<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


(MARK ONE)
  [ X ]    QUARTERLY REPORT PUSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       OR

  [   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           FOR THE TRANSITION PERIOD FROM            TO            .
                                           ---------    -----------

                        COMMISSION FILE NUMBER 333-78459

                              NEXTEL PARTNERS, INC.
             (Exact Name of Registrant as Specified in Its Charter)



            DELAWARE                                     91-1930918

(STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)




                          4500 CARILLON POINT, KIRKLAND
                                WASHINGTON 98033,
                                 (425) 828-1713

    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE AND TELEPHONE NUMBER,
                              INCLUDING AREA CODE)


       INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X  NO     .
                                             ---    ---

<PAGE>   2

                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>

PART I     FINANCIAL INFORMATION                                                                            PAGE NO.
<S>                                                                                                            <C>
           Item 1.  Financial Statements
                    Condensed Consolidated Balance Sheets
                           As of September 30, 1999 (unaudited) and December 31, 1998                           3
                    Condensed Consolidated Statements of Operations
                           Three and nine months ended September 30, 1999 and 1998 (unaudited)                  4
                    Condensed Consolidated Statement of Changes in Stockholders' Equity
                           Nine months ended September 30, 1999 (unaudited)                                     5
                    Condensed Consolidated Statements of Cash Flows
                           Nine months ended September 30, 1999 and 1998 (unaudited)                            6
                    Notes to Condensed Consolidated Financial Statements                                        7

           Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations      13

           Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                 24


PART II    OTHER INFORMATION

           Item 1.  Legal Proceedings                                                                          25

           Item 2.  Changes in Securities and Use of Proceeds                                                  25

           Item 6.  Exhibits and Reports on Form 8-K                                                           26
</TABLE>




                                       2
<PAGE>   3

                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         SEPTEMBER 30,           DECEMBER 31,
                                                                                             1999                   1998
                                                                                     ---------------------- -------------------
                                         ASSETS                                           (unaudited)
<S>                                                                                  <C>                    <C>
CURRENT ASSETS
    Cash and cash equivalents                                                         $            214,173    $              16
    Short-term investments                                                                         193,173                    -
    Accounts receivable, net of allowance $839 and $254, respectively                                5,013                1,546
    Subscriber equipment inventory                                                                   1,439                1,353
    Other current assets                                                                             4,410                  325
    Restricted cash                                                                                175,000                    -
                                                                                     ---------------------  -------------------
Total current assets                                                                               593,208                3,240
                                                                                     ---------------------  -------------------

PROPERTY, PLANT AND EQUIPMENT, net                                                                 167,647              107,948

OTHER NON-CURRENT ASSETS:
    FCC operating licenses, net                                                                    148,600              133,180
    Debt issuance costs and other assets                                                            22,979                3,298
    Receivable from officer                                                                          2,200                    -
                                                                                     ---------------------  -------------------
Total non-current assets                                                                           173,779              136,478
                                                                                     ---------------------  -------------------

TOTAL ASSETS                                                                          $            934,634    $         247,666
                                                                                     =====================  ===================


                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable                                                                  $              8,045    $           1,043
    Accrued expenses                                                                                14,678                4,554
    Due to Nextel                                                                                    2,746                3,398
                                                                                     ---------------------  -------------------
Total current liabilities                                                                           25,469                8,995
                                                                                     ---------------------  -------------------

LONG-TERM DEBT
    Credit facility - term B and C                                                                 325,000                    -
    14% Senior discount notes, due 2009                                                            445,308                    -
                                                                                     ---------------------  -------------------
    Total long-term debt                                                                           770,308                    -
                                                                                     ---------------------  -------------------
Total liabilities                                                                                  795,777                8,995
                                                                                     ---------------------  -------------------

COMMITMENTS AND CONTINGENCIES (See Notes)

STOCKHOLDERS' EQUITY
    Preferred stock, Series A convertible, par value $.001 per share,                                   21                    -
      20,972,441 shares issued and outstanding
    Preferred stock, Series B redeemable or convertible to                                               2                    -
      Series C preferred stock 2010, par value $.001 per share, 12% cumulative
      annual dividend; 2,185,000 shares issued and
      outstanding
    Preferred stock, Series C convertible, par value $.001 per share,                                   11                    -
      10,778,771 shares issued and outstanding
    Preferred stock, Series D convertible, par value at $.001 per share,                                 2                    -
      2,185,000 shares issued and outstanding
    Common stock, Class A, par value $.001 per share, 1,598,888 and 1,588,888 shares,                7,474                1,604
      respectively, issued and outstanding, and paid-in capital
    Warrants outstanding                                                                             3,847                    -
    Common stock, Class B, par value $.001 per share convertible                                         -                    -
    Other paid-in capital                                                                          357,077              260,761
    Accumulated deficit                                                                            (81,656)             (22,553)
    Subscriptions receivable from stockholders                                                    (142,489)                   -
    Deferred compensation                                                                           (5,432)              (1,141)

                                                                                     ---------------------  -------------------
Total stockholders' equity                                                                         138,857              238,671
                                                                                     ---------------------  -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                            $            934,634    $         247,666
                                                                                     =====================  ===================
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

<PAGE>   4

                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                       UNAUDITED                                      UNAUDITED
                                                FOR THE THREE MONTHS ENDED                     FOR THE NINE MONTHS ENDED
                                                       SEPTEMBER 30,                                  SEPTEMBER 30,
                                         -----------------------------------------    --------------------------------------------
                                               1999                    1998                  1999                      1998
                                         -----------------       -----------------    --------------------       -----------------
<S>                                      <C>                     <C>                  <C>                        <C>
REVENUES:
  Service revenues                         $        8,327          $        1,064       $          17,617          $        1,501
  Equipment revenues                                1,133                     632                   2,977                     632
                                         ----------------        ----------------     -------------------        ----------------
      Total revenues                                9,460                   1,696                  20,594                   2,133
                                         ----------------        ----------------     -------------------        ----------------

OPERATING EXPENSES:
  Cost of service revenues                          4,716                   2,394                  11,786                   3,461
  Cost of equipment revenues                        2,626                   1,149                   7,424                   1,149
  Selling, general and administrative              10,160                   5,083                  22,591                   7,342
  Stock based compensation                            548                       -                   1,579                       -
  Depreciation and amortization                     2,624                   1,234                   8,162                   1,860
                                         ----------------        ----------------     -------------------        ----------------
     Total operating expenses                      20,674                   9,860                  51,542                  13,812
                                         ----------------        ----------------     -------------------        ----------------

LOSS FROM OPERATIONS                              (11,214)                 (8,164)                (30,948)                (11,679)

  Interest expense, net                           (17,535)                      -                 (44,571)                      -
  Interest income                                   6,528                       -                  16,416                       -
                                         ----------------        ----------------     -------------------        ----------------

LOSS BEFORE INCOME TAX PROVISION                  (22,221)                 (8,164)                (59,103)                (11,679)
  Income tax provision                                  -                       -                       -                       -

                                         ----------------        ----------------     -------------------        ----------------
  Net loss                                 $      (22,221)         $       (8,164)      $         (59,103)         $      (11,679)
                                         ================        ================     ===================        ================
</TABLE>



  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.
<PAGE>   5


                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES
       Condensed Consolidated Statement of Changes in Stockholders' Equity
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                  CLASS A
                                                                                              COMMON STOCK AND
                                                            PREFERRED STOCK                    PAID-IN CAPITAL
                                                   ---------------------------------- ---------------------------------
                                                        SHARES            AMOUNT           SHARES           AMOUNT
                                                   ----------------- ---------------- ----------------- ----------------
<S>                                                <C>               <C>              <C>               <C>
 BALANCE
   December 31, 1998                                            -      $         -           1,588,888    $      1,604
   Issuance of  common stock                                                                    10,000    $         61
   Issuance of Series A preferred stock                  20,972,441               21               -               -
   Issuance of warrants                                         -                -                 -               -
   Subscriptions receivable from stockholders                   -                -                 -               -
   Reclass of other paid-in capital to Preferred
     Series B, C, and D                                         -                -                 -               -
   Issuance of Series B preferred stock                   2,185,000                2               -               -
   Issuance of Series C preferred stock                  10,778,771               11               -               -
   Issuance of Series D preferred stock                   2,185,000                2               -               -
   Return of capital to Nextel                                  -                -                 -               -
   Deferred compensation                                        -                -                 -             5,809
   Vesting of deferred compensation                             -                -                 -               -
   Net loss                                                     -                -                 -               -
   Equity issuance costs                                        -                -                 -               -
   Motorola credit                                              -                -                 -               -
                                                   ----------------- ---------------- ----------------- ---------------

 BALANCE
   September 30, 1999 (unaudited)                        36,121,212    $          36         1,598,888    $      7,474
                                                   ================= ================ ================= ===============

<CAPTION>
                                                                         OTHER
                                                      WARRANTS          PAID-IN         ACCUMULATED         SUBSCRIPTIONS
                                                     OUTSTANDING        CAPITAL           DEFICIT            RECEIVABLE
                                                   ----------------  --------------  ------------------  --------------------
<S>                                                <C>               <C>             <C>                 <C>
 BALANCE
   December 31, 1998                                $          -       $    260,761    $       (22,553)    $            -
   Issuance of  common stock
   Issuance of Series A preferred stock                        -            208,142                -                    -
   Issuance of warrants                                      3,847              -                  -                    -
   Subscriptions receivable from stockholders                  -                -                  -               (157,203)
   Reclass of other paid-in capital to Preferred
     Series B, C, and D                                        -           (133,180)               -                    -
   Issuance of Series B preferred stock                        -             21,848                -                    -
   Issuance of Series C preferred stock                        -            110,731                -                    -
   Issuance of Series D preferred stock                        -             22,264                -                    -
   Return of capital to Nextel                                 -           (130,900)               -                    -
   Deferred compensation                                       -                -                  -                    -
   Vesting of deferred compensation                            -                -                  -                    -
   Net loss                                                    -                -              (59,103)                 -
   Equity issuance costs                                       -             (2,589)               -                    -
   Motorola credit                                             -                -                  -                 14,714
                                                   ----------------  --------------  -----------------   ------------------

 BALANCE
   September 30, 1999 (unaudited)                   $        3,847     $    357,077    $       (81,656)    $       (142,489)
                                                   ================  ==============  =================   ==================

