Subject: [NEXTEL-1] Nextel Reports Record Third Quarter 2003 Results

From: [email-masked]
Date: Thu, 16 Oct 2003 07:09:31 -0400

October 16, 2003 07:00 AM US Eastern Timezone

Nextel Reports Record Third Quarter 2003 Results

RESTON, Va.--(BUSINESS WIRE)--Oct. 16, 2003--Nextel Communications, Inc.
(NASDAQ:NXTL)
-- Income of $346 Million, or $0.33 per share including Debt Retirement Charges
-- Operating Income before Depreciation and Amortization of $1.13 Billion
-- Record Quarterly Subscriber Additions of 646,000; Over 12.3 Million Total
Subscribers
-- Additional De-leveraging Activities Drive Net Debt to Under $9 Billion
-- 2003 Guidance Raised; Free Cash Flow Target Now $1 Billion or More

Nextel Communications, Inc. (NASDAQ:NXTL), today announced record financial
results for third quarter 2003 including income available to common stockholders
of $346 million, or $0.33 per share, which includes the impact of debt retirement
charges of $132 million, or $0.13 per share. Revenue was $2.9 billion, a 27%
increase over last year's third quarter. Operating income before depreciation and
amortization was $1.13 billion for the third quarter, increasing by 29% over the
third quarter of the prior year. Nextel added approximately 646,000 subscribers
during the third quarter, bringing total subscribers to 12.3 million at September
30, not including 245,000 ending subscribers from Nextel's Boost Mobile subsidiary
which added 102,000 additional subscribers during the third quarter.

"Nextel's passion is to help people get things done. Increasing customer demand
for our services has once again led to record revenue and profitability
performance," said Tim Donahue, Nextel's president and CEO. "Nextel continues to
distance itself from the competition by growing the lifetime value of the
industry's best customers. We're looking forward to a strong finish to 2003 and,
once again, we are raising our guidance, in our relentless drive to be the leader
in wireless communications."
"Continual improvements across-the-board are driving our excellent results," said
Tom Kelly, Nextel's executive vice president and COO. "Our network quality and
differentiated products and services are driving record subscriber additions as
well as further improvement in our industry leading customer satisfaction.
Nextel's Nationwide Direct Connect(SM) service is fully up and running. In the
last 60 days, approximately one third of our customers have used this new feature
to instantly communicate with the more than 13 million Nextel and Nextel Partners
subscribers in the U.S. and with NII Holdings subscribers in Baja, Mexico. Next
week, we begin the launch of an exciting new lineup of handsets and we look
forward to continuing our mission to serve the most important customers in the
wireless industry and helping them to get things done."

Nextel's average monthly service revenue per subscriber (ARPU) was approximately
$71 for the third quarter, up from $69 in the second quarter and significantly
higher than estimates for other national wireless carriers. Customer churn was
approximately 1.4% for the third quarter, the best since 1997.

"We are posting outstanding results from operations and building on Nextel's track
record of meeting or exceeding our expectations," said Paul Saleh, Nextel's
executive vice president and CFO. "We achieved record results this quarter
including operating income before depreciation and amortization of $1.13 billion,
or a 43% service revenue margin. Additionally, our consistently strong operating
performance, positive outlook and substantial liquidity position allowed us to
continue to strengthen our financial profile. During the quarter, we proactively
reduced Nextel's net debt (long term debt less cash and short term investments) to
under $9 billion. Given our strong momentum, we are once again raising our
financial guidance for the full year. Nextel is now targeting $1 billion or more
in free cash flow and $1.15 or more in earnings per share for 2003."
For the quarter ending September 30, 2003, Nextel retired approximately $2.2
billion in principal amount of its outstanding indebtedness in exchange for
approximately $1.76 billion in cash and 30 million shares of common stock valued
at $584 million. Additionally, during the quarter, Nextel announced another $1.3
billion of redemptions to be completed in the fourth quarter.

The company also raised approximately $2.0 billion of 12 year 7.375% Senior Notes
and approximately $500 million from equity issued under the Direct Stock Purchase
Plan. Nextel may from time to time as it deems appropriate enter into similar
transactions, which in the aggregate may be material. Common shares outstanding at
September 30, 2003 were approximately 1.096 billion.

