So I would not be a buyer of NIHD… Goldman has plenty of reasons that make me think that this stock is done going higher… when we look at the mobile operators the key metrics are new subscribers, the subscriber growth outlook, the average revenue per user… which is known by its acronym ARPU, which is just to confuse you… the churn rate, which is the rate at which subscribes terminate their service agreements… the lower the churn rate, the healthier the subscriber base… and the companies bad debt expense… which represents subscribers who have used the service but have not paid their bills… it looks like NIHD’s subscribers growth targets, according to the axe, have been too aggressive… especially as it seems that the pace of new additions has peaked… particularly in Argentina.

The companies churn rate… the people who are leaving to go to competitor… spiked by 40% in the last quarter… 1.4% to 2.1%… very bad sign the axe says… as did the percentage of subscribers who are not paying their bills… it is bad debt expense… which jumped from 1.9% in the first quarter of 2008 to 2.8% in the first quarter of 2008... don’t forget their was a swine flu incident in Mexico… but I can live with all of these problems given my believe in the strength of the internet mobile thesis… if not for one huge issue… this is one that I am coming up with myself… I do not need the axe… I may not be able to go up against the axe, but I can certainly add to hit the axe’s excellent work… see there are two big 3G spectrum auctions happening in Mexico and Brazil… where they auction off different airwaves… they are both scheduled for the fourth quarter of this year.

Now, the bulls in this stock think that the auctions will be a positive for NIHD… me, I disagree… you see NIHD will have to build out a 3G network… I think that it does get them… people might be excited… but they will have to build out a new 3G network on top of its existing network… and we know from the Digitimes article that I quoted earlier… the problems that they are having in China with the 3G build out, it is a hugely expensive project to build out the towers, the antennas, everything that you need to make these systems work… I think that the expectations of what it will cost NIHD to do its own 3G build out are way too low… or in other words, if you caught the last segment, NIHD’s problem is CommScope… a play that I just recommended as a play on the fact that building these 3G networks is very pricey and difficult, and CommScope does it… NIHD can get the spectrum licenses in Mexico and Brazil, but it is not at all clear to me that it can afford to build the actual 3G network without taking a huge amount of worrisome debt… or diluting its equity… or both.

People continually underestimate the cost of the build out of these very expensive internet systems… because they are just now realizing what a bunch of band width hogs these 3G phones are… China saw it, that is why we CommScope… AT&T saw it… and now I think that NIHD is going to see it… and when it does I believe that that will cause the stock to take a huge tumble.

But there is a winner here, a stock that works because of NIHD’s pain is its gain… and that stock is, America Movil (AMX)… now I am not telling you to buy AMX but I am giving you the one hand the other… American Movil is the largest wireless in Latin America… but most importantly it has made the upgrade… it started a year ago, it is already thru the bottle neck… these 3G auctions will allow American Movile to grow its wireless broad band network more efficiently… I think that it is going to be in the 3G sweet shop… especially as its competitor, NIHD, realizes just how much capital it will have to deploy to build out a legitimate 3G network… and faces the problems that China is currently facing… the 3G sweet spot… hum.

All of this is going to boomerang in American Movile’s favor… on top of that, American Movile’s churn rates have been declining… meaning that it has a more stabile subscriber base… plus, when you invest in this stock you have got some savy fellow share holders who understand the wireless business… that guy Carlos Slim, Latin American Telco tycoon, he owns 32% of the company… AT&T, which knows and understands the 3G bottle necks, owns 17%… NIHD’s share holder base has nothing to compare these two.

Here is the bottom line…