures and the disruption of our wireless networks as a result of natural disasters, severe weather, terroristattacks, acts of war, 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 ofoperations and financial condition. In the past, more stringent network performance standards and reporting obligations have been adopted by thegovernment in Brazil in order to ensure quality of service during unforeseen disturbances. We could be required to make significant investments in ourexisting networks in order to comply with these types of network performance standards. Any of these occurrences could damage our reputation, adverselyimpact subscriber and investor confidence and could negatively impact our results of operations and financial condition.Risks Relating to Our Common Stock12.If our stock price does not remain above $1.00, our common stock could be delisted from The NASDAQ Stock Market, which could have a materialadverse effect on the liquidity of our common stock.On June 14, 2017, we received a notice (the “Notice”) from The NASDAQ Stock Market LLC (“Nasdaq”) indicating that the bid price of our commonstock for the prior 30 consecutive business days had closed below the minimum $1.00 per share required for continued listing on the Nasdaq Global SelectMarket under Nasdaq Listing Rule 5450(a)(1), and we were provided with a grace period of 180 calendar days, or until December 11, 2017, to regaincompliance with the minimum bid price requirement. On December 12, 2017, we received a staff determination letter from Nasdaq indicating that we hadfailed to regain compliance with the minimum closing bid price requirement, that we were not eligible for a second 180-day grace period and that we wouldbe delisted from the Nasdaq Global Select Market. We requested a hearing before a Nasdaq listing qualifications panel, which automatically stayed thedelisting of our common stock pending the issuance of a determination by the panel. At our hearing in February 2018, we were granted an extension throughJune 11, 2018 to regain compliance with the minimum bid share price necessary for continued listing on the Nasdaq Global Select Market, which requires usto maintain a closing bid price of at least $1.00 for a minimum of ten consecutive business days. During the extension, our common stock will continue totrade on the Nasdaq Global Select Market. On March 8, 2018, the closing bid price of our common stock was above $1.00 for the tenth consecutive businessday, and we are now in compliance with all Nasdaq Listing Rules. If we are unable to continue to maintain a closing bid price of at least $1.00, there is a riskthat our common stock could be delisted from Nasdaq, and thereafter trading in our common stock, if any, may be conducted through the over-the-counter orother markets. As a consequence of such delisting, an investor could find it more difficult to dispose of, or to obtain quotations as to the price of, our commonstock. Delisting of our common stock could also result in lower prices per share of our common stock than would otherwise prevail.13.There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of other stockholders.As of February 28, 2018, funds associated with 683 Capital Management, Joseph D. Samberg, Exile Capital Management and Capital World Investorsowned approximately 13.5%, 12.2%, 9.9% and 9.5%, respectively, of our outstanding common stock. Capital World Investors also has certain additionalrights under our registration rights agreement dated June 26, 2015. Circumstances may arise in which these stockholders may have an interest in pursuing orpreventing acquisitions, divestitures or other transactions, including the issuance of additional shares or debt, that, in their judgment, could enhance theirinvestment in us or another company in which they invest. Such transactions might adversely affect us or other holders of our common stock. In addition, oursignificant concentration of share ownership may adversely affect the trading price of our common shares because investors may perceive disadvantages inowning shares in companies with significant stockholders.14.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;20 •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 RegistrationStatement 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 broadmarket and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.15.Certain provisions of our certificate of incorporation and our bylaws may make it difficult for stockholders to change the composition of our Boardand 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 interestsof the Company and our stockholders. The provisions in our Charter and Bylaws include, among other things, those that:•authorize our Board to issue preferred stock and to determine the price and other terms, including preferences and voting rights, of those shareswithout 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 couldenable 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, mayprevent or discourage attempts to remove and replace incumbent directors. These provisions may frustrate or prevent any attempts by our stockholders toreplace or remove our current management by making it more difficult for stockholders to replace members of our Board, which is responsible for appointingthe members of our management.Item 1B.Unresolved Staff CommentsNone.Item 2.PropertiesOur principal executive and administrative offices are located in Reston, Virginia, where we rent temporary office space on a month-to-month basis. Inaddition, Nextel Brazil leases office space in São Paulo and Rio de Janeiro. Nextel Brazil also leases transmitter and receiver sites under various individualsite leases. As of December 31, 2017, Nextel Brazil had 6,871 constructed sites at leased and owned locations, including those constructed for its networks. Inaddition, Nextel Brazil also had 1,970 radio access network, or RAN, sharing sites, 153 global system for mobile, or GSM, sites and 511 indoor sites as ofDecember 31, 2017.21 Item 3.Legal ProceedingsWe 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 orlegal actions will have a material effect on our business, financial condition, results of operations or cash flows. See Note 9 to our consolidated financialstatements at the end of this annual report on Form 10-K for more information.Item 4.Mine Safety DisclosuresNot applicable.22 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities1.Market for Common StockOur common stock trades on the Nasdaq Global Select Market under the trading symbol “NIHD.” The following table sets forth on a per share basis thereported high and low sales prices for our common stock, as reported on the market at the time, for the quarters indicated. Price Range ofCommon Stock High Low2016 First Quarter$5.72 $3.01Second Quarter5.65 2.64Third Quarter3.63 2.05Fourth Quarter3.33 1.702017 First Quarter$3.45 $1.05Second Quarter1.30 0.36Third Quarter0.80 0.40Fourth Quarter0.55 0.222.Number of Stockholders of RecordAs of March 7, 2018, there were approximately 51 holders of record of our common stock, including the Depository Trust Corporation, which acts as aclearinghouse for multiple brokerage and custodial accounts.3.DividendsWe 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 anticipatethat for the foreseeable future any cash flow generated from our operations will be used to invest in our business and operations and to make contractualpayments under our financing 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, 2017:Period Total Number ofShares Purchased Average Price PerShare Total Number of SharesPurchased as Part ofProgram Approximate Dollar Value ofShares that May Yet BePurchased Under the ProgramOctober 1, 2017 - October 31, 2017 78(1) $0.43 78 November 1, 2017 - November 30, 2017 35(1) 0.36 35 December 1, 2017 - December 31, 2017 —(1) — — Total 113(1) 0.41 113 $—(1) Pursuant to a general authorization, which was not publicly announced, whereby we are authorized to repurchase shares of our common stock tosatisfy employee withholding tax obligations related to stock-based compensation.23 Performance GraphThe 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, 2017. This graph also compares our common stock to the cumulative total stockholder return on the Nasdaq 100 Index, thecommon 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 ofthe comparative indices or peer issuers, and that all dividends were reinvested.Index7/6/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016NII Holdings$100.00 $38.57 $29.92 $32.76 $18.84 $19.73 $12.74Nasdaq 100$100.00 $94.73 $104.42 $102.25 $100.44 $111.63 $110.28Oi S.A.$100.00 $42.39 $28.80 $18.64 $23.72 $51.17 $39.81Telefônica Brasil S.A.$100.00 $65.39 $65.22 $90.33 $99.32 $106.84 $96.03Index3/31/2017 6/30/2017 9/30/2017 12/31/2017NII Holdings$7.70 $4.74 $2.73 $2.49Nasdaq 100$124.56 $129.80 $137.35 $146.92Oi S.A.$71.35 $59.62 $65.17 $60.50Telefônica Brasil S.A.$111.43 $104.93 $121.73 $114.9824 Item 6.Selected Financial DataOn September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and Nextel InternationalTelecom, 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 toSeptember 15, 2014, five additional subsidiaries of NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. Werefer to the companies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Nextel Brazil and our previous otheroperating 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 thePlan Debtors and the Official Committee of Unsecured Creditors, dated April 20, 2015. We refer to this plan, as amended, as the Plan of Reorganization. OnJune 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 ourconsolidated 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 relatedto our reorganization under Chapter 11, the Successor Company's financial results are prepared under a new basis of accounting and are not directlycomparable to the Predecessor Company's financial results.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 theconsolidated financial statements and notes thereto in Item 8 of this report and “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” in Item 7 of this report. The selected consolidated financial data presented below includes the results of Nextel Brazil and our corporateheadquarters. In connection with the sale of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru, we have included the results of these formeroperating companies for all periods presented as discontinued operations in the tables below. For more information regarding material uncertainties in ourbusiness, see Note 1 and Note 9 to our consolidated financial statements. Successor Company Predecessor Company Year EndedDecember 31, Year EndedDecember 31, Six MonthsEnded December31, Six MonthsEnded June 30, Year Ended December 31, 2017 2016 2015 2015 2014 2013 (in thousands, except per share data)Consolidated Statement of Operations Data: Operating revenues$869,767 $985,046 $529,434 $683,711 $1,848,954 $2,203,040Impairment, restructuring and other charges$179,727 $1,384,811 $32,308 $36,792 $105,664 $121,578Foreign currency transaction (losses) gains, net$(1,271) $76,615 $(99,737) $(63,948) $(51,149) $(92,456)Net (loss) income from continuing operations$(351,666) $(1,533,879) $(292,491) $1,519,401 $(1,224,671) $(1,200,425)Net (loss) income from continuing operations per commonshare, basic$(3.51) $(15.32) $(2.93) $8.73 $(7.11) $(6.98)Net (loss) income from continuing operations per commonshare, diluted$(3.51) $(15.32) $(2.93) $8.71 $(7.11) $(6.98) Successor Company Predecessor Company December 31, December 31, 2017 2016 2015 2014 2013 (in thousands)Consolidated Balance Sheet Data: Total assets$1,105,098 $1,418,509 $2,729,908 $5,374,034 $8,679,954Long-term debt, including current portion$655,707 $756,316 $665,067 $925,271 $5,298,412Liabilities subject to compromise$— $— $— $4,593,493 $—25 Impairment, Restructuring and Other Charges. During 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that thecarrying value of this segment was not fully recoverable. As a result, we recorded non-cash asset impairment charges of $57.9 million to reduce the carryingvalues of Nextel Brazil's long-lived assets to their respective fair values. In addition, in 2017, Nextel Brazil recognized $70.5 million in restructuring costsprimarily related to future lease costs for certain transmitter and receiver sites in low-usage areas and $34.2 million in restructuring costs related to a changein the scope of its radio access network, or RAN, sharing implementation. During 2016, we reviewed our Nextel Brazil segment for potential impairment anddetermined 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, 2015and the six months ended June 30, 2015, we recognized $32.3 million and $36.8 million, respectively, in impairment, restructuring and other chargesprimarily related to the shutdown or abandonment of certain transmitter and receiver sites in Brazil, retail store closures related to the realignment ofdistribution channels and restructuring charges incurred in connection with the realignment of our organization and staffing structure. During 2014, werecognized $105.7 million in impairment, restructuring and other charges primarily related to the discontinuation of certain projects related to the nextgeneration of our push-to-talk services, restructuring charges incurred in connection with the realignment of our organization and staffing structure, and otherasset impairment charges related to store closures and the shutdown or abandonment of transmitter and receiver sites in Brazil. During 2013, we recognized$121.6 million in impairment, restructuring and other charges primarily related to the discontinuation of our use of software relating to customer relationshipmanagement, the restructuring of certain outsourcing agreements to manage our network infrastructure and restructuring charges incurred in connection withstaff reductions and the realignment of our organization.Foreign Currency Transaction (Losses) Gains, Net. Consolidated foreign currency transaction gains during the year ended December 31, 2016 wereprimarily 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 netliabilities. Consolidated foreign currency transaction losses for each of the remaining periods presented primarily relate to the impact of the depreciation inthe value of the Brazilian real relative to the U.S. dollar on Nextel Brazil's assets and liabilities. See “Critical Accounting Policies and Estimates — ForeignCurrency.” for more information.Net (Loss) Income From Continuing Operations. For the years ended December 31, 2017 and 2016, net loss from continuing operations included the$57.9 million and the $1.34 billion non-cash asset impairment charges, respectively, to reduce the carrying values of Nextel Brazil's long-lived assets to theirrespective fair values discussed above. For the six months ended June 30, 2015, net income from continuing operations included $1,956.9 million inreorganization items, which represented a $1,775.8 million gain we recognized in connection with the settlement of our liabilities subject to compromiseupon 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 byprofessional fees and other costs incurred in connection with our Chapter 11 filing.26 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsINDEX TO MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONSForward Looking and Cautionary Statements28Introduction29A. Executive Overview29B. Results of Operations331. Year Ended December 31, 2017 vs. Year Ended December 31, 201634a. Consolidated34b. Nextel Brazil36c. Corporate392. Year Ended December 31, 2016 vs. Combined Period Ended December 31, 201540a. Consolidated40b. Nextel Brazil42c. Corporate44C. Liquidity and Capital Resources44D. Future Capital Needs and Resources46E. Effect of Inflation and Foreign Currency Exchange48F. Effect of New Accounting Standards4927 Forward-Looking and Cautionary StatementsThis annual report on Form 10-K may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 andSection 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-lookingstatements. 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 theseforward-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 toplace undue reliance on any forward-looking statements, which speak only as of the date that we make them. Forward-looking statements are based on currentexpectations and assumptions that are subject to significant risks and uncertainties that could cause actual results to differ materially from those in theforward-looking statements. Except as otherwise required by law, we undertake no obligation to publicly release any updates to forward-looking statementsto 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 onour 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 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;•risks associated with our partnership with ice group;•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 environmentthere;•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 relatedcurrency 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 digital two-way mobile data or internet connectivity services in Brazil;•the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our servicedeployment and marketing plans and customer demand;•risks related to the operation and expansion of our network in Brazil, including the potential need for additional funding to support enhancedcoverage and capacity, and the risk that we will not attract enough subscribers to support the related costs of deploying or operating the network;•our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth asnecessary, 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 thecosts 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 ourbusiness;•the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers ofcellular services and personal communications services;•market acceptance of our new service offerings;28 •our ability to successfully wind down our legacy iDEN network in Brazil and migrate our iDEN subscriber base to our WCDMA network;•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 otherreports filed with the SEC.IntroductionThe following is a discussion and analysis of:•our consolidated financial condition as of December 31, 2017 and 2016 and our consolidated results of operations for the years ended December31, 2017 and 2016, for the six-month periods ended December 31, 2015 and June 30, 2015 and for the combined twelve-month period endedDecember 31, 2015; 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 futureperformance.We refer to our majority-owned Brazilian operating company, Nextel Telecomunicações Ltda., as Nextel Brazil.A.Executive OverviewNextel Brazil Business Overview. We provide wireless communication services under the NextelTM brand in Brazil with our principal operations locatedin major urban and suburban centers with high population densities and related transportation corridors of that country where there is a concentration ofBrazil’s population and economic activity, including primarily Rio de Janeiro and São Paulo. Nextel Brazil operates a wideband code division multipleaccess, or WCDMA, network, which has been upgraded to offer long-term evolution, or LTE, services in certain areas. Nextel Brazil's network enables us tooffer a wide range of products and services supported by that technology. We are also a party to a roaming agreement that allows us to offer our subscribersnationwide voice and data services outside of our network's footprint. Our target market is individual consumers who use our services to meet bothprofessional and personal needs. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. We believe our targetmarket is attracted to the services and pricing plans we offer, as well as the quality of and data speeds provided by our network.The services we currently offer include:•mobile telephone voice and wireless data services;•international voice and data roaming services;•application-based radio connection; and•value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and internationalWiFi hotspot networks.In September 2017, Nextel Brazil decided to wind down its iDEN operations with a target to cease all iDEN services in mid-2018. As a result, NextelBrazil has provided notice of the eventual shutdown to its remaining iDEN subscribers and is currently working to actively migrate the remainder of itslegacy iDEN subscriber base to its WCDMA network by proactively promoting attractive service offerings. As of December 31, 2017, 11% of our subscriberswere on Nextel Brazil's iDEN network.The majority of our subscribers purchase services from us by acquiring the SIM cards from us separately, and using the SIM cards in handsets that theyacquire from other sources. As of December 31, 2017, Nextel Brazil had about 3.246 million total subscriber units in commercial service, which we estimateto be about 4.2% of total postpaid mobile handsets and other devices in commercial service in Brazil. We refer to these subscriber units in commercial servicecollectively as our subscriber base.Our goal is to grow our subscriber base and revenues by providing differentiated wireless communications services that are valued by our existing andpotential subscribers. We are also striving to manage our capital and operating expenditures in the near term and improve our profitability and cash flow overthe long term. Our strategy for achieving these goals is based on several core principles, including:•offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;29 •continuing to implement cost reduction strategies and redesigning our network architecture in order to lower cash costs per user, outweigh scaledisadvantages, create an agile organization and improve overall profitability;•focusing on higher value customer segments that generate higher ARPU and lower subscriber turnover; and•building on the strength of the unique positioning of the Nextel brand.In addition, as a result of pressure on our capital resources, over the last several years, we have implemented changes in our business to better align ourorganization and costs with our operational and financial results. These changes have included reduced spending on subscriber growth, reductions in capitalexpenditures, significant reductions in our headquarters staff through the reorganization of certain roles and responsibilities between our Brazil and corporateteams, and headcount reductions in Brazil, all of which were designed to reduce costs while maintaining the support necessary to meet our subscribers' needs.Additionally, during 2017, we reached agreement with our bank lenders to obtain amortization and covenant relief.Effective in January 2018, we entered into amendments to Nextel Brazil's equipment financing facility and its bank loans with Brazilian lenders, whichaligned the material financing terms in all three facilities. Among other changes, these amendments provide for the deferral of substantially all principalpayments for the first 48 months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and aholiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. See Note 7 to our consolidated financialstatements for more information on these financing arrangements.In 2018, we expect that projected lower customer turnover will allow us to grow our WCDMA subscriber base to generate higher revenues in the future.We will also continue to focus on opportunities to reduce operating expenses through operational improvements and cost reductions to preserve ourliquidity. See “C. Liquidity and Capital Resources” and “D. Future Capital Needs and Resources” for more information.Partnership Agreement. On June 5, 2017, we and ice group, an international telecommunications company operating primarily in Norway under the“ice.net” brand, along with certain affiliates of ours and ice group, entered into an investment agreement to partner in the ownership of Nextel Brazil. On July20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings S.à r.l., or Nextel Holdings, a newly formed subsidiary of NII thatindirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initial investment, ice group received 50.0 millionshares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of common stock in this entity. The investmentagreement also provided ice group with an option, exercisable on or before November 15, 2017, to invest an additional $150.0 million in Nextel Holdings foran additional 30% ownership. ice group did not exercise its option, and on February 27, 2018, we terminated the investment agreement. Since we continue tohave a controlling interest in Nextel Brazil, we have consolidated this entity and its subsidiaries.Prior to the closing of the initial investment by ice group, we contributed $116.6 million in cash to Nextel Holdings. In connection with and subsequentto the closing of the initial investment, we contributed an additional $56.8 million to Nextel Holdings, representing all of our freely distributable cashoutside of Nextel Brazil, including proceeds released from escrowed funds from the sale of Nextel Mexico received to date, less $50.0 million we retained forour expenses outside of the partnership.Critical Accounting Policies and EstimatesThe preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to makeestimates and judgments that affect the amounts reported in those financial statements and accompanying notes. We consider the accounting policies andestimates addressed below to be the most important to our financial position and results of operations, either because of the significance of the financialstatement item or because they require the exercise of significant judgment and/or use of significant estimates. Although we believe that the estimates we useare 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 current revenue recognition policy does not require the exercise of significant judgment or the use of significantestimates, 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 ouroperating revenues net of value-added taxes, but we include certain revenue-based taxes that are our primary obligation.30 Service revenues primarily consist of fixed monthly access charges. Other components of service revenue include revenues from calling party paysprograms, variable charges for usage in excess of plan limits, long-distance charges and international roaming revenues derived from calls placed by oursubscribers on other carriers’ networks. We recognize service revenue as service is provided, net of credits and adjustments for service discounts. Werecognize excess usage, local, long distance and calling party pays revenue at contractual rates per minute as minutes are used. We record cash received inexcess 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 rental revenues from third party tenants that rent space on our transmitter and receiver sites. We recognize revenuegenerated from our handset maintenance programs on a monthly basis at fixed amounts over the service period. We recognize roaming revenues atcontractual rates per minute as minutes are used. We recognize revenues from third party tenants on a monthly basis based on the terms set by the underlyingagreements.Allowance for Doubtful Accounts. We establish an allowance for doubtful accounts receivable sufficient to cover probable and reasonably estimablelosses. We estimate this allowance based on historical experience, aging of accounts receivable and collections trends. Actual write-offs in the future could beimpacted by general economic and business conditions, as well as fluctuations in subscriber deactivations, that are difficult to predict and therefore maydiffer from our estimates. A 10% increase in our consolidated allowance for doubtful accounts as of December 31, 2017 would have resulted in $4.2 millionof additional bad debt expense for the year ended December 31, 2017.Depreciation of Property, Plant and Equipment. We record our network assets and other improvements that extend the useful lives of the underlyingassets 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 ourimplementation of fresh start accounting. As a result of the application of fresh start accounting in connection with our emergence from Chapter 11 and thenon-cash asset impairment charges we recorded in 2016 and 2017, we adjusted all existing property, plant and equipment to its estimated fair value andrevised the associated depreciable lives. We calculate depreciation using the straight-line method based on estimated useful lives ranging from 3 to 30 yearsfor network equipment, communication towers and network software and 3 to 10 years for software, office equipment, furniture and fixtures, and other, whichincludes 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 thanexpected. We periodically reassess the economic life of these components and make adjustments to their useful lives after considering historical experienceand capacity requirements, consulting with the vendor and assessing new product and market demands and other factors. When our assessment indicates thatthe 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 impactfuture results of operations.Amortization of Intangible Assets. Our intangible assets primarily consist of our telecommunications licenses and our customer relationships. Wecalculate amortization on our licenses using the straight-line method based on estimated useful lives of 26 to 30 years. We calculate amortization on ourcustomer relationships using the straight-line method based on an estimated useful life of 4 years. While the terms of our licenses, including renewals, rangefrom 10 to 40 years, the political and regulatory environment in Brazil is continuously changing and, as a result, the cost of renewing our licenses beyondthat range could be significant. In addition, the wireless telecommunications industry is experiencing significant technological change, and the commerciallife of any particular technology is difficult to predict. In light of these uncertainties, we classify our licenses as definite lived intangible assets. Many of ourlicenses 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 tocomply, 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 paysignificant renewal fees, either of which could have a significant impact on the estimated useful lives of our licenses, which could significantly impact futureresults of operations. As a result of the implementation of fresh start accounting, we revised the remaining estimated useful lives of our licenses to includerenewal 