Capital expenditures for the third quarter 2003 were $403 million. Total minutes
of use on the Nextel National Network grew by 39% in the third quarter to 26.9
billion compared with the prior year's third quarter.
2003 Guidance (Revised to reflect positive business trends through third quarter)

Nextel is raising its guidance. This guidance is forward-looking and is based upon
management's current beliefs as well as a number of assumptions concerning future
events and as such, should be taken in the context of the risks and uncertainties
outlined in the Securities and Exchange Commission filings of Nextel
Communications Inc. The new guidance is:

-- Free cash flow of more than $1 billion - up from $600 million
-- Earnings per share of $1.15 or more - up from at least $1.00
-- Operating income before depreciation and amortization of $4.1 billion or more -
up from $3.9 billion
-- Capital expenditures of $1.8 billion or less - unchanged
-- Net subscriber additions (excluding Boost Mobile) of approximately 2.2 million
- up from 1.9 million or more.

In addition to the results prepared in accordance with Generally Accepted
Accounting Principles (GAAP) provided throughout this press release, Nextel has
presented non-GAAP financial measures, such as operating income before
depreciation and amortization, free cash flow and ARPU. The non-GAAP financial
measures should be considered in addition to, but not as a substitute for, the
information prepared in accordance with GAAP. Reconciliations from GAAP results to
these non-GAAP financial measures are provided in the notes to the attached
financial tables. To view these and other reconciliations and information about
how to access the conference call discussing Nextel's third quarter results visit
the 'Investor Relations' link under the 'About Nextel' tab at www.nextel.com.

About Nextel

Nextel Communications, a Fortune 300 company based in Reston, Va., is a leading
provider of fully integrated wireless communications services and has built the
largest guaranteed all-digital wireless network in the country covering thousands
of communities across the United States. Nextel and Nextel Partners, Inc.,
currently serve 293 of the top 300 U.S. markets. Through recent market launches,
Nextel and Nextel Partners service is available today in areas of the U.S. where
approximately 243 million people live or work.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995. A number of the matters and subject areas discussed in this press release
that are not historical or current facts deal with potential future circumstances
and developments, including our future expectations concerning our financial and
operating performance. The discussion of such matters and subject areas is
qualified by the inherent risks and uncertainties surrounding future expectations
generally, and also may materially differ from Nextel's actual future experience
involving any one or more of such matters and subject areas. Nextel has attempted
to identify, in context, certain of the factors that they currently believe may
cause actual future experience and results to differ from Nextel current
expectations regarding the relevant matter or subject area. Such risks and
uncertainties include the economic conditions in our targeted markets, performance
of our technologies, timely development and delivery of new technologies,
including those associated with NEXTEL DIRECT CONNECT(TM) and our planned upgrade
to our voice coder technology, competitive conditions, market acceptance of our
services, access to sufficient capital to meet operating and financing needs and
the other risks and uncertainties that are described from time to time in Nextel
reports filed with the SEC, including Nextel's annual report on Form 10-K for the
year ended December 31, 2002 and in its quarterly report on Form 10-Q for the
quarterly period ended June 30, 2003. This press release speaks only as of its
date, and Nextel disclaims any duty to update the information herein.

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited
Consolidated Statements of Operations
(in millions, except per share amounts)