<CAPTION>
                                                         DEFERRED
                                                       COMPENSATION            TOTALS
                                                   -------------------- --------------------
<S>                                                <C>                  <C>
 BALANCE
   December 31, 1998                                   $        (1,141)   $         238,671
   Issuance of  common stock                                       (61)                 -
   Issuance of Series A preferred stock                            -                208,163
   Issuance of warrants                                            -                  3,847
   Subscriptions receivable from stockholders                      -               (157,203)
   Reclass of other paid-in capital to Preferred
     Series B, C, and D                                            -               (133,180)
   Issuance of Series B preferred stock                            -                 21,850
   Issuance of Series C preferred stock                            -                110,742
   Issuance of Series D preferred stock                            -                 22,266
   Return of capital to Nextel                                     -               (130,900)
   Deferred compensation                                        (5,809)                 -
   Vesting of deferred compensation                              1,579                1,579
   Net loss                                                        -                (59,103)
   Equity issuance costs                                           -                 (2,589)
   Motorola credit                                                                   14,714
                                                   -------------------  -------------------

 BALANCE
   September 30, 1999 (unaudited)                      $        (5,432)   $         138,857
                                                   ===================  ===================
</TABLE>



  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

<PAGE>   6

                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          UNAUDITED
                                                                                  FOR THE NINE-MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                        ----------------------------------------------
                                                                               1999                      1998
                                                                        --------------------      --------------------
<S>                                                                     <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                $          (59,103)       $          (11,679)
 Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities
 Depreciation and amortization                                                        8,162                     1,860
 Amortization of debt issuance costs                                                  1,464                       -
 Interest accretion for senior discount notes                                        38,932                       -
 Deferred compensation                                                                1,579                       -
 Allowance for doubtful accounts                                                        585                       -
 Change in current assets and liabilities:
   Accounts receivable                                                               (4,052)                     (809)
   Subscriber equipment inventory                                                       (86)                   (1,778)
   Other current assets                                                              (4,085)                     (430)
   Accounts payable and accrued expenses                                             20,426                     1,043
   Operating advances from Nextel                                                      (652)                      -
                                                                        -------------------       -------------------
 Net cash provided by (used in) operating activities                                  3,170                   (11,793)
                                                                        -------------------       -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Loan to officer                                                                     (2,200)                      -
 Capital expenditures                                                               (52,756)                 (101,623)
 FCC licenses                                                                        (6,950)                      -
 Purchase of short-term investments                                                (193,173)                      -
                                                                        -------------------       -------------------
    Net cash used in investing activities                                          (255,079)                 (101,623)
                                                                        -------------------       -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Equity contributions from Nextel                                                       -                     113,416
 Proceeds from borrowings                                                           731,376                       -
 Restricted cash transfer                                                          (175,000)                      -
 Proceeds from equity contributions                                                  67,596                       -
 Return of capital to Nextel                                                       (130,900)                      -
 Equity costs                                                                        (2,589)                      -
 Debt issuance costs                                                                (24,417)                      -
                                                                        -------------------       -------------------
   Net cash provided by financing activities                                        466,066                   113,416
                                                                        -------------------       -------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                           214,157                       -

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           16                       -
                                                                        -------------------       -------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $          214,173        $              -
                                                                        ===================       ===================


SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
  Contribution of FCC licenses from Nextel Communications, Inc.          $            8,884        $          133,380
                                                                        ===================       ===================
  Accrued debt and equity issuance costs                                 $              -          $            3,298
                                                                        ===================       ===================
  Equipment purchased from Motorola's equity contribution credit         $           14,714        $              -
                                                                        ===================       ===================

CASH PAID FOR INTEREST                                                   $            4,758        $              -
                                                                        ===================       ===================
</TABLE>



  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.



<PAGE>   7

                     NEXTEL PARTNERS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -- BASIS OF PRESENTATION

The interim financial statements as of and for the three- and nine-month periods
ended September 30, 1999 and 1998 have been prepared without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and notes contained in our Form S-4 Registration Statement
filed, May 14, 1999 as amended.

The financial information included herein reflects all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary to the fair presentation of the results of the interim periods. The
results of operations for the three- and nine-month periods ended September 30,
1999 are not necessarily indicative of the results to be expected for the full
year.

NOTE 2 -- FORMATION AND CAPITALIZATION

Formation

Nextel Partners, Inc., which together with its subsidiaries is referred to as
"Partners" or the "Company," was formed as a shell corporation on July 8, 1998,
solely to facilitate the Capitalization Transactions discussed below. From July
8, 1998 to January 29, 1999, the activities of Partners were solely focused on
this objective. These activities were funded by Nextel Communications, Inc.
through one of its subsidiaries ("Nextel") and Eagle River Investments LLC
("Eagle River") through intercompany advances amounting to $3.4 million at
December 31, 1998, which were repaid by using proceeds from the Capitalization
Transactions. The only common stock issuance of the Partners shell entity in
1998 consisted of issuance of restricted stock to key employees of the Partners
shell entity as part of its compensation plan and to Eagle River.

Prior to January 29, 1999, Nextel formed and began to operate the digital
wireless communication service business in upstate New York and Hawaii described
in Note 3, which is referred to as the Nextel Carve-Out. The unincorporated
operations of the Nextel Carve-Out constitute the Company's business and were
contributed to the Company in the Capitalization Transactions.

Initial Capitalization Transactions

On January 29, 1999, Nextel contributed the Nextel Carve-Out to the Company in
exchange for 2,185,000 shares of Series B Preferred Stock, 8,740,000 shares of
Series C Preferred Stock, 2,185,000 shares of Series D Preferred Stock and cash
of $130.9 million. Simultaneously, the Company sold equity securities in a
private placement in the amount of $174.8 million and debt securities in the
aggregate principal amount at maturity of $800 million. The equity securities
sold consisted of 17,479,971 shares of Series A Preferred Stock (valued at
$170.9 million) and warrants to purchase 405,710 shares of Class A Common Stock
for an exercise price of $.001 per share (valued at $3.8 million). The equity
securities were sold in exchange for cash of $52.1 million, an irrevocable cash
equity commitment of $104.3 million to be received over the subsequent two-year
period, and a vendor credit from Motorola, Inc. ("Motorola") of $18.4 million
towards the purchase of infrastructure equipment. As of September 30, 1999 the
Company has used approximately $14.7 million of the vendor credit from Motorola
and expects to utilize the remaining amount before the end of 1999.

Some of the principal assets used in the Nextel Carve-Out are Federal
Communications Commission ("FCC") licenses. To effect the contribution of the
business of the Nextel Carve-Out to the Company, Nextel filed for approval with
the FCC to transfer to the Company all the rights to the use of and benefits of
these licenses. Pending receipt of FCC approval, the Company has the right to
use the frequencies pursuant to a frequency management agreement (the "Frequency
Management Agreement") between the Company and a wholly owned subsidiary of
Nextel. The Company expects to receive the FCC's approval of the transfer of the
FCC licenses in the fourth quarter of 1999. Upon receipt of FCC approval, the
Frequency Management Agreement will expire.


                                       7
<PAGE>   8


Expansion Territory Capitalization Transactions

On September 9, 1999, Nextel Partners Operating Corporation ("OPCO"), a wholly
owned subsidiary of Nextel Partners, entered into an Expansion Territory Asset
Transfer and Reimbursement Agreement with Nextel to acquire certain assets,
properties, rights and interests to be used in connection with the construction
and operation of additional territories ("Expansion Territory") for $10.6
million. To accomplish the build-out and operation of the Expansion Territory,
the Company issued 888,357 shares of Series C Preferred Stock to Nextel having
an aggregate implied value of $8.9 million in exchange for the contribution of
certain licenses and an extension of an operating agreement governing the
build-out of the Network in the Expansion Territory. The Company also issued
Series A and C Preferred Stock for equity contributions of $50 million. The
issuance of Series A Preferred Stock consisted of 3,492,470 shares (valued at
$37.2 million) and Series C Preferred stock of 1,150,414 shares (valued at $12.8
million). The equity securities were issued in exchange for cash of $15.5
million, an irrevocable cash equity commitment of $30.9 million to be received
over the subsequent two-year period, and a vendor credit from Motorola of $3.6
million towards the purchase of infrastructure equipment.

The following summarizes the dollar amount and number of shares issued as part
of the Capitalization Transactions on September 9, 1999.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                                    Equity
                                                                       Shares Issued             Contribution
                                                                       -------------             ------------
<S>                                                                       <C>                     <C>
Series A Preferred Stock.                                                 3,492,470               $ 37,207,384
Series C Preferred Stock                                                  2,038,771                 21,676,170

Subscription Receivable                                                                            (34,548,019)
-------------------------------------------------------------------------------------------------------------------
</TABLE>


Basis of Presentation

In substance, the Capitalization Transactions on January 29, 1999 constituted
(1) the incorporation of the Nextel Carve-Out, (2) the formal assumption by the
Nextel Carve-Out of Partners' liabilities, (3) a $130.9 million distribution to
Nextel, and (4) sales of Nextel Carve-Out securities to outsiders in exchange
for cash and irrevocable commitments. Accordingly, the accompanying financial
statements reflect the accounts of the Nextel Carve-Out at Nextel's historical
cost basis for all periods presented. These accounts include Nextel's cost basis
in the FCC licenses discussed above, as all of the rights to the use of and the
benefits of ownership of the FCC licenses were held by the Nextel Carve-Out
prior to the Capitalization Transactions. In the Capitalization Transactions,
the rights to the use of and the benefits of the FCC licenses were transferred
to the Company through the Frequency Management Agreement in exchange for the
issuance of preferred stock to Nextel for $133.2 million. Since the Frequency
Management Agreement is analogous to a capital lease, the cost basis of the FCC
licenses continue to be reflected in the Company's accounts in a manner similar
to the accounting for a capital lease under Statement of Financial Accounting
Standards ("SFAS") No. 13 "Accounting for Leases." The accompanying financial
statements also include the accounts of Partners prior to the Capitalization
Transactions, as Nextel funded the operations of Partners and they were incurred
for the benefit of the Nextel Carve-Out, and Partners had no substance apart
from the Nextel Carve-Out. The distribution and sale of securities transactions
have been reflected in the accompanying financial statements on January 29,
1999.

The accompanying financial statements also reflect the acquisition of the
Expansion Territory for $10.6 million from Nextel and related Capitalization
Transactions on September 9, 1999 as described above.

