##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-K

|           |  |                                                                                            
|---------- |  | -------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                            
|þ          |  | 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the fiscal year ended December 31,
	2001                                               
|or        
|          
|o          |  | 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: 000-29633

Nextel Partners, Inc.

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                |  |                                      
|--------------------------------------------------------------- |  | -------------------------------------
|Delaware                                                        |  | 91-1930918                           
|(State or Other Jurisdiction of
	Incorporation or Organization) |  | (I.R.S. Employer
	Identification No.)

4500 Carillon Point,

Kirkland, Washington 98033,


(425) 576-3600


(Address of principal executive offices, zip
code and telephone number, including area code)


Securities registered pursuant to Section
12(b) of the Act:

None


Securities registered pursuant to Section
12(g) of the Act:

Class A Common Stock, $0.001 par
value


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 þ          No o .

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.     þ

Based on the closing sales price on March 5,
2002, the aggregate market value of the voting and non-voting
common stock held by non-affiliates of the registrant was
$1,114,505,437.

Indicate the number of shares outstanding of each
of issuers classes of common stock as of the latest
practicable date:

|                           |  |                                   |                    | 
|-------------------------- |  | --------------------------------- | ------------------ | 
|Outstanding Title of Class |  | Number of Shares on March 5, 2002
|                           |  |                                  
|Class A Common Stock       |  |                                   | 165,602,591 shares | 
|Class B Common Stock       |  |                                   | 79,056,228 shares  | 

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this
Report, to the extent not set forth herein, is incorporated by
reference from the registrants definitive proxy statement
relating to the annual meeting of stockholders scheduled to be
held on May 14, 2002, which definitive proxy statement
shall be filed with the Securities and Exchange Commission
within 120 days after the end of the fiscal year to which
this report relates.



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TABLE OF CONTENTS



|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | Item 1. Business                                                                             
|              | Item 2. Properties                                                                           
|              | Item 3. Legal Proceedings                                                                    
|              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II      
|              | Item 5. Market for Registrants Common Equity and Related Stockholders Matters               
|              | Item 6. Selected Consolidated Financial Data                                                 
|              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|              | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|              | Item 8. Financial Statements and Supplementary Data                                          
|              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III     
|              | Item 10. Directors and Executive Officers of the Registrant                                  
|              | Item 11. Executive Compensation                                                              
|              | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|              | Item 13. Certain Relationships and Related Transactions                                      
|PART IV      
|              | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|EXHIBIT INDEX
|SIGNATURES   
|EXHIBIT 10.64
|EXHIBIT 23.1 
|EXHIBIT 99.1 



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##### Table of Contents



NEXTEL PARTNERS, INC.

FORM 10-K

Table Of Contents

PART I

|         |  |                                                                                        |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                        |  | Page
|         |  |                                                                                        |  |     
|Item 1.  |  | Business                                                                               |  |      | 2  | 
|Item 2.  |  | Properties                                                                             |  |      | 33 | 
|Item 3.  |  | Legal Proceedings                                                                      |  |      | 33 | 
|Item 4.  |  | Submission of Matter to a Vote of Security Holders                                     |  |      | 34 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Equity and
	Related Stockholder Matters                 |  |      | 34 | 
|Item 6.  |  | Selected Consolidated Financial Data                                                   |  |      | 34 | 
|Item 7.  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |      | 37 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about
	Market Risk                            |  |      | 51 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                            |  |      | 53 | 
|Item 9.  |  | Changes in and Disagreements with Accountants and
	Accounting and Financial Disclosure |  |      | 83 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                     |  |      | 83 | 
|Item 11. |  | Executive Compensation                                                                 |  |      | 83 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |      | 83 | 
|Item 13. |  | Certain Relationships and Related Transactions                                         |  |      | 83 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statement Schedules, and
	Reports on Form 8-K                      |  |      | 84 | 
|         |  | Signatures                                                                             |  |      | 89 | 

1



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##### Table of Contents






PART I




Item 1.     Business

Overview

We provide digital wireless communications
services in mid-sized and tertiary markets throughout the United
States. We hold licenses for wireless frequencies in
58 markets where over 51 million people, or Pops, live
and work. We have the right to operate in 15 of the top
100 metropolitan statistical areas in the United States
ranked by population and 55 of the top 200 metropolitan
statistical areas. In January 1999, we entered into a joint
venture agreement with Nextel WIP Corp. (Nextel
WIP), an indirect wholly owned subsidiary of Nextel
Communications, Inc. (Nextel). Nextel, through
Nextel WIP, owned 32.3% of our common stock as of
December 31, 2001 and is our largest stockholder. The
Nextel relationship was created to accelerate the build-out of
the Nextel digital mobile network in the United States by
granting us the exclusive right to offer wireless communications
services under the Nextel brand in selected mid-sized and
tertiary markets.

The Nextel digital mobile network uses a single
digital transmission technology called integrated digital
enhanced network, or iDEN, which was developed by Motorola. This
network constitutes one of the largest fully integrated digital
wireless communications systems in the United States. We offer a
package of wireless voice and data services under the Nextel
brand name targeted primarily to business users. We currently
offer the following four services, fully integrated and
accessible through a single wireless handset:



| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile, or interconnect, telephone
	service;                                                                                                                    
|
| |  | Nextel Direct Connect service, which allows
	subscribers in the same geographic region to contact each other
	instantly, on private one-to-one calls or on a group call;
|
| |  | two-way messaging, which allows users to receive
	and send pages and short text messages; and                                                                           
|
| |  | Nextel Wireless Web service, which allows users
	with Internet-ready telephones access to the world wide web and
	web-based applications such as email and e-commerce.  

Nextel plans to expand the Nextel Direct Connect
service throughout the Nextel digital mobile network, including
our portion of the network. The first phase of this plan has
been rolled out in our markets, and we, with Nextel, now offer
an improved Direct Connect service, which allows any customer to
instantly communicate with any other customer within a
prescribed geographic area. The geographic area (the
Direct Connect calling area) always includes several
counties and in most cases includes an entire state. In some
cases, the Direct Connect calling area includes multiple states.
Because of this enhancement to the Nextel Direct Connect
service, customers can assemble their own talk
groups with other customers within the Direct Connect
calling area, thereby eliminating the need for an operator to
administer these talk groups. A second enhancement of Direct
Connect, traveling Direct Connect is expected to be
rolled out in some markets in 2002. Upon implementation of this
enhancement, any two or more customers traveling to a market
outside of their Direct Connect calling area will still be able
to use Direct Connect in that market. For example, Nextel
customers traveling from Albany to Honolulu will be able to
direct connect each other while in the Honolulu area and will be
able to direct connect other Nextel customers who reside in the
Honolulu calling area. However, the customers while in Honolulu
will not be able to direct connect customers in their Albany
Direct Connect calling area.

In April 2001, we and Nextel introduced the
i85s and the i50sx handsets, and in
November 2001, we and Nextel introduced the i90c
handset. All of these handsets are part of a new platform of
digital handsets with embedded Java technology. These new
handsets, developed and manufactured by Motorola, combine the
qualities of our Internet-capable handsets with additional
features and functionality such as the ability to download
Java-based applications, wireless synchronization capabilities
and voice-activated dialing and recorder features.

Our senior management team has substantial
operating experience, with members averaging 16 years in
the telecommunications industry. Each member of senior
management has significant experience working at

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AT&T Wireless, McCaw Cellular and/or
Nextel. Key stockholders, in addition to Nextel WIP,
include Credit Suisse First Boston (formerly known as
DLJ Merchant Banking,) Madison Dearborn Partners, Motorola
and Eagle River Investments, an investment company controlled by
Craig O. McCaw.


Strategic Alliance with Nextel

Our affiliation with Nextel is an integral part
of our strategy. Nextel WIP has contributed to us licenses
and cash in exchange for an ownership stake in our company.
Under our agreements with Nextel WIP, we enjoy numerous
important benefits, including:



| |   |                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nextel Brand and Differentiated Marketing
	Programs.We have the exclusive right
	to build, operate and provide digital wireless communication
	services using the iDEN platform and the Nextel brand name in
	all of our markets.                                                                          
|
| |  | Integrated Nationwide Network.Our systems are operationally seamless
	with those of Nextel, enabling customers of both companies to
	utilize all voice and data capabilities on the other
	Companys portion of the digital mobile network.                                                                
|
| |  | Exclusive Partnership.We have the exclusive right to provide
	wireless communication services using the iDEN/800 MHz
	frequencies to Nextels customers who roam into our markets.                                                                                                                         
|
| |  | Infrastructure.In
	exchange for a fee, based on Nextels cost to provide the
	service, we have the right to utilize portions of Nextels
	infrastructure, including certain switching facilities and
	network monitoring systems, until our customer volume makes it
	advantageous for us to build our own.
|
| |  | Relationships.Nextel assists us in obtaining
	substantially the same terms it receives from vendors of
	equipment and services. In addition, we have developed our own
	relationships with other vendors from which we seek the same or
	comparable terms as Nextel receives from its vendors.             

Business Strategy

Our goal is to become the leading provider of
integrated digital wireless communication services in each
market in our territory by offering high-capacity, high-quality
advanced communications services primarily to business users. In
addition to our relationship with Nextel, we believe the
following elements of our business strategy will distinguish our
wireless service offerings from those of our competitors and
will enable us to compete successfully:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Provide Differentiated Package of Wireless
	Services.We are a wireless service
	provider that can offer interconnect, Nextel Direct Connect,
	two-way messaging and Nextel Wireless Web services, fully
	integrated in a single wireless telephone. We believe this
	four-in-one offering is particularly attractive to
	business users. In addition, we maintain uniformity with Nextel
	by offering consistent rates to our customers anywhere on the
	Nextel digital mobile network.
|
| |  | Target Business Customers.We believe that our focus on business
	customers has resulted in higher monthly average revenue per
	unit and lower average monthly service cancellations or
	terminations. These business customers constitute a market
	segment for which we believe our product has high utility, and
	we further believe that we and Nextel are the only major
	U.S. wireless carriers directing fully integrated,
	nationwide offerings to this segment.                  
|
| |  | Maintain a Robust Reliable Network.We have completed the initial
	build-out of our system in all but one of our markets. Our
	objective is to maintain a robust and reliable system in our
	markets that covers all key areas in that market and operates
	seamlessly with the Nextel digital mobile network.                                                                                                                                                                            
|
| |  | Provide Unparallel Customer Service.In addition to our unique four-in-one
	service offering, our objective is to distinguish ourselves by
	providing the highest quality customer service in the industry.                                                                                                                                                                                                                                                                               
|
| |  | Operate in Mid-Sized and Tertiary Markets.We focus on mid-sized and tertiary
	markets with demographics we believe to be similar to those
	served by Nextel. We believe that this strategy will allow us to
	rapidly increase penetration within our targeted customer base,
	which we believe has                                                                                                                                                                                       

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| |  |                                                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | historically been underserved in these markets.
	We believe that this focus, combined with our differentiated
	service offerings, will allow us to sustain our pricing strategy.

Markets

We hold licenses for wireless frequencies in 58
markets where over 51 million people live and work. We
consider these markets to be attractive because:



| |   |                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | based on our understanding of Nextels
	business strategy, these markets are integral to Nextels
	strategy of providing national digital wireless services;                                                                                 
|
| |  | we believe that Nextel has experienced rapid
	subscriber growth and competitive success in markets with
	similar economic and demographic characteristics;                                                                                   
|
| |  | we believe that our markets generally contain
	fewer wireless competitors than do larger, more urban markets;
	and                                                                                                                           
|
| |  | a number of our markets are adjacent to
	operational Nextel markets and include numerous offices and
	branches of Nextel national account customers that we expect
	will become our customers as we have launched service in their
	vicinity.

As of December 31, 2001,we have launched
digital wireless service in all of the following markets (except
for Burlington, Vermont which we plan to launch in the second
half of 2003):

|          |  |                                                        |  |          |            | 
|--------- |  | ------------------------------------------------------ |  | -------- | ---------- | 
|          |  |                                                        |  | Licensed
|Region    |  | Markets(1)                                             |  | Pops    
|          |  |                                                        |  |         
|          |  |                                                        |  |         
|Northeast |  | Syracuse/Utica-Rome/Binghamton/Elmira, NY              |  |          | 2,058,780  | 
|          |  | Harrisburg/York/Lancaster, PA                          |  |          | 1,688,822  | 
|          |  | Buffalo/Jamestown, NY                                  |  |          | 1,497,610  | 
|          |  | Altoona/Johnstown/State College/Williamsport, PA       |  |          | 1,462,511  | 
|          |  | Rochester, NY                                          |  |          | 1,211,105  | 
|          |  | Albany/Glens Falls, NY                                 |  |          | 1,171,669  | 
|          |  | Wilkes-Barre/Scranton, PA                              |  |          | 987,728    | 
|          |  | Burlington, VT (launch planned for 2nd half of
	2003)  |  |          | 697,496    | 
|          |  | Erie, PA                                               |  |          | 371,209    | 
|          |  |                                                        |  |          |            | 
|          |  | Total                                                  |  |          | 11,146,930 | 
|          |  |                                                        |  |          |            | 
|Midwest   |  | Waterloo/Dubuque/Davenport/Cedar Rapids/Iowa
	City, IA |  |          | 1,960,174  | 
|          |  | Peoria/Springfield/Champaign/Bloomington/
	Decatur, IL |  |          | 1,844,352  | 
|          |  | Omaha/Lincoln, NE                                      |  |          | 1,782,470  | 
|          |  | Evansville/Owensboro, IN/KY                            |  |          | 1,549,132  | 
|          |  | Green Bay/Fond du Lac/Appleton/Sheboygan, WI           |  |          | 1,407,226  | 
|          |  | Fargo/Grand Forks, ND                                  |  |          | 1,229,945  | 
|          |  | Des Moines, IA                                         |  |          | 917,732    | 
|          |  | Sioux City/Sioux Falls, IA/SD                          |  |          | 724,726    | 
|          |  | Boise/Twin Falls, ID                                   |  |          | 662,770    | 
|          |  | Eau Claire/La Crosse, WI                               |  |          | 505,515    | 
|          |  | Rochester/Mankato, MN                                  |  |          | 484,185    | 
|          |  | Duluth, MN                                             |  |          | 349,952    | 
|          |  | Terre Haute, IN                                        |  |          | 343,148    | 
|          |  | Idaho Falls/Pocatello, ID                              |  |          | 341,399    | 

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|                  |  |                                             |  |          |            | 
|----------------- |  | ------------------------------------------- |  | -------- | ---------- | 
|                  |  |                                             |  | Licensed
|Region            |  | Markets(1)                                  |  | Pops    
|                  |  |                                             |  |         
|                  |  |                                             |  |         
|                  |  | Wausau, WI                                  |  |          | 256,214    | 
|                  |  | Ft. Dodge/Mason City, IA                    |  |          | 209,375    | 
|                  |  |                                             |  |          |            | 
|                  |  | Total                                       |  |          | 14,568,315 | 
|                  |  |                                             |  |          |            | 
|South             |  | Louisville/Lexington-Fayette, KY            |  |          | 3,335,496  | 
|                  |  | Fayetteville/Fort Smith/Pine Bluff, AR      |  |          | 1,796,093  | 
|                  |  | Roanoke/Lynchburg/Charlottesville, WV       |  |          | 1,713,008  | 
|                  |  | Shreveport/Monroe/Tyler/Longview, LA/TX     |  |          | 1,626,510  | 
|                  |  | Hattiesburg/Jackson, MS                     |  |          | 1,430,863  | 
|                  |  | McAllen/Harlingen/Brownsville, TX           |  |          | 1,023,589  | 
|                  |  | Pensacola/Panama City/Fort Walton Beach, FL |  |          | 884,110    | 
|                  |  | Odessa-Midland/San Angelo, TX               |  |          | 832,582    | 
|                  |  | Parkersburg-Marietta, WV/OH                 |  |          | 816,017    | 
|                  |  | Macon-Warner Robins, GA                     |  |          | 764,670    | 
|                  |  | Montgomery, AL                              |  |          | 739,246    | 
|                  |  | Lafayette/Lake Charles, LA                  |  |          | 737,723    | 
|                  |  | Charleston, WV                              |  |          | 726,176    | 
|                  |  | Tallahassee, FL                             |  |          | 718,520    | 
|                  |  | Temple-Killeen/Waco, TX                     |  |          | 701,599    | 
|                  |  | Mobile, AL                                  |  |          | 701,536    | 
|                  |  | Corpus Christi/Victoria, TX                 |  |          | 635,127    | 
|                  |  | Bristol/Johnson City/Kingsport, VA/TN       |  |          | 590,874    | 
|                  |  | Little Rock, AR                             |  |          | 583,845    | 
|                  |  | Albany, GA                                  |  |          | 458,163    | 
|                  |  | Alexandria, LA                              |  |          | 457,789    | 
|                  |  | Texarkana, TX/AR                            |  |          | 451,143    | 
|                  |  | Lubbock, TX                                 |  |          | 437,581    | 
|                  |  | Huntington-Ashland, WV/KY                   |  |          | 407,269    | 
|                  |  | Columbus, GA                                |  |          | 397,505    | 
|                  |  | Beaumont, TX                                |  |          | 385,090    | 
|                  |  | Pascagoula, MS                              |  |          | 363,988    | 
|                  |  | Amarillo, TX                                |  |          | 322,269    | 
|                  |  | Laredo, TX                                  |  |          | 296,562    | 
|                  |  | Dothan/Auburn-Opelika, AL/GA                |  |          | 267,011    | 
|                  |  | Bryan-College Station, TX                   |  |          | 192,653    | 
|                  |  | Abilene, TX                                 |  |          | 191,518    | 
|                  |  |                                             |  |          |            | 
|                  |  | Total                                       |  |          | 24,986,125 | 
|                  |  |                                             |  |          |            | 
|Noncontinental US |  | Hawaii (all islands)                        |  |          | 1,211,537  | 
|                  |  |                                             |  |          |            | 
|                  |  | Combined Total                              |  |          | 51,912,907 | 
|                  |  |                                             |  |          |            | 



---



|    |                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We may, from time to time, reconfigure our
	markets to take advantage of build-out and management synergies
	and marketing opportunities. While the actual territories and
	population estimates will not change, the way we group our
	markets may increase or decrease the total number of markets.

5



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We have calculated total Pops for a given market
by utilizing Census 2000 data published by the
U.S. Census Bureau, which lists population estimates by
county. Future launch schedules for our markets are subject to
the various factors discussed under the heading Risk
Factors in this 10-K Annual Report.

In addition to the medium-sized and tertiary
markets, our markets include selected corridors along interstate
and state highways. While these corridors do not have large
business or residential populations, we believe that significant
revenues will be earned from travelers on such highways.
Accordingly, the population of a given area may not fully
indicate the amount of the revenues that may be generated in
such area.

The Nextel Digital Mobile Network

We constructed our portion of the Nextel digital
mobile network using the same technology used by Nextel. This
technology, referred to as iDEN, was developed by Motorola.

As required, we build and operate our portion of
the Nextel digital mobile network in accordance with
Nextels standards, which enables both companies to achieve
a consistent level of service throughout the United States.

Our customers have access to digital quality and
advanced features whether they are using our or Nextels
portion of the Nextel digital mobile network. This contrasts to
the hybrid analog/ digital networks of cellular competitors,
which do not support all features in the analog-only portions of
their networks.

Digital Mobile Network Services.We offer a bundled product consisting
of the following fully integrated services accessible through a
single wireless telephone:



| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile, or interconnect, telephone
	service;                                                                                                                  
|
| |  | Nextel Direct Connect service, which allows users
	in the same geographic region to contact each other instantly,
	on private one-to-one calls or on a group call;    
|
| |  | two-way messaging, which allows users to receive
	and send pages and short text messages; and                                                                         
|
| |  | Nextel Wireless Web service, which allows users
	with Internet-ready telephones access to the world wide web and
	web-based applications such as email and e-commerce.

In addition, the Nextel digital mobile network
has been designed to offer customers additional features, such
as voicemail, call holding, call waiting, no-answer or
busy-signal transfer, call forwarding and three-way calling.

We believe that a significant degree of overlap
exists in the customer population for these separate wireless
communications services. We also believe that business customers
are attracted to the convenience of combining multiple wireless
communications services in a single wireless telephone and
consolidating all wireless service charges into a single package
price and billing statement.

Our experience shows that a sizable portion of
certain business users communications involves contacting
co-workers within the same organization. Nextel Direct Connect
service is especially well suited to address these intracompany
wireless communications needs. Nextel Direct Connect service
enables a customer to instantly set up a conference on either a
one-to-one or group basis within the Direct Connect calling
area. We believe this is a feature that is not included in any
integrated service package currently available from competing
cellular and digital operators. We believe that the Nextel
Direct Connect service generates approximately 34% of our
network traffic.

To further expand the flexibility and convenience
offered by Nextel Direct Connect service to customers outside a
single organization but within a single industry or interest
group located in the Direct Connect calling area, Nextel has
introduced in both its markets and ours the Nextel Business
Networks service. Nextel Business Networks extends Nextel Direct
Connect service beyond a companys employees to suppliers,
customers and other parties involved in the same transaction,
industry or work site. For example, a contractor can instantly
connect not only with his employees, but with his subcontractors
and vendors within his Direct Connect calling area.

6



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We believe our focus on business customers,
particularly those customers who employ a mobile workforce with
high demand for wireless communications services, accounts, in
part, for our performance in the following areas:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Subscriber Growth.Our subscriber base has grown from
	approximately 10,200 subscribers as of December 31, 1998 to
	approximately 227,400 subscribers as of December 31, 2000
	and 515,900 subscribers as of December 31, 2001.                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Subscriber Revenues.Our monthly average revenue per unit,
	or ARPU for wireless communication services was approximately
	$71 for the years ended December 31, 2000 and 2001, as
	compared with a wireless industry average of approximately
	$45.56 for the six month period ended June 30, 2001, as
	reported by the Cellular Telecommunications and Internet
	Association. In addition, our lifetime revenue per subscriber
	was approximately $4,200 as of December 31, 2000 and
	approximately $4,400 as of December 31, 2001, which we
	believe to be the highest in the industry.

International Roaming Agreements.To the extent that we are able to
continue to be a part of Nextels international roaming
agreements, we will continue to operate under those agreements.
These agreements remain in force unless terminated by one of the
parties in writing subject to a notice period of six months. Our
agreements with Nextel WIP also allow us to earn revenue when
non-U.S. subscribers roam on our portion of the Nextel digital
mobile network. Currently, our and Nextels subscribers can
roam on TELUSs network in Canada and TELUSs
subscribers can roam on the Nextel digital mobile network.

Digital Mobile Network Technology.The Nextel digital mobile network
combines the iDEN technology developed and designed by Motorola
with a low-power, multi-site deployment of base radios similar
to that used by cellular service that permits us to reuse the
same frequency in different cells, increasing our systems
effective capacity. Nextel currently uses iDEN technology
throughout its portion of the Nextel digital mobile network and
we are required by our operating agreements to use iDEN
technology. iDEN technology is a proprietary format for
delivering signals over scattered, non-contiguous specialized
mobile radio, or SMR, frequencies.

The iDEN technology shares the same basic
platform as the wireless standards underlying global system for
mobile communications, or GSM, and time division multiple
access, or TDMA. iDEN shares many common components with the GSM
technology that has been established as the digital cellular
communications standard in Europe and is a variant of the GSM
technology that is being deployed by certain cellular and PCS
operators in the United States. iDEN differs in a number of
significant respects from the TDMA technology versions being
assessed or deployed by many cellular and PCS providers in the
United States. The iDEN technology, when utilized for the
two-way radio dispatch function, can be significantly more
efficient than TDMA technology formats.

The design of the Nextel digital mobile network
is premised on dividing a service area into multiple sites. Each
site will contain the base radio connected by landline
facilities or a microwave to a computer-controlled switching
center. In the case of mobile telephone calls, the switching
center controls the automatic transfer of calls from site to
site as a customer travels, coordinates calls to and from a
customers telephone and connects calls to the public
switched telecommunications network. In the case of two-way
dispatch calls, the switching center connects the customer
initiating the call directly to the other customer in the case
of a private call, and directly to a number of other customers
in the case of a group call.

Under our operating agreements, we and Nextel WIP
are required to cooperate to optimize the location of the
switching centers to support both Nextels existing and
planned network service and service in our launched markets and
those under construction. In areas where we do not have our own
switch, we obtain switching services from Nextel WIP for a fee.
Currently, we have installed three switches, one in Hawaii, one
in upstate New York and one in Kentucky. We are also in the
process of completing the installation of a switch in Iowa.

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The implementation of the Nextel digital mobile
network design and technology increases the capacity of a SMR
channel significantly, as compared to analog technology, in two
ways:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The content of every call made by a digital
	subscriber is converted into a stream of data bits that is
	encoded and compressed before being transmitted over the
	airwaves. By converting the call into digital bits, both the
	content and the processing information used to route the call
	can be transmitted over the same channel without causing
	interference with other calls. Upon receipt of the coded data
	bits, the customers telephone will decode the signal into
	an audible voice.
|
| |  | By using the iDEN digital technology instead of
	analog technology on our systems, we achieve an approximate
	six-fold improvement in efficiency in the use of our spectrum
	for two-way radio dispatch service and an approximate three-fold
	improvement in efficiency for mobile telephone service.                                                                                                                                                                                                

Each cell site provides service on our licensed
frequencies to a particular geographic area permitting the
customers telephone to communicate with our network. By
designing our system with multiple cell sites, we are able to
reuse the frequency channels many times throughout the same
license area by placing our transmitters at low elevation sites
and restricting the power of each transmitter to a directed
geographic area, which may be less than one mile and up to 30
miles. This process avoids interference, while permitting
significantly more customers to use the frequencies allotted to
us. This system, combining digital compression technology with
the reuse of spectrum throughout our license area, allows us to
support more customer calls than would otherwise be the case
with analog technologies.

Network Build-Out and Capital Expenditure
Plan

Cell Site Acquisition and Construction.As of December 31, 2001, we had
2,788 cell sites equipped and operational, which covered almost
all planned cell site locations for our transmission equipment
throughout our territory.

Initially, we leased approximately 40 sites from
Nextel WIP. In April 1999, Nextel WIP sold the towers
constructed on these sites to SpectraSite Holdings, Inc., along
with other towers, and entered into agreements pursuant to which
SpectraSite agreed to build or purchase additional towers,
including towers in our territory. We have entered into leasing
arrangements with SpectraSite on agreed terms for space on
towers controlled by SpectraSite located in our territory and
upon which we require space. With respect to the SpectraSite
towers in our territory on which we lease space and which were
sold to Spectrasite by Nextel WIP, Nextel WIP has agreed to
compensate us for the difference between the lease rates we pay
to SpectraSite and the lease rates we would have paid to Nextel
WIP under our former master lease agreement.

To reduce the risk of zoning and other local
regulatory delays, construction delays and site acquisition
costs, we have located our cell sites on existing transmission
towers owned by third parties wherever possible, or if
necessary, on towers constructed or purchased by SpectraSite or
other contracted third parties.

Build-Out Criteria.Our agreements with Nextel WIP require
us to build out our markets in compliance with the site
acquisition, frequency design, launch criteria and construction
standards that are in effect from time to time and are generally
applicable to Nextels U.S. operating subsidiaries. These
standards evolve with changes in technology and are subject to
modification or adjustments to comply with local rules and laws.

In general, the site acquisition and construction
standards include the use of standard lease or license
agreements, appropriate environmental testing of sites for our
transmission equipment, compliance with local zoning and
building permit requirements and compliance with applicable
Federal Aviation Administration and FCC registration and other
federal and state requirements applicable to site construction
and operation.

Frequency design requirements relate to specific
frequencies, their required signal strength and propagation
performance levels in a given area.

Similarly, the launch criteria include the
ability to provide service in the designated market at specified
performance levels to both new customers and existing Nextel
digital mobile network customers who roam into our market and
the ability to support additional features as required by Nextel.

8



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Relationship with Nextel

We intend to capitalize on our relationship with
Nextel and believe our relationship provides strategic and
cost-saving advantages, including the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nextel brand awareness and marketing programs.We benefit from Nextels national
	marketing efforts and related advertising campaigns, which are
	designed to increase awareness of the Nextel brand name and
	stimulate interest in and demand for Nextel service by stressing
	its versatility, value, simplicity and quality.                                                                                                                                                                                                                                                                                                     
|
| |  | Nationwide roaming.Our customers and customers of Nextel
	are able to use interconnect service and all of Nextels
	features, except Nextel Direct Connect, wherever they travel
	throughout the Nextel digital mobile network at no additional
	charge. Nextel provides our customers the same mobile telephone
	functionality and related features available to them in our
	markets when they roam into Nextels markets. Pursuant to
	our operating agreements with Nextel WIP, Nextels
	subscribers generate revenue for us when they roam into our
	markets, and we pay Nextel when our subscribers roam into their
	markets.
|
| |  | Support services.The operating agreements with Nextel
	WIP enable us to use Nextels switching facilities and
	network monitoring center; use Nextels back-office systems
	to support customer activation and billing of national accounts;
	and access technology improvements from Nextels research
	and development. To the extent we are charged for these
	services, prices are based on Nextels cost to provide us
	these services.                                                                                                                                                                                        
|
| |  | Nextels existing relationships with
	vendors and distributors.Nextel WIP
	has agreed to assist us in obtaining substantially the same
	terms it receives from its vendors of equipment and services.
	For example, under our agreement with Motorola, we purchase
	wireless telephones and infrastructure equipment from Motorola
	at substantially the same prices as Nextel. We have developed
	our own relationships with vendors and seek from Nextels
	distributors the same or comparable terms as Nextels.                                                                                                                
|
| |  | Nextels national accounts.Numerous offices and branches of
	Nextels national accounts have become our customers when
	we have launched service in their area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Sales and Marketing

Business Customer Focus.Our marketing strategy targets
business users who we believe are particularly attracted to the
Nextel digital mobile networks potential for increasing
efficiencies and reducing costs. We have initially concentrated
our sales efforts on a number of distinct groups of mobile
workers, including personnel in the transportation, delivery,
real property and facilities management, construction and
building trades, landscaping and other service sectors. We
expect to gradually expand our target customer group to include
additional industry groups.

Prior to launch in each of our markets, we have
marketed our services to leads and prospects based on targeted
business users of our wireless services. We also generate
prospects from offices or branches of Nextel national accounts
located within our territory or as a result of inquiries
directed to Nextel before we have launched our services. We
expect to continue to benefit from Nextels national
advertising campaigns. We use a direct sales force as well as
indirect sales channels, direct mail, telemarketing and expect
to use our own stores in 2002 to market our services and
products.

We believe that this focus on business customers
and our unique bundle of services have resulted in higher
monthly average revenue per unit and a lower average monthly
cancellation or termination rate than other wireless services
providers have experienced.

Pricing Plans.Although we set our price levels in
each of our markets independently of Nextel, we are required to
adopt Nextels overall pricing strategies. We believe these
strategies are both profitable and attractive to customers. In
particular, unlike our competitors, our customers pay the same
rates they pay at home when traveling anywhere on either
Nextels or our portion of the Nextel digital mobile
network, without

9



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the complex dialing procedures, access fees or
higher roaming airtime rates frequently encountered by roaming
customers of cellular providers.


Customer Care

In October 1999, we opened our customer care call
center in Las Vegas, Nevada and began to provide services to our
customers. Our customers can reach customer service by dialing
611 from their wireless telephones or by calling the national
800 number advertised by Nextel. Nextels call center
routes all calls from our customers to us. In addition to
customer care, we have located our credit and activation, order
fulfillment and collection services in the Las Vegas call center.

In May 2001, we broke ground on our second
customer support facility in Panama City Beach, Florida. We took
occupancy of the facility in January 2002 and started to answer
customer calls during February 2002.

The Nextel WIP Operating Agreements

The operating agreements define the relationship,
rights and obligations between Nextel WIP and us. The agreements
began January 29, 1999, have initial terms of ten years and
may be extended for up to two and a half years, with four
ten-year renewals available at our option.