For the nine       For the three
months ended       months ended
September 30,      September 30,
----------------- ------------------
2003    2002      2003     2002
--------- ------- --------- --------
Operating revenues
Service revenues                $7,194  $6,002    $2,599   $2,139
Handset and accessory
revenues (1)                      620     388       288      140
--------- ------- --------- --------
7,814   6,390     2,887    2,279
--------- ------- --------- --------
Operating expenses
Cost of service (exclusive of
depreciation included below)    1,218   1,100       441      383
Cost of handset and accessory
revenues (1)                    1,040     759       415      235
Selling and marketing            1,337   1,138       482      412
General and administrative       1,180   1,113       420      371
Restructuring and impairment
charges                             -      35         -        -
Depreciation and amortization    1,264   1,199       429      412
--------- ------- --------- --------
Operating income                   1,775   1,046       700      466
Interest expense                  (664)   (813)     (220)    (271)
Interest income                     32      45        10       14
(Loss) gain on retirement of
debt, net of debt conversion
cost of $0, $134, $0 and
$87 (2)                          (139)    347      (132)     208
Reduction in fair value of
investment                         (2)    (38)        -       (3)
Other (expense) income,
net (3)                           (35)   (299)       11      (23)
--------- ------- --------- --------
Income before income tax
provision                           967     288       369      391
Income tax provision               (70)   (373)      (21)      (8)
--------- ------- --------- --------
Net income (loss)                    897     (85)      348      383
(Loss) gain on retirement of
mandatorily redeemable
preferred stock                    (7)    457         -      193
Mandatorily redeemable
preferred stock dividends
and accretion                     (55)   (175)       (2)     (50)
--------- ------- --------- --------
Income available to common
stockholders                       $835    $197      $346     $526
========= ======= ========= ========

Earnings per common share
Basic                            $0.81   $0.23     $0.33    $0.58
========= ======= ========= ========
Diluted                          $0.79   $0.22     $0.32    $0.55
========= ======= ========= ========
Weighted average number of
common shares outstanding
Basic                            1,030     851     1,050      911
========= ======= ========= ========
Diluted                          1,060     888     1,091      988
========= ======= ========= ========

Selected Balance Sheet Data
(in millions)

September December
30,      31,
2003     2002
--------- --------

Cash, cash equivalents and short-
term investments                                   $3,563   $2,686
Accounts and notes receivable,
net of allowance for doubtful
accounts of $91 and $127                            1,217    1,077
Property, plant and equipment,
net                                                 8,802    8,918
Intangible assets, net                               6,937    6,607
Total assets                                        21,440   21,484

Long-term debt, including current
portion                                            12,204   12,278
Capital lease and finance
obligations, including current
portion                                               184      272
Total liabilities                                   16,409   17,623

Mandatorily redeemable preferred
stock                                                  96    1,015
Stockholders' equity                                 4,935    2,846

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited
Adjusted Income Available to Common Stockholders Data
(in millions, except per share amounts)

For the nine     For the nine
months ended     months ended
Sept. 30, 2003   Sept. 30, 2002
----------------- ----------------
Basic             Basic
EPS               EPS
-------           ------

Income available to common
stockholders                           $835   $0.81      $197  $0.23
Restructuring and impairment
charges                                 -       -        35   0.04
Loss (gain) on retirement of
debt, net                             139    0.13      (347) (0.41)
Equity in losses of NII Holdings
- pre-bankruptcy emergence              -       -       226   0.27
Reduction in fair value of
investment                              2       -        38   0.05
SFAS No. 142 income tax provision
adjustment                              -       -       335   0.39
Loss (gain) on retirement of
mandatorily redeemable preferred
stock                                   7    0.01      (457) (0.54)
--------- ------- --------- ------
Adjusted income available to common
stockholders (4)                       $983   $0.95       $27  $0.03
========= ======= ========= ======

For the three     For the three
months ended      months ended
Sept. 30, 2003    Sept. 30, 2002
----------------- ----------------
Basic             Basic
EPS               EPS
-------           ------

Income available to common
stockholders                           $346   $0.33      $526  $0.58
Loss (gain) on retirement of
debt, net                             132    0.13      (208) (0.23)
Reduction in fair value of
investment                              -       -         3      -
Gain on retirement of mandatorily
redeemable preferred stock              -       -      (193) (0.21)
--------- ------- --------- ------
Adjusted income available to common
stockholders (4)                       $478   $0.46      $128  $0.14
========= ======= ========= ======

Other Data

For the three
months ended
Sept.     June   March
30,       30,     31,
2003      2003    2003
--------- ------- -------

Handsets in service, end of period
(in thousands) (5)                           12,329    11,683 11,092
Net handset additions (in
thousands) (5)                                  646       591    480
Average monthly minutes of use per
handset                                         740       720    650
Average monthly revenue per
handset/unit (ARPU) (6)                         $71       $69    $67
Cost per gross add (CPGA) (7)                   $450      $460   $450
Cash cost per handset/unit (CCPU)
(8)                                             $24       $23    $23
Operating income before depreciation
and amortization (OIBDA)
(in millions) (9)                            $1,129    $1,004   $906
Bad debt expense included in general
and administrative (in millions)                $20       $25    $56
Bad debt expense as a percentage
of operating revenues                           0.7%      1.0%   2.4%

