Nextel Reports Strong Third-Quarter 2004 Results

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Nextel announced strong financial and operating results for the third-quarter 2004, including record revenue and operating income before depreciation and amortization (OIBDA). Highlights include revenue of $3.40 billion, up 18% from last year's third-quarter revenue of $2.89 billion and OIBDA of $1.32 billion, up 17% from last year's third-quarter OIBDA of $1.13 billion. Third-quarter 2004 income was $586 million, or $0.53 per share, up from last year's third-quarter income of $346 million, or $0.33 per share.

Nextel ended the third quarter with approximately 15.3 million total subscribers including 14.5 million Nextel subscribers and 800,000 Boost Mobile subscribers. During the quarter, Nextel added 550,000 new subscribers, average revenue per user (ARPU) was $69 and customer satisfaction improved as evidenced by a reduction in churn to 1.5%. In addition, Boost Mobile added 195,000 subscribers during the third quarter.

Income available to common stockholders was $586 million, or $0.53 per share for the third quarter of 2004. Income available to common stockholders includes a $175 million, or $0.16 per share, tax benefit from the release of a portion of the valuation allowance attributable to our capital loss carryforwards, and a $21 million loss, or $0.02 per share, on the early retirement of debt. Adjusted for these two items, third-quarter income available to common stockholders was $432 million, or $0.39 per share.

During the third quarter, Nextel undertook a number of balance sheet activities. On July 15, 2004, Nextel closed on a new $4 billion revolving credit facility, increasing liquidity by $1.4 billion while lowering interest rates and lowering debt. Nextel also participated in debt-for-debt exchanges in the third quarter, replacing $450 million in principal amount of its 9.375% notes due 2009 and $67 million in principal amount of its 9.5% notes due 2011 with $550 million in principal amount of its 6.875% notes due 2013. Additionally, on September 27, 2004, we announced that we had purchased from Motorola 6 million of our Class B shares for $141 million and 5.6 million shares of Nextel Partners' Class A stock for $77 million.

Nextel ended the third quarter of 2004 with approximately $1.7 billion in cash, cash equivalents and short-term investments. Total liquidity was $4.7 billion and Nextel had $9.1 billion of debt outstanding as of the end of the third-quarter 2004, down from $12.2 billion as of the end of the third-quarter 2003.
Capital expenditures were $659 million in the third quarter of 2004. Total system minutes of use on the Nextel National Network increased 25% during the third quarter when compared with the same period in 2003 to approximately 33.6 billion, excluding Boost Mobile usage.

Revised 2004 Guidance

Nextel's 2004 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. Nextel's current outlook for full-year 2004 results is as follows: [indent]-- OIBDA of approximately $5.1 billion - up from $4.9 billion
-- Earnings per share of approximately $2.60, on a GAAP basis - up from $2.00
-- Capital expenditures of $2.4 billion, or less - up from $2.2 billion
-- Free cash flow of approximately $1.5 billion, down from $1.7 billion
-- Total year-end 2004 subscribers of 16 million or more:
[indent]-- 2 million or more Nextel subscriber additions, up from 1.9 million and
-- 650,000 or more Boost Mobile subscribers, up from 500,000 [/indent][/indent]

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