NOTE 3. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

Description of Business

The Company provides a wide array of digital wireless communications services
throughout the United States, primarily to business users, utilizing frequencies
licensed by the FCC. Partners' operations are primarily conducted by wholly
owned subsidiaries of OPCO.

Partners' digital network ("Digital Mobile Network") has been developed with
advanced mobile communication systems employing digital technology with a
multi-site configuration permitting frequency reuse utilizing digital technology
developed by Motorola (such technology is referred to as the "integrated Digital
Enhanced Network" or "iDEN"(Trademark). Partners' principal


                                       8
<PAGE>   9

business objective is to offer high capacity, high quality, advanced
communication services in its territories throughout the United States targeted
towards mid-sized and smaller markets. Various operating agreements entered into
by subsidiaries of the Company and Nextel (See Note 5) provide for support
services to be provided by Nextel. Additionally, the Company plans to use
Nextel's back-office systems initially to support customer activation, billing
and customer care as well as other services during a transition period.

Investments in Short-term Investments

Marketable debt securities and certificates of deposit with original purchase
maturities greater than three months are classified as Short-term investments.
Marketable debt securities include corporate commercial paper, which the Company
holds to maturity. These held to maturity securities are valued on the Company's
balance sheet at amortized cost.

Restricted Cash

Restricted cash reflects the cash collateral account maintained under the credit
facility equal to the $175.0 million borrowings outstanding at September 30,
1999 under the Term B Loan. These funds will not be available until the FCC has
approved the transfer of control from Nextel to the Company, of the licenses
held by Nextel WIP License Corp.

Interest Rate Risk Management

The Company uses derivative financial instruments consisting of interest rate
swap and interest rate protection agreements in the management of its interest
rate exposures. In April 1999, the Company entered into an interest rate swap
agreement for $60 million to partially hedge interest rate exposure with respect
to the Term B Loan. These interest rate swap agreements will have the effect of
converting certain of the Company's variable rate obligations to fixed or other
variable rate obligations. Amounts to be paid or received under interest rate
swap agreements will be accrued as interest rates change and will be recognized
over the life of the swap agreements as an adjustment to interest expense. The
fair value of the swap agreements will not be recognized in the consolidated
financial statements, since the swap agreements will meet the criteria for
matched swap accounting.

The Company will not use financial instruments for trading or other speculative
purposes, nor will it be a party to any leveraged derivative instrument. The use
of derivative financial instruments will be monitored through regular
communication with senior management. The Company will be exposed to credit loss
in the event of nonperformance by the counterparties. This credit risk is
minimized by dealing with a group of major financial institutions with which the
Company has other financial relationships. The Company does not anticipate
nonperformance by the counterparties.

Capitalized Interest

The Company's wireless communications systems and FCC operating licenses
represent qualifying assets pursuant to SFAS No. 34, "Capitalization of Interest
Cost." The Company capitalized interest of approximately $3.8 million for the
three-month period ended September 30, 1999 and $9.7 million for the nine-month
period ended September 30, 1999.

Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which establishes accounting and reporting standards for derivative
instruments and for hedging activities by requiring that all derivatives be
recognized in the balance sheet and measured at fair value. SFAS No. 137, issued
August 1999, postpones for one year the mandatory effective date for SFAS No.
133 to January 1, 2001. The Company is still evaluating the effects of the
change in financial position or results of operations for SFAS No. 133.




                                       9
<PAGE>   10

NOTE 4.   LONG-TERM DEBT (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                                                      AS OF             AS OF
                                                                                   SEPTEMBER 30,     DECEMBER 31,
                                                                                       1999             1998
                                                                                       ----             ----
<S>                                                                                  <C>                <C>
14% Senior Redeemable Discount Notes 2009, net of unamortized discount of
$354.7 million                                                                       $445,308           $ -

Bank Credit Facility - Term B Loan, interest at Company's option, calculated on
Administrative Agent's alternate base rate or reserve adjusted London Interbank
Offered Rate ("LIBOR")                                                                175,000             -

Bank Credit Facility - Term C Loan, interest at Company's option, calculated on
Administrative Agent's alternate base rate or reserve adjusted London Interbank
Offered Rate ("LIBOR")                                                                150,000             -
                                                                                     --------           -----
Total Long-term Debt                                                                 $770,308           $ -
                                                                                     ========           =====
</TABLE>

Senior Redeemable Discount Notes

On January 29, 1999, the Company completed the issuance of Senior Redeemable
Discount Notes due 2009 (the "Notes"). The aggregate accreted value of the Notes
will increase from $406.4 million at issuance at a rate of 14%, compounded
semi-annually to a final accreted value equal to a principal amount at maturity
of $800 million. Thereafter, the Notes bear interest at a rate of 14% per annum
payable semi-annually in arrears.

The Notes represent senior unsecured obligations of the Company, and rank
equally in right of payment to all existing and future senior unsecured
indebtedness of the Company and senior in right of payment to all existing and
future subordinated indebtedness of the Company. The Notes are effectively
subordinated to (i) all secured obligations of the Company, including borrowings
under the bank credit facility, to the extent of assets securing such
obligations and (ii) all indebtedness including borrowings under the bank credit
facility and trade payables of OPCO.

The indenture contains certain covenants that limit, among other things, the
ability of the Company to: (i) pay dividends, redeem capital stock or make
certain other restricted payments or investments, (ii) incur additional
indebtedness or issue preferred equity interests, (iii) merge, consolidate or
sell all or substantially of its assets, (iv) create liens on assets, and (v)
enter into certain transactions with affiliates or related persons. As of
September 30, 1999, the Company was in compliance with applicable covenants.

The Notes are redeemable at the option of the Company, in whole or in part, any
time on or after February 1, 2004 in cash at the redemption price on that date,
plus accrued and unpaid interest and liquidated damages if any, at the date of
liquidation. In addition, prior to February 1, 2002, the Company may on one or
more occasions redeem up to 35% of the aggregate principal amount at maturity of
Notes originally issued at a redemption price equal to 114% of the accreted
value at that date, plus accrued and unpaid interest and liquidated damages if
any, with the net cash proceeds of one or more public equity offerings; provided
that at least 65% of the aggregate principal amount at maturity of Notes
originally issued remain outstanding immediately after the occurrence of such
redemption.

Bank Credit Facility

On January 29, 1999, the Company, through OPCO, entered into a credit facility
("Term B Loan") with a syndicate of banks and other financial institutions led
by Donaldson, Lufkin and Jenrette Securities Corporation, as arranger ("DLJSC"),
and DLJ Capital Funding, Inc., as syndication agent ("DLJ Capital"). The Term B
Loan includes a $175 million term loan facility and initially, a $100 million
revolving credit facility. The Term B Loan has a maturity of nine years. The
revolving credit facility terminates eight years from the initial funding.

On September 9, 1999, the Company, through OPCO entered into an Amended and
Restated Credit Agreement (the "Amended and Restated Credit Agreement") with a
syndicate of banks and other financial institutions with DLJ Capital Funding,
Inc., as syndication agent. The parties agreed to amend and restate in its
entirety the credit agreement to, among other things, obtain from



                                       10
<PAGE>   11

certain of the Lenders an additional term loan commitment ("Term C Loan") in the
maximum aggregate principle amount of $150.0 million. The Term C Loan facility
has a maturity of nine years.

The Term B and Term C Loans bear interest, at the option of the Company, at the
Administrative Agent's alternate base rate or reserve-adjusted LIBOR plus, in
each case, applicable margins. The applicable margin for the Term B Loan is
4.75% over LIBOR and 3.75% over the base rate. For the revolving credit
facility, which is part of Term B Loan, the initial applicable margin is 4.25%
over LIBOR and 3.25% over the base rate until consolidated EBITDA as adjusted is
positive at which time the applicable margin will be initially 4.0% over LIBOR
and 3.0% over the base rate and thereafter will be determined on the basis of
the ratio of total debt to annualized EBITDA as adjusted and will range between
2.25% and 3.75% over LIBOR and between 1.25% and 2.75% over the base rate. The
applicable margin for the Term C Loan is 4.25% over LIBOR and 3.25% over the
base rate.

The Company pays a commitment fee calculated at a rate equal to 2.00% per annum,
calculated on the daily average unused commitment under the revolving credit
facility (whether or not then available). Such fee will be payable quarterly in
arrears. The commitment fee is subject to reduction based on utilization of the
revolving credit facility.

Prior to the date on which the Company's portion of the Digital Mobile Network
is substantially complete and operations and services are offered to customers
over a minimum coverage area, loans under the revolving credit facility will be
made subject to satisfaction of certain financial covenants and certain
build-out covenants.

The Term B and C Loans are subject to mandatory prepayment: (i) with 100% of the
net cash proceeds from the issuance of debt, subject to certain exceptions, (ii)
with 100% of net cash proceeds of asset sales, subject to certain exceptions,
(iii) with 50% of the Company's excess cash flow (as defined), (iv) with 50% of
the net cash proceeds from the issuance of equity, and (v) with 100% of net
casualty proceeds, subject to certain exceptions.

The Company's obligations under the Term B and C Loans are secured by a
first-priority perfected lien on all property and assets, tangible and
intangible, of the Company's subsidiaries including a pledge of the capital
stock of all the Company's subsidiaries. The Company and its subsidiaries
guarantee the obligations of OPCO under the Term B and C Loans. Such guarantee
will only be recourse to the Company's pledge of all of the outstanding capital
stock of the Company's subsidiaries to secure the obligations of the Company
under the Term B and C Loans.

The Term B and C Loans contain covenants and restrictions on the ability of the
Company to engage in certain activities, including but not limited to: (i)
limitations on the incidence of liens and indebtedness, (ii) restrictions on
sale lease-back transactions, consolidations, mergers, sale of assets, capital
expenditures, transactions with affiliates and investments, and (iii) severe
restrictions on dividends, and other similar distributions.

Additionally, the Term B and C Loans contain financial covenants requiring the
Company to maintain (i) certain defined ratios of senior debt and total debt to
EBITDA (net loss before interest expense, interest income, depreciation,
amortization and deferred compensation expense) as adjusted, (ii) a minimum
interest coverage ratio, (iii) a minimum fixed charge coverage ratio, (iv) a
maximum leverage ratio, and (v) minimum service revenues, subscriber units and
covered population equivalents. As of September 30, 1999, the Company was in
compliance with all of its required covenants.