Capital Expenditures
(in millions)

For the nine      For the three
months ended      months ended
September 30,     September 30,
----------------- ----------------
2003    2002      2003   2002
--------- ------- --------- ------

Cash paid for capital expenditures,
excluding capitalized interest       $1,131  $1,372      $424   $356
Changes in capital expenditures
accrued or unpaid                       (21)    (49)      (21)    45
--------- ------- --------- ------
Capital expenditures, excluding
capitalized interest                  1,110   1,323       403    401
Capitalized interest                      27      36         7     11
--------- ------- --------- ------
Total capital expenditures          $1,137  $1,359      $410   $412
========= ======= ========= ======

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited
Condensed Consolidated Statements of Cash Flows
(in millions)

For the nine      For the three
months ended      months ended
September 30,     September 30,
----------------- -----------------
2003      2002     2003     2002
--------- ------- --------- -------
Cash flows from operating
activities
Net income (loss)                    $897    $(85)     $348    $383
Adjustments to reconcile net
income (loss) to net cash
provided by
operating activities:
Depreciation and amortization     1,264   1,199       429     412
Change in accrued interest on
short-term investments              (9)    (19)       (3)     (6)
Other                               242     418       104    (185)
--------- ------- --------- -------
Net cash provided by
operating activities           2,394   1,513       878     604
--------- ------- --------- -------

Cash flows from investing
activities
Cash paid for capital
expenditures, including
capitalized interest              (1,158) (1,408)     (431)   (367)
Payments for licenses,
acquisitions and other, net of
cash acquired                       (263)   (416)      (25)    (99)
Cash relinquished as a result of
deconsolidation of NII Holdings        -    (250)        -       -
Net changes in short-term
investments and other               (179)     62       (45)    201
--------- ------- --------- -------
Net cash used in investing
activities                    (1,600) (2,012)     (501)   (265)
--------- ------- --------- -------

Cash flows from financing
activities
Purchase and retirement of debt
securities and mandatorily
redeemable
preferred stock                  (2,466)   (689)   (1,759)   (394)
Proceeds from issuance of debt
securities                         1,983       -     1,983       -
Proceeds from issuance of stock       605       1       569       1
Repayments under capital lease
and finance obligations              (35)    (77)      (10)    (28)
Repayments under long-term
credit facility                     (148)      -       (49)      -
Borrowings under long-term
credit facility                       69       -         -       -
Payment for capital lease buy-
out                                  (54)      -         -       -
Mandatorily redeemable preferred
stock dividends                      (57)      -       (15)      -
Other                                  (2)      4        (1)      4
--------- ------- --------- -------
Net cash (used in) provided
by financing activities         (105)   (761)      718    (417)
--------- ------- --------- -------

Net increase (decrease) in cash
and cash equivalents                   689  (1,260)    1,095     (78)
Cash and cash equivalents,
beginning of period                  1,846   2,481     1,440   1,299
--------- ------- --------- -------
Cash and cash equivalents, end of
period                              $2,535  $1,221    $2,535  $1,221
========= ======= ========= =======

Free Cash Flow Schedule
(in millions)

For the nine      For the three
months ended      months ended
September 30,     September 30,
----------------- -----------------
2003     2002     2003     2002
--------- ------- --------- -------

OIBDA (9)                            $3,039  $2,245    $1,129    $878
Capital expenditures, excluding
capitalized interest                (1,110) (1,323)     (403)   (401)
Payments for licenses,
acquisitions and other                (263)   (416)      (25)    (99)
Changes in working capital and
other                                  (96)   (284)      (60)    (89)
--------- ------- --------- -------
Unlevered free cash flow (10)       1,570     222       641     289
Net interest paid, including
capitalized interest                  (588)   (514)     (216)   (145)
Mandatorily redeemable preferred
stock dividends                        (57)      -       (15)      -
--------- ------- --------- -------
Free cash flow (10)                   925    (292)      410     144
Net financing activities, excluding
mandatorily redeemable preferred
stock dividends                        (48)   (761)      733    (417)
Cash relinquished as a result of
deconsolidation of NII Holdings          -    (250)        -       -
Change in short-term investments       (188)     43       (48)    195
--------- ------- --------- -------
Net increase (decrease) in cash
and cash equivalents                $689 $(1,260)   $1,095    $(78)
========= ======= ========= =======