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 carryingamount 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 forthe difference between the estimated fair value and the carrying value of the assets. In 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that the carrying value of this segment was not fullyrecoverable. As a result, in 2017, we recorded non-cash asset impairment charges of $57.9 million to reduce the carrying values of Nextel Brazil's long-livedassets to their respective fair values. We allocated these impairment charges on a pro rata basis between property, plant and equipment and spectrum licenses.31 During 2016, we reviewed our Nextel Brazil segment for potential impairment and determined that the carrying value of our Nextel Brazil segment wasnot 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'slong-lived assets to their respective fair values.Foreign Currency. We translate Nextel Brazil's results of operations from the Brazilian real to the U.S. dollar using average exchange rates for therelevant period. We translate assets and liabilities using the exchange rate in effect at the relevant reporting date. We report the resulting gains or losses fromtranslating foreign currency financial statements as other comprehensive income or loss. Because we translate Nextel Brazil's operations using averageexchange 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 transactiongains or losses. We report the effect of changes in exchange rates on intercompany transactions of a long-term investment nature as part of the cumulativeforeign currency translation adjustment in our consolidated financial statements. The intercompany transactions that, in our view, are of a long-terminvestment nature include certain intercompany loans and advances from our U.S. and Luxembourg subsidiaries to Nextel Brazil. In contrast, we report theeffect of exchange rates on U.S. dollar-denominated intercompany loans and advances to our foreign subsidiaries that are due, or for which repayment isanticipated in the foreseeable future, as foreign currency transaction gains or losses in our consolidated statements of comprehensive loss. As a result, ourdetermination of whether intercompany loans and advances are of a long-term investment nature can have a significant impact on how we report foreigncurrency 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 inaccordance with the Financial Accounting Standards Board’s, or the FASB's, authoritative guidance on accounting for contingencies. We accrue for losscontingencies 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 contingenciesif 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 isonly a remote possibility that the loss will occur. The FASB’s authoritative guidance requires us to make judgments regarding future events, including anassessment 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 theassistance of our legal counsel and in some instances, of third party legal counsel. As a result of the significant judgment required in assessing and estimatingloss contingencies, actual losses realized in future periods could differ significantly from our estimates. We currently estimate the reasonably possible lossesrelated to matters for which we have not accrued liabilities, as they are not deemed probable, to be approximately $760.0 million as of December 31, 2017.Income Taxes. We account for income taxes using the asset and liability method, under which we recognize deferred income taxes for differencesbetween the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax creditcarryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which thosetemporary 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 thatincludes the enactment date. We provide a valuation allowance against deferred tax assets if, based upon the weight of available evidence, we do not believeit 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 othertax deductions. During 2016, we recorded full valuation allowances on the deferred tax assets of Nextel Brazil, our U.S. parent company and subsidiaries andour foreign holding companies due to substantial negative evidence, including the recent history of cumulative losses and the projected losses for 2017 andsubsequent years. As a result, the valuation allowance on our deferred tax assets increased by $1.7 billion during 2016. As of December 31, 2017, wecontinued to maintain full valuation allowances on each of these deferred tax assets. We do not anticipate that we will recognize significant tax benefits withrespect 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 therelevant taxing authorities for various tax years. We regularly assess the potential outcome of current and future examinations in each of the taxingjurisdictions when determining the adequacy of the provision for income taxes. We have only recorded financial statement benefits for tax positions that webelieve reflect the “more-likely-than-not” criteria of the FASB’s authoritative guidance on accounting for uncertainty in income taxes, and we haveestablished income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a taxreserve is established, we adjust it only when there is more information available or when an event occurs necessitating a change. While we believe that theamount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome ofcurrent or future examinations may result in a reduction to the tax benefits previously recorded on our consolidated financial statements or may exceed thecurrent income tax reserves in amounts that could be material.32 On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act.The Tax Act makes broad and complex changes to the U.S. tax code. In connection with this legislation, we have recorded our U.S. deferred tax asset andcorresponding valuation allowance as of December 31, 2017 at the 21% tax rate with no impact to our income tax expense. In addition, we have determinedthat no tax liability needs to be recorded for the one-time transition tax as our international subsidiaries have negative cumulative foreign earnings. We areelecting to treat the tax on global intangible low-taxed income as an expense in the period in which we become liable for this tax and are not currentlyrecording a deferred tax liability for this item. In accordance with Staff Accounting Bulletin, or SAB No. 118, “Income Tax Accounting Implications of theTax Cuts and Jobs Act,” our measurement period remains open with respect to the above items in order to allow us to evaluate all possible impacts ofevolving guidance to be issued by the Internal Revenue Service and the FASB.B.Results of OperationsIn accordance with accounting principles generally accepted in the U.S., we translated the results of operations of our Brazilian operating segmentusing the average exchange rates for the years ended December 31, 2017 and 2016 and for the combined twelve-month period ended December 31, 2015. Thefollowing table presents the average exchange rates we used to translate Nextel Brazil's results of operations, as well as changes from the average exchangerates utilized in prior periods. Successor Company PredecessorCompany Combined Year EndedDecember 31,2017 Year EndedDecember 31,2016 Six MonthsEndedDecember 31,2015 Six MonthsEnded June 30,2015 Year EndedDecember 31,2015 2016 to 2017PercentChange 2015 to 2016PercentChangeBrazilian real3.19 3.49 3.70 2.97 3.33 8.6% (4.8)%The following table presents the currency exchange rates in effect at the end of each of the quarters in 2017 and 2016, as well as at the end of 2015. Ifthe value of the exchange rate of the Brazilian real depreciates relative to the U.S. dollar, our future operating results and the values of our assets held in localcurrencies will be adversely affected. Successor Company 2017 2016 2015 December September June March December September June March DecemberBrazilian real3.31 3.17 3.31 3.13 3.26 3.25 3.21 3.56 3.90The percentage amounts presented in the “Actual Change from Previous Year” and the “Constant Currency Change from Previous Year” columns in thetables below reflect the positive (better, or B,) or negative (worse, or W,) growth rates for each of the line items. In addition, to provide transparency intoNextel Brazil's results of operations, we present the year-over-year percentage change in each of the line items presented on a consolidated basis and forNextel Brazil on a constant currency basis in the “Constant Currency Change from Previous Year” columns in the tables below. The comparison of results forthese line items on a constant currency basis shows the impact of changes in foreign currency exchange rates (i) by adjusting the relevant measures for theyear ended December 31, 2016 to amounts that would have resulted if the average foreign currency exchange rates for the year ended December 31, 2016were the same as the average foreign currency exchange rates that were in effect for the year ended December 31, 2017; and (ii) by comparing the constantcurrency financial measures for the year ended December 31, 2016 to the actual financial measures for the year ended December 31, 2017. This constantcurrency comparison applies consistent exchange rates to the operating revenues earned in foreign currencies and to the other components of segmentearnings for the year ended December 31, 2016. The constant currency information reflected in the tables below is not a measurement under accountingprinciples 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 ofoperations.33 1.Year Ended December 31, 2017 vs. Year Ended December 31, 2016a.Consolidated Successor Company Actual Change fromPrevious Year Constant CurrencyChange fromPrevious Year Year EndedDecember 31,2017 Year EndedDecember 31,2016 Dollars B(W)Change B(W) Change (dollars in thousands) Brazil segment (losses) earnings$(31,071) $67,186 $(98,257) (146)% (142)%Corporate segment losses and eliminations(24,174) (36,821) 12,647 34 % 34 %Consolidated segment (losses) earnings(55,245) 30,365 (85,610) (282)% (251)%Impairment, restructuring and other charges(179,727) (1,384,811) 1,205,084 87 % 88 %Depreciation and amortization(37,187) (172,383) 135,196 78 % 80 %Operating loss(272,159) (1,526,829) 1,254,670 82 % 84 %Interest expense, net(118,605) (113,732) (4,873) (4)% 9 %Interest income41,507 37,689 3,818 10 % 1 %Foreign currency transaction (losses) gains, net(1,271) 76,615 (77,886) (102)% (102)%Other expense, net(7,930) (9,711) 1,781 18 % 25 %Loss from continuing operations before reorganization items and income taxbenefit(358,458) (1,535,968) 1,177,510 77 % 79 %Reorganization items445 (803) 1,248 155 % 155 %Income tax benefit6,347 2,892 3,455 119 % 119 %Net loss from continuing operations(351,666) (1,533,879) 1,182,213 77 % 79 %Income (loss) from discontinued operations, net of income taxes1,005 (19,994) 20,999 105 % 105 %Net loss(350,661) (1,553,873) 1,203,212 77 % 79 %Net loss attributable to noncontrolling interest(49,647) — (49,647) NM NMNet loss attributable to NII Holdings$(301,014)$(1,553,873) $1,252,859 81 % 82 %_______________________________________NM-Not MeaningfulWe define segment (losses) earnings as operating loss before depreciation, amortization and impairment, restructuring and other charges. Werecognized consolidated segment losses of $55.2 million in 2017 compared to consolidated segment earnings of $30.4 million in 2016. Our consolidatedresults include the results of operations of our Brazil segment and our corporate operations in the sections that follow.1.Impairment, restructuring and other chargesConsolidated impairment, restructuring and other charges recognized in 2017 included the following:•$70.5 million in restructuring charges, most of which related to future lease costs for certain transmitter and receiver sites that are no longer requiredin Nextel Brazil's business;•a $57.9 million non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values;•$34.2 million in restructuring charges related to a change in the scope of Nextel Brazil's radio access network, or RAN, sharing implementation;•$9.3 million in other non-cash asset impairment charges primarily related to the abandonment of certain transmitter and receiver sites that were nolonger required in Nextel Brazil's business; and•$6.5 million in severance and other related costs resulting from the separation of certain executive level employees in Brazil.34 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 toimpair our trademark intangible asset and other property, plant and equipment at the corporate level. Consolidated impairment, restructuring and othercharges 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 connectionwith 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;•$10.8 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required inNextel 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 ourorganizational structure and reduce general and administrative expenses.The restructuring charges related to future lease costs and Nextel Brazil's RAN sharing agreement discussed above had no impact on our current cashbalances and are not expected to impact our projected future cash flows.2.Depreciation and amortizationThe $135.2 million, or 78%, decrease in consolidated depreciation and amortization on a reported basis, and 80% decrease on a constant currency basis,in 2017 compared to 2016 resulted primarily from the $1.34 billion non-cash asset impairment charge we recognized in 2016.3.Interest expense, netConsolidated net interest expense increased $4.9 million, or 4%, on a reported basis in 2017 compared to 2016 as a result of the impact of theappreciation in the Brazilian real on our reported results. Consolidated net interest expense decreased 9% on a constant currency basis over the same periodprimarily due to principal payments under Nextel Brazil's equipment financing facility and bank loans, partially offset by interest incurred under NextelBrazil's spectrum financing arrangement.4.Foreign currency transaction (losses) gains, netConsolidated foreign currency transaction gains of $76.6 million in 2016 were primarily due to the appreciation in the value of the Brazilian realrelative to the U.S. dollar during the year ended December 31, 2016 on Nextel Brazil's U.S. dollar-denominated net liabilities.35 b.Nextel Brazil Successor Company Actual Change fromPrevious Year ConstantCurrencyChange fromPrevious Year Year EndedDecember 31,2017 % ofNextel Brazil’sOperatingRevenues Year EndedDecember 31,2016 % ofNextel Brazil’sOperatingRevenues Dollars B(W)Change B(W) Change (dollars in thousands) Service and other revenues$847,773 97 % $963,041 98 % $(115,268) (12)% (20)% Handset and accessory revenues21,888 3 % 21,837 2 % 51 — (8)%Cost of handsets and accessories(40,207) (5)% (29,273) (3)% (10,934) (37)% (26)%Handset and accessory net subsidy(18,319) (2)% (7,436) (1)% (10,883) (146)% (125)%Cost of service (exclusive ofdepreciation and amortization)(374,637) (43)% (364,648) (37)% (9,989) (3)% 6 %Selling and marketing expenses(108,490) (13)% (116,538) (12)% 8,048 7 % 15 %General and administrative expenses(377,398) (43)% (407,233) (41)% 29,835 7 % 15 %Segment (losses) earnings$(31,071) (4)% $67,186 7 % $(98,257) (146)% (142)%The average value of the Brazilian real appreciated relative to the U.S. dollar during 2017 by 9% compared to the average value that prevailed during2016. As a result, the components of Nextel Brazil's results of operations for 2017, after translation into U.S. dollars, reflect higher revenues and expenses inU.S. dollars than would have occurred if the Brazilian real had not appreciated relative to the U.S. dollar. To the extent the value of the Brazilian realdepreciates relative to the U.S. dollar, Nextel Brazil's future reported results of operations will be adversely affected.We use the term “subscriber unit,” which we also refer to as a subscriber, to represent an active SIM card, which is the level at which we tracksubscribers. The table below provides an overview of Nextel Brazil's subscriber units in commercial service on both its iDEN and WCDMA networks, as wellas Nextel Brazil's subscriber turnover rates for each of the quarters in 2016 and 2017. We calculate subscriber turnover by dividing subscriber deactivationsfor the period by the average number of subscriber units during that period.36 Three Months Ended March 31, 2016 June 30, 2016 September 30,2016 December 31,2016 March 31, 2017 June 30, 2017 September 30,2017 December 31,2017 (subscribers in thousands)iDEN subscriber units1,552.0 1,315.1 1,127.8 962.1 822.7 686.3 563.3 449.7WCDMA subscriber units2,744.7 2,708.7 2,717.1 2,746.3 2,815.2 2,874.6 2,864.8 2,845.8Total subscriber units incommercial service —beginning of period4,296.7 4,023.8 3,844.9 3,708.4 3,637.9 3,560.9 3,428.1 3,295.5 iDEN net subscriber losses(195.2) (149.7) (130.8) (110.1) (115.4) (103.5) (100.3) (76.6)WCDMA net subscriber (losses)additions(77.7) (29.2) (5.7) 39.6 38.4 (29.3) (32.3) 26.8Total net subscriber losses(272.9) (178.9) (136.5) (70.5) (77.0) (132.8) (132.6) (49.8) Migrations from iDEN toWCDMA41.7 37.6 34.9 29.3 21.0 19.5 13.3 23.5 iDEN subscriber units1,315.1 1,127.8 962.1 822.7 686.3 563.3 449.7 349.6WCDMA subscriber units2,708.7 2,717.1 2,746.3 2,815.2 2,874.6 2,864.8 2,845.8 2,896.1Total subscriber units incommercial service — end ofperiod4,023.8 3,844.9 3,708.4 3,637.9 3,560.9 3,428.1 3,295.5 3,245.7 Total subscriber turnover4.34% 3.99% 3.99% 3.65% 3.71% 3.95% 4.47% 3.83%iDEN subscriber turnover4.80% 4.46% 4.65% 4.71% 5.52% 5.88% 6.89% 6.36%WCDMA subscriber turnover4.10% 3.78% 3.73% 3.31% 3.23% 3.53% 4.04% 3.47%Nextel Brazil's WCDMA subscriber turnover steadily decreased throughout 2016 as a result of various actions Nextel Brazil implemented in an effortto retain existing subscribers. These actions included the implementation of new simplified rate plans, the issuance of loyalty discounts and customer carecredits, more customer self-care offerings, better delivery of service and other actions to improve our customers' overall experience. During the second andthird quarters of 2017, Nextel Brazil's WCDMA subscriber turnover increased as a result of the introduction of unlimited voice offerings by competitors andthe tightening of certain credit and collections policies during the first three quarters of 2017. In addition, the increase in Nextel Brazil's WCDMA subscriberturnover in the third quarter of 2017 was partially caused by a significant number of customer contract expirations. In August 2017, Nextel Brazil beganoffering unlimited voice rate plans in response to the increasingly competitive environment. As a result of its efforts to migrate existing customers to thesetypes of unlimited rate plans, as well as other targeted efforts to promote customer loyalty, Nextel Brazil's WCDMA subscriber turnover declined in thefourth quarter of 2017. We expect that Nextel Brazil's WCDMA subscriber turnover levels will be lower in the first half of 2018 than in the fourth quarter of2017.The following table represents Nextel Brazil's average monthly revenue per subscriber, or ARPU, for subscribers on both its iDEN and WCDMAnetworks for each of the quarters in 2016 and 2017, as well as for the years ended December 31, 2016 and 2017, in both U.S. dollars (US$) and in Brazilianreais (BRL). We calculate service ARPU by dividing service revenues per period by the weighted average number of subscriber units in commercial serviceduring that period. Three Months Ended Year Ended Three Months Ended Year Ended March 31, 2016 June 30,2016 September 30,2016 December 31,2016 December 31,2016 March 31, 2017 June 30, 2017 September 30,2017 December 31,2017 December 31,2017Total serviceARPU (US$)16 19 21 20 19 21 19 19 18 19WCDMA serviceARPU (US$)16 20 21 21 20 22 20 19 18 20iDEN serviceARPU (US$)15 16 19 18 16 17 15 15 14 16 Total serviceARPU (BRL)62 66 67 67 65 65 62 59 57 61WCDMA serviceARPU (BRL)64 70 69 69 68 68 65 61 58 63iDEN serviceARPU (BRL)57 56 60 59 58 54 49 47 47 5037 During the first half of 2017, Nextel Brazil's WCDMA service ARPU in Brazilian reais decreased compared to recent prior quarters as the result of ahigher volume of discounts to retain existing customers and slightly lower loading ARPU in an effort to attract new customers. Nextel Brazil's WCDMAservice ARPU in Brazilian reais continued to decrease in the second half of 2017 due primarily to price deterioration in the overall wireless market and newtypes of unlimited rate plans that were introduced in response to the competitive environment. These types of plans remove many of the usage-based fees thatNextel Brazil charged in previous quarters, which resulted in less revenue per customer. Nextel Brazil is taking actions in an effort to stabilize WCDMAservice ARPU in 2018.Nextel Brazil's iDEN network does not support data services that are competitive with the higher speed data services offered by its competitors or thatare 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 iDENnetwork and offer incentives to transition those subscribers to services on its WCDMA network. Nextel Brazil has experienced net subscriber losses andoverall declines in its iDEN service ARPU. In response to continued subscriber losses on its iDEN network, in September 2017, Nextel Brazil decided to winddown its iDEN operations with a target to cease all iDEN services in mid-2018. As a result, Nextel Brazil has provided notice of the eventual shutdown to itsremaining iDEN subscribers and is actively working to migrate the remainder of its legacy iDEN subscriber base to its WCDMA network by proactivelypromoting attractive service offerings. As a result of this decision, we expect a significant decrease in iDEN-based operating revenue from 2017 to 2018,which will have a negative impact on operating income in 2018.Results Overview.Recently, Brazil has experienced one of the worst economic recessions in its history, characterized by years of negative real wage growth, a net loss ofjobs, higher unemployment and lower consumer confidence. These economic conditions and trends resulted in a decline in the amount of consumerdisposable income that is available to purchase telecommunications services and negatively impacted Nextel Brazil's results of operations for the past twoyears. Although by the end of 2017, Brazil's economy was beginning to recover, the growth is slow with gradual improvements.Nextel Brazil's segment earnings decreased $98.3 million, or 146%, on a reported basis, and 142% on a constant currency basis, in 2017 compared to2016 primarily as a result of a decline in operating revenues, partially offset by lower operating expenses as follows:1.Service and other revenuesService and other revenues decreased $115.3 million, or 12%, on a reported basis, and 20% on a constant currency basis, in 2017 compared to 2016 as aresult of the decline in Nextel Brazil's iDEN subscriber base, as well as the decrease in service ARPU discussed above.Nextel Brazil's WCDMA subscriber base grew from 2.815 million subscribers as of the end of 2016 to 2.896 million subscribers as of the end of 2017.Despite the overall growth in its WCDMA subscriber base, Nextel Brazil's WCDMA-based service and other revenues decreased 6% on a constant currencybasis from 2016 to 2017 due to a decrease in local currency WCDMA service ARPU.Nextel Brazil's iDEN-based service and other revenues decreased $132.2 million, or 47%, from 2016 to 2017, or 52% on a constant currency basis, as aresult of a 58% decrease in Nextel Brazil's iDEN subscriber base from 823 thousand subscribers as of the end of 2016 to 350 thousand subscribers as of theend of 2017 and the decline in local currency iDEN service ARPU.2.Handset and accessory net subsidyNextel Brazil recognized $18.3 million in handset and accessory net subsidy in 2017 compared to $7.4 million in 2016. In 2017 and 2016,approximately 90% of our WCDMA gross subscriber additions utilized existing handsets rather than purchasing a new handset from Nextel Brazil, resultingin relatively low levels of handset and accessory net subsidy.3.Cost of serviceCost of service increased $10.0 million, or 3%, on a reported basis in 2017 compared to 2016. On a constant currency basis, Nextel Brazil's cost ofservice decreased 6% over the same period mainly due to lower transmitter and receiver site rent and maintenance costs, a reduction in the volume of calls onNextel Brazil's iDEN network and lower mobile termination rates, partially offset by expenses related to Nextel Brazil's RAN sharing agreement. Nextel Brazilwill continue to incur rent expenses related to iDEN transmitter and receiver sites subsequent to their shutdown until these leases end.38 4.Selling and marketing expensesSelling and marketing expenses decreased $8.0 million, or 7%, on a reported basis, and 15% on a constant currency basis, in 2017 compared to 2016 asa result of a change in the mix between direct and indirect commissions to less costly channels, as well as lower advertising expenses due to fewer televisionmarketing campaigns.5.General and administrative expensesGeneral and administrative expenses decreased $29.8 million, or 7%, on a reported basis, and 15% on a constant currency basis, in 2017 compared to2016 primarily resulting from a decrease in certain consulting costs.c.Corporate Successor Company Actual Change fromPrevious Year Year EndedDecember 31,2017 Year EndedDecember 31,2016 Dollars B(W) Change (dollars in thousands)Service and other revenues$106 $168 $(62) (37)%Selling, general and administrative expenses(24,280) (36,989) 12,709 34 %Segment losses$(24,174) $(36,821) $12,647 34 %Segment losses decreased $12.6 million, or 34%, in 2017 compared to 2016 primarily due to reductions in payroll costs resulting from fewer generaland administrative personnel following reductions in force and lower information technology costs resulting from the reorganization of certain roles andresponsibilities between our Brazil and corporate teams. General and administrative expenses for 2017 included approximately $2.1 million of transactioncosts related to our partnership agreement with ice group.39 2.Year Ended December 31, 2016 vs. Combined Period Ended December 31, 2015a.Consolidated Successor Company PredecessorCompany Combined Actual Change fromPrevious Year ConstantCurrencyChange fromPrevious Year Year EndedDecember 31,2016 Six Months EndedDecember 31,2015 Six Months EndedJune 30, 2015 Year EndedDecember 31,2015 Dollars B(W) Change B(W) Change (dollars in thousands) Brazil segment earnings (losses)$67,186 $(15,925) $(75,234) $(91,159) $158,345 174 % 177 %Corporate segment losses andeliminations(36,821) (26,100) (37,982) (64,082) 27,261 43 % 43 %Consolidated segment earnings(losses)30,365 (42,025) (113,216) (155,241) 185,606 120 % 120 %Impairment, restructuring andother charges(1,384,811) (32,308) (36,792) (69,100) (1,315,711) NM NMDepreciation and amortization(172,383) (85,364) (153,878) (239,242) 66,859 28 % 25 %Operating loss(1,526,829) (159,697) (303,886) (463,583) (1,063,246) (229)% (242)%Interest expense, net(113,732) (55,563) (82,820) (138,383) 24,651 18 % 13 %Interest income37,689 17,200 15,327 32,527 5,162 16 % 21 %Foreign currency transactiongains (losses), net76,615 (99,737) (63,948) (163,685) 240,300 147 % 149 %Other expense, net(9,711) (1,176) (137) (1,313) (8,398) NM NMLoss from continuing operationsbefore reorganization items andincome tax benefit (provision)(1,535,968) (298,973) (435,464) (734,437) (801,531) (109)% (118)%Reorganization items(803) 1,467 1,956,874 1,958,341 (1,959,144) (100)% (100)%Income tax benefit (provision)2,892 5,015 (2,009) 3,006 (114) (4)% 6 %Net (loss) income fromcontinuing operations(1,533,879) (292,491) 1,519,401 1,226,910 (2,760,789) (225)% (222)%Income (loss) from discontinuedoperations, net of income taxes(19,994) 11,608 221,114 232,722 (252,716) (109)% (109)%Net (loss) income$(1,553,873) $(280,883) $1,740,515 $1,459,632 $(3,013,505) (206)% (204)%_______________________________________NM-Not MeaningfulFor purposes of comparison to the year ended December 31, 2016, we combined the results of operations for the six months ended December 31, 2015with 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 relatedto our reorganization under Chapter 11, the Successor Company's financial results for the six months ended December 31, 2015 are prepared under a newbasis of accounting and are not directly comparable to the Predecessor Company's financial results for the six months ended June 30, 2015. For the samereasons, our results of operations for the combined twelve-month period ended December 31, 2015 are not fully comparable to our results of operations forthe year ended December 31, 2016.We define segment earnings (losses) as operating loss before depreciation, amortization and impairment, restructuring and other charges. Werecognized consolidated segment earnings of $30.4 million in 2016 compared to consolidated segment losses of $155.2 million in the combined periodended December 31, 2015. Our consolidated results include the results of operations of our Brazil segment and our corporate operations in the sections thatfollow.40 1.Impairment, restructuring and other chargesIn 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 toimpair our trademark intangible asset and other property, plant and equipment at the corporate level. Consolidated impairment, restructuring and othercharges 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 connectionwith 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;•$10.8 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required inNextel 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 ourorganizational structure and reduce general and administrative expenses.Consolidated impairment, restructuring and other charges recognized for the combined period ended December 31, 2015 primarily related to thefollowing:•$43.7 million in non-cash asset impairment charges, the majority of which related to the shutdown or abandonment of transmitter and receiver sitesand 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 effortto 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 ourbusiness plan.The restructuring charges related to future lease costs and Nextel Brazil's RAN sharing agreement discussed above had no impact on our cash balances.2.Depreciation and amortizationThe $66.9 million, or 28%, decrease in consolidated depreciation and amortization on a reported basis, and the 25% decrease on a constant currencybasis, 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 werecognized in 2016.3.Interest expense, netConsolidated net interest expense decreased $24.7 million, or 18%, on a reported basis, and 13% on a constant currency basis, for 2016 compared tocombined period ended December 31, 2015 primarily as a result of principal payments related to Nextel Brazil's equipment financing facility and 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), netConsolidated foreign currency transaction gains of $76.6 million during the year ended December 31, 2016 were primarily due to the appreciation inthe 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 theimpact 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 NextelBrazil's U.S. dollar-denominated net liabilities.41 5.Reorganization itemsReorganization items of $1,958.3 million in 2015 were primarily related to the $1,775.8 million gain we recognized in connection with the settlementof 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 startaccounting, partially offset by professional fees and other costs incurred in connection with our Chapter 11 filing.b. Nextel Brazil Successor Company PredecessorCompany Combined Actual Change fromPrevious Year ConstantCurrencyChange fromPrevious Year Year EndedDecember31, 2016 % ofNextel Brazil’sOperatingRevenues Six MonthsEndedDecember 31,2015 Six MonthsEnded June30, 2015 Year EndedDecember 31,2015 % ofNextel Brazil’sOperatingRevenues Dollars B(W)Change B(W) Change (dollars in thousands) Service and otherrevenues$963,041 98 % $501,028 $643,804 $1,144,832 94 % $(181,791) (16)% (12)% Handset and accessoryrevenues21,837 2 % 28,304 39,807 68,111 6 % (46,274) (68)% (66)%Cost of handsets andaccessories(29,273) (3)% (46,904) (121,143) (168,047) (14)% 138,774 83 % 82 %Handset and accessorynet subsidy(7,436) (1)% (18,600) (81,336) (99,936) (8)% 92,500 93 % 92 %Cost of service(exclusive ofdepreciation andamortization)(364,648) (37)% (212,866) (256,153) (469,019) (39)% 104,371 22 % 19 %Selling and marketingexpenses(116,538) (12)% (71,557) (105,357) (176,914) (15)% 60,376 34 % 31 %General andadministrativeexpenses(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 averagevalue that prevailed during the year ended December 31, 2015. As a result, the components of Nextel Brazil's results of operations for 2016, after translationinto 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.Despite decreases in local currency operating revenues, Nextel Brazil recognized segment earnings of $67.2 million, and a segment earnings margin of7%, during 2016 as a result of the execution of initiatives to reduce operating expenses included in our business plan. Nextel Brazil recognized segmentearnings 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 thefollowing:1.Service and other revenuesThe $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, 2015.42 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 of2016. Nextel Brazil has continued to strategically facilitate the migration of iDEN subscribers to its WCDMA network, which resulted in 144 thousandmigrations during 2016. As a result of the increase in its WCDMA service ARPU and the overall growth in its WCDMA subscriber base, Nextel Brazil'sWCDMA-based service and other revenues increased $91.8 million, or 15%, from the combined period ended December 31, 2015 to 2016, or 21% on aconstant 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 thecombined 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 from1.6 million subscribers as of the end of 2015 to 0.8 million subscribers as of the end of 2016.2.Handset and accessory net subsidyThe $92.5 million, or 93%, decrease in handset and accessory net subsidy on a reported basis from the combined period ended December 31, 2015 to2016 is largely related to an increased emphasis on new service plans under which services are provided to new subscribers using their existing handsets, aswell as lower subsidies per handset. As a result of the new service plans, during 2016, 89% of Nextel Brazil's new WCDMA subscribers representedsubscribers who utilized their existing handsets rather than purchasing one from Nextel Brazil compared to 70% during 2015. The decrease in handset andaccessory net subsidy from the combined period ended December 31, 2015 to 2016 was also impacted by a $25.3 million charge that Nextel Brazilrecognized 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 beingrecovered. During 2016, we recovered $20.8 million of these credits. On a constant currency basis, Nextel Brazil's handset and accessory net subsidydecreased 92% in 2016 compared to the combined period ended December 31, 2015.3.Cost of serviceThe $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 theresult 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 mobiletermination 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 theresult 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 inestimate. On a constant currency basis, Nextel Brazil's cost of service decreased 19% from the combined period ended December 31, 2015 to 2016.4.Selling and marketing expensesThe $60.4 million, or 34%, decrease in selling and marketing expenses on a reported basis during 2016 compared to the combined period endedDecember 31, 2015 is primarily due to a reduction in sales and marketing personnel, lower advertising and media expenses resulting from cost reductions andretail 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 alignour costs with our business plan. On a constant currency basis, Nextel Brazil's selling and marketing expenses decreased 31% during 2016 compared to thecombined period ended December 31, 2015.5.General and administrative expensesThe $82.9 million, or 17%, decrease in general and administrative expenses on a reported basis during 2016 compared to the combined period endedDecember 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 callcenters, a reduction in payroll costs resulting from fewer general and administrative personnel following reductions in force and a decrease in bad debtexpense primarily resulting from higher levels in 2015 caused by deteriorating macroeconomic conditions in Brazil. These decreases were partially offset byincreases in certain consulting expenses. On a constant currency basis, Nextel Brazil's general and administrative expenses decreased 13% during 2016compared to the combined period ended December 31, 2015.43 c.Corporate Successor Company PredecessorCompany Combined Actual Change fromPrevious Year Year EndedDecember 31,2016 Six MonthsEndedDecember 31,2015 Six MonthsEnded June 30,2015 Year EndedDecember 31,2015 Dollars B(W) Change (dollars in thousands)Service and other revenues$168 $116 $168 $284 $(116) (41)%Selling, general and administrativeexpenses(36,989) (26,216) (39,071) (65,287) 28,298 43 %Segment losses$(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 inpayroll costs resulting from fewer general and administrative personnel following reductions in force, lower consulting expenses and lower informationtechnology costs.C.Liquidity and Capital ResourcesWe define working capital as total current assets less total current liabilities. As of December 31, 2017, we had working capital of $216.5 millioncompared to a working capital deficit of $119.7 million as of December 31, 2016. The change from a working capital deficit to working capital is the result ofthe classification of the majority of Nextel Brazil's equipment financing facility and bank loans as long-term debt as of December 31, 2017 compared to theentirety of these balances being classified as current portion of long-term debt as of December 31, 2016. As of December 31, 2017, our working capitalincluded $193.9 million in cash and cash equivalents, of which $5.9 million was held by Nextel Brazil in Brazilian reais, and $16.7 million in short-terminvestments, all of which was held in Brazilian reais. In addition, as of December 31, 2017, we had $50.3 million of cash collateral securing certainperformance bonds relating to our obligations to deploy spectrum in Brazil, all of which we recorded as a component of prepaid expenses and other in ourconsolidated balance sheet. In January 2018, we recovered substantially all of the cash securing these performance bonds. As of December 31, 2017, we alsohad $110.0 million in cash held in escrow in connection with the sale of Nextel Mexico, which we classified as a component of prepaid expenses and other inour consolidated balance sheet. We recently reached an agreement with the Mexican tax authorities related to the audits of Nextel Mexico's income taxreturns for the years 2010 and 2011. Specifically, we agreed to incremental tax liabilities of $36.9 million to settle all open issues related to these tax years.We expect to utilize existing tax credits to settle these liabilities, although it is possible that we may need to settle a portion of these liabilities using cashthat is currently held in escrow. We expect to receive a release of some of the $72.4 million in previously escrowed funds related to the 2010 and 2011income tax audits in the next few months.A substantial portion of our U.S. dollar-denominated cash, cash equivalents and short-term investments is held in bank deposits, and our cash, cashequivalents and short-term investments held in Brazilian reais are typically maintained in a combination of money market funds, highly liquid overnightsecurities and fixed income investments. The values of our cash, cash equivalents and short-term investments that are held in Brazilian reais will fluctuate inU.S. dollars based on changes in the exchange rate of the Brazilian real relative to the U.S. dollar.44 Cash Flows Successor Company Predecessor Company Year EndedDecember 31, Year EndedDecember 31, Six MonthsEndedDecember 31, Six MonthsEnded June 30, Combined YearEndedDecember 31, 2017 2016 2015 2015 2015 Cash and cash equivalents, beginning of period$257,380 $342,184 $423,135 $334,194 $334,194Net cash used in operating activities(87,138) (45,205) (78,485) (254,757) (333,242)Net cash provided by (used in) investing activities71,795 54,450 (976) 1,027,821 1,026,845Net cash used in financing activities(48,690) (93,004) (25,068) (778,231) (803,299)Effect of exchange rate changes on cash and cash equivalents541 (1,045) 916 (9,152) (8,236)Change in cash and cash equivalents related to discontinuedoperations— — 22,662 103,260 125,922Cash and cash equivalents, end of period$193,888 $257,380 $342,184 $423,135 $342,184The following is a discussion of the primary sources and uses of cash in our operating, investing and financing activities.We used $87.1 million of cash in our operating activities during 2017 primarily to fund operating losses and interest expense. We used $45.2 million ofcash in our operating activities during 2016, which represents a $288.0 million improvement from the combined year ended December 31, 2015, largelycaused by lower operating losses resulting from cost reduction efforts and the sale of our operations in Mexico, partially offset by a $76.9 million upfrontpayment 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 operatingactivities 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 loweroperating losses in Brazil and cash conservation efforts both in Brazil and at the corporate level.Our investing activities provided us with $71.8 million of cash during 2017 primarily due to $53.5 million in cash released from escrow, $33.5 millionof net cash returned to us from the release of performance bonds and $59.4 million in net proceeds received from maturities of our short-term investments inBrazil, partially offset by $66.5 million in cash capital expenditures.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 releaseof 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 capitalexpenditures and $50.5 million in deposits to secure certain performance bonds relating to our obligations to deploy spectrum in Brazil, offset by net cashproceeds 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 partof 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 ofNextel Mexico 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 ofNextel Mexico were partially offset by $88.5 million in cash capital expenditures and $20.0 million in deposits to secure certain performance bonds relatingto our obligations to deploy spectrum in Brazil.We used $48.7 million of cash in our financing activities during 2017 primarily due to $48.9 million in semi-annual principal payments under NextelBrazil's equipment financing facility and $36.5 million in principal payments under Nextel Brazil's bank loans, partially offset by $50.0 million in cash wereceived in connection with our partnership agreement with ice group.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 NextelBrazil's equipment financing facility and $42.5 million in principal payments under Nextel Brazil's 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 underNextel Brazil's equipment financing facility. We used $778.2 million of cash in our financing activities during the six months ended June 30, 2015, largelydue to $745.2 million of cash distributions paid in settlement of certain claims in connection with our emergence from Chapter 11.45 D.Future Capital Needs and ResourcesCapital Resources. Our ongoing capital resources depend on a variety of factors, including our existing cash, cash equivalents and investmentbalances, cash flows generated by our operating activities, cash that we recover from the amounts held in escrow to secure our indemnification obligations inconnection with the sale of Nextel Mexico, external financial sources, other financing arrangements and the availability of cash proceeds from the sale ofassets.Our ability to generate sufficient net cash from our operating activities in the future is dependent upon, among other things:•the amount of revenue we are able to generate and collect from our subscribers, including our ability to increase the size of our subscriber base;•the amount of operating expenses required to provide our services;•the cost of acquiring and retaining subscribers, including the subsidies we incur to provide handsets to both our new and existing subscribers; and•changes in foreign currency exchange rates.Due to the impact of our recent and projected results of operations and other factors, we expect our access to the capital markets in the near term may belimited. See “— Future Outlook.” for more information.Capital Needs and Contractual Obligations. We currently anticipate that our future capital needs will principally consist of funds required for:•operating expenses and capital expenditures relating to our existing network and the continued deployment of LTE in São Paulo;•payments in connection with previous spectrum purchases and ongoing spectrum license fees;•debt service requirements;•obligations relating to our tower financing arrangements and capital lease obligations;•cash taxes; and•other general corporate expenditures.The following table sets forth the amounts and timing of contractual payments for our most significant contractual obligations determined as ofDecember 31, 2017. The information included in the table below reflects future unconditional payments and is based upon, among other things, the currentterms of the relevant agreements and certain assumptions, such as future interest rates. Most of the amounts included in the table below will be settled inBrazilian 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 Contractual Obligations1 Year 1-3 Years 3-5 Years 5 Years Total (in thousands)Capital leases and tower financing obligations (1)$48,354 $85,916 $84,314 $621,495 $840,079Operating leases (2)127,430 213,871 168,047 151,364 660,712Equipment financing (3)14,421 23,767 79,059 195,953 313,200Bank loans (4)18,684 37,045 82,180 171,917 309,826Spectrum financing (5)— 63,239 74,263 85,288 222,790Purchase obligations (6)57,081 54,224 20,335 — 131,640Other long-term obligations (7)1,682 395 1,490 105,270 108,837Total contractual commitments$267,652 $478,457 $509,688 $1,331,287 $2,587,084_______________________________________(1)These amounts represent principal and interest payments due under our co-location agreements, our tower financing arrangements and our sale oftowers 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.46 (3)These amounts represent principal and interest payments associated with a U.S. dollar-denominated loan agreement with the China DevelopmentBank in Brazil to finance infrastructure equipment, which is guaranteed by Nextel Holdings.(4)These amounts represent principal and interest payments associated with Nextel Brazil's bank loans.(5)These amounts represent principal and interest payments in connection with the amount Nextel Brazil borrowed to acquire 30MHz of spectrum inthe 1.8 GHz band in July 2016.(6)These amounts include maximum contractual purchase obligations under various agreements with our vendors, including the roaming and RANsharing agreements that Nextel Brazil entered into with Telefonica in May 2016. See Note 9 to our consolidated financial statements for moreinformation regarding these agreements.(7)These amounts include our current estimates of asset retirement obligations based on our expectations as to future retirement costs, inflation ratesand timing of retirements, as well as amounts related to our uncertain income tax positions.Capital Expenditures. Our capital expenditures, including capitalized interest, were $51.1 million and $51.3 million for the years ended December 31,2017 and 2016, $72.6 million for the six months ended December 31, 2015 and $69.2 million for the six months ended June 30, 2015. We expect to continueour 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 ourregulatory requirements, as well as the costs associated with the installation of network infrastructure and switching equipment; and•the costs we incur in connection with non-network related information technology projects.Our future capital expenditures may also be affected by future technology improvements, technology choices and our available capital.Future Outlook. As of December 31, 2017, our consolidated sources of funding included $210.6 million in cash and short-term investments, $110.0million in cash held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, and $50.3 million in cash pledged ascollateral to secure certain performance bonds relating to our obligations to deploy our WCDMA spectrum in Brazil. In January 2018, we recoveredsubstantially all of the cash securing these performance bonds. In addition, we recently reached an agreement with the Mexican tax authorities related to theaudits of Nextel Mexico's income tax returns for the years 2010 and 2011. We expect to receive a release of some of the $72.4 million in previously escrowedfunds related to the 2010 and 2011 income tax audits in the next few months. Based on the recent challenging competitive environment in Brazil that weanticipate will continue, as well as the loss of revenues associated with the shutdown of our iDEN business, we expect that our cash flow from operations willbe negative for 2018. We expect our capital expenditures for 2018 to be similar to the levels experienced in 2017.In October 2017, Nextel Brazil entered into an amended and restated equipment financing facility and sixth amendments to its bank loans withBrazilian lenders. In January 2018, we received the final approval from the China Export and Credit Insurance Corporation, or Sinosure, for the amended andrestated equipment financing facility, at which point all of these amendments became effective. As a result of the amendments, the material financing terms inall three facilities were aligned. Among other changes, these amendments provide for the deferral of substantially all principal payments for the first 48months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and a holiday for certain financialcovenant compliance, including the net debt financial covenant, until June 30, 2020. In connection with these amendments, Nextel Brazil granted additionalsecurity interests to each of its lenders in the form of preferential rights to amounts held in certain of Nextel Brazil's bank accounts and pledged incrementalequipment and property to these lenders. In addition, Nextel Brazil will be subject to monthly minimum cash and minimum receivable requirements. NextelHoldings and certain of its subsidiaries have agreed to make equity contributions to Nextel Brazil over the next 48 months.As a result of these amendments, our liquidity forecast has substantially improved, and based on our business plan, we believe our current sources offunding described above will provide us with sufficient liquidity to fund our business through 2019. Our business plan is based on a number of assumptions,including lower subscriber turnover and a decrease in certain costs compared to 2017. In addition, it assumes that we will recover substantially all of theamount held in escrow. If our actual results of operations differ from our business plan and/or the ultimate amount recovered from our cash held in escrowdoes not meet our current forecasted amount or is delayed for a significant amount of time, our business could be negatively impacted, and we would need toobtain additional funding and/or significantly reduce our capital and operational spending to further preserve our liquidity.47 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;•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 liquidityneeds, 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 andassume 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 fromthose now anticipated; or•if other presently unexpected circumstances arise that have a material effect on the cash flow or profitability of our business, such ascontingencies.E.Effect of Inflation and Foreign Currency ExchangeOur net assets are subject to foreign currency exchange risks since they are primarily maintained in Brazilian reais. Additionally, some of NextelBrazil'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 rateof inflation has historically been significantly higher than that of the U.S. We seek to protect our earnings from inflation and possible currency depreciationby periodically adjusting the local currency prices charged by Nextel Brazil for sales of handsets and services to its subscribers. We routinely monitor ourforeign 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 operatingexpenses such as salaries, employee benefits and lease costs are, however, subject to normal inflationary pressures. From time to time, we may experienceprice changes in connection with the purchase of system infrastructure equipment and handsets, but we do not currently believe that any of these pricechanges will be material to our business.48 F.Effect of New Accounting StandardsIn May 2014, the FASB issued Accounting Standards Codification, or ASU, No. 2014-09, “Revenue from Contracts with Customers,” or ASC 606,which provides us with a single revenue recognition model for recognizing revenue from contracts with customers and significantly expands the disclosurerequirements for revenue arrangements. We implemented ASC 606 on January 1, 2018, using the modified retrospective method for all contracts open at thatdate. Prior periods will not be retroactively adjusted. In utilizing the modified retrospective method, we are recognizing the cumulative effect of applying thestandard at the date of initial application, and we will disclose the results under both the new and old standards for the first year after adoption, beginning inthe first quarter of 2018.During the first quarter of 2018, we will record a cumulative adjustment to accumulated deficit that is primarily composed of the following:•a net contract asset related to the portion of our revenues associated with service plans that are sold concurrently with a subsidized handset; and•an asset related to costs incurred to acquire a contract, which primarily relates to the deferral of commission expenses.The future impact of ASC 606 on our revenues primarily relates to contracts with customers where the customer also purchases a subsidized handsetfrom us, which comprises approximately 10% of our new subscribers. A portion of our revenues will be reallocated from service and other revenues to handsetand accessory revenues, and these revenues will be recognized at an earlier point in time compared to our current accounting under the existing authoritativeguidance. The earlier revenue recognition results in the creation of a contract asset for revenues recognized prior to contractual billing. Given currentbusiness trends, we do not expect a material change in total operating revenues.The timing of expense recognition related to certain of our contract acquisition costs, primarily sales commissions, will be impacted as these expenseswill be capitalized and amortized under the new standard rather than being expensed as incurred under existing authoritative guidance. We expensedapproximately $36.6 million of contract acquisition costs during the year ended December 31, 2017.While we have reached conclusions on the key accounting assessments related to adopting this standard, we are continuing to finalize our assessment ofthe resulting quantitative impacts. Based on currently available information, we estimate that our opening accumulated deficit balance on January 1, 2018will decrease by between $20.0 million and $30.0 million, primarily related to the deferral of previously expensed contract acquisition costs. We do notexpect to recognize a material net contract asset.In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which replaces existing leasing rules with a comprehensive leasemeasurement and recognition standard and expanded disclosure requirements. ASU No. 2016-02 will require lessees to recognize most leases on their balancesheet 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 sheetfor 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 lessorshave the option to recognize and measure leases either at the beginning of the earliest period presented or at the beginning of the period of adoption using amodified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. Weexpect that we will record a material amount of lease liabilities as a result of implementing this standard. We are currently evaluating the adoption methods,as well as the additional effects ASU No. 2016-02 will have on our consolidated financial statements.In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which provides guidance regardingcash flow statement classification and presentation of changes in restricted cash. We implemented this new standard on January 1, 2018. The amendments inthis 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 asrestricted cash or restricted cash equivalents. Entities will also be required to reconcile this total to amounts on the consolidated balance sheet and disclosethe nature of the restrictions. We expect that the adoption of this ASU will reclassify changes in restricted cash and other deposits from cash provided by(used in) investing activities to a component of the reconciliation of the beginning of period to end of period change in cash and cash equivalents for allperiods presented.49 Item 7A.Quantitative and Qualitative Disclosures About Market RiskOur revenues are primarily denominated in Brazilian reais, while a portion of our operations are financed in U.S. dollars. As a result, fluctuations in theBrazilian real relative to the U.S. dollar expose us to foreign currency exchange risks. These risks include the impact of translating our local currency reportedearnings into U.S. dollars when the U.S. dollar strengthens against the Brazilian real.We occasionally enter into derivative transactions for hedging or risk management purposes. We have not and will not enter into any derivativetransactions for speculative or profit generating purposes. In the past, Nextel Brazil has entered into hedge agreements to manage foreign currency risk oncertain forecasted transactions. The fair values of these instruments were 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 changesin future cash flows. As of December 31, 2017, approximately 34% of our consolidated principal amount of debt was fixed rate debt, and the remaining 66%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, 2017 forboth our fixed and variable rate debt obligations, all of which have been determined at their fair values. See Note 3 to our consolidated financial statementsfor more information. The changes in the fair values of our debt obligations compared to their fair values as of December 31, 2016 reflect changes inapplicable market conditions and changes in other company-specific conditions during 2017. In addition, the interest rates presented below reflect theimpact of the implementation of fresh start accounting on our capital lease obligations. All of the information in the table is presented in U.S. dollarequivalents, which is our reporting currency. The actual cash flows associated with our debt obligations are denominated in U.S. dollars (US$) and Brazilianreais (BRL). Successor Company Year of Maturity 2017 2016 1 Year 2 Years 3 Years 4 Years 5 Years Thereafter Total Fair Value Total Fair Value (dollars in thousands)Fixed Rate (BRL)$4,478 $24,510 $25,622 $25,589 $24,900 $122,924 $228,023 $218,449 $222,789 $214,164Average InterestRate99.1% 22.7% 25.0% 24.8% 22.9% 49.8% 39.3% 42.1% Variable Rate(US$)$1,200 $1,200 $1,200 $1,200 $57,558 $182,267 $244,625 $237,958 $293,550 $280,893Average InterestRate3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.5% Variable Rate(BRL)$977 $977 $977 $977 $46,853 $148,370 $199,131 $144,301 $237,235 $221,075Average InterestRate8.8% 8.8% 8.8% 8.8% 9.6% 9.6% 9.6% 19.1% Item 8.Financial Statements and Supplementary DataWe 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 alsolisted 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 statementsand 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 DisclosureNot applicable.50 Item 9A.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file orsubmit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods required by theSecurities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to the Company's management, includingour principal executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.As of December 31, 2017, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out underthe supervision and with the participation of our management teams in the United States and Brazil, including our principal executive officer and chieffinancial officer. Based on such evaluation, our principal executive officer and chief financial officer concluded that the design and operation of ourdisclosure controls and procedures were not effective due to a material weakness in the Company's internal control over financial reporting, as describedbelow. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, that creates a reasonable possibilitythat 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 validationsperformed by staff at our headquarters office who were not part of the financial close process in Brazil. Based on these procedures, management believes thatthe consolidated financial statements included in this report have been prepared in accordance with U.S. generally accepted accounting principles, andpresent 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 ReportingOver the course of 2017, we took a number of actions that improved Nextel Brazil’s control environment and information and communicationprocesses.In April 2017 and September 2017, respectively, Nextel Brazil hired a new chief executive officer and a new chief financial officer, both of whom haveenhanced the monitoring of compliance with internal control objectives by formalizing internal control accountability measures across the organization inBrazil. As a result of these and other actions demonstrating an increased commitment to establishing an appropriate tone at the top in Nextel Brazil, webelieve this previously disclosed control deficiency underlying the control environment component of our material weakness has been remediated.To address the previously disclosed deficiencies in our information and communication process, we performed risk assessments and detailedwalkthroughs of the processes related to leases, accrued liabilities and operating expenses. We identified the key information required for these processes anddesigned and implemented controls over such information. The controls we implemented over accrued liabilities and operating expenses operated effectivelyover a sufficient period of time to allow us to conclude we have remediated this component of the material weakness. However, the controls we implementedover information related to leases did not operate consistently, and we have concluded that further improvements will be required to consider these controlseffective.As a result of these and other actions, we observed meaningful decreases in both the number of new deficiencies identified throughout the year and thenumber of unremediated deficiencies at December 31, 2017. In addition, we have implemented and will continue to implement controls related to ouradoption of ASU No. 2014-09, “Revenue from Contracts with Customers,” which is effective as of January 1, 2018. These improvements, some of which wereimplemented in the fourth quarter, as well as the items discussed below, have materially affected, or are reasonably likely to materially affect, the Company'sinternal control over financial reporting.51 Management's Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and Rule15d-15(f) under the Securities Exchange Act of 1934, as amended). Because of its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate 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 establishedin Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on thisassessment, management concluded the Company's internal control over financial reporting was not effective as of December 31, 2017 due to a continuingmaterial weakness in our information and communication process and our control environment. Because our overall control environment lacks automation,we depend on a large number of personnel to validate the completeness and accuracy of information used to support accounting analyses, to revise controlactivities to be responsive to changes in our business and to manage the financial statement close process. During 2017, we did not have a sufficient numberof experienced resources at Nextel Brazil, which impacted, among other things, our ability to reach timely conclusions and validate the completeness andaccuracy of information used to support various accounting analyses, which resulted in immaterial misstatements, some of which were corrected, and controldeficiencies across multiple accounts. These matters create a reasonable possibility that a material misstatement to our consolidated financial statements willnot be prevented or detected on a timely basis.KPMG LLP, an independent registered public accounting firm, has expressed an adverse report on the operating effectiveness of our internal controlover financial reporting as of December 31, 2017. KPMG LLP’s report appears on Page F-3 of this annual report on Form 10-K.Plan for Remediation of Nextel Brazil's Material WeaknessManagement is committed to dedicating the resources necessary to ensure sustained effective control design and operation is achieved, and willcontinue to work to ensure we maintain sufficient experienced resources, automate processes such as lease accounting, and monitor risks related to newaccounting requirements or changes that could place an unmanageable strain on our resources.Item 9B.Other InformationNone.52 PART IIIItem 10.Directors, Executive Officers of the Registrant and Corporate GovernanceThe information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the2018 Annual Meeting of Stockholders, which we expect will be held on May 3, 2018.Item 11.Executive CompensationThe information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the2018 Annual Meeting of Stockholders.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the2018 Annual Meeting of Stockholders.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the2018 Annual Meeting of Stockholders.Item 14.Principal Accountant Fees and ServicesThe information required by this item will be provided by being incorporated herein by reference to the Company’s definitive proxy statement for the2018 Annual Meeting of Stockholders.53 PART IVItem 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 reportare listed below: PageReport of Independent Registered Public Accounting FirmF-2Report of Independent Registered Public Accounting FirmF-3Consolidated Balance Sheets — As of December 31, 2017 and 2016 (Successor Company)F-4Consolidated Statements of Comprehensive (Loss) Income — For the Years Ended December 31, 2017 and 2016 (Successor Company), For the SixMonths Ended December 31, 2015 (Successor Company) and For the Six Months Ended June 30, 2015 (Predecessor Company)F-5Consolidated Statements of Changes in Stockholders' (Deficit) Equity — For the Years Ended December 31, 2017 and 2016 (Successor Company),For the Six Months Ended December 31, 2015 (Successor Company) and For the Six Months Ended June 30, 2015 (Predecessor Company)F-6Consolidated Statements of Cash Flows — For the Years Ended December 31, 2017 and 2016 (Successor Company), For the Six Months EndedDecember 31, 2015 (Successor Company) and For the Six Months Ended June 30, 2015 (Predecessor Company)F-7Notes to Consolidated Financial StatementsF-8(2)Financial Statement Schedules. The following financial statement schedules are filed as part of this report. Schedules other than the scheduleslisted below are omitted because they are either not required or not applicable. PageSchedule I — Condensed Financial Information of RegistrantF-37Schedule II — Valuation and Qualifying AccountsF-41(3)List of Exhibits.54 ExhibitNumber Exhibit Description Form Exhibit Incorporated byReference FilingDate FiledHerewith2.1 First Amended Joint Plan of Reorganization Proposed by the Debtors and Debtors inPossession 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 Holdingsand 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 Agreementwith 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 CingularWireless Services, Inc., NIHD Telecom Holdings, B.V., NIU Holdings LLC,Comunicaciones de Mexico S.A. de C.V., Nextel International (Uruguay) LLC, NIIInternational Telecom S.C.A., NII International Holdings S.à r.l., NII GlobalHoldings, Inc., NII Capital Corp. and NII Holdings. 8-K 10.1 01/26/15 10.4 Amended and Restated Credit Agreement, effective January 5, 2018, among NextelTelecomunicações Ltda., the Guarantors and China Development Bank, as Lender,Administrative Agent and Arranger (Sinosure). 8-K 10.1 11/01/17 10.5 Amended and Restated Credit Agreement, effective January 5, 2018, among NextelTelecomunicações Ltda., the Guarantors and China Development Bank, as Lender,Administrative Agent and Arranger (Non-Sinosure). 8-K 10.2 11/01/17 10.6 Parent Guaranty Agreement, effective January 5, 2018, between Nextel Holdings S.àr.l., as Parent Guarantor, and China Development Bank, as Administrative Agentunder the Sinosure Credit Agreement and Non-Sinosure Credit Agreement. 8-K 10.4 11/01/17 10.7 Shareholder Undertaking Agreement, dated April 20, 2012, between NII Holdings,Inc., and China Development Bank Corporation (as Sinosure Administrative Agentand Non-Sinosure Administrative Agent). 10-K 10.16 03/03/16 10.8 Amendment No. 6 and Consolidation to Bank Credit Certificate, effective January 5,2018, between Nextel Telecomunicações Ltda. and Caixa Economica Federal. 8-K 10.8 11/01/17 10.9 Amendment No. 6 and Consolidation to Bank Credit Certificate, effective January 5,2018, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A. 8-K 10.6 11/01/17 10.10 Investment Agreement, dated June 5, 2017, among NII Holdings, Inc., AINMTHoldings AB and AINMT Brazil Holdings B.V., among others. 8-K 10.1 06/06/17 10.11 Shareholders Agreement in Relation to Nextel Holdings S.à r.l., dated June 5, 2017,among NII International Telecom and AINMT Brazil Holdings B.V., among others. 8-K 10.2 06/06/17 10.12 NII Holdings Severance Plan. 10-K 10.16 02/28/13 10.13(+) NII Holdings Change of Control Severance Plan. 8-K 10.2 12/22/15 10.14(+) NII Holdings 2015 Incentive Compensation Plan. S-8 4.1 06/26/15 10.15(+) Form of Restricted Stock Award Agreement (Employees). 8-K 10.3 06/30/15 10.16(+) Form of Nonqualified Stock Option Agreement (Employees). 8-K 10.4 06/30/15 10.17(+) Form of Director and Executive Officer Indemnification Agreement. 10-K 10.32 03/03/16 55 10.18(+) Form of Separation and Release Agreement for Daniel Freiman and Shana Smith. *10.19(+) Offer Letter for Steven M. Shindler, dated April 30, 2013. 8-K 10.1 05/02/13 10.20(+) Separation and Release Agreement between NII Holdings, Inc. and Steven Shindler,dated July 25, 2017. 8-K 10.1 07/27/17 10.21(+) Employment Agreement between Nextel Telecomunicações Ltda. and RobertoRittes, dated April 24, 2017. 8-K 10.2 07/27/17 10.22(+) First Amendment to Employment Agreement between Nextel TelecomunicaçõesLtda. and Roberto Rittes, dated January 12, 2018. *10.23(+) Letter Agreement between NII Holdings, Inc. and Daniel Freiman, dated July 25,2017. 8-K 10.3 07/27/17 10.24(+) Letter Agreement between NII Holdings, Inc. and Shana Smith, dated July 25, 2017. 8-K 10.4 07/27/17 10.25(+) Employment Agreement between Nextel Telecomunicações Ltda. and FranciscoTosta Valim Filho, dated August 25, 2015. 10-K 10.37 03/03/16 10.26(+) Separation, Release and Other Covenants Agreement between NextelTelecomunicações Ltda. and Francisco Tosta Valim Filho, dated May 23, 2017. 8-K 10.1 05/24/17 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. *99.1 Form of Restated Articles of Association of Nextel Holdings S.à r.l. 8-K 99.1 06/07/17 99.2 Form of Second Restated Articles of Association of Nextel Holdings S.à r.l. 8-K 99.2 06/07/17 101 The following materials from the NII Holdings, Inc. Annual Report on Form 10-Kfor the year ended December 31, 2017 formatted in eXtensible Business ReportingLanguage (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statementsof Comprehensive (Loss) Income, (iii) Consolidated Statements of Changes inStockholders’ (Deficit) Equity, (iv) Consolidated Statements of Cash Flows and(v) Notes to Consolidated Financial Statements. *_______________________________________+Indicates Management Compensatory Plan, Contract or Arrangement.Item 16.Form 10-K Summary.None.56 SIGNATURESPursuant 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 itsbehalf by the undersigned, thereunto duly authorized.NII HOLDINGS, INC. By: /s/ TIMOTHY M. MULIERI Timothy M. MulieriVice President, Corporate Controller(on behalf of the registrant and asPrincipal Accounting Officer)March 15, 2018Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities indicated on March 15, 2018.Signature Title /s/ ROBERTO RITTES Chief Executive Officer, Nextel Brazil (Principal Executive Officer)Roberto Rittes /s/ DANIEL E. FREIMAN Chief Financial Officer (Principal Financial Officer)Daniel E. Freiman /s/ KEVIN L. BEEBE Chairman of the Board of DirectorsKevin L. Beebe /s/ JAMES V. CONTINENZA DirectorJames V. Continenza /s/ HOWARD S. HOFFMANN DirectorHoward S. Hoffmann /s/ RICARDO KNOEPFELMACHER DirectorRicardo Knoepfelmacher /s/ CHRISTOPHER T. ROGERS DirectorChristopher T. Rogers /s/ ROBERT A. SCHRIESHEIM DirectorRobert A. Schriesheim /s/ STEVEN M. SHINDLER DirectorSteven M. Shindler 57 NII HOLDINGS, INC. AND SUBSIDIARIESINDEX TO CONSOLIDATED FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULESREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMF-2REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMF-3CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets — As of December 31, 2017 and 2016 (Successor Company)F-4Consolidated Statements of Comprehensive (Loss) Income — For the Years Ended December 31, 2017 and 2016 (Successor Company), For theSix Months Ended December 31, 2015 (Successor Company) and For the Six Months ended June 30, 2015 (Predecessor Company)F-5Consolidated Statements of Changes in Stockholders' (Deficit) Equity — For the Years Ended December 31, 2017 and 2016 (SuccessorCompany), For the Six Months Ended December 31, 2015 (Successor Company) and For the Six Months Ended June 30, 2015 (PredecessorCompany)F-6Consolidated Statements of Cash Flows — For the Years Ended December 31, 2017 and 2016 (Successor Company), For the Six Months EndedDecember 31, 2015 (Successor Company) and For the Six Months Ended June 30, 2015 (Predecessor Company)F-7Notes to Consolidated Financial StatementsF-8FINANCIAL STATEMENT SCHEDULES Schedule I — Condensed Financial Information of RegistrantF-37Schedule II — Valuation and Qualifying AccountsF-41F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of DirectorsNII Holdings, Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of NII Holdings, Inc. and subsidiaries (the Company) as of December 31, 2017 and 2016(Successor), the related consolidated statements of comprehensive (loss) income, changes in stockholders’ (deficit) equity, and cash flows for the years endedDecember 31, 2017 and 2016 (Successor), for the six-month periods ended December 31, 2015 (Successor) and June 30, 2015 (Predecessor), and the relatednotes and financial statement schedules listed in the accompanying index (collectively, the consolidated financial statements). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016(Successor), and the results of its operations and its cash flows for the years ended December 31, 2017 and 2016, and for the six-month periods endedDecember 31, 2015 (Successor) and June 30, 2015 (Predecessor), in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2018 expressed an adverse opinion on theeffectiveness of the Company’s internal control over financial reporting.Fresh-Start ReportingAs discussed in Note 3 to the consolidated financial statements, on June 26, 2015, the Company satisfied the conditions to emerge from Chapter 11bankruptcy proceedings. Accordingly, the accompanying consolidated financial statements as of and for the years ended December 31, 2017 and 2016(Successor) and for the six-month period ended December 31, 2015 (Successor) have been prepared in accordance with Accounting Standards CodificationTopic 852, Reorganizations. The Company applied fresh-start reporting as of June 30, 2015 and recognized net assets at fair value, resulting in a lack ofcomparability with the consolidated financial statements of the Predecessor.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLPWe have served as the Company's auditor since 2014.McLean, VirginiaMarch 15, 2018F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of DirectorsNII Holdings, Inc.:Opinion on Internal Control Over Financial ReportingWe have audited NII Holdings, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In ouropinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has notmaintained effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of December 31, 2017 and 2016 (Successor), the related consolidated statements of comprehensive (loss) income, changesin stockholders’ (deficit) equity, and cash flows for the years ended December 31, 2017 and 2016 (Successor), for the six-month periods ended December 31,2015 (Successor) and June 30, 2015 (Predecessor), and the related notes and financial statement schedules listed in the accompanying index (collectively, theconsolidated financial statements), and our report dated March 15, 2018 expressed an unqualified opinion on those consolidated financial statements.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weaknessrelated to an insufficient number of experienced resources at Nextel Brazil, which impacted, among other things, the Company's ability to reach timelyconclusions and validate the completeness and accuracy of information used to support accounting analyses across multiple accounts was identified andincluded in management’s assessment. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our auditof the 2017 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ KPMG LLPMcLean, VirginiaMarch 15, 2018F-3 NII HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(in thousands, except par values) Successor Company December 31, 2017 December 31, 2016ASSETSCurrent assets Cash and cash equivalents$193,888 $257,380Short-term investments16,711 73,859Accounts receivable, net of allowance for doubtful accounts of $42,011 and $54,221106,715 153,806Handset and accessory inventory3,163 8,295Prepaid expenses and other254,461 280,145Total current assets574,938 773,485Property, plant and equipment, net117,262 129,475Intangible assets, net194,694 243,681Other assets218,204 271,868Total assets$1,105,098 $1,418,509LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITYCurrent liabilities Accounts payable$42,284 $69,186 Accrued expenses and other300,815 271,899 Deferred revenues7,314 11,614 Current portion of long-term debt7,990 540,474Total current liabilities358,403 893,173Long-term debt647,717 215,842Other long-term liabilities220,925 143,472Total liabilities1,227,045 1,252,487Commitments and contingencies (Note 9) Stockholders’ (deficit) 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, 100,384 shares issued and outstanding — 2017,100,258 shares issued and outstanding — 2016100 100Paid-in capital2,139,299 2,076,612Accumulated deficit(2,135,770) (1,834,756)Accumulated other comprehensive loss(46,903) (75,934)Total NII Holdings stockholders’ (deficit) equity(43,274) 166,022Noncontrolling interest(78,673) —Total (deficit) equity(121,947) 166,022Total liabilities and stockholders’ (deficit) equity$1,105,098 $1,418,509The accompanying notes are an integral part of these consolidated financial statements.F-4 NII HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(in thousands, except per share amounts) Successor Company PredecessorCompany Year Ended December 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015Operating revenues Service and other revenues$847,879 $963,209 $501,130 $643,904Handset and accessory revenues21,888 21,837 28,304 39,807 869,767 985,046 529,434 683,711Operating expenses Cost of service (exclusive of depreciation and amortization included below)374,637 364,648 212,852 256,085Cost of handsets and accessories40,207 29,273 46,904 121,143Selling, general and administrative510,168 560,760 311,703 419,699Impairment, restructuring and other charges179,727 1,384,811 32,308 36,792Depreciation22,192 135,429 64,108 126,789Amortization14,995 36,954 21,256 27,089 1,141,926 2,511,875 689,131 987,597Operating loss(272,159) (1,526,829) (159,697) (303,886)Other (expense) income Interest expense, net(118,605) (113,732) (55,563) (82,820)Interest income41,507 37,689 17,200 15,327Foreign currency transaction (losses) gains, net(1,271) 76,615 (99,737) (63,948)Other expense, net(7,930) (9,711) (1,176) (137) (86,299) (9,139) (139,276) (131,578)Loss from continuing operations before reorganization items and income tax benefit(provision)(358,458) (1,535,968) (298,973) (435,464)Reorganization items (Note 3)445 (803) 1,467 1,956,874Income tax benefit (provision) (Note 11)6,347 2,892 5,015 (2,009)Net (loss) income from continuing operations(351,666) (1,533,879) (292,491) 1,519,401Income (loss) from discontinued operations, net of income taxes(Note 6)1,005 (19,994) 11,608 221,114Net (loss) income(350,661) (1,553,873) (280,883) 1,740,515Net loss attributable to noncontrolling interest(49,647) — — —Net (loss) income attributable to NII Holdings$(301,014) $(1,553,873) $(280,883) $1,740,515 Net (loss) income from continuing operations per common share, basic$(3.51) $(15.32) $(2.93) $8.73Net income (loss) from discontinued operations per common share, basic0.01 (0.20) 0.12 1.27Net (loss) income attributable to NII Holdings per common share, basic$(3.50) $(15.52) $(2.81) $10.00Net (loss) income from continuing operations per common share, diluted$(3.51) $(15.32) $(2.93) $8.71Net income (loss) from discontinued operations per common share, diluted0.01 (0.20) 0.12 1.27Net (loss) income attributable to NII Holdings per common share, diluted$(3.50) $(15.52) $(2.81) $9.98 Weighted average number of common shares outstanding, basic100,332 100,098 100,000 172,363Weighted average number of common shares outstanding, diluted100,332 100,098 100,000 172,691 Comprehensive (loss) income, net of income taxes Foreign currency translation adjustment$7,696 $169,785 $(248,781) $(205,899) Reclassification adjustment for sale of Nextel Argentina, Nextel Mexico and Nextel Chile(Note 6)— — (1,672) 421,953 Other— — 4,734 2,956 Other comprehensive income (loss)7,696 169,785 (245,719) 219,010 Net (loss) income attributable to NII Holdings(301,014) (1,553,873) (280,883) 1,740,515 Total comprehensive (loss) income attributable to NII Holdings$(293,318) $(1,384,088) $(526,602) $1,959,525The accompanying notes are an integral part of these consolidated financial statements.F-5 NII HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY(in thousands) Common Stock Paid-in Capital AccumulatedDeficit Accumulated OtherComprehensive Loss TotalStockholders’(Deficit) Equity NoncontrollingInterest Total (Deficit)Equity Shares Amount Balance, January 1, 2015 —Predecessor Company172,363 $172 $1,517,081 $(2,150,664) $(1,331,353) $(1,964,764) $— $(1,964,764)Net income— — — 1,740,515 — 1,740,515 — 1,740,515Other comprehensive income— — — — 219,010 219,010 — 219,010Share-based compensation activity— — 5,239 — — 5,239 — 5,239Balance, June 30, 2015 — PredecessorCompany172,363 172 1,522,320 (410,149) (1,112,343) — — —Elimination of Predecessor Company'sequity(172,363) (172) (1,522,320) 410,149 1,112,343 — — —Issuance of Successor Company'scommon stock100,000 100 2,067,565 — — 2,067,665 — 2,067,665Balance, July 1, 2015 — SuccessorCompany100,000 100 2,067,565 — — 2,067,665 — 2,067,665Net loss— — — (280,883) — (280,883) — (280,883)Other comprehensive loss— — — — (245,719) (245,719) — (245,719)Share-based compensation activity1 — 2,932 — — 2,932 — 2,932Balance, December 31, 2015 —Successor Company100,001 100 2,070,497 (280,883) (245,719) 1,543,995 — 1,543,995Net loss— — — (1,553,873) — (1,553,873) — (1,553,873)Other comprehensive income— — — — 169,785 169,785 — 169,785Share-based compensation activity257 — 6,115 — — 6,115 — 6,115Balance, December 31, 2016 —Successor Company100,258 100 2,076,612 (1,834,756) (75,934) 166,022 — 166,022Net loss— — — (301,014) — (301,014) (49,647) (350,661)Other comprehensive income— — — — 7,696 7,696 1,604 9,300Share-based compensation activity126 — 4,797 — — 4,797 170 4,967Sale of noncontrolling interest— — 57,890 — 21,335 79,225 (30,800) 48,425Balance, December 31, 2017 —Successor Company100,384 $100 $2,139,299 $(2,135,770) $(46,903) $(43,274) $(78,673) $(121,947)The accompanying notes are an integral part of these consolidated financial statements.F-6 NII HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015Cash flows from operating activities: Net (loss) income$(350,661) $(1,553,873) $(280,883) $1,740,515Adjustments to reconcile net (loss) income to net cash used in operating activities: (Income) loss from discontinued operations(1,005) 19,994 (11,608) (221,114)Amortization of debt (premiums) discounts and financing costs(3,297) (4,570) 181 18,753Depreciation and amortization37,187 172,383 85,364 153,878Provision for losses on accounts receivable76,518 77,883 32,279 65,396Provision for inventory obsolescence1,033 1,731 2,156 —Foreign currency transaction losses (gains), net1,271 (76,615) 99,737 63,948Impairment charges, restructuring charges and losses on disposal of fixed assets68,529 1,352,667 13,354 31,471Deferred income tax (benefit) provision(568) (3,183) (2,513) 905Share-based compensation expense4,967 6,076 2,923 5,239Reorganization items in connection with emergence from Chapter 11— — — (1,775,787)Fresh start adjustments, net— — — (248,709)Other, net2,636 1,898 (3,829) (11,083)Changes in assets and liabilities: Accounts receivable(30,534) (58,951) (38,756) (35,013)Prepaid value-added taxes13,879 15,894 9,311 50,564Handset and accessory inventory4,139 17,273 13,940 7,513Prepaid expenses and other(13,358) 8,903 (21,027) (26,688)Other long-term assets(5,341) (41,447) 20,981 47,253Accrued value-added taxes19,211 (7,565) (285) (7,941)Other long-term liabilities88,460 41,851 23,876 (32,819)Accounts payable, accrued expenses and other(204) (15,554) (46,674) 18,565Total operating cash used in continuing operations(87,138) (45,205) (101,473) (155,154)Total operating cash provided by (used in) discontinued operations— — 22,988 (99,603)Net cash used in operating activities(87,138) (45,205) (78,485) (254,757)Cash flows from investing activities: Capital expenditures(66,536) (61,291) (76,630) (88,485)Purchases of investments(629,364) (1,075,119) (558,883) (757,714)Proceeds from sales of investments688,714 1,102,492 575,838 756,546Purchase of licenses(2,289) (16,936) (4,018) (5,391)Change in restricted cash and other deposits27,516 67,894 (51,235) (57,074)Other, net275 (2,243) 4,697 3,501Total investing cash provided by (used in) continuing operations18,316 14,797 (110,231) (148,617)Total investing cash provided by discontinued operations53,479 39,653 109,255 1,176,438Net cash provided by (used in) investing activities71,795 54,450 (976) 1,027,821Cash flows from financing activities: Proceeds from partnership agreement50,000 — — —Repayments under equipment financing facility and bank loans(85,949) (90,843) (24,452) (124)Repayments under capital leases and other(9,522) (2,161) (616) (1,884)Claims paid to senior noteholders— — — (745,221)Net proceeds from debtor-in-possession loan— — — 340,375Repayment of debtor-in-possession loan— — — (340,375)Other, net(3,219) — — (4,291)Total financing cash used in continuing operations(48,690) (93,004) (25,068) (751,520)Total financing cash used in discontinued operations— — — (26,711)Net cash used in financing activities(48,690) (93,004) (25,068) (778,231)Effect of exchange rate changes on cash and cash equivalents541 (1,045) 916 (9,152)Change in cash and cash equivalents related to discontinued operations— — 22,662 103,260Net (decrease) increase in cash and cash equivalents(63,492) (84,804) (80,951) 88,941Cash and cash equivalents, beginning of period257,380 342,184 423,135 334,194Cash and cash equivalents, end of period$193,888 $257,380 $342,184 $423,135The accompanying notes are an integral part of these consolidated financial statements.F-7NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Summary of OperationsOverview. Unless the context requires otherwise, “NII Holdings, Inc.,” “NII Holdings,” “we,” “our,” “us” and “the Company” refer to the combinedbusinesses of NII Holdings, Inc. and its consolidated subsidiaries. We refer to our majority-owned Brazilian operating company, Nextel TelecomunicaçõesLtda., as Nextel Brazil. Our consolidated results from continuing operations in this annual report on Form 10-K include the results of operations of NextelBrazil and our corporate headquarters.We provide wireless communication services under the NextelTM brand in Brazil with our principal operations located in major urban and suburbancenters with high population densities and related transportation corridors of that country where there is a concentration of Brazil’s population and economicactivity, including primarily Rio de Janeiro and São Paulo. Nextel Brazil operates a wideband code division multiple access, or WCDMA, network, which hasbeen upgraded to offer long-term evolution, or LTE, services in certain areas. Nextel Brazil's network enables us to offer a wide range of products and servicessupported by that technology. We are also a party to a roaming agreement that allows us to offer our subscribers nationwide voice and data services outside ofour network's footprint. Our target market is individual consumers who use our services to meet both professional and personal needs. Our target subscribersgenerally exhibit above average usage, revenue and loyalty characteristics. We believe our target market is attracted to the services and pricing plans weoffer, as well as the quality of and data speeds provided by our network.The services we currently offer include:•mobile telephone voice and wireless data services;•international voice and data roaming services;•application-based radio connection; and•value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and internationalWiFi hotspot networks.In September 2017, Nextel Brazil decided to wind down its integrated digital enhanced network, or iDEN, operations with a target to cease all iDENservices in mid-2018. As a result, Nextel Brazil has provided notice of the eventual shutdown to its remaining iDEN subscribers and is currently working toactively migrate the remainder of its legacy iDEN subscriber base to its WCDMA network by proactively promoting attractive service offerings. As ofDecember 31, 2017, 11% of our subscribers were on Nextel Brazil's iDEN network.As of December 31, 2017, Nextel Brazil had about 3.246 million total subscriber units in commercial service.Removal of Going Concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplatesthe realization of assets and satisfaction of liabilities in the normal course of business.Prior to the fourth quarter of 2017, and as previously disclosed, there was substantial doubt about whether our results of operations would provide uswith sufficient liquidity to settle our obligations as they became due, principally the amounts due under Nextel Brazil's equipment financing facility and itsbank loans.Effective in January 2018, Nextel Brazil entered into an amended and restated equipment financing facility and sixth amendments to its bank loanswith Brazilian lenders. Among other changes, these amendments provide for the deferral of substantially all principal payments for the first 48 months fromthe date of effectiveness, an extension of the loan maturity dates to 98 months from the date of effectiveness, and a holiday for certain financial covenantcompliance, including the net debt financial covenant, until June 30, 2020.As of December 31, 2017, our consolidated sources of funding included $210.6 million in cash and short-term investments, $110.0 million in cash heldin escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, and $50.3 million in cash pledged as collateral to securecertain performance bonds relating to our obligations to deploy our WCDMA spectrum in Brazil. In January 2018, we recovered substantially all of the cashsecuring these performance bonds.As a result of these amendments, our liquidity forecast has substantially improved, and based on our business plan, we believe our current sources offunding described above will provide us with sufficient liquidity to fund our business through 2019. As a result, we believe that there is no longer substantialdoubt surrounding our ability to continue as a going concern.F-8NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOur business plan is based on a number of assumptions, including lower subscriber turnover and a decrease in certain costs compared to 2017. Inaddition, it assumes that we will recover substantially all of the amount held in escrow. If our actual results of operations differ from our business plan and/orthe ultimate amount recovered from our cash held in escrow does not meet our current forecasted amount or is delayed for a significant amount of time, ourbusiness could be negatively impacted, and we would need to obtain additional funding and/or significantly reduce our planned capital and operationalspending to further preserve our liquidity.Partnership Agreement. On June 5, 2017, we and AINMT Holdings AB, or ice group, an international telecommunications company operatingprimarily in Norway under the “ice.net” brand, along with certain affiliates of ours and ice group, entered into an investment agreement to partner in theownership of Nextel Brazil. On July 20, 2017, ice group completed its initial investment of $50.0 million in Nextel Holdings S. à r.l., or Nextel Holdings, anewly formed subsidiary of NII that indirectly owns Nextel Brazil, in exchange for 30% ownership in Nextel Holdings. In connection with the initialinvestment, ice group received 50.0 million shares of cumulative preferred voting stock in Nextel Holdings, and we received 116.6 million shares of commonstock in this entity. The investment agreement also provided ice group with an option, exercisable on or before November 15, 2017, to invest an additional$150.0 million in Nextel Holdings for an additional 30% ownership. ice group did not exercise its option, and on February 27, 2018, we terminated theinvestment agreement. Since we continue to have a controlling interest in Nextel Brazil, we have consolidated this entity and its subsidiaries.Prior to the closing of the initial investment by ice group, we contributed $116.6 million in cash to Nextel Holdings. In connection with and subsequentto the closing of the initial investment, we contributed an additional $56.8 million to Nextel Holdings, representing all of our freely distributable cashoutside of Nextel Brazil, including proceeds released from escrowed funds from the sale of Nextel Mexico received to date, less $50.0 million we retained forour expenses outside of the partnership.2. Summary of Significant Accounting PoliciesReorganization Accounting. In accordance with the requirements of reorganization accounting, NII Holdings adopted the provisions of fresh startaccounting as of June 30, 2015 and became a new entity for financial reporting purposes. References to the “Successor Company” relate to NII Holdings onor subsequent to June 30, 2015. References to the “Predecessor Company” relate to NII Holdings prior to June 30, 2015. See Note 3 for more informationregarding the implementation of fresh start accounting.Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States, or the U.S.,requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involvedin making estimates, actual results to be reported in future periods could differ from our estimates.Principles of Consolidation. The consolidated financial statements include the accounts of NII Holdings and our subsidiaries. Our decision toconsolidate an entity is based on our control of the entity through direct and indirect majority interest in the entity. We eliminate all intercompanytransactions, including intercompany profits and losses, in consolidation.Concentrations of Risk. Substantially all of our revenues are generated from our operations located in Brazil. Regulatory entities in Brazil regulate thelicensing, construction, acquisition, ownership and operation of our networks, and certain other aspects of our business, including some of the rates we chargeour subscribers. Changes in the current telecommunications statutes or regulations in Brazil could adversely affect our business. In addition, as ofDecember 31, 2017, 87% of our total assets were owned by Nextel Brazil. Political, financial and economic developments in Brazil could impact therecoverability of our assets.Financial instruments that potentially subject us to significant amounts of credit risk consist of cash, cash equivalents, short-term investments andaccounts receivable. Our cash and cash equivalents are deposited with high-quality financial institutions. At times, we maintain cash balances in excess ofFederal Deposit Insurance Corporation (or the foreign country equivalent institution) limits. Our short-term investments are composed of certain investmentsmade by Nextel Brazil. See Note 8 for further information. Our accounts receivable are generally unsecured. We routinely assess the credit worthiness of oursubscribers and maintain allowances for probable losses, where necessary.Foreign Currency. We translate Nextel Brazil's results of operations from Brazilian reais to U.S. dollars using average exchange rates during therelevant period, while we translate assets and liabilities at the exchange rate in effect at the reporting date. We translate equity balances at historical rates. Wereport the resulting gains or losses from translating foreign currency financial statements as other comprehensive income or loss.F-9NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn general, monetary assets and liabilities held by Nextel Brazil that are denominated in U.S. dollars give rise to realized and unrealized foreigncurrency transaction gains and losses, which we record in our consolidated statement of comprehensive (loss) income as foreign currency transaction gains orlosses. We report the effects of changes in exchange rates associated with certain U.S. dollar-denominated intercompany loans and advances to our foreignsubsidiaries that are of a long-term investment nature as other comprehensive income or loss in our consolidated financial statements. We have determinedthat certain U.S. dollar-denominated intercompany loans and advances to Nextel Brazil are of a long-term investment nature.Cash and Cash Equivalents. We consider all highly liquid investments with an original maturity of three months or less at the time of purchase to becash equivalents, except for certain certificates of deposit in Brazil that are redeemable on demand. We classify these certificates of deposit as short-terminvestments. Cash equivalents primarily consist of money market funds and other similarly structured funds.Short-Term Investments. We classify investments in debt securities as available-for-sale as of the balance sheet date and report them at fair value. Werecord unrealized gains and losses, net of income tax, as other comprehensive income or loss. We report realized gains or losses, as determined on a specificidentification basis, and other-than-temporary declines in value, if any, in net other expense in our consolidated statement of comprehensive (loss) income.See Note 8 for additional information.Handset and Accessory Inventory. We record handsets and accessories at the lower of cost or their net realizable value. We determine cost by theweighted average costing method. We expense handset costs at the time of sale and classify such costs in cost of handsets and accessories. Inventory costincludes amounts associated with non-income based taxes.We analyze the net realizable value of handset and accessory inventory on a periodic basis. This analysis includes an assessment of the obsolescence ofindividual devices, our sales forecasts and other factors. For the year ended December 31, 2017 and 2016, we recorded losses related to inventoryobsolescence of $1.0 million and $1.7 million, respectively. In addition, for the six months ended December 31, 2015, we recorded losses related to inventoryobsolescence of $2.2 million. We did not record any losses related to inventory obsolescence during the six months ended June 30, 2015.Property, Plant and Equipment. We record property, plant and equipment, including improvements that extend useful lives or enhance functionality,at cost, while we charge maintenance and repairs to expense as incurred.We capitalize internal and external costs incurred to develop internal-use software, which consist primarily of costs related to configuration, interfaces,installation and testing. We also capitalize internal and external costs incurred to develop specified upgrades and enhancements if they result in significantadditional functionalities for our existing software. We expense all costs related to evaluation of software needs, data conversion, training, maintenance andother post-implementation operating activities.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-networkinternal use software. We include depreciation expense on our capital leases in accumulated depreciation. We amortize leasehold improvements over theshorter of the lease terms or the useful lives of the improvements.Construction in progress includes internal and external labor, materials, transmission and related equipment, engineering, site development, interestand other costs relating to the construction and development of our wireless network. We do not depreciate assets under construction until they are ready fortheir intended use. We capitalize interest and other costs, including labor and software upgrades, which are applicable to the construction of, and significantimprovements that enhance functionality to, our network equipment.As of June 30, 2015, in connection with the implementation of fresh start accounting, we adjusted our property, plant and equipment to its estimatedfair value and revised the depreciable lives. We will continue to periodically review the depreciation method, useful lives and estimated salvage value of ourproperty, plant and equipment and revise those estimates if current estimates are significantly different from previous estimates.Asset Retirement Obligations. We record an asset retirement obligation, or ARO, and an associated asset retirement cost, or ARC, when we have alegal obligation in connection with the retirement of tangible long-lived assets. Our obligations arise from certain of our leases and relate primarily to thecost of removing our communication towers and network equipment from leased sites. We recognize an ARO, and the associated ARC, in the period in whichit is incurred at fair value computed using discounted cash flow techniques. The liability is then accreted over time until the obligation is settled and theARC is depreciated over the useful life of the related assets.F-10NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSWe make adjustments for changes to either the timing or amount of the estimated future settlement obligation in the period incurred. We recognizeincreases in the present value of the AROs as an additional liability and add this amount to the carrying amount of the associated ARC. We record decreasesas a reduction in both the recorded liability and the carrying amount of the associated ARC.As of December 31, 2017 and 2016, our asset retirement obligations were included as a component of other long-term liabilities in our consolidatedbalance sheet and are as follows (in thousands):Balance, January 1, 2016 — Successor Company $19,642New asset retirement obligations 198Change in assumptions (1,619)Accretion 2,552Settlement of asset retirement obligations (441)Foreign currency translation and other 7,274Balance, December 31, 2016 — Successor Company 27,606New asset retirement obligations 486Change in assumptions (9,181)Accretion 1,677Settlement of asset retirement obligations (9,375)Foreign currency translation and other 112Balance, December 31, 2017 — Successor Company $11,325Derivative Financial Instruments. We occasionally enter into derivative transactions for hedging or risk management purposes. We record allderivative instruments as either assets or liabilities on our consolidated balance sheet at their fair value. We have not and will not enter into any derivativetransactions for speculative or profit generating purposes. See Note 8 for additional information.Valuation of Long-Lived Assets. We review long-lived assets such as property, plant and equipment and identifiable intangible assets with definiteuseful lives, which include our telecommunications licenses, for impairment whenever events or changes in circumstances indicate that the carrying amountmay not be recoverable. If the total of the expected undiscounted future cash flows of the asset or asset group is less than the carrying amount of the asset, werecognize a loss, if any, for the difference between the fair value and carrying value of the asset.Intangible Assets. Our intangible assets consist of our telecommunications licenses and our customer relationships. We calculate amortization on ourlicenses using the straight-line method based on an estimated useful life of 26 to 30 years. We calculate amortization on our customer relationships using thestraight-line method based on an estimated useful life of 4 years.In Brazil, licenses are customarily issued conditionally for specified periods of time ranging from 10 to 40 years, including renewals. In addition, thewireless telecommunications industry is experiencing significant technological change, and the commercial life of any particular technology is difficult topredict. In light of these uncertainties, we classify our licenses as definite lived intangible assets. In connection with the implementation of fresh startaccounting, 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.Revenue Recognition. Operating revenues primarily consist of wireless service revenues and revenues generated from the sale of handsets andaccessories. 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 paysprograms, where applicable, variable charges for usage in excess of plan limits, long-distance charges, international roaming revenues derived from callsplaced by our subscribers on other carriers’ networks and revenues generated from broadband data services we provide on our WCDMA network, net ofcredits and adjustments for service discounts. We recognize excess usage, local, long distance and calling party pays revenue at contractual rates per minuteas minutes are used. We record cash received in excess of revenues earned as deferred revenues. We recognize service revenue as service is provided. Werecognize handset revenue when title and risk of loss passes to the customer.F-11NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOther 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 towers. We recognize revenue generatedfrom our handset maintenance programs on a monthly basis at fixed amounts over the service period. We recognize roaming revenues at contractual rates perminute as minutes are used. We recognize co-location revenues from third party tenants on a monthly basis based on the terms set by the underlyingagreements.We expect our revenue recognition policies to change in the first quarter of 2018 in connection with the implementation of Accounting StandardsUpdate, or ASU, No. 2014-09, “Revenue from Contracts with Customers,” or ASC 606.Revenue-Based Taxes. We record revenue-based taxes and other excise taxes on a gross basis as a component of both service and other revenues andselling, general and administrative expenses in our consolidated financial statements. For the years ended December 31, 2017 and 2016, we recognized $28.2million and $46.9 million in revenue-based taxes and other excise taxes, respectively. For the six months ended December 31, 2015 and the six monthsended June 30, 2015, we recognized $30.9 million and $39.0 million in revenue-based taxes and other excise taxes, respectively.Accounts Receivable. Accounts receivable represents amounts due from subscribers, net of an allowance for doubtful accounts, and includes amountsthat have been billed to customers and amounts that have not yet been billed.Allowance for Doubtful Accounts. We establish an allowance for doubtful accounts receivable sufficient to cover probable and reasonably estimatedlosses. We estimate this allowance based on historical experience, aging of accounts receivable and recent collections trends. While we believe that theestimates we use are reasonable, actual results could differ from those estimates.Advertising Costs. We expense costs related to advertising and other promotional expenditures as incurred. Advertising costs totaled $26.9 millionand $30.9 million for the years ended December 31, 2017 and 2016, respectively. We recognized $21.6 million in advertising costs during the six monthsended December 31, 2015 and $28.7 million during the six months ended June 30, 2015, respectively.Share-Based Compensation. We measure and recognize compensation expense for all share-based compensation awards based on estimated fairvalues. We account for share-based awards exchanged for employee services in accordance with the authoritative guidance for stock compensation. Underthat guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award when settled in shares, and isrecognized over the employee's requisite service period. Compensation expense is amortized on a straight-line basis over the requisite service period for theentire award, which is generally the vesting period of the award. See Note 12 for more information.Net (Loss) Income Per Common Share, Basic and Diluted. Basic net (loss) income per common share is computed by dividing adjusted net (loss)income attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted net (loss) income per commonshare reflects the potential dilution of securities that could participate in our earnings, but not securities that are antidilutive, including stock options with anexercise price greater than the average market price of our common stock.Our unvested restricted stock awards, or RSAs, contain non-forfeitable rights to dividends, whether paid or unpaid. As a result, our RSAs are consideredparticipating securities because their holders have the right to participate in earnings with common stockholders. We use the two-class method to allocate netincome between common shares and other participating securities.ice group's investment in Nextel Holdings was made in the form of cumulative preferred shares. Under the terms of this agreement, liquidation proceedsor distributions of Nextel Brazil's future earnings will be allocated first to ice group until its cumulative dividends and original investment have beenrecouped. Earnings will then be allocated to us to the extent of our investment and pro rata thereafter. ice group is entitled to receive a 2% annual dividendon its cumulative preferred voting stock in Nextel Holdings. ice group's preferred shares are considered participating securities. As presented for the yearended December 31, 2017, our calculation of basic net loss from continuing operations per common share includes $49.6 million in net loss attributable tononcontrolling interest and $0.5 million related to undeclared dividends on ice group's preferred stock.As presented for the year ended December 31, 2017, we did not include 3.4 million stock options and 0.3 million in restricted common shares in ourcalculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive. In addition, as presented forthe year ended December 31, 2016, we did not include 3.5 million stock options and 0.8 million in restricted common shares in our calculation of diluted netloss from continuing operations per common share because their effect would have been antidilutive. As presented for the six months ended December 31,2015 and the six months ended June 30, 2015, we did not include 2.2 million and 4.8 million stock options, respectively, in our calculation of diluted net(loss) income from continuing operations per common share because their effect would have been antidilutive. In addition, for theF-12NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSsix months ended December 31, 2015, we did not include an immaterial amount of restricted common shares in our calculation of diluted net (loss) incomefrom continuing operations per common share because their effect would have been antidilutive.Income Taxes. We account for income taxes using the asset and liability method, under which we recognize deferred income taxes for the taxconsequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as fortax loss carryforwards and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable incomein 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 ratesin income in the period that includes the enactment date. We recognize a valuation allowance on deferred tax assets unless it is determined that it is “more-likely-than-not” that the asset will be realized.New Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Codification,or ASC, No. 2014-09, “Revenue from Contracts with Customers,” or ASC 606, which provides us with a single revenue recognition model for recognizingrevenue from contracts with customers and significantly expands the disclosure requirements for revenue arrangements. We implemented ASC 606on January 1, 2018, using the modified retrospective method for all contracts open at that date. Prior periods will not be retroactively adjusted. In utilizingthe modified retrospective method, we are recognizing the cumulative effect of applying the standard at the date of initial application, and we will disclosethe results under both the new and old standards for the first year after adoption, beginning in the first quarter of 2018.During the first quarter of 2018, we will record a cumulative adjustment to accumulated deficit that is primarily composed of the following:•a net contract asset related to the portion of our revenues associated with service plans that are sold concurrently with a subsidized handset; and•an asset related to costs incurred to acquire a contract, which primarily relates to the deferral of commission expenses.The future impact of ASC 606 on our revenues primarily relates to contracts with customers where the customer also purchases a subsidized handsetfrom us, which comprises approximately 10% of our new subscribers. A portion of our revenues will be reallocated from service and other revenues to handsetand accessory revenues, and these revenues will be recognized at an earlier point in time compared to our current accounting under the existing authoritativeguidance. The earlier revenue recognition results in the creation of a contract asset for revenues recognized prior to contractual billing. Given currentbusiness trends, we do not expect a material change in total operating revenues.The timing of expense recognition related to certain of our contract acquisition costs, primarily sales commissions, will be impacted as these expenseswill be capitalized and amortized under the new standard rather than being expensed as incurred under existing authoritative guidance. We expensedapproximately $36.6 million of contract acquisition costs during the year ended December 31, 2017.While we have reached conclusions on the key accounting assessments related to adopting this standard, we are continuing to finalize our assessment ofthe resulting quantitative impacts. Based on currently available information, we estimate that our opening accumulated deficit balance on January 1, 2018will decrease by between $20.0 million and $30.0 million, primarily related to the deferral of previously expensed contract acquisition costs. We do notexpect to recognize a material net contract asset.In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which replaces existing leasing rules with a comprehensive leasemeasurement and recognition standard and expanded disclosure requirements. ASU No. 2016-02 will require lessees to recognize most leases on their balancesheet 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 sheetfor 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 lessorshave the option to recognize and measure leases either at the beginning of the earliest period presented or at the beginning of the period of adoption using amodified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. Weexpect that we will record a material amount of lease liabilities as a result of implementing this standard. We are currently evaluating the adoption methods,as well as the additional effects ASU No. 2016-02 will have on our consolidated financial statements.F-13NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which provides guidance regardingcash flow statement classification and presentation of changes in restricted cash. We implemented this new standard on January 1, 2018. The amendments inthis 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 asrestricted cash or restricted cash equivalents. Entities will also be required to reconcile this total to amounts on the consolidated balance sheet and disclosethe nature of the restrictions. We expect that the adoption of this ASU will reclassify changes in restricted cash and other deposits from cash provided by(used in) investing activities to a component of the reconciliation of the beginning of period to end of period change in cash and cash equivalents for allperiods presented.3. Emergence from Chapter 11 Proceedings and Fresh Start AccountingOn 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, inthe United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. In addition, subsequent to September15, 2014, five additional subsidiaries of NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. We refer to thecompanies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Nextel Brazil and our previous other operatingsubsidiaries 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 thePlan Debtors and the Official Committee of Unsecured Creditors, dated April 20, 2015. We refer to this plan, as amended, as the Plan of Reorganization. OnJune 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.The significant transactions that occurred on the Emergence Date in connection with the effectiveness of our Plan of Reorganization included thefollowing:•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 upto 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 $0.001per 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 holdersof claims and service providers in comprehensive settlement of numerous integrated claims and disputes approved by the Bankruptcy Court inconnection 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 ormodifications 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 ofMarch 29, 2011, among NII Capital Corp. (as issuer), each of the guarantors party thereto and Wilmington Savings Fund Society, FSB (assuccessor trustee) and all amendments, supplements or modifications thereto and extensions thereof;F-14NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS•$500.0 million aggregate principal amount of 8.875% senior notes due 2019 issued by NII Capital Corp. pursuant to an indenture, dated as ofDecember 15, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto and U.S. Bank National Association (as successortrustee) 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 ofAugust 18, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto and Wilmington Savings Fund Society, FSB (assuccessor trustee) and all amendments, supplements or modifications thereto and extensions thereof.Pursuant to our Plan of Reorganization, we entered into a registration rights agreement to provide registration rights to parties that, together with theiraffiliates, received upon emergence 10% or more of the issued and outstanding common stock of NII Holdings in connection with the Plan of Reorganization.In satisfaction of this registration rights agreement, on July 14, 2015, we filed a Registration Statement on Form S-1 under the Securities Act of 1933 toregister our common stock that may be offered for sale from time to time by certain selling stockholders. On July 21, 2015, this Form S-1 was declaredeffective. We are not selling any common stock under the related prospectus and will not receive any proceeds from the sale of common stock by the sellingstockholders.In connection with our emergence from Chapter 11, we were required to apply the provisions of fresh start accounting to our financial statementsbecause: (i) the holders of existing voting shares of NII Holdings prior to its emergence from the Chapter 11 proceedings received less than 50% of the votingshares of NII Holdings outstanding following its emergence from the Chapter 11 proceedings; and (ii) the reorganization value of our assets immediatelyprior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims. Because our results of operations during theperiod 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 ofbusiness on June 30, 2015. Under the principles of fresh start accounting, a new reporting entity is considered to be created, and as a result, we allocated thereorganization value of NII Holdings as of June 30, 2015 to our individual assets based on their estimated fair values at the date we applied fresh startaccounting.Reorganization Items.The components of our reorganization items were as follows (in thousands): Successor Company PredecessorCompany Year Ended Six MonthsEnded Six MonthsEnded December 31,2017 December 31,2016 December 31,2015 June 30, 2015Gain on settlement ofliabilities subject tocompromise$— $— $— $1,775,787Net gain on fresh start fairvalue adjustments— — — 261,772Reorganization-relatedprofessional fees andother costs445 (803) 1,467 (80,685)Total reorganizationitems$445 $(803) $1,467 $1,956,874F-15NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Impairment, Restructuring and Other ChargesLong-Lived Asset Impairments.During 2016, we reviewed our Nextel Brazil segment for potential impairment and compared the carrying value of Nextel Brazil's long-lived assets toour estimate of undiscounted future cash flows. Our estimate of undiscounted future cash flows was probability-weighted and took into consideration ourability to obtain capital necessary to fund our business plan. In addition, we assumed that the proceeds from any potential sale of Nextel Brazil would besignificantly less than its carrying value. Based on our estimates, we determined that the carrying value of our Nextel Brazil segment was not fullyrecoverable. 