NOTE 5.  RELATED PARTY TRANSACTIONS:

Motorola Purchase Agreements

Pursuant to the equipment purchase agreements between Partners and Motorola
dated January 29, 1999 (the "Equipment Purchase Agreements"), and prior to the
Capitalization Transactions, the purchase agreements between Nextel and
Motorola, Motorola provided the iDEN infrastructure and subscriber handset
equipment to Partners throughout its markets. The Company relies on Motorola for
the manufacture of a substantial portion of the equipment necessary to construct
its Digital Mobile Network and handset equipment for the foreseeable future. The
Equipment Purchase Agreements govern Partners' rights and obligations regarding
purchases of system infrastructure equipment manufactured by Motorola and
others.

For the three- and nine-month periods ended September 30, 1999 the Company
purchased approximately $7.0 million and $14.7 million, respectively, of
infrastructure equipment, warranties and other services from Motorola. For the
year ended December 31, 1998, the Company purchased approximately $47.5 million
of infrastructure equipment, handsets, warranties and other services from
Motorola.



                                       11

<PAGE>   12

The Joint Venture Agreement

The Company, OPCO and a wholly owned subsidiary of Nextel ("Nextel Sub") entered
into a joint venture agreement (the "Joint Venture Agreement") dated January 29,
1999. Summarized below are several of the important terms of the Joint Venture
Agreement.

MIS Services - Nextel provides the Company access to identified information
system platforms on an ongoing basis, as more fully described in the Joint
Venture Agreement. The Company pays to Nextel a fee, based on Nextel's cost, for
these services. For the three- and nine-month periods ended September 30, 1999,
the Company was charged approximately $139,000 and $285,000, respectively, for
these services.

Roaming Agreement - Pursuant to a roaming agreement (the "Roaming Agreement")
entered into between Nextel Sub and OPCO, Nextel Sub and OPCO provide ESMR
service to subscribers of the other (in either case, the "Home Service
Provider") while such subscribers are out of the Home Service Provider's
territory and roaming in the territory of the other (in either case, the "Remote
Service Provider"). Under the Roaming Agreement, each Home Service Provider is
responsible for billing its own subscribers and designated users for roaming
usage in accordance with its own subscriber plans and service agreements. The
Roaming Agreement provides that each party pays the other's monthly roaming fees
in an amount based on the actual system minutes generated by the respective
subscribers of each Home Service Provider operating as authorized roamers in the
Remote Service Provider's territory. For the three- and nine-month periods ended
September 30, 1999 the Company earned approximately $2.7 million and $5.8
million, respectively, from Nextel customers roaming on the Company's system.
Conversely, the Company was charged approximately $309,000 and $653,000 for the
three- and nine-month periods ended September 30, 1999, respectively, for the
Company's customers roaming on Nextel's system.

Master Site Lease Agreement - OPCO leases from Nextel Sub, under a master site
lease agreement entered into between them (the "Master Site Lease"), space on
telecommunications towers and other sites, which are owned or leased by
affiliates of Nextel Sub in the Territory. Pursuant to the Master Site Lease, as
the network build-out progresses, additional sites may become subject to the
Master Site Lease. OPCO pays Nextel Sub monthly rental payments based on the
number of telecommunication tower sites leased by OPCO. For the three- and
nine-month periods ended September 30, 1999 the Company was charged
approximately $171,000 and $407,000, respectively, by Nextel under these
arrangements.

Transition Services Agreement - Nextel Sub, through its affiliates, provides
services to OPCO for a limited period under a transition services agreement
entered into between OPCO and Nextel Sub (the "Transition Services Agreement").
Under the Transition Services Agreement, accounting, payroll, customer care,
purchasing, human resources, billing and other such functions are made available
to OPCO. In return for the service received through Nextel Sub, OPCO pays
monthly fees to Nextel based on Nextel's cost. For the three- and nine-month
periods ended September 30, 1999, the Company was charged approximately $833,000
and $1,852,000, respectively, for these services.

Switch Sharing Agreement - Nextel, through its affiliates, provides
telecommunications switching services to OPCO pursuant to a switch sharing
agreement entered into between Nextel Sub and OPCO (the "Switch Sharing
Agreement"). The Switch Sharing Agreement permits OPCO to link cell sites to and
electronically access switching equipment used and maintained by affiliates of
Nextel in the operation of Nextel's Digital Mobile Network, which facilitates
OPCO provision of ESMR service to the Company's subscribers. Under the Switch
Sharing Agreement, OPCO pays Nextel Sub monthly switching fees based on a
pricing formula agreed to by the parties based on Nextel's cost of providing
such services in the year 2001. For the three- and nine-month periods ended
September 30, 1999, the Company was charged approximately $664,000 and
$1,529,000, respectively, for these services.

Payable to Nextel

Prior to the Capitalization Transactions discussed in Note 2, the Company had
limited financial resources. As a result, to fund the operations of the Company
prior to the Capitalization Transactions, Nextel and Eagle River advanced the
Company $3.4 million (as of December 31, 1998) to cover its costs during the
period. These advances did not bear interest and were repaid in majority on
January 29, 1999. As of September 30, 1999 the Company owed Nextel $2.7 million
under the same terms discussed above.

NOTE 6.  SUBSEQUENT EVENTS

On or about October 29, 1999 the FCC issued an order approving the transfer of
FCC licenses from Nextel to the Company. This order was issued and made public
by the FCC. The Company and Nextel have 60 days from the date of the order to
complete the transfer of the licenses.



                                       12
<PAGE>   13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FORWARD-LOOKING STATEMENTS

         Some statements and information contained in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
not historical facts, but are forward-looking statements. They can be identified
by the use of forward-looking words such as "believes", "expects", "intends",
"plans", "may", "will", "would", "could", "should" or "anticipates" or the
negative or other variations of these words or other comparable words, or by
discussions of strategy that involve risks and uncertainties. Such
forward-looking statements include, but are not limited to:

         -    our business plan, its advantages and our strategy for
              implementing our plan and meeting our scheduled build-out for
              commercial launch of our portion of the Digital Mobile Network;

         -    general economic conditions in the geographic areas and
              occupational markets that represent our portion of the Digital
              Mobile Network;

         -    the availability of adequate quantities of system infrastructure
              and subscriber equipment and components to meet service deployment
              and marketing plans and customer demand;

         -    the ability to achieve market penetration and average subscriber
              revenue levels sufficient to provide financial viability to our
              digital mobile network business;

         -    our expectation regarding the continued successful performance and
              market acceptance of the technology we use;

         -    our ability to attract and retain sufficient customers; and

         -    our anticipated capital expenditures, funding and levels of debt
              and our expectations regarding additional debt, including our
              ability to access sufficient debt or equity capital to meet our
              operating and financing needs.

         We warn you that these forward-looking statements are only predictions,
subject to risks and uncertainties, including financial, regulatory environment,
industry growth and trend predictions. Actual events or results may differ
materially. For more discussion of important factors that could cause results to
differ materially from the forward-looking statements see "Risk Factors."

         Please read the following discussion of our condensed consolidated
financial condition and results of operations for the three- and nine-month
periods ended September 30, 1999 and 1998 together with our registration
statement on Form S-4 under the Securities Act of 1933 (No. 333-78459) filed on
May 14, 1999, as amended.

         Our historical results discussed in this section and throughout this
Form 10-Q include the Nextel operations we assumed as part of our initial
capitalization, which occurred on January 29, 1999. See Note 2 of our Notes to
Condensed Consolidated Financial Statements contained elsewhere in this report.

OVERVIEW

         In our territories, we are the only service provider licensed to use
the Nextel brand name and market Nextel digital wireless communication service
based on technology developed by Motorola. By the end of 2001, with our combined
Initial and Expansion Territories, we plan to provide service to 53 mid-sized
and smaller markets throughout the United States, where we estimate that
approximately 40.5 million people live or work. Our initial target market is
business users, and we offer or plan to offer them a differentiated, integrated
package of digital wireless communication services.

         We currently operate five markets in upstate New York and Hawaii where
4.5 million people live or work. Our upstate New York and Hawaii markets
launched commercial service in July and September of 1998, respectively. We will
launch service in four additional markets (Erie, PA, Waco/Temple-Killeen, TX,
Glens Falls, NY and Binghamton/Elmira, NY) during the fourth quarter of 1999,
covering a population of approximately 1.5 million.



                                       13
<PAGE>   14

         At September 30, 1999, we provided service to approximately 33,400
subscriber units, all from our Hawaii and upstate New York markets. These
markets added (net of deactivations) 8,406 subscriber units during the quarter
and 23,219 subscriber units for the nine-month period ended September 30, 1999.

         As we expect to launch four new markets for service during the fourth
quarter of 1999 and as we continue to develop, build-out and enhance our Digital
Mobile Network, we expect to continue to experience negative operating margins.
In addition, we anticipate costs such as site rentals, telecommunications
expenses, system and other capital items to increase. Sales and marketing
expenses and general and administrative costs are also expected to increase with
the commercialization of service in four additional markets.

         Over the past few years the wireless industry has experienced a decline
in prices generally as a result of competition from other wireless providers,
including new entrants into the market. In contrast, as reported in its
quarterly reports, Nextel's monthly average revenue per unit has increased over
the past few years and remains above the industry average. We cannot assure you
that our results will duplicate Nextel's since we set our prices independently
and our markets are distinct from Nextel's.

          Recently, service plans offering large blocks of minutes of airtime
have been introduced by wireless service providers as a means to gain market
share from established cellular carriers with relative coverage advantages.
These packages have increased subscriber usage in the industry, while slowing
the rate of decline in average revenue per unit during 1998.

         Our agreements with Nextel permit us to establish our own local pricing
in our markets. However, we must provide national customers who have a national
rate with Nextel the same rates as they receive in Nextel's markets. In
addition, our pricing must conform to guidelines that ensure that our pricing
structure is consistent with Nextel's national marketing strategy.


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998

         REVENUES

         Our primary sources of revenues are service and equipment sales
revenues. Our service revenues consist of charges for airtime usage, and monthly
network access fees from providing integrated wireless services within our
territory, particularly mobile telephone and two-way radio dispatch services.
Service revenues also include roaming revenues related to Nextel's customers
using our portion of the digital Mobile Network. The service revenues are the
product of the number of customers that subscribe to our service and our monthly
average revenue per unit. Average revenue per unit (ARPU) is an industry measure
of total service revenue from subscribers divided by the average number of
digital subscriber units.

