NEW YORK-Nextel Communications Inc., the largest 800 MHz enhanced specialized mobile radio carrier in the country, plans to sell $500 million in 10-year debt.
Moody’s Investors Service, New York, announced Oct. 15 it had given the proposed issue of senior discount notes a speculative grade rating of B3.
Rather than increasing leverage by adding to its debt levels, Nextel may use some of the proceeds of the new issue to help repay more expensive outstanding debt. Moody’s said it believes Nextel also is “taking advantage of favorable capital market conditions…(and) recognizes the importance of capital markets access.”
The carrier announced plans in July to accelerate its network buildout, and said it now serves 70 of the top 100 markets, according to Moody’s.
Nextel, headquartered in McLean, Va., added nearly a third of its total subscriber base during the third quarter of this year and had 946,600 customers as of Sept. 30.
“To put this in perspective, this is roughly comparable to the number of [Code Division Multiple Access] subscribers and (also) to the number of [Global System for Mobile Communications] subscribers in the United States,” Moody’s said.
However, M.G. Subhas, managing director, and Douglas Bontemps, senior analyst, in Moody’s corporate finance group, cautioned that Nextel faces significant challenges, including: managing and operating its large and fast growing network, adding and maintaining significant numbers of new customers each month and competition from cellular and personal communications services providers.
