Nextel profit falls as acquisition nears

Despite continued increased subscriber and revenue growth, Nextel Communications saw its profits shrink 60% in the second quarter due to preparations for its upcoming acquisition by Sprint and tax credits from the previous year.

Nextel posted $524 million in income for the quarter, compared to $1.34 billion from last year’s second quarter, but before the merger, related and other costs was $1.4 billion. Revenues made a 16% jump year-to-year from $3.2 billion to $3.8 billion, and Nextel added 763,000 customers, 213,000 of which were prepaid Boost Mobile customers.

Nextel now has 17.8 million customers as it prepares for its merger with Sprint this quarter. Both companies’ shareholders have already approved the $36 billion deal, and the two are not awaiting FCC and U.S. Justice Department approval.

Nextel also saw a slight increase in its average revenue per user. Already one of the highest in the industry, ARPU increased from $67 in the first quarter to $68 in the second. Churn for the second quarter was 1.4%. Boost Mobile now has 1.7 million customers, making up 10% of Nextel’s subscriber base.