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited
Long-Term Debt and Mandatorily Redeemable Preferred Stock Data
(dollars in millions)

Book and   New debt
principal  issuance
June 30,   value of     and      Sept. 30,
2003    retirements  other        2003
-------- ------------ --------   ---------

10.65% senior redeemable
discount notes due 2007       $676         $676       $-          $-
9.75% senior serial
redeemable discount notes
due 2007 (a)                   912          415        -         497
4.75% convertible senior
notes due 2007                 284            -        -         284
9.95% senior serial
redeemable discount notes
due 2008 (b)                 1,293          294        -         999
12% senior serial
redeemable notes due 2008,
net of unamortized
discount of $3 and $3 (c)     271            3        -         268
9.375% senior serial
redeemable notes due 2009    1,670           71        -       1,599
5.25% convertible senior
notes due 2010                 607            -        -         607
9.5% senior serial
redeemable notes due 2011,
including a fair value
hedge adjustment of $65
at June 30, 2003 and $37
at September 30, 2003          929            5      (28)(d)     896
6% convertible senior notes
due 2011                       608            -        -         608
7.375% senior serial
redeemable notes due 2015,
including unamortized
premium of $0 and $8             -            -    2,008       2,008
Bank credit facility          4,470            -      (49)(e)   4,421
Other                            17            -        -          17
--------   ---------  --------   ---------
Total long-term debt,
including current
portion                  $11,737        1,464   $1,931     $12,204
========   ---------  ========   =========

13% series D exchangeable
preferred stock
mandatorily
redeemable 2009               $375          375       $-          $-
11.125% series E exchangeable
preferred stock mandatorily
redeemable 2010                392          392        -           -
Zero coupon convertible
preferred stock
mandatorily
redeemable 2013                 94            -        2 (f)      96
--------   ---------  --------   ---------
Total mandatorily
redeemable preferred
stock                       $861          767       $2         $96
========   ---------  ========   =========

Total retirements                         $2,231

(a) On October 31, 2003 we will redeem the entire outstanding
aggregate principal amount of our 9.75% senior notes at a
redemption price equal to 102.4375% of the principal amount.
(b) On October 24, 2003 we will redeem $500 million in principal amount of our
9.95% senior notes at a redemption price equal to 104.975% of the $500 million in
principal amount.
(c) On November 1, 2003 we will redeem the entire outstanding aggregate principal
amount of our 12% senior notes at a redemption price equal to 106% of the
principal amount.
(d) Represents the non-cash decrease to the fair value hedge adjustment during the
quarter.
(e) Represents scheduled principal payment on term loans.
(f) Represents mandatorily redeemable preferred stock accretion.

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited
Notes to Financial Data

1)  Through June 30, 2003, we recognized handset sales as revenues on
a straight-line basis over the estimated customer relationship
period of 3.5 years in accordance with the Securities and Exchange
Commission's Staff Accounting Bulletin, or SAB, No. 101, "Revenue
Recognition in Financial Statements." Costs of handset sales were
recognized over the same period in amounts equivalent to the
revenues recognized from the handset sales. The handset costs in
excess of the revenues (handset subsidies) generated from handset
sales were expensed immediately as these amounts exceeded our
minimum contractual revenues.
Effective July 1, 2003, we adopted the provisions of Emerging Issues Task Force,
or EITF, Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." Under EITF Issue No. 00-21, we no longer need to consider whether a
customer is able to realize utility from the handset in the absence of undelivered
service, as we did under SAB No. 101. Therefore, we account for the sale of a
handset as a unit of accounting separate from the subsequent service to the
customer. Accordingly, we recognize revenue from handset sales and the related
cost of handset revenues when title to the handset passes to the customer for all
arrangements entered into beginning July 1, 2003. In addition, we recognize the
portion of the activation fees allocated to the handset unit of accounting, along
with an equal amount of costs, when title of the handset passes to the customer.
We elected to apply the provisions of EITF Issue No. 00-21 to our existing
customer relationships as of July 1, 2003. Accordingly, we reduced our total
assets and liabilities by about $1.3 billion, representing substantially all of
the handsets revenues and costs associated with the original sale of handsets that
were deferred under SAB No. 101.
For the nine      For the three
months ended      months ended
September 30,     September 30,
------------------ ----------------
2003      2002     2003    2002
---------- ------- ---------- -----
(in millions)     (in millions)
Current period handset and accessory sales                  $787    $645
$285  $232 Net effect of SAB No. 101 and EITF Issue No. 00-21         (167)
(257)         3   (92)
---------- ------- ---------- -----
Handset and accessory
revenues                         $620    $388       $288  $140
========== ======= ========== =====