Under these agreements, Nextel WIP is obligated
to share with us Nextels experience in operating iDEN
networks by granting us access to meetings and providing
specified services upon our request. The most significant
services Nextel WIP may provide us are:



| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | use of some of Nextels switching facilities
	in exchange for a per-minute fee based on Nextels national
	average cost for such service, including financing and
	depreciation costs;                         
|
| |  | monitoring of switches owned by us on a 24-hour
	per day basis by Nextels network monitoring center in
	exchange for a fee based on pro-rata costs;                                                           
|
| |  | use of Nextels back-office systems in order
	to support customer activation, billing and customer care for
	national accounts in exchange for fees based on Nextels
	national average cost for such services;
|
| |  | use of the Nextel brand name and certain
	trademarks and service marks, and the marketing and advertising
	materials developed by Nextel, in exchange for a marketing
	services fee described below;           
|
| |  | access to technology enhancements and
	improvements; and                                                                                                                                                       
|
| |  | assisting us in contracting with Nextels
	vendors on substantially the same terms as Nextel wherever
	possible.                                                                                               

To further support us in our efforts, Nextel WIP
has also agreed that:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | no marketing services fee is due until the first
	month of the quarter beginning after we achieve two consecutive
	quarters of positive EBITDA as adjusted, at which time the fee
	will be 0.5% of gross monthly service revenues until
	December 31, 2003 and 1.0% of gross monthly service
	revenues thereafter; and                                                                                                                                                                      
|
| |  | when a Nextel subscriber roams on our system we
	receive a percentage of the service revenues generated by the
	roaming subscriber. The percentage was 90% of the service
	revenues in 2000, 85% in 2001 and is 80% in 2002 and thereafter,
	subject to upward or downward adjustment based on the relative
	customer satisfaction levels of Nextel and us as measured by a
	customer satisfaction survey administered on a regular basis by
	a third-party vendor engaged by Nextel and us.

In addition, the operating agreements require
that we adhere to certain key operating requirements, including
the following:



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | we generally are required to offer the full
	complement of products and services offered by Nextel in
	comparable service areas;

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| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we must abide by Nextels standard pricing
	structure  principally home-rate roaming, but we need
	not charge the same prices as Nextel;                             
|
| |  | we must meet minimum network performance and
	customer care thresholds; and                                                                                           
|
| |  | we must adhere to standards in other operating
	areas, such as frequency design, site acquisition, construction,
	cell site maintenance and marketing and advertising.

The U.S. Wireless Communications
Industry

Overview.Mobile
wireless communications systems use a variety of radio
frequencies to transmit voice and data, and include cellular
telephone services, ESMR, PCS and paging. ESMR stands for
enhanced specialized mobile radio and is the regulatory term
applied to the services, including those provided by the Nextel
digital mobile network, that combine wireless telephone service
with a dispatch feature and paging. PCS stands for personal
communications service and refers to digital wireless telephone
service.

Since the first commercial cellular systems
became operational in 1983, mobile wireless telecommunications
services have grown dramatically as these services have become
widely available and increasingly affordable. This growth has
been driven by technological advances, changes in consumer
preferences and increased availability of spectrum to new
operators.

The provision of cellular telephone service began
with providers utilizing the 800 MHz band of radio
frequency in 1982 when the FCC began issuing two licenses per
market throughout the United States. In 1993, the FCC allocated
a portion of the radio spectrum, 1850-1990 MHz, for a new
wireless communications service commonly known as PCS. The
FCCs stated objectives in auctioning bandwidth for PCS
were to foster competition among existing cellular carriers,
increase availability of wireless services to a broader segment
of the public, and bring innovative technology to the U.S.
wireless industry. Since 1995, the FCC has conducted auctions in
which industry participants have been awarded PCS licenses for
designated areas throughout the United States.

The demand for wireless telecommunications has
grown rapidly, driven by the increased availability of services,
technological advancements, regulatory changes, increased
competition and lower prices. According to the Cellular
Telecommunications and Internet Association, the number of
wireless subscribers in the United States, including cellular,
PCS and ESMR, has grown from approximately 200,000 as of
June 30, 1985 to 118 million by June 30, 2001,
which reflected a penetration rate of 42.1%.

The following table sets forth certain U.S.
wireless industry statistics:

U.S. Wireless Subscribers 1992-June
2001

|                                                     |  |                         |       |          |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |     
|---------------------------------------------------- |  | ----------------------- | ----- | -------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ----- | ----
|                                                     |  |                         |       |         
|                                                     |  | Year Ended December 31, |       |         
|                                                     |  |                         |       | June 30,
|                                                     |  | 1992                    |       | 1993     |  | 1994 |       | 1995 |  | 1996 |       | 1997 |  | 1998 |       | 1999 |  | 2000 |       | 2001
|                                                     |  |                         |       |          |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |     
|Wireless Industry Statistics(1)                      |  |                         |       |          |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |     
|Total service revenues (in billions)                 |  | $                       | 7.8   |          |  | $    | 10.9  |      |  | $    | 14.2  |      |  | $    | 19.1  |      |  | $    | 23.6  |      |  | $ | 27.5  |   |  | $ | 33.1  |   |  | $ | 40.0  |   |  | $ | 52.5  |   |  | $ | 30.9  | (2) 
|Wireless subscribers at end of period (in
	millions) |  |                         | 11.0  |          |  |      | 16.0  |      |  |      | 24.1  |      |  |      | 33.8  |      |  |      | 44.0  |      |  |   | 55.3  |   |  |   | 69.2  |   |  |   | 86.0  |   |  |   | 109.5 |   |  |   | 118.4 |     
|Subscriber growth                                    |  |                         | 46.0  | %        |  |      | 45.1  | %    |  |      | 50.8  | %    |  |      | 40.0  | %    |  |      | 30.4  | %    |  |   | 25.6  | % |  |   | 25.1  | % |  |   | 24.3  | % |  |   | 27.2  | % |  |   | 22.0  | %(3)
|Average monthly revenues per subscriber              |  | $                       | 68.68 |          |  | $    | 61.49 |      |  | $    | 56.21 |      |  | $    | 51.00 |      |  | $    | 47.70 |      |  | $ | 42.78 |   |  | $ | 39.43 |   |  | $ | 41.24 |   |  | $ | 45.27 |   |  | $ | 45.56 | (4) 
|Ending penetration                                   |  |                         | 4.3   | %        |  |      | 6.2   | %    |  |      | 9.2   | %    |  |      | 12.9  | %    |  |      | 16.6  | %    |  |   | 20.7  | % |  |   | 25.6  | % |  |   | 31.6  | % |  |   | 38.9  | % |  |   | 42.1  | %   
|Digital subscribers at end of period (in millions)   |  |                         |      |          |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |   | 6.5   |   |  |   | 18.3  |   |  |   | 38.5  |   |  |   | 73.2  |   |  |   | N/A   |     



---

Source: Cellular Telecommunications and Internet
Association and Census Bureau Data.



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Reflects domestic U.S. commercially operational
	cellular, ESMR and PCS providers.   
|   
|(2) | Reflects six month total.                                                            
|   
|(3) | Reflects subscriber growth between June 2000 and
	June 2001.                         
|   
|(4) | Reflects average monthly revenues per subscriber
	between January 2001 and June 2001.

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Wireless Communications Systems.In the U.S. wireless communications
industry, there are three mobile wireless telephone services:
cellular, ESMR and PCS. Cellular and ESMR services utilize radio
spectrum in the 800 MHz band while PCS operates at higher
frequencies of 1850 to 1990 MHz. Use of the 800 MHz band gives
cellular and ESMR superior ability to penetrate buildings and
other physical obstacles and spread or propagate
through air, thereby reducing infrastructure costs since fewer
base radios are needed to cover a given area.

All cellular service transmissions were
originally analog-based, although many cellular providers have
now overlaid digital systems alongside their analog systems in
large markets. Analog cellular technology has the advantage of
using a consistent standard nationwide, permitting nationwide
roaming using a single-mode, single-band telephone. On the other
hand, analog technology has several disadvantages, including
less efficient use of spectrum, which reduces effective call
capacity; inconsistent service quality; decreased privacy,
security and reliability as compared to digital technologies;
and the inability to offer services such as voice mail, call
waiting or caller identification.

All PCS services, like ESMR, are all-digital
systems that convert voice or data signals into a stream of
binary digits that is compressed before transmission, enabling a
single radio channel to carry multiple simultaneous signal
transmissions. This enhanced capacity, along with improvements
in digital signaling, allows digital-based wireless technologies
to offer new and enhanced services, and improved voice quality
and system flexibility, as compared with analog technologies.
Call forwarding, call waiting and greater call privacy are among
the enhanced services that digital systems provide. In addition,
due to the reduced power consumption of digital telephones,
users benefit from an extended battery life.

The FCC has also assigned non-contiguous portions
of the 800 MHz band to SMR, which was initially dedicated
to analog two-way radio dispatch services. This service only
became viable in the mobile wireless telephone market with the
introduction in 1993 of ESMR, which applies digital technology
to make use of the 800 MHz spectrum band and its superior
propagation characteristics to deliver the advantages of a
digital wireless mobile telephone system while retaining and
significantly enhancing the value of SMRs traditional
dispatch feature.

Unlike analog cellular, which has been
implemented in a uniform manner across the United States,
several mutually incompatible digital technologies are currently
in use in the United States. Roaming into different areas often
requires multi-mode (analog/digital) and/or multi-band
(PCS/cellular) telephones that function at both cellular and PCS
frequencies and/or are equipped for more than one type of
modulation technology. Time-division technologies, which include
GSM, TDMA and iDEN, break up each transmission channel into time
slots that increase effective capacity. Code Division Multiple
Access, or CDMA technology, is a spread-spectrum technology that
transmits portions of many messages over a broad portion of the
available spectrum rather than a single channel. iDEN phones
presently operate only in the iDEN mode within SMR frequencies,
and therefore cannot roam onto other digital or analog wireless
networks.

Nextel.Nextel
deployed a second generation of Motorolas iDEN technology
beginning in the third quarter of 1996. In their quarterly and
10-K Annual Reports, Nextel has reported a significant rate of
customer growth since that time. Based on Nextels
quarterly and 10-K Annual Reports, over the past four years the
number of Nextels U.S. subscribers has grown at a 15%
compounded growth rate quarter over quarter, and, as reported by
Nextel, for the year ended December 31, 2001, the number
had grown to approximately 8.7 million.

The Nextel Direct Connect service dispatch
capability allows any member of a mobile team to immediately
communicate with any or all of a prearranged Nextel
phone-equipped team with the push of a button within the Direct
Connect calling area. This push-to-talk feature
works like a two-way radio, but, in contrast to analog dispatch
SMR radios, iDEN technology allows only the person or persons
being called to hear the conversation.

Nextel plans to expand the Nextel Direct Connect
service throughout the Nextel digital mobile network, including
our portion of the network. The first phase of this plan has
been rolled out in our markets, and we,

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with Nextel, now offer an improved Direct Connect
service which allows customers to instantly communicate with
other customers in the customers Direct Connect calling
area. Because of this enhancement to the Nextel Direct Connect
service, customers can assemble their own talk
groups with other customers within the Direct Connect
calling area, thereby eliminating the need for an operator to
administer these talk groups. A second enhancement of Direct
Connect, traveling Direct Connect is expected to be
rolled out in some markets in 2002. Upon implementation of this
enhancement, any two or more customers traveling to a market
outside of their Direct Connect calling area will still be able
to use Direct Connect in that market. For example, Nextel
customers traveling from Albany to Honolulu will be able to
direct connect each other while in the Honolulu area and will be
able to direct connect other Nextel customers who reside in the
Honolulu calling area. However, the customers, while in
Honolulu, will not be able to direct connect customers in their
Albany Direct Connect calling area.


Nextel Direct Connect service, together with
other enhancements, including call alert, speakerphone
capability and two-way messaging, differentiates Nextels
digital service from those of cellular and PCS providers, and we
believe it has been responsible for Nextels strong appeal
to business users in mobile occupations, including
transportation, delivery, real property and facilities
management, construction and building, landscaping, and other
service sectors. In addition to its advantages to customers,
Nextel Direct Connect service uses only half the bandwidth that
an interconnected call over an iDEN network would use, and this
efficient use of spectrum gives the iDEN service provider the
opportunity to offer attractive pricing for Nextel Direct
Connect service.

In 2000, we and Nextel introduced Nextel Wireless
Web services in all of our domestic markets, creating the only
nationwide integrated voice and packet data network. This
service allows a Nextel Wireless Web customer to be always
connected to the Internet as long as their phone is turned
on.

Nextel Wireless Web services provide a customer
with access to the following functions through their telephone:



| |   |                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | content and commerce, such as news, travel,
	financial and electronic retailing web sites;                                                                                                                   
|
| |  | industry solutions, such as fleet management
	applications;                                                                                                                                                  
|
| |  | mobile office solutions, such as corporate
	e-mail, calendar and address book; and                                                                                                                           
|
| |  | access services and solutions, such as use of the
	telephone as a wireless modem, enabling customers to connect
	their laptop or handheld device to their corporate network or an
	Internet service provider.

Nextel continues to work with third-party vendors
through their Nextel Developers Program to encourage the
development of valuable applications for vertical markets such
as the construction, financial, hospitality and transportation
segments, in order to offer customers additional data services.

Competition

In each of the markets where our portion of the
Nextel digital mobile network will operate, we will likely
compete with the two established cellular licensees and as many
as six PCS licensees, including AT&T Wireless, Sprint PCS,
Verizon Wireless, VoiceStream and Cingular Wireless. Our ability
to compete effectively with other wireless communications
service providers depends on a number of factors, including:



| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the continued satisfactory performance of iDEN
	technology;                                                                                                         
|
| |  | the establishment and maintenance of roaming
	service among our market areas and those of Nextel; and                                                               
|
| |  | the development of cost-effective direct and
	indirect channels of distribution for our portion of the Nextel
	digital mobile network and our products and services.

A substantial number of the entities that have
been awarded PCS licenses are current cellular communications
service providers and joint ventures of current and potential
wireless communications service providers, many of which have
financial resources, customer bases and name recognition greater
than ours.

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PCS operators will likely compete with us in
providing some or all of the services available through our
network. Additionally, we expect that existing cellular service
providers, some of which have been operational for a number of
years and have significantly greater financial and technical
resources, customer bases and name recognition than us, will
continue to upgrade their systems to provide digital wireless
communications services competitive with those available on our
network. Moreover, cellular and wireline companies are
authorized to participate in dispatch and SMR services. We also
expect our business to face competition from other technologies
and services developed and introduced in the future.


We believe that the mobile telephone service
currently being provided on the Nextel digital mobile network
utilizing the iDEN technology is similar in function to and
achieves performance levels competitive with those being offered
by other current wireless communications service providers in
our market areas. There are, however, and will in certain cases
continue to be, differences between the services provided by us
and by cellular and/or PCS system operators and the performance
of our respective systems. The all-digital networks that we and
Nextel operate provide customers with digital quality and
advanced features wherever they roam on the Nextel digital
mobile network, in contrast to hybrid analog/digital networks of
cellular competitors, which do not support these features in the
analog-only portion of their networks. Nevertheless, our ability
to provide roaming services will be more limited than that of
carriers whose subscribers use wireless telephones that can
operate on both analog and digital cellular networks and who
have roaming agreements covering larger parts of the country. As
the Nextel digital mobile network expands to cover a greater
geographic area, this disadvantage will be reduced, but we
anticipate that the Nextel digital mobile network may never
cover the same geographic areas as other mobile telephone
services. In addition, if either PCS or cellular operators
provide two-way radio dispatch services in the future, our
competitive advantage in being uniquely able to combine that
service with our mobile telephone service would be impaired.

Wireless telephones used on the Nextel digital
mobile network are not compatible with those employed on
cellular or PCS systems, and vice versa. This lack of
interoperability may impede our ability to attract cellular or
PCS customers or those new mobile telephone customers that
desire the ability to access different service providers in the
same market.

These telephones are likely to remain
significantly more expensive than analog telephones, and are
likely to remain somewhat more expensive than digital cellular
or PCS telephones that do not incorporate a comparable
multi-function capability. We therefore expect to charge higher
prices for our telephones than the prices charged by operators
for analog cellular telephones and possibly than the prices
charged by operators for digital cellular telephones. However,
we believe that our multi-function telephones currently are
competitively priced compared to multi-function 
mobile telephone service and short text messaging 
digital, cellular and PCS telephones.

During the transition to digital technology,
certain participants in the U.S. cellular industry are offering
telephones with dual mode  analog and
digital  compatibility. Additionally, certain analog
cellular system operators that directly or through their
affiliates also are constructing and operating digital PCS
systems have made available to their customers dual mode/dual
band  800 MHz cellular/1900 MHz
PCS  telephones, to combine the enhanced feature set
available on digital PCS systems within their digital service
coverage areas with the broader wireless coverage area available
on the analog cellular network. We do not have comparable hybrid
telephones available to our customers. We can give no assurances
that potential customers will be willing to accept system
coverage limitations as a trade-off for the enhanced
multi-function wireless communications package we plan to
provide on our portion of the Nextel digital mobile network.

Over the past several years, as the number of
wireless communications providers in our market areas have
increased, the prices of such providers wireless service
offerings to customers in those markets have generally been
decreasing. We may encounter market pressures to reduce our
service offering prices or to restructure our service offering
packages to respond to particular short-term, market-specific
situations, such as special introductory pricing or packages
that may be offered by new providers launching their service in
a market, or to remain competitive in the event that wireless
service providers generally continue to reduce the prices
charged to their customers, particularly if PCS operators enter
the smaller markets that we intend to serve.

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Because many of the cellular operators and
certain of the PCS operators in our markets have substantially
greater financial resources than us, they may be able to offer
prospective customers equipment subsidies or discounts that are
substantially greater than those, if any, that could be offered
by us and may be able to offer services to customers at prices
that are below prices that we are able to offer for comparable
services. Thus, our ability to compete based on the price of our
digital telephones and service offerings will be limited. We
cannot predict the competitive effect that any of these factors,
or any combination thereof, will have on us.

Cellular operators and PCS operators and entities
that have been awarded PCS licenses generally control more
spectrum than is allocated for SMR service in each of the
relevant market areas. Specifically, each cellular operator is
licensed to operate 25 MHz of spectrum and certain PCS
licensees have been licensed for between 10 MHz and
30 MHz of spectrum in the markets in which they are
licensed, while only approximately 20 MHz is available to
all competing SMR systems, including Nextels and our
systems, in those markets. The control of more spectrum gives
cellular operators and many PCS licensees the potential for more
system capacity and, therefore, the ability to serve more
subscribers than SMR operators, including Nextel and us. We
believe that we generally have adequate spectrum to provide the
capacity needed on our portion of the Nextel digital mobile
network currently and for the reasonably foreseeable future
although we may need to acquire additional spectrum in some
markets to insure that the quality of our network keeps pace
with anticipated growth in our customer base.

Since it has received auction authority, the FCC
has held almost 40 spectrum auctions. Generally, the auctions do
not involve spectrum used to compete with our services. However,
the FCC has authorized a consortium of communications companies
to provide nationwide mobile satellite services which may
compete with traditional mobile wireless services. Additionally,
the FCC has reallocated, but not yet assigned, frequencies in
the 700 MHz band of the former analog television channels
60-69 and 52-59 to commercial services. The auctions for this
spectrum have been scheduled for June 19, 2002. It is
possible that this spectrum, once auctioned, will be used to
offer services that are competitive with our service. In
addition, the FCC will continue to auction spectrum in the
future, and we cannot predict how these frequencies will be
used, the technologies that will develop or what impact, if any,
they will have on our ability to compete for wireless
communications services customers.

In January 2001, the FCC completed the re-auction
of over 150 PCS licenses. The vast majority of these
licenses were purchased by carriers who offer services in
competition to us. A decision by the United States Court of
Appeals for the District of Columbia Circuit involving the
bankruptcy proceeding of NextWave Personal Communications, Inc.
placed the status of these licenses in doubt. While a settlement
had been reached in this matter, the settlement required
Congressional approval by December 31, 2001, which never
occurred. The status of these licenses is once again in doubt,
and the United States Supreme Court recently agreed to accept
review of the Court of Appeals decision. The FCC or Congress may
also allocate additional spectrum at any time and create rules
that would make services provided on that spectrum competitive
with our ESMR service.

In addition, the FCC has initiated two inquiries
that may affect the availability of spectrum for wireless
services. One is an inquiry into secondary spectrum markets, and
the other is an inquiry into third-generation, or
3G, services to be offered in the near future by
wireless carriers. It is impossible to predict the outcome or
timeframe for FCC action on these matters. However, the outcome
of these proceedings will likely affect the ability of all
carriers, including us, to obtain additional spectrum to be used
in offering both traditional and advanced wireless services.

Regulation

Federal
Regulation

SMR Regulation.We
are an SMR operator regulated by the FCC. The FCC also regulates
the licensing, construction, operation and acquisition of all
other wireless telecommunications systems in the United States,
including cellular and PCS operators. We are generally subject
to the same FCC rules and regulations as cellular and PCS
operators, but our status as an SMR operator creates some
important regulatory differences.

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Within the limitations of available spectrum and
technology, SMR operators are authorized to provide mobile
communications services to business and individual users,
including mobile telephone, two-way radio dispatch, paging and
mobile data services. SMR regulations have undergone significant
changes during the last several years and continue to evolve as
new FCC rules and regulations are adopted.

The first SMR systems became operational in 1974,
but these early systems were not permitted or designed to
provide interconnected telephone service competitive with that
provided by cellular operators. SMR operators originally
emphasized two-way dispatch service, which involves shorter
duration communications than mobile telephone service and places
less demand on system capacity. SMR system capacity and quality
was originally limited by:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the smaller portion of the radio spectrum
	allocated to SMR;                                                                                                                                                                               
|
| |  | the assignment of SMR frequencies on a
	non-contiguous basis;                                                                                                                                                                              
|
| |  | regulations and procedures that initially served
	to spread ownership of SMR licenses among a large number of
	operators in each market, further limiting the amount of SMR
	spectrum available to any particular operator; and            
|
| |  | older SMR technology, which employed analog
	transmission and a single site, high-power transmitter
	configuration, precluding the use of any given SMR frequency by
	more than one caller at a time within a given licensed service
	area.

The original analog SMR market was oriented
largely to customers such as contractors, service companies and
delivery services that have significant field operations and
need to provide their personnel with the ability to communicate
directly with one another, either on a one-to-one or one-to-many
basis, within a limited geographic area. SMR licenses granted
prior to 1997 have several unfavorable characteristics, as
compared with cellular or PCS licenses. Because these SMR
licenses were on a site-by-site basis, numerous SMR licenses
were required to cover the metropolitan area typically covered
by a single cellular or PCS license.

SMR licenses granted in 1997 and later were
granted to cover a large area (known as an economic area, or EA)
rather than a particular antenna at a particular site. EA
licenses therefore, are more like cellular or PCS licenses in
this regard, and eliminate one of the former regulatory
disadvantages of SMR licenses. The FCC has held two SMR auctions
for EA licenses, which include the frequencies on which we and
Nextel operate in the 800 MHz band. In both auctions, Nextel, or
a bidding consortium made up of Nextel and us, was the largest
successful bidder, and as a result, we or a Nextel subsidiary
hold EA licenses for most, but not all, of the territories that
we intend to serve.

The first EA licenses granted the licensee
exclusive use of the frequencies in the EA territory. To the
extent that another SMR site-by-site licensee may be operating
in the same frequencies in the EA pursuant to another license,
the EA license has priority, but must compensate the incumbent
for the cost of changing to another frequency. We, or a Nextel
subsidiary, hold all of the EA licenses from the first auction
that includes our frequencies. Most of our EA licenses are free
of incumbent carriers other than Nextel. Nextel WIP has
transferred to us those site-by-site licenses located in our EA
territories operating at the same frequencies.

In the second EA auction, we acquired almost all
of the EA licenses that include frequencies which we operate on
a site-by-site basis. As a result, we will be able to provide
service throughout the EA territory on those frequencies. Unlike
the previous EA auction, however, the EA licensee does not have
exclusive use of the frequencies in the EA territory. Therefore,
in those limited areas where another entity may have acquired
the EA license at auction but where we are an incumbent licensee
operating on a site-by-site basis on the same frequency, we have
the right to continue to operate under the existing site-by-site
authorization.

EA licenses to operate on these frequencies were
granted pursuant to a one-time auction and are issued for ten
years, after which we need to apply for renewal from the FCC. We
expect to obtain renewal of our EA licenses if we are otherwise
in good standing before the FCC. In addition, all of our SMR
licenses are subject to FCC build-out requirements. The FCC has
modified the build-out deadlines for our pre-1997 site-by-site
SMR licenses permitting us to utilize the same build-out
schedules as our EA licenses. Our EA licenses must

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provide coverage to at least one-third of the
population of the license area within three years of the initial
grant and two-thirds of the population within five years.
Failure to comply with the build-out requirements for both
site-by-site licenses and EA licenses may result in a revocation
of these licenses by the FCC. We hold and utilize both
site-by-site licenses and EA licenses. We have met all of the
applicable time and population based build-out requirements and
associated filings of licenses to date.


Federal Regulation of Wireless Operators.SMR regulations have undergone
significant changes during the last five years and continue to
evolve as new FCC rules and regulations are adopted pursuant to
the Omnibus Budget Reconciliation Act of 1993 and the
Communications Act. Since 1996 SMR operators like us and Nextel
have been subject to common carrier obligations similar to those
of cellular and PCS operators. This regulatory change recognized
the emergence of SMR service as competitive with the wireless
service provided by cellular and PCS providers. As a result, SMR
providers like us now have many of the same rights (such as the
right to interconnect with other carriers) and are subject to
many of the same obligations applicable to cellular and PCS
operators.

The FCC prohibits any SMR, cellular or PCS
provider, including us, collectively regulated as Commercial
Mobile Radio Service, or CMRS, providers, from
restricting another carriers ability to resell its
services until November 24, 2002. In addition, we must
provide consumers the ability to manually roam on
our network. The FCC also has adopted requirements for CMRS
providers, including covered SMR providers, to implement various
enhanced 911 capabilities. We, along with Nextel, are in
the process of implementing such capabilities and have received
from the FCC a waiver of the requirements for at least one year.
In some states, we may not be able to recover our costs of
implementing such enhanced 911 capabilities.

The FCC also requires CMRS providers to deploy
number portability technology that would allow
customers to keep their telephone numbers when switching to
another carrier. Covered SMR providers, including us, along with
all other CMRS services providers, must offer this number
portability service in the 100 largest metropolitan areas,
including the ability to support nationwide roaming, by November
2002. This requirement also includes enabling calls from our
network to be delivered to telephone numbers that have been
switched from one wireline carrier to another. The FCC is
currently considering a petition, supported by many in the
industry, that would eliminate this requirement. It is not clear
what the outcome of this proceeding will be. Number portability,
if implemented, will impose costs that we believe will not have
a material adverse impact on our operations. It will also
enhance the ability of customers to switch providers, both from
us to other carriers and from other carriers to us.

The FCCs spectrum cap regulations currently
limit any entity from holding attributable interests in more
than 55 MHz of licensed broadband PCS, cellular or covered
SMR spectrum with significant overlap in any geographic area.
Effective January 1, 2003, the FCC intends to completely
eliminate the wireless spectrum cap. The FCC has stated that it
will replace the existing spectrum cap with some other, as yet
unidentified, means of competition enforcement. These rules will
affect our ability, as well as our competitors ability, to
obtain additional spectrum.

Wireless providers, including us, also must
satisfy FCC requirements relating to technical and
reporting matters. One such requirement is the coordination of
proposed frequency usage with adjacent wireless users,
permittees and licensees in order to avoid electrical
interference between adjacent networks. In addition, the height
and power of base radio transmitting facilities of certain
wireless providers and the type of signals they emit must fall
within specified parameters.

The FCC is responsible for the other rules and
policies which govern the operations over the SMR spectrum
necessary for the offering of our services. This includes the
terms under which CMRS providers interconnect their networks and
the networks of wireline and other wireless providers of
interstate communications services. The FCC also has the
authority to adjudicate, among other matters, complaints filed
under the Communications Act with respect to service providers
subject to its jurisdiction. Under its broad oversight authority
with respect to market entry and the promotion of a competitive
marketplace for wireless providers, the FCC regularly conducts
rulemaking and other types of proceedings to determine rules and
policies that could affect SMR operations, and the CMRS
industry generally. These rules and policies are applicable to
our operations and we intend to comply with the FCCs
promulgations.

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The FCC imposes a number of obligations for local
exchange carriers to interconnect their network to other
carriers networks which affect wireless service providers.
Established local exchange carriers must provide for co-location
of equipment necessary for interconnection, as well as any
technically feasible method of interconnection requested by a
CMRS provider. In addition, all local exchange carriers are
obligated to enter into reciprocal, cost-based compensation
arrangements with CMRS providers for the transmission of local
calls. On July 18, 2000 the United States Court of Appeals
for the Eighth Circuit overturned the FCCs order that
required compensation based on the most efficient network
configuration. The U.S. Supreme Court is currently considering
an appeal of this decision. The outcome of this appeal may have
a significant impact on the charges we pay to other carriers and
on the compensation we receive for interconnection. In addition,
the FCC has recently initiated a further inquiry into the
compensation rates carriers must pay each other for both the
transmission of local and long distance calls. While this
proceeding is expected to take several years to complete, the
outcome may significantly affect the charges we pay to other
carriers and the compensation we receive for these services.
Furthermore, if we cannot successfully negotiate an
interconnection agreement with an established local exchange
carrier, it may require the relevant state public utilities
commissions to serve as arbitrators.

In addition, the Communications Assistance for
Law Enforcement Act of 1994 requires all telecommunications
carriers, including wireless carriers, to ensure that their
equipment is capable of permitting the government, pursuant to a
court order or other lawful authorization, to intercept any wire
and electronic communications carried by the carrier to or from
its subscribers. On August 15, 2000, the United States
Court of Appeals for the D.C. Circuit reversed and remanded
a FCC requirement that certain call identifying information be
provided to law enforcement. Moreover, implementation of certain
capabilities affecting the transmission of packet-mode data, as
required by the FCC, was required to be completed by
November 19, 2001. We have timely requested a two-year
extension for the packet-mode requirements and are thus in
compliance pending consultation with the FBI and receipt of a
final FCC order. Compliance with the requirements of this Act,
further FBI requests, and the FCCs rules could impose
significant additional direct and/or indirect costs on us and
other wireless carriers.

Wireless networks are also subject to certain FCC
and FAA regulations respecting the relocation, lighting and
construction of transmitter towers and antennas and are subject
to regulation under the National Environmental Policy Act, the
National Historic Preservation Act, and the environmental
regulations of the FCC. Compliance with these provisions could
impose additional direct and/or indirect costs on us and other
licensees. The FCCs rules require antenna structure owners
to notify the FAA of structures that may require marking or
lighting. In addition to our SMR licenses, we may also
utilize other carriers facilities to connect base radio
sites and to link them to their respective main switching
offices. These facilities may be separately licensed by the FCC
and may be subject to regulation as to technical parameters,
service, and transfer or assignment.

Pursuant to the Communications Act, all
telecommunications carriers that provide interstate
telecommunications services, including SMR providers such as
ourselves, are required to make an equitable and
non-discriminatory contribution to support the cost of
federal universal service programs. These programs are designed
to achieve a variety of public interest goals, including
affordable telephone service nationwide, as well as subsidizing
telecommunications services for schools and libraries.
Contributions are calculated on the basis of each carriers
interstate end-user telecommunications revenue. The
Communications Act also permits states to adopt universal
service regulations not inconsistent with the Communications Act
or the FCCs regulations. While states cannot, generally,
regulate our rates for universal services, the FCC has concluded
that states can require CMRS providers to contribute to their
universal services funds. Additional costs may be incurred by us
and ultimately by our subscribers as a result of our compliance
with these required contributions. The FCC has recently
initiated a proceeding which could significantly increase the
contributions we must market to Federal Universal Service
Programs. We cannot predict whether the proceeding will result
in any significant change in the contribution we must make.

The Communications Act also requires all
telecommunications carriers, including SMR licensees, to
ensure that their services are accessible to and useable by
persons with disabilities, if readily achievable.

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Compliance with these provisions, and the
regulations promulgated thereunder, could impose additional
direct and/or indirect costs on us and other licensees.


In addition, other regulations may be promulgated
pursuant to the Communications Act or other acts of Congress,
which could significantly raise our cost of providing service.
In response, we may be required to modify our business plans or
operations in order to comply with any such regulations.
Moreover, the FCC or other federal government agencies or any
state regulatory agency having jurisdiction over our business
may adopt or change regulations or take other action that could
adversely affect our financial condition or results of
operations.

State
Regulation and Local Approvals

The states in which we operate generally have
agencies or commissions charged under state law with regulating
telecommunications companies, and local governments generally
seek to regulate placement of transmitters and rights of way.
While the powers of state and local governments to regulate
wireless carriers are limited to some extent by federal law, we
will have to devote resources to comply with state and local
requirements. For example, state and local governments generally
may not regulate our rates or our entry into a market, but are
permitted to manage public rights of way, for which they can
require fair and reasonable compensation.