<TABLE>
<CAPTION>
                                                                REVENUES
                                   (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR AVERAGE REVENUE PER UNIT)

                                         FOR THE THREE                           FOR THE THREE
                                            MONTHS                                  MONTHS
                                            ENDED                                    ENDED
                                         SEPTEMBER 30,      % OF CONSOLIDATED    SEPTEMBER 30,      % OF CONSOLIDATED
                                              1999              REVENUES              1998              REVENUES
                                              ----              --------              ----              --------
<S>                                          <C>                <C>                 <C>                  <C>
Service and Roaming Revenues                 $8,327                88%               $1,064                63%
Equipment Sales Revenues                      1,133                12%                  632                37%
                                             ------             ------               ------              -----

       Total Revenues                        $9,460               100%               $1,696               100%
                                             ======             ======               ======              =====
Average Revenue per Unit                        $66                                     N/A
                                             ======                                  ======
</TABLE>


ARPU is not calculated for September 30, 1998 due to information not comparable
to the same period ending September 30, 1999.

The service and equipment sales revenues for the three months ended September
30, 1999 were primarily generated from our upstate New York and Hawaii markets,
which became operational July and September 1998, respectively. The increase in
revenues for the three-month period reflects the growth in subscribers from
3,761 at the end of September 1998 to 33,401 at the end of September 1999. We
expect revenues to increase substantially over the previous year as we launch
additional markets and continue to add subscribers in the existing markets.





                                       14
<PAGE>   15

         COST OF SERVICE REVENUES

         The network expenses included in the cost of service revenues are site
rent, utilities, maintenance, engineering personnel and interconnect charges.
Network expenses depend primarily on the number of cell sites on-air, total
minutes of use and mix of minutes of use between interconnect and Nextel Direct
Connect services. For the three-month period ended September 30, 1999 and 1998,
our network costs were $4.7 million and $2.4 million, respectively. The costs
for both periods were incurred primarily from the Hawaii and upstate New York
markets. The increase in expenses was driven mostly by 27% growth in the number
of operating cell sites. In addition, these markets were launched during the
three-month period ended September 30, 1998; thus the network costs of $2.4
million do not reflect an entire quarter of operations. We expect these expenses
to increase as cell sites move to an operational status and usage of the network
system increases.

         COST OF EQUIPMENT REVENUES

         The cost of the subscriber handsets and accessories sold during the
three-month period ended September 30, 1999 and 1998 were $2.6 million and $1.1
million, respectively. The increase in revenue for 1999 is due to the upstate
New York and Hawaii markets launching during the third quarter, 1998 with
initial adds of 3,761 subscribers compared to gross adds of 10,836 for the same
period for 1999. As part of our business plan, we often offer our equipment at a
discount or as part of a promotion. As a result, the loss on equipment was $1.5
million for the three-month period ended September 30, 1999 and a loss of $0.5
for the same period ended September 30, 1998. We expect to continue to employ
these discounts and promotions, because we believe that the use of such
promotions will result in increased revenue as the number of our subscribers
grows.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses consist of sales and
marketing expenses, and general and administrative costs. Sales and marketing
expenses relate to sales representatives, sales support personnel, indirect
distribution channels, marketing and advertising programs. We anticipate that
our cost per gross additional customer will be relatively high during our first
several years of operation, but will decline as sales representatives become
more efficient, we expand our indirect distribution channels and the cost of our
sales infrastructure is distributed over a greater base of customer additions.

         General and administrative costs relate to corporate overhead personnel
including tax, legal, planning, human resources, treasury and accounting
functions. Most of the above functions have been transitioned from Nextel to our
own personnel by September 30, 1999. Nextel continued to make customer care,
collection and billing functions available to us as part of the transition
period. In return for these services during the transition period, we pay
monthly fees based on number of subscribers and Nextel's cost of providing the
services. For the three-month period ended September 30, 1999, we paid Nextel
$484,000 for the transition services.

         We have entered into agreements for back-office systems services to
support customer activation, billing and customer care with vendors who have
experience providing these services to Nextel. On October 25, 1999, our
customers care call center began operations. Many of the above systems will
begin to transfer from Nextel to our own service providers.

         For the three-month period ended September 30, 1999 and 1998 our
selling, general and administrative expenses were $10.2 million and $5.1
million, respectively. Of the $10.2 million, $6.1 million relate to upstate New
York and Hawaii markets for the three-month period ended September 1999. The
remaining $4.1 million expenses pertain to additional marketing and sales
activity for new market launches plus administrative costs to hire and set-up
functional departments and offices. Most of the $5.1 million of expenses for the
three-month period ended September 1998 were incurred from the upstate New York
and Hawaii markets, which launched commercial service July and September, 1998,
respectively.

          STOCK BASED COMPENSATION EXPENSE

         We recorded stock based compensation expense associated with our
restricted stock purchase plan of $0.5 million for the three-month period ended
September 30, 1999. This plan was initiated July 8, 1998, but shares were not
issued until November 1998. As such, no expense was recorded for the same period
ended September 30, 1998. The plan is considered compensatory and we account for
its deferred compensation expenses on a basis similar to that used for stock
appreciation rights.

         DEPRECIATION AND AMORTIZATION EXPENSE

         Depreciation and amortization expenses were $2.6 million and $1.2
million for the three-month periods ended September 30, 1999 and 1998,
respectively. The increase of $1.4 million relates primarily to depreciating our
wireless fixed asset network for


                                       15
<PAGE>   16

sites launched for commercial service and starting the amortization of our FCC
licensed radio spectrum. We expect that depreciation and amortization to
increase as cell sites are converted to an operational status and markets
launched.

         NET LOSS

         For the three-month period ended September 30, 1999 we reported a net
loss of approximately $22.2 million. Compared to the same period for 1998, the
loss for the three-months increased $14.0 million from a total net loss of $8.2
million.

Expenses have increased in all categories as we have been hiring staff,
setting-up functional departments and offices and ramping up our sales and
marketing activities in anticipation of the new market launches. In addition,
costs have moderately increased for Hawaii and upstate New York markets to meet
the subscriber demand since they became operational during the third quarter,
1998. We anticipate reporting net losses for the foreseeable future as we
continue to launch new markets and grow to meet the demands of the business.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998

         REVENUES

<TABLE>
<CAPTION>
                                                                REVENUES
                                   (DOLLAR AMOUNT IN THOUSANDS, EXCEPT FOR AVERAGE REVENUE PER UNIT)

                                          FOR THE NINE                           FOR THE NINE
                                             MONTHS                                 MONTHS
                                             ENDED                                  ENDED
                                          SEPTEMBER 30,     % OF CONSOLIDATED    SEPTEMBER 30,     % OF CONSOLIDATED
                                              1999              REVENUES             1998              REVENUES
                                              ----              --------             ----              --------
<S>                                         <C>                 <C>                 <C>                 <C>
Service and Roaming Revenues                $17,617                86%              $1,501                70%
Equipment Sales Revenues                      2,977                14%                 632                30%
                                            -------             ------              ------              -----
       Total Revenues                       $20,594               100%              $2,133               100%
                                            =======             ======              ======              =====
Average Revenue per Unit                        $63                                  N/A
                                            -------                                 ======
</TABLE>


ARPU is not calculated for September 30, 1998 due to information not comparable
to the same period ending September 30, 1999.

         The service and equipment sales revenues for the nine months ended
September 30, 1999 were primarily generated from our upstate New York and Hawaii
markets, which became operational July and September 1998, respectively. The
increase in revenues from 1998 to 1999 is due to the growth in number of
subscribers from the initial launch period. From the period ended September 30,
1998 to the period ended September 30, 1999, the subscriber base enlarged from
3,761 to 33,401. Since these markets were launched during the three-month period
ended September 30, 1998, revenues for the nine-month period also include use by
Nextel customers of our portion of the Digital Mobile Network.

         COST OF SERVICE REVENUES

         For the nine-month period ended September 30, 1999 our network costs
were $11.8 million compared to $3.5 million for the same period ended 1998. The
driver for the increased expenses for 1999 relates primarily to nine months of
operational activities compared to initial operating expenses for upstate New
York and Hawaii that launched July and September 1998, respectively.

         COST OF EQUIPMENT REVENUES

         The cost of the subscriber handsets and accessories sold during the
nine-month period ended September 30, 1999 was $7.4 million compared to $1.1
million for the same period ended 1998. The reason for the increase in cost is
primarily from adding 27,610 subscribers for the nine-month period ended
September 30, 1999 compared to 3,761 for the initial launch period. As part of
our business plan, we often offer our equipment at a discount or as part of a
promotion. As a result, the loss on equipment was $4.4 million and $0.5 million
for the same nine-month period ended September 30, 1999 and 1998, respectively.
We expect to continue to employ these discounts and promotions, because we
believe that the use of such promotions will result in increased revenue as the
number of our subscribers grows.



                                       16
<PAGE>   17

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative costs relate to corporate overhead personnel
including tax, legal, planning, human resources, treasury and accounting
functions. While we have directly hired key personnel in such areas, the
nine-month period has been a transition period which Nextel has made certain
accounting, payroll, customer care, purchasing, human resources and billing
functions available to us. In return for these services during the transition
period, we pay monthly fees based on Nextel's cost of providing them. For the
nine-month period ended September 30, 1999 we paid Nextel $1.0 million for
transition services. By the end of the 1999, we expect many of these transition
services to be transferred from Nextel to our employees and systems.

         For the nine-month period ended September 30, 1999, our selling,
general and administrative expenses were $22.6 million compared to $7.3 million
for the same period ended 1998. Of the total $22.6 million for the nine months
ended September 1999, $13.3 million pertained to Hawaii and upstate New York
markets. The remaining amount reflects the costs to hire and set-up functional
departments and offices in addition to increasing the sales and marketing
activities for new market launches. The $6.0 million increase in expenses for
the Hawaii and upstate New York markets for the same period reflects the growth
in sales and marketing activities to build the subscriber count from 3,761 to
33,401 by the end of September 30, 1999.

         STOCK BASED COMPENSATION EXPENSE

         We recorded stock based compensation expense associated with our
restricted stock purchase plan of $1.6 million, for the nine-month period ended
September 30, 1999. This plan was issued on July 8, 1998, but shares were not
issued until November 1998. For this reason, no expense was recorded for the
nine-month period. The plan is considered compensatory and we account for its
deferred compensation expenses on a basis similar to that used for stock
appreciation rights.

