Nextel 2000 operating revenues hit record $5.7 billion

(Telephony) Nextel Communications announced operating revenues today for full-year 2000 reached $5.71 billion, a new record. In addition, the company reported consolidated operating cash flow of $1.26 billion and that it now has 7.63 million subscribers worldwide.

“If you look at our accomplishments in 2000, where we grew our subscribers by 48%, our revenue by 55%, and our cash flow by 100%, by anybody’s standards it was a helluva year,” said CEO Timothy Donahue.

Nextel’s domestic operating revenues for the year totaled $5.38 billion, while Nextel International reported revenues of $330 million. Domestic consolidated operating cash flow (EBITDA) rose to $1.4 billion in 2000, but EBITDA attributed to Nextel International fell $133 million for the year. However, this was an improvement over the $163 million loss reported for 1999.

Consolidated operating cash flow for the quarter grew 79% to $387 million.

“Five years ago, when Tim and I first joined this company, we had less revenue--which, by the way, was all analog--than the company generated in EBITDA in the fourth quarter of 2000,” said Daniel Akerson, Nextel’s outgoing chairman. “That’s how far we’ve come.

Akerson is stepping down to become chairman of Nextel International, in anticipation of an IPO filing later this year, though he will remain a Nextel director. William E. Conway, Jr., who has served on the Nextel board the previous three years, will replace Akerson as Nextel chairman.

Looking ahead, Donahue said Nextel will continue to aggressively grow all elements of the business.

“Although we are not immune from overall business trends or an economic slowdown, we still have tremendous growth prospects in voice and data, both in the U.S. and abroad, through an ever-expanding Nextel International,” he said.

As a result, chief financial officer John Brittain cautioned that operating expenses will be significantly greater early in the year, with cashflow accelerating in the second half of 2001. For this year, domestic revenues are expected to exceed $7 billion--a 25% to 30% growth rate--with anticipated cash flow growth of 50% to 65%.

“Nextel has the resources to fund the future growth for wireless services,” Brittain said. “We’re extremely pleased with our operating metrics and financial health as we look forward to continued growth in 2001.”

Brittain added that Nextel is preparing its network, distribution channels and support staff for a greater level of net subscriber additions in 2001 compared with 2000, when it added 2.16 million subscribers.

“Commensurate with our growth, we will not hold back on investing in the capital needed to increase our footprint and serve the high-usage demand of our customers,” he said.

Total minutes of use on Nextel’s national network grew 75% to 31.5 billion. To accommodate this demand, Nextel added about 3,900 cell sites and brought 29 switches online during 2000. It also has committed to purchasing additional spectrum in the 700, 800 and 900 MHz bands.

Currently the company has about 20 MHz of spectrum in the 800 and 900 MHz bands in 52 of the top 100 U.S. markets, and about 4MHz in the 700 band. The FCC recently postponed the spectrum auction for this band until at least September.

Growth also is expected to come from the introduction of new products and an expansion of the company’s retail footprint. Earlier this month Nextel launched its new i2000plus phone, the company’s first global phone with Internet capability. The phone can be used in more than 75 countries.

With this introduction, every phone in Nextel’s product offering is Internet ready, according to Donahue. The company is also excited about the introduction of another handset, which has a larger screen, improved ergonomics, voice command capabilities, and the ability to run JAVA applications that reside on the phone, he said.

“This phone will offer our customers and developers more flexibility in creating customized wireless data applications that increase a worker’s productivity,” Donahue said.

Donahue said there is still more to come this year.

“One of the real bright spots for 2001 is the introduction of two and possibly three new handsets … that are smaller and lighter with improved feature functionality,” he said.

The company also hopes to acquire more than 200 retail locations from Let’s Talk Cellular, which Nextel believes will help it to better serve its small and medium-sized business markets.

“We have realized for awhile that we need more points of distribution that would allow us to do that,” said Thomas Kelly, executive vice president of marketing. “This will also allow us, with the evolution of our data product, to have places where we can provide demonstration opportunities for applications, be they horizontal or vertical, and at the same time incorporate partnership programs, or partnership hardware, that may work in conjunction with a Nextel wireless data packet network.”