Nextel Boosts Moto
Nextel Communications Inc. (Nasdaq: NXTL) has revealed plans to aggressively expand its network over the next twelve months -- investment that will play into the hands of infrastructure vendor Motorola Inc. (NYSE: MOT).
The U.S. carrier has outlined its intention to increase capital expenditure to $2.2 billion in 2004, 29 percent above analysts' estimates of $1.7 billion.
Speaking on a conference call for its 2003 financial results, executive VP and COO Tom Kelly told of the carrier’s plan to increase the number of base-station cell sites (see Nextel Ups Revenue). “We will expand the Nextel National Network and broaden our reach by adding an additional 2,200 coverage sites.”
Such growth is nearly triple the forecast of 865 new sites expected by UBS analysts.
Nextel is the fifth largest carrier by subscriber base in the U.S., boasting 12.3 million customers, according to Ovum Ltd.. Motorola is the sole equipment supplier for its commercial iDEN service, with the network generating 20 percent of the vendor’s total annual revenue.
Lehman Brothers analyst Blake Bath describes the investment as “a positive sign for the U.S. wireless infrastructure market in general and for Motorola in particular... We view this increase as a sign of healthy demand and are encouraged that capex is moving higher.”
Nextel’s bullish plans cap a week to remember for Motorola. The network injection follows a $307 million contract windfall from Indian carriers Bharat Sanchar Nigam Ltd. (BSNL), MTNL, and Tata Teleservices Ltd. (see Moto Wins in India).
The deals include deployments of both GSM (Global System for Mobile communications) and CDMA (Code Division Multiple Access) networks. According to Lehman Brothers, the wins will help Motorola generate $4.6 billion in sales from its infrastructure unit this year.
Shares in Motorola were up 0.16 percent at press time, valued at $17.57 apiece.
— Justin Springham, Senior Editor, Europe, Unstrung