Subject: [NEXTEL-1] Fitch Ratings Comments on Nextel in Wake of FCC's Action

From: NEXTEL-1
Date: Mon, 12 Jul 2004 17:48:35 -0400

Fitch Ratings Comments on Nextel in Wake of FCC's Action

The Federal Communications Commission adopted a long anticipated plan
Thursday (July 8) loosely based on Nextel's Consensus Plan for resolving
interference to public safety users. Cash requirements for this plan
closely match Fitch's previous expectations for Consensus Plan cash
costs and fall within current considerations for the rating, which were
upgraded on June 24. Clearly, the allocation of 10 MHz of new spectrum
in the PCS band addresses a key strategic issue for Nextel, offers
additional alternatives for Nextel's long-term technology needs and
affords a definitive evolutionary path to deploy a high-speed wireless
data network to remain competitive. Over the next three years, taking
into account the higher level of spending for a next generation wireless
broadband deployment and cash requirements associated with the rebanding
plan, Fitch expects Nextel to generate FCF during this period, albeit at
significantly lower levels than in 2003.

The FCC will require Nextel to relinquish spectrum rights to certain
licenses in the 800 MHZ band and all of its licenses in the 700 MHz band
in exchange for 10 MHz of spectrum in the 1.9 GHz band. The FCC placed a
value of approximately $4.8 billion on the 1.9 GHz spectrum, and Fitch
believes the FCC established an approximate value of $1.6 billion for
Nextel's 700 and 800 MHz spectrum contributions. Consequently, to
balance the valuation differences in the transaction,

Nextel would also incur cash requirements of approximately $3.2 billion
to fund rebanding costs for public safety ($850 million), retuning costs
for Nextel's network ($822 million) and relocation costs for 1.9 GHz
incumbents ($512 million). Furthermore, to the degree the combined costs
are less than the overall value of the 1.9 GHz spectrum, Nextel would
make a payment to the United States Treasury.

As part of the decision, the FCC would require Nextel to establish
escrow accounts and letters of credit in the amount of $2.5 billion to
guarantee adequate funding of relocation costs for the 800 MHz users.
Since Nextel plans to draw $1 billion on its new $4 billion secured
facility to repay term loan A, Fitch believes Nextel would investigate
the potential to increase funding commitments to ensure adequate
liquidity for the company.

Fitch expects Nextel's competitors to initiate vigorous legal challenges
associated with today's ruling by the FCC although the success and
timing of such legal challenges is highly uncertain. Furthermore, the
U.S.  Comptroller General will review the issues to determine if the
FCC's decision violates any appropriations statutes and whether it's
suitable to stay any facets of the plan.

On June 24, Fitch upgraded the ratings on Nextel Communications Inc.'s
senior unsecured notes to 'BB+', Nextel Finance Company's senior secured
facilities and term loans to 'BBB-' and Nextel's preferred stock rating
to 'BB'. The rating outlook is "positive."

www.telecomweb.com

------------------------ Yahoo! Groups Sponsor --------------------~--> 
Make a clean sweep of pop-up ads. Yahoo! Companion Toolbar.
Now with Pop-Up Blocker. Get it for free!
http://us.click.yahoo.com/L5YrjA/eSIIAA/yQLSAA/61FxlB/TM
--------------------------------------------------------------------~-> 

-- 
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address 
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

Yahoo! Groups Links

<*> To visit your group on the web, go to:
    http://groups.yahoo.com/group/NEXTEL-1/

<*> To unsubscribe from this group, send an email to:
    [email-masked]

<*> Your use of Yahoo! Groups is subject to:
    http://docs.yahoo.com/info/terms/