Under the Communications Act, state and local
authorities maintain authority over the zoning of sites where
our antennas are located. These authorities, however, may not
discriminate against or prohibit our services through their use
of zoning authority. Therefore, while we may need approvals for
particular sites or may not be able to choose the exact location
for our sites we do not foresee significant problems in placing
our antennas at sites in our territory.

Employees

As of December 31, 2001, we had
approximately 1,900 employees. None of our employees are
represented by a labor union or subject to a collective
bargaining agreement, nor have we experienced any work stoppage
due to labor disputes. We believe that our relations with our
employees are good.

Executive Officers of the Registrant

The following table sets forth certain
information with respect to our executive officers:

|                |  |     |    |          |  |                                                              
|--------------- |  | --- | -- | -------- |  | -------------------------------------------------------------
|Name            |  | Age |    | Position
|                |  |     |    |         
|John Chapple    |  |     | 48 |          |  | President, Chief Executive Officer and Chairman
	of the Board
|John Thompson   |  |     | 48 |          |  | Vice President, Chief Financial Officer and
	Treasurer       
|David Thaler    |  |     | 46 |          |  | Vice President  Business Operations                         
|David Aas       |  |     | 48 |          |  | Vice President  Engineering and
	Technical Operations       
|Perry Satterlee |  |     | 41 |          |  | Vice President  Sales and Marketing                         
|Mark Fanning    |  |     | 42 |          |  | Vice President  People Development                          
|Donald Manning  |  |     | 41 |          |  | Vice President, General Counsel and Secretary                

John Chappleworked
to organize Nextel Partners throughout 1998 and has been the
President, Chief Executive Officer and Chairman of the Board of
Nextel Partners and our subsidiaries since August 1998.
Mr. Chapple was elected to our Board of Directors pursuant
to the terms of our amended and restated shareholders
agreement. Mr. Chapple, a graduate of Syracuse University
and Harvard Universitys Advanced Management Program, has
over 23 years of experience in the wireless communications
and cable television industries. From 1978 to 1983, he served on
the senior management team of Rogers Cablesystems before moving
to American Cablesystems as Senior Vice President of Operations
from 1983 to 1988. From 1988 to 1995, he served as Executive
Vice President of Operations for McCaw Cellular Communications
and subsequently AT&T Wireless Services following the merger
of those companies. From 1995 to 1997, Mr. Chapple was the
President and Chief Operating Officer for Orca Bay Sports and
Entertainment in

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Vancouver, B.C. Orca Bay owned and operated
Vancouvers National Basketball Association and National
Hockey League sports franchises in addition to the General
Motors Place sports arena and retail interests. Mr. Chapple
is the past Chairman of Cellular One Group and the Personal
Communications Industry Association, past Vice-Chairman of the
Cellular Telecommunications and Internet Association and has
been on the Board of Governors of the NHL and NBA.
Mr. Chapple is currently on the Syracuse University Maxwell
School Board of Advisors and on the Fulcrum Technologies, Inc.
Board of Directors.


John Thompsonhas
been the Chief Financial Officer and Treasurer of Nextel
Partners and our subsidiaries since August 1998 and has
approximately 23 years of finance experience, including
over 15 years in the wireless communications industry.
Mr. Thompson holds both a B.A. in Accounting and a Juris
Doctor from the University of Puget Sound. From 1978 to 1986, he
served as Tax Manager for Laventhol & Horwath. In 1986,
he joined McCaw Cellular Communications as Vice President of
Tax. In 1990, he became Senior Vice President of McCaw Cellular
Communications and assumed a significant role in a number of key
initiatives for the company, including its acquisition of LIN
Broadcasting in 1990, the merger of it and AT&T in 1993, and
AT&Ts PCS license acquisitions in 1996. In 1997, he
became Chief Financial Officer for AT&T Wireless Services.
Mr. Thompson has served on the boards of a number of
AT&T Wireless Services joint ventures, including Bay Area
Cellular Telephone Company, and currently serves on the board of
Cellport Systems, Inc.

David Thalerhas
been the Vice President  Business Operations of
Nextel Partners and our subsidiaries since August 1998 and has
over 19 years of management experience in the wireless and
cable television industries. From February 1997 to 1998, he
served as Senior Vice President and Managing Director of
International Development and Operations for AT&T Wireless
Services. In this role, Mr. Thaler had overall
responsibility for all operating facets related to AT&T
Wireless joint ventures in Brazil, Hong Kong, India, Colombia
and Taiwan. From 1995 to 1997, Mr. Thaler was Vice
President of Operations for AT&T Wireless Services
Central Region business unit. From 1988 to 1995, Mr. Thaler
served as Vice President and General Manager of McCaw Cellular
Communications Midwest District, providing overall
leadership for an operation consisting of 14 metropolitan
areas. From 1983 to 1988, he served as General Manager and
Regional Vice President for American Cablesystems.

David Aashas been
the Vice President  Engineering and Technical
Operations of Nextel Partners and our subsidiaries since August
1998. Prior to joining Nextel Partners, Mr. Aas served as
Vice President of Engineering and Operations of AT&T
Wireless Messaging Division. Mr. Aas has over
24 years of experience in the wireless industry and has
held a number of senior technical management positions,
including positions with Airsignal from 1977 to 1981, MCI from
1981 to 1986, and MobileComm from 1986 to 1989. From 1989 to
August 1998, he was with AT&T Wireless, where he led the
design, development, construction and operation of AT&T
Wireless national messaging network. Mr. Aas served
on the Technical Development Committee of the Personal
Communications Industry Association and led the development and
deployment of the PACT two-way messaging system.

Perry Satterleehas
been the Vice President  Sales and Marketing of
Nextel Partners and our subsidiaries since August 1998 and has
over 14 years of wireless industry experience. Prior to
Nextel Partners, Mr. Satterlee spent two years with Nextel,
where he held the position of President  Pacific
Northwest Area since its inception in 1996. Prior to joining
Nextel, Mr. Satterlee served from 1992 to 1996 as Vice
President and General Manager of AT&T Wireless
Services Central California District. From 1990 to 1992,
he was General Manager of McCaw Cellular Communications
Ventura/ Santa Barbara market. From 1988 to 1990,
Mr. Satterlee was Director of Planning for McCaw Cellular
Communications, where he led the companys planning and
budgeting processes.

Mark Fanninghas
been the Vice President  People Development of Nextel
Partners and our subsidiaries since August 1998 and has over
20 years of human resources experience, including nine
years in the wireless industry with McCaw Cellular
Communications and AT&T Wireless Services. From 1995 to
1998, Mr. Fanning served as Vice President for People
Development Operations for AT&T Wireless Services. From 1991
to 1995, he served as Director and later as Vice President of
Compensation & Benefits for AT&T

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Wireless Services. From 1989 to 1991, he was the
Director of People Development for McCaw Cellulars
California/ Nevada region.


Donald Manninghas
been the Vice President, General Counsel and Secretary of Nextel
Partners and our subsidiaries since August 1998 and has over
16 years of legal experience. From July 1996 to July 1998,
he served as Regional Attorney for the Western Region of
AT&T Wireless Services, an 11-state business unit generating
over $400 million in revenues annually. Prior to joining
AT&T Wireless Services, from September 1989 to July 1996,
Mr. Manning was an attorney with Heller Ehrman
White & McAuliffe specializing in corporate and
commercial litigation. From September 1985 to September 1989, he
was an attorney with the Atlanta-based firm of Long,
Aldridge & Norman.

Our executive officers do not serve for any
specified terms and, instead, are appointed by, and serve at the
discretion of, our Board of Directors. There are no family
relationships among our directors and officers.

RISK FACTORS

The following risk factors and other
information included in this 10-K Annual Report should be
carefully considered. The risks and uncertainties described
below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently
deem immaterial also may impair our business operations. If any
of the following risks occur, our business, financial condition,
operating results and cash flows could be materially adversely
affected.

We have a history of operating losses, expect
to continue to incur substantial operating losses in the future
and may not be able to generate the earnings necessary to fund
our operations, sustain the continued growth of our business or
repay our debt obligations.

We did not commence commercial operations until
January 29, 1999, and the portion of the Nextel digital
mobile network we acquired on that date only had a few months of
operating history. Since then, we have had a history of
operating losses, and, as of December 31, 2001, we had an
accumulated deficit of approximately $697.0 million. We
expect to continue to incur substantial operating losses and to
generate negative cash flow from operating activities at least
through 2003. We cannot assure you that we will become
profitable or sustain profitability in the future. If we fail to
achieve significant and sustained growth in our revenues and
earnings from operations, we will not have sufficient cash to
fund our current operations, sustain the continued growth of our
business or repay our debt obligations. In addition, the
slowdown in the U.S. economy generally and terrorist
attacks upon the United States have added economic and consumer
uncertainty that could adversely affect our revenue growth. Our
failure to fund our operations or continued growth would have an
adverse impact on our financial condition, and our failure to
make any required payments would result in defaults under all of
our debt agreements, which could result in the cessation of our
business.

If Nextel experiences financial or operational
difficulties, our business may be adversely affected.

Our business plan depends, in part, on Nextel
continuing to build and sustain customer support of their brand
and the Motorola iDEN technology. If Nextel encounters financial
problems or operating difficulties relating to their portion of
the Nextel digital mobile network or experiences a significant
decline in customer acceptance of their products or the Motorola
iDEN technology, our affiliation with and dependence on Nextel
may adversely affect our business, including the quality of our
services, the ability of our customers to roam within the entire
network and our ability to attract and retain customers.
Additional information regarding Nextel, their domestic digital
mobile network business and the risks associated with that
business can be found in Nextels 10-K Annual Report
on Form 10-K for the year ended December 31, 2000,
and, when filed, for the year ended December 31, 2001, as
well as Nextels other filings made under the Securities
Act of 1933 and the Securities Exchange Act of 1934 (SEC file
number 0-19656).

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Under certain circumstances, Nextel WIP has
the ability to purchase, and a majority of our Class A
stockholders can cause Nextel WIP to purchase, all of our
outstanding Class A common stock.

Under our restated certificate of incorporation
and our operating agreements, in certain circumstances and
subject to certain limitations, Nextel WIP has the ability to
purchase, or to cause and fund redemption by us of, all of the
outstanding shares of our Class A common stock. In
addition, under the provisions of our restated certificate of
incorporation, upon the occurrence of certain events, the
holders of a majority of our outstanding Class A common
stock can require Nextel WIP to purchase, or cause and fund a
redemption by us of, all of the outstanding shares of our
Class A common stock.

Any failure to integrate our portion of the
Nextel digital mobile network with Nextels portion
effectively or on schedule would have an adverse effect on our
results of operations.

Pursuant to our operating agreements with Nextel
WIP, Nextel WIP provides us with important services and
assistance, including a license to use the Nextel brand name and
the sharing of switches that direct calls to their destinations.
Any interruption in the provision of these services could delay
or prevent the successful integration of our portion of the
Nextel digital mobile network with Nextels portion, which
is essential to the overall success of our business.

Moreover, our business plan depends on our
ability to implement integrated customer service, network
management and billing systems with Nextels systems to
allow our respective portions of the Nextel digital mobile
network to operate together, and 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 systems effectively or
on schedule may have an adverse effect on our results of
operations.

Difficulties in constructing and operating our
portion of the Nextel digital mobile network could increase the
estimated costs and delay the continued expansion of the
network, which would adversely affect our ability to generate
revenue.

The continued operation of our portion of the
Nextel digital mobile network involves a high degree of risk.
Before we are able to build additional cell sites in our markets
to expand coverage, fill in holes in coverage or to increase
capacity, we will need to:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | select and acquire appropriate sites for our
	transmission equipment, or cell sites;                   
|
| |  | purchase and install low-power transmitters,
	receivers and control equipment, or base radio equipment;
|
| |  | build out the physical infrastructure;                                                                 
|
| |  | obtain interconnection services from local
	telephone service carriers on a timely basis; and          
|
| |  | test the cell site.                                                                                    

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



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

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Before fully implementing our portion of the
Nextel digital mobile network in a new market area or expanding
coverage in an existing market area, we must complete systems
design work, find appropriate sites and construct necessary
transmission structures, receive regulatory approvals, free up
frequency channels now devoted to non-digital transmissions and
begin systems optimization. These processes may take weeks or
months to complete and may be hindered or delayed by many
factors, including unavailability of antenna sites at optimal
locations, land use and zoning controversies and limitations of
available frequencies. 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 Nextel digital mobile
network on a timely basis may affect our ability to provide the
quality of services in our markets consistent with our current
business plan, and any significant delays could have a material
adverse effect on our business.

If we do not offer services that Nextel WIP
requires us to offer or we fail to meet performance standards,
we risk termination of our agreements with Nextel WIP, which
would eliminate our ability to carry out our current business
plan and strategy.

Our operating agreements with Nextel WIP require
us to construct and operate our portion of the Nextel digital
mobile network to specific standards, and to offer certain
services by Nextel and its domestic subsidiaries. Our failure to
satisfy these obligations could constitute a material default
under the operating agreements that would give Nextel WIP the
right to terminate these agreements, and would terminate our
right to use the Nextel brand. The non-renewal or termination of
the Nextel WIP operating agreements would eliminate our ability
to carry out our current business plan and strategy and
adversely affect our financial condition.

We may be required to implement material
changes to our business operations to the extent these changes
are adopted by Nextel, which may not be beneficial to our
business.

If Nextel adopts material changes to their
operations, our operating agreements with Nextel WIP give it the
right to require us to make similar changes to our operations.
The failure to implement required changes could, under certain
circumstances, trigger the ability of Nextel WIP to terminate
their operating agreements with us. Even if the required 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
plan.

The transmission technology used by us and
Nextel 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 Nextel 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 carriers
only when Motorola developed a proprietary technology it calls
iDEN. We, Nextel, and Southern LINC are currently
the only major U.S. wireless service providers utilizing iDEN
technology on a nationwide basis, and iDEN phones are not
currently designed to roam onto other domestic wireless networks.

Our operating agreements with Nextel WIP require
us to use the iDEN technology in our system and prevent us from
adopting any new communications technology that may perform
better or are available at a lower cost without Nextel
WIPs consent.

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,
because of the restrictive provisions in our operating
agreements with Nextel WIP, we will be less able to compete
effectively and could lose customers to our competitors.

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We are dependent on Motorola for
telecommunications equipment necessary for the operation of our
business, and any failure of Motorola to perform would adversely
affect our operating results.

Motorola is currently our sole-source supplier of
transmitters used in our network and wireless telephone
equipment used by our customers, and we rely, and expect to
continue to rely, on Motorola to manufacture a substantial
portion of the equipment necessary to construct our portion of
the Nextel digital mobile network. We expect that for the next
few years, Motorola, and competing manufacturers who are
licensed by Motorola, will be the only manufacturers of wireless
telephones that are compatible with the Nextel digital mobile
network. If Motorola becomes unable to deliver such equipment,
or refuses to do so on reasonable terms, then we may not be able
to service our existing subscribers or add new subscribers and
our business would be adversely affected. Motorola and their
affiliates engage in wireless communications businesses and may
in the future engage in additional businesses that do or may
compete with some or all of the services we offer. We cannot
assure you that any potential conflict of interest between us
and Motorola will not adversely affect our ability to obtain
equipment in the future. In addition, the failure by Motorola to
deliver necessary technology improvements and enhancements and
system infrastructure and subscriber equipment on a timely,
cost-effective basis would have an adverse effect on our growth
and operations. We generally have been able to obtain adequate
quantities of base radios and other system infrastructure
equipment from Motorola, and adequate volumes and mix of
wireless telephones and related accessories from Motorola, to
meet subscriber and system loading rates, but we cannot be sure
that equipment quantities will be sufficient in the future.
Additionally, in the event of shortages of that equipment, our
agreements with Nextel WIP provide that available supplies of
this equipment would be allocated proportionately between Nextel
and us.

Costs and other aspects of a future deployment
of advanced digital technology could adversely affect our
operations and growth.

Based on our current outlook and the current
outlook of Nextel, we anticipate eventually deploying advanced
digital technology that will allow high capacity wireless voice
and high speed data transmission, and potentially other advanced
digital services. The technology that we would deploy to provide
these types of broadband wireless services is sometimes referred
to as third-generation or 3G. We and Nextel are
focusing these activities on maximizing our ability to deliver
3G capabilities while continuing to fully utilize our iDEN
digital mobile network. Significant capital expenditures would
be required in implementing this third-generation technology,
and there can be no guarantee that we will have the financial
resources necessary to fund these expenditures or, if we do
implement this technology, that it would provide the advantages
that we would expect. Moreover, it may be necessary to acquire
additional frequencies to implement third-generation
technologies, and we cannot be sure that we will be able to
obtain such spectrum on reasonable terms, if at all. The actual
amount of the funds required to finance and implement this
technology may significantly exceed our current estimate.
Further, any future implementation could require additional
unforeseen capital expenditures in the event of unforeseen
delays, cost overruns, unanticipated expenses, regulatory
changes, engineering design changes, equipment unavailability
and technological or other complications. In addition, there are
several types of third-generation technologies that may not be
fully compatible with each other or with other currently
deployed digital technologies. If the type of technology that we
either choose to deploy or are required to deploy to maintain
compatibility with the technology chosen by Nextel does not gain
widespread acceptance or perform as expected, or if our
competitors develop third-generation technology that is more
effective or economical than ours, our business may be adversely
affected.

We may not be able to obtain additional
spectrum, which may adversely impact our ability to implement
our business plan.

We may seek to acquire additional spectrum,
including through participation as a bidder or member of a
bidding group in government-sponsored auctions of spectrum. We
may not be able to accomplish any spectrum acquisition or the
necessary additional capital for that purpose may not be
available on acceptable terms, or at all. If sufficient
additional capital is not available, to the extent we are able
to complete any spectrum acquisition, the amount of funding
available to us for our existing businesses would be reduced.
Even if we are able to acquire spectrum, we may still require
additional capital to finance the pursuit of any new

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business opportunities associated with our
acquisitions of additional spectrum, including those associated
with the potential provision of any new
third-generation or 3G wireless
services. This additional capital may not be available.


We cannot be sure that any future spectrum
auctions will occur or, if so, occur on their currently
announced schedules. For example, the Federal Communications
Commission already has postponed on several occasions the first
auction of the reallocated 700 MHz spectrum now being used by
broadcast television stations, and that auction is currently
scheduled for June 19, 2002. We also cannot be sure:



| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in which auctions we will participate, alone or
	as a member of a bidding group;                                                                     
|
| |  | whether we or any bidding group in which we are a
	participant will be a successful bidder and will be awarded
	spectrum licenses in any auction; and
|
| |  | what amounts would be required to be bid to
	prevail in any auction.                                                                                 

Our future performance will depend on our and
Nextels ability to succeed in the highly competitive
wireless communications industry.

Our ability to compete effectively with
established and prospective wireless communications service
providers depends on many factors, including the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If the wireless communications technology that we
	and Nextel use does not continue to perform in a manner that
	meets customer expectations, we will be unable to attract and
	retain customers. Customer acceptance of the services we offer
	is and will continue to be affected by technology-based
	differences and by the operational performance and reliability
	of system transmissions on the Nextel digital mobile network. If
	we are unable to address and satisfactorily resolve performance
	or other transmission quality issues as they arise, including
	transmission quality issues on Nextels portion of the
	Nextel digital mobile network, we may have difficulty attracting
	and retaining customers, which would adversely affect our
	revenues.                           
|
| |  | Because the Nextel digital mobile network does
	not provide roaming coverage on a nationwide basis that is as
	extensive as is available through most cellular and personal
	communication services providers, we may not be able to compete
	effectively against those providers. In addition, some of our
	competitors provide their customers with handsets with both
	digital and analog capability, which expands their coverage,
	while we have only digital capability. We cannot be sure that
	we, either alone or together with Nextel, will be able to
	achieve comparable system coverage or that a sufficient number
	of customers or potential customers will be willing to accept
	system coverage limitations as a trade-off for our
	multi-function wireless communications package.
|
| |  | Neither we nor Nextel have the extensive direct
	and indirect channels of distribution for the Nextel digital
	mobile network products and services that are available to some
	of our competitors. The lack of these distribution channels
	could adversely affect our operating results. Many of our
	competitors have established extensive networks of retail
	locations, including locations dedicated solely to their
	products, and multiple distribution channels and therefore have
	access to more potential customers than we do.                                                                                                                                                                                                                                                        
|
| |  | Because of their greater resources, some of our
	competitors may be able to offer services to customers at prices
	that are below the prices that we can offer for comparable
	services. If we cannot, as a result, compete effectively based
	on the price of our service offerings, our revenues and growth
	may be adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The wireless telecommunications industry is
	experiencing significant technological change. Our digital
	technology could become obsolete. We rely on digital technology
	that is not compatible with, and that competes with, other forms
	of digital and non-digital voice communication technology.
	Competition among these differing technologies can: segment the
	user markets, which could reduce demand for specific
	technologies, including our technology; reduce the resources
	devoted by third-party suppliers, including Motorola, which
	supplies all of our current digital technology, to developing or
	improving the technology for our systems; and adversely affect
	market acceptance of our services.                                                                      

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2000, we began to offer our subscribers access
	to digital two-way mobile data and Internet connectivity under
	the brand name Nextel Wireless Web. We cannot be sure that these
	services will continue to perform satisfactorily, be utilized by
	a sufficient number of our subscribers or produce sufficient
	levels of customer satisfaction or revenue. Because we have less
	spectrum than some of our competitors, and because we have
	elected to defer the implementation of third
	generation or 3G services, any digital two-way
	mobile data and Internet connectivity services that we may offer
	could be significantly limited compared to those services
	offered by other wireless communications providers with larger
	spectrum positions. The success of these new services will be
	jeopardized if: we are unable to offer these new services
	profitably; these new service offerings adversely impact the
	performance or reliability of the Nextel digital mobile network;
	we, Nextel or third-party developers fail to develop new
	applications for our customers; or we otherwise do not achieve a
	satisfactory level of customer acceptance and utilization of
	these services.
|
| |  | If either personal communication services or
	cellular operators provide two-way radio dispatch or comparable
	capabilities in the future, our competitive advantage may be
	impaired. Further, some of our competitors have attempted to
	compete with the Nextel Direct Connect service by offering
	unlimited mobile-to-mobile calling plan features and reduced
	rate calling plan features for designated small groups. If these
	calling plan modifications are perceived by our existing and
	potential customers as viable substitutes for our differentiated
	services, our business may be adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | We expect that as the number of wireless
	communications providers in our market areas increases,
	including providers of both digital and analog services, our
	competitors prices in these markets will decrease. We may
	encounter further market pressures to reduce our digital mobile
	network service offering prices; restructure our digital mobile
	network service offering packages to offer more value; or
	respond to particular short-term, market-specific situations,
	for example, special introductory pricing or packages that may
	be offered by new providers launching their services in a
	particular market. A reduction in our pricing would likely have
	an adverse effect on our revenues and operating results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Because of the numerous features we offer, our
	mobile handsets are, and are likely to remain, significantly
	more expensive than mobile analog telephones and are, and are
	likely to remain, somewhat more expensive than digital cellular
	or personal communication services telephones that do not
	incorporate a comparable multi-function capability. The higher
	cost of our equipment may make it more difficult or less
	profitable to attract customers who do not place a high value on
	our unique multi-service offering. This may reduce our growth
	opportunities or profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Recent agreements between competitors in some of
	our markets to share network construction efforts will
	reportedly reduce their costs and increase their coverage area.
	These agreements, along with future agreements, may increase
	market pressure for us to reduce our prices and expand our
	coverage areas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Our network may not have sufficient capacity
to support our anticipated customer growth.

Our business plan depends on assuring that our
portion of the Nextel digital mobile network has adequate
capacity to accommodate anticipated new customers and the
related increase in usage of our network. This plan relies on:



| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | the ability to obtain additional spectrum when
	and where required;                                                                  
|
| |  | the availability of wireless telephones of the
	appropriate model and type to meet the demands and preferences
	of our customers; and
|
| |  | the ability to obtain and construct additional
	cell sites and other infrastructure equipment.                                       

We cannot assure you that we will not experience
unanticipated difficulties in obtaining these items, which could
adversely affect our ability to build our portion of the network.

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We have potential systems limitations on
adding customers, which may adversely affect our growth and
performance.

Our success in generating revenues by attracting
and retaining large numbers of customers to our portion of the
Nextel digital mobile network is critical to our business plan.
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 basis,
we may encounter other factors that could adversely affect our
ability to successfully add customers to our portion of the
Nextel digital mobile network, including:



| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | inadequate or inefficient systems, business
	process and related support functions especially as related to
	customer service and accounts receivable collection; and                                                                 
|
| |  | an inappropriately long length of time between a
	customers order and activation of service for that
	customer, especially because the current activation time for our
	new customers is longer than that of some of our competitors.

Customer reliance on our customer service
functions may increase as we add new customers. Our inability to
timely and efficiently meet the demands for these services could
decrease or postpone subscriber growth, or delay or otherwise
impede billing and collection of amounts owed, which would
adversely affect our revenues.

Our highly leveraged capital structure and
other factors could limit our ability to obtain additional
financing and our growth opportunities.

The level of our outstanding debt greatly exceeds
the level of our revenues and stockholders equity. As of
December 31, 2001, we had approximately $1.3 billion
of total long-term debt outstanding, including $325 million
outstanding under our credit facility, $392.3 million of
14% senior discount notes outstanding at their accreted value,
$400 million of 11% senior notes outstanding and
$210.5 million of 12.5% senior discount notes outstanding
at their accreted value. This indebtedness represented
approximately 79% of our total book capitalization at that date.
As of December 31, 2001, we also had $31.0 million of
mandatorily redeemable preferred stock outstanding, including
accrued dividends. In addition, on February 5, 2002, we
closed the transaction to amend our existing credit facility to
provide for an additional $50 million term loan.

Our large amount of outstanding indebtedness, and
the fact that we may need to incur additional debt in the
future, could significantly impact our business for the
following reasons:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | it limits our ability to obtain additional
	financing, if needed, to continue the build-out of or implement
	any enhancement of our portion of the Nextel digital mobile
	network including any enhanced iDEN services to expand wireless
	voice capacity, enhanced data services or potential third
	generation or 3G mobile wireless services, to
	cover our cash flow deficit or for working capital, other
	capital expenditures, debt service requirements or other
	purposes;
|
| |  | it will require us to dedicate a substantial
	portion of our operating cash flow to fund interest expense on
	our credit facility and other indebtedness, reducing funds
	available for our build-out, operations or other purposes;                                                                                                                                                                                                                                                   
|
| |  | it makes us vulnerable to interest rate
	fluctuations because our credit facility term loan bears
	interest at variable rates; and                                                                                                                                                                                                                                                                                                                                                     
|
| |  | it limits our ability to compete with competitors
	who are not as highly leveraged, especially those who may be
	able to price their service packages at levels below those which
	we can or are willing to match.                                                                                                                                                                                                                                                                     

Our ability to make payments on our indebtedness
and to fund planned capital expenditures will depend on our
ability to generate cash in the future. This, to a certain
extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control. Based on our current level of operations and
anticipated cost savings and operating improvements, we believe
our cash flow from operations, available cash and available
borrowings under our credit facility will be adequate to meet
our estimated capital

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requirements to build out our portion of the
Nextel digital mobile network using the current 800 MHz iDEN
system until we become free cash flow positive, which we
anticipate will not occur before 2004.


We cannot be sure, however, that our business
will generate sufficient cash flow from operations, that
currently anticipated cost savings and operating improvements
will be realized on schedule or that future borrowings will be
available to us under our credit facility in an amount
sufficient to enable us to pay our indebtedness, our obligations
under our credit facility or our existing senior discount notes
and senior notes, or to fund our other liquidity needs. In
addition, if our indebtedness cannot be repaid at maturity or
refinanced, we will not be able to meet our obligations under
our debt agreements, which could result in the cessation of our
business.

General conditions in the wireless communications
industry or specific competitors results, including
potential slowing of new subscriber additions, declining ARPU or
increased customer dissatisfaction, may adversely affect the
market price of our Class A common stock and, as a result,
could impair our ability to raise additional capital through the
sale of our equity or debt securities. In addition, the
fundraising efforts of Nextel or any of its affiliates may also
adversely affect our ability to raise additional funds.

Our existing debt agreements contain
restrictive and financial covenants that limit our operating
flexibility.

Our credit facility and the indentures governing
our existing senior notes and senior discount notes contain
covenants that, among other things, restrict our ability to take
specific actions even if we believe them to be in our best
interest. These include restrictions on our 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 a merger, consolidation or sale of
	assets; or                  
|
| |  | engage in any business other than
	telecommunications.                     

In addition, our 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
Pops, minimum EBITDA requirements and minimum fixed charge
coverage ratios. We cannot assure you that we will be able to
meet these requirements or satisfy these covenants in the
future, and if we fail to do so, our debts could become
immediately payable at a time when we are unable to pay them,
which could adversely affect our ability to carry out our
business plan and would have a negative impact on our financial
condition.

If an event constituting a change of control
occurs, we may be required to redeem all of our outstanding
notes even if our credit facility prohibits such a redemption or
we lack the resources to make such a redemption.

Upon the occurrence of a defined change of
control under the indentures governing our existing senior
discount notes and senior notes, other than a change of control
involving certain of our existing stockholders, we could be
required to redeem our existing senior discount notes and senior
notes. However, our credit facility prohibits us, except under
certain circumstances, from redeeming any of our outstanding
notes before their stated maturity. In the event we become
subject to a change of control at a time when we are prohibited
from redeeming our outstanding notes our failure to redeem such
notes would constitute an event of default under the respective
indentures, which would in turn result in a default under our
credit facility. Any default

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under our indentures or credit facility could
result in an acceleration of such indebtedness, which would harm
our financial condition and adversely impact our ability to
implement our business plan and could result in the cessation of
our business. Moreover, even if we obtained consent under our
credit facility, we cannot be sure that we would have sufficient
resources to redeem our outstanding notes and still have
sufficient funds available to successfully pursue our business
plan.


We are dependent on our current key personnel,
and our success depends upon our continued ability to attract,
train and retain additional qualified personnel.

The loss of one or more key employees could
impair our ability to successfully build out and operate our
portion of the Nextel digital mobile network. We believe that
our future success will also depend on our continued ability to
attract and retain highly qualified technical, sales and
management personnel. We believe that there is and will continue
to be intense competition for qualified personnel in the
wireless communications industry. We may not be successful in
retaining our key personnel or in attracting and retaining other
highly qualified technical, sales and management personnel.

Concerns that the use of wireless telephones
may pose health and safety risks may discourage the use of our
wireless telephones.

Studies and reports have suggested that, and
additional studies are currently being undertaken to determine
whether, radio frequency emissions from enhanced specialized
mobile radio, or ESMR, cellular and personal communications
service, or PCS, wireless telephones may be linked with health
risks, including cancer, and may interfere with various
electronic medical devices, including hearing aids and
pacemakers. The actual or perceived risk of portable telephones
could adversely affect us through a reduced subscriber growth
rate, a reduction in subscribers, reduced network usage per
subscriber or reduced financing available to the mobile
communications industry.

Litigation by individuals alleging injury from
health effects associated with radio frequency emissions from
mobile phones has been brought against us and other mobile
wireless carriers and manufacturers. In addition, purported
class action litigation has been filed seeking to require all
wireless telephones to include an earpiece that would enable use
of wireless telephones without holding them against the
users head. While it is not possible to predict the
outcome of this litigation, circumstances surrounding it could
increase the cost of our wireless telephones as well as increase
other costs of doing business.

Due to safety concerns, some state and local
legislatures have passed or are considering legislation
restricting the use of wireless telephones while driving
automobiles. The passage of this type of legislation could
decrease demand for our services.

Regulatory authorities exercise considerable
power over our operations, which could be exercised against our
interests and impose additional unanticipated costs.

The FCC and 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. While the
Telecommunications Act of 1996 provided for significant
deregulation of the U.S. telecommunications industry, certain
FCC rules regulating it remain subject to judicial review and
additional FCC rulemaking. As a result, we cannot predict the
effect that this or other legislation or any FCC rulemaking may
have on our 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 actions taken by regulatory authorities might
increase our costs of providing service and adversely affect our
financial condition. In addition, we anticipate FCC regulation
or Congressional legislation that creates additional spectrum
allocations that may also have the effect of adding new entrants
into the mobile telecommunications market.

