Public Notice Seeks Comments on Nextel Gripes
The FCC released a public notice Fri. asking interested parties to comment within 10 days on all the issues raised in ex parte filings since the 800 MHz rebanding order was released Aug. 6. The notice also extends some deadlines contained in the order. Meanwhile, Nextel CEO Timothy Donahue said Fri. his goal is “final resolution” of the order by the end of 2004.
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The FCC said in its comments are welcomed on such issues as “the relocation process, valuation of the spectrum, and interference issues.” The FCC said it specifically doesn’t want comments on the freeze on 900 MHz license applications, and comments should focus on issues raised by Nextel.
As expected, the public notice offers relatively little beyond a basic request for more information that could lead to a sua sponte reconsideration order by the Commission (CD Oct 21 p2). The PN also extended some key deadlines by days, including a requirement that within 60 days of publication in the Federal Register Nextel obtain a letter of credit for $2.5 billion in retuning costs.
Donahue commented on the order, a leading area of uncertainty for the carrier, during a call with analysts to discuss the carrier’s 3rd-quarter results. His comments came hours before release of the PN. “Nextel has had a number of meetings with the Commissioners and staff,” he said. “I'm pleased with the progress that we have made… Suffice it to say I'm hopeful that we can have final resolution on this issue in the next 60 days.”
Donahue also said he didn’t expect the Nov. 2 elections to have a material effect on the 800 MHz order and its aftermath, even if the presidential race leads to major changes on the FCC. “Obviously this has been going on for 2- 1/2 years now,” he said. “It is critically important to the FCC to get behind this as well as [for] public safety.”
Nextel reported mostly positive financial results Fri. Earnings increased 69% in the 3rd quarter over the same period in 2003, to $586 million. Revenue was $3.4 billion, up from $2.89 billion a year ago. Nextel added 550,000 customers to bring its rolls up to 15.3 million total subscribers. Churn was a relatively slim 1.5%. ARPU was $69, several dollars below analyst estimates. The carrier also reported growth in its prepaid Boost Mobile Service, which added 195,000 subscribers in the 3rd quarter, bringing total subscribers to 800,000.
“Nextel is experiencing strong demand for its wireless services across all sectors and especially higher growth in government, high-end individuals and our Boost Mobile business,” Donahue said: “Nextel continues to take more than its proportionate share of high quality subscribers, revenue and most importantly cash flow.”
Nextel was the 4th wireless carrier to report last week, following announcements by Sprint, Cingular and AT&T Wireless. UBS said Fri. it sees 2 distinct trends based on the first reports. “Gross adds have come in stronger across the board, despite the seasonal ‘back to school’ phenomena, and we now forecast U.S. penetration to reach 60.9% at the end of ‘04, up 6% from ‘03,” UBS said. “Churn is tracking in line with its seasonal pattern of being higher in Q3 versus Q2, so we believe there are no signs of churn ramping on account of an increasingly competitive market.”