Nextel Communications Inc. announced customer additions of 458,000 in the third quarter, ending the three-month period with 4.05 million customers.
“The third quarter was our best ever, with both domestic and international operations setting new records and reaching new milestones,” said Nextel President and Chief Executive Officer Tim Donahue in the company’s quarterly conference call with analysts. “Nextel’s strong subscriber growth did not stop significant growth in cash flow.”
Domestic operating cash flow increased 30 times to $210 million compared with last year’s third-quarter operating cash flow of $7 million, said Nextel. Consolidated net loss was $361 million, or $1.10 per share, and includes a foreign currency adjustment of 5 cents per share for transactional accounting losses associated with the Brazilian currency weakness. Consolidated revenue grew 76 percent to $889 million, compared with $506 million the previous year.
Domestic average revenue per user held flat in the second quarter at $74, with domestic churn at 2 percent, said the company. Nextel said its average subscriber uses 430 minutes of airtime each month and total domestic minutes of use reached 4.9 billion during the quarter.
“We will not be shy about expanding our network and spending the dollars necessary to continue to meet exploding demand,” said Donahue, who declined to give analysts any specific guidance on future capital expenditure plans. “Demand on the network is significant. MOUs are growing exponentially, and customers are asking for more coverage.”
Donahue said Nextel will work on expanding its footprint and increasing capacity in its core markets going forward. Domestic capital expenditures were $453 million during the third quarter.
Donahue said the company will begin rolling out data services by the beginning of the first quarter. The enhanced specialized mobile radio operator plans to offer customized Internet-based services via the Microsoft Network portal. Microsoft Corp. earlier this year invested $600 million in Nextel. Services will include access to e-mail, calendar functions, address book contacts and Web-based applications developed by third parties specifically for Nextel Business Network users.
“Data is our next great differentiator,” said Donahue, who indicated Nextel has more than 100 software developers constructing vertical Web-based applications. “Our technical trials are advancing nicely … We’re still in the process of sorting out pricing. We believe it’s important for customers to understand the new enhanced services we are bringing to them.”
Donahue also indicated Nextel and its only equipment and handset supplier, Motorola Inc., continue to search for a second handset vendor to deal with the demand for iDEN service.
“Motorola and Nextel are looking at ways to develop a second source of handsets as soon as possible,” said Donahue. “We are in conversations. Because of the volumes, there are a lot more [parties] interested.”
Nextel International added 70,500 subscribers, ending the third quarter with 319,200 proportionate subscribers. Total digital subscribers for Nextel International and its affiliates in all managed and minority interest operations surpassed 1 million subscribers at the end of September.
