NII Holdings

Latin American carrier NII Holdings ( NIHD) is a prime target for consolidation by a bigger telecommunications player because of its strong wireless spectrum assets, a 10 million-plus wireless subscriber base and the strongest average revenue per user in the region, according to Morningstar.

"Now armed with spectrum, and more than 10 million subscribers, the firm should start to garner plenty of takeout attention," writes Morningstar. The company currently has wireless operations in Mexico, Brazil, Argentina, Peru and Chile, over 800 megahertz of spectrum and a walkie-talkie partnership with Sprint ( S) to go with its subscribers.

The region's leading carrier and the fourth largest wireless provider in the world America Movil ( AMX) is a strong candidate to take out NII Holdings as it continues its buying spree.

"Internationally, America Movil continues to buy-up everything in sight. After engulfing nearly all of cable-giant Net Servicos in Brazil, the firm recently swallowed up the remaining 40% of fixed-line brethren Telmex that it didn't already own. Given its seemingly insatiable hunger for expansion, scale, and synergies, we wouldn't be at all surprised to see it make a similar play for NII Holdings at some point," writes Morningstar. That's especially true after a 2010 merger between NII Holdings and Televisa was put on ice in Aug. 2011.

Morningstar gives NII Holdings a five star rating and a fair value of $42 a share, more than double its current share price of $20.46. The company is expected to earn $25 cents a share in its first quarter 2012 results due on Feb. 23, according to Zacks consensus estimates. Analysts give the company an estimated price target of $36.04 a share on 2012 revenue of $7.4 billion and profit of $279 million, according to data compiled by Bloomberg. For more on NII Holdings shares, see 5 telecom picks for 2012.

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