Subject: [NEXTEL-1] Fitch Expresses Concerns On Potential Funding Requirements of the 800 MHz Consensus Plan.

From: [email-masked]
Date: Fri, 24 Oct 2003 22:59:54 -0400

Even though Fitch expects Nextel's positive operating trends to continue over the
near-term, challenges and risks remain which could moderate the pace of
anticipated credit profile improvement. Shorter-term issues include the decision
by the Federal Communications Commission (FCC) on the 800 MHz consensus plan and
industry cost impacts associated with wireless number portability. From an
intermediate to longer-term perspective, the concerns include the competitive
threats to Nextel's Direct Connect offering, fundamentals supporting the wireless
industry, potential funding requirements of the 800 MHz consensus plan and
technical viability of the iDEN platform.

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October 17, 2003 11:09 AM US Eastern Timezone

Fitch Ratings Assigns 'BB-' to Nextel's Senior Note Offering

CHICAGO--(BUSINESS WIRE)--Oct. 17, 2003--Fitch Ratings has assigned a 'BB-' rating
to Nextel Communications, Inc.'s (Nextel) proposed $500 million senior redeemable
ten-year notes offering. Nextel Finance Company's senior secured bank facility is
rated 'BB+' and Nextel's preferred stock is rated 'B'. Proceeds of the offering
will be used for general corporate purposes. The Rating Outlook remains Positive.

Nextel's rating reflects the company's excellent progress in deleveraging its
balance sheet using excess cash from operations, open market purchases, debt
refinancing and the issuance of equity over the last several quarters thereby
reducing its interest and preferred dividend obligations. Moreover, operational
trends are positive, as Nextel has for the second time exceeded financial and
operational targets set for 2003. Fitch believes Nextel's new financial guidance
is achievable and includes positive free cash flow of at least $1 billion (up from
$600 million), operating income before depreciation and amortization (OIBDA) of at
least $4.1 billion (up from $3.9 billion) and net additions of at least 2.2
million (up from 1.9 million).

Fitch expects Nextel to continue pursuing further improvements to its capital
structure utilizing its free cash flow, excess liquidity cushion and opportunistic
equity and debt issuances to refinance Nextel's highest cost debt. Reflecting this
strategy, for the first nine months of 2003, Nextel has retired approximately $2.1
billion of high yield debt (including bank amortizations) and $932 million of
preferred stock. This total principal retired is on top of the approximately $3.2
billion of debt and preferred stock retired in 2002. In addition, Nextel earlier
today announced that it plans to redeem the remainder ($499 million) of its 9.95%
senior notes due 2008 and all of its outstanding ($284 million) 4.75% convertible
senior notes due 2007 during the fourth quarter of 2003. These improvements to the
capital structure will extend maturities beyond 2010 while reducing medium-term
maturity levels and lowering the average cost of debt, which was less than 7% at
the end of the third quarter of 2003.

During the third quarter of 2003, Nextel reported continued strong operating
results, reflecting its competitive advantage of its differentiated push-to-talk
(PTT) offering. Monthly average revenue per user (ARPU) for the second quarter was
$71 (flat from a year ago) and is considerably higher than the average ARPU of
nationwide wireless operators in the low $50 range. OIBDA margins improved to
43.4% of service revenues, which is industry leading among the nationwide
operators. Total churn declined to an impressive 1.4% for the quarter, down from
2.0% a year ago as Nextel's customer relationship strategies accentuating improved
retention, credit screening and customer service proved effective. Owing to the
low total churn, net additions were a strong 646,000 for the quarter. With Verizon
Wireless indicating higher than expected take-up of its PTT offering along with
Nextel's strong net additions and low churn, Fitch believes this points toward
expansion of subscribers within the PTT category.

Even though Fitch expects Nextel's positive operating trends to continue over the
near-term, challenges and risks remain which could moderate the pace of
anticipated credit profile improvement. Shorter-term issues include the decision
by the Federal Communications Commission (FCC) on the 800 MHz consensus plan and
industry cost impacts associated with wireless number portability. From an
intermediate to longer-term perspective, the concerns include the competitive
threats to Nextel's Direct Connect offering, fundamentals supporting the wireless
industry, potential funding requirements of the 800 MHz consensus plan and
technical viability of the iDEN platform.

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