Current period cost of
handset and accessory sales    $1,211  $1,016       $416  $327
Net effect of SAB No. 101
and EITF Issue No. 00-21         (171)   (257)        (1)  (92)
---------- ------- ---------- -----
Cost of handset and
accessory revenues             $1,040    $759       $415  $235
========== ======= ========== =====

2)  The 2003 loss on retirement of debt includes the loss associated
with the retirement of our series D and series E preferred stock,
which were classified as long-term debt effective July 1, 2003, in
accordance with our adoption of Statement of Financial Accounting
Standards, or SFAS, No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity."
3)  Other (expense) income, net includes, among other things, equity in losses of
unconsolidated affiliates, net, which represents our proportionate share of the
operating results of NII Holdings, Inc.  and Nextel Partners, Inc. in accordance
with the equity method of accounting based upon preliminary operating results
provided to us for the three-month and nine-month periods ended September 30,
2003.
4)  Adjusted income available to common stockholders represents our income
available to common stockholders excluding the impacts of certain items, which
include, among other things, debt and preferred stock retirements and the effect
of an adoption of a new accounting standard. Adjusted income available to common
stockholders as defined above may not be similar to adjusted income available to
common stockholders measures of other companies, is not a measurement under
accounting principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the information contained
in our statement of operations. We believe that adjusted income available to
common stockholders is useful because it allows investors to evaluate our
operating results and related financial performance for different periods on a
more comparable basis by excluding items that do not relate to the ongoing
operations of our wireless business.
5)  Net handset additions represents gross handsets activated during the period
less handsets deactivated. Net handset additions and handsets in service, end of
period, does not include handsets attributable to test markets, such as the Boost
Mobile program.  These net handset additions reflect a customer churn rate of
about 1.4% for the third quarter 2003 and about 1.6% for the second quarter 2003.
The customer churn rate is an indicator of customer retention and represents the
monthly percentage of the customer base that disconnects from service. Customer
churn is calculated by dividing the number of handsets disconnected from
commercial service during the period by the average number of handsets in
commercial service during the period. Churn is not a measurement under accounting
principles generally accepted in the United States and may not be similar to churn
calculations of other companies.
6)  Average monthly revenue per handset/unit in service, or ARPU, is an industry
metric that measures revenues per period from our customers divided by the
weighted average number of handsets in commercial service during that period,
excluding the impact of test markets such as the Boost Mobile program. ARPU as
defined above may not be similar to ARPU measures of other companies, is not a
measurement under accounting principles generally accepted in the United States
and should be considered in addition to, but not as a substitute for, the
information contained in our statement of operations. We believe that ARPU
provides useful information concerning the appeal of our rate plans and service
offerings and our performance in attracting and retaining high value customers.
Other revenue in 2003 includes revenues for such services as Boost Mobile service
revenues, roaming, analog and other. ARPU can be calculated and reconciled to our
consolidated statements of operations as follows:
For the three
months ended
September  June   March
30,      30,    31,
2003     2003   2003
-------- ------- -------
(in millions,
except for ARPU)

Service revenues                         $2,599  $2,385  $2,210
Less:  Other revenue                         46      33      24
-------- ------- -------
Subscriber revenues                      $2,553  $2,352  $2,186
======== ======= =======

