Nextel Reports Record Third Quarter 2003 Results
RESTON, Va.--(BUSINESS WIRE)--Oct. 16, 2003--Nextel Communications, Inc. (NASDAQ:NXTL)
-- Income of $346 Million, or $0.33 per share including Debt
Retirement Charges
-- Operating Income before Depreciation and Amortization of $1.13
Billion
-- Record Quarterly Subscriber Additions of 646,000; Over 12.3
Million Total Subscribers
-- Additional De-leveraging Activities Drive Net Debt to Under $9
Billion
-- 2003 Guidance Raised; Free Cash Flow Target Now $1 Billion or
More
Nextel Communications, Inc. (NASDAQ:NXTL), today announced record financial results for third quarter 2003 including income available to common stockholders of $346 million, or $0.33 per share, which includes the impact of debt retirement charges of $132 million, or $0.13 per share. Revenue was $2.9 billion, a 27% increase over last year's third quarter. Operating income before depreciation and amortization was $1.13 billion for the third quarter, increasing by 29% over the third quarter of the prior year. Nextel added approximately 646,000 subscribers during the third quarter, bringing total subscribers to 12.3 million at September 30, not including 245,000 ending subscribers from Nextel's Boost Mobile subsidiary which added 102,000 additional subscribers during the third quarter.
"Nextel's passion is to help people get things done. Increasing customer demand for our services has once again led to record revenue and profitability performance," said Tim Donahue, Nextel's president and CEO. "Nextel continues to distance itself from the competition by growing the lifetime value of the industry's best customers. We're looking forward to a strong finish to 2003 and, once again, we are raising our guidance, in our relentless drive to be the leader in wireless communications."
"Continual improvements across-the-board are driving our excellent results," said Tom Kelly, Nextel's executive vice president and COO. "Our network quality and differentiated products and services are driving record subscriber additions as well as further improvement in our industry leading customer satisfaction. Nextel's Nationwide Direct Connect(SM) service is fully up and running. In the last 60 days, approximately one third of our customers have used this new feature to instantly communicate with the more than 13 million Nextel and Nextel Partners subscribers in the U.S. and with NII Holdings subscribers in Baja, Mexico. Next week, we begin the launch of an exciting new lineup of handsets and we look forward to continuing our mission to serve the most important customers in the wireless industry and helping them to get things done."
Nextel's average monthly service revenue per subscriber (ARPU) was approximately $71 for the third quarter, up from $69 in the second quarter and significantly higher than estimates for other national wireless carriers. Customer churn was approximately 1.4% for the third quarter, the best since 1997.
"We are posting outstanding results from operations and building on Nextel's track record of meeting or exceeding our expectations," said Paul Saleh, Nextel's executive vice president and CFO. "We achieved record results this quarter including operating income before depreciation and amortization of $1.13 billion, or a 43% service revenue margin. Additionally, our consistently strong operating performance, positive outlook and substantial liquidity position allowed us to continue to strengthen our financial profile. During the quarter, we proactively reduced Nextel's net debt (long term debt less cash and short term investments) to under $9 billion. Given our strong momentum, we are once again raising our financial guidance for the full year. Nextel is now targeting $1 billion or more in free cash flow and $1.15 or more in earnings per share for 2003."
For the quarter ending September 30, 2003, Nextel retired approximately $2.2 billion in principal amount of its outstanding indebtedness in exchange for approximately $1.76 billion in cash and 30 million shares of common stock valued at $584 million. Additionally, during the quarter, Nextel announced another $1.3 billion of redemptions to be completed in the fourth quarter. The company also raised approximately $2.0 billion of 12 year 7.375% Senior Notes and approximately $500 million from equity issued under the Direct Stock Purchase Plan. Nextel may from time to time as it deems appropriate enter into similar transactions, which in the aggregate may be material. Common shares outstanding at September 30, 2003 were approximately 1.096 billion.
Capital expenditures for the third quarter 2003 were $403 million. Total minutes of use on the Nextel National Network grew by 39% in the third quarter to 26.9 billion compared with the prior year's third quarter.
2003 Guidance (Revised to reflect positive business trends through third quarter)
Nextel is raising its guidance. This guidance is forward-looking and is based upon management's current beliefs as well as a number of assumptions concerning future events and as such, should be taken in the context of the risks and uncertainties outlined in the Securities and Exchange Commission filings of Nextel Communications Inc. The new guidance is:
-- Free cash flow of more than $1 billion - up from $600
million
-- Earnings per share of $1.15 or more - up from at least $1.00
-- Operating income before depreciation and amortization of $4.1
billion or more - up from $3.9 billion
-- Capital expenditures of $1.8 billion or less - unchanged
-- Net subscriber additions (excluding Boost Mobile) of
approximately 2.2 million - up from 1.9 million or more.
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