MCLEAN, Va.-Nextel Communications Inc., along with other equity investors, announced an agreement with Nextel Partners Inc. to build and operate an integrated digital wireless communications network using frequencies licensed to Nextel.
“The program allows Nextel to focus its domestic efforts in optimizing operations in larger U.S. markets and to accelerate, through the Nextel Partners organization, the buildout of mid-size and small markets and many rural areas, fulfilling Nextel’s objective of expanding our system coverage to substantially all markets in the United States,” said Dan Akerson, Nextel’s chairman and chief executive officer.
A recent Prudential Securities report indicated Nextel is looking at options to limit its capital outlays. One way is through a partnership, but the company will obtain an approximate 35-percent fully diluted ownership interest in Nextel Partners.
Nextel Partners will be financed and operated separately from Nextel, said Nextel. Nextel Partners plans to provide service in markets encompassing a population of about 39 million people. Buildout of key markets is expected to occur over a three-year period.
In addition, Nextel will receive $100 million for expenditures and start-up costs that Nextel incurred in markets Nextel Partners plans to serve. Nextel Partners expects to receive cash equity investments, including $125 million from DLJ Merchant Banking and its affiliated funds, as well as $30 million from Eagle River Investments L.L.C., the investment firm owned by Craig McCaw. Motorola Inc. also has committed to invest $25 million in the form of integrated Digital Enhanced Network infrastructure equipment.
Nextel Partners was established by John Capple, CEO of Nextel Partners, and other former executives of McCaw Cellular Communications Inc., various private equity investors and Nextel Communications.
