..........................NEXTEL.....................SPRINT PCS
Revenue.............$889M....100.0%.............$844...100.0%
Cost of Service.....175.........19.7%...............579....68.5%
SG&A.................539.........60.6%...............662....78.4%
Depr & Amort..... 261.........29.4%...............393....46.6%
Operating loss.......(86).........(9.7%)............(790)..(93.6%)
Interest expense....220.........24.7%..............176....20.9%
.........................NEXTEL...................SPRINT PCS
Customers.................4.1M........................4.7M
Adds.......................458.........................720
ARPU.......................74..........................54
Qtr. Rev. from adds....101.7M.................116.6M
Churn........................2%.......................3 1/2%
EBITDA....................210M+.................(397M)
Capex......................453 domestic...........608
L/T debt....................$8.44B................$9.63B
Annualized revenue...$3.64B...................$3.04B
Here is what the numbers mean WHEN TAKEN IN CONTEXT:
1. NXTL is ahead of PCS in the drive toward EBITDA +, free cash flow, and profitability. The spread is $607 million.
2. NXTL's arpu is 37% higher than PCS's.
3. NXTL has almost 57% LESS customer turnover (churn). That is, PCS's churn rate is 75% higher than NXTL's.
4. NXTL is EBITDA +; PCS has 1 1/2-2 years before it will be EBITDA +, based on comparing with NXTL's financial history. PCS is AT LEAST 18 months behind in its quest for EBITDA +.
5. PCS's buildout is behind NXTL's. (See churn, revenue, size of customer base, debt and capex.)
6. PCS will REQUIRE considerably more revenue than NXTL to be both EBITDA+ and profitable. Notice that while revenues are approximately the same, expense % are considerably higher for PCS, indicating is behind NXTL is achieving its goal of profitability.
7. Assuming NXTL adds 1.8 million users in 2000 while PCS adds 3.5 million in 2000, NXTL will have 6.2 million users and PCS will have 9.1 million.
8. Based on #7 above, and further assuming arpu's of $74 and $54, respectively, NXTL's annualized revenue at 12/31/2000 will be $5.5 BILLION vs. PCS's $$5.9 BILLION.
IT'S MY BELIEF that PCS will require more debt and capex to build out its system. While I can't prove it by the numbers, my belief is based on anecdotal evidence of the existing PCS system. It reminds me of NXTL's system 2 years ago. Can anyone doubt that PCS must build a larger system than NXTL because the commodity market is bigger than the mobile work group market? Thus giving rise to higher costs and a higher revenue breakeven point. |