If we fail to comply with the terms of our
licenses or applicable regulations, we could lose one or more
licenses or face penalties and fines. For example, we could lose
a license if we fail to construct or operate

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facilities as required by the license. If we lose
licenses, that loss could have a material adverse effect on our
business and financial condition.


Nextel WIP has contractual approval rights
that allow it to exert significant influence over our
operations, and it can acquire additional shares of our
stock.

Pursuant to our amended shareholders
agreement and operating agreements, the approval of the director
designated by Nextel WIP, and/or of Nextel WIP itself, is
required in order for us to:



| |   |                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | make a material change in our technology;                                                                                                                                                                                                                                                                     
|
| |  | modify our business objectives in any way that is
	inconsistent with our objectives under our material agreements,
	including our operating agreements with Nextel WIP;                                                                                                                                       
|
| |  | dispose of all or substantially all of our assets;                                                                                                                                                                                                                                                            
|
| |  | make a material change in or broaden the scope of
	our business beyond our current business objectives; or                                                                                                                                                                                                    
|
| |  | enter into any agreement the terms of which would
	be materially altered in the event that Nextel WIP either
	exercises or declines to exercise their rights to acquire
	additional shares of our stock under the terms of the amended
	shareholders agreement or our restated certificate of
	incorporation.

These approval rights relate to significant
transactions, and decisions by the Nextel WIP-designated
director could conflict with those of our other directors,
including our independent directors.

In addition, the amended shareholders
agreement does not prohibit Nextel WIP or any of our other
stockholders or any of their respective affiliates from
purchasing shares of our Class A common stock in the open
market. Any such purchases would increase the voting power and
influence of the purchasing stockholder, and could result in a
change of control of us. Additionally, if we experience a change
of control, Nextel WIP could purchase all of our licenses for
$1.00, provided that it enters into a royalty-free agreement
with us to allow us to use the licenses in our territory for as
long as our operating agreements with Nextel WIP remain in
effect. Such an agreement would be subject to approval by the
FCC.

Significant stockholders represented on our
board of directors can exert significant influence over us and
may have interests that conflict with those of our other
stockholders.

As of December 31, 2001, our officers,
directors and greater than 5% stockholders together controlled
approximately 72.2% of our outstanding common stock. As a
result, these stockholders, if they act together, will be able
to control the management and affairs of our company and all
matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions.
This concentration of ownership may have the effect of delaying
or preventing a change in control of our company.

In addition, under our amended shareholders
agreement, Nextel WIP, Madison Dearborn Partners and Eagle River
each have the right to designate a member to our six-member
board of directors. We cannot be certain that any conflicts that
arise between the interests of our company and those of these
stockholders will always be resolved in our favor. Moreover, as
described above, Nextel WIP has certain approval rights that
allow it to exert significant influence over our operations.

DLJ Merchant Banking, Madison Dearborn Partners
and Eagle River each own significant amounts of our capital
stock and each currently has a representative on our board of
directors. Each of these entities or their affiliates has
significant investments in other telecommunications businesses,
some of which may compete with us currently or in the future. We
do not have a noncompetition agreement with any of our
stockholders, and thus their or their affiliates current
and future investments could create conflicts of interest.

Anti-takeover provisions could prevent or
delay a change of control that stockholders may favor.

Provisions of our charter documents, amended
shareholders agreement, operating agreements and Delaware
law may discourage, delay or prevent a merger or other change of
control that stockholders may

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consider favorable. We have authorized the
issuance of blank check preferred stock and have
imposed certain restrictions on the calling of special meetings
of stockholders. If we experience a change of control, Nextel
WIP could purchase all of our licenses for $1.00, provided that
it enters into a royalty-free agreement with us to allow us to
use the frequencies in our territory for as long as our
operating agreements remain in effect. Such an agreement would
be subject to approval by the FCC. Moreover, a change of control
could trigger an event of default under provisions in our credit
facility and the indentures governing our senior discount notes
and senior notes. These provisions could have the effect of
delaying, deferring or preventing a change of control in our
company, discourage bids for our Class A common stock at a
premium over the market price, lower the market price of our
Class A common stock, or impede the ability of the holders
of our Class A common stock to change our management.


Regulations to which we are subject may affect
the ability of some of our investors to have an equity interest
in us. Additionally, our restated certificate of incorporation
contains provisions that allow us to redeem shares of our
securities in order to maintain compliance with applicable
federal and state telecommunications laws and
regulations.

Our business is subject to regulation by the FCC
and state regulatory commissions or similar state regulatory
agencies in the states in which we operate. This regulation may
prevent some investors from owning our securities, even if that
ownership may be favorable to us. The FCC and some states have
statutes or regulations that would require an investor who
acquires a specified percentage of our securities or the
securities of one of our subsidiaries to obtain approval from
the FCC or the applicable state commission to own those
securities. Moreover, our restated certificate of incorporation
allows us to redeem shares of our stock from any stockholder in
order to maintain compliance with applicable federal and state
telecommunications laws and regulations.

Our Series B preferred stock has a
liquidation preference to our common stock, can be redeemed by
us at any time and must be redeemed for cash in February
2010.

Upon a liquidation of our company, holders of our
Series B preferred stock would be entitled to receive,
prior to receipt of any funds by the holders of our common
stock, an aggregate liquidation preference equal to
$21.9 million, plus dividends accrued on such amount from
the date of issuance up to the liquidation date equal to 12% per
annum of the aggregate liquidation preference, compounded
quarterly. As of December 31, 2001, we had
$31.0 million of Series B preferred stock outstanding,
including accrued dividends. In addition, we can redeem all of
our Series B preferred stock at any time upon payment of
the accreted liquidation preference, subject to the covenants in
our debt instruments. Pursuant to our restated certificate of
incorporation, we must redeem all of our Series B preferred
stock in February 2010, and we cannot guarantee that we will
have sufficient cash from operations at that time to make such
redemption. In the event that we default on our redemption
obligations, the accreted liquidation preference will continue
to accrue until we fulfill our redemption obligations in full.

Our stock price has been and is likely to
continue to be volatile.

The market price of our Class A common stock
has been volatile in the past and is likely to continue to be
volatile and could be subject to wide fluctuations in response
to factors such as the following, some of which are beyond our
control:



| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | quarterly variations in our or Nextels
	operating results;                                                                                      
|
| |  | variations in our or Nextels operating
	results from the expectations of securities analysts and
	investors;                                    
|
| |  | changes in expectations as to our or
	Nextels future financial performance, including financial
	estimates by securities analysts and investors;
|
| |  | changes in laws and regulations affecting the
	telecommunications industry;                                                                      
|
| |  | announcements of significant claims or
	proceedings against us;                                                                                  

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| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in market valuations of Nextel or other
	telecommunications companies;                                                                         
|
| |  | announcements of technological innovations or new
	services by us, Nextel or our competitors;                                                          
|
| |  | announcements by us, Nextel or our competitors of
	significant contracts, acquisitions, strategic partnerships,
	joint ventures or capital commitments;
|
| |  | additions or departures of key personnel;                                                                                                              
|
| |  | future sales of our Class A common stock; and                                                                                                          
|
| |  | volume fluctuations.                                                                                                                                   

FORWARD-LOOKING STATEMENTS

Our forward-looking statements are subject to
a variety of factors that could cause actual results to differ
materially from current beliefs.

Some statements and information contained in this
10-K Annual Report are not historical facts, but are
forward-looking statements. They can be identified by the use of
forward-looking words such as believes,
expects, plans, may,
will, would, could,
should or anticipates or other
comparable words, or by discussions of strategy, plans or goals
that involve risks and uncertainties that could cause actual
results to differ materially from those currently anticipated.
We warn you that these forward-looking statements are only
predictions, subject to risks and uncertainties. Actual events
or results can differ materially from those expressed or implied
as a result of a variety of factors, including those set forth
above under Risk Factors. Such forward-looking
statements include, but are not limited to, statements with
respect to the following:



| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our plan for meeting our scheduled build-out for
	commercial launch of markets within our portion of the Nextel
	digital mobile network;                                                                                                                         
|
| |  | our business plan, its advantages and our
	strategy for implementing our plan;                                                                                                                                                                                   
|
| |  | general economic conditions in the geographic
	areas and occupational markets that we are targeting in our
	portion of the Nextel digital mobile network;                                                                                                        
|
| |  | our expectation regarding the continued
	successful performance and market acceptance of the technology
	we use;                                                                                                                                                 
|
| |  | our ability to attract and retain sufficient
	customers;                                                                                                                                                                                                         
|
| |  | our anticipated capital expenditures and funding
	requirements, including our ability to access sufficient debt or
	equity capital to meet operating and financing needs;                                                                                        
|
| |  | the availability of adequate quantities of system
	infrastructure and subscriber equipment and components to meet
	our service deployment, marketing plans and customer demand;                                                                                  
|
| |  | the ability to achieve and maintain market
	penetration and average subscriber revenue levels sufficient to
	provide financial viability;                                                                                                                        
|
| |  | our ability to timely and successfully accomplish
	required scale-up of our billing, collection, customer care and
	similar back-office operations to keep pace with customer
	growth, increased system usage rates and growth in levels of
	accounts receivable;
|
| |  | the quality and price of similar or comparable
	wireless communications services offered or to be offered by our
	competitors, including providers of PCS and cellular services;                                                                                 
|
| |  | future legislation or regulatory actions relating
	to specialized mobile radio services, other wireless
	communications services or telecommunications services generally;                                                                                       
|
| |  | other risks and uncertainties described from time
	to time in our reports filed with the SEC; and                                                                                                                                                                

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| |   |                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to implement new digital technology,
	sometimes referred to as 3G or
	third-generation technology, which could facilitate
	high-speed, high-volume wireless voice and data transmission and
	other advanced digital services; and      
|
| |  | Nextels planned enhancement of Direct
	Connect called traveling Direct Connect, which would
	allow two or more subscribers traveling outside of their Direct
	Connect calling area to a different market area to use Direct
	Connect in that market.




Item 2.     Properties

We own no material real property. We lease our
headquarters located in Kirkland, Washington. This facility is
approximately 14,000 square feet, and we have a lease commitment
on the facility through July 2006. We lease administrative
offices of approximately 22,800 square feet in Minnetonka,
Minnesota under a lease expiring March 31, 2005 and we
lease additional administrative office space of approximately
59,000 feet in Eden Prairie, Minnesota under a lease expiring in
November 2007. We lease approximately 65,000 square feet of
office space in Las Vegas, Nevada under a lease expiring
October 31, 2006 and approximately 67,000 square feet of
office space in Panama City Beach, Florida under a lease
expiring six years from date of occupancy, which was
January 2, 2002, in each case for operation of a customer
service call center. We lease cell sites for the transmission of
radio service under various master site lease agreements as well
as individual site leases. The terms of these leases generally
range from five to 25 years at monthly rents ranging from
$300 to $3,200. As of December 31, 2001, we had
approximately 2,812 constructed sites at leased locations, of
which 2,788 were operational.




Item 3.     Legal
Proceedings

On December 5, 2001, a purported class
action lawsuit was filed in the United States District Court for
the Southern District of New York against us, two of our
executive officers and four of the underwriters involved in our
initial public offering. The lawsuit is captioned Keifer v.
Nextel Partners, Inc., et al, No. 01 CV 10945. It
was filed on behalf of all persons who acquired our common stock
between February 22, 2000 and December 6, 2000 and
names as defendants us, John Chapple, our President, Chief
Executive Officer and Chairman of the Board, John D.
Thompson, our Chief Financial Officer and Treasurer, Goldman
Sachs & Co., Credit Suisse First Boston Corporation,
Morgan Stanley & Co. Incorporated and Merrill Lynch
Pierce Fenner & Smith Incorporated. The complaint alleges
that the defendants violated the Securities Act of 1933 and the
Securities Exchange Act of 1934 by issuing a registration
statement and prospectus that were false and misleading in that
they failed to disclose that: (i) the defendant
underwriters allegedly had solicited and received excessive and
undisclosed commissions from certain investors who purchased our
common stock issued in connection with our initial public
offering; and (ii) the defendant underwriters allegedly
allocated shares of our common stock issued in connection with
our initial public offering to investors who allegedly agreed to
purchase additional shares of our common stock at pre-arranged
prices. The complaint seeks recissionary and/or compensatory
damages. We dispute the allegations of the complaint that
suggest any wrongdoing on our part or by our officers, and we
intend to defend the action vigorously and will pursue all
appropriate remedies available to us and our officers.

On June 8, 2001 a purported class action
lawsuit was filed in the Superior Court of Fulton County, State
of Georgia by Reidy Gimpelson against Nextel Partners, Inc. as
well as several other wireless carriers and manufacturers of
wireless telephones. The complaint alleges that the defendants,
among other things, manufactured and distributed wireless
telephones that cause adverse health affects. The plaintiffs
seek compensatory damages, reimbursement for certain costs
including reasonable legal fees, punitive damages and injunctive
relief. We dispute the allegations of the complaint, will
vigorously defend against the action, and intend to seek
indemnification from the manufacturers of the wireless
telephones if necessary.

We are subject to other claims and legal actions
that may arise in the ordinary course of business. We do not
believe that any of these other pending claims or legal actions
will have a material effect on our business or results of
operations.

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Item 4.     Submission
of Matters to a Vote of Security Holders

No matters were submitted for a vote of our
security holders during the fourth quarter of the year ended
December 31, 2001.




PART II




Item 5.     Market
for Registrants Common Equity and Related Stockholders
Matters

Market

Our Class A common stock is traded on NASDAQ
under the symbol NXTP. The following table sets
forth, for the periods indicated, the high and low stock prices
of our Class A common stock as reported on NASDAQ:

|                                                                                 |  |      |       |     |  |   |       | 
|-------------------------------------------------------------------------------- |  | ---- | ----- | --- |  | - | ----- | 
|Quarterly Common Stock Price Ranges for the Year Ended:                          |  | High |       | Low
|                                                                                 |  |      |       |    
|December 31, 2000                                                                |  |      |       |     |  |   |       | 
|First Quarter (from February 22, 2000, the
	date of our initial public offering) |  | $    | 40.13 |     |  | $ | 28.25 | 
|Second Quarter                                                                   |  | $    | 32.75 |     |  | $ | 13.00 | 
|Third Quarter                                                                    |  | $    | 34.50 |     |  | $ | 22.00 | 
|Fourth Quarter                                                                   |  | $    | 29.00 |     |  | $ | 10.06 | 
|                                                                                
|December 31, 2001                                                                |  |      |       |     |  |   |       | 
|First Quarter                                                                    |  | $    | 24.50 |     |  | $ | 11.00 | 
|Second Quarter                                                                   |  | $    | 18.02 |     |  | $ | 10.50 | 
|Third Quarter                                                                    |  | $    | 15.80 |     |  | $ | 4.35  | 
|Fourth Quarter                                                                   |  | $    | 12.32 |     |  | $ | 4.88  | 

Holders

As of March 5, 2002, there were
approximately 22,020 holders of record of our Class A
common stock and a single stockholder of record holding all
79,056,228 shares of our Class B common stock.

Dividends

We have never paid cash dividends on any of our
capital stock, including our Class A common stock. We
currently intend to retain any future earnings to fund the
development and growth of our business. Therefore, we do not
currently anticipate paying any cash dividends on our
Class A common stock in the foreseeable future. In
addition, our credit facility prohibits us from paying dividends
without our lenders consent, and the indentures pursuant
to which our senior notes and senior discount notes were issued
contain a limitation on our ability to pay dividends. We will,
however, be required, in liquidation or upon mandatory
redemption in February 2010, to pay dividends on our
Series B preferred stock.

Recent Sales of Unregistered
Securities

See Managements Discussion and
Analysis of Financial Condition and Results of Operations 
Liquidity and Capital Resources for a description of our
recent sale of unregistered securities.




Item 6.     Selected
Consolidated Financial Data

We have summarized below our historical
consolidated financial data as of and for the years ended
December 31, 1999, 2000 and 2001. The historical operating
data presented below for the same periods are derived from our
records.

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Please read this table together with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and our audited
consolidated financial statements and the related notes included
elsewhere in this 10-K Annual Report.

|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |          |  
|--------------------------------------------------------------------------------------- | ------------------------------------ | ----------------------- | -------- | ------- | - | ---- | -------- | -------- | - | - | -------- | -------- | -
|                                                                                        |                                      |                        
|                                                                                        |                                      | Year Ended December 31,
|                                                                                        |                                      |                        
|                                                                                        |                                      | 1999                    |          | 2000    |   | 2001
|                                                                                        |                                      |                         |          |         |   |     
|                                                                                        |                                      |                        
|                                                                                        |                                      | (Dollars in thousands) 
|Consolidated Statements of Operations
	Data:                                            |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Operating revenues:                                                                     |                                      |                         |          |         |   |      |          |          |   |   |          |         
|                                                                                        | Service revenues(1)                  |                         | $        | 28,136  |   |      | $        | 130,125  |   |   | $        | 363,573  |  
|                                                                                        | Equipment revenues(1)                |                         |          | 4,584   |   |      |          | 5,745    |   |   |          | 13,791   |  
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Total revenues                                                                          |                                      |                         | 32,720   |         |   |      | 135,870  |          |   |   | 377,364  |         
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Operating expenses:                                                                     |                                      |                         |          |         |   |      |          |          |   |   |          |         
|                                                                                        | Cost of service revenues             |                         |          | 18,807  |   |      |          | 84,962   |   |   |          | 192,728  |  
|                                                                                        | Cost of equipment revenues(1)        |                         |          | 10,742  |   |      |          | 26,685   |   |   |          | 59,202   |  
|                                                                                        | Selling, general and administrative  |                         |          | 34,862  |   |      |          | 117,975  |   |   |          | 210,310  |  
|                                                                                        | Stock-based compensation             |                         |          | 27,256  |   |      |          | 70,144   |   |   |          | 30,956   |  
|                                                                                        | Depreciation and amortization        |                         |          | 12,689  |   |      |          | 38,044   |   |   |          | 76,491   |  
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Total operating expenses                                                                |                                      |                         | 104,356  |         |   |      | 337,810  |          |   |   | 569,687  |         
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Operating income (loss)                                                                 |                                      |                         | (71,636  | )       |   |      | (201,940 | )        |   |   | (192,323 | )       
|Other income (expense):                                                                 |                                      |                         |          |         |   |      |          |          |   |   |          |         
|                                                                                        | Other  loss from disposal of assets |                         |          |        |   |      |          | (228     | ) |   |          |         |  
|                                                                                        | Interest expense, net                |                         |          | (65,362 | ) |      |          | (102,619 | ) |   |          | (126,096 | )
|                                                                                        | Interest income                      |                         |          | 24,585  |   |      |          | 63,132   |   |   |          | 32,473   |  
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Total other income (expense)                                                            |                                      |                         | (40,777  | )       |   |      | (39,715  | )        |   |   | (93,623  | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Loss before income tax provision                                                        |                                      |                         | (112,413 | )       |   |      | (241,655 | )        |   |   | (285,946 | )       
|Income tax provision                                                                    |                                      |                         |         |         |   |      |         |          |   |   |         |         
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Loss before extraordinary item and cumulative
	effect of change in accounting principle |                                      |                         | (112,413 | )       |   |      | (241,655 | )        |   |   | (285,946 | )       
|Extraordinary item  loss on early
	retirement of debt                                  |                                      |                         |         |         |   |      | (23,485  | )        |   |   |         |         
|Cumulative effect of change in accounting
	principle                                    |                                      |                         |         |         |   |      |         |          |   |   | (1,787   | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Net loss                                                                                |                                      |                         | (112,413 | )       |   |      | (265,140 | )        |   |   | (287,733 | )       
|Mandatorily redeemable preferred stock dividends                                        |                                      |                         |         |         |   |      | (5,667   | )        |   |   | (3,504   | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Loss attributable to common stockholders                                                |                                      | $                       | (112,413 | )       |   | $    | (270,807 | )        |   | $ | (291,237 | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Loss per share attributable to common
	stockholders, basic and diluted:                 |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Loss before extraordinary item and cumulative
	effect of change in accounting principle |                                      | $                       | (38.18   | )       |   | $    | (1.21    | )        |   | $ | (1.19    | )       
|Extraordinary item                                                                      |                                      |                         |         |         |   |      | (0.12    | )        |   |   |         |         
|Cumulative effect of change in accounting
	principle                                    |                                      |                         |         |         |   |      |         |          |   |   | (0.01    | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         
|Net loss per share attributable to common
	stockholders                                 |                                      | $                       | (38.18   | )       |   | $    | (1.33    | )        |   | $ | (1.20    | )       
|                                                                                        |                                      |                         |          |         |   |      |          |          |   |   |          |         

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|                                                                          |  |                        |           |      |  |      |           |  |  |   |           | 
|------------------------------------------------------------------------- |  | ---------------------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                                          |  |                       
|                                                                          |  | As of December 31,    
|                                                                          |  |                       
|                                                                          |  | 1999                   |           | 2000 |  | 2001
|                                                                          |  |                        |           |      |  |     
|                                                                          |  |                       
|                                                                          |  | (Dollars in thousands)
|Consolidated Balance Sheet Data:                                          |  |                        |           |      |  |      |           |  |  |   |           | 
|Cash and cash equivalents, short-term investments
	and restricted cash(2) |  | $                      | 568,729   |      |  | $    | 928,346   |  |  | $ | 557,285   | 
|Plant, property and equipment, net                                        |  |                        | 252,223   |      |  |      | 532,702   |  |  |   | 845,934   | 
|FCC operating licenses, net                                               |  |                        | 151,056   |      |  |      | 245,295   |  |  |   | 283,728   | 
|Total assets                                                              |  |                        | 1,015,327 |      |  |      | 1,793,084 |  |  |   | 1,821,721 | 
|Current liabilities                                                       |  |                        | 58,503    |      |  |      | 120,423   |  |  |   | 127,972   | 
|Long-term debt                                                            |  |                        | 785,484   |      |  |      | 1,067,684 |  |  |   | 1,327,829 | 
|Series B redeemable preferred stock                                       |  |                        |          |      |  |      | 27,517    |  |  |   | 31,021    | 
|Total stockholders equity                                                |  |                        | 170,616   |      |  |      | 570,215   |  |  |   | 319,504   | 
|Total liabilities and stockholders equity                                |  | $                      | 1,015,327 |      |  | $    | 1,793,084 |  |  | $ | 1,821,721 | 

|                                        |  |                         |          |      |  |      |          |   |  |   |          |  
|--------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                        |  |                        
|                                        |  | Year Ended December 31,
|                                        |  |                        
|                                        |  | 1999                    |          | 2000 |  | 2001
|                                        |  |                         |          |      |  |     
|                                        |  |                        
|                                        |  | (Dollars in thousands) 
|Other Data:                             |  |                         |          |      |  |      |          |   |  |   |          |  
|Covered Pops (end of period) (millions) |  |                         | 6        |      |  |      | 24       |   |  |   | 33       |  
|Subscribers (end of period)             |  |                         | 46,100   |      |  |      | 227,400  |   |  |   | 515,900  |  
|Cash flows from operating activities    |  | $                       | (66      | )    |  | $    | (116,028 | ) |  | $ | (153,894 | )
|Cash flows from investing activities    |  | $                       | (363,605 | )    |  | $    | (504,744 | ) |  | $ | (249,824 | )
|Cash flows from financing activities    |  | $                       | 517,928  |      |  | $    | 960,051  |   |  | $ | 214,525  |  
|EBITDA as adjusted(3)                   |  | $                       | (31,691  | )    |  | $    | (93,752  | ) |  | $ | (84,876  | )
|Capital expenditures(4)                 |  | $                       | 151,743  |      |  | $    | 303,573  |   |  | $ | 374,001  |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In December 2000, we changed our revenue
	recognition policy for activation fees (included in service
	revenues) and equipment (phones) revenues in accordance with the
	Securities and Exchange Commission Staff Accounting
	Bulletin 101 (SAB 101), Revenue Recognition in
	Financial Statements. This change in our revenue
	recognition policy became effective as of January 1, 2000,
	and accordingly, quarterly results for 2000 were restated in our
	Form 10-K for the year ended December 31, 2000 (see
	Notes 2 and 12 of the Notes to the Financial Statements).
	See Managements Discussion and Analysis of Financial
	Condition and Results of Operations for a more detailed
	description of the impact of our adoption of this policy.                                                                                                                                                                                                                         
|   
|(2) | Short-term investments include marketable
	securities and corporate commercial paper with original purchase
	maturities greater than three months. Restricted cash reflects
	the cash collateral account maintained under the credit facility
	equal to borrowings outstanding until January 21, 2000,
	when the FCC approved the transfer applications relating to the
	licenses we acquired on January 29, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | EBITDA, as adjusted, represents net loss before
	interest expense, interest income, depreciation, amortization,
	stock-based compensation expense and loss from disposal of
	assets. EBITDA is commonly used to analyze companies on the
	basis of operating performance, leverage and liquidity. While
	EBITDA as adjusted should not be construed as a substitute for
	operating income or as a better measure of liquidity than cash
	flow from operating activities, which are determined in
	accordance with generally accepted accounting principles, we
	have presented EBITDA as adjusted to provide additional
	information with respect to our ability to meet future debt
	service, capital expenditure and working capital requirements.
	EBITDA as adjusted is not a measure determined under generally
	accepted accounting principles. Also, EBITDA as adjusted as
	calculated above may not be comparable to similarly titled
	measures reported by other companies.

36



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Capital expenditures are exclusive of capitalized
	interest but include accrued or financed capital, including the
	$22 million of Motorola vendor credits which were fully
	utilized during 1999. Capital expenditures are required to
	purchase network equipment, such as switching and radio
	transmission equipment. Capital expenditures also include
	purchases of other equipment used for administrative purposes,
	such as office equipment, computers and telephone systems. These
	amounts exclude $1.2 million, $5.5 million and
	$5.5 million of capitalized interest for 1999, 2000 and
	2001, respectively, and is offset by net proceeds from the
	transfer of telecommunication towers and related assets to
	Spectrasite of $2.2 million, $9.3 million, and
	$10.4 million, respectively (see Note 2 of the Notes
	to the Financial Statements).






|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
	of Financial Condition and Results of Operations

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. For a discussion of
important factors that could cause results to differ materially
from the forward-looking statements contained in this 10-K
Annual Report, see Risk Factors and
Forward-Looking Statements.

Please read the following discussion together
with the Selected Consolidated Financial Data, the consolidated
financial statements and the related notes included elsewhere in
this 10-K Annual Report.

Our historical results discussed in this section
and throughout this 10-K Annual Report include the operations we
acquired from Nextel WIP on January 29, 1999 in connection
with our initial capitalization, which operations had previously
been managed by Nextel. See Note 1 of our audited
consolidated financial statements for a discussion of our
formation, capitalization and basis of presentation.

Overview

We provide digital wireless communications
services in mid-sized and tertiary markets throughout the United
States. We hold licenses for wireless frequencies in 58 markets
where over 51 million people, or Pops, live and work. We
have the right to operate in 15 of the top 100 metropolitan
statistical areas in the United States ranked by population and
55 of the top 200 metropolitan statistical areas. As of
December 31, 2001, we had commercial operations in markets
with total Pops of approximately 49.3 million and the
ability to offer service to, or cover, approximately
33.1 million Pops. These operational markets are in
Alabama, Arkansas, Central Illinois, Florida, Georgia, Hawaii,
Idaho, Indiana, Iowa, Kentucky, Louisiana, Minnesota,
Mississippi, Nebraska, New York, Pennsylvania, Tennessee, Texas,
Virginia and Wisconsin.

As of December 31, 2001, we had
approximately 515,900 digital subscribers. Our subscriber base
grew 127% compared to December 31, 2000, when we had an
ending subscriber count of approximately 227,400.

In June 2000, we introduced Nextel Wireless Web
service in select markets, and by the end of 2000 we offered
this data service in all of our launched markets. Nextel
Wireless Web service provides Internet-ready telephones with
wireless Internet services, including web-based applications and
content. As of December 31, 2001, we had approximately
212,000 data subscribers. Revenue from data represents less than
$1.00 of our incremental ARPU and we do not anticipate that
revenue from data will have a significant effect on ARPU in the
foreseeable future. Moreover, in an effort to increase a
customers acceptance of our data service, we may bundle in
our rate plans or provide as a promotion basic data services
without charging an additional fee.

Due to the continued development, build-out and
enhancement of our portion of the Nextel digital mobile network,
we expect to continue to experience negative operating margins.
In addition, we anticipate costs such as site rentals,
telecommunications expenses, network equipment costs and other
capital expenses to increase. Sales and marketing expenses and
general and administrative costs are also expected to increase
with continued penetration of existing markets and
commercialization of service in new markets.

37



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##### Table of Contents



Results of Operations



| |                                                                       
| | ----------------------------------------------------------------------
| | Year Ended December 31, 2001 Compared
	to Year Ended December 31, 2000



| |         
| | --------
| | Revenues

Our primary sources of revenues are service
revenues and equipment revenues. Service revenues increased 179%
to $363.6 million for the year ended December 31, 2001
as compared to $130.1 million recognized during the year
ended December 31, 2000. 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 from
Nextel subscribers using our portion of the Nextel digital
mobile network. Roaming revenues for 2001 accounted for
approximately 16% of our service revenues, as compared to 19%
for the year 2000. Although we continue to see growth in roaming
revenues due to an increase in coverage and on-air cell sites,
we expect the percentage of roaming revenues to service revenues
to continue to decline due to anticipated revenue growth that we
expect from our increasing customer base.

In addition, although we anticipate continued
growth in our service revenues during 2002, since we have
launched all of our markets, other than Burlington, Vermont, we
do not expect to experience the robust rates of growth of
revenues over prior years that we have experienced in prior
years.

The following table shows the impact of SAB 101
for the years ended December 31, 2001 and 2000.

|                                                           |                                           |                    |         |              |  |   |         |         | 
|---------------------------------------------------------- | ----------------------------------------- | ------------------ | ------- | ------------ |  | - | ------- | ------- | 
|                                                           |                                           |                   
|                                                           |                                           | For the Year Ended
|                                                           |                                           |                   
|                                                           |                                           | December 31,       |         | December 31,
|                                                           |                                           | 2001               |         | 2000        
|                                                           |                                           |                    |         |             
|                                                           |                                           |                   
|                                                           |                                           | (In thousands)    
|Revenues:                                                  |                                           |                    |         |              |  |   |         |        
|Service revenues billed or accrued                         |                                           | $                  | 365,971 |              |  | $ | 131,480 |        
|Activation fees deferred                                   |                                           |                    | (3,487  | )            |  |   | (1,635  | )      
|Previously deferred activation fees recognized             |                                           |                    | 1,089   |              |  |   | 280     |        
|                                                           |                                           |                    |         |              |  |   |         |        
|                                                           | Total service revenues reported           |                    | $       | 363,573      |  |   | $       | 130,125 | 
|                                                           |                                           |                    |         |              |  |   |         |        
|Equipment revenues billed                                  |                                           | $                  | 23,078  |              |  | $ | 20,329  |        
|Equipment revenues deferred                                |                                           |                    | (20,232 | )            |  |   | (18,977 | )      
|Previously deferred equipment revenues recognized          |                                           |                    | 10,945  |              |  |   | 4,393   |        
|                                                           |                                           |                    |         |              |  |   |         |        
|                                                           | Total equipment revenues reported         |                    | $       | 13,791       |  |   | $       | 5,745   | 
|                                                           |                                           |                    |         |              |  |   |         |        
|Operating expenses:                                        |                                           |                    |         |              |  |   |         |        
|Cost of equipment revenues                                 |                                           | $                  | 70,887  |              |  | $ | 42,624  |        
|Cost of equipment revenues deferred                        |                                           |                    | (23,718 | )            |  |   | (20,612 | )      
|Previously deferred cost of equipment revenues
	recognized |                                           |                    | 12,033  |              |  |   | 4,673   |        
|                                                           |                                           |                    |         |              |  |   |         |        
|                                                           | Total cost of equipment revenues reported |                    | $       | 59,202       |  |   | $       | 26,685  | 
|                                                           |                                           |                    |         |              |  |   |         |        

Equipment revenues reported for the year ended
December 31, 2001 were $13.8 million as compared to
$5.7 million reported for the same period in 2000,
representing an increase of $8.1 million, or 142%.