         DEPRECIATION AND AMORTIZATION EXPENSE

         Depreciation and amortization expenses were $8.2 million for the
nine-month period ended September 30, 1999. Compared to the same period in 1998,
this was an increase of $6.3 million from $1.9 million. The increase relates
primarily to depreciating the wireless network assets for the launched Hawaii
and upstate New York markets and starting the amortization of our FCC licensed
radio spectrum.

         NET LOSS

         For the nine-month period ended September 30, 1999 we reported a net
loss of approximately $59.1 million. Compared to the same period for 1998, the
loss increased $47.4 million from a total net loss of $11.7 million for the
nine-month period. Expenses increased in all categories as we have added
subscriber usage to the network, hired staff, set-up functional departments and
offices, and ramped-up marketing and sales activities for new launch markets. We
anticipate reporting net losses for the foreseeable future as we grow and expand
to meet the requirements of the business.

LIQUIDITY AND CAPITAL RESOURCES

         Our primary liquidity needs arise from the capital requirements
necessary to complete the initial and expansion territory build-out of our
portion of the Digital Mobile Network. Currently, we estimate that capital
requirements to build our systems in the combined Initial and Expansion
territory of the Digital Mobile Network, including operating losses and working
capital for the period from inception through the end of 2003, when we expect to
achieve positive Earnings Before Interest Taxes Depreciation and Amortization
("EBITDA") as adjusted for a full fiscal year, will total approximately $1.2
billion, including the in-kind contributions by Nextel and Motorola in exchange
for equity interests in Nextel Partners. We expect capital expenditures to
include, among other things, switches, base radios, transmission towers,
antennae, radio frequency engineering, cell site construction, and additional
FCC licenses. We estimate capital expenditures for 1999 will total approximately
$130.0 million. This estimate excludes approximately $127.0 million of
reimbursements paid to Nextel for the Initial and Expansion territory
transactions on January 29, 1999 and September 9, 1999, respectively.

         For the nine- month period ended September 30, 1999, our capital
expenditures were approximately $67.5 million (including $14.7 million from the
Motorola vendor credit), spent primarily to build-out of the Digital Mobile
Network in the upstate New York, Hawaii, Pennsylvania, Kentucky, Iowa, and Texas
markets. The capital expenditures for the nine-month period ended September 30,
1999 was $34.1 million less than the same period for 1998 due to the
construction for the initial launch of the upstate New York and Hawaii markets.




                                       17
<PAGE>   18

         SOURCES OF FUNDING

         Our primary sources of funding are from third party financing
activities which for the nine-month period ended September 30, 1999 was $799.0
million. This includes proceeds from cash equity contributions of $67.6 million,
the offering of the old notes for $406.4 million, the Term B Loan for $175.0
million and the Term C Loan for $150.0 million.

Concurrently, we also received:
         (1) the contribution by Nextel of FCC licenses to Nextel WIP License
Corp., and the grant of the right to use these licenses and Nextel's agreement
to transfer the stock of Nextel WIP License Corp. to us, all in exchange for our
redeemable preferred stock and convertible preferred stock, and

         (2) the contribution by Motorola of a $22.0 million credit to use
against our purchases of Motorola manufactured infrastructure equipment in
exchange for our convertible preferred stock.

         In total, the cash equity contributions consisted of irrevocable
commitments of an aggregate of $202.8 million of cash in exchange for equity in
the form of convertible preferred stock. Our cash equity investors contributed
$67.6 million for the nine-month period ended September 30, 1999 with the
remaining portion to be paid at 12 months and 24 months following the Closing
dates.

         OPCO entered into an Amended and Restated Credit Agreement on September
9, 1999 for a $425.0 million credit facility which provides for a $100.0
million, eight-year revolving credit facility, a $175.0 million, nine-year Term
B Loan and a $150.0 million, nine-year Term C Loan. On January 29, 1999 we
borrowed $175.0 million under the Term B Loan and on September 9, 1999 the
$150.0 million Term C Loan was added.

         We are exposed to changes in interest rates under the Term B and C
Loans. Our primary interest rate exposure results from changes in LIBOR, which
is used to determine the interest, rate applicable to borrowings by OPCO under
its credit facility. As of September 30, 1999, OPCO had $325 million outstanding
under its credit facilities. In April 1999, we entered into an interest rate
swap agreement for $60 million to partially hedge our interest rate exposure
with respect to the Term B Loan. Interest rate swaps have the effect of
converting the applicable variable rate obligations to fixed or other variable
rate obligations. For every 1/8% change in the underlying interest rate
associated with the Term B and C Loans, annual interest expense changes by
approximately $330,000.

         Borrowings under the Term B and C Loans are secured by a first priority
pledge of all assets of our subsidiaries and a pledge of their capital stock,
including the stock of Nextel WIP License Corp. The credit facility contains
customary financial and other covenants for the wireless industry. The credit
facility also contains covenants requiring us to maintain certain defined
financial ratios and meet operational targets including service revenues,
subscriber units and network coverage. As of September 30, 1999 we were in
compliance with all covenants associated with our credit facility.

         We believe the net proceeds from the offering of the notes, together
with the equity investments and borrowings under the credit Term B and C Loans,
provide us with funds sufficient to complete our build-out, acquire additional
FCC licenses and provide us with the working capital necessary to cover our debt
service requirements and operating losses, through 2003, which is when we
anticipate achieving positive operating cash flow for the full fiscal year.
Although we estimate that we will have sufficient funds through 2003, we cannot
assure you that additional funding will not be necessary. We could need
additional financing in order to complete our portion of the Digital Mobile
Network and acquire additional FCC licenses, which might be expensive or
impossible to obtain.

EQUIPMENT AND OPERATING AGREEMENTS

         In connection with our build-out, we have entered into agreements with
Motorola to purchase necessary infrastructure equipment and other related
software and services to implement the Motorola technology we use as well as
subscriber handset units and other accessories. In addition, in connection with
the capitalization transactions, Motorola contributed to us a total of $22.0
million credit against future purchases in exchange for shares of our preferred
stock. As of September 30, 1999, we used approximately $14.7 million of the
credit from Motorola and expect to use the remainder of the credit by the end of
the year.

YEAR 2000 DATE CONVERSION

         We are in the process of evaluating and addressing Year 2000 compliance
of our computer systems. Such Year 2000 compliance efforts are designed to
identify, address and resolve issues that may be created by computer programs
being written



                                       18
<PAGE>   19

using two digits rather than four to define the applicable year. Any of our
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.

         Using a structured method, we have inventoried non-system equipment
purchased by the Company directly from the vendor as well as non-system
equipment purchased from Nextel Communications in January 1999 as part of our
original financing. As of the end of this quarter we have completed our
assessment of all the non-system equipment acquired by Nextel Partners directly
from a vendor and, based on representations obtained from the vendors or the
vendors' web sites, believe this non-system equipment is Year 2000 compliant.
With respect to non-system equipment purchased from Nextel Communications, we
are in the process of upgrading or otherwise renovating software, as needed
using numerous enterprise applications or software code built or supplied by
Nextel Communications. We expect to complete our upgrades and renovations by
November 15, 1999.

         Using a structured method, we have also inventoried certain system
equipment purchased directly by us from the vendors. As of the end of this
quarter we have acquired hardware from Dell Corporation, Hewlett-Packard, and
Cisco primarily. The acquired hardware is warranted by the manufacturer to be
Year 2000 complaint. We have also engaged in application development,
principally in Oracle database and Microsoft SQL server environments, both of
which are warranted by the manufacturer to be Year 2000 compliant. We have
installed third party billing front-end software from ITDS Intelicom Services
called TRIS+ version 2.2.6, which is warranted by ITDS to be Year 2000
compliant. The TRIS+ software uses Ingres 6.4 database developed by Computer
Associated that is warranted by Computer Associates as Year 2000 compliant. We
have developed software code of our own and have verified that it is Year 2000
compliant

         However, our ability to reach our Year 2000 compliance goal is, and
will continue to be, dependent on the parallel efforts of certain third party
vendors, suppliers and business partners. In particular, we rely on services and
products offered by Motorola for our system infrastructure equipment and
subscriber handset units, and Nextel, and third-party providers of services and
products to Nextel, for sales, distribution and back office support services and
information systems, including customer activation, billing and customer care.
When available, we have acquired Year 2000 disclosure statements from our
billing vendor. We have also acquired similar statements from Nextel
Communications' web-site and Motorola's web-site.

         We cannot independently assess the impact of Year 2000 risks, issues
and compliance activities and programs involving operators of public telephone
networks or other service providers, such as electric utilities. We therefore
must rely on these operators' estimates of their own Year 2000 risks, issues and
the status of their related compliance activities and programs in our own risk
assessment process. Because our systems are interconnected with public telephone
networks and are dependent upon the systems of other service providers, the
failure of these third parties to address their own Year 2000 risks and the
disruption of operations in their computer programs may result in material
adverse effect on our operations, including:

         -    the inability of subscribers to make or receive phone calls;

         -    the inability of sites, switches and other interfaces to
              accurately record call details of subscriber phone calls; and

         -    the inability of billing system to accurately report and bill
              subscribers for phone usage.

         Currently, we are in process of creating contingency plans to handle
situations in which we are faced with a business interruption due to a Year 2000
issue that is beyond our control or ability to remedy.

         We believe that the costs of modifying, upgrading or replacing our
systems and equipment will not have a material effect on our liquidity,
financial condition or results of operations. We currently estimate that our
expenditures in connection with our Year 2000 compliance efforts will not exceed
$2 million. To date, we have not deferred any specific projects, goals or
objectives relating to our operations as a result of our efforts.


RISK FACTORS

WE NEED TO BUILD SUBSTANTIAL NETWORK FACILITIES AND DEVELOP A CUSTOMER BASE
BEFORE WE CAN GENERATE EARNINGS TO SERVICE OUR DEBT

         Nextel Partners had no operating history until January 29, 1999, and
the networks we acquired on that date only had a few months of operating
history. We expect to spend significant amounts for site acquisition,
construction, testing and deployment



                                       19
<PAGE>   20

before our commencement of full-scale commercial operations. If we fail to
complete the commercial launch of our portion of the Digital Mobile Network on
schedule or if we fail to achieve significant and sustained growth in our
revenues and earnings from operations, we will not have sufficient cash from
operations to repay or refinance our outstanding notes and our other debt.

