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Technology Stocks : NEXTEL
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To: Paul Smith who wrote (7823)10/6/1998 7:15:00 AM
From: John F. Dowd   of 10227
 
Dear Paul: As I said it was done simplistically. In a capital intense environment like NXTL's I figured that the debt was representative of imbedded infrastructure and therefore would offset any premium demanded by the unique infrastructural advantages provided by NXTL. On the other hand if you want to include it there are about 5 bill. (18 /share) in various bondds out there (Excite Summary). T offered 23/share and the assumption of debt (how else could they buy a company out- walk away from the debt?). So true there is a lot more debt to be assumed with NXTL but it is also commensurate with the much larger infrastructure necessary to create a nation-wide all digital presence. So I left out the debt consideration. I guess the point is that if T was willing to pay that price for a company with 1/4 the subscriber base no nationwide footprint and arpu's of 43% less than NXTL's and not possessing the licenses and technological innovation of NXTL, NXTL must be worth a heck of a lot more especially if you want an all digital system. That is where the takeover aspect of NXTL hangs in the balance. It is kind of like the battle between ATM and IP that goes on in the voice/data industry as we speak. The buyer will have to be a very savvy digitally oriented entity.

JFD
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