38



---



##### Table of Contents



Total revenues increased 178% to
$377.4 million during 2001 as compared to
$135.9 million generated in 2000. This growth in revenues
was due to launching new markets along with increased revenues
from existing markets of approximately $119.4 million, an
increase of 93% over the same period in 2000. The following
table sets forth those markets launched during 2001 and our
previously launched markets:

|                                                             |  |               |                        | 
|------------------------------------------------------------ |  | ------------- | ---------------------- | 
|Markets                                                      |  | Market Launch
|                                                             |  |              
|Wausau/ Merrill/ Weston/ Stevens Point/ Plover/
	Shawano, WI |  |               | 4th Quarter 2001       | 
|Idaho Falls/ Pocatello, ID                                   |  |               | 4th Quarter 2001       | 
|Ft. Dodge/ Webster City/ Clear Lake/ Mason City,
	IA         |  |               | 4th Quarter 2001       | 
|Lubbock, TX                                                  |  |               | 4th Quarter 2001       | 
|Odessa/ Midland/ San Angelo, TX                              |  |               | 4th Quarter 2001       | 
|Amarillo, TX                                                 |  |               | 4th Quarter 2001       | 
|Fargo/ Grand Forks, ND                                       |  |               | 4th Quarter 2001       | 
|McAllen/ Harlingen/ Brownsville, TX                          |  |               | 4th Quarter 2001       | 
|Altoona/ Johnstown/ State College/ Williamsport,
	PA         |  |               | 4th Quarter 2001       | 
|Sioux City/ Sioux Falls, IA/ SD                              |  |               | 4th Quarter 2001       | 
|Roanoke/ Lynchburg/ Charlottesville, VA                      |  |               | 2nd Quarter 2001       | 
|Green Bay/ Fond du Lac/ Appleton/ Sheboygan, WI              |  |               | 2nd Quarter 2001       | 
|Eau Claire/ La Crosse, WI                                    |  |               | 2nd Quarter 2001       | 
|Rochester/ Mankato, MN                                       |  |               | 2nd & 3rd Quarter 2001 | 
|Duluth, MN                                                   |  |               | 2nd Quarter 2001       | 
|Hattiesburg/ Jackson, MS                                     |  |               | 2nd Quarter 2001       | 
|Evansville/ Owensboro, IN/ KY                                |  |               | 1st Quarter 2001       | 
|Laredo, TX                                                   |  |               | 1st Quarter 2001       | 
|Little Rock, AR                                              |  |               | 1st Quarter 2001       | 
|Fayetteville-Springdale/ Ft. Smith/ Pine Bluff, AR           |  |               | 1st Quarter 2001       | 
|Abilene, TX                                                  |  |               | 1st Quarter 2001       | 
|Terre Haute, IN                                              |  |               | 1st Quarter 2001       | 
|Columbus, GA/ AL                                             |  |               | 1st Quarter 2001       | 
|Dothan/ Auburn/ Opelika, AL                                  |  |               | 1st Quarter 2001       | 
|Bristol/ Johnson City/ Kingsport, VA/ TN                     |  |               | 4th Quarter 2000       | 
|Corpus Christi/ Victoria, TX                                 |  |               | 4th Quarter 2000       | 
|Macon/ Warner Robins, GA                                     |  |               | 4th Quarter 2000       | 
|Albany, GA                                                   |  |               | 4th Quarter 2000       | 
|Alexandria, LA                                               |  |               | 4th Quarter 2000       | 
|Texarkana, TX                                                |  |               | 3rd Quarter 2000       | 
|Shreveport/ Monroe/ Tyler/ Longview, LA/ TX                  |  |               | 3rd Quarter 2000       | 
|Peoria/ Springfield/ Champaign/ Bloomington/
	Decatur, IL    |  |               | 2nd Quarter 2000       | 
|Waterloo/ Dubuque/ Davenport/ Cedar Rapids/ Iowa
	City, IA   |  |               | 2nd Quarter 2000       | 
|Omaha/ Lincoln, NE                                           |  |               | 2nd Quarter 2000       | 
|Des Moines, IA                                               |  |               | 2nd Quarter 2000       | 
|Boise/ Twin Falls, ID                                        |  |               | 2nd Quarter 2000       | 
|Montgomery, AL                                               |  |               | 2nd Quarter 2000       | 
|Pensacola/ Panama City/ Fort Walton Beach, FL                |  |               | 2nd Quarter 2000       | 
|Lafayette/ Lake Charles, LA                                  |  |               | 2nd Quarter 2000       | 
|Mobile, AL                                                   |  |               | 2nd Quarter 2000       | 

39



---



##### Table of Contents



|                                             |  |               |                  | 
|-------------------------------------------- |  | ------------- | ---------------- | 
|Markets                                      |  | Market Launch
|                                             |  |              
|Beaumont, TX                                 |  |               | 2nd Quarter 2000 | 
|Pascagoula, MS                               |  |               | 2nd Quarter 2000 | 
|Bryan/ College Station, TX                   |  |               | 2nd Quarter 2000 | 
|Harrisburg/ York/ Lancaster, PA              |  |               | 1st Quarter 2000 | 
|Wilkes-Barre/ Scranton, PA                   |  |               | 1st Quarter 2000 | 
|Louisville/ Lexington-Fayette, KY            |  |               | 1st Quarter 2000 | 
|Tallahassee, FL                              |  |               | 1st Quarter 2000 | 
|Temple/ Killeen/ Waco, TX                    |  |               | 4th Quarter 1999 | 
|Erie, PA                                     |  |               | 4th Quarter 1999 | 
|Hawaii (all islands)                         |  |               | 3rd Quarter 1998 | 
|Rochester, NY                                |  |               | 3rd Quarter 1998 | 
|Buffalo, NY                                  |  |               | 3rd Quarter 1998 | 
|Syracuse/ Utica-Rome/ Binghamton/ Elmira, NY |  |               | 3rd Quarter 1998 | 
|Albany/ Glens Falls, NY                      |  |               | 3rd Quarter 1998 | 

Average revenue per unit, or ARPU, is an industry
term that measures total service revenues per month from our
subscribers divided by the average number of digital subscriber
units in commercial service for that month. Our ARPU remained at
$71 for the year ended December 31, 2001 as it was for the
year ended December 31, 2000. We attribute the consistent
ARPU to the fact that we launched new markets, increased minutes
used by customers and the use of additional features such as
voice mail and short message services, and to a lesser extent,
Nextel Wireless Web services and Nextel Worldwide roaming
products. While we expect to continue to achieve ARPU levels
above the industry average, we expect to see a slight decline in
the near future. The following table sets forth our recent
revenues and ARPU:

Revenues

|                             |  |                                                |         |              |  |              |     |              |  |   |         |  |  |  |     |  
|---------------------------- |  | ---------------------------------------------- | ------- | ------------ |  | ------------ | --- | ------------ |  | - | ------- |  |  |  | --- | -
|                             |  | For the Year                                   |         |              |  | For the Year |     |             
|                             |  | Ended                                          |         | % of         |  | Ended        |     | % of        
|                             |  | December 31,                                   |         | Consolidated |  | December 31, |     | Consolidated
|                             |  | 2001                                           |         | Revenues     |  | 2000         |     | Revenues    
|                             |  |                                                |         |              |  |              |     |             
|                             |  |                                               
|                             |  | (Dollar amounts in thousands, except for ARPU)
|Service and roaming revenues |  | $                                              | 363,573 |              |  |              | 96  | %            |  | $ | 130,125 |  |  |  | 96  | %
|Equipment revenues           |  |                                                | 13,791  |              |  |              | 4   | %            |  |   | 5,745   |  |  |  | 4   | %
|                             |  |                                                |         |              |  |              |     |              |  |   |         |  |  |  |     |  
|Total revenues               |  | $                                              | 377,364 |              |  |              | 100 | %            |  | $ | 135,870 |  |  |  | 100 | %
|                             |  |                                                |         |              |  |              |     |              |  |   |         |  |  |  |     |  
|ARPU(1)                      |  | $                                              | 71      |              |  |              |     |              |  | $ | 71      |  |  |  |     |  
|                             |  |                                                |         |              |  |              |     |              |  |   |         |  |  |  |     |  



---



|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | ARPU was not adjusted for SAB 101 and does not
	include roaming revenues generated by Nextel customers that use
	our portion of the Nextel digital mobile network.



| |                         
| | ------------------------
| | Cost of Service Revenues

Cost of service revenues consists primarily of
network operating costs which involve site rental fees for cell
sites and switches, utilities, maintenance and interconnect and
other wireline transport charges. Cost of service revenues also
includes the amounts we must pay Nextel WIP when our customers
roam onto Nextels portion of the Nextel digital mobile
network. These expenses depend mainly on the number of operating
cell sites, total minutes of use and mix of minutes of use
between interconnect and Nextel Direct Connect services as the
use of Nextel Direct Connect is more efficient than interconnect
and, accordingly, relatively less costly to provide.

For 2001, our cost of service revenues was
$192.7 million as compared to $85.0 million for 2000,
representing an increase of 127%. The increase in costs was
primarily the result of bringing on-air

40



---



##### Table of Contents



approximately 1,251 additional cell sites in
2001, as well as an increase in airtime usage. Increased airtime
usage resulted from the growth in the number of customers from
2000 along with the increased minutes of use per customer. We
expect cost of service revenues to increase as we place more
cell sites in service and the usage of minutes increases as our
customer base grows.




| |                           
| | --------------------------
| | Cost of Equipment Revenues

Cost of equipment revenues includes the cost of
the subscriber wireless telephones and accessories sold by us.
Our cost of equipment revenues reported for 2001 was
$59.2 million as compared to $26.7 million for 2000.
The increase in costs was related mostly to the growth in number
of subscribers. As part of our business plan, we often offer our
equipment at a discount or as part of a promotion. As a result,
the difference between equipment revenues and cost of equipment
revenues was a loss of $45.4 million for 2001, as compared
to a loss of $20.9 million for 2000. We expect to continue
to employ these discounts and promotions in an effort to grow
our number of subscribers. Therefore, for the foreseeable
future, we expect that cost of equipment revenues will continue
to exceed our equipment revenues.



| |                                              
| | ---------------------------------------------
| | Selling, General and Administrative
	Expenses

Selling, general and administrative expenses
consist of sales and marketing expenses, customer care services
and general and administrative costs. For 2001, selling, general
and administrative expenses were $210.3 million as compared to
$118.0 million for 2000, representing an increase of 78%.

Sales and marketing expenses increased as a
result of:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | increased sales and marketing activities to
	launch markets and grow our customer base;                            
|
| |  | our hiring of additional sales and marketing
	employees to accommodate the growth in new and existing markets;
	and
|
| |  | higher expenses related to a greater proportion
	of sales received from indirect distribution channels.            

General and administrative costs relate to
corporate personnel overhead including tax, legal, planning,
human resources, information technology, treasury, accounting
and our customer care center operations. Our general and
administrative costs increased as a result of our:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | hiring employees for our functional departments
	and offices to support the growth of the new and existing
	markets;                               
|
| |  | increasing staffing and operating our customer
	care and fulfillment service center in Las Vegas, Nevada to
	support the growing customer base; and
|
| |  | hiring employees to maintain and support systems.                                                                                                  

As we continue to grow our customer base and
expand our operations, we expect our sales and marketing
expenses and general and administrative costs to continue to
increase in the foreseeable future.



| |                                 
| | --------------------------------
| | Stock-Based Compensation Expense

For the years ended December 31, 2001 and
2000, we recorded stock-based compensation expense associated
with our restricted stock purchase plan and employee stock
options granted during 1999 of $31.0 million and
$70.1 million, respectively. This is a non-cash expense.
Prior to our initial public offering, grants were considered
compensatory and accounted for on a basis similar to that used
for stock appreciation rights. At the closing of our initial
public offering (February 25, 2000), the intrinsic value of
the options and restricted stock was recorded and is being
amortized over the remaining vesting periods. We expect stock
based compensation expense to decrease as the options continue
to vest.

41



---



##### Table of Contents





| |                                       
| | --------------------------------------
| | Depreciation and Amortization
	Expense

For 2001, our depreciation and amortization
expense was $76.5 million as compared to $38.0 million
for 2000, representing an increase of 101%. The
$38.5 million increase related primarily to depreciating
the wireless network assets for the 1,251 additional cell sites
placed in service during 2001, along with the costs related to
furniture and equipment purchased to set up new offices and
amortizing additional FCC-licensed radio spectrum associated
with the new markets launched. We expect depreciation to
continue to increase due to the additional cell sites we plan to
place in service. Additionally, we are in the process of
assessing the impact of SFAS 142 (see Recently Issued Accounting
Pronouncements), which may entirely eliminate the amortization
expense related to FCC licenses.



| |                                     
| | ------------------------------------
| | Interest Expense and Interest Income

Interest expense, net of capitalized interest,
increased from $102.6 million for 2000 to
$126.1 million for 2001, representing an increase of 23%.
The increase was due to interest during the entire year on the
$200 million in 11% senior notes that we issued in March
2000 as well as the $200 million in 11% senior notes that
we issued in July 2000 and was offset by the reduction in
interest costs from our redemption in April 2000 of 35% of the
14% senior discount notes in April 2000. Additionally,
approximately $5.2 million related to the non-cash fair
market value adjustments of our interest rate swaps was included
as interest expense in 2001.

For 2001, interest income was $32.5 million,
as compared to $63.1 million for 2000, representing a
decrease of 48%. This decrease was due to a decline in interest
rates on our short-term investments and a reduction in our cash
balance because of additional spending related to the network
build-out.



| |                                                     
| | ----------------------------------------------------
| | Cumulative Effect of Change in Accounting
	Principle

Effective January 1, 2001, we adopted
Statement of Financial Accounting Standard (SFAS) No. 133,
Accounting for Derivative Instruments and Certain Hedge
Activities, as amended by SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain
Hedging Activities  an amendment of FASB Statement
No. 133. SFAS 133 and 138 require a company to
recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value
through income. We hold interest rate swap agreements to
mitigate our interest rate risk. We determined under the new
rules and criteria that our interest rate swap agreements are
ineffective hedges, and thus do not qualify for hedge accounting
treatment. The initial adoption resulted in the recording of an
additional liability of $1.8 million, with the offset
recorded as a cumulative effect of change in accounting
principle.



| |         
| | --------
| | Net Loss

For 2001, we had a loss attributable to common
stockholders of approximately $291.2 million as compared to
a loss of $270.8 million for 2000, representing an increase
of 8%. The $291.2 million loss for 2001 includes a charge
of approximately $1.8 million relating to the
implementation of SFAS 133. In addition, the loss for 2000
includes an extraordinary item for $23.5 million relating
to the early retirement of the 14% senior notes. Expenses
increased in all categories as we launched new markets, added
subscriber usage to the network, hired staff for functional
departments and offices, and increased marketing and sales
activities for the existing and newly launched markets. We
anticipate reporting net losses for the foreseeable future as we
grow and expand to meet the requirements of the business.



| |                                                                       
| | ----------------------------------------------------------------------
| | Year Ended December 31, 2000 Compared
	to Year Ended December 31, 1999



| |         
| | --------
| | Revenues

Service revenues increased 363% to
$130.1 million for 2000 as compared to $28.1 million
recognized during 1999. Roaming revenues for 2000 accounted for
approximately 19% of our service revenues.

42



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The following table shows the results reported
for 2000 and the impact of SAB 101 if the accounting policy
had not been implemented along with reported results for 1999
and the pro forma if SAB 101 had been in effect for 1999:

|                                      |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |        | 
|------------------------------------- | -------------- | ---------------------- | ------- | ----------------- |  | -------- | ------- | --------- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                      |                |                       
|                                      |                | For the Year Ended    
|                                      |                |                       
|                                      |                |                        |         |                  
|                                      |                | December 31, 2000      |         | December 31, 1999
|                                      |                |                        |         |                  
|                                      |                | Reported               |         | Pre-SAB 101       |  | Reported |         | Pro Forma
|                                      |                |                        |         |                   |  |          |         |          
|                                      |                |                       
|                                      |                | (Dollars in thousands)
|Revenues:                             |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |       
|Service revenues and roaming revenues |                | $                      | 130,125 |                   |  | $        | 131,480 |           |  | $ | 28,136 |        |  | $ | 28,066 |       
|Equipment revenues                    |                |                        | 5,745   |                   |  |          | 20,329  |           |  |   | 4,584  |        |  |   | 1,676  |       
|                                      |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |       
|                                      | Total revenues |                        | $       | 135,870           |  |          | $       | 151,809   |  |   | $      | 32,720 |  |   | $      | 29,742 | 
|                                      |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |       
|Operating expenses:                   |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |       
|Cost of equipment revenues            |                | $                      | 26,685  |                   |  | $        | 42,624  |           |  | $ | 10,742 |        |  | $ | 7,764  |       
|                                      |                |                        |         |                   |  |          |         |           |  |   |        |        |  |   |        |       

The effect of SAB 101 does not change our loss
from operations or EBITDA.

Equipment revenues reported for 2000, adjusted in
accordance with the implementation of SAB 101, were
$5.7 million as compared to $4.6 million reported for
1999, an increase of $1.1 million, or 24%. Without
adjusting for the impact of SAB 101, equipment revenues would
have increased 341%, or $15.7 million, during 2000 to
$20.3 million.

Total revenues increased 316% to
$135.9 million during 2000 as compared to
$32.7 million generated in 1999. The growth in revenues was
due to launching new markets along with increased revenues from
the existing markets.

Our ARPU increased $5 during the year to $71 in
2000, as compared to $66 in 1999. We credit the higher ARPU to
the fact that we launched new markets, increased minutes used by
customers, higher pricing plans targeted for particular market
segments, and the use of additional features such as voice mail,
short message services, and to a lesser extent Nextel Wireless
Web services and Nextel Worldwide roaming products. The
following table sets forth our revenues and ARPU:

Revenues

|                             |  |                                                |         |          |  |              |     |          |  |   |        |  |  |  |     |  
|---------------------------- |  | ---------------------------------------------- | ------- | -------- |  | ------------ | --- | -------- |  | - | ------ |  |  |  | --- | -
|                             |  | Year Ended                                     |         | % of     |  | Year Ended   |     | % of    
|                             |  | December 31,                                   |         | Revenues |  | December 31, |     | Revenues
|                             |  | 2000                                           |         | 2000     |  | 1999         |     | 1999    
|                             |  |                                                |         |          |  |              |     |         
|                             |  |                                               
|                             |  | (Dollar amounts in thousands, except for ARPU)
|Service and roaming revenues |  | $                                              | 130,125 |          |  |              | 96  | %        |  | $ | 28,136 |  |  |  | 86  | %
|Equipment revenues           |  |                                                | 5,745   |          |  |              | 4   | %        |  |   | 4,584  |  |  |  | 14  | %
|                             |  |                                                |         |          |  |              |     |          |  |   |        |  |  |  |     |  
|Total revenues               |  | $                                              | 135,870 |          |  |              | 100 | %        |  | $ | 32,720 |  |  |  | 100 | %
|                             |  |                                                |         |          |  |              |     |          |  |   |        |  |  |  |     |  
|ARPU(1)                      |  | $                                              | 71      |          |  |              |     |          |  | $ | 66     |  |  |  |     |  
|                             |  |                                                |         |          |  |              |     |          |  |   |        |  |  |  |     |  



---



|    |                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | ARPU was not adjusted for SAB 101 and does not
	include roaming revenues generated from the use by Nextel
	subscribers of our portion of the Nextel digital mobile network.



| |                         
| | ------------------------
| | Cost of Service Revenues

For 2000, our cost of service revenues was
$85.0 million as compared to $18.8 million for the
same period in 1999, representing an increase of 352%. The
increase in costs was primarily the result of bringing on-air
approximately 1,012 additional cell sites during 2000 for a
total of approximately 1,537 operating cell sites, as well as
increases in airtime usage. Increased airtime usage resulted
from the 393% growth in number of customers from 1999 along with
the increased minutes of use per customer.

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| |                           
| | --------------------------
| | Cost of Equipment Revenues

Our cost of equipment revenues reported for 2000
adjusted for SAB 101 was $26.7 million. Without the effect
of SAB 101, our cost of equipment revenues for 2000 would
have been $42.6 million as compared to $10.7 million
for 1999, representing an increase of 298%. The increase in
costs was related mostly to the growth in number of customers.
As part of our business plan, we often offer our equipment at a
discount or as part of a promotion. As a result, the difference
between equipment revenues and cost of equipment revenues was a
loss of $20.9 million for 2000, adjusted for SAB 101,
compared to a loss of $6.2 million for 1999. Without SAB
101, net equipment margin for 2000 would have been a loss of
$22.3 million.



| |                                              
| | ---------------------------------------------
| | Selling, General and Administrative
	Expenses

For 2000, these costs were $118.0 million as
compared to $34.9 million for 1999, representing an
increase of 238%. Sales and marketing expenses increased as a
result of:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | increased sales and marketing activities to
	launch markets and grow our customer base;                            
|
| |  | our hiring of additional sales and marketing
	employees to accommodate the growth in new and existing markets;
	and
|
| |  | higher expenses related to a greater proportion
	of sales received from indirect distribution channels.            

The first six to nine months of 1999 was, for the
most part, a transition period during which Nextel WIP provided
us with many back-office services such as fulfillment,
activations, and collections. For the remainder of 1999 and
during 2000 the majority of these services were transferred to
our employees and systems. Therefore, our general and
administrative costs increased as a result of our:



| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | hiring employees to set up functional departments
	and offices to support the growth of the new and existing
	markets;                      
|
| |  | staffing and operating our own customer care and
	fulfillment service center in Las Vegas, Nevada to support the
	growing customer base; and
|
| |  | hiring employees to maintain and support systems
	that were in development during 1999.                                                     



| |                                 
| | --------------------------------
| | Stock-Based Compensation Expense

For 2000 and 1999, we recorded stock-based
compensation expense associated with our restricted stock
purchase plan and employee stock options granted during 1999 of
$70.1 million and $27.3 million, respectively. This is
a non-cash expense.



| |                                       
| | --------------------------------------
| | Depreciation and Amortization
	Expense

For 2000, our depreciation and amortization
expense was $38.0 million as compared to $12.7 million
for 1999, representing an increase of 199%. The
$25.3 million increase related primarily to depreciating
the wireless network assets for approximately 1,012 additional
cell sites placed in service along with the furniture and
equipment to set up the offices in Las Vegas, Nevada and
amortizing additional FCC-licensed radio spectrum associated
with the new markets launched during 2000.



| |                                     
| | ------------------------------------
| | Interest Expense and Interest Income

Interest expense, net of capitalized interest,
increased from $65.4 million for 1999 to
$102.6 million for 2000, representing an increase of 57%.
The increase was due to the $150 million term loan obtained
in September 1999, and the issuance of $200 million in 11%
senior notes in March 2000 and an additional $200 million
in 11% senior notes in July 2000, offset by redeeming 35% of the
14% senior discount notes in April 2000.

For 2000, interest income was $63.1 million
as compared to $24.6 million for 1999, representing an
increase of 157%. This increase was due to the income recognized
on the investment of the net proceeds

44



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##### Table of Contents



received from the term loan in September 1999,
from our initial public offering of Class A common stock in
February 2000 and from the issuance of 11% senior notes in March
2000 and July 2000.




| |                   
| | ------------------
| | Extraordinary Item

On April 18, 2000 we utilized a portion of
our proceeds from our initial public offering in February 2000
to redeem 35% of the aggregate accreted value of the 14% senior
discount notes. As a result of the early retirement of these
senior discount notes, we recognized an extraordinary loss of
approximately $23.5 million, representing the excess of the
redemption price over the accreted value of the notes redeemed.



| |         
| | --------
| | Net Loss

For 2000, we had a loss attributable to common
stockholders of approximately $270.8 million as compared to
a loss of $112.4 million for 1999, representing an increase
of 141%. The $270.8 million loss for 2000 includes an
extraordinary loss of approximately $23.5 million and a
dividend relating to our mandatorily redeemable preferred stock
of $5.7 million. Expenses increased in all categories as we
transitioned from start-up mode, launched new markets, added
subscriber usage to the network, hired staff, set up functional
departments and offices, and increased marketing and sales
activities for the newly launched markets.

Liquidity and Capital Resources

Our primary liquidity needs arise from the
capital requirements necessary to complete the build-out of our
portion of the Nextel digital mobile network and expand or
enhance coverage in our existing markets, including the future
acquisitions of additional frequencies, installing new switches
and the introduction of new services. Without limiting the
foregoing, we expect capital expenditures to include, among
other things, the purchase of switches, base radios,
transmission towers and antennae; radio frequency engineering;
and cell site construction.

For the year ended December 31, 2001, we
used $153.9 million in cash for operating activities, as
compared to $116.0 million for the same period in 2000. The
increased use of funds for operating activities in 2001 was
primarily due to hiring employees, setting up functional
departments and offices, network operating costs for additional
sites placed in service, increased marketing and sales
activities along with purchasing an inventory of telephones and
accessories and an increase in receivables due to additional
customers.

Net cash used in investing activities during 2001
was $249.8 million, a decrease of $254.9 million as
compared to 2000. The reason for less cash used in investing
activities for 2001 was due primarily to the receipt of proceeds
from the sale of short-term investments in 2001 versus the
purchase of short-term investments in 2000, offset by an
increase in capital expenditures mostly for the network
build-out. During 2001, we invested $398.6 million in
capital expenditures, excluding $3.4 million of non-cash
capitalized interest, spent primarily to build out and expand
coverage on the Nextel digital mobile network in Pennsylvania,
Kentucky, Iowa, Nebraska, Florida, Texas, Alabama, Louisiana,
Mississippi, Illinois, Idaho, Georgia, Minnesota, Wisconsin,
North Dakota, Virginia and West Virginia markets. Furthermore,
we accelerated the following three projects initially planned
for 2002:



| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | a change in our billing system;                                                
|
| |  | the addition of a new call center in Panama City
	Beach, Florida; and          
|
| |  | an additional switch in Florida, which is
	expected to come online in mid-2002.

The additional switch in Florida is expected to
eventually result in an expense savings by reducing our switch
sharing cost. We also invested $43.5 million, excluding
$1.4 million of non-cash capitalized interest, in FCC
licenses.

During 2000, we invested $264.5 million in
capital expenditures, excluding $4.3 million of non-cash
capitalized interest, which were primarily for the Hawaii,
upstate New York, Texas, Pennsylvania, Kentucky, Iowa,
Nebraska and Florida markets. We also acquired
$54.2 million of FCC licenses, excluding $2.5 million
of non-cash capitalized interest.

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For 2002, we anticipate our total capital
spending will be approximately $315 million. This includes
the cost associated with our anticipated build-out of an
additional 2 million pops, which, if successfully
completed, would increase our covered Pops from approximately
33 million to approximately 35 million by the end of
2002.

The following table provides details regarding
our contractual cash obligations subsequent to December 31,
2001:

Payments Due by Period

|                              |  |        |           |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |           | 
|----------------------------- |  | ------ | --------- | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---------- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | --------- | 
|Contractual Obligations       |  | Total  |           | 2002 |  | 2003 |        | 2004 |  | 2005 |        | 2006 |  | Thereafter
|                              |  |        |           |      |  |      |        |      |  |      |        |      |  |           
|                              |  |       
|                              |  | ($000)
|Long-term Debt                |  | $      | 1,470,000 |      |  | $    |       |      |  | $    | 1,688  |      |  | $          | 3,250  |  |  | $ | 3,250  |  |  | $ | 3,250  |  |  | $ | 1,458,562 | 
|Redeemable Preferred Stock    |  | $      | 82,107    |      |  | $    |       |      |  | $    |       |      |  | $          |       |  |  | $ |       |  |  | $ |       |  |  | $ | 82,107    | 
|Operating Leases              |  | $      | 240,505   |      |  | $    | 53,268 |      |  | $    | 54,868 |      |  | $          | 49,864 |  |  | $ | 36,270 |  |  | $ | 16,673 |  |  | $ | 29,562    | 
|                              |  |        |           |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |           | 
|Total Contractual Obligations |  | $      | 1,792,612 |      |  | $    | 53,268 |      |  | $    | 56,556 |      |  | $          | 53,114 |  |  | $ | 39,520 |  |  | $ | 19,923 |  |  | $ | 1,570,231 | 
|                              |  |        |           |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |           | 

As of December 31, 2001, our cash and cash
equivalents and short-term investments balance was approximately
$557.3 million, which includes the net proceeds of
approximately $205.4 million from the issuance of our 12.5%
senior discount notes in December 2001. We also have access to
an undrawn line of credit of $100 million and in February
2002, we amended our credit facility to obtain $50 million
of senior bank debt. While we believe we have sufficient funds
to continue the build-out of our portion of the Nextel digital
mobile network to cover 35 million Pops using the current
800 MHz iDEN system, to acquire additional frequencies, install
additional switches and to provide us with the working capital
necessary to cover our debt service requirements and operating
losses through 2003 (after which time we anticipate achieving
positive free cash flow for the full fiscal year), we cannot
assure you that additional funding will not be necessary.
Additionally, to the extent we decide to expand our digital
mobile network or implement a 3G technology, we
would intend to acquire additional financing to fund these
projects. In the event that additional financing is necessary,
such financing may not be available to us on satisfactory terms,
if at all, for a number of reasons, including, without
limitation, restrictions in our debt instruments on our ability
to raise additional funds, conditions in the economy generally
and in the wireless communications industry specifically, market
conditions and other factors that may be beyond our control.



| |                   
| | ------------------
| | Sources of Funding

To date, third-party financing activities have
provided all of our funding. As of December 31, 2001 these
financings totaled approximately $2.1 billion and included:



| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | proceeds from cash equity contributions of
	$202.8 million;                                                                                                                                                                     
|
| |  | the offering of 14% senior discount notes for
	$406.4 million, less $191.2 million for the partial
	redemption of these notes in April 2000;                                                                                    
|
| |  | term loans incurred by our operating subsidiary
	in the aggregate principal amount of $325.0 million;                                                                                                                           
|
| |  | the contribution by Nextel WIP of FCC licenses
	valued at $178.3 million, in exchange for Class B
	common stock and Series B preferred stock;                                                                                   
|
| |  | the contribution by Motorola of a
	$22.0 million credit to use against our purchases of
	Motorola-manufactured infrastructure equipment in exchange for
	Class A common stock, all of which had been used by
	December 31, 1999;
|
| |  | net proceeds from the sale of Class A common
	stock in our initial public offering of $510.8 million;                                                                                                                           
|
| |  | the offering of 11% senior notes for
	$200 million in March 2000;                                                                                                                                                               
|
| |  | the offering of an additional $200 million
	in 11% senior notes in July 2000; and                                                                                                                                               
|
| |  | the offering of 12.5% senior discount notes for
	$210.4 million in December 2001.                                                                                                                                               

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Our 14% senior discount notes due
February 1, 2009 were sold in January 1999. The notes were
issued at a discount to their aggregate principal amount at
maturity and generated aggregate gross proceeds to us of
approximately $406.4 million. In July 1999 we exchanged
these notes for registered notes having the same financial terms
and covenants as the notes issued in January 1999. Cash interest
will not accrue on the notes prior to February 1, 2004. On
April 18, 2000, we redeemed 35% of the accreted value of
these outstanding notes for approximately $191.2 million
with proceeds from our initial public offering. The redemption
payment of $191.2 million included $167.7 million of
these outstanding notes plus a 14% premium of approximately
$23.5 million. The notes still outstanding will accrete in
value representing the amortization of original issue discount
at a rate of 14%, compounded semiannually, to an aggregate
principal amount of $520.0 million by February 1,
2004. As of December 31, 2001, the accreted value of the
outstanding 14% senior discount notes was approximately
$392.3 million.

Nextel Partners Operating Corp., one of our
wholly owned subsidiaries, entered into a credit facility in
January 1999 with a syndicate of banks and other financial
institutions led by Donaldson, Lufkin & Jenrette
Securities Corporation, as arranger, DLJ Capital Funding, as
syndication agent, and Bank of Montreal, as administrative
agent. This credit facility was amended and restated in
September 1999 and further amended on March 10, 2000 and
January 25, 2001. The credit facility, as amended, includes
a $175 million term loan, a $150 million term loan and
a $100 million reducing revolving credit facility. The
credit facility may not exceed $425 million. The
$175 million term loan matures on January 29, 2008,
and the $150 million term loan matures on July 29,
2008. The revolving credit facility will terminate on
January 29, 2007. As of December 31, 2001,
$175 million was outstanding under the $175 million
term loan, $150 million was outstanding under the
$150 million term loan and no amounts were outstanding
under the $100 million revolving credit facility. On
February 5, 2002, we closed the transaction to amend our
existing $150 million credit facility to provide for an
additional $50 million term loan.