OUR SUBSIDIARIES MAY NOT BE IN A POSITION TO PAY US THE CASH WE NEED TO OPERATE
OUR BUSINESS

         We are a holding company and conduct our business principally through
operating subsidiaries. Accordingly, we depend on payments from our subsidiaries
to provide the cash necessary to make the payments on the notes. Our
subsidiaries may not generate earnings sufficient to enable us to operate our
business and meet our payment obligations.

         Our principal operating subsidiary is the primary obligor on a $425.0
million credit facility that is structurally senior to the notes, secured by the
operating assets and a pledge of the stock of our subsidiaries, and contains
covenants that restrict dividends and other payments to us by our subsidiaries.
Future debt agreements of our subsidiaries likely will also impose significant
restrictions on the ability of our subsidiaries to pay dividends or make other
payments to us that would be necessary to make interest payments on our notes or
to repay the notes at maturity.

OUR EXISTING DEBT INCLUDE RESTRICTIVE AND FINANCIAL COVENANTS WHICH WE MAY NOT
BE ABLE TO MEET IN THE FUTURE

         The indenture relating to the notes and the credit facility contain
certain covenants that, among other things, restrict our subsidiaries' ability
to:

         -    incur additional debt;
         -    pay dividends or distributions on, or redeem or repurchase,
              capital stock;
         -    create liens on assets;
         -    make investments, loans or advances;
         -    issue or sell capital stock of certain of our subsidiaries;
         -    enter into transactions with affiliates;
         -    enter into sale and leaseback transactions;
         -    enter into a merger, consolidation or sale of assets; or
         -    engage in any other business other than telecommunications.

         In addition, the credit facility imposes financial covenants which
require our principal subsidiary to comply with specified financial ratios and
tests, including minimum interest coverage ratios, maximum leverage ratios,
minimum service revenues, minimum subscriber units and covered populations,
minimum EBITDA as adjusted requirements and minimum fixed charge coverage
ratios. If the financial covenants are not met, the lenders under the credit
facility will be entitled to declare such indebtedness immediately due and
payable.

         We cannot assure you that our subsidiaries or we will be able to meet
these requirements or satisfy these covenants in the future, which could harm
our business.

WE MAY BE UNABLE TO REFINANCE OUR DEBT WHEN PAYMENTS ON THE NOTES BEGIN

         To prevent default under our outstanding notes, we might need
additional financing or refinancing. Our failure to pay cash interest on the
notes as required would result in defaults under our other debt agreements,
including our principal operating subsidiary's credit facility. We cannot assure
you that we will be able to effect such a financing transaction on acceptable
terms, if at all.

DIFFICULTIES IN CONSTRUCTING AND OPERATING OUR PORTION OF THE DIGITAL MOBILE
NETWORK COULD INCREASE ITS ESTIMATED COSTS AND DELAY ITS SCHEDULED COMPLETION,
THEREBY ADVERSELY AFFECTING OUR ABILITY TO GENERATE REVENUE

         The development and operation of our portion of the Digital Mobile
Network involves a high degree of risk. Before we are in a position to commence
operations in our unbuilt markets, we will need to:

         -    select and acquire appropriate sites for our transmission
              equipment, commonly called cell sites;
         -    purchase and install low-power transmitters, receivers and control
              equipment, which are collectively referred to as the base radio;
         -    build out the physical infrastructure;
         -    test the network; and



                                       20
<PAGE>   21


         -    acquire additional FCC licenses to launch markets.

         Our ability to successfully perform these necessary steps may be
hindered by, among other things, any failure:

         -    to lease or obtain rights to sites for the location of our base
              radio equipment;
         -    to obtain necessary zoning and other local approvals with respect
              to the placement, construction and modification of our facilities;
         -    to acquire additional necessary radio frequencies from third
              parties or to exchange radio frequency licenses with Nextel;
         -    to commence and complete the construction of sites for our
              equipment in a timely and satisfactory manner; and
         -    to obtain necessary approvals, licenses and permits from federal,
              state and local agencies, including land use regulatory approvals
              and approvals from the Federal Aviation Administration with
              respect to the transmission towers that we will be using.

         In addition, we may experience cost overruns and delays not within our
control caused by acts of governmental entities, design changes, material and
equipment shortages, delays in delivery and catastrophic occurrences. Any
failure to construct our portion of the Digital Mobile Network on a timely basis
may affect our ability to provide services in our markets on a schedule
consistent with our current business plan, and any significant delays could have
a material adverse effect on our business.

WE COULD NEED ADDITIONAL FINANCING IN ORDER TO COMPLETE OUR PORTION OF THE
DIGITAL MOBILE NETWORK, WHICH MIGHT BE EXPENSIVE OR IMPOSSIBLE TO OBTAIN

         If we encounter unanticipated construction cost overruns or incur
additional costs beyond those currently reflected in our business plan, we would
require additional financing that may not be permitted by the financial
covenants in our debt agreements. If that financing is unavailable, we could
have inadequate cash flow to operate our business and service our debt.

         Such failure could also result in the delay or abandonment of some or
all of our acquisition, development and expansion plans and expenditures and
thereby adversely affect our business.

Our network must have sufficient capacity to support our anticipated customer
growth

         Our business plan depends on the proper and timely construction of our
portion of the Digital Mobile Network with adequate capacity to accommodate
anticipated new customers and the related increase in usage of our network. This
plan relies on:

         -    the availability of a sufficient quantity of sites for our
              transmission equipment;
         -    the availability and quality of the infrastructure equipment
              necessary to operate our network;
         -    the availability of subscriber units used by our customers to
              receive our services;
         -    the ability to add capacity to serve additional customers as they
              are added to the network; and
         -    the ability in certain markets to acquire additional radio
              frequencies.

         We cannot assure you that we will not experience delays in the
availability of, or unanticipated difficulties in obtaining, these items, which
may adversely affect our ability to attract customers.

WE MUST DEVELOP EFFECTIVE BUSINESS PRACTICES AND PROCEDURES TO MAINTAIN CUSTOMER
SATISFACTION

         Critical to our business plan is our success in attracting and
retaining large numbers of customers to our portion of the Digital Mobile
Network to generate revenue.

         In order to do so, we must develop effective procedures for customer
activation, customer service, billing and other support services. Even if our
system is functional on a technical level, we could lose customers if they are
displeased with the quality of our customer service operations.

OUR BUSINESS STRATEGY DEPENDS ON THE SUCCESSFUL AND CONTINUED INTEGRATION OF OUR
PORTION OF THE DIGITAL MOBILE NETWORK WITH NEXTEL'S PORTION

         Pursuant to operating agreements, Nextel provides us with important
services and assistance, including a license to use the Nextel brand name and
the sharing of switches, devices that direct calls to their destinations. These
services are critical to the successful integration of our network with Nextel's
as well as to the overall success of our business.



                                       21

<PAGE>   22


         Our business plan depends on our ability to implement an integrated
customer service, network management and billing system with Nextel's systems
that allows our network to operate with Nextel's network to provide our and
Nextel's customers with "seamless" service. Integration requires that numerous
and diverse computer hardware and software systems work together. Any failure to
integrate these information systems on schedule may have an adverse effect on
our ability to achieve the revenues contemplated by the plan.

WE MUST COMPLETE OUR PORTION OF THE DIGITAL MOBILE NETWORK BY SET DEADLINES OR
OTHERWISE RISK LOSING NEXTEL'S SUPPORT

         Our agreements with Nextel require us to construct our portion of the
Digital Mobile Network to specific standards and by set deadlines. Our failure
to do so may constitute a material default under the operating agreements that
would give Nextel the right to terminate these agreements. The non-renewal or
termination of the operating agreements would adversely affect our financial
condition and eliminate our ability to carry out our current business plan and
strategy.

WE MAY BE REQUIRED TO IMPLEMENT MATERIAL CHANGES ADOPTED BY NEXTEL, WHICH MAY
NOT BE BENEFICIAL TO OUR BUSINESS

         If Nextel adopts material changes to its operations, including the
adoption of new technologies, the operating agreements give Nextel the right to
require similar changes to our operations. Even if the change is beneficial to
Nextel, the effect on our business may differ due to differences in markets and
customers. We cannot assure you that such changes would not adversely affect our
business.

NEXTEL MAY EXPERIENCE BUSINESS PROBLEMS WHICH COULD ADVERSELY AFFECT OUR
BUSINESS

         Our business plan depends on Nextel completing its portion of the
Digital Mobile Network on schedule. If Nextel encounters financial problems or
operating difficulties relating to its portion of the Digital Mobile Network,
our affiliation and dependence on Nextel may adversely affect our business,
including the quality of our services and the ability of our customers to roam
in the entire network.

WE ARE ENTIRELY DEPENDENT ON MOTOROLA FOR TELECOMMUNICATIONS EQUIPMENT NECESSARY
FOR THE OPERATION OF OUR BUSINESS

         Motorola, Inc. is our sole-source supplier of transmitters used in our
network and handset equipment used by our customers and we rely on Motorola to
manufacture a substantial portion of the equipment necessary to construct our
portion of the Digital Mobile Network. We expect that for the foreseeable
future, Motorola and competing manufacturers who are licensed by Motorola will
be the only manufacturers of this equipment. If Motorola becomes unable to
deliver such equipment, or refuses to do so on reasonable terms, our business
would be adversely affected.

THE TRANSMISSION TECHNOLOGY USED IN THE DIGITAL MOBILE NETWORK IS DIFFERENT FROM
THAT USED BY MOST OTHER WIRELESS CARRIERS, AND, AS A RESULT, WE MIGHT NOT BE
ABLE TO KEEP PACE WITH INDUSTRY STANDARDS IF MORE WIDELY USED TECHNOLOGIES
ADVANCE

         The Digital Mobile Network uses scattered, non-contiguous radio
spectrum near the frequencies used by cellular carriers. Because of their
fragmented character, these frequencies traditionally were only usable for
two-way radio calls, such as those used to dispatch taxis and delivery vehicles.
Nextel became able to use these frequencies to provide a wireless telephone
service competitive with cellular only when Motorola developed a proprietary
technology it calls "iDEN(Trademark)". We and Nextel are currently the only
major wireless service providers utilizing iDEN technology in the United States,
and iDEN phones are not currently designed to roam onto other wireless networks.

