Subject: [NEXTEL-1] Nextel stock slips after reports of FCC backing

From: NEXTEL-1
Date: Thu, 24 Jun 2004 15:42:39 -0400

NEW YORK, June 24 (Reuters) - Shares of Nextel 
Communications Inc. (NasdaqNM:NXTL - News) slid more than 
two percent on Thursday as investors worried that its plan to 
swap wireless airwaves with the government could trigger 
litigation from Verizon Wireless.

Nextel shares were down 62 cents, or 2.31 
percent, at $26.19 in midday trade on Nasdaq after reports that 
Federal Communications Commission Chairman Michael 
Powell favors a plan that would give Nextel new airwaves.

Nextel has lobbied for the new spectrum for more than two years 
as it currently operates in the 800 Megahertz band where it 
interferes with public safety communications systems.

Nextel spokeswoman Leigh Horner said she could not comment 
on the potential timing of any FCC decision. The company has 
previously said it hoped for a decision by the end of June.

The price of the plan has not been disclosed, and some 
investors were also concerned about how much Nextel would 
need to lay out in capital expenditure, or capex, for the new 
spectrum.

"Investors may refocus on some of the capex concerns," SG 
Cowen analyst Tom Watts said.

The FCC could ask Nextel to pay at least $3 billion, including 
cash and spectrum under the plan, Reuters reported on 
Wednesday citing a source close to the matter. Watts sees $2.5 
billion to $3.0 billion as a reasonable amount.

Nextel has said its plan would help it develop advanced wireless 
services but its proposal caused controversy among rivals 
because it would give Nextel valuable airwaves in the 1.9 Ghz 
band. Many companies hope to use that band for advanced 
high-speed data wireless networks.

Some investors are concerned about the likelihood that Nextel's 
biggest rival Verizon Wireless (NYSE:VZ - News; NYSE:VOD - 
News) could delay the process by filing a lawsuit against the 
FCC.

"Once we get an official announcement I believe Verizon will 
quickly state their intention of fighting this in the courts," Roe 
Equity Research analyst Kevin Roe said. "Assuming Verizon 
does pursue this in the court it could delay the implementation."

A Verizon representative was not immediately available to 
comment.

Some of the decline on Thursday was related to selling by 
short-term investors, analysts said. Nextel shares have crept up 
from less than $23 since the end of May as speculation mounted 
that the FCC would approve its plan.

Amid increased government focus on homeland security after 
September 11, 2001, the FCC has set as priority the resolution 
of interference in the 800 Mhz band, which Nextel shares with 
public safety communications systems.

Watts said the FCC would be careful not to approve any 
proposals that did not have a good chance of surviving court 
scrutiny.

"I think the FCC would not make a decision unless they felt it 
could withstand an injunction," Watts said, noting that the 
regulator would try to avoid a reversal of its decision. 

© Reuters 2004. All Rights Reserved. 

http://www.reuters.com/newsSearchResultsHome.jhtml?qtype==a&position==1&query==walkie-talkie+&x= &y==9

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