ARPU calculated with Subscriber
revenues                                   $71     $69     $67
======== ======= =======
ARPU calculated with Service revenues       $72     $70     $68
======== ======= =======

7)  Cost per gross add, or CPGA, is an industry metric that is
calculated by dividing our selling, marketing and handset and
accessory subsidy costs, excluding costs unrelated to initial
customer acquisition, by our new subscribers during the period, or
gross adds. CPGA excludes the impact of test markets such as the
Boost Mobile program. CPGA as defined above may not be similar to
CPGA measures of other companies, is not a measurement under
accounting principles generally accepted in the United States and
should be considered in addition to, but not as a substitute for,
the information contained in our statement of operations. We
believe CPGA is a measure of the relative cost of customer
acquisition. Costs unrelated to initial customer acquisition
include the costs associated with retaining existing customers and
costs associated with test markets such as the Boost Mobile
program. CPGA can be calculated and reconciled to our consolidated
statements of operations as follows:
For the three
months ended
September  June   March
30,     30,    31,
2003    2003   2003
-------- ------ -------
(in millions,
except for CPGA)

Handset and accessory revenues              $288   $171    $161
Less:  Cost of handset and accessory
revenues                                    415    315     310
-------- ------ -------
Handset and accessory subsidy costs          127    144     149
Plus:  Selling and marketing                 482    444     411
-------- ------ -------
Statement of operations costs                609    588     560
Less:  Costs unrelated to initial
customer acquisition                         89     68      60
-------- ------ -------
Customer acquisition costs                  $520   $520    $500
======== ====== =======

Cost per Gross Add from customer
acquisition costs                          $450   $460    $450
======== ====== =======
Cost per Gross Add from statement of
operations costs                           $530   $520    $505
======== ====== =======

8)  Cash cost per handset/unit, or CCPU, is calculated by dividing the
sum of our cost of service and general and administrative expenses
by the weighted average number of handsets in commercial service
during the period. CCPU as defined above may not be similar to
CCPU measures of other companies, is not a measurement under
accounting principles generally accepted in the United States and
should be considered in addition to, but not as a substitute for,
the information contained in our statement of operations. CCPU is
commonly used within our industry as an indicator of the cash
expenses associated with ongoing business operations on a per
handset basis. Our management uses CCPU as an integral part of
internal reporting and believes CCPU is also useful to investors
to evaluate our ability to scale costs associated with providing
services to customers and managing our core business operations.
CCPU can be reconciled to our consolidated statements of
operations as follows:
For the three
months ended
September June  March
30,    30,    31,
2003   2003  2003
-------- ----- ------
(in millions,
except CCPU)

Cost of service                               $441  $408   $369
General and administrative                     420   385    375
-------- ----- ------
$861  $793   $744
======== ===== ======

CCPU                                           $24   $23    $23
======== ===== ======

9)  OIBDA represents operating income before depreciation and
amortization. Service revenue margin represents OIBDA divided by
service revenues. OIBDA and service revenue margin as defined
above may not be similar to OIBDA and service revenue margin
measures of other companies, are not measurements under accounting
principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the
information contained in our statement of operations. We believe
that OIBDA and service revenue margin provide useful information
to investors because they are indicators of the strength and
performance of our ongoing business operations, including our
ability to fund discretionary spending such as capital
expenditures, spectrum acquisitions and other investments and our
ability to incur and service debt. While depreciation and
amortization are considered operating costs under generally
accepted accounting principles, these expenses primarily represent
the non-cash current period allocation of costs associated with
long-lived assets acquired or constructed in prior periods. Our
OIBDA and service revenue margin calculations are commonly used as
some of the bases for investors, analysts and credit rating
agencies to evaluate and compare the periodic and future operating
performance and value of companies within the wireless
telecommunications industry. OIBDA can be reconcilied to our
consolidated statements of operations as follows:
For the nine        For the three
months ended         months ended
Sept. 30,            Sept. 30,
------------        -------------
2003      2002      2003      2002
----      ----      ----      ----
(in millions)       (in millions)

Operating income                $1775     $1046     $ 700     $ 466
Depreciation and amortization    1264      1199       429       412
-----     -----     -----     -----
OIBDA                         $3039     $2245     $1129     $ 878
=====     =====     =====     =====
Service revenue margin          42%       37%       43%       41%
=====     =====     =====     =====
Operating income margin         25%       17%       27%       22%
=====     =====     =====     =====