The $175 million and the $150 million
term loan both bear interest, at our option, at the
administrative agents alternate base rate or
reserve-adjusted London Interbank Offering Rate
(LIBOR) plus, in each case, applicable margins. The
applicable margin for the $175 million term loan is 4.75%
over LIBOR and 3.75% over the base rate of the higher of 0.5%
per annum above the latest federal funds rate or the prime rate.
The applicable margin for the $150 million term loan is
4.25% over LIBOR and 3.25% over the base rate. For the revolving
credit facility, 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. As of December 31, 2001, the interest rates on
the $175 million term loan and the $150 million term
loan were 6.65% and 6.36%, respectively.

Borrowings under the term loans are secured by a
first priority pledge of all assets of our subsidiaries and a
pledge of their capital stock. The credit facility contains
financial and other covenants customary for the wireless
industry, including limitations on our ability to incur
additional debt, create liens on assets or enter into
significant transactions and covenants relating to minimum
service revenues, subscriber units and covered Pops. The credit
facility also contains covenants requiring that we maintain
certain defined financial ratios and meet operational targets
for service revenues, subscriber units and network coverage. As
of December 31, 2001, we were in compliance with all
covenants associated with this credit facility and anticipate
remaining in compliance with these covenants for the foreseeable
future.

On March 10, 2000, we issued
$200 million of 11% senior notes due 2010, and on
July 27, 2000, we issued an additional $200 million of
11% senior notes, each in a private placement. We subsequently
exchanged all of the March 2000 and July 2000 notes for
registered notes having the same financial terms and covenants
as the privately placed notes. Interest accrues for these notes
at the rate of 11% per annum, payable semiannually in cash in
arrears on March 15 and September 15 of each year.

On December 4, 2001 we issued in a private
placement $225 million of 12.5% senior discount notes due
2009. These notes were issued at a discount to their aggregate
principal amount at maturity and generated aggregate gross
proceeds to us of approximately $210.4 million. The notes
were sold to Credit Suisse First

47



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##### Table of Contents



Boston and Duetsche Banc Alex. Brown Inc., as
initial purchasers, in accordance with Rule 144A and
Regulation S under the Securities Act. We intend to
exchange these notes for registered notes having the same
financial terms and covenants as the notes issued in December
2001. Interest accrues for these notes at the rate of 12.5% per
annum commencing on May 15, 2002, payable semiannually in
cash in arrears on May 15 and November 15 of each year.


As discussed in more detail in Business
 Risk Factors, if we fail to satisfy the financial
covenants and other requirements contained in our credit
facility and the indentures governing our outstanding notes, our
debts could become immediately payable at a time when we are
unable to pay them, which could adversely affect our liquidity
and financial condition.



| |                                    
| | -----------------------------------
| | Equipment and Operating
	Agreements

Currently, our agreements with Nextel WIP allow
us access to Nextels switches and switching facilities.
Nextel WIP has agreed to cooperate with us to establish a switch
facility for our network and to deploy switches in our territory
in a manner which best meets the following criteria:



| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | integration of our cell sites into Nextels
	national switching infrastructure;
|
| |  | shared coverage of Nextel Direct Connect service
	to communities of interest;  
|
| |  | minimized costs to us and to Nextel; and                                       
|
| |  | maximized quality of service to our customers and
	to Nextel customers.        

These criteria provide for a flexible
construction schedule of switches to serve our territory,
depending on the existing switches in Nextels territory
and the amount of customer traffic handled by any one switch. We
have the option of installing our own switching facilities
within our territory. However, our deployment of any switching
facility requires coordination with Nextel WIP and may require
Nextel WIPs approval. Our agreements with Nextel WIP
require us to implement and install appropriate switch elements
as the number of our subscribers and cell site levels increases.
For example, we will need to install a mobile switching office
for every 120,000 subscriber units or a base site controller for
every 50 operational cell sites. We believe that we have
sufficient funds for these installations under our current
business plans. We completed a switch in Kentucky and placed it
into operation during the third quarter of 2001. In addition, we
have started to work on two other switches, one in Iowa, which
will be operational during the first quarter of 2002, and
another in Florida with an expected operational date during the
second half of 2002.

Additionally, we executed a lease for office
space in Panama City Beach, Florida, which will house our second
customer support facility. We occupied this facility in January
2002 and started to answer customer calls during February 2002.

Critical Accounting Policies



| |                    
| | -------------------
| | Revenue Recognition

We recognize revenue for airtime and other
services over the service period, net of credits and adjustments
for service discounts. We also recognize revenues for sale of
accessory equipment when title passes, which is upon shipping
the accessory to the customer. Certain of our telephone and
accessory equipment sales are also made through independent
distributors under agreements allowing rights of return on
merchandise unsold by the distributors.

In December 1999, the Securities and Exchange
Commission issued Staff Accounting Bulletin 101
(SAB 101), Revenue Recognition in Financial
Statements, effective January 1, 2000, which gives
guidance on the conditions that must be met before revenue is
recognized. During December 2000 we changed our revenue
recognition policy for activation fees (included in service
revenues) and equipment (phones) revenues in accordance
with SAB 101. Under this new policy, our activation fees
and phone revenues are deferred and recognized over three years,
the expected life of the customer relationship. The decision to
defer these revenues is based on the conclusion that the service
contract and the phone revenue are

48



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##### Table of Contents



multiple element arrangements or earnings
processes that should not be separated. In other words, the
service contract is essential to the functionality of the phone.
Concurrently, the related costs for the phone equipment are
deferred to the extent of deferred revenues, resulting in no
change to EBITDA or net loss. The direct and incremental phone
costs in excess of revenues generated from phone sales are
expensed immediately as the amounts exceed our minimum
contractual revenue.




| |                                                 
| | ------------------------------------------------
| | Capitalization and Depreciation of Fixed
	Assets

We are inherently capital intensive with the
build out of the digital network. Thus, we record our system
(digital network) and non-system fixed assets, including
improvements that extend useful lives, at cost, while
maintenance and repairs are charged to operations as incurred.
Depreciation and amortization are computed using the
straight-line method based on estimated useful lives of up to
31 years for cell site shelters, three to ten years for
digital mobile network equipment, and three to seven years for
furniture and fixtures. Leasehold improvements are amortized
over the shorter of the respective lives of the leases or the
useful lives of the improvements.

Construction in progress includes costs of labor
(internal and external), materials, transmission and related
equipment, engineering, site design, interest and other costs
relating to the construction and development of our digital
mobile network. Assets under construction are not depreciated
until placed into service. In capitalizing costs related to the
construction of the digital network, we include costs that are
required to get the mobile network ready for commencement or
capable of generating billable revenues.



| |             
| | ------------
| | FCC Licenses

Our FCC operating licenses are recorded at
historical cost and are amortized using the straight-line method
based on estimated useful lives of 40 years. Our FCC
licenses and the requirements to maintain the licenses are
similar to other licenses granted by the FCC, including Personal
Communications Services (PCS) and cellular licenses
in that they are subject to renewal after the initial 10-year
term. Historically, the renewal process associated with these
FCC licenses has been perfunctory. The accounting for these
licenses has historically not been constrained by the renewal
and operational requirements. We believe that we have met and
will continue to meet all requirements necessary to retain and
secure renewal of our FCC licenses.

We are in the process of evaluating the financial
statement impact of the adoption of SFAS Nos. 141 and 142
and assessing whether FCC licenses are determined to have
indefinite lives. If FCC licenses are in fact determined to have
indefinite lives, we will no longer amortize these licenses and
be required to perform an asset impairment analysis. See
Recently Issued Accounting Pronouncements.



| |                                 
| | --------------------------------
| | Impairment of Long-Lived
	Assets

Our long-lived assets consist principally of
property, plant and equipment and FCC licenses. It is our policy
to assess impairment of long-lived assets pursuant with
SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of. This
includes determining if certain factors have occurred, including
significant decreases in the market value of certain assets,
significant changes in the manner in which an asset is used,
significant changes in the legal climate or business climate
that could affect the value of an asset, or current period or
continuing operating or cash flow losses or projections that
demonstrate continuing losses associated with certain assets
used for the purpose of producing revenue. Thus far, we believe
none of these factors have occurred.

Recently Issued Accounting
Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 141 Business
Combinations and SFAS No. 142 Goodwill and
Other Intangible Assets. SFAS No. 141 requires
business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting and
broadens the criteria for recording intangible assets separate
from goodwill. Recorded goodwill and intangibles will be
evaluated against these new criteria and may result in certain
intangibles being subsumed into goodwill,

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or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from
goodwill. SFAS No. 142 requires the use of a no
amortization approach to account for purchased goodwill and
certain intangibles. Under a no amortization approach, goodwill
and certain intangibles will not be amortized into results of
operations, but instead would be reviewed for impairment and
written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain
intangibles exceeds fair value. We are in the process of
evaluating the financial statement impact of the adoption of
SFAS Nos. 141 and 142 and assessing whether FCC licenses
are determined to have indefinite lives. If FCC licenses are in
fact determined to have indefinite lives, we will no longer
amortize these licenses and be required to perform an asset
impairment analysis.


In June 2001, the Financial Accounting Standards
Board issued SFAS No. 143, Accounting for Asset
Retirement Obligations (effective for us on
January 1, 2003). This Statement addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated
asset retirement costs. We are in the process of evaluating the
financial statement impact of the adoption of SFAS No. 143.

In August 2001, the Financial Accounting
Standards Board issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets (effective
for us as of January 1, 2002). This Statement supersedes
FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed
of and APB No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment
of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. We are in the process
of evaluating the financial statement impact of the adoption of
SFAS No. 144.

Related Party Transactions



| |                             
| | ----------------------------
| | Motorola Purchase Agreements

Pursuant to the equipment purchase agreements
between us and Motorola, one of our significant stockholders,
Motorola provides the iDEN infrastructure and subscriber handset
equipment to us throughout our markets. We expect to rely on
Motorola for the manufacture of a substantial portion of the
equipment necessary to construct our portion of the Nextel
digital mobile network and handset equipment for the foreseeable
future. The equipment purchase agreements govern our rights and
obligations regarding purchases of system infrastructure
equipment manufactured by Motorola and others.

For the years ended December 31, 1999, 2000
and 2001, we purchased approximately $40.7 million,
$154.7 million, and $178.0 million, respectively, of
infrastructure and other equipment, handsets, warranties and
services from Motorola.



| |                            
| | ---------------------------
| | Nextel Operating Agreements

We, our operating subsidiary and Nextel WIP
entered into a joint venture agreement (the Joint Venture
Agreement) dated January 29, 1999. The Joint Venture
Agreement, along with the other operating agreements, defines
the relationships, rights and obligations between the parties.
Our roaming agreement with Nextel WIP provides that each party
pays the other companys monthly roaming fees in an amount
based on the actual system minutes used by our respective
customers when they are roaming on the other partys
network. For the years ended December 31, 1999, 2000 and
2001 we earned approximately $8.5 million,
$24.7 million and $58.1 million, respectively, from
Nextel customers roaming on our system, which is included in
service revenues.

During 1999, 2000 and 2001, recorded as part of
cost of service revenues, we paid Nextel WIP $4.9 million,
$20.5 million and $58.4 million, respectively, for
services such as specified telecommunications switching
services, charges for our customers roaming on Nextels
system and other support costs.

Under our transition services agreement with
Nextel WIP, certain accounting, payroll, customer care,
purchasing, human resources and billing functions are made
available to our operating subsidiary. During 1999, 2000 and
2001, we were charged approximately $2.4 million,
$2.3 million and $3.0 million, respectively,

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for these services. During 2000 the transition
services that were still required were limited to Nextel
telemarketing and customer care, fulfillment, activations and
billing for the national accounts. Nextel WIP also provided us
access to certain back office and information systems platforms
on an ongoing basis. We pay to Nextel a fee, based on
Nextels cost, for these services. For the years ended
December 31, 1999, 2000 and 2001, we were charged
approximately $450,000, $1.1 million, and
$1.5 million, respectively. Both the transition and back
office information services are included in selling, general and
administrative expenses.


As part of our initial capitalization
transactions, Nextel transferred certain FCC licenses to three
wholly owned subsidiaries of Nextel WIP. Upon FCC approval of
the transfers, Nextel WIP transferred the stock of these three
subsidiaries  Nextel WIP License Corp., Nextel WIP
Expansion Corp. and Nextel WIP Expansion Two Corp. 
to us. At December 31, 2001, approximately
$2.7 million of FCC licenses were reported in long-term
liabilities representing a credit owed to Nextel WIP for the
return of excess licenses.



| |                      
| | ---------------------
| | Business Relationship

In the ordinary course of business, we have
engaged the services of and leased tower space from American
Tower Corporation, of which Mr. Dodge, one of our
directors, is a stockholder, president, chief executive officer
and chairman of the board of directors. During 1999, 2000 and
2001 we paid American Tower Corporation $805,000,
$6.2 million and $13.2 million for these services and
tower leases, respectively.



| |                                   
| | ----------------------------------
| | DLJ Merchant Banking
	Relationship

Donaldson, Lukfin & Jenrette Securities
Corporation and Credit Suisse First Boston have served as
initial purchasers of our senior notes and senior discount notes
and received customary discounts and commissions in connection
with each such offering. Donaldson, Lukfin & Jenrette
Securities Corporation also acted as our financial advisor and
as arranger, and DLJ Capital Funding, Inc., an affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation, acted
as syndication agent, under our credit facility, and received
customary fees and reimbursements in connection therewith. DLJ
Merchant Banking and certain related parties, all of which are
affiliates of Donaldson, Lufkin & Jenrette Securities
Corporation, own a significant amount of our equity through
their affiliate, Credit Suisse First Boston, and are represented
on our Board of Directors. Donaldson, Lufkin & Jenrette
Securities Corporation was a co-lead manager of the initial
public offering of our Class A Common Stock, and we may
from time to time enter into other investment banking
relationships with it or one of our affiliates. The aggregate
amount of all fees paid to the Credit Suisse and the DLJ
Entities in connection with the capitalization transactions from
inception through December 31, 2001 is approximately
$29.9 million.

Recent Developments

In March 2002, we entered into agreements to
purchase additional 800 MHz SMR frequencies covering
portions of the Rio Grande area of Texas, subject to FCC
approval and other standard closing conditions, for aggregate
consideration of approximately $32 million.




Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

We are subject to market risks arising from
changes in interest rates. Our primary interest rate results
from changes in LIBOR or the prime rate, which are used to
determine the interest rate applicable to the term loans of our
subsidiary under our credit facility. In April 1999 and 2000, we
entered into interest rate swap agreements for $60 million
and $50 million respectively, to partially hedge interest
rate exposure with respect to our $325 million term loans.
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 a hypothetical, instantaneous and unfavorable change of 100
basis points in the interest rate of all our variable rate
obligations would be approximately $2.2 million.

On January 1, 2001, we adopted SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS 133), as amended by
SFAS No. 138. These statements establish accounting and
reporting standards requiring that every derivative instrument
(including certain derivative instruments

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embedded in other contracts) be recorded on the
balance sheet as either an asset or liability measured at fair
value. The statements require that changes in the
derivatives fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. If hedge
accounting criteria are met, the changes in a derivatives
fair value (for a cash flow hedge) are deferred in
stockholders equity as a component of comprehensive
income. These deferred gains and losses are recognized as income
in the period in which the hedge item and hedging instrument are
settled. The ineffective portions of hedge returns are
recognized as earnings. In accordance with SFAS 133, these swap
agreements have been designated as ineffective cash flow hedges.
Initial adoption resulted in the recording of an additional
liability of $1.8 million, with the offset recorded as a
cumulative effect of change in accounting principle. The
interest rate swap agreements are included in other long-term
liabilities on the balance sheet. For the year ended
December 31, 2001, we recorded a non-cash, non-operating
charge of $5.2 million related to the market value of
interest rate swap agreements which has been reflected in
interest expense, and $1.8 million which has been reflected
as a cumulative effect of change in accounting principle.


The following discloses the fair value of the
swap agreements recorded during 2001:

|                                             |  |        |       | 
|-------------------------------------------- |  | ------ | ----- | 
|                                             |  | ($000)
|                                             |  |       
|Fair value as of January 1, 2001             |  | $      | 1,787 | 
|Change in fair value  interest rate changes |  | $      | 5,181 | 
|                                             |  |        |       | 
|Fair value as of December 31, 2001           |  | $      | 6,968 | 
|                                             |  |        |       | 

In January 1999, we issued our 14% senior
discount notes, and in March 2000 and July 2000, we issued our
11% senior notes. In addition, on December 4, 2001 we
issued 12.5% senior notes in a private placement. While
fluctuations in interest rates may affect the fair value of
these notes, interest expense will not be affected due to the
fixed interest rate of these notes.

We do not intend to use financial instruments for
trading or other speculative purposes, nor do we intend to be a
party to any leveraged derivative instrument. The use of
derivative financial instruments is monitored through regular
communication with senior management. We 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 we have other
financial relationships. We do not anticipate nonperformance by
these counterparties.

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Item 8.     Financial
Statements and Supplementary Data

NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND

FINANCIAL STATEMENT SCHEDULES


|                                                                                                                 |                                                 |      |    |    | 
|---------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ---- | -- | -- | 
|                                                                                                                 |                                                 | Page
|                                                                                                                 |                                                 |     
|Report of Independent Public Accountants                                                                         |                                                 |      | 54 |   
|Consolidated Balance Sheets as of
	December 31, 2000 and 2001                                                    |                                                 |      | 55 |   
|Consolidated Statement of Operations for the
	Years Ended December 31, 1999, 2000 and 2001                       |                                                 |      | 56 |   
|Consolidated Statement of Changes in
	Stockholders Equity for the Years Ended December 31,
	1999, 2000 and 2001 |                                                 |      | 57 |   
|Consolidated Statements of Cash Flows for the
	Years Ended December 31, 1999, 2000 and 2001                      |                                                 |      | 59 |   
|Notes to the Consolidated Financial Statements                                                                   |                                                 |      | 60 |   
|Financial Statement Schedule                                                                                     |                                                 |      |    |   
|                                                                                                                 | Schedule II, Valuation and Qualifying
	Accounts |      |    | 84 | 

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REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To Nextel Partners, Inc.:

We have audited the accompanying consolidated
balance sheets of Nextel Partners, Inc. (a Delaware corporation)
and subsidiaries as of December 31, 2001 and 2000 and the
related consolidated statements of operations, changes in
stockholders equity and cash flows for each of the three
years in the period ended December 31, 2001. These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial
position of Nextel Partners, Inc. and subsidiaries as of
December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States.

As explained in Note 2 to the financial
statements, effective January 1, 2001, the Company changed
its method of accounting for derivative instruments and hedging
activities, and effective January 1, 2000, the Company
changed its method of accounting for equipment revenues,
activation fees and related costs.



| |                        
| | -----------------------
| | /s/ ARTHUR ANDERSEN LLP

Seattle, Washington

January 25, 2002


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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |          |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | --------- | ------------ | ------- | - | --------- | -------- | ------- | 
|                                                                                                                                                            |                                                                                                                                                   | December 31,                       |           | December 31,
|                                                                                                                                                            |                                                                                                                                                   | 2000                               |           | 2001        
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |             
|                                                                                                                                                            |                                                                                                                                                   |                                   
|                                                                                                                                                            |                                                                                                                                                   | (Dollars in thousands)            
|ASSETS                                                                                                                                                     
|CURRENT ASSETS                                                                                                                                              |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            | Cash and cash equivalents                                                                                                                         |                                    | $         | 493,552      |         |   | $         | 304,359  |        
|                                                                                                                                                            | Short-term investments                                                                                                                            |                                    |           | 434,794      |         |   |           | 252,926  |        
|                                                                                                                                                            | Accounts receivable, net of allowance $1,398 and
	$4,068, respectively                                                                            |                                    |           | 34,912       |         |   |           | 85,129   |        
|                                                                                                                                                            | Subscriber equipment inventory                                                                                                                    |                                    |           | 3,146        |         |   |           | 7,115    |        
|                                                                                                                                                            | Other current assets                                                                                                                              |                                    |           | 17,522       |         |   |           | 9,540    |        
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total current assets                                                                                                                                        |                                                                                                                                                   |                                    | 983,926   |              |         |   | 659,069   |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|PROPERTY, PLANT AND EQUIPMENT, at cost                                                                                                                      |                                                                                                                                                   |                                    | 583,956   |              |         |   | 968,268   |         
|                                                                                                                                                            | Less  accumulated depreciation                                                                                                                   |                                    |           | (51,254      | )       |   |           | (122,334 | )      
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            |                                                                                                                                                   | Property, plant and equipment, net |           |              | 532,702 |   |           |          | 845,934 | 
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|OTHER NON-CURRENT ASSETS:                                                                                                                                   |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            | FCC operating licenses, net of accumulated
	amortization of $3,608 and $8,744, respectively                                                       |                                    |           | 245,295      |         |   |           | 283,728  |        
|                                                                                                                                                            | Debt issuance costs, net of accumulated
	amortization of $5,376 and $9,061, respectively, and other assets                                        |                                    |           | 28,961       |         |   |           | 30,790   |        
|                                                                                                                                                            | Receivable from officer                                                                                                                           |                                    |           | 2,200        |         |   |           | 2,200    |        
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total non-current assets                                                                                                                                    |                                                                                                                                                   |                                    | 276,456   |              |         |   | 316,718   |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|TOTAL ASSETS                                                                                                                                                |                                                                                                                                                   | $                                  | 1,793,084 |              |         | $ | 1,821,721 |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|LIABILITIES AND STOCKHOLDERS
	EQUITY                                                                                                                      
|CURRENT LIABILITIES                                                                                                                                         |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            | Accounts payable                                                                                                                                  |                                    | $         | 78,805       |         |   | $         | 71,009   |        
|                                                                                                                                                            | Accrued expenses                                                                                                                                  |                                    |           | 39,518       |         |   |           | 54,016   |        
|                                                                                                                                                            | Due to Nextel WIP                                                                                                                                 |                                    |           | 2,100        |         |   |           | 2,947    |        
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total current liabilities                                                                                                                                   |                                                                                                                                                   |                                    | 120,423   |              |         |   | 127,972   |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|LONG-TERM OBLIGATIONS                                                                                                                                       |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            | Credit facility  term B and C                                                                                                                    |                                    |           | 325,000      |         |   |           | 325,000  |        
|                                                                                                                                                            | 14% Senior discount notes due 2009                                                                                                                |                                    |           | 342,684      |         |   |           | 392,337  |        
|                                                                                                                                                            | 12.5% Senior notes due 2009                                                                                                                       |                                    |           |             |         |   |           | 210,492  |        
|                                                                                                                                                            | 11% Senior notes due 2010                                                                                                                         |                                    |           | 400,000      |         |   |           | 400,000  |        
|                                                                                                                                                            | Other long-term liabilities                                                                                                                       |                                    |           | 7,245        |         |   |           | 15,395   |        
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total long-term obligations                                                                                                                                 |                                                                                                                                                   |                                    | 1,074,929 |              |         |   | 1,343,224 |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total liabilities                                                                                                                                           |                                                                                                                                                   |                                    | 1,195,352 |              |         |   | 1,471,196 |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|COMMITMENTS AND CONTINGENCIES (See Note 8)                                                                                                                  |                                                                                                                                                   |                                    |           |              |         |   |           |         
|REDEEMABLE PREFERRED STOCK, Series B
	redeemable 2010, par value $.001 per share, 12% cumulative
	annual dividend; 13,110,000 shares issued and outstanding |                                                                                                                                                   |                                    | 27,517    |              |         |   | 31,021    |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|STOCKHOLDERS EQUITY                                                                                                                                        |                                                                                                                                                   |                                    |           |              |         |   |           |         
|                                                                                                                                                            | Preferred stock, 100 million shares
	authorized but 0 is outstanding                                                                              |                                    |           |             |         |   |           |         |        
|                                                                                                                                                            | Common stock, Class A, par value $.001 per
	share, 165,015,002 and 165,562,642 shares, respectively, issued
	and outstanding, and paid-in capital |                                    |           | 864,706      |         |   |           | 865,807  |        
|                                                                                                                                                            | Common stock, Class B, par value $.001 per
	share convertible, 79,056,228 shares issued and outstanding, and
	paid-in capital                     |                                    |           | 163,312      |         |   |           | 163,312  |        
|                                                                                                                                                            | Accumulated deficit                                                                                                                               |                                    |           | (405,773     | )       |   |           | (697,010 | )      
|                                                                                                                                                            | Subscriptions receivable from stockholders                                                                                                        |                                    |           | (7,411       | )       |   |           |         |        
|                                                                                                                                                            | Deferred compensation                                                                                                                             |                                    |           | (44,619      | )       |   |           | (12,605  | )      
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|Total stockholders equity                                                                                                                                  |                                                                                                                                                   |                                    | 570,215   |              |         |   | 319,504   |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                  |                                                                                                                                                   | $                                  | 1,793,084 |              |         | $ | 1,821,721 |         
|                                                                                                                                                            |                                                                                                                                                   |                                    |           |              |         |   |           |         

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

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |             |         | 
|-------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | -------- | --------- | ------- | ---- | -------- | ----------- | ------- | - | -------- | ----------- | ------- | 
|                                                                           |                                                                                                                                                                |                                            
|                                                                           |                                                                                                                                                                | For the Years Ended                        
|                                                                           |                                                                                                                                                                | December 31,                               
|                                                                           |                                                                                                                                                                |                                            
|                                                                           |                                                                                                                                                                | 1999                                        |          | 2000      |         | 2001
|                                                                           |                                                                                                                                                                |                                             |          |           |         |     
|                                                                           |                                                                                                                                                                |                                            
|                                                                           |                                                                                                                                                                | (Dollars in thousands, except for share and
|                                                                           |                                                                                                                                                                | per share amounts)                         
|REVENUES:                                                                  |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           | Service revenues (Received from Nextel WIP
	$8,536, $24,685 and $58,087, respectively)                                                                         |                                             | $        | 28,136    |         |      | $        | 130,125     |         |   | $        | 363,573     |        
|                                                                           | Equipment revenues                                                                                                                                             |                                             |          | 4,584     |         |      |          | 5,745       |         |   |          | 13,791      |        
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           |                                                                                                                                                                | Total revenues                              |          |           | 32,720  |      |          |             | 135,870 |   |          |             | 377,364 | 
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|OPERATING EXPENSES:                                                        |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           | Cost of service revenues (Paid to Nextel WIP
	$4,922, $20,506 and $58,403, respectively)                                                                       |                                             |          | 18,807    |         |      |          | 84,962      |         |   |          | 192,728     |        
|                                                                           | Cost of equipment revenues                                                                                                                                     |                                             |          | 10,742    |         |      |          | 26,685      |         |   |          | 59,202      |        
|                                                                           | Selling, general and administrative (exclusive of
	stock based compensation expense shown below) (Paid to Nextel
	WIP $2,831, $3,419 and $4,500, respectively) |                                             |          | 34,862    |         |      |          | 117,975     |         |   |          | 210,310     |        
|                                                                           | Stock based compensation                                                                                                                                       |                                             |          | 27,256    |         |      |          | 70,144      |         |   |          | 30,956      |        
|                                                                           | Depreciation and amortization                                                                                                                                  |                                             |          | 12,689    |         |      |          | 38,044      |         |   |          | 76,491      |        
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           |                                                                                                                                                                | Total operating expenses                    |          |           | 104,356 |      |          |             | 337,810 |   |          |             | 569,687 | 
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|LOSS FROM OPERATIONS                                                       |                                                                                                                                                                |                                             | (71,636  | )         |         |      | (201,940 | )           |         |   | (192,323 | )          
|                                                                           | Other  Loss from disposal of assets                                                                                                                           |                                             |          |           |         |      |          | (228        | )       |   |          |             |        
|                                                                           | Interest expense, net                                                                                                                                          |                                             |          | (65,362   | )       |      |          | (102,619    | )       |   |          | (126,096    | )      
|                                                                           | Interest income                                                                                                                                                |                                             |          | 24,585    |         |      |          | 63,132      |         |   |          | 32,473      |        
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|LOSS BEFORE INCOME TAX PROVISION                                           |                                                                                                                                                                |                                             | (112,413 | )         |         |      | (241,655 | )           |         |   | (285,946 | )          
|                                                                           | Income tax provision                                                                                                                                           |                                             |          |          |         |      |          |            |         |   |          |            |        
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
	EFFECT OF ACCOUNTING CHANGE |                                                                                                                                                                |                                             | (112,413 | )         |         |      | (241,655 | )           |         |   | (285,946 | )          
|                                                                           | Extraordinary item  loss on early
	retirement of debt, net of $0 income tax                                                                                   |                                             |          |          |         |      |          | (23,485     | )       |   |          |            |        
|                                                                           | Cumulative effect of change in accounting
	principle, net of $0 income tax                                                                                     |                                             |          |          |         |      |          |            |         |   |          | (1,787      | )      
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|NET LOSS                                                                   |                                                                                                                                                                |                                             | (112,413 | )         |         |      | (265,140 | )           |         |   | (287,733 | )          
|                                                                           | Mandatorily redeemable preferred stock dividends                                                                                                               |                                             |          |          |         |      |          | (5,667      | )       |   |          | (3,504      | )      
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                                   |                                                                                                                                                                | $                                           | (112,413 | )         |         | $    | (270,807 | )           |         | $ | (291,237 | )          
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|LOSS PER SHARE ATTRIBUTABLE TO COMMON
	STOCKHOLDERS, BASIC AND DILUTED:    |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           | Loss before extraordinary item and cumulative
	accounting change                                                                                               |                                             | $        | (38.18    | )       |      | $        | (1.21       | )       |   | $        | (1.19       | )      
|                                                                           | Extraordinary item                                                                                                                                             |                                             | $        |          |         |      | $        | (0.12       | )       |   | $        |            |        
|                                                                           | Cumulative effect of accounting change                                                                                                                         |                                             | $        |          |         |      | $        |            |         |   | $        | (0.01       | )      
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           | Net Loss per share attributable to common
	stockholders                                                                                                        |                                             | $        | (38.18    | )       |      | $        | (1.33       | )       |   | $        | (1.20       | )      
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            
|                                                                           | Weighted average number of shares outstanding                                                                                                                  |                                             |          | 2,944,218 |         |      |          | 203,783,474 |         |   |          | 242,472,070 |        
|                                                                           |                                                                                                                                                                |                                             |          |           |         |      |          |             |         |   |          |            

