Nextel's quarterly loss shrinks, subscribers soar
By Jessica Hall
NEW YORK, July 18 (Reuters) - Wireless telephone company
Nextel Communications Inc. on Tuesday said its
second-quarter loss shrank amid record subscriber growth and
higher average revenues per customer.
In the second quarter, Nextel's loss was $292 million, or
38 cents a share, an improvement when compared with the loss of
$315 million, or 52 cents a share, a year ago.
The quarterly loss, however, was larger than the 36-cent
loss expected by Wall Street analysts, according to research
firm First Call/Thomson Financial.
Nextel's second-quarter revenues jumped 59 percent to $1.26
billion, compared with $793 million a year ago. Shares of
Nextel were unchanged at 68-13/16 on Nasdaq.
Reston, Va.-based Nextel also said Tuesday it is weighing
partnerships with various U.S. and international wireless and
wired-based telephone companies, as well Internet-related
firms.
"Most (partnership) opportunities are within the telecom
industry...but there are others who are involved in Internet
data services who may be interested in partnerships or
strategic alliances as far as offering content over wireless
platforms," Nextel Chief Financial Officer Steve Shindler said
in a telephone interview.
Nextel, which last year held unsuccessful merger talks with
long-distance telephone company WorldCom Inc. , said it
was considering a wide range of partnership scenarios but
declined to be more specific. Nextel also said it may enter the
upcoming auctions of wireless licenses with a partner.
Operating cash flow (earnings before interest, taxes,
depreciation and amortization) increased 166 percent to $290
million in the second quarter, compared with $109 million a
year ago. Analysts track cash flow as a barometer of health for
companies with high debt loads.
Nextel's average monthly revenues per domestic subscriber
was an industry-leading $74, compared with $72 in the first
quarter. It expects its average revenues to be at least $72 in
the near term.
Nextel, which serves mostly high-spending business
customers rather than consumers, added 677,000 new subscribers
in the second quarter, bringing its total subscriber base to
6.2 million customers globally.
In the United States, Nextel added 560,600 subscribers,
beating its own forecast of 500,000 new subscribers. Its
customer turnover, or churn rate, remained at about 2 percent
for domestic customers.
Nextel expects its strong subscriber growth and low
customer turnover to continue.
"The reality ... is that we averaged 550,000 net
(subscriber) adds in the first two quarters of this year. I see
no reason why we can't continue to add customers at that rate,"
Nextel Chief Executive Tim Donahue said in a conference call
with analysts and reporters.
"Increased revenue and net subscriber additions and record
cash flow are particularly pleasing in light of the
increasingly competitive national and global wireless
marketplace," Donahue said.
Nextel's telephones offer a two-way "walkie talkie"
feature, in addition to traditional wireless services, that
appealed to traditional blue collar industries such as
construction or landscaping.
Nextel, however, has been working to expand its customer
base. White-collar customers comprise about 30 percent of its
customers and that market its fastest-growing segment.
To support the soaring subscriber growth, Nextel's domestic
capital spending rose to $686 million in the second quarter,
compared with $661 million in the first quarter of 2000. It
expects capital spending to be at similar levels in the third
quarter.
Domestic revenues jumped 55 percent to $1.20 billion, while
domestic cash flow grew 108 percent to a record $323 million.
Nextel's international operations added a record 116,400
proportionate subscriber additions in the second quarter. The
proportionate results reflect Nextel's ownership in various
joint ventures.
Second-quarter international revenues jumped 191 percent
from the year ago quarter, to $64 million. Operating cash flow
losses declined 28 percent to $33 million.
International capital expenditures increased to $137
million, compared with $116 million in the first quarter.
The company said it is "encouraged" by the initial success
of its new services: global roaming, which allows customers to
use one phone and one number in more than 65 countries, and
wireless data.
About 40,000 customers currently use its new Nextel Online
Internet services, which it launched in 750 cities in the U.S.
in April. Nextel expects about 4-5 percent of its customers to
use the data service by year-end.
About 49 percent of its domestic customer base already has
an Internet-ready telephone handset, which Nextel expects will
help boost the acceptance of its wireless data services.
(( -- Jessica Hall, New York newsroom 212-859-1729))
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