         Future technological advancements may enable other wireless
technologies to equal or exceed our current levels of service, and render iDEN
technology obsolete. If Motorola is unable to upgrade or improve iDEN technology
or develop other technology to meet future advances in competing technologies on
a timely basis, or at an acceptable cost, we will be less able to compete
effectively and could lose customers to our competitors.

OUR ABILITY TO CHANGE TECHNOLOGY IS LIMITED BY THE TECHNOLOGICAL REQUIREMENTS OF
OUR FRAGMENTED RADIO SPECTRUM AND OUR AGREEMENTS WITH NEXTEL

         The iDEN technology is currently the only wireless industry technology
in general use on the spectrum we control. Our agreements with Nextel require us
to use the iDEN technology in the deployment of our system and prevent us from
adopting any new communications technology without Nextel's consent. Therefore,
even if we wished to change our technology for competitive reasons, our options
to do so might be limited by the unavailability of alternative technologies, or
by Nextel's decision not to consent.


                                       22
<PAGE>   23

CERTAIN SIGNIFICANT SHAREHOLDERS REPRESENTED ON OUR BOARD OF DIRECTORS MAY HAVE
INTERESTS THAT CONFLICT WITH OURS AND YOURS

         Nextel, DLJ Merchant Banking Partners II and Eagle River Investments
have the right to designate members to our board of directors. We cannot be
certain that any conflicts that arise between our interests and those of these
shareholders will always be resolved in our favor.

         Pursuant to a shareholders' agreement and the joint venture agreement,
the approval of the director selected by Nextel is required in order for us to:

         -    dispose of all or substantially all of our assets,
         -    broaden the scope of our business, or
         -    make a material change in our technology.

         The approval of a director selected by DLJ Merchant Banking is
currently required for significant matters, including:

         -    the determination of compensation and benefits of senior
              management,
         -    modifications of our long-term business strategy or scope of
              business, or
         -    material modifications of any material customer relationships.

         These approvals relate to significant transactions and such decisions
by the director could involve a conflict between our interests and those of the
shareholder appointing the director, which may not be resolved in our favor.

         In addition, Nextel has preemptive rights relating to any public
offering of our capital stock by us or DLJ Merchant Banking. Moreover, under
certain circumstances, Nextel has the ability, and our shareholders have the
ability to cause Nextel, to purchase all of our outstanding capital stock.

         Eagle River, which is owned and controlled by Craig O. McCaw, has
interests in a number of other telecommunications companies and ventures,
including significant investments in Nextel, NEXTLINK Communications, which
provides telephone and other telecommunications services to businesses, and
Teledesic Corporation, which is building a satellite constellation to provide
data services worldwide. NEXTLINK and Teledesic are not currently our
competitors but could be in the future. We do not have a noncompetition
agreement with Eagle River, and thus these investments and future investments by
Eagle River may create a conflict of interest.

WE FACE COMPETITION FROM OTHER WIRELESS SERVICE PROVIDERS AND OTHER
COMMUNICATIONS TECHNOLOGIES, PUTTING DOWNWARD PRESSURE ON PRICES

         We compete for market share and customers with current or potential
cellular and digital wireless communications service providers, including AT&T
Wireless Services, Sprint PCS, Bell Atlantic, BellSouth, Southwestern Bell,
PrimeCo Personal Communications and Airtouch. Many of our competitors have
financial resources, subscriber bases and name recognition greater than ours.
Our competitors may offer prospective customers equipment subsidies or discounts
that are substantially greater than those, if any, that we could offer and may
offer services to customers at prices that are below prices that we are able or
willing to offer. Such competition may cause downward pressures on prices, which
may adversely affect our profits.

         In the future, wireless services may also compete more directly with
traditional telephone service providers who offer services over wire lines and
with cable operators who may expand their services by offering traditional
telecommunications services over their cable systems. In addition, we expect to
compete with other communications technologies, such as paging and global
satellite networks. Moreover, we may face competition from technologies that may
be introduced in the future. All such competition is expected to be intense. We
cannot assure you that we will be able to attract enough customers either to
compete successfully or implement our business plan in this environment.

REGULATORY AUTHORITIES EXERCISE CONSIDERABLE POWER OVER OUR OPERATIONS, WHICH
COULD BE EXERCISED AGAINST OUR INTERESTS AND IMPOSE ADDITIONAL UNANTICIPATED
COSTS

         The FCC and relevant state telecommunications authorities regulate our
business to a substantial degree. The regulation of the wireless
telecommunications industry is subject to constant change. New rules and
regulations may be adopted pursuant to the Communications Act of 1934, as
amended by Telecommunications Act of 1996. The Telecommunications Act provided
for significant deregulation of the U.S. telecommunications industry and such
legislation remains subject to judicial review and additional FCC rulemaking. As
a result, we cannot predict the effect that the legislation and any FCC
rulemaking may have on our



                                       23
<PAGE>   24

future operations. We must comply with all applicable regulations to conduct our
business. Modifications of our business plans or operations to comply with
changing regulations or certain action taken by regulatory authorities might
increase our costs of providing service and adversely affect our financial
condition.

         The FCC has the right to revoke licenses at any time for cause,
including failure to comply with the terms of the licenses, failure to continue
to qualify for the licenses, malfeasance or other misconduct. In addition, at
the end of a ten-year term, we will have to apply to the FCC for renewal of some
of our licenses to provide our core services, which combine wireless telephone
service with dispatch and paging features. We cannot assure you that these
licenses will be renewed.

WE MAY FACE ADDITIONAL COST AND OTHER ADVERSE EFFECTS DUE TO YEAR 2000 ISSUES

         Many computer systems and software programs may not function properly
in the year 2000 and beyond because of a once common programming standard, which
used two digits instead of four digits to signify a year. These computer systems
and software programs read the year "1999" as "99" and not "1999." Because of
this, the year 2000 may appear as the year 1900, which could result in system
failures or disruptions. This problem is often referred to as the "Year 2000"
issue.

         If we are unable to fix a material Year 2000 problem, we could
experience an interruption or failure of our business operations. Likewise, if
parties upon which we depend for products or service, especially Motorola,
Nextel or the operators of public telephone networks in markets where we
operate, are unable to fix a material Year 2000 problem, a resulting
interruption or failure of their ability to provide products or services could
hurt us.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are subject to market risks arising from changes in interest rates.
Our primary interest rate exposure results from changes in LIBOR or the prime
rate which are used to determine the interest rate applicable to borrowings by
our subsidiary under its credit facility. As of September 30, 1999, our
subsidiary had $325 million outstanding under its credit facilities. In April
1999, we entered into an interest rate swap agreement for $60.0 million of these
borrowings to partially hedge our interest rate exposure. Interest rate swaps
have the effect of converting the applicable variable rate obligations to fixed
or other variable rate obligations. Our potential loss over one year that would
result from an instantaneous and unfavorable change of 100 basis points in the
interest rate of all our variable rate obligations would be approximately $2.7
million.

         We do not use financial instruments for trading or other speculative
purposes.

         In September 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), which establishes accounting and reporting standards
for derivative instruments and for hedging activities by requiring that all
derivatives be recognized in the balance sheet and measured at fair value. SFAS
No. 137, issued August 1999, postpones for one year our mandatory effective date
for SFAS No. 133 to January 1, 2001. We are still evaluating the effects of the
change in our financial position or results of operations for SFAS No. 133.





                                       24
<PAGE>   25

PART II

ITEM 1.       LEGAL PROCEEDINGS

              From time to time we are subject to legal proceedings that arise
              in the ordinary course of business. We do not believe that these
              actions, when finally concluded, will have a material adverse
              effect on our business.


ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

              USE OF PROCEEDS

         The Company did not receive any cash proceeds from the issuance of the
new notes as described in our Form S-4 Registration Statement (No. 333-78459).
Instead, the Company received in exchange for the new notes, old notes in like
principal amount. The old notes surrendered in exchange for the new notes were
retired and canceled and cannot be reissued. Accordingly, the issuance of the
new notes did not result in any change in the indebtedness of the Company.

         The net proceeds from the offering of the old notes, the cash equity
contributions, the capital contributions by Nextel and Motorola and the
borrowings under the credit facilities which we received on January 29, 1999 and
September 9, 1999, are being used to complete our portion of the Digital Mobile
Network and to fund operating losses and working capital through 2003, when we
expect to achieve positive operating cash flow for that full fiscal year.

         The following table shows the sources and anticipated uses of the
proceeds from the capitalization transactions through 2003:

                SOURCES AND ANTICIPATED USES OF FUNDS AND ASSETS
                                 (IN MILLIONS)

<TABLE>
<CAPTION>

                   SOURCES:                                                    USES:
                   --------                                                    -----
<S>                                             <C>         <C>                                           <C>
                                                            Nextel capital expenditure reimbursement      $  126.4
Existing term B loan (1)                         $ 175.0    (2)
New term C loan (1)                                150.0    Capital expenditures                             591.0
Revolver  (1)                                      100.0    Operating losses                                 122.5
                                                            Transaction expenses, net cash interest and      164.6
14% Senior discount notes due 2008                 406.4    working capital
Contributed cash equity                             67.6    FCC licenses                                     149.8
Motorola contribution (3)                           22.0    Excess Cash                                       44.2
                                                                                                          --------
Nextel non-cash equity                             142.3
Committed cash equity (4)                          135.2
                                                --------
                                 Total sources  $1,198.5                                      Total uses  $1,198.5
                                                ========                                                  ========
</TABLE>


(1) See Note 4 to Notes to Condensed Consolidated financial Statements.
(2) The cost of assets related to cell sites in certain markets at varying
    stages of construction in the Initial and Expansion Territories which
    Nextel transferred to Partners at Closings on January 29, 1999 and
    September 9, 1999, respectively.
(3) Motorola's equity contribution is in the form of infrastructure equipment.
(4) Committed cash equity will be funded 12 months and 24 months following
    Closing dates.




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<PAGE>   26

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

      (a)      Exhibit 27 - Financial Data Schedule

      (b)      Reports on form 8-K.

               (i)      Current Report on Form 8-K dated and filed on September
                        24, 1999 with the Commission reporting under Item 5 the
                        Expansion Territory Asset Transfer and Reimbursement
                        Agreement with Nextel.


SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants has duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.

                                                      NEXTEL PARTNERS, INC.

Date:  November 15, 1999                  By: /S/ John D. Thompson
                                             -----------------------------------
                                          John D. Thompson
                                          Chief Financial Officer and Treasurer








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