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

56



---



##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY

For the Years Ended December 31, 1999,
2000, and 2001


|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |         |   | 
|------- | ----------------------------------------------------------------- | --------------------------------------------- |  | ---------------- | - | ---------------- | - | ------- | - | ------ |  | ----------- | ------- |  | - | ------- | ----- |  |  | ---------- | - |  | - | ------- | - | 
|        |                                                                   |                                               |  |                  |   |                  |   |        
|        |                                                                   |                                               |  |                  |   | Class A          |   | Class B
|        |                                                                   |                                               |  | Common Stock and |   | Common Stock and
|        |                                                                   | Preferred Stock                               |  | Paid-In Capital  |   | Paid-In Capital 
|        |                                                                   |                                               |  |                  |   |                 
|        |                                                                   | Shares                                        |  | Amount           |   | Shares           |   | Amount  |   | Shares |  | Amount     
|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |            
|        |                                                                   |                                              
|        |                                                                   | (Dollars in thousands)                       
|BALANCE |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|        | December 31, 1998                                                 |                                               |  |                 |   |                  | $ |        |   |        |  | 9,533,328   |         |  | $ | 1,604   |       |  |  |           |   |  | $ |        |  
|        | Issuance of common stock                                          |                                               |  |                 |   |                  |   |        |   |        |  | 60,000      |         |  |   | 61      |       |  |  |           |   |  |   |        |  
|        | Issuance of Series A preferred stock                              |                                               |  | 125,834,646      |   |                  |   | 21      |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Issuance of warrants                                              |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Subscriptions receivable from stockholders                        |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Proceeds from stockholders                                        |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Reclass of other paid-in capital to Preferred
	Series B, C, and D |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Issuance of Series B preferred stock                              |                                               |  | 13,110,000       |   |                  |   | 2       |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Issuance of Series C preferred stock                              |                                               |  | 64,672,626       |   |                  |   | 11      |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Issuance of Series D preferred stock                              |                                               |  | 13,110,000       |   |                  |   | 2       |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Return of capital to Nextel WIP                                   |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Deferred compensation                                             |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   | 143,755 |       |  |  |           |   |  |   |        |  
|        | Vesting of deferred compensation                                  |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Net loss                                                          |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Equity issuance costs                                             |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Motorola credit                                                   |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|BALANCE |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|        | December 31, 1999                                                 |                                               |  | 216,727,272      |   |                  |   | 36      |   |        |  | 9,593,328   |         |  |   | 145,420 |       |  |  |           |   |  |   |        |  
|        | Initial public offering conversion to common stock                |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |         |  
|        | Series A preferred stock                                          |                                               |  | (125,834,646     | ) |                  |   | (21     | ) |        |  | 125,834,646 |         |  |   | 208,163 |       |  |  |           |   |  |   |        |  
|        | Series C preferred stock                                          |                                               |  | (64,672,626      | ) |                  |   | (11     | ) |        |  |            |         |  |   |        |       |  |  | 64,672,626 |   |  |   | 110,742 |  
|        | Series D preferred stock                                          |                                               |  | (13,110,000      | ) |                  |   | (2      | ) |        |  |            |         |  |   |        |       |  |  | 13,110,000 |   |  |   | 22,266  |  
|        | Series B preferred stock reclassed                                |                                               |  | (13,110,000      | ) |                  |   | (2      | ) |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Series B redeemable preferred stock dividend                      |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Initial public offering stock issued                              |                                               |  |                 |   |                  |   |        |   |        |  | 27,025,000  |         |  |   | 540,500 |       |  |  |           |   |  |   |        |  
|        | Net loss                                                          |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Equity issuance costs                                             |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   | (31,223 | )     |  |  |           |   |  |   | (5,957  | )
|        | Deferred compensation  options
	forfeited                        |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   | (2,938  | )     |  |  |           |   |  |   |        |  
|        | Vesting of deferred compensation                                  |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Subscription receivable from stockholders                         |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Warrants exercised by stockholders                                |                                               |  |                 |   |                  |   |        |   |        |  | 2,434,260   |         |  |   | 3,851   |       |  |  |           |   |  |   |        |  
|        | Class B common stock issued                                       |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  | 1,273,602  |   |  |   | 36,261  |  
|        |                                                                   | Stock options exercised                       |  |                  |  |                  |   |         |  |        |  |             | 85,000  |  |   |         | 142   |  |  |            |  |  |   |         |  | 
|        |                                                                   | Stock issued for employee stock purchase plan |  |                  |  |                  |   |         |  |        |  |             | 42,768  |  |   |         | 791   |  |  |            |  |  |   |         |  | 
|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|BALANCE |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|        | December 31, 2000                                                 |                                               |  |                 |   |                  |   |        |   |        |  | 165,015,002 |         |  |   | 864,706 |       |  |  | 79,056,228 |   |  |   | 163,312 |  
|        | Series B redeemable preferred stock dividend                      |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Net loss                                                          |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Deferred compensation  options
	forfeited                        |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   | (1,058  | )     |  |  |           |   |  |   |        |  
|        | Vesting of deferred compensation                                  |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        | Subscription receivable from stockholders                         |                                               |  |                 |   |                  |   |        |   |        |  |            |         |  |   |        |       |  |  |           |   |  |   |        |  
|        |                                                                   | Stock options exercised                       |  |                  |  |                  |   |         |  |        |  |             | 322,375 |  |   |         | 561   |  |  |            |  |  |   |         |  | 
|        |                                                                   | Stock issued for employee stock purchase plan |  |                  |  |                  |   |         |  |        |  |             | 225,265 |  |   |         | 1,598 |  |  |            |  |  |   |         |  | 
|BALANCE |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        
|        | December 31, 2001                                                 |                                               |  |                 |   |                  | $ |        |   |        |  | 165,562,642 |         |  | $ | 865,807 |       |  |  | 79,056,228 |   |  | $ | 163,312 |  
|        |                                                                   |                                               |  |                  |   |                  |   |         |   |        |  |             |         |  |   |         |       |  |  |            |   |  |   |        

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

57



---



##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY  (Continued)

For the Years Ended December 31, 1999,
2000, and 2001


|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |          |       | 
|------- | ----------------------------------------------------------------- | --------------------------------------------- | - | ------- | - | ----------- | - | ------------- | - | ------------ | - | -------- | - |  | - | -------- | - |  | - | -------- | - |  | - | -------- | ----- | 
|        |                                                                   |                                               |   | Other   |   |             |   |               |   |              |   |         
|        |                                                                   | Warrants                                      |   | Paid-In |   | Accumulated |   | Subscriptions |   | Deferred     |   |         
|        |                                                                   | Outstanding                                   |   | Capital |   | Deficit     |   | Receivable    |   | Compensation |   | Totals  
|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |         
|        |                                                                   |                                              
|        |                                                                   | (Dollars in thousands)                       
|BALANCE |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|        | December 31, 1998                                                 |                                               | $ |        |   |             | $ | 260,761       |   |              | $ | (22,553  | ) |  | $ |         |   |  | $ | (1,141   | ) |  | $ | 238,671  |      
|        | Issuance of common stock                                          |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | (61      | ) |  |   |         |      
|        | Issuance of Series A preferred stock                              |                                               |   |        |   |             |   | 208,142       |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 208,163  |      
|        | Issuance of warrants                                              |                                               |   | 3,847   |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 3,847    |      
|        | Subscriptions receivable from stockholders                        |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   | (157,203 | ) |  |   |         |   |  |   | (157,203 | )    
|        | Proceeds from stockholders                                        |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   | 52,145   |   |  |   |         |   |  |   | 52,145   |      
|        | Reclass of other paid-in capital to Preferred
	Series B, C, and D |                                               |   |        |   |             |   | (133,180      | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   | (133,180 | )    
|        | Issuance of Series B preferred stock                              |                                               |   |        |   |             |   | 21,848        |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 21,850   |      
|        | Issuance of Series C preferred stock                              |                                               |   |        |   |             |   | 110,731       |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 110,742  |      
|        | Issuance of Series D preferred stock                              |                                               |   |        |   |             |   | 22,264        |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 22,266   |      
|        | Return of capital to Nextel WIP                                   |                                               |   |        |   |             |   | (130,900      | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   | (130,900 | )    
|        | Deferred compensation                                             |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | (143,755 | ) |  |   |         |      
|        | Vesting of deferred compensation                                  |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | 27,256   |   |  |   | 27,256   |      
|        | Net loss                                                          |                                               |   |        |   |             |   |              |   |              |   | (112,413 | ) |  |   |         |   |  |   |         |   |  |   | (112,413 | )    
|        | Equity issuance costs                                             |                                               |   |        |   |             |   | (2,638        | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   | (2,638   | )    
|        | Motorola credit                                                   |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   | 22,010   |   |  |   |          |   |  |   | 22,010   |      
|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|BALANCE |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|        | December 31, 1999                                                 |                                               |   | 3,847   |   |             |   | 357,028       |   |              |   | (134,966 | ) |  |   | (83,048  | ) |  |   | (117,701 | ) |  |   | 170,616  |      
|        | Initial public offering conversion to common stock                |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |          |      
|        | Series A preferred stock                                          |                                               |   |        |   |             |   | (208,142      | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   |         |      
|        | Series C preferred stock                                          |                                               |   |        |   |             |   | (110,731      | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   |         |      
|        | Series D preferred stock                                          |                                               |   |        |   |             |   | (22,264       | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   |         |      
|        | Series B preferred stock reclassed                                |                                               |   |        |   |             |   | (21,848       | ) |              |   |         |   |  |   |         |   |  |   |         |   |  |   | (21,850  | )    
|        | Series B redeemable preferred stock dividend                      |                                               |   |        |   |             |   |              |   |              |   | (5,667   | ) |  |   |         |   |  |   |         |   |  |   | (5,667   | )    
|        | Initial public offering stock issued                              |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 540,500  |      
|        | Net loss                                                          |                                               |   |        |   |             |   |              |   |              |   | (265,140 | ) |  |   |         |   |  |   |         |   |  |   | (265,140 | )    
|        | Equity issuance costs                                             |                                               |   |        |   |             |   | 5,957         |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | (31,223  | )    
|        | Deferred compensation  options
	forfeited                        |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | 2,938    |   |  |   |         |      
|        | Vesting of deferred compensation                                  |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | 70,144   |   |  |   | 70,144   |      
|        | Subscription receivable from stockholders                         |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   | 75,637   |   |  |   |         |   |  |   | 75,637   |      
|        | Warrants exercised by stockholders                                |                                               |   | (3,847  | ) |             |   |              |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 4        |      
|        | Class B common stock issued                                       |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   |         |   |  |   | 36,261   |      
|        |                                                                   | Stock options exercised                       |   |         |  |             |   |               |  |              |   |          |  |  |   |          |  |  |   |          |  |  |   |          | 142   | 
|        |                                                                   | Stock issued for employee stock purchase plan |   |         |  |             |   |               |  |              |   |          |  |  |   |          |  |  |   |          |  |  |   |          | 791   | 
|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|BALANCE |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|        | December 31, 2000                                                 |                                               |   |        |   |             |   |              |   |              |   | (405,773 | ) |  |   | (7,411   | ) |  |   | (44,619  | ) |  |   | 570,215  |      
|        | Series B redeemable preferred stock dividend                      |                                               |   |        |   |             |   |              |   |              |   | (3,504   | ) |  |   |         |   |  |   |         |   |  |   | (3,504   | )    
|        | Net loss                                                          |                                               |   |        |   |             |   |              |   |              |   | (287,733 | ) |  |   |         |   |  |   |         |   |  |   | (287,733 | )    
|        | Deferred compensation  options
	forfeited                        |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | 1,058    |   |  |   |         |      
|        | Vesting of deferred compensation                                  |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   |         |   |  |   | 30,956   |   |  |   | 30,956   |      
|        | Subscription receivable from stockholders                         |                                               |   |        |   |             |   |              |   |              |   |         |   |  |   | 7,411    |   |  |   |         |   |  |   | 7,411    |      
|        |                                                                   | Stock options exercised                       |   |         |  |             |   |               |  |              |   |          |  |  |   |          |  |  |   |          |  |  |   |          | 561   | 
|        |                                                                   | Stock issued for employee stock purchase plan |   |         |  |             |   |               |  |              |   |          |  |  |   |          |  |  |   |          |  |  |   |          | 1,598 | 
|BALANCE |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         
|        | December 31, 2001                                                 |                                               | $ |        |   |             | $ |              |   |              | $ | (697,010 | ) |  | $ |         |   |  | $ | (12,605  | ) |  | $ | 319,504  |      
|        |                                                                   |                                               |   |         |   |             |   |               |   |              |   |          |   |  |   |          |   |  |   |          |   |  |   |         

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

58



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##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |          |          |         |  
|----------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------------- | -------- | -------- | ------ | ------- | -------- | -------- | ------- | -------- | -------- | -------- | ------- | -
|                                                      |                                                                             |                                                     
|                                                      |                                                                             | For the Years Ended December 31,                    
|                                                      |                                                                             |                                                     
|                                                      |                                                                             | 1999                                                 |                                                           | 2000     |          | 2001  
|                                                      |                                                                             |                                                      |                                                           |          |          |       
|                                                      |                                                                             |                                                     
|                                                      |                                                                             | (Dollars in thousands)                              
|CASH FLOWS FROM OPERATING
	ACTIVITIES:                |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Net loss                                                                    |                                                      | $                                                         | (112,413 | )        |        | $       | (265,140 | )        |         | $        | (287,733 | )       
|                                                      | Adjustments to reconcile net loss to net cash
	used in operating activities |                                                      |                                                           |          |          |        |         |          |          |         |          |          |         
|                                                      |                                                                             | Depreciation and amortization                        |                                                           |          | 12,689   |        |         |          | 38,044   |         |          |          | 76,491   |        
|                                                      |                                                                             | Amortization of debt issuance costs                  |                                                           |          | 2,122    |        |         |          | 3,259    |         |          |          | 3,683    |        
|                                                      |                                                                             | Interest accretion for senior discount notes         |                                                           |          | 44,496   |        |         |          | 43,128   |         |          |          | 44,852   |        
|                                                      |                                                                             | Bond discount amortization                           |                                                           |          |         |        |         |          |         |         |          |          | 70       |        
|                                                      |                                                                             | Extraordinary loss on retirement of debt             |                                                           |          |         |        |         |          | 23,485   |         |          |          |         |        
|                                                      |                                                                             | Fair value adjustments of hedges                     |                                                           |          |         |        |         |          |         |         |          |          | 5,181    |        
|                                                      |                                                                             | Cumulative effect of change in accounting
	principle |                                                           |          |         |        |         |          |         |         |          |          | 1,787    |        
|                                                      |                                                                             | Stock based compensation                             |                                                           |          | 27,256   |        |         |          | 70,144   |         |          |          | 30,956   |        
|                                                      |                                                                             | Gain on deferred sale-leaseback                      |                                                           |          | (27      | )      |         |          | (314     | )       |          |          | (605     | )      
|                                                      |                                                                             | Loss on disposal of assets                           |                                                           |          |         |        |         |          | 228      |         |          |          |         |        
|                                                      |                                                                             | Change in current assets and liabilities:            |                                                           |          |          |        |         |          |          |         |          |          |          |        
|                                                      |                                                                             |                                                      | Accounts receivable, net                                  |          |          | (5,626 | )       |          |          | (27,740 | )        |          |          | (50,217 | )
|                                                      |                                                                             |                                                      | Subscriber equipment inventory                            |          |          | (342   | )       |          |          | (1,451  | )        |          |          | (3,969  | )
|                                                      |                                                                             |                                                      | Other current assets                                      |          |          | (8,194 | )       |          |          | (9,114  | )        |          |          | 7,928   |  
|                                                      |                                                                             |                                                      | Accounts payable, accrued expenses and other
	liabilities |          |          | 44,554 |         |          |          | 6,160   |          |          |          | 16,835  |  
|                                                      |                                                                             |                                                      | Operating advances due to/(from) Nextel WIP               |          |          | (4,581 | )       |          |          | 3,283   |          |          |          | 847     |  
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Net cash used in operating activities                                       |                                                      |                                                           | (66      | )        |        |         | (116,028 | )        |         |          | (153,894 | )       
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|CASH FLOWS FROM INVESTING
	ACTIVITIES:                |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Loan to officer                                                             |                                                      |                                                           | (2,200   | )        |        |         |         |          |         |          |         |         
|                                                      | Capital expenditures                                                        |                                                      |                                                           | (155,220 | )        |        |         | (318,377 | )        |         |          | (389,875 | )       
|                                                      | Change in capital expenditure related accruals                              |                                                      |                                                           | 33,875   |          |        |         | 53,864   |          |         |          | (8,736   | )       
|                                                      | Proceeds from sale of assets                                                |                                                      |                                                           | 2,246    |          |        |         | 9,259    |          |         |          | 10,425   |         
|                                                      | FCC licenses                                                                |                                                      |                                                           | (2,850   | )        |        |         | (54,152  | )        |         |          | (43,506  | )       
|                                                      | Sale (purchase) of short-term investments                                   |                                                      |                                                           | (239,456 | )        |        |         | (195,338 | )        |         |          | 181,868  |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      |                                                                             | Net cash used in investing activities                |                                                           |          | (363,605 | )      |         |          | (504,744 | )       |          |          | (249,824 | )      
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|CASH FLOWS FROM FINANCING
	ACTIVITIES:                |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Proceeds from sale of common stock                                          |                                                      |                                                           |         |          |        |         | 540,500  |          |         |          |         |         
|                                                      | Proceeds from borrowings                                                    |                                                      |                                                           | 731,376  |          |        |         | 400,000  |          |         |          | 210,422  |         
|                                                      | Payment to redeem 14% senior discount notes                                 |                                                      |                                                           |         |          |        |         | (191,233 | )        |         |          |         |         
|                                                      | Exercise of warrants                                                        |                                                      |                                                           |         |          |        |         | 4        |          |         |          |         |         
|                                                      | Stock Options Exercised                                                     |                                                      |                                                           |         |          |        |         | 142      |          |         |          | 561      |         
|                                                      | Proceeds from stock issued for employee stock
	purchase plan                |                                                      |                                                           |         |          |        |         | 791      |          |         |          | 1,598    |         
|                                                      | Restricted cash transfer                                                    |                                                      |                                                           | (175,000 | )        |        |         | 175,000  |          |         |          |         |         
|                                                      | Proceeds from equity contributions                                          |                                                      |                                                           | 119,740  |          |        |         | 75,637   |          |         |          | 7,411    |         
|                                                      | Return of capital to Nextel WIP                                             |                                                      |                                                           | (130,900 | )        |        |         |         |          |         |          |         |         
|                                                      | Equity costs                                                                |                                                      |                                                           | (2,638   | )        |        |         | (31,223  | )        |         |          |         |         
|                                                      | Debt issuance costs                                                         |                                                      |                                                           | (24,650  | )        |        |         | (9,567   | )        |         |          | (5,467   | )       
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      |                                                                             | Net cash provided by financing activities            |                                                           |          | 517,928  |        |         |          | 960,051  |         |          |          | 214,525  |        
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|NET INCREASE (DECREASE) IN CASH AND CASH
	EQUIVALENTS |                                                                             |                                                      | 154,257                                                   |          |          |        | 339,279 |          |          |         | (189,193 | )       
|CASH AND CASH EQUIVALENTS, beginning of
	year         |                                                                             |                                                      | 16                                                        |          |          |        | 154,273 |          |          |         | 493,552  |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|CASH AND CASH EQUIVALENTS, end of
	year               |                                                                             | $                                                    | 154,273                                                   |          |          | $      | 493,552 |          |          | $       | 304,359  |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|SUPPLEMENTAL DISCLOSURE OF NON-CASH
	TRANSACTIONS     |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Contribution of FCC licenses from Nextel
	Communications, Inc.              |                                                      | $                                                         | 8,884    |          |        | $       | 36,261   |          |         | $        |         |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Equipment purchased from Motorolas equity
	contribution credit             |                                                      | $                                                         | 22,010   |          |        | $       |         |          |         | $        |         |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Capitalized interest on accretion of senior
	discount notes                 |                                                      | $                                                         | 9,612    |          |        | $       | 6,820    |          |         | $        | 4,801    |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|                                                      | Accretion of redeemable preferred stock dividends                           |                                                      | $                                                         |         |          |        | $       | 5,667    |          |         | $        | 3,504    |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         
|CASH PAID FOR INTEREST, net of capitalized
	amount    |                                                                             | $                                                    | 17,302                                                    |          |          | $      | 43,176  |          |          | $       | 70,138   |         
|                                                      |                                                                             |                                                      |                                                           |          |          |        |         |          |          |         |          |         

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

59



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##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

December 31, 1999, 2000 and
2001


1.     Formation,
Capitalization and Basis of Presentation



| |          
| | ---------
| | Formation

We were 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, our activities were solely focused on
this objective. These activities were funded by Nextel
Communications, Inc. and its subsidiaries (Nextel)
through Nextel WIP Corp. (Nextel WIP), an indirect
wholly owned subsidiary of 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. Our only common stock issuance of the 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 later in
Note 1, which is referred to as the Nextel Carve-Out. The
unincorporated operations of the Nextel Carve-Out constitute our
business and were contributed to us in the Capitalization
Transactions.



| |                                     
| | ------------------------------------
| | Initial Capitalization
	Transactions

On January 29, 1999, Nextel WIP contributed
the Nextel Carve-Out to us in exchange for 13,110,000 shares of
Series B preferred stock, 52,440,000 shares of
Series C preferred stock, 13,110,000 shares of
Series D preferred stock and cash of $130.9 million.
Simultaneously, we 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 104,879,826 shares of
Series A preferred stock (valued at $170.9 million)
and warrants to purchase 2,434,260 shares of Class A common
stock for an exercise price of $.00167 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.

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 us, Nextel filed for
approval with the FCC to transfer to us all the rights to the
use of and benefits of these licenses. The FCC granted approval
to transfer ownership of the Initial Capitalization Transaction
licenses on January 21, 2000 from Nextel WIP to us.



| |                                                           
| | ----------------------------------------------------------
| | Expansion and Option Territory
	Capitalization Transaction

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
WIP 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, we issued 5,330,142 shares of
Series C preferred stock to Nextel WIP 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. On March 20, 2000 the FCC granted
approval to transfer ownership of the Expansion Territory
licenses from Nextel WIP to us. Upon receipt of FCC approval,
the Frequency Management Agreement expired. We also issued
Series A and C preferred stock for equity contributions of
$50 million. The issuance of Series A preferred stock
consisted of 20,954,820 shares (valued at $37.2 million)
and Series C preferred stock of 6,902,484 shares (valued at
$12.8 million). The equity securities were issued in
exchange for cash of

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##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$15.5 million, an irrevocable cash equity
commitment of $31.0 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. As of December 31, 1999, we had used the vendor
credit from both the Initial and Expansion Territory
Capitalization Transactions in its entirety.

On September 27, 2000, OPCO entered into an
expansion territory asset transfer and reimbursement agreement
with Nextel WIP to acquire for approximately $3.4 million
certain assets, properties, rights and interests to be used in
connection with the construction and operation of additional
territories (the Option Territory). As part of this
expansion, we issued to Nextel WIP 1,273,602 shares of
Class B common stock having an aggregate value of
$36.3 million in exchange for the contribution of certain
licenses and an extension of an operating agreement governing
the build-out of the Nextel Digital Mobile Network in the new
expansion territory.



| |                                                     
| | ----------------------------------------------------
| | Initial Public Offering Capitalization
	Transactions

In December 1999, our Board of Directors
authorized the filing of a registration statement with the
Securities and Exchange Commission (the SEC) that
would permit us to sell shares of our common stock in connection
with a proposed initial public offering (IPO). On
January 27, 2000 we filed a registration statement with the
SEC to sell 27,025,000 shares of Class A common stock,
which became effective February 22, 2000. With the
consummation of the IPO on February 25, 2000, all the
outstanding shares of our Series A preferred stock
automatically converted into 125,834,646 shares of Class A
common stock and all the outstanding Companys
Series C and D preferred stock automatically converted into
77,782,626 shares of Class B common stock. In addition, the
Series B redeemable preferred stock held by Nextel WIP
became subject to mandatory cash redemption 375 days after
February 1, 2009. The Series B preferred stock, plus
accrued dividends, was reclassified from stockholders
equity to the section of the balance sheet between liabilities
and stockholders equity. Simultaneously, an adjustment was
made to the accumulated deficit representing the 12% dividend
accrued from the time of issuance to the closing date of the IPO.

The following summarizes the number of shares and
dollar amount issued as part of the Initial, Expansion, IPO and
Option Capitalization Transactions described above.

|                                                                                             |  |        |             |                |  |   |          |  
|-------------------------------------------------------------------------------------------- |  | ------ | ----------- | -------------- |  | - | -------- | -
|                                                                                             |  | Shares |             | Equity        
|                                                                                             |  | Issued |             | Contributions 
|                                                                                             |  |        |             |               
|                                                                                             |  |        |             | (In thousands)
|Common-Class A (Series A preferred
	stock converted)                                         |  |        | 125,834,646 |                |  | $ | 208,163  |  
|Common-Class A (IPO  public
	shareholders)                                                  |  |        | 27,025,000  |                |  | $ | 540,500  |  
|Common-Class B (Series C preferred
	stock converted)                                         |  |        | 64,672,626  |                |  | $ | 110,742  |  
|Common-Class B (Series D preferred
	stock converted)                                         |  |        | 13,110,000  |                |  | $ | 22,266   |  
|Common-Class B (Option Territory 
	September 27, 2000)                                      |  |        | 1,273,602   |                |  | $ | 36,261   |  
|Subscriptions Receivable (Initial Transaction)                                               |  |        |            |                |  | $ | (157,203 | )
|Warrants to purchase Class A common shares
	issued for a purchase price of $.00167 per share |  |        | 2,434,260   |                |  | $ | 3,847    |  

Approximately $34 million of issuance costs
were charged to equity as part of the Capitalization
Transactions.



| |                   
| | ------------------
| | Warrants Exercised

On May 2 and June 5, 2000, two of our
stockholders exercised their warrants that totaled 1,245,822 and
1,188,438 shares, respectively, to purchase the same number of
Class A common shares for a purchase price of $.00167 per
share. As of December 31, 2000 all outstanding warrants had
been exercised.

61



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##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                         
| | ------------------------
| | Subscriptions Receivable

During 1999, 2000 and 2001 stockholders
contributed $74.2 million, $75.6 million, and
$7.4 million, respectively, related to commitments and
pre-funding of commitments. As of December 31, 2001, all
irrevocable commitments from our current stockholders to
contribute additional capital have been fulfilled.



| |                      
| | ---------------------
| | 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 our liabilities, (3) a
$130.9 million distribution to Nextel WIP, 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 WIPs historical cost basis for
all periods presented. These accounts include Nextel WIP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 us through the Frequency Management
Agreement in exchange for the issuance of preferred stock to
Nextel WIP 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 our
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
our accounts prior to the Capitalization Transactions, as Nextel
WIP funded our operations and were incurred for the benefit of
the Nextel Carve-Out, and we had no substance apart from the
Nextel Carve-Out.

The accompanying financial statements also
reflect the acquisition of the Expansion Territory for
$10.6 million from Nextel WIP and related Capitalization
Transactions on September 9, 1999, the Initial Public
Offering Capital Transactions consummated on February 25,
2000, and the acquisition of the Option Territory for
$3.4 million from Nextel WIP and related Capitalization
Transactions on September 27, 2000.

2.     Operations and
Significant Accounting Policies



| |                        
| | -----------------------
| | Description of Business

We provide a wide array of digital wireless
communications services throughout the United States, primarily
to business users, utilizing frequencies licensed by the FCC.
Our operations are primarily conducted by OPCO, our wholly owned
subsidiary. Substantially all of our assets, liabilities,
operating losses and cash flows are within OPCO and our wholly
owned subsidiaries.

Our digital network (Nextel 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). Our principal business
objective is to offer high-capacity, high-quality, advanced
communication services in our territories throughout the United
States targeted towards mid-sized and tertiary markets. Various
operating agreements entered into by our subsidiaries and Nextel
WIP (see Note 11) provide for support services to be provided by
Nextel WIP, as required.



| |                      
| | ---------------------
| | Concentration of Risk

We believe that the geographic and industry
diversity of our customer base minimizes the risk of incurring
material losses due to concentration of credit risk.

We are a party to certain equipment purchase
agreements with Motorola (see Note 11). For the foreseeable
future we expect that we will need to rely on Motorola for the
manufacture of a substantial portion

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

of the infrastructure equipment necessary to
construct and make operational our digital mobile network as
well as for the provision of digital mobile telephone handsets
and accessories.

As previously discussed, we are reliant on Nextel
WIP for the provision of certain services. For the foreseeable
future, we will need to rely on Nextel WIP for the provision of
these services, as we will not have the infrastructure to
support those services.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.



| |                            
| | ---------------------------
| | Principles of Consolidation

The consolidated financial statements include the
accounts of us and our wholly owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation.



| |                   
| | ------------------
| | Net Loss per Share

In accordance with SFAS No. 128,
Computation of Earnings Per Share, basic earnings
per share is computed by dividing loss attributable to common
stockholders by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share
is computed by dividing loss attributable to common stockholders
by the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Common
equivalent shares consist of shares of common stock issuable
upon the conversion of the convertible preferred stock (using
the if-converted method) and shares issuable upon the exercise
of stock options and warrants (using the treasury stock method).
As presented, basic and diluted loss per share are equal since
common equivalent shares are excluded from the calculation of
diluted earnings per share as their effects are antidilutive due
to our net losses. We have not had any issuances or grants for
nominal consideration as defined under Staff Accounting Bulletin
98. For the years ended December 31, 1999, 2000, and 2001,
approximately 4.9 million, 4.9 million and
1.9 million shares of restricted stock, respectively, and
8.5 million and 11.6 million stock options for 2000
and 2001, respectively, were excluded from the calculation of
common equivalent shares, as their effects are antidilutive.

The basic and diluted net loss per share for the
years ended December 31, 2000 and 2001 is computed based on
the weighted average number of shares. The weighted average
number of shares for the year ended December 31, 2000 does
not represent a complete reporting period since the IPO was
consummated on February 25, 2000. In addition, net loss
attributable to common stockholders increased by the amount of
the accrued dividend on the Series B redeemable preferred
stock.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash equivalents include time deposits and highly
liquid investments with remaining maturities of three months or
less at the time of purchase.



| |                       
| | ----------------------
| | 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

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

paper, which we hold to maturity. We have
designated these securities as held-to-maturity securities and
they are valued on our balance sheet at amortized cost.
Short-term investments consist of the following:

|                             |  |                |         |      |  |   |         | 
|---------------------------- |  | -------------- | ------- | ---- |  | - | ------- | 
|                             |  |               
|                             |  | December 31,  
|                             |  |               
|                             |  | 2000           |         | 2001
|                             |  |                |         |     
|                             |  |               
|                             |  | (In thousands)
|Commercial Paper             |  | $              | 356,342 |      |  | $ | 33,744  | 
|U.S. Treasuries              |  |                | 78,452  |      |  |   | 219,182 | 
|                             |  |                |         |      |  |   |         | 
|Total Short-Term Investments |  | $              | 434,794 |      |  | $ | 252,926 | 
|                             |  |                |         |      |  |   |         | 

The contractual maturities for the commercial
paper were an average of approximately six and five months
during 2000 and 2001, respectively. For the U.S. Treasuries,
contractual maturities were an average of six and eleven months
during 2000 and 2001, respectively.



| |                                
| | -------------------------------
| | Subscriber Equipment
	Inventory

Subscriber equipment is valued at the lower of
cost or market. Cost for the telephone equipment is determined
by the first-in, first-out method. Cost for related accessories
is determined by the weighted average method. Telephone costs in
excess of the revenue generated from telephone sales, or
telephone subsidies, are expensed at the point of sale. We do
not recognize the expected telephone subsidy prior to the point
of sale due to the fact that we expect to recover the telephone
subsidy through service revenues and the marketing decision to
sell the telephone at less than cost is confirmed at the point
of sale.



| |                              
| | -----------------------------
| | Property, Plant and Equipment

Property, plant and equipment, including
improvements that extend useful lives, are recorded at cost,
while maintenance and repairs are charged to operations as
incurred. Depreciation and amortization are computed using the
straight-line method based on estimated useful lives of up to
31 years for cell site shelters, three to ten years for
equipment and three to seven years for furniture and fixtures.
Leasehold improvements are amortized over the shorter of the
respective lives of the leases or the useful lives of the
improvements.

Construction in progress includes labor,
materials, transmission and related equipment, engineering, site
design, interest and other costs relating to the construction
and development of our digital mobile network. Assets under
construction are not depreciated until placed into service.



| |                            
| | ---------------------------
| | Sale-Leaseback Transactions

On October 13, 1999, we signed a Letter of
Agreement by and among Nextel and some of its subsidiaries and
Spectrasite Holdings, Inc. and some of its subsidiaries to
transfer specified telecommunication towers and related assets
to Spectrasite for cash. Subsequently, we leased space on the
telecommunication towers from Spectrasite pursuant to a master
lease agreement. During 1999, 2000 and 2001 we received cash
proceeds of approximately $2.2 million, $9.3 million
and $10.4 million, respectively, for the assets sold to
Spectrasite and other such companies. These sale-leaseback
transactions are accounted for as real estate lease agreements
and normal sales-leasebacks. Any gain recognized on the sale of
assets is deferred and amortized in cost of service revenues
over the life of the lease. During 1999, 2000, and 2001 we
amortized $27,000, $314,000, and $605,000, respectively, related
to the net gain on sales of these assets.



| |                     
| | --------------------
| | Capitalized Interest

Our wireless communications systems and FCC
operating licenses represent qualifying assets pursuant to SFAS
No. 34, Capitalization of Interest Cost. We
capitalized interest of approximately $13.7 million during
1999, $15.7 million during 2000 and $12.5 million
during 2001.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |             
| | ------------
| | FCC Licenses

FCC operating licenses are recorded at historical
cost and are amortized using the straight-line method based on
estimated useful lives of 40 years. Our FCC licenses and
the requirements to maintain the licenses are similar to other
licenses granted by the FCC, including Personal Communications
Services (PCS) and cellular licenses in that they
are subject to renewal after the initial 10-year term.
Historically, the renewal process associated with these FCC
licenses has been perfunctory. The accounting for these licenses
has historically not been constrained by the renewal and
operational requirements. Amortization begins with the
commencement of service to customers in a particular market.
Amortization expense of approximately $518,000,
$2.9 million, and $5.1 million was recorded for the
years ended December 31, 1999, 2000 and 2001, respectively.