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 totheir respective fair values. We estimated the fair value of our Nextel Brazil segment using a market approach based on our market capitalization andcombined it with the fair value of our outstanding debt obligations to determine the impairment charge. See Note 8 for more information on our estimate ofthe 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 trademarkintangible asset to zero, and the remainder between property, plant and equipment and spectrum licenses on a pro rata basis.During the first quarter of 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that, as a result of the continueddecline in share price, the carrying value of this segment was not fully recoverable. As a result, we recorded non-cash asset impairment charges of $57.9million in 2017 to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. We estimated the fair value of our NextelBrazil segment using the same approach applied in 2016 and allocated these impairment charges on a pro rata basis between property, plant and equipmentand spectrum licenses.During the fourth quarter of 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that its carrying value wasrecoverable as of December 31, 2017.Other Asset Impairments.During 2017 and 2016, Nextel Brazil recognized $9.3 million and $11.0 million in non-cash asset impairment charges, respectively, primarily related tothe abandonment of certain transmitter and receiver sites that are no longer required in its business.During the six months ended December 31, 2015 and the six months ended June 30, 2015, we recognized $12.6 million and $31.1 million in non-cashasset impairment charges, the majority of which related to the shutdown or abandonment of transmitter and receiver sites that are no longer required in NextelBrazil's business, retail store closures related to the realignment of distribution channels in Brazil and the discontinuation of certain information technologyprojects in Brazil and at the corporate level.Restructuring Charges.In 2017, as a result of a change in the scope of Nextel Brazil's radio access network, or RAN, sharing implementation, Nextel Brazil determined thatRAN sharing would no longer be utilized for approximately 800 transmitter and receiver sites. As a result, Nextel Brazil recognized $34.2 million inrestructuring costs, of which $17.5 million relates to the present value of future payments to which Nextel Brazil was committed and the remainder relates tothe impairment of certain prepayments and other deferred costs attributable to these transmitter and receiver sites.In 2017, Nextel Brazil recognized $70.5 million in restructuring costs, the majority of which related to future lease costs for approximately 1,200transmitter and receiver sites in low-usage areas in connection with Nextel Brazil's RAN sharing agreement. In addition, Nextel Brazil recognized $6.5million in severance and other related costs in 2017 related to the separation of approximately 200 employees, which included executive level employees.In an effort to further reduce costs, in the first quarter of 2018, Nextel Brazil entered into arrangements with certain of its tower lessors for the exchangeof unused transmitter and receiver sites for other sites needed in its wireless network. As of December 31, 2017, Nextel Brazil had $27.6 million in accruedrestructuring charges related to transmitter and receiver sites that could be exchanged, a portion of which may be reversed in the future.In 2016, Nextel Brazil recognized $21.4 million in restructuring costs related to the early termination of leases for approximately 600 transmitter andreceiver sites in connection with Nextel Brazil's RAN sharing agreement.F-16NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDuring 2016, we recognized $3.2 million in severance and other related costs at the corporate level. In addition, during 2016, Nextel Brazil recognized$10.8 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required in its businessand certain office closures.During the six months ended December 31, 2015, Nextel Brazil recognized $8.4 million in restructuring charges related to future lease costs for certaintransmitter and receiver sites that are no longer necessary in our business plan. In addition, during the six months ended December 31, 2015, we recognized$9.9 million in severance and other related costs in Brazil and at the corporate level as a result of the separation of employees. These actions included thetermination of:•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.We also recognized $5.4 million in severance and other related costs at the corporate level during the six months ended June 30, 2015 related to theseparation of approximately 30 employees.Total impairment, restructuring and other charges were as follows (in thousands): Successor Company PredecessorCompany Year Ended December 31, Six MonthsEndedDecember 31, Six MonthsEnded June30, 2017 2016 2015 2015Brazil$178,467 $1,340,610 $23,968 $28,072Corporate1,260 44,201 8,340 8,720 Total impairment, restructuring and other charges$179,727 $1,384,811 $32,308 $36,792In addition, as of December 31, 2017, the total of our accrued restructuring charges was as follows (in thousands):Balance, January 1, 2017 — Successor Company$24,103 Restructuring charges95,363 Cash payments and other(6,315) Foreign currency translation adjustment(3,380)Balance, December 31, 2017 — Successor Company$109,771F-17NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. Supplemental Financial Statement InformationPrepaid Expenses and Other.The components of our prepaid expenses and other are as follows: Successor Company December 31, 2017 2016 (in thousands)Cash in escrow$110,024 $163,435Cash collateral related to performance bonds50,340 30,928Brazil judicial deposits43,648 —Value-added taxes27,635 29,829Prepayment for roaming and RAN sharing agreements4,586 27,731Other prepaid assets14,231 23,020Other current assets3,997 5,202 $254,461 $280,145Property, Plant and Equipment, Net.The components of our property, plant and equipment, net are as follows: Successor Company December 31, 2017 2016 (in thousands)Land$489 $675Building and leasehold improvements935 1,489Network equipment, communication towers and network software82,493 95,298Software, office equipment, furniture and fixtures and other22,498 10,952Less: Accumulated depreciation and amortization(11,461) — 94,954 108,414Construction in progress22,308 21,061 $117,262 $129,475See Note 4 for information regarding the impairment of property, plant and equipment.F-18NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIntangible Assets, Net.Our intangible assets, net include the following: Successor Company December 31, 2017 December 31, 2016 AverageUseful Life(Years) Gross CarryingValue AccumulatedAmortization Net CarryingValue Gross CarryingValue AccumulatedAmortization Net CarryingValue (in thousands)Amortizable intangible assets: Licenses26 $189,920 $(5,426) $184,494 $226,426 $— $226,426Customer relationships4 15,300 (5,100) 10,200 17,255 — 17,255 $205,220 $(10,526) $194,694 $243,681 $— $243,681See Note 4 for information regarding the impairment of intangible assets. In addition, the weighted average useful lives of the intangible assets weacquired during the year ended December 31, 2016 was 30 years.Based on the carrying amount of our intangible assets as of December 31, 2017 and current exchange rates, we estimate amortization expense for eachof the next five years to be as follows (in thousands):YearsEstimatedAmortization Expense2018$14,464201911,06420207,66420217,66420227,664Actual amortization expense to be reported in future periods could differ from these estimates as a result of additional acquisitions of intangibles, aswell as changes in foreign currency exchange rates and other relevant factors.Other Assets.The components of our other long-term assets are as follows: Successor Company December 31, 2017 2016 (in thousands)Brazil judicial deposits$110,758 $85,123Prepayment for roaming and RAN sharing agreements23,747 37,433Cash collateral related to performance bonds— 56,523Other83,699 92,789 $218,204 $271,868F-19NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAccrued Expenses and Other.The components of our accrued expenses and other are as follows: Successor Company December 31, 2017 2016 (in thousands)Contingencies$78,006 $56,171Network system and information technology48,702 50,286Payroll related items and commissions32,613 45,187Non-income based taxes30,044 28,158Capital expenditures10,198 17,514Other101,252 74,583 $300,815 $271,899Other Long-Term Liabilities. The components of our other long-term liabilities are as follows: Successor Company December 31, 2017 2016 (in thousands)Accrued lease termination and other restructuring charges$92,463 $31,365Non-current withholding taxes67,356 55,078Other61,106 57,029 $220,925 $143,472Accumulated Other Comprehensive Loss. As of December 31, 2017 and 2016, the tax impact on our accumulated other comprehensive loss was notmaterial. In addition, as of December 31, 2017 and 2016, all of our accumulated other comprehensive loss represented cumulative foreign currencytranslation adjustment.F-20NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSupplemental Cash Flow Information. Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015 (in thousands)Capital expenditures Cash paid for capital expenditures, including capitalized interest$66,536 $61,291 $76,630 $88,485Change in capital expenditures accrued and unpaid or financed, includingaccreted interest capitalized(15,433) (9,984) (4,018) (19,282) $51,103 $51,307 $72,612 $69,203Interest costs Interest expense, net$118,605 $113,732 $55,563 $82,820Interest capitalized1,669 283 2,142 2,556 $120,274 $114,015 $57,705 $85,376 Cash paid for interest, net of amounts capitalized$91,297 $105,636 $59,914 $65,598In connection with the completion of the sale of Nextel Argentina to Grupo Clarin in January 2016, the promissory note that was initially issued inconnection with this transaction was canceled. See Note 6 for more information. In addition, as of December 31, 2016, we recorded $125.7 million as acomponent of long-term debt on our consolidated balance sheet in connection with the signing of the license agreement related to our acquisition of 30MHzof spectrum in the 1.8 GHz band in July 2016. Other than these two transactions, we did not have any significant non-cash investing or financing activitiesduring the years ended December 31, 2017 and 2016.For the six months ended December 31, 2015, we had $25.0 million in non-cash investing activities, representing U.S. treasury notes that we receivedand cash placed in escrow to secure our indemnification obligations in connection with the sale of Nextel Argentina. For the six months ended June 30, 2015,we had the following non-cash investing and financing activities:•$2,067.7 million in Successor Company common stock that we issued in partial satisfaction of certain claims that were settled in connection withour 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 connectionwith the sale of Nextel Mexico.6. Discontinued OperationsSale of Nextel Argentina. On September 11, 2015, NII Mercosur Telecom, S.L.U. and NII Mercosur Moviles, S.L.U., both of which were indirectsubsidiaries of NII Holdings, entered into a binding agreement with Grupo Clarin relating to the sale of all of the outstanding equity interests of NextelCommunications Argentina, S.R.L., or Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allowed GrupoClarin or any of its affiliates to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatoryauthorities in Argentina. We received the remaining cash consideration in October 2015, including $6.0 million deposited in escrow to satisfy potentialindemnification claims. On January 27, 2016, the agreement was amended to permit Grupo Clarin or any of its affiliates to exercise the right to acquire theremaining 51% equity interest prior to receiving regulatory approval, and Grupo Clarin and its affiliates immediately acquired the remaining 51% of NextelArgentina for no additional proceeds. In the second half of 2016, $5.4 million in escrow was released to us, and we entered into a mutual release agreementwith Grupo Clarin for all current and future claims. As a result, we have no further obligations in connection with this transaction.F-21NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSale of Nextel Mexico. On April 30, 2015, we, together with our wholly-owned subsidiary NIU Holdings LLC, completed the sale of our Mexicanoperations to New Cingular Wireless, an indirect subsidiary of AT&T. The transaction was structured as a sale of all of the outstanding stock of the parentcompany 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 inescrow to satisfy potential indemnification claims. The net proceeds from this sale were $1.448 billion after deducting Nextel Mexico's outstandingindebtedness and applying other specified purchase price adjustments. In 2016, we paid $4.0 million, plus interest, out of escrow to settle an indemnificationclaim. As of December 31, 2017, $73.5 million of the cash held in escrow has been released to us and $110.0 million remains deposited in escrow related tocertain potential tax indemnity claims made by New Cingular Wireless. While we are required to continue to indemnify New Cingular Wireless for any validclaims that arise in the future, New Cingular Wireless is not permitted to make any additional claims against the escrow account other than for claims relatingto the 2012 tax year totaling not more than $3.8 million.The potential tax indemnity claims submitted by New Cingular Wireless purport to relate to various ongoing tax audits by the Mexican tax authoritiesfor the years 2010 through 2014. Of the total potential tax claims, $12.2 million relates to actual assessments that Nextel Mexico has received. The remainingamounts relate to unassessed matters. New Cingular Wireless' claims include $35.5 million related to the audit of Nextel Mexico’s income tax return for 2010and $36.9 million related to the audit of Nextel Mexico's income tax return for 2011. The remaining $37.6 million of potential tax claims relates primarily tonon-income tax-based audits for the years 2011 through 2014.We recently reached an agreement with the Mexican tax authorities related to the audits of Nextel Mexico's income tax returns for the years 2010 and2011. Specifically, we agreed to incremental tax liabilities of $36.9 million to settle all open issues related to these tax years. We expect to utilize existingtax credits to settle these liabilities, although it is possible that we may need to settle a portion of these liabilities using cash that is currently held in escrow.We expect to receive a release of some of the $72.4 million in previously escrowed funds related to the 2010 and 2011 income tax audits in the next fewmonths. As of December 31, 2017, we had accrued $1.5 million related to the 2011 income tax audit. We are continuing to work with the Mexican taxauthorities to settle the open non-income tax-based audits and accelerate the release of the remaining escrow.There can be no assurance as to the outcome of the foregoing remaining tax audits or indemnity claims.Sale of Nextel Peru. In August 2013, our wholly-owned subsidiaries NII Mercosur Telecom, S.L. and NII Mercosur Moviles, S.L., completed the sale ofall of the outstanding equity interests of our wholly-owned subsidiary, Nextel del Peru, S.A., or Nextel Peru, to Empresa Nacional de TelecomunicacionesS.A. and one of its subsidiaries, Entel Inversiones, S.A., which we refer to collectively as Entel. In connection with this sale, $50.0 million was placed inescrow. Through December 31, 2015, we paid $15.6 million in response to certain claims. In December 2016, we paid $17.3 million out of the escrow accountto settle all outstanding claims with Entel, and the remaining $17.1 million in escrow was released to us. As a result, Entel released us from all current andfuture indemnification obligations, and we have no further obligations in connection with this transaction.In connection with the sale of Nextel Argentina, Nextel Mexico and Nextel Peru, we have reported the results of these operating companies asdiscontinued operations in this annual report on Form 10-K. Accordingly, we reclassified the results of operations for these former operating companies asdiscontinued operations for all periods presented. Unless otherwise noted, amounts included in these notes to our consolidated financial statements excludeamounts attributable to discontinued operations. The major components of income (loss) from discontinued operations related to Nextel Argentina, NextelMexico and Nextel Peru were as follows (in thousands):F-22NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six MonthsEndedDecember 31, Six MonthsEnded June30, 2017 2016 2015 2015Operating revenues$— $— $75,450 $599,038Operating expenses— — (60,863) (675,245)Other income (expense), net— — 1,159 (49,974)Income (loss) before income tax provision— — 15,746 (126,181)Income tax provision— — (4,770) (8,065) — — 10,976 (134,246)Income (loss) on disposal of Nextel Argentina,Nextel Mexico and Nextel Peru1,005 (19,994) 632 355,360Income (loss) from discontinued operations, netof income taxes$1,005 $(19,994) $11,608 $221,1147. DebtThe components of our debt are as follows: Successor Company December 31, 2017 2016 (in thousands)Brazil equipment financing$242,883 $291,597Brazil bank loans200,567 242,076Brazil spectrum financing122,044 125,684Brazil capital lease and tower financing obligations90,213 96,722Other— 237Total debt655,707 756,316Less: current portion(7,990) (540,474) $647,717 $215,842Amendments to Equipment Financing Facility and Bank Loans. In October 2017, Nextel Brazil entered into an amended and restated equipmentfinancing facility and sixth amendments to its bank loans with Brazilian lenders. In January 2018, we received final approval for the amended and restatedequipment financing facility, at which point all of these amendments became effective. We accounted for these amendments as a non-substantialmodification of debt and capitalized $6.1 million in expenses related to creditors that will be amortized over the new term of the loans. As a result of theamendments, the material financing terms in all three facilities were aligned. Among other changes, these amendments provide for the deferral ofsubstantially all principal payments for the first 48 months from the date of effectiveness, an extension of the loan maturity dates to 98 months from the dateof effectiveness, and a holiday for certain financial covenant compliance, including the net debt financial covenant, until June 30, 2020. In connection withthese amendments, Nextel Brazil granted additional security interests to each of its lenders in the form of preferential rights to amounts held in certain ofNextel Brazil's bank accounts and pledged incremental equipment and property to these lenders. In addition, Nextel Brazil will be subject to monthlyminimum cash and minimum receivable requirements. Nextel Holdings and certain of its subsidiaries have agreed to make equity contributions to NextelBrazil over the next 48 months.F-23NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSBrazil Equipment Financing Facility. In April 2012, Nextel Brazil entered into a U.S. dollar-denominated loan agreement with the China DevelopmentBank, under which Nextel Brazil was able to borrow up to $500.0 million to finance infrastructure equipment and certain other costs related to thedeployment of its WCDMA network. A portion of this financing has a floating interest rate based on LIBOR plus 2.90% (an all-in interest rate of 4.46% and4.22% as of December 31, 2017 and 2016, respectively), and the remainder has a floating interest rate based on LIBOR plus 1.80% (an all-in interest rate of3.36% and 3.12% as of December 31, 2017 and 2016, respectively). This financing is guaranteed by Nextel Holdings. In addition, the terms of this financinglimit Nextel Brazil's ability to pay dividends and other upstream payments. Loans under this agreement have a 48-month grace period from January 2018 formaterial repayments, a 50-month material repayment term that begins in January 2022 and a final maturity of February 2026. Assets purchased using theamounts borrowed under Nextel Brazil's equipment financing facility are pledged as collateral. A portion of Nextel Brazil's accounts receivable is alsopledged as collateral under its equipment financing facility. As of December 31, 2017, we had $244.6 million in principal amount outstanding under NextelBrazil's equipment financing facility. Nextel Brazil does not have the ability to borrow additional amounts under this facility.Brazil Bank Loans. In December 2011, Nextel Brazil borrowed the equivalent of $341.2 million from a Brazilian bank. Because this loan isdenominated in Brazilian reais, the payments for principal and interest will fluctuate in U.S. dollars based on changes in the exchange rate of the Brazilianreal relative to the U.S. dollar. In October 2012, Nextel Brazil entered into an additional Brazilian real-denominated bank loan agreement, under whichNextel Brazil borrowed the equivalent of approximately $196.9 million. Prior to the effectiveness of the sixth amendments to these bank loans discussedabove, both of these loan agreements had floating interest rates equal to 139.54% of the local Brazilian borrowing rate (an all-in interest rate of 9.63% and19.05% as of December 31, 2017 and 2016, respectively). As a result of the effectiveness of the loan amendments, both of the loan agreements have floatinginterest rates equal to 127.00% of the local Brazilian borrowing rate for 48 months from January 2018. After this period elapses, the interest rates will returnto 139.54% of the local Brazilian borrowing rate for the remainder of the loan period. Loans under these agreements have a 48-month grace period fromJanuary 2018 for material repayments, a 50-month material repayment term that begins in January 2022 and a final maturity of January 2026. A portion ofNextel Brazil's accounts receivable is pledged as collateral under these bank loans. As of December 31, 2017, we had $199.1 million in principal amountoutstanding under Nextel Brazil's bank loans.Brazil Spectrum Financing. In December 2015, Nextel Brazil participated in a spectrum auction and was the successful bidder for 30 MHz of spectrumin the 1.8 GHz band for 455 million Brazilian reais, or approximately $116.7 million based on foreign currency exchange rates at the time. The spectrumlicense has an initial term of 15 years with an optional 15-year renewal period. In July 2016, Nextel Brazil paid 45.5 million Brazilian reais, or approximately$14.0 million based on foreign currency exchange rates in effect at the time, in connection with the signing of this license agreement. The remaining 409.5million Brazilian reais, or approximately $122.2 million based on foreign currency exchange rates at the time, plus accrued interest of 1% per month andannual inflationary adjustments, is due in six annual installments, beginning in July 2019. Nextel Brazil elected to accept the government-provided spectrumfinancing for the remaining amount due under this spectrum financing.Capital Leases and Tower Financing Obligations.Site-Related Capital Lease Obligations. We have entered into various agreements under which we are entitled to lease space on towers or otherstructures owned by third parties and to install our transmitter and receiver equipment in that space.Tower Financing Obligations. From 2002 to 2008, we sold and subsequently leased back space on certain transmitter and receiver sites in Brazil. Dueto our continuing involvement with these properties, we account for these transactions as financing arrangements. As a result, we did not recognize any gainsfrom the sales of these towers under these arrangements, and we maintain the tower assets on our consolidated balance sheets. In addition, we recognized theproceeds received as financing obligations. We recognize ground rent payments as operating expenses in cost of service and tower base rent payments asinterest expense and a reduction in the financing obligation using the effective interest method. In addition, we recognize co-location rent payments made bythe third party lessees to the owner of the site as other operating revenues because of our continuing involvement with the tower assets. During the yearsended December 31, 2017 and 2016, we recognized $8.1 million and $7.7 million, respectively, in other operating revenues related to these co-location leasearrangements. During the six months ended December 31, 2015 and the six months ended June 30, 2015, we recognized $3.6 million and $7.8 million inother operating revenues, respectively, related to these arrangements.F-24NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDebt Maturities. For the years subsequent to December 31, 2017, scheduled annual maturities of all debt outstanding are as follows (in thousands):YearPrincipal Repayments2018$6,655201926,687202027,799202127,7662022129,311Thereafter453,561Total$671,7798. Fair Value MeasurementsAvailable-for-Sale Securities.As of December 31, 2017 and 2016, available-for-sale securities held by Nextel Brazil included $16.7 million and $73.8 million, respectively, ininvestment funds. These funds invest primarily in Brazilian government bonds, long-term bank certificates of deposit and Brazilian corporate debentures.During the years ended December 31, 2017 and 2016, the six months ended December 31, 2015 and the six months ended June 30, 2015, we did not haveany material unrealized gains or losses associated with these investments.We account for our available-for-sale securities at fair value. The fair value of our Brazilian certificates of deposit is based on their current redemptionamount, and we classify these certificates of deposit within Level 2 of the fair value hierarchy. The fair value of Nextel Brazil's investment funds is measuredbased on the funds' net asset value as a practical expedient, which is excluded from the fair value hierarchy.Debt Instruments.The carrying amounts and estimated fair values of our debt instruments are as follows: Successor Company December 31, 2017 2016 CarryingAmount EstimatedFair Value CarryingAmount EstimatedFair Value (in thousands)Brazil equipment financing$242,883 $237,958 $291,597 $280,893Bank loans and other200,567 144,312 242,313 221,458Brazil spectrum financing122,044 128,225 125,684 117,059 $565,494 $510,495 $659,594 $619,410We estimated the fair value of the Brazil bank loans, as well as the fair value of our equipment financing facility in Brazil, utilizing inputs such asU.S. Treasury security yield curves, prices of comparable bonds, LIBOR, U.S. Treasury bond rates and credit spreads on comparable publicly traded bonds.We consider Nextel Brazil's equipment financing facility, bank loans and other and its spectrum financing to be Level 3 in the fair value hierarchy.F-25NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDerivative Instruments.We occasionally enter into derivative transactions for risk management purposes. We have not and will not enter into any derivative transactions forspeculative or profit generating purposes. Nextel Brazil did not have any derivative instruments as of December 31, 2017. As of December 31, 2016, NextelBrazil had an immaterial amount of derivative instruments that we classified as short-term investments in our consolidated balance sheets. We consider thismeasurement to be Level 3 in the fair value hierarchy. Nextel Brazil entered into foreign currency option agreements to manage the foreign currencyexposures associated with the forecasted purchase of handsets and other U.S. dollar-denominated payments. We do not apply hedge accounting to thesederivative instruments. As a result, we have included all changes in the fair value of these instruments as a component of other expense, net in ourconsolidated statement of comprehensive (loss) income. For the year ended December 31, 2016, Nextel Brazil recognized $3.3 million in net realized losses,resulting from the changes in estimated fair value of these derivative instruments. Unrealized losses recognized during 2016 were not material. For the sixmonths ended December 31, 2015 and June 30, 2015, Nextel Brazil recognized $5.2 million and $6.3 million in net realized gains, respectively, resultingfrom the changes in the estimated fair value of these derivative instruments. In addition, for the six months ended December 31, 2015 and June 30, 2015,Nextel Brazil recorded an immaterial amount of unrealized losses resulting from the changes in the estimated fair value of these derivative instruments.Other Financial Instruments.The carrying values of cash and cash equivalents, accounts receivable and accounts payable contained in our consolidated balance sheets approximatetheir fair values due to the short-term nature of these instruments.9. Commitments and ContingenciesCapital and Operating Lease Commitments.We have co-location capital lease obligations on some of our transmitter and receiver sites in Brazil. See Note 7 for further information regarding theseagreements.We lease various cell sites, office facilities and other assets under operating leases. Some of these leases provide for annual increases in our rentpayments based on changes in locally-based consumer price indices. The remaining terms of our cell site leases range from less than one to fifteen years andare generally renewable for additional terms. The remaining terms of our office leases range from less than one to ten years. We have not included reasonablyassured renewal periods in our calculation of future minimum payments for operating lease obligations shown in the table below. For the year endedDecember 31, 2017, total rent expense under operating leases was $178.5 million, of which approximately $63.2 million related to rent payments for certaintransmitter and receiver sites that Nextel Brazil is not fully utilizing. For the year ended December 31, 2016, total rent expense under operating leases was$164.6 million. In addition, during the six months ended December 31, 2015 and the six months ended June 30, 2015, total rent expense under operatingleases was $76.4 million and $93.4 million, respectively.For years subsequent to December 31, 2017, future minimum payments for all capital and operating lease obligations that have initial or remainingnoncancelable lease terms exceeding one year, net of rental income, are as follows (in thousands): CapitalLeases OperatingLeases Total2018$48,354 $127,430 $175,784201943,026 112,280 155,306202042,890 101,591 144,481202143,016 90,622 133,638202241,298 77,425 118,723Thereafter621,495 151,364 772,859Total minimum lease payments840,079 660,712 1,500,791Less: imputed interest(749,866) — (749,866)Total$90,213 $660,712 $750,925F-26NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSBrazil RAN Sharing Commitment.In May 2016, Nextel Brazil entered into an amendment to a nationwide roaming voice and data services agreement with Telefonica Brazil, S.A., orTelefonica, to reduce the usage rates for roaming traffic. Concurrently, Nextel Brazil entered into a 10-year RAN sharing agreement with Telefonica, underwhich Telefonica will permit Nextel Brazil to use some of its tower and equipment infrastructure to transmit telecommunications signals on Nextel Brazil'sspectrum. Nextel Brazil expects to use this agreement to fulfill the regulatory coverage obligations under its spectrum licenses rather than utilizing its ownnetwork. 