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Monday October 18, 4:24 pm Eastern Time
Nextel's loss shrinks, subscriber growth soars
By Jessica Hall
NEW YORK, Oct 18 (Reuters) - Wireless telephone company Nextel Communications Inc.
on Monday reported a smaller-than- expected third quarter loss on record global subscriber
growth and high average customer spending and use.
Reston, Va.-based Nextel's (NasdaqNM:NXTL - news) third quarter loss attributable to common shareholders was $361 million,
or $1.10 a share, down from $442 million, or $1.56 a share, a year ago. Analysts had expected Nextel to post a loss of $1.11 a
share, according to research firm First Call/Thomson Financial.
Nextel's operating cash flow (earnings before interest, taxes, depreciation and amortization) was $175 million, up 61 percent over
the prior second quarter. Revenues increased to $889 million from $506 million a year ago.
Nextel shares hit an intraday high of 77-7/16, but settled somewhat lower at 75-1/4, up 5/16, in heavy early afternoon trading on
Nasdaq.
''This quarter was our best ever,'' Nextel's President and Chief Executive Tim Donahue said in a statement. ''Strong demand for
Nextel's unique approach to offering business wireless services pushed domestic subscribers past the 4 million mark ...
international operations gained significant momentum,'' he said.
Nextel added 458,000 domestic subscribers, bringing its total domestic subscriber base to 4.05 million customers, a 68 percent
increase over year-ago levels.
Nextel, which serves mostly high-spending business customers rather than consumers, said its domestic average revenues per
subscriber was $74, up $4 from a year ago. Nextel expects its industry-leading average monthly subscriber revenues to remain
above $70 through the end of next year.
Internationally, Nextel increased its subscriber base by 70,500 proportionate subscribers to 319,200. The proportionate figures are
based upon Nextel's ownership interests in various ventures.
''International is giving the first sign of a turn around. International was as good as I could have expected. It's a great sign,'' said
Prudential analyst Chris Larsen.
While the fourth quarter historically is not Nextel's strongest quarter due to several business holidays, the company expects its
overall, strong subscriber growth to continue.
Nextel expects to add 1.7 million domestic subscribers in 1999 and even more in 2000, Nextel's Nextel's Chief Financial Officer
Steve Shindler said in a telephone interview.
''Momentum in the business is strong and we expect that to continue. As we move into 2000, we're going to add even more
subscribers than we'll see in 1999,'' Shindler said.
Total domestic minutes of use, or calling volume on its network, grew to 4.9 billion minutes during the third quarter, up 82 percent
over levels a year ago.
Capital spending was $484 million during the third quarter of 1999 and included $453 million for domestic operations and $31
million for international operations.
Nextel reiterated that it expects its capital expenditures per new subscriber in its core cities to be at or below $1100, down from
$1250 a year ago.
''We expect the financial progress of Nextel to continue to show strong improvement over the coming quarters,'' Shindler said.
Nextel expects new products, such as data services and international roaming telephones, to be rolled out commercially next year.
These services will somewhat boost revenues and cash next year and substantially add more after that, Shindler said.
The company said it may have an announcement regarding a geographic expansion when it unveils fourth quarter results.
Nextel said it had enough capacity and spectrum to meet its current business plan. It may continue to acquire more channels for
future products and services.
Nextel planned to buy wireless telephone licenses from bankrupt wireless carrier NextWave Telecom Inc., but the plan was held
up by a bankruptcy court in August.
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