Regarding Nextel: Communication licenses (channels) are also valued at cost for accounting purposes. However, once the license is utilized it is worth lots more. The asset(license) is still stated at cost on the financials.
For example: A few years ago, a license cost less than $ 100.00. I know, I have one. However, the fair market value of a license is quite a bit higher. My license was worth approx. $10,000, without even being built out with equipment and operated. Hope you can see by my simple example that there is another way of valueing a comminucation company.
OK, let's estimate the value Nextel's licenses:
In the auction, Nextel bid $88.8 million for 475 of the 525 Economic Area licenses being auctioned by the FCC. On average, Nextel won rights to almost 10 MHz of spectrum in areas covering all 50 states and approximately 98% of the U.S. population.
....
Overall, including the frequencies secured as well as other frequencies owned by Nextel in adjacent 800 MHz ranges, Nextel now owns on average 15 MHz of usable spectrum in major markets in the United States and approximately 10 MHz in the entire U.S.
Let's see: 10MHz USA-wide is worth $88.8M, 5MHz in major markets - another $41.2M (let's be charitable), which brings the total to $130M or a whopping $0.50 per share! Note that as the useable spectrum expands, the value of Nextel's licenses is bound to go down.
15MHz can theoretically support up to 3,000 simultaneous phone conversation per base tranceiver. That times the number of transceivers on the Nextel network equals its peak capacity.
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