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 originalroaming agreement. Nextel Brazil was required to prepay 250 million Brazilian reais, or approximately $76.9 million based on foreign currency exchangerates 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 arerecognizing approximately 318 million Brazilian reais on a ratable basis over a period of five years for the amended roaming agreement, which began inAugust 2016, and approximately 482 million Brazilian reais over a period of approximately seven years for the RAN sharing agreement, which began inOctober 2016. In 2017, Nextel Brazil recorded approximately 116 million Brazilian reais, or approximately $36.9 million based on foreign currencyexchange rates at the time, of the total 482 million Brazilian reais related to the RAN sharing agreement as a component of restructuring costs as a result of achange in the scope of this arrangement.Equipment, Handsets and Other Commitments.We are a party to purchase agreements with various suppliers, under which we have committed to purchase equipment, network services and handsetsthat will be used or sold in the ordinary course of business. As of December 31, 2017, we are committed to purchase $131.6 million in total under thesearrangements, which includes amounts related to the RAN sharing agreement discussed above, $57.1 million of which we are committed to pay in 2018,$54.2 million of which we are committed to pay in 2019 and 2020 combined and $20.3 million of which we are committed to pay in 2021 and 2022combined. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractualobligations. Our commitments are generally determined based on noncancelable quantities or termination amounts. We also purchase products and servicesas needed with no firm commitment. Amounts actually paid under some of these agreements will likely be higher due to variable components of theseagreements. The more significant variable components that determine the ultimate obligation owed include such items as hours contracted, subscribers andother factors. In addition, we are a party to various arrangements that are conditional in nature and obligate us to make payments only upon the occurrence ofcertain events, such as the delivery of functioning software or a product.Contingencies.Nextel Brazil has received various assessment notices from municipal, state and federal Brazilian authorities asserting deficiencies in payments relatedprimarily to value-added taxes and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitions disputing theseassessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. Inother cases, Nextel Brazil's petitions have been denied, and Nextel Brazil is currently appealing those decisions. As of December 31, 2017 and 2016, NextelBrazil also had contingencies related to certain consumer, contract and labor-related matters, some of which are secured by judicial guarantees. Nextel Brazilmay in the future be subject to litigation involving tax and other matters requiring judicial deposits of cash that will not be released until the pending matteris resolved.As of December 31, 2017 and 2016, Nextel Brazil had accrued liabilities of $81.2 million and $76.8 million, respectively, related to contingencies, ofwhich $7.4 million and $1.4 million related to unasserted claims, respectively. We currently estimate the reasonably possible losses related to matters forwhich Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be approximately $760.0 million as of December 31, 2017. We continueto evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies. As a result, future increases or decreases toour accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.F-27NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSLegal Proceedings.We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legalactions will have a material effect on our business, financial condition, results of operations or cash flows.10. Capital StockCommon Stock. Holders of our common stock are entitled to one vote per share on all matters submitted for action by the stockholders and shareequally, share for share, if dividends are declared on the common stock. If our Company is partially or completely liquidated, dissolved or wound up, whethervoluntarily or involuntarily, the holders of the common stock are entitled to share ratably in the net assets remaining after payment of all liquidationpreferences, if any, applicable to any outstanding preferred stock. There are no redemption or sinking fund provisions applicable to the common stock.Undesignated Preferred Stock. Our Board of Directors has the authority to issue undesignated preferred stock of one or more series and in connectionwith the creation of such series, to fix by resolution the designation, voting powers, preferences and relative, participating, optional and other special rightsof such series, and the qualifications, limitations and restrictions thereof. As of December 31, 2017, we had not issued any shares of undesignated preferredstock.Common Stock Reserved for Issuance. In connection with our emergence from Chapter 11, our Board of Directors adopted an incentive compensationplan, which contemplates grants of up to 5,263,158 shares of our common stock to directors and employees of the reorganized company, including potentialgrants of restricted stock, restricted stock units and options to purchase shares of our common stock. Under the 2015 Incentive Compensation Plan, we had1,183,767 shares of our common stock reserved for future issuance as of December 31, 2017.11. Income TaxesThe components of (loss) income from continuing operations before income taxes and the related income tax benefit (provision) are as follows (inthousands): Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015U.S. $(41,143) $(53,843) $(1,820) $1,745,628Non-U.S. (316,870) (1,482,928) (295,686) (224,218)Total$(358,013) $(1,536,771) $(297,506) $1,521,410F-28NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Successor Company Predecessor Company Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months Ended June30, 2017 2016 2015 2015Current: Federal$— $— $— $—Foreign5,779 (291) 2,502 (1,104)Total current income tax benefit (provision)5,779 (291) 2,502 (1,104)Deferred: Federal— 2,864 (403) (814)State, net of Federal tax benefit (provision)— 319 (45) (91)Foreign568 — 2,961 —Total deferred income tax benefit (provision)568 3,183 2,513 (905)Total income tax benefit (provision)$6,347 $2,892 $5,015 $(2,009)A reconciliation of the U.S. statutory Federal income tax rate to our effective tax rate as a percentage of (loss) income from continuing operations beforeincome tax benefit (provision) is as follows: Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015Statutory Federal tax rate35% 35% 35% 35%Reorganization items— — — (46)Effect of foreign operations— (2) (12) —Effect of statutory Federal tax rate change on deferred tax asset(37) — — —Change in deferred tax asset valuation allowance16 (32) (20) 9Effect of permanent differences(12) — — —Other, net— (1) (1) 2Effective tax rate2% — 2% —F-29NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe components of our deferred tax assets and liabilities consist of the following: Successor Company December 31, 2017 2016 (in thousands)Deferred tax assets: Net operating losses and capital loss carryforwards$6,509,165 $6,363,915Allowance for doubtful accounts20,122 17,867Accrued expenses53,867 54,263Accrual for contingent liabilities27,016 24,669Intangible assets121,122 130,983Property, plant and equipment143,701 253,882Leasing related activity27,519 25,822Equity compensation1,151 1,182Long term debt55,146 53,159Inventory reserve717 1,729Other1,004 17,573 6,960,530 6,945,044 Valuation allowance(6,957,569) (6,945,044) Total deferred tax asset2,961 —Deferred tax liabilities: Other2,432 —Total deferred tax liability2,432 —Net deferred tax asset$529 $—As of December 31, 2017, we had $1.4 billion of net operating loss carryforwards for U.S. Federal and state income tax purposes, which expire in variousamounts beginning in 2027 through 2037. Due to our emergence from bankruptcy on June 26, 2015, the timing and manner in which we will utilize the netoperating loss carryforwards in any year will be limited relating to changes in our ownership. The annual limitation is $40.2 million, and some of our netoperating loss carryforwards will expire before use in the future due to this limitation. As a result of this limitation, our net operating loss carryforwards forU.S. Federal and state income tax purposes are $898.9 million.As of December 31, 2017, our Brazilian subsidiaries had $2.1 billion of net operating loss carryforwards that can be carried forward indefinitely, but theamount that we can utilize annually is limited to 30% of Brazilian taxable income before the net operating loss deduction. Our foreign subsidiaries' ability toutilize the foreign tax net operating losses in any single year ultimately depends upon their ability to generate sufficient taxable income.As of December 31, 2017, our holding companies in Luxembourg each had net operating losses ranging from $1.1 billion to $8.7 billion that can becarried forward indefinitely. An immaterial amount of losses generated in 2017 can be carried forward 17 years. Our holding companies in Spain had $964.2million of net operating loss carryforwards that can be carried forward 18 years. Given the nature of activities that are considered taxable in these jurisdictionsand the activities engaged in by the holding companies, these net operating loss carryforwards will never be utilized by our holding companies.F-30NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe deferred tax asset valuation allowances that our subsidiaries and holding companies had as of December 31, 2017 and 2016 are as follows: Successor Company 2017 2016 (in millions)Brazil$1,162.5 $1,089.9U.S. 240.4 367.2Luxembourg5,313.7 5,275.9Spain241.0 212.0Total$6,957.6 $6,945.0The realization of deferred tax assets is dependent on the generation of future taxable income sufficient to realize our tax loss carryforwards and othertax deductions. Valuation allowances are required to be recognized on deferred tax assets unless it is determined that it is “more-likely-than-not” that theasset will be realized. As of December 31, 2017, we continued to record full valuation allowances on the deferred tax assets of our foreign operatingcompanies, our U.S. parent company and subsidiaries and our foreign holding companies due to substantial negative evidence, including the recent historyof cumulative losses and the projected losses for 2018 and subsequent years.We are subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which we operate and to potential examination by the relevant taxauthorities. The earliest years that remain subject to examination by jurisdiction are: U.S. - 2007; Brazil - 2012, and Luxembourg, Netherlands and Spain -2009. We regularly assess the potential outcome of future examinations in each of the taxing jurisdictions when determining the adequacy of our provisionfor income taxes. We have only recorded financial statement benefits for tax positions which we believe reflect the “more-likely-than-not” criteriaincorporated in the FASB’s authoritative guidance on accounting for uncertainty in income taxes, and we have established income tax accruals in accordancewith this authoritative guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax accrual is established, we adjust itonly when there is more information available or when an event occurs necessitating a change. While we believe that the amounts of the recorded financialstatement benefits and tax accruals reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations mayresult in a reduction to the tax benefits previously recorded on the financial statements or may exceed the current income tax reserves in amounts that couldbe material.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act.The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. Federal corporate tax rate from 35percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; and (3) requiring acurrent inclusion in U.S. Federal taxable income of certain earnings of controlled foreign corporations, known as global intangible low-taxed income.We have prepared an analysis of the effect of the Tax Act on our U.S. income taxes and have formed the following conclusions:•In response to the reduction in the U.S. Federal tax rate to 21%, which was effective January 1, 2018, we have recorded our deferred tax asset andcorresponding valuation allowance as of December 31, 2017 at the 21% tax rate with no impact to our income tax expense;•We have determined that no tax liability needs to be recorded for the one-time transition tax as our international subsidiaries have negativecumulative foreign earnings; and•We are electing to treat the tax on global intangible low-taxed income as an expense in the period in which we become liable for this tax and are notcurrently recording a deferred tax liability for this item.In accordance with Staff Accounting Bulletin, or SAB No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” our measurementperiod remains open with respect to the above items in order to allow us to evaluate all possible impacts of evolving guidance to be issued by the InternalRevenue Service and the FASB.F-31NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS12. Employee Stock and Benefit PlansIn connection with our emergence from Chapter 11, NII Holdings canceled all shares of its common stock, preferred stock and other equity interests thatexisted prior to June 26, 2015. Our Board of Directors subsequently adopted an incentive compensation plan, which we refer to as the 2015 IncentiveCompensation Plan. The 2015 Incentive Compensation Plan provides us with the ability to award stock options, restricted stock, restricted stock units, andcash-based incentives to our employees, directors and officers. The 2015 Incentive Compensation Plan contemplates grants of up to 5,263,158 shares of ourcommon stock to directors and employees of the reorganized company, including potential grants of restricted stock, restricted stock units and options topurchase shares of our common stock. All grants or awards made under the 2015 Incentive Compensation Plan are governed by written agreements betweenus and the participants and have a maximum term of ten years.On the date of our emergence from Chapter 11, we made grants of 564,311 shares of restricted stock, 41,721 restricted stock units and 1,580,208 optionsto purchase shares of common stock. Subsequent to this date, we made grants of an additional 468,069 shares of restricted stock and 5,071,457 options topurchase shares of common stock. Stock options, restricted stock awards and restricted stock units are also granted to certain new employees on the later ofthe date of hire or the date that the grant is approved.Stock Option AwardsFor the years ended December 31, 2017 and 2016, the six months ended December 31, 2015 and the six months ended June 30, 2015, we recognized$2.6 million, $2.8 million, $1.0 million and $1.5 million, respectively, in share-based compensation expense related to stock options. The amountsrecognized in our consolidated statements of comprehensive (loss) income for tax benefits related to share-based payment arrangements in 2017, 2016 andboth periods in 2015 were not material. We include substantially all share-based compensation expense as a component of selling, general and administrativeexpenses. As of December 31, 2017, there was $1.1 million in unrecognized compensation cost related to non-vested employee stock option awards. Weexpect this cost to be recognized over a weighted average period of 1.50 years. The amount of cash paid for exercises under all share-based paymentarrangements was immaterial for 2017, 2016 and both periods in 2015.As a result of the Company's emergence from Chapter 11 proceedings, all prior stock option awards granted under the 2012 Incentive CompensationPlan were canceled. Our stock options generally vest thirty-three percent per year over a three-year period. The following table summarizes stock optionactivity under the 2015 Incentive Compensation Plan: Number ofOptions Weighted AverageExercise Priceper Option Weighted AverageRemaining Life Aggregate IntrinsicValueOutstanding, December 31, 20163,276,105 $10.14 Granted2,250,000 $0.58 Exercised— — Forfeited(2,168,407) $11.02 Outstanding, December 31, 20173,357,698 $3.16 8.83 —Exercisable, December 31, 2017660,677 $9.02 7.48 —There were no options exercised during the year ended December 31, 2017. As of December 31, 2017, our vested stock options had an intrinsic value ofzero. Generally, our stock options are non-transferable, except by will or laws of descent or distribution, and the actual value of the stock options that arecipient may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. If a participant's employment isterminated without cause prior to the date options are available to be exercised, the participant will receive stock options on a pro-rata basis based on thefraction of the performance period that has elapsed from the beginning of the performance period until the participant's termination. If the participant doesnot exercise the pro-rata shares within 90 days of the employee's termination, the options are considered forfeited and are available for reissuance under theterms of the 2015 Incentive Compensation Plan.F-32NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe weighted average fair value of the stock option awards on their grant dates using the Black-Scholes-Merton option-pricing model were $0.22 and$1.48 for each option granted during the years ended December 31, 2017 and 2016 and $2.98 for the period from June 26, 2015 to December 31, 2015, basedon the following assumptions: Successor Company Year Ended Period from June 26, 2015 December 31, 2017 December 31, 2016 to December 31, 2015Risk free interest rate1.53% 1.53% - 1.90% 1.71% - 2.05%Expected stock price volatility40.87% 40.71% - 40.87% 31.73% - 41.92%Expected term in years5.16 5.16 5.16 - 6.00Expected dividend yield— — —The expected term of stock option awards granted represents the period that we expect our stock option awards will be outstanding and was determinedbased on a Monte Carlo model of stock prices and option disposition intensity. The intensity is based on models of stock price path, time dependentsuboptimal voluntary exercise and post-vest termination. The risk free interest rate for the grant date of options granted is consistent with the zero-couponU.S. Treasury rate curve. Expected volatility takes into consideration a blended historical and implied volatility of comparable companies' option contracts.Restricted Stock and Restricted Stock Unit AwardsFor the years ended December 31, 2017 and 2016, the six months ended December 31, 2015 and the six months ended June 30, 2015, we recognized$2.0 million, $3.4 million, $1.9 million and $2.3 million, respectively, in share-based compensation expense related to restricted stock and restricted stockunits. The amounts recognized in our consolidated statements of comprehensive (loss) income for tax benefits related to share-based payment arrangementsfor the years ended December 31, 2017 and 2016, the six months ended December 31, 2015 and the six months ended June 30, 2015 were not material. Weinclude substantially all share-based compensation expense as a component of selling, general and administrative expenses.As a result of the Company's emergence from Chapter 11 proceedings, all prior restricted stock awards and restricted stock units granted under the 2012Incentive Compensation Plan were canceled. As of December 31, 2017, restricted stock represented both non-vested restricted stock awards and restrictedstock units. Our restricted stock awards generally vest thirty-three percent per year over a three-year period. The following table summarizes restricted stockactivity under the 2015 Incentive Compensation Plan, for the year ended December 31, 2017: Number ofShares Weighted AverageGrant DateFair ValuePer ShareRestricted stock awards as of December 31, 2016522,442 $10.65Granted— —Vested(185,387) $12.06Forfeited(239,705) $7.38Restricted stock awards as of December 31, 201797,350 $15.99If a participant's employment is terminated without cause prior to the vesting dates, the participant will receive restricted stock on a pro-rata basis basedon the fraction of the performance period that has elapsed from the beginning of the performance period until the participant's termination. Any unvestedshares are forfeited and available for reissuance under the terms of the 2015 Incentive Compensation Plan. The fair value of our restricted stock is determinedbased on the quoted price of our common stock at the grant date. As of December 31, 2017, there was $0.8 million in unrecognized compensation cost relatedto restricted stock. We expect this cost to be recognized over a weighted average period of 0.48 years. For the year ended December 31, 2017, the value of ourvested restricted stock awards was immaterial.F-33NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS13. Segment InformationWe have determined our reportable segment based on our method of internal reporting, which disaggregates our business by geographic location. Weevaluate performance and provide resources to it based on operating income before depreciation, amortization and impairment, restructuring and othercharges, which we refer to as segment earnings. Nextel Brazil is our only reportable segment.F-34NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Brazil Corporate andEliminations Consolidated (in thousands)Year Ended December 31, 2017 - Successor Company Operating revenues$869,661 $106 $869,767Segment losses$(31,071) $(24,174) $(55,245)Less: Impairment, restructuring and other charges (179,727)Depreciation and amortization (37,187)Foreign currency transaction losses, net (1,271)Interest expense and other, net (85,028)Loss from continuing operations before reorganization items and income tax provision $(358,458)Capital expenditures$51,103 $— $51,103Year Ended December 31, 2016 - Successor Company Operating revenues$984,878 $168 $985,046Segment earnings (losses)$67,186 $(36,821) $30,365Less: Impairment, restructuring and other charges (1,384,811)Depreciation and amortization (172,383)Foreign currency transaction gains, net 76,615Interest expense and other, net (85,754)Loss from continuing operations before reorganization items and income tax provision $(1,535,968)Capital expenditures$51,307 $— $51,307Six Months Ended December 31, 2015 - Successor Company Operating revenues$529,332 $102 $529,434Segment losses$(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 $72,612Six Months Ended June 30, 2015 - Predecessor Company Operating revenues$683,611 $100 $683,711Segment losses$(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 $69,203December 31, 2017 - Successor Company Identifiable assets$957,495 $147,603 $1,105,098December 31, 2016 - Successor Company Identifiable assets$1,000,098 $418,411 $1,418,509F-35NII HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS14. Quarterly Financial Data (Unaudited) Successor Company First Second Third Fourth (in thousands, except per share amounts)2017 Operating revenues$250,955 $225,134 $204,808 $188,870Operating loss(79,849) (68,931) (83,372) (40,007)Net loss from continuing operations(92,675) (87,467) (94,428) (77,096)Net (loss) income from discontinued operations(38) 2,697 (92) (1,562)Net loss from continuing operations, per common share, basic$(0.92) $(0.87) $(0.94) $(0.77)Net income (loss) from discontinued operations, per common share,basic$— $0.02 $— $(0.02)Net loss from continuing operations, per common share, diluted$(0.92) $(0.87) $(0.94) $(0.77)Net income (loss) from discontinued operations, per common share,diluted$— $0.02 $— $(0.02) Successor Company First Second Third Fourth (in thousands, except per share amounts)2016 Operating revenues$226,557 $249,213 $260,836 $248,440Operating loss(54,064) (28,751) (1,386,696) (57,318)Net loss from continuing operations(32,807) (4,796) (1,411,554) (84,722)Net loss from discontinued operations(3,781) (5,075) (7,389) (3,749)Net loss from continuing operations, per common share, basic$(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)During 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 theirrespective fair values. See Note 4 for more information on these impairment charges.The sum of the per share amounts do not equal the annual amounts due to changes in the number of weighted average common shares outstandingduring the year.F-36NII HOLDINGS, INC. AND SUBSIDIARIESSCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANTNII HOLDINGS, INC.CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)(in thousands) Successor Company December 31, 2017 December 31, 2016ASSETSCurrent assets Cash and cash equivalents$28,167 $54,101Short-term intercompany receivables— 1,242Prepaid expenses and other104 —Total current assets28,271 55,343Long-term intercompany receivables15 3,146Other assets2 112,503Total assets$28,288 $170,992LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current liabilities Short-term intercompany payables$1,439 $4,570Total current liabilities1,439 4,570Other long-term liabilities148,796 400Total liabilities150,235 4,970Total (deficit) equity(121,947) 166,022Total liabilities and stockholders’ (deficit) equity$28,288 $170,992F-37NII HOLDINGS, INC. AND SUBSIDIARIESSCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANTNII HOLDINGS, INC.CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (PARENT COMPANY ONLY)(in thousands) Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015Operating revenues$— $— $— $—Operating expenses Selling, general and administrative— — — 429Impairment, restructuring and other charges— 36,839 — —Depreciation and amortization— 1,116 744 — — 37,955 744 429Operating loss— (37,955) (744) (429)Other (expense) income Interest expense, net— — — (119)Intercompany interest expense— (117,078) (118,365) (159,117)Interest income— — — 37Intercompany interest income231 197 97 125Equity in (loss) income of affiliates(300,107) (1,401,998) (167,324) 1,793,151Other (expense) income, net(1,138) (206) (3) 995 (301,014) (1,519,085) (285,595) 1,635,072(Loss) income before reorganization items and income tax benefit(301,014) (1,557,040) (286,339) 1,634,643Reorganization items— — (373) 68,355Income tax benefit (provision)— 3,183 (448) (1,002)Net (loss) income from continuing operations(301,014) (1,553,857) (287,160) 1,701,996(Loss) income from discontinued operations, net of income taxes— (16) 6,277 38,519Net (loss) income$(301,014) $(1,553,873) $(280,883) $1,740,515 Comprehensive (loss) income, net of income taxes Foreign currency translation adjustment$7,696 $169,785 $(248,781) $(205,899) Reclassification adjustment for sale of Nextel Argentina, Nextel Mexicoand Nextel Peru— — (1,672) 421,953 Other— — 4,734 2,956 Other comprehensive income (loss)7,696 169,785 (245,719) 219,010 Net (loss) income(301,014) (1,553,873) (280,883) 1,740,515 Total comprehensive (loss) income$(293,318) $(1,384,088) $(526,602) $1,959,525 F-38NII HOLDINGS, INC. AND SUBSIDIARIESSCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANTNII HOLDINGS, INC.CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)(in thousands) Successor Company PredecessorCompany Year EndedDecember 31, Year EndedDecember 31, Six Months EndedDecember 31, Six Months EndedJune 30, 2017 2016 2015 2015Cash flows from operating activities: Net (loss) income$(301,014) $(1,553,873) $(280,883) $1,740,515Adjustments to reconcile net (loss) income to net cash (used in) providedby operating activities284,932 1,554,075 280,910 (1,735,521)Net cash (used in) provided by operating activities(16,082) 202 27 4,994Cash flows from investing activities: Investments in subsidiaries(10,043) (36,356) (29,690) (61,405)Return