Reuters
UPDATE - Nextel says may skip 3G, hopes for free cash in 03
Tuesday December 3, 7:54 am ET
AMSTERDAM, Dec 3 (Reuters) - U.S. wireless telecoms carrier Nextel (NasdaqNM:NXTL - News) said on Tuesday it hoped to generate free cash-flow before 2004, on the early side of previous forecasts, partly by cutting spending, including on new networks.
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Nextel's Chief Technology Officer Barry West told an investor conference in London that the company is considering avoiding huge investments in third generation (3G) mobile telephony and opting instead for its successor fourth generation when that comes along at the end of the decade.
"With the advent of our Vocoder (a network upgrade which increases capacity for voice calls), we are able to avoid the expense of the 3G overlay, may be avoiding 3G totally. We're actually looking at fourth generation," he told a Nasdaq conference broadcast on the Internet.
In October Nextel's Chief Executive Tim Donahue said that Nextel had not yet taken a decision on when it would build a high-speed wireless network.
West said that the real benefit of a 3G wireless broadband network, which is mostly touted as a necessity to offer fast data communications, was that it offers more efficient voice communications.
Nextel thinks it will already have efficient voice communications that use only half the capacity of a normal call after it puts the Vocoder software in its network, which will double capacity to 22 million customers.
"That will give us enough capacity for a number of years," West said.
"When our new Vocoder is deployed, we should be able to reduce our capex (capital expenditure) significantly. In 2004 capex could be significantly down (from around $2 billion in 2002 and 2003), maybe even below a billion dollars," he added.
Lower spending, also as a result of more efficient operations and lower handset subsidies, would help the number five U.S. mobile carrier generate free cash flow.
"Guidance has been for free cash in 2004 or sooner. I can tell you the company is focusing on 'sooner'", West said.
He also said that the company could lift its profitability. Nextel had earlier forecast that earnings before interest, tax, depreciation and amortisation (EBITDA) margins would remain around the current 40 to 41 percent level.
"We think we can maintain and may be even improve on these (EBITDA) margins," Best said. |
