Nextel Ups Revenue

Full-year revenue was $10.8B, up 24% over 2002; net income was $1.47B or $1.41 per share

February 20, 2004

5 Min Read

RESTON, Va. -- Nextel Communications, Inc. (NASDAQ: NXTL), today announced record financial results for 2003 including income available to common stockholders of $1.47 billion, or $1.41 per share. Revenue was $10.8 billion in 2003, a 24% increase over 2002 and was $3.0 billion in the fourth quarter. Operating income before depreciation and amortization, (OIBDA) was $4.2 billion in 2003, an increase of 35% over the prior year. During 2003, Nextel's free cash flow grew to a record $1.3 billion, compared to $122 million for 2002. Nextel retired $7.8 billion in debt and preferred stock in 2003 and issued $4.7 billion in new lower cost debt, resulting in net debt and preferred retirements of $3.1 billion. Year-end debt and preferred stock, net of cash, cash equivalents and short-term investments was $8.2 billion. Nextel added approximately 2.3 million new subscribers during 2003 with 553,000 subscribers added during the fourth quarter, bringing total subscribers to 12.9 million at year-end.

"In 2003, Nextel set the pace for the wireless industry exceeding all of our financial goals," said Tim Donahue, Nextel's president and CEO. "We delivered $1.3 billion in free cash flow, which is more than a billion dollar increase over 2002. We increased OIBDA by 35% over last year to $4.2 billion. We grew subscribers 21% to 12.9 million by adding 2.3 million subscribers. In addition, we added 385,000 subscribers using Boost Mobile service in 2003. Nextel has a keen focus on operational excellence and a drive to aggressively pursue opportunities to build on our record of profitable growth. We will continue to invest in long term growth opportunities that expand Nextel's reach, enhance our differentiation and build on our success."

"In 2003, strong customer demand helped drive revenue growth of 24%, while a long term focus on smart growth strategies allowed our operating margin on service revenue to grow to approximately 44% in the fourth quarter. At the same time, Nextel launched a new campaign to enhance our corporate brand, signed an exclusive sports marketing arrangement with NASCAR(R), and improved our industry leading customer satisfaction while making Nationwide Direct Connect(sm) a reality," said Tom Kelly, Nextel's executive vice president and COO. "In 2004, we will expand the Nextel National Network and broaden our reach by adding an additional 2,200 coverage sites. In addition, we will increase our targeting of high-value customer segments, like the millions of NASCAR fans. We will also expand our Boost Mobile service to new markets, while continuing to deliver industry leading results."

Nextel's average monthly service revenue per subscriber was approximately $70 for the fourth quarter and $69 for the full year. Customer churn decreased to an average of 1.6% for the year and was 1.5% for the fourth quarter of 2003.

Nextel's net income available to common stockholders for the year was $1.47 billion, or $1.41 per share and includes gains from the sale of investments of $213 million, or $0.20 cents per share, and losses from the retirement of debt and preferred stock of $252 million, or $0.24 per share. 2003 net income after adjustment to eliminate the impact of those two items, was up significantly to $1.5 billion, or $1.45 per share as compared with last year's net income, adjusted to eliminate gains from the deconsolidation of NII Holdings and from balance sheet de-leveraging activities and other items, of $236 million, or $0.27 per share.

During the fourth quarter, Nextel reported income of $637 million, or $0.58 per share, including charges related to debt restructuring of $106 million, or $0.09 per share, and gains related to the sale of a portion of our investments in NII Holdings and Nextel Partners of $213 million, or $0.19 per share. Net of these items, the fourth quarter adjusted net income was up significantly to $530 million, or $0.48 per share, as compared with last year's net income of $209 million, or $0.21 per share, adjusted for gains related to the retirement of debt and preferred stock of $35 million, or $0.04 per share, and a gain on the deconsolidation of NII Holdings of $1.2 billion, or $1.24 per share. (See attached reconciliation of Income and EPS data.)

"Nextel enters 2004 in excellent financial condition," said Paul Saleh, Nextel's executive vice president and CFO. "Nextel has a healthy balance sheet and a solid financial profile. Our industry leading subscriber metrics coupled with low operating costs have produced the industry's highest margins and strong capital efficiency. During the fourth quarter, Nextel generated $1.18 billion in OIBDA making it Nextel's seventh consecutive quarter of OIBDA margins above 40%. Nextel's focus on high-value customer segments continues to produce sustainable growth in subscribers, revenue and margins while generating strong free cash flow."

Capital expenditures for the full year of 2003 were $1.8 billion - essentially flat with 2002. Total minutes of use on the Nextel National Network grew by 37% in 2003 to 101 billion. Nextel added approximately 1,200 cell sites to its network during 2003, bringing the total number of sites to approximately 17,500 at year-end. During the fourth quarter, Nextel added approximately 700 cell sites and capital expenditures were $711 million.

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 2004 results is as follows:

  • $4.9 billion in OIBDA, or more

  • $1.6 billion in free cash flow, or more

  • $2.00 in earnings per share, or more

  • Capital expenditures of approximately $2.2 billion

  • Subscriber additions of 1.8 million, or more, excluding Boost Mobile



In addition to the results prepared in accordance with Generally Accepted Accounting Principles (GAAP) provided throughout this press release, Nextel has presented non-GAAP financial measures, such as operating income before depreciation and amortization, OIBDA margin, free cash flow and ARPU. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial tables.

Nextel Communications Inc.

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