of investments in subsidiaries162 34,260 35,315 23Other, net— (16) — —Net cash (used in) provided by investing activities(9,881) (2,112) 5,625 (61,382)Cash flows from financing activities: Other, net29 — — —Net cash provided by financing activities29 — — —Net (decrease) increase in cash and cash equivalents(25,934) (1,910) 5,652 (56,388)Cash and cash equivalents, beginning of period54,101 56,011 50,359 106,747Cash and cash equivalents, end of period$28,167 $54,101 $56,011 $50,359F-39NII HOLDINGS, INC. AND SUBSIDIARIESSCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT1. Basis of PresentationNII Holdings, Inc., or NII Holdings, our parent company, is a holding company that conducts substantially all of its business operations through NextelBrazil. See Note 1 to our consolidated financial statements for more information. As specified in Nextel Brazil's local financing agreements, there arerestrictions on the parent company's ability to obtain funds from certain of its subsidiaries through dividends, loans or advances. These condensed financialstatements have been presented on a “parent company only” basis. In accordance with this parent company only presentation, we have presented our parentcompany's investments in consolidated subsidiaries under the equity method. These condensed parent company only financial statements should be read inconjunction with our consolidated financial statements included elsewhere herein.2. Dividends From SubsidiariesFor the year ended December 31, 2016, NII Holdings' consolidated subsidiaries declared and paid $33.9 million in cash dividends to the parentcompany. NII Holdings' consolidated subsidiaries did not declare any dividends to the parent company during the year ended December 31, 2017, the sixmonths ended December 31, 2015 or the six months ended June 30, 2015.F-40 NII HOLDINGS, INC. AND SUBSIDIARIESSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS(in thousands) Balance atBeginning ofPeriod Charged toCosts andExpenses Deductionsand OtherAdjustments (1) Balance atEnd ofPeriodYear Ended December 31, 2017 — Successor Company Allowance for doubtful accounts$54,221 $76,518 $(88,728) $42,011Valuation allowance for deferred tax assets$6,945,044 $28,637 $(16,112) $6,957,569Year Ended December 31, 2016 — Successor Company Allowance for doubtful accounts$39,033 $77,883 $(62,695) $54,221Valuation allowance for deferred tax assets$5,290,813 $1,555,006 $99,225 $6,945,044Six Months Ended December 31, 2015 — Successor Company Allowance for doubtful accounts$— $32,279 $6,754(2)$39,033Valuation allowance for deferred tax assets$4,388,792 $1,010,438 $(108,417) $5,290,813Six 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_______________________________________(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.F-41Exhibit 10.18FORM OF AMENDED AND RESTATED SEPARATION AND RELEASE AGREEMENTThis Amended and Restated Separation and Release Agreement (“Agreement”) is made by and between NII Holdings, Inc., aDelaware corporation ("NII"), and ______ (hereinafter “Employee”) on March 8, 2018. NII and Employee are collectively referred toas the “Parties” and individually as a “Party.”RECITALS: WHEREAS, in connection with the wind down of its operations in Reston, Virginia, NII is undergoing a reduction-in-forcethat will result in the elimination of Employee’s position;WHEREAS, NII desires to provide Employee with separation benefits to assist Employee in the transition from employmentwith NII;WHEREAS, the parties to this agreement desire to resolve all issues, whether known or unknown, arising out of Employee’semployment and separation from employment in a mutually satisfactory manner, confidentially, and without resort to litigation; andWHEREAS, this Agreement replaces and supersedes the prior Amended and Restated Separation and Release Agreementdated July 25, 2017 and all amendments thereto.AGREEMENT:NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained and other good andvaluable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties do hereby covenant and agree:1. Termination of Employment; Separation Benefits A.Employee will be terminated from employment due to job elimination on April 1, 2019 or on an earlier date inthe sole discretion of NII as described below (the “Termination Date”). In consideration of Employee’s acceptance of thisAgreement:1)NII shall pay Employee two times annual base salary. Using Employee’s base salary as of March 8, 2018, thiswould be $931,500. This amount is subject to increase based on the base salary in effect on the Termination Date andshall be paid to Employee in one lump sum, payable within twenty (20) business days of the Termination Date or theEffective Date (as defined below).2)In the event that NII exercises its discretion to make a payment under NII’s cash bonus plan following theexecution of this Agreement and that bonus covers a period prior to and including the Employee’s Termination Date,NII shall pay to Employee the unpaid prorated bonus to which Employee would have been entitled based on NII’sactual performance and pursuant to the terms and conditions of the then applicable bonus plan if and when it is paid.3)In the event that NII triggers a payment pursuant to the Key Employee Incentive Plan (the “KEIP”), asprovided for in NII’s bankruptcy proceedings concluded in June 2015, NIIshall pay to Employee his portion of the KEIP pursuant to the terms and conditions of the KEIP and when paymentsare made to other eligible employees.B.The Parties hereby agree that if NII determines in its sole discretion that the transition of Employee’sresponsibilities is substantially complete prior to the Termination Date, then NII may accelerate the Termination Date with atleast 60 days prior written notice without any additional base salary or benefits owed to the Employee after the amendedTermination Date other than as provided in this Agreement.C.Employee hereby agrees that NII will deduct from the above-described payments all withholding taxes andother payroll deductions that NII is required by law to make from wage payments to employees. Employee hereby agrees thatthe payments and performances described in this Agreement are all that Employee shall be entitled to receive from NII exceptfor vested qualified retirement benefits, if any, to which Employee may be entitled under NII's ERISA plans. Employee furtheracknowledges and agrees that the payment described in Section 1(A) shall be deemed to satisfy NII’s obligations pursuant toNII’s Severance Plan (as amended and restated February 27, 2013) (the “Severance Plan”), that such payment represents thefull amount payable to Employee under the terms of the Severance Plan, and that the Severance Plan requires Employee toexecute this Agreement as a condition of receiving any such payments.2. ConsiderationEmployee hereby agrees and acknowledges that the benefits set forth in Section 1 of this Agreement are more than Employeewould otherwise be entitled to receive under any of NII’s policies and procedures and that they are in addition to anything of value towhich Employee already is entitled; and, specifically, that because execution of this Agreement is a condition of receiving any benefitsunder the Severance Plan, to the extent it would be deemed to apply to Employee’s termination, Employee is not otherwise entitled toany of the benefits set forth in Section 1. Employee acknowledges and agrees that the amount made payable to him is in completesatisfaction of any and all claims of any kind that he has made or could have in connection with his employment and separation fromemployment. 3. Complete ReleaseIn exchange for the consideration set forth herein, Employee hereby knowingly and voluntarily releases and forever dischargesNII and any related companies, including, without limitation, their affiliates, former and current employees, officers, agents, directors,shareholders, investors, attorneys, successors and assigns or any of them (the “Released Parties”) from all liabilities, claims, demands,rights of action or causes of action Employee had, has or may have against any of the Released Parties, including but not limited to anyclaims or demands based upon or relating to Employee’s employment with NII or the termination of that employment. This includesbut is not limited to a release of any rights or claims Employee may have under Title VII of the Civil Rights Act of 1964, whichprohibits discrimination in employment based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits payingmen and women unequal pay for equal work; the Age Discrimination in Employment Act of 1967, the (“ADEA”) which prohibits agediscrimination in employment; the Americans with Disabilities Act, which prohibits discrimination against otherwise qualified disabledindividuals; the Virginia Human Rights Act, which is a state statue prohibiting, among other things, employment discrimination; theFairfax County Human Rights Ordinance, which is a local ordinance prohibiting, among other things, employment discrimination; orany other federal, state or local laws or regulations prohibiting employment discrimination. This also includes but is not limited to arelease by Employee of any claims for wrongful discharge, breach of contract, under the Severance Plan, or any other statutory,common law, tort or contract claim that Employee had, has or may have against any ofthe Released Parties. This release covers both claims that Employee knows about and those that Employee may not know about.Notwithstanding the foregoing, neither party is releasing any right to enforce this Agreement, and Employee is not releasing:(1) any vested qualified retirement benefits under NII’s ERISA plan (although it does include a release of all claims to benefits underthe Severance Plan); (2) the right to continuation in NII’s medical plans as provided by COBRA; (3) any claims for unemploymentcompensation or workers compensation benefits or other rights that may not be released as a matter of law; (4) any claims solelyrelating to the validity of this general release under the ADEA, as amended; (5) any non-waiveable right to file a charge with the U.S.Equal Employment Opportunity Commission, the Occupational Safety and Health Act, the Securities and Exchange Commission orany other federal, state or local governmental agency or commission (“Government Agencies”); or (6) any rights to indemnificationpursuant to NII’s or any successor company’s Certificate of Incorporation, Delaware General Corporation Law or the Director andOfficer Indemnification Agreement between the Parties. If a government agency were to pursue any matters that are released herein,Employee agrees that this Agreement will control as the exclusive remedy and full settlement of all such claims by Employee formoney damages. However, Employee understands that this Agreement does not limit Employee’s ability to communicate with anyGovernment Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency.This Agreement does not limit Employee’s right to receive an award for information provided to any Government Agencies.Employee represents and warrants that Employee has no knowledge of any improper or illegal actions, misstatements oromissions by NII, is not aware of any facts or evidence that could give rise to such a claim, nor does Employee know of any basis onwhich any third party or governmental entity could assert such a claim. Employee further represents and warrants that he/she hasfulfilled Employee’s duties to NII to the best of Employee’s abilities and in a reasonable and prudent manner, and that Employee hasnot knowingly engaged, directly or indirectly, in any actions or omissions that could be perceived as improper or unlawful, nor hasEmployee failed to report any such actions or omissions to NII. Employee further represents and warrants that he/she has been paid allcompensation due and owing from NII as a result of Employee’s work, that he/she has received all rights to which Employee is entitledunder the Family and Medical Leave Act, and that he/she is not suffering from any undisclosed illness or injury that would becompensable under NII’s workers’ compensation insurance.Employee hereby acknowledges and agrees that this release is a general release and that by signing this Agreement, he issigning and agreeing to this release.4. Non-Release of Future ClaimsEmployee understands and agrees that he is waiving any and all rights and claims under the ADEA. Employee agrees that hiswaiver of these ADEA claims is knowing and voluntary, and understands that he is forever releasing any such claims that might havearisen before the date of this Agreement. The Parties agree that the decision to terminate Employee’s employment has been made priorto the execution of this Agreement.5. Encouragement to Consult with AttorneyEmployee has had the opportunity to consult with an attorney and has been encouraged to do so prior to executing thisAgreement. 6. Period for Review and Consideration of AgreementEmployee may have, if desired, 45 days within which to consider this Agreement, first proposed to him on November 13,2015. Employee acknowledges and agrees that any changes made to this Agreement after it first was offered do not re-start the runningof the 45-day period. Employee may execute the Agreement prior to the expiration of the 45-day period but in no event may heexecute it prior to the Termination Date. Employee acknowledges that in the event he decides to execute this Agreement in fewer than45 days, he has done so with the express understanding that he has been given and declined the opportunity to consider this release fora full 45 days. Employee acknowledges that his decision to sign the Agreement in fewer than 45 days was not induced by NII throughfraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the 45-day time period. Employeeacknowledges receipt of the OWBPA document appended to this Agreement that contains the employees affected by this terminationprogram and their titles and ages.7. Employee's Right to Revoke AgreementEmployee may revoke this Agreement within seven (7) days of Employee's signing it. Revocation can be made by delivering awritten notice of revocation to Shana Smith, General Counsel and Corporate Secretary, NII Holdings, Inc., 1875 Explorer Street, Suite800, Reston, VA 20190. For this revocation to be effective, written notice must be received by Ms. Smith no later than the close ofbusiness on the seventh day after Employee signs this Agreement. If Employee has not revoked the Agreement, the eighth (8th) dayafter Employee signs this Agreement shall be the Effective Date for purposes of this Agreement.8. No Future LawsuitsEmployee promises never to file a lawsuit asserting any claims that are released in Section 3 of this Agreement. In the eventEmployee breaches this Section 8, Employee shall pay to NII all of its expenses incurred as a result of such breach, including but notlimited to, reasonable attorney’s fees and expenses.9. Disclaimer of LiabilityThis Agreement and the payments and performances hereunder are made solely to assist Employee in making the transitionfrom employment with NII, and are not and shall not be construed to be an admission of liability, an admission of the truth of any fact,or a declaration against interest on the part of NII.10. Confidential Information/Return of PropertyEmployee covenants and agrees that Employee shall not use, divulge, publish or disclose to any person or organization,confidential information obtained by Employee during the course of Employee’s employment or related to Employee’s cessation ofemployment (“Confidential Information”). The Confidential Information consists of the following: (a) personal, financial, private orsensitive information concerning NII’s executives, employees, customers and suppliers; (c) information concerning NII’s finances,business practices, long-term and strategic plans and similar matters; (d) information concerning NII’s formulas, designs, methods ofbusiness, trade secrets, technology, business operations, business records and files; and (e) any other non-public information which, ifused, divulged, published or disclosed by Employee, would be reasonably likely to provide a competitive advantage to a competitor orto cause any of NII’s executives or employees embarrassment. Employee further agrees to return immediately to NII all of NII’sproperty, if any, in Employee’s possession or under Employee’s control upon the Termination Date or such earlier date as Employee’semployment shall cease. Employee agrees that if he intentionally damages any NII property following notification of termination, thisAgreement becomes null and void. Employeeacknowledges that in addition to the promises contained in this Agreement, he remains bound by the Non-Competition andConfidentiality Agreement between the Parties. 11. Statements Regarding the Parties The Parties agree not to do or say or write anything, directly or indirectly, that reasonably may be expected to have the effect ofcriticizing or disparaging the other Party. In addition, the Employee agrees not to do or say or write anything, directly or indirectly, thatreasonably may be expected to have the effect of criticizing or disparaging any director of NII; any of NII’s employees, officers oragents; or diminishing or impairing the goodwill and reputation of NII or the products and services it provides. Employee furtheragrees not to assert that any current or former employee, agent, director or officer of NII has acted improperly or unlawfully withrespect to Employee or any other person regarding employment. 12. Cooperation with LitigationEmployee will cooperate fully with NII in its defense of any lawsuit filed over matters that occurred during the course ofEmployee’s employment with NII, and Employee agrees to provide full and accurate information with respect to the same.13. Litigation AssistanceEmployee agrees that, unless compelled by valid subpoena or other court order, and in such case only after providing sufficientnotice to NII of such subpoena or court order to allow NII a reasonable opportunity to object to the same, Employee shall not, directlyor indirectly, assist any person or entity in connection with any potential or actual litigation against NII or any other of the ReleasedParties described in Section 3 of this Agreement.14. Execution of DocumentsEach of the Parties hereto shall execute any and all further documents and perform any and all further acts reasonably necessaryor useful in carrying out the provisions of this Agreement.15. Invalid ProvisionsThe invalidity or unenforceability of any particular provision of this Agreement shall not affect the validity or enforceability ofany other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision wereomitted.16. AcknowledgmentEmployee acknowledges that Employee has signed this Agreement freely and voluntarily without duress of any kind.Employee has conferred with an attorney or has knowingly and voluntarily chosen not to confer with an attorney about the Agreement. 17. Entire AgreementThis Agreement contains the entire understanding of Employee and NII concerning the subjects it covers and it supersedes allprior understandings and representations, except that Employee acknowledges and confirms the continuing effectiveness of theprovisions of any Confidentiality Agreement between Employee and NII. NII has made no promises to Employee other than those setforth herein. This Agreement may not be modified or supplemented except by a subsequent written agreement signed by all Parties.18. SuccessorshipIt is the intention of the parties that the provisions hereof be binding upon the Parties, their employees, affiliates, agents, heirs,successors and assigns forever.19. Governing LawThis Agreement shall be governed by the laws of the Commonwealth of Virginia, without regard to its conflict of lawsprinciples.EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND ISVOLUNTARILY ENTERING INTO IT. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS ARELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates stated below.Date Employee NII HOLDINGS, INC. March 8, 2018 By: Exhibit 10.22PRIMEIRO ADITIVO AO CONTRATO DE TRABALHOFIRST AMENDMENT TO THE EMPLOYMENTAGREEMENT Pelo presente instrumento, de um lado:By this instrument: 1. NEXTEL TELECOMUNICAÇÕES LTDA., com sede naCidade de São Paulo, Estado de São Paulo, na Avenida dasNações Unidas, 14.171, 27º andar, Torre “C” - Crystal Tower,Condomínio Rochaverá Corporate Towers, Vila Gertrudes, CEP04794-000, inscrita perante o CNPJ/MF sob o nº66.970.229/0001-67, neste ato representada por seu representantelegal, a seguir denominada simplesmente EMPREGADORA; e1. NEXTEL TELECOMUNICAÇÕES LTDA, with headoffices in the City of São Paulo, State of São Paulo, at Avenidadas Nações Unidas, 14.171, 27th floor, Tower “C” - CrystalTower, Condominium Rochaverá Corporate Towers, VilaGertrudes, Zip Code 04794-000, enrolled with TaxpayerRegistration CNPJ/MF under no. 66.970.229/0001-67, herebyrepresented by its legal representatives, hereinafter referred to asEMPLOYER; and2. Mr. ROBERTO RITTES, residente e domiciliado na RuaCovenção de Itu 57, Cidade de São Paulo, Estado de São Paulo,portador da CTPS de nº 15775, Série 197, portador do RG nº26801865-0, inscrito no CPF/MF sob o nº 225.282.758-65, aquidenominado simplesmente EMPREGADO,2. Mr. ROBERTO RITTES, resident and domiciled at RuaConvenção de Itu, 57 city of São Paulo, State of São Paulo,bearer of Employment Booklet No. 15775 Series 197, IdentityCard No. 26801865-0 enrolled with the CPF/MF under no.225.282.758-65, hereinafter referred to as EMPLOYEE, EMPREGADO e EMPREGADORA são doravante tambémdenominadas, em conjunto, como “Partes” e, individualmente,como “Parte”.EMPLOYER and EMPLOYEE are hereinafter individuallyreferred to as a “Party”, and jointly referred to as “Parties”. CONSIDERANDO QUE:WITNESSETH: A. CONSIDERANDO que as Partes firmaram em 24 de abrilde 2017 o Contrato de Trabalho (o “Contrato”);A. WHEREAS, the Parties entered into on April 24, 2017an Employment Agreement (the “Agreement”); B. CONSIDERANDO que as Partes desejam mutuamente alterarcertos termos e condições do Contrato.B. WHEREAS, the Parties mutually agree to modify certainterms and conditions of the Agreement.Resolvem as Partes celebrar o presente Aditivo ao Contrato (o“Aditivo”), nos termos e condições que seguem.CLAUSULA PRIMEIRA – BÔNUS ANUAL1.1 Pelo presente instrumento e na melhor forma de direito, asPartes resolvem, de comum acordo, alterar o limite do BônusAnual do EMPREGADO e a periodicidade de pagamento emcaso de atingimento das metas. Dessa forma, a Cláusula 5.1 passaa vigorar com a seguinte redação:5.1. O EMPREGADO fará jus a um Bônus Anual de até R$ R$3.840.000,00 (três milhões, oitocentos e quarenta mil reais),composto por um pagamento anual em data a ser determinadapela EMPREGADORA se as metas mínimas anuaisespecificadas forem atingidas. As Partes reconhecem econcordam que as métricas e metas de desempenho específicasdo EMPREGADO serão estabelecidas pelo Comitê deRemuneração do Conselho de Administração da NII Holdings,Inc. (“NII”), controladora do EMPREGADOR, com base noorçamento anual do EMPREGADOR e um plano de bônus epagamento será condicionado ao atingimento das metas mínimasem todas métricas de desempenho e sujeito à aprovação doComitê de Remuneração do Conselho de Administração da NII.Todos os valores aqui indicados são brutos.The Parties hereby agree to execute this First Amendment to theAgreement (the "Amendment"), under the following terms andconditions.SECTION ONE – ANNUAL BONUS1.1 According to the present instrument and under the bestterms of law, the Parties, by mutual agreement, decide to changethe limit of the Annual Bonus of the EMPLOYEE and theperiod of payment in case minimum targets are achieved.Accordingly, Section 5.1 shall read as follows:5.1. The EMPLOYEE will be entitled to an Annual Bonus ofup to 3,840,000 Reais (three million, eight hundred and fortythousand reais), comprised of one annual payment to be madeon the date determined by the EMPLOYER, if specifiedminimum annual targets are achieved. The Parties acknowledgeand agree that the EMPLOYEE’s specific performancemeasures and targets will be set by the CompensationCommittee of the Board of Directors of NII Holdings, Inc.(“NII”), the ultimate controlling parent of EMPLOYER, basedon the EMPLOYER’s annual budget and a bonus plan, and thepayment is contingent on achieving minimum thresholds for allperformance measures and subject to approval by theCompensation Committee of the Board of Directors of NII. Allamounts herein are gross. CLÁUSULA SEGUNDA - RATIFICAÇÃO2.1 Todos os demais termos e condições estabelecidos noContrato e não expressamente alterados pelo presente Aditivopermanecem inalterados, sendo, nesta oportunidade,expressamente ratificados pelas Partes.E por estarem assim justas e contratadas, as Partes assinam opresente Aditivo em 02 (duas) vias, para que produzam osmesmos efeitos legais, na presença de 02 (duas) testemunhas.[Página de assinatura ao Primeiro Aditivo ao Contrato deTrabalho datado de 24 de abril de 2017]São Paulo, 12 de janeiro de 2018CLAUSE TWO - RATIFICATION2.1 All other terms and conditions established in the Agreementand not expressly modified by this Amendment remainunchanged, being, on this occasion, expressly ratified by theParties.In witness hereof, the Parties sign the present Amendment in 02(two) counterparts, to produce the same legal effects, in thepresence of 02 (two) witnesses.[Signature page to the First Amendment to the EmploymentAgreement dated April 24th, 2017]São Paulo, January 12th, 20182/s/ Luana Pedersini de Matos NEXTEL TELECOMUNICAÇÕES LTDA. /s/ Roberto Rittes ROBERTO RITTESTestemunhas: / Witnesses:1. __________________________ 2. __________________________Nome: / Name: Nome: / Name:CPF: / Id#: CPF: / Id#:3Exhibit 21.1SUBSIDIARIES OF NII HOLDINGS, INC.(as of December 31, 2017)CorporationJurisdiction ofIncorporationNextel International Services, Ltd.Delaware, USANII Capital Corp.Delaware, USANII International Holdings S.à r.l.LuxembourgNII International Services S.à r.l.LuxembourgNII International TelecomLuxembourgNII Mercosur Móviles, S.L.SpainNII Mercosur Telecom, S.L.SpainNIU Holdings, LLCDelaware, USANextel Holdings S.à r.l.LuxembourgNII International Mobile S.à r.l.LuxembourgMcCaw International (Brazil), LLCVirginia, USAAirfone Holdings, LLCDelaware, USANextel Participações Ltda.BrazilNextel Telecomunicações Ltda.BrazilNextel Telecomunicações de Longa Distancia Ltda.BrazilSunbird Participações Ltda.BrazilSunbird Telecomunicações Ltda.BrazilExhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsNII Holdings, Inc.:We consent to the incorporation by reference in the registration statements (No. 333-205259 and 333-205665) on Forms S-8 and S-3, respectively, of NIIHoldings, Inc. of our reports dated March 15, 2018, with respect to the consolidated balance sheets of NII Holdings, Inc. and subsidiaries (the Company) as ofDecember 31, 2017 and 2016 (Successor), the related consolidated statements of comprehensive (loss) income, changes in stockholders' (deficit) equity, andcash flows for the years ended December 31, 2017 and 2016 (Successor), for the six-month periods ended December 31, 2015 (Successor) and June 30, 2015(Predecessor), the related notes and financial statement schedules (collectively, the consolidated financial statements), and the effectiveness of internalcontrol over financial reporting as of December 31, 2017, which reports appear in the December 31, 2017 annual report on Form 10-K of NII Holdings, Inc.Our report dated March 15, 2018, on the effectiveness of internal control over financial reporting as of December 31, 2017, expresses our opinion that theCompany did not maintain effective internal control over financial reporting as of December 31, 2017 because of the effect of a material weakness on theachievement of the objectives of the control criteria. A material weakness related to an insufficient number of experienced resources at Nextel Brazil, whichimpacted, among other things, the Company's ability to reach timely conclusions and validate the completeness and accuracy of information used to supportaccounting analyses across multiple accounts was identified.Our report dated March 15, 2018, on the consolidated financial statements, contains an explanatory paragraph that states that on June 26, 2015, the Companysatisfied the conditions to emerge from Chapter 11 bankruptcy proceedings. Accordingly, the consolidated financial statements as of and for the years endedDecember 31, 2017 and 2016 (Successor) and for the six-month period ended December 31, 2015 (Successor) have been prepared in accordance withAccounting Standards Codification Topic 852, Reorganizations. The Company applied fresh-start reporting as of June 30, 2015 and recognized net assets atfair value, resulting in lack of comparability with the consolidated financial statements of the Predecessor./s/ KPMG LLPMcLean, VirginiaMarch 15, 2018Exhibit 31.1CERTIFICATION PURSUANT TORULE 13a-14(a)I, Roberto Rittes, certify that:1.I have reviewed this annual report on Form 10-K for the period ended December 31, 2017 of NII Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 15, 2018 /s/ ROBERTO RITTES Roberto Rittes Principal Executive Officer Exhibit 31.2CERTIFICATION PURSUANT TORULE 13a-14(a)I, Daniel E. Freiman, certify that:1.I have reviewed this annual report on Form 10-K for the period ended December 31, 2017 of NII Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 15, 2018 /s/ DANIEL E. FREIMAN Daniel E. Freiman Chief Financial Officer Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K for the period ended December 31, 2017 (the “Report”) of NII Holdings, Inc. and subsidiaries (the“Company”), I, Roberto Rittes, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of theSarbanes-Oxley Act of 2002, that to my knowledge and belief:1.The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.March 15, 2018 /s/ ROBERTO RITTES Roberto Rittes Principal Executive Officer Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K for the period ended December 31, 2017 (the “Report”) of NII Holdings, Inc. and subsidiaries (the“Company”), I, Daniel E. Freiman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of theSarbanes-Oxley Act of 2002, that to my knowledge and belief:1.The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.March 15, 2018 /s/ DANIEL E. FREIMAN Daniel E. Freiman Chief Financial Officer 

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