Subject: [NEXTEL-1] 16-Oct-03 Lazard Freres & Company On Nextel

From: [email-masked]
Date: Mon, 20 Oct 2003 18:12:09 -0400

16-Oct-03 Lazard Freres & Company (Matthew J. Janiga )

NXTL: Strong 3Q driven by ARPU upside

RATING:            HOLD
PRICE:             $22.12           TICKER:            NXTL
PRICE TARGET:      $20              MARKET CAP:        $24.1B
S & P 500:         1047             NASDAQ:            1939 z

TOTAL DEBT / CAP   62%              PROJ. 3-YR. EPS GROWTH
NM
TOTAL NET DEBT (M) $8,825           AVG. DAILY TRADE VOLUME (000)
17,993
SHARES OUT (M)     1,091            FREE CASH FLOW YIELD (2003E)
4.6%
52-WEEK RANGE      $22-$8           DIVIDEND/YIELD
NM/NM
EPS (DEC.)          2002                2003E                   2004E
                                OLD      NEW      Y/Y   OLD
NEW      Y/Y
1Q                 $(0.35)     $0.20    $0.20     --   $0.34E
$0.44E    120%
2Q                  (0.05)      0.27     0.27     --    0.41E
0.46E     70%
3Q                   0.14       0.38E    0.44     214%  0.39E
0.47E      7%
4Q                   0.21       0.33E    0.45E    114%  0.34E
0.45E      0%
Year               $(0.05)     $1.18E   $1.36E    --   $1.48E
$1.83E     35%
PE                                       16.3x
12.1x

NXTL: Strong 3Q driven by ARPU upside

* We are raising our 2003 and 2004 estimates ('03 EBITDA to $4.2B and '04 EBITDA
to $5.0B), due primarily to lower churn and bad debt and higher ARPU assumptions

* We believe that 3Q ARPU upside was driven by National DC adoption
(estimated incremental $0.50) and higher overage resulting from strong MOU  growth

* NXTL share buoyancy expected to continue near term as 2004 estimates are revised
upward and recent strong performance in key metrics is extrapolated in long-term
projections

* Challenges expected to increase in 2004, with risks including WNP, continuing
mix-shift to more retail-centric customers, PTT competition and potential for
higher-than-expected spending

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