Subject: [NEXTEL-1] WR HAMBRECHT + CO on NXTL:UPDATE TECHNOLOGY

From: Marcel <[email-masked]>
Date: Wed, 18 Dec 2002 20:03:08 -0500

NXTL:  UPDATE TECHNOLOGY

Peter C. Friedland, CFA
[email-masked]

415.551.3160
WR HAMBRECHT + CO
www.wrhambrecht.com

· Yesterday, Nextel re-affirmed its 2002 financial guidance and hosted an iDEN technology
update session with Motorola in Plantation, FL.

· In terms of guidance, Nextel continues to expect 1.9 million net adds (implying ~450,000

for Q4:02), at least $3.1 billion of EBITDA and less than $1.9 billion in capex.

· Motorola and Nextel affirmed that the 6:1 vocoder software will be delivered on time in
Q1:03 with commercial rollout beginning in Q3:03. The 6:1 vocoder allows six calls to be
conducted concurrently over one radio channel, enabling the company to double the capacity
of
its iDEN network following full deployment in the 2004/2005 timeframe. We note that the
6:1
vocoder requires a line card upgrade to base stations as well as handsets with the new
vocoder
software, which the company plans to distribute beginning in 2004.

· Nextel plans to launch Nationwide Direct Connect service in mid-2003. The nationwide
service will enable customers to make push-to-talk calls between regional calling areas.

· Nextel continues to believe that Direct Connect has significant latency advantages
versus competitive push-to-talk products from CDMA carriers. Nextel believes push-to-talk
over CDMA networks has a call setup latency of 5 seconds versus Nextel's iDEN network at a

half a second, and that CDMA may not be able to resolve these issues until the deployment
of
CDMA 1XEV-DV, which is likely several years away.

· Nextel remains confident that the FCC will rule in favor of its Consensus Plan, which
would expand the company's contiguous 800 MHz spectrum to 16 MHz from 10 MHz,
providing the company with greater network operating flexibility. Nextel expects to hear a

ruling from the FCC regarding the Consensus Plan within 3-4 months.

· We maintain our Hold rating. Nextel has posted a steady stream of strong quarterly
operating
results, improved its balance sheet by swapping out debt and preferred for common equity,
and
made significant strides with Motorola to enhance the capacity of iDEN technology, making
the
company more capital efficient. However, we remain concerned that a combination of
continued
intense industry pricing competition, competitive CDMA push-to-talk products coming to
market
within the next 12 months, and slowing industry subscriber growth will make it challenging
for
the company to continue its robust pace of growth. Our price target remains $12 based on a

DCF analysis using a 13% WACC and 6x terminal multiple, which is in line with the
historical
trading range for the RBOCs.

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