By Luciana Bruno
SAO PAULO (Reuters) - Nextel operator NII Holdings Inc is stepping up investment in Brazil to expand its tiny share of the mobile telephone market and has no plans to sell out despite an economic slowdown, its chief operating officer said.
The downsized company will plough into Brazil a good part of the resources generated by the recent $1.8 billion sale of its Mexican operations to AT&T, NII Holdings COO and Nextel Brazil president, Gokul Hemmady, told Reuters.
Reston, Virginia-based NII Holdings has sold its operations in Chile and Peru and is in talks to sell its Argentine unit this year, leaving Brazil as its sole Latin American operation.
Hemmady dismissed speculation that his company, which is expected to emerge from bankruptcy protection within weeks, also plans to exit Brazil.
"We have no intention of selling our operation here. We have left five countries, when we sell Argentina, to stay in one," he said in an interview on Tuesday. "Having said that, there is always a price for every sale," he added.
Nextel will launch more competitive packages next week for voice and data customers in Brazil, said Hemmady, who did not give a dollar number for the planned investment.
Despite a slowdown that is pushing Brazil into recession, Nextel's Brazilian unit turned a profit of $3.5 million in the first quarter, compared to a $49.3 million loss a year earlier.
Nextel's network has not attracted potential buyers in the recent wave of telecom mergers in Brazil because much of it still works on decades-old radio technology that lets customers use their cell phones like walkie-talkies. Modern smartphones have an array of instant messaging options that have made the push-to-talk function obsolete.
By moving to a network built on smartphones, Nextel has begun to gain subscribers for its 3G plans in Brazil, whilst the number of radio users has declined. Of its 4.2 million customers in Brazil today, more than half are on voice and data plans.
To expand its fourth generation (4G) network from Rio de Janeiro to Sao Paulo, its largest market, Nextel will need to buy spectrum in the 1.8 GHz frequency that the government plans to auction this year, the company's marketing and sales vice president George Dolce said.
Nextel is Brazil's fifth operator with just 0.67 percent of the wireless market. Grupo Oi SA, America Movil SAB de CV, TIM Participações SA, which is controlled by Telecom Italia (MILAN:TLIT) SpA, and Telefonica (MADRID:TEF) Brasil SA each have between 18 and 29 percent.