For the three months ended
June 30, 2003   March 31, 2003
-------------   --------------
(in millions)  (in millions)
Operating income                $ 582     $ 493
Depreciation and amortization     422       413
-----     -----
OIBDA                         $1004     $ 906
=====     =====
Service revenue margin          42%       41%
=====     =====
Operating income margin         24%       22%
=====     =====

Guidance
For the year ended
Dec. 31, 2003
(in millions)
Operating income    $ 2,350 or higher
Depreciation and
amortization         1,750 or lower
OIBDA             $ 4,100 or higher

10) Free cash flow represents OIBDA less capital expenditures,
payments for licenses, acquisitions and other, net interest paid,
preferred stock dividends adjusted for changes in working capital
and other.  Free cash flow as defined above may not be similar to
free cash flow measures of other companies, is not a measurement
under accounting principles generally accepted in the United
States and should be considered in addition to, but not as a
substitute for, the information contained in our statement of
cash flows.  We believe that free cash flow provides useful
information to investors, analysts and our management about the
cash generated by our core operations after interest and
dividends and our ability to fund scheduled debt maturities and
other financing activities, including discretionary refinancing
and retirement of debt.  Free cash flow can be reconcilied to our
condensed consolidated statements of cash flows as follows:
For the        For the
nine          three
months ended  months ended
Sept. 30,     Sept. 30,
------------  ------------
2003    2002  2003    2002
----    ----  ----    ----
(in millions) (in millions)
Net cash provided by operating
activities                               $2394  $1513  $ 878 $ 604
Change in accrued interest on short-term
investments                                  9     19      3     6
Net cash used in investing activities     (1600) (2012)  (501) (265)
Cash relinquished as a result of
deconsolidation of NII Holdings              -    250      -     -
Net changes in short-term investments
and other                                  179    (62)    45  (201)
Mandatorily redeemable preferred stock
dividends                                  (57)     -    (15)    -
-----  -----  ----- -----
Free cash flow                         $ 925  $(292) $ 410 $ 144
=====  =====  ===== =====

Guidance
For the year ended
Dec. 31,2003
(in millions)
Net cash provided by operating        $ 3,360 or higher
activities
Change in accrued interest on
short-term investments                     (a)
Net cash used in investing
activities                           (2,300) or lower

Net changes in short-term
investments and other                      (a)
Mandatorily redeemable preferred
stock dividends                      (60) or lower
Free cash flow                    $ 1,000 or higher

(a) For guidance purposes, we do not distinguish between short-term
investments and cash and cash equivalents.

Unlevered free cash flow represents OIBDA less capital expenditures,
payments for licenses, acquisitions and other adjusted for changes in
working capital and other. Unlevered free cash flow as defined above
may not be similar to unlevered free cash flow measures of other
companies, is not a measurement under accounting principles generally
accepted in the United States and should be considered in addition to,
but not as a substitute for, the information contained in our
statement of cash flows. We believe that unlevered free cash flow
provides useful information to investors, analysts and our management
about the cash generated by our core operations and our ability to
fund interest payments, preferred stock dividends, scheduled debt
maturities and other financing activities, including discretionary
refinancing and retirement of debt. Unlevered free cash flow can be
reconciled to our condensed consolidated statements of cash flows as
follows:

For the nine    For the three
months ended    months ended
September 30,   September 30,
-------------   -------------
2003    2002     2003    2002
----    ----     ----    ----
(in millions)   (in millions)

Net cash provided by operating
activities                            $2394  $1513     $ 878 $ 604
Change in accrued interest on short-
term investments                          9     19         3     6
Net cash used in investing
activities                            (1600) (2012)     (501) (265)
Cash relinquished as a result of
deconsolidation of NII Holdings           -    250         -     -
Net changes in short-term
investments and other                   179    (62)       45  (201)
Net interest paid, including
capitalized interest                    588    514       216   145
-----  -----     ----- -----
Unlevered free cash flow            $1570  $ 222     $ 641 $ 289
=====  =====     ===== =====

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