During 1999, 2000, and 2001 we acquired
approximately $8.9 million, $91.2 million and
$44.0 million of FCC licenses, respectively, excluding
capitalized interest of $2.8 million, $3.4 million,
and $2.3 million, respectively. Of the total amount
acquired during these years, Nextel WIP contributed FCC licenses
of $8.9 million in 1999 as part of the Expansion Territory
transaction and $36.3 million in 2000 as part of the Option
Territory transaction in exchange for Class B common stock.
The remaining $50.8 million for 2000 were payments made to
acquire FCC licenses through separate cash deals or auctions
plus payments accrued for $4.1 million.



| |                  
| | -----------------
| | Long-Lived Assets

Our long-lived assets consist principally of
property, plant and equipment and FCC licenses. It is our policy
to assess impairment of long-lived assets pursuant with
SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of. This
includes determining if certain factors have occurred, including
significant decreases in the market value of certain assets,
significant changes in the manner in which an asset is used,
significant changes in the legal climate or business climate
that could affect the value of an asset, or current period or
continuing operating or cash flow losses or projections that
demonstrate continuing losses associated with certain assets
used for the purpose of producing revenue. Thus far, we believe
none of these factors have occurred.



| |                              
| | -----------------------------
| | Interest Rate Risk Management

We use derivative financial instruments
consisting of interest rate swap and interest rate protection
agreements in the management of our interest rate exposures. In
April 1999 and 2000, we entered into an interest rate swap
agreement for $60 million and $50 million,
respectively, to partially hedge interest rate exposure with
respect to our $325 million term loans. This interest rate
swap agreement has the effect of converting certain of our
variable rate obligations to fixed or other variable rate
obligations. Prior to the adoption of SFAS 133, amounts
paid or received under the interest rate swap agreement were
accrued as interest rates change and recognized over the life of
the swap agreement as an adjustment to interest expense. As of
December 31, 2000, the fair value of the swap agreements
were not recognized in the consolidated financial statements,
since the swap agreements met the criteria for hedge accounting
prior to adoption of SFAS 133.

On January 1, 2001, we adopted SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS 133), as amended
by SFAS No. 138. These statements establish accounting and
reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other
contracts) be recorded on the balance sheet as either an asset
or liability measured at fair value. The statements require that
changes in the derivatives fair value be recognized
currently in earnings unless specific hedge accounting criteria
are met. If hedge accounting criteria are met, the changes in a
derivatives fair value (for a cash flow hedge) are
deferred in stockholders equity as a component of
comprehensive income. These deferred gains and losses are
recognized as income in the period in which the hedge item and
hedging instrument are

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

settled. The ineffective portions of hedge
returns are recognized as earnings. In accordance with
SFAS 133, these swap agreements have been designated as
ineffective cash flow hedges. Initial adoption resulted in the
recording of an additional liability of $1.8 million, with
the offset recorded as a cumulative effect of change in
accounting principle. The hedges are included in other long-term
liabilities on the balance sheet. For the year ended
December 31, 2001, we recorded a non-cash, non-operating
charge of $5.2 million related to the market value of
interest rate swap agreements which has been reflected in
interest expense, and $1.8 million which has been reflected
as a cumulative effect of change in accounting principle.

We will not use financial instruments for trading
or other speculative purposes, nor will we be a party to any
leveraged derivative instrument. The use of derivative financial
instruments is monitored through regular communication with
senior management. We 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 we has other financial relationships. We
do not anticipate nonperformance by these counterparties.



| |                    
| | -------------------
| | Revenue Recognition

Revenue net of customer discounts and rebates is
recognized for airtime and other services over the period
earned. Certain of our digital equipment sales are made through
independent distributors under agreements allowing rights of
return on merchandise unsold by the distributors.

In December 1999, the Securities and Exchange
Commission issued Staff Accounting Bulletin 101
(SAB 101), Revenue Recognition in Financial
Statements, effective January 1, 2000, which gives
guidance on the conditions that must be met before revenue is
recognized. During December 2000 we changed our revenue
recognition policy for activation fees (included in service
revenues) and equipment (phones) revenues in accordance
with SAB 101. Under this new policy, our activation fees
and phone revenues are deferred and recognized over three years,
the expected life of the customer relationship. The decision to
defer these revenues is based on the conclusion that the service
contract and the phone revenue are multiple element arrangements
or earnings processes that should not be separated. In other
words, the service contract is essential to the functionality of
the phone. Concurrently, the related costs for the phone
equipment are deferred to the extent of deferred revenues,
resulting in no change to loss from operations or net loss. The
direct and incremental phone costs in excess of revenues
generated from phone sales are expensed immediately as the
amounts exceed our minimum contractual revenue. In 2000 and 2001
we recognized $1.1 million and $1.1 million,
respectively, of equipment revenues that were initially deferred
on January 1, 2000.

The following table shows the reported results
for 1999 and the pro forma as if SAB 101 had been in effect for
1999.

|                     |                            |                |         |           |        |   |         |        |        | 
|-------------------- | -------------------------- | -------------- | ------- | --------- | ------ | - | ------- | ------ | ------ | 
|                     |                            |               
|                     |                            | For the Year  
|                     |                            | Ended         
|                     |                            | December 31,  
|                     |                            | 1999          
|                     |                            |               
|                     |                            | Reported       |         | Pro Forma
|                     |                            |                |         |          
|Revenues:            |                            |                |         |           |        |   |         |       
|                     | Service revenues           |                | $       | 28,136    |        |   | $       | 28,066 |       
|                     | Equipment revenues         |                |         | 4,584     |        |   |         | 1,676  |       
|                     |                            |                |         |           |        |   |         |       
|                     |                            | Total revenues |         | $         | 32,720 |   |         | $      | 29,742 | 
|                     |                            |                |         |           |        |   |         |       
|Operating expenses:  |                            |                |         |           |        |   |         |       
|                     | Cost of equipment revenues |                | $       | 10,742    |        |   | $       | 7,764  |       
|                     |                            |                |         |           |        |   |         |       
|Loss from Operations |                            | $              | (71,636 | )         |        | $ | (71,636 | )     
|                     |                            |                |         |           |        |   |         |       

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                  
| | -----------------
| | Advertising Costs

Costs related to advertising and other
promotional expenditures are expensed as incurred. Advertising
costs totaled approximately $3.0 million,
$15.2 million and $25.7 million for the years ended
December 31, 1999, 2000 and 2001, respectively.



| |                    
| | -------------------
| | Debt Issuance Costs

In relation to the issuance of long-term debt
discussed in Note 5, we incurred a cumulative total of
$24.6 million, $34.2 million and $39.6 million in
deferred financing costs as of December 31, 1999, 2000 and
2001, respectively. These debt issuance costs will be amortized
over the terms of the underlying obligation using the effective
interest rate method. For the years ended December 31,
1999, 2000 and 2001, $2.1 million, $3.3 million and
$3.7 million of debt issuance costs, respectively, were
amortized and included in interest expense.



| |                         
| | ------------------------
| | Stock Based Compensation

As allowed by SFAS No. 123, Accounting
for Stock Based Compensation (SFAS 123),
we have chosen to account for compensation cost associated with
our stock compensation plans in accordance with APB Opinion
No. 25, Accounting for Stock Issued to
Employees, and related interpretations, and comply with
the disclosure provisions of SFAS 123. For the year ended
December 31, 1999, compensation expense under SFAS 123
and APB Opinion No. 25 was substantially identical.



| |             
| | ------------
| | Income Taxes

Deferred tax assets and liabilities are
determined based on the temporary differences between the
financial reporting and tax bases of assets and liabilities
applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse. Future tax
benefits, such as net operating loss carryforwards, are
recognized to the extent that realization of such benefits is
considered to be more likely than not.



| |                  
| | -----------------
| | Segment Reporting

SFAS 131 requires companies to disclose certain
information about operating segments. Based on the criteria
within SFAS 131, we have determined that we have one
reportable segment, wireless services.



| |                  
| | -----------------
| | Reclassifications

Certain amounts in prior years financial
statements have been reclassified to conform to the current year
presentation.



| |                                           
| | ------------------------------------------
| | Recently Issued Accounting
	Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 141 Business
Combinations and SFAS No. 142 Goodwill and
Other Intangible Assets. SFAS No. 141 requires
business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting and
broadens the criteria for recording intangible assets separate
from goodwill. Recorded goodwill and intangibles will be
evaluated against this new criteria and may result in certain
intangibles being subsumed into goodwill, or alternatively,
amounts initially recorded as goodwill may be separately
identified and recognized apart from goodwill. SFAS No. 142
requires the use of a non-amortization approach to account for
purchased goodwill and certain intangibles. Under a
non-amortization approach, goodwill and certain intangibles will
not be amortized into results of operations, but instead would
be reviewed for impairment and written down and charged to
results of operations only in the periods in which the recorded
value of goodwill and certain

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

intangibles exceeds fair value. We are in the
process of evaluating the financial statement impact of the
adoption of SFAS Nos. 141 and 142 and assessing whether FCC
licenses are determined to have indefinite lives. If FCC
licenses are in fact determined to have indefinite lives, we
will no longer amortize these licenses and be required to
perform an asset impairment analysis.

In June 2001, the Financial Accounting Standards
Board issued SFAS No. 143, Accounting for Asset
Retirement Obligations (effective for us on
January 1, 2003). This Statement addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated
asset retirement costs. We are in the process of evaluating the
financial statement impact of the adoption of SFAS No. 143.

In August 2001, the Financial Accounting
Standards Board issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets (effective
for us as of January 1, 2002). This Statement supersedes
FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of and APB Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. We are in
the process of evaluating the financial statement impact of the
adoption of SFAS No. 144.

3.     Property and
Equipment

|                                                  |  |                |         |      |  |   |          |  
|------------------------------------------------- |  | -------------- | ------- | ---- |  | - | -------- | -
|                                                  |  |               
|                                                  |  | December 31,  
|                                                  |  |               
|                                                  |  | 2000           |         | 2001
|                                                  |  |                |         |     
|                                                  |  |               
|                                                  |  | (In thousands)
|Building and improvements                         |  | $              | 2,774   |      |  | $ | 3,983    |  
|Equipment                                         |  |                | 443,043 |      |  |   | 807,730  |  
|Furniture and fixtures                            |  |                | 21,641  |      |  |   | 34,571   |  
|Less  accumulated depreciation and
	amortization |  |                | (51,254 | )    |  |   | (122,334 | )
|                                                  |  |                |         |      |  |   |          |  
|Subtotal                                          |  |                | 416,204 |      |  |   | 723,950  |  
|Construction in progress                          |  |                | 116,498 |      |  |   | 121,984  |  
|                                                  |  |                |         |      |  |   |          |  
|Total property and equipment                      |  | $              | 532,702 |      |  | $ | 845,934  |  
|                                                  |  |                |         |      |  |   |          |  

4.     Accrued
Expenses

|                                 |  |                |        |      |  |   |        | 
|-------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                                 |  |               
|                                 |  | December 31,  
|                                 |  |               
|                                 |  | 2000           |        | 2001
|                                 |  |                |        |     
|                                 |  |               
|                                 |  | (In thousands)
|Accrued interest                 |  | $              | 14,498 |      |  | $ | 16,668 | 
|Accrued payroll and related      |  |                | 9,843  |      |  |   | 22,744 | 
|Accrued network and interconnect |  |                | 6,450  |      |  |   | 4,968  | 
|Other accrued expenses           |  |                | 8,727  |      |  |   | 9,636  | 
|                                 |  |                |        |      |  |   |        | 
|Total accrued liabilities        |  | $              | 39,518 |      |  | $ | 54,016 | 
|                                 |  |                |        |      |  |   |        | 

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

5.     Long-Term
Debt

|                                                                                                                                                                                          |                      |                |         |           |  |   |         |           | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | -------------- | ------- | --------- |  | - | ------- | --------- | 
|                                                                                                                                                                                          |                      |               
|                                                                                                                                                                                          |                      | December 31,  
|                                                                                                                                                                                          |                      |               
|                                                                                                                                                                                          |                      | 2000           |         | 2001     
|                                                                                                                                                                                          |                      |                |         |          
|                                                                                                                                                                                          |                      |               
|                                                                                                                                                                                          |                      | (In thousands)
|12.5% Senior Notes due November 15, 2009,
	net of $14.5 million discount at December 31, 2001.                                                                                            |                      | $              |        |           |  | $ | 210,492 |          
|14% Senior Redeemable Discount Notes due 2009,
	net of unamortized discount of $177.3 million at
	December 31, 2000 and $127.7 million at
	December 31, 2001.                             |                      |                | 342,684 |           |  |   | 392,337 |          
|11% Senior Notes due 2010, interest payable
	semiannually in cash and in arrears                                                                                                          |                      |                | 400,000 |           |  |   | 400,000 |          
|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 |           |  |   | 175,000 |          
|Bank Credit Facility  Term C Loan, interest
	at Companys option, calculated on Administrative
	Agents alternate base rate or reserve adjusted LIBOR                                    |                      |                | 150,000 |           |  |   | 150,000 |          
|                                                                                                                                                                                          |                      |                |         |           |  |   |         |          
|                                                                                                                                                                                          | Total long-term debt |                | $       | 1,067,684 |  |   | $       | 1,327,829 | 
|                                                                                                                                                                                          |                      |                |         |           |  |   |         |          



| |                   
| | ------------------
| | 12.5% Senior Notes

On December 4, 2001 we issued
$225 million in aggregate principal amount 12.5% Senior
Notes due 2009 (the 2001 Notes) in a private
placement. The 2001 Notes were issued at a discount in which we
received gross proceeds of $210.4 million and net proceeds
of approximately $205.4 million. The discount on the 2001
Notes will be amortized over the term of the debt. Interest will
accrue for the 2001 Notes at the rate of 12.5% per annum,
payable semiannually in cash on May 15 and November 15
of each year, and commencing on May 15, 2002.

The 2001 Notes represent senior unsecured
obligations, and rank equally in right of payment to our entire
existing and future senior unsecured indebtedness and senior in
right of payment to all our existing and future subordinated
indebtedness. The 2001 Notes are effectively subordinated to
(i) all our secured obligations, 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 2001 Notes contain certain covenants that
limit, among other things, our ability 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 all of our assets,
(iv) create liens on assets, and (v) enter into
certain transactions with affiliates or related persons. As of
December 31, 2001, we were in compliance with applicable
covenants.

The 2001 Notes are redeemable at our option, in
whole or in part, any time on or after November 15, 2005 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 November 15, 2004, we
may, on one or more occasions, redeem up to 35% of the aggregate
principal amount of the 2001 Notes issued at a redemption price
equal to 112.5% of the principal amount of the notes redeemed,
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 2001 Notes
originally issued remains outstanding immediately after the
occurrence of such redemption; and that the redemption occurs
within 60 days of such sale.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                      
| | -------------------------------------
| | 14% Senior Redeemable Discount
	Notes

On January 29, 1999, we completed the
issuance of Senior Redeemable Discount Notes due 2009 (the
1999 Notes). The aggregate accreted value of the
1999 Notes was to 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. On April 18, 2000 we redeemed 35% of the
1999 Notes for approximately $191.2 million, net of an
extraordinary loss of approximately $23.5 million for early
retirement of debt. The redemption was made with some of the
proceeds we received from our initial public offering of
Class A common stock. The remaining aggregate accreted
value of the 1999 Notes will increase at a rate of 14%,
compounded semi-annually to a final accreted value equal to a
principal amount at maturity of $520 million. Thereafter,
the 1999 Notes bear interest at a rate of 14% per annum payable
semi-annually in arrears.

The 1999 Notes represent our senior unsecured
obligations, and rank equally in right of payment to our entire
existing and future senior unsecured indebtedness and senior in
right of payment to all our existing and future subordinated
indebtedness. The 1999 Notes are effectively subordinated to
(i) all our secured obligations, 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 1999 Notes contain certain covenants that
limit, among other things, our ability 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 all of our assets,
(iv) create liens on assets, and (v) enter into
certain transactions with affiliates or related persons. As of
December 31, 2001, we were in compliance with applicable
covenants.

The 1999 Notes are redeemable at the our option,
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.



| |                 
| | ----------------
| | 11% Senior Notes

On March 10, 2000 we issued
$200 million in aggregate principal amount 11% Senior Notes
due 2010, and on July 27, 2000 issued an additional
$200 million of 11% Senior Notes, each in a private
placement (the 2000 Notes). We exchanged the 2000
Notes issued in March and July for registered notes having the
same financial terms and covenants. Interest will accrue for the
2000 Notes at the rate of 11% per annum, payable semiannually in
cash in arrears on March 15 and September 15 of each
year, and commenced on September 15, 2000.

The 2000 Notes represent our senior unsecured
obligations, and rank equally in right of payment to our entire
existing and future senior unsecured indebtedness and senior in
right of payment to all our existing and future subordinated
indebtedness. The 2000 Notes are effectively subordinated to (i)
all our secured obligations, 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 2000 Notes contain certain covenants that
limit, among other things, our ability 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 all of our assets,
(iv) create liens on assets and (v) enter into certain
transactions with affiliates or related persons. As of
December 31, 2001, we were in compliance with all of our
required covenants.

The 2000 Notes are redeemable at the our option,
in whole or in part, any time on or after March 15, 2005 in
cash at the redemption price on that date, plus accrued and
unpaid interest and liquidated damages if

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

any, at the date of liquidation. In addition,
prior to March 15, 2003, we may on one or more occasions
redeem up to 35% of the aggregate principal amount at maturity
of the 2000 Notes originally issued at a redemption price equal
to 111% of the principal amount of the notes redeemed, 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 2000 Notes originally issued
remain outstanding immediately after the occurrence of such
redemption.



| |                     
| | --------------------
| | Bank Credit Facility

On January 29, 1999, we, 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, we, 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 certain of the Lenders an
additional term loan commitment (Term C Loan)
in the maximum aggregate principal amount of $150 million.
The Term C Loan facility has a maturity of nine years.

The Term B and Term C Loans bear interest, at the
our option, 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 of the higher of 0.5%
per annum above the latest federal funds rate or the prime 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.

We pay 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 is 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 our
portion of the Nextel 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 our excess cash flow (as
defined), (iv) with 50% of the net cash proceeds from the
issuance of equity at any time after the fifth anniversary of
the credit facility, and (v) with 100% of net casualty
proceeds, subject to certain exceptions.

Our 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 our subsidiaries including a
pledge of the capital stock of all our subsidiaries. We and our
subsidiaries guarantee the obligations of OPCO under the
Term B and C Loans. Such guarantee will only be recourse to
our pledge of all of the outstanding capital stock of our
subsidiaries to secure our obligations under the Term B and
C Loans.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Term B and C Loans contain covenants and
restrictions on our ability 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 us 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
December 31, 2001, we were in compliance with all of our
required covenants.



| |                                     
| | ------------------------------------
| | Future Maturities of Long-Term
	Debt

Based on the debt issued on January 29,
1999, September 9, 1999, March 10, 2000, July 27,
2000 and December 4, 2001, as discussed above, the
scheduled annual maturities of long-term debt outstanding as of
December 31, 2001, under existing long-term debt agreements
are as follows (in thousands):

|                            |  |   |           |  
|--------------------------- |  | - | --------- | -
|2002                        |  | $ |          |  
|2003                        |  |   | 1,688     |  
|2004                        |  |   | 3,250     |  
|2005                        |  |   | 3,250     |  
|2006                        |  |   | 3,250     |  
|Thereafter                  |  |   | 1,458,562 |  
|                            |  |   |           |  
|                            |  |   | 1,470,000 |  
|Less  unamortized discount |  |   | (142,171  | )
|                            |  |   |           |  
|                            |  | $ | 1,327,829 |  
|                            |  |   |           |  

6.     Fair Value of
Financial Instruments

Fair value estimates, assumptions, and methods
used to estimate the fair value of our financial instruments are
made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. We used
quoted market prices to derive our estimates for the
12.5% Notes, the 14% Senior Notes and the
11% Notes. For the redeemable preferred stock, fair values
were estimated using a discounted cash flow analysis.

|                |                            |                                  |   |            |  |          |   |            |  |  |   |       |  |  |   |       | 
|--------------- | -------------------------- | -------------------------------- | - | ---------- |  | -------- | - | ---------- |  |  | - | ----- |  |  | - | ----- | 
|                |                            |                                 
|                |                            | For the Year Ending December 31,
|                |                            |                                 
|                |                            |                                  |   |           
|                |                            | 2000                             |   | 2001      
|                |                            |                                  |   |           
|                |                            | Carrying                         |   | Estimated  |  | Carrying |   | Estimated 
|                |                            | Amount                           |   | Fair Value |  | Amount   |   | Fair Value
|                |                            |                                  |   |            |  |          |   |           
|                |                            |                                 
|                |                            | (In millions)                   
|Long-term Debt: |                            |                                  |   |            |  |          |   |            |  |  |   |       |  |  |   |      
|                | 12.5% Senior Notes         |                                  | $ |           |  |          | $ |           |  |  | $ | 210.5 |  |  | $ | 200.3 | 
|                | 14% Senior Notes           |                                  | $ | 342.7      |  |          | $ | 374.4      |  |  | $ | 392.3 |  |  | $ | 312.0 | 
|                | 11% Notes                  |                                  | $ | 400.0      |  |          | $ | 400.0      |  |  | $ | 400.0 |  |  | $ | 324.0 | 
|                | Bank term B loan           |                                  | $ | 175.0      |  |          | $ | 175.0      |  |  | $ | 175.0 |  |  | $ | 175.0 | 
|                | Bank term C loan           |                                  | $ | 150.0      |  |          | $ | 150.0      |  |  | $ | 150.0 |  |  | $ | 150.0 | 
|                | Redeemable Preferred Stock |                                  | $ | 27.5       |  |          | $ | 32.5       |  |  | $ | 31.0  |  |  | $ | 36.5  | 

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

7.     Income
Taxes

Deferred tax assets and liabilities consist of
the following (in thousands):

|                              |  |              |          |      |  |   |          |  
|----------------------------- |  | ------------ | -------- | ---- |  | - | -------- | -
|                              |  |             
|                              |  | December 31,
|                              |  |             
|                              |  | 2000         |          | 2001
|                              |  |              |          |     
|Deferred tax assets:          |  |              |          |      |  |   |          |  
|Operating loss carryforwards  |  | $            | 145,233  |      |  | $ | 235,404  |  
|Intangibles                   |  |              | 2,705    |      |  |   |         |  
|Interest                      |  |              |         |      |  |   | 45,598   |  
|Deferred compensation         |  |              | 8,323    |      |  |   | 10,365   |  
|Other                         |  |              | 3,070    |      |  |   | 7,322    |  
|Valuation allowance           |  |              | (120,704 | )    |  |   | (218,298 | )
|                              |  |              |          |      |  |   |          |  
|                              |  |              | 38,627   |      |  |   | 80,391   |  
|Deferred tax liabilities:     |  |              |          |      |  |   |          |  
|Property, plant and equipment |  |              | (38,627  | )    |  |   | (77,329  | )
|Intangibles                   |  |              |         |      |  |   | (3,062   | )
|                              |  |              |          |      |  |   |          |  
|Net deferred tax liability    |  | $            |         |      |  | $ | (80,391  | )
|                              |  |              |          |      |  |   |          |  

At December 31, 2000, we had approximately
$392.5 million of consolidated net operating loss
(NOL) carryforwards for federal income tax purposes
expiring through 2020. At December 31, 2001, we had
approximately $619.4 million of consolidated NOL
carryforwards for federal income tax purposes through 2021,
based on actual tax returns filed through 1999 and actual
estimates prepared for December 31, 2001. At
December 31, 2000 and 2001, we recorded a valuation
allowance of approximately $120.7 million and
$218.3 million, respectively. The increase of approximately
$97.6 million in the valuation allowance between years is
due to available objective evidence that would have created
sufficient uncertainty regarding the realization of the net
deferred tax assets. Such factors primarily would have included
anticipated recurring operating losses resulting from the
development of our business.

The difference between the statutory tax rate of
approximately 38% in 2001 (35% federal and 3% state,
net of federal benefits) and 37% in 2000 (35% federal and
2% state, net of federal benefits) and the tax benefit of
zero disclosed above by us is primarily due to our full
valuation allowance against the net deferred tax assets. Our
ability to utilize the NOL in any given year may be limited by
certain events, including a significant change in ownership
interest.

8.     Commitments
and Contingencies



| |                            
| | ---------------------------
| | Operating Lease Commitments

We lease various cell sites, equipment and office
facilities under operating leases. Leases for cell sites are
typically five years with renewal options. Office facilities and
equipment are leased under agreements with terms ranging from
one month to 20 years. The leases normally provide for the
payment of minimum annual rentals and certain leases include
provisions for renewal options of up to five years.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

For years subsequent to December 31, 2001,
future minimum payments for all operating lease obligations that
have initial noncancellable lease terms exceeding one year are
as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2002       |  | $ | 53,268  | 
|2003       |  |   | 54,868  | 
|2004       |  |   | 49,864  | 
|2005       |  |   | 36,270  | 
|2006       |  |   | 16,673  | 
|Thereafter |  |   | 29,562  | 
|           |  |   |         | 
|           |  | $ | 240,505 | 
|           |  |   |         | 

Total rental expense for the years ended
December 31, 1999, 2000 and 2001 was approximately
$9.7 million, $25.7 million and $48.1 million,
respectively.



| |                   
| | ------------------
| | Regulatory Matters

The FCC issues Specialized Mobile Radio
(SMR) licenses on both a site-specific and wide-area
basis. Each license enables SMR carriers to provide service
either on a site-specific basis, in specific 800 MHz
Economic Areas (EA) or 900 MHz Metropolitan
Trading Areas (MTA) in the United States. Currently,
SMR licenses are issued for a period of 10 years, and are
subject to certain construction and operational requirements.

The FCC granted approval to transfer ownership of
the Initial Capitalization Transaction licenses on
January 21, 2000 from Nextel WIP to us. Pursuant to this
event the cash collateral account (restricted cash) we
established to maintain a balance equal to the amounts
outstanding under the Term B credit facility was made
available.

On March 20, 2000, the FCC granted approval
of the transfer from Nextel WIP to us of ownership of the
Expansion Territory licenses we acquired from Nextel WIP on
September 9, 1999.

In November 2000 the application to transfer
ownership of the Option Territory licenses acquired on
September 27, 2000 from Nextel WIP to us was completed. The
FCC granted approval of our change control application on
March 27, 2001, and on May 18, 2001 the Option
Territory licenses were transferred from Nextel WIP to us.

The FCC has routinely granted license renewals
providing the licensees have complied with applicable rules,
policies and the Communications Act of 1934, as amended. We
believe that we have met and will continue to meet all
requirements necessary to secure the retention and renewal of
our SMR licenses subsequent to the FCC approved transfer of the
licenses from Nextel WIP.



| |                  
| | -----------------
| | Legal Proceedings

On June 8, 2001 a purported class action
lawsuit was filed against Nextel Partners, Inc. as well as
several other wireless carriers and manufacturers of wireless
telephones. The complaint alleges that the defendants, among
other things, manufactured and distributed wireless telephones
that cause adverse health affects. The plaintiffs seek
compensatory damages, reimbursement for certain costs including
reasonable legal fees, punitive damages and injunctive relief.
We dispute the allegations of the complaint, will vigorously
defend against the action, and intend to seek indemnification
from the manufacturers of the wireless telephones if necessary.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

We are subject to other claims and legal actions
that may arise in the ordinary course of business. We do not
believe that any of these other pending claims or legal actions
will have a material effect on our financial position or results
of operations.

9.     Capital Stock
and Stock Rights

Prior to our initial public offering, pursuant to
the Restated Certificate of Incorporation, we had the authority
to issue 1,020 million shares of capital stock, divided
into five classes as follows: (i) 600 million shares
of common stock, par value, $.001 per share;
(ii) 150 million shares of Series A convertible
preferred stock, par value $.001 per share;
(iii) 150 million shares of Series B redeemable
or convertible preferred stock, par value $.001 per share;
(iv) 90 million shares of Series C convertible
preferred stock, stated value $.001 per share; and
(v) 30 million shares of Series D convertible
preferred stock, par value, $.001 per share. The number of
authorized shares described above changed upon the filing of a
Restated Certificate of Incorporation immediately prior to
consummation of the initial public offering on February 25,
2000. Upon this filing we have the authority to issue
713,110,000 shares of capital stock, divided into four classes
as follows: (i) 500 million shares of Class A
common stock, par value $.001 per share;
(ii) 100 million shares of Class B convertible
common stock, par value $.001 per share; (iii) 13,110,000
shares of Series B preferred stock, par value $.001 per
share; and (iv) 100 million shares of other preferred
stock.

The following is a summary description of our
capital stock.



| |             
| | ------------
| | Common Stock

The holders of common stock are entitled to one
vote per share on all matters submitted for action by the
shareholders. There is no provision for cumulative voting with
respect to the election of directors. Holders of common stock
are entitled to share equally, share for share, if dividends are
declared on common stock, whether payable in cash, property or
securities.

Class A Common
Stock Under certain
circumstances, shares of Class A common stock and
securities convertible into Class A common stock (other
than Class B common stock) are callable at the option of
Nextel WIP or may be put to Nextel WIP at the option of the
holders.

Class B Common
Stock Shares of
Class B common stock are convertible at any time at the
option of the holder into an equal number of shares of
Class A common stock upon a transfer by Nextel or Nextel
WIP to a third party who is not a holder of Class B common
stock.

Ranking
With respect to rights on liquidation, dissolution or winding up
the order of preference is as follows:



| |                                              
| | ---------------------------------------------
| | 1.     the Series B
	preferred stock;        
|
| | 2.     the Class A
	and Class B common stock.

The holders of Series B preferred stock do
not have any voting rights other than to approve mergers or
consolidations adverse to the rights of holders of such
securities.

Series A Preferred
Stock Each share of
Series A preferred stock was converted into one share of
Class A common stock upon consummation of the IPO on
February 25, 2000.

Series B Preferred
Stock The Series B
preferred stock is subject to mandatory redemption by us
375 days after February 1, 2009. The price for
redemption will be the liquidation value, which accretes at an
annual rate of 12% from the date of issuance. The Series B
preferred stock is subject to voluntary redemption for cash at
our option at any time at its then current liquidation value.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                
| | ---------------
| | Preferred Stock

Series C Preferred Stock and
Series D Preferred
Stock Each share of
Series C and Series D preferred stock was converted
into one share of Class B common stock upon the
consummation of the IPO on February 25, 2000.



| |                                    
| | -----------------------------------
| | Common Stock Reserved for
	Issuance

As of December 31, 2000 and 2001, we had
reserved common stock for future issuance as detailed below:

|                                         |       |              |           |              |  |  |            |            | 
|---------------------------------------- | ----- | ------------ | --------- | ------------ |  |  | ---------- | ---------- | 
|                                         |       | As of        |           | As of       
|                                         |       | December 31, |           | December 31,
|                                         |       | 2000         |           | 2001        
|                                         |       |              |           |             
|Employee options outstanding             |       |              | 8,485,102 |              |  |  | 11,589,750 |           
|Employee options available for grant     |       |              | 7,975,252 |              |  |  | 4,548,229  |           
|Employee stock purchase plan available   |       |              | 2,957,232 |              |  |  | 2,731,967  |           
|Employee stock purchase plan outstanding |       |              | 42,768    |              |  |  | 268,033    |           
|                                         |       |              |           |              |  |  |            |           
|                                         | Total |              |           | 19,460,354   |  |  |            | 19,137,979 | 
|                                         |       |              |           |              |  |  |            |           

10.     Stock and
Employee Benefit Plans



| |                                
| | -------------------------------
| | Restricted Stock Purchase
	Plan

Pursuant to our Restricted Stock Purchase Plan
(the Plan), in 1998, we issued 8,774,994 shares of
Class A common stock to our senior managers and 758,334
shares of Class A common stock to Eagle River at $.00167
per share. During 1999 an additional 60,000 shares were issued
to our senior management at $.00167 per share. Pursuant to the
original Plan, the shares issued to senior managers vested over
a four-year period based on the passing of time and based on
certain Company performance goals related to revenue, EBITDA as
adjusted and the successful build-out of our network. At the
time of the initial public offering (February 25, 2000),
all vesting provisions related to performance goals were removed
and these shares now vest solely based on the passage of time.
Accordingly, compensation expense for 2000 and thereafter is
fixed and recognized over the remaining vesting period of these
restricted shares. As of December 31, 1999, 2000 and 2001,
4,689,906 shares, 7,686,387 shares and
9,048,558 shares, respectively, were considered fully
vested, including the 758,334 shares issued to Eagle River
which vested immediately upon issuance. Compensation expense
recognized by us, which accounted for the Plan using variable
accounting prior to the initial public offering, for the year
ended December 31, 1999 was approximately
$26.6 million. Compensation expense for 2000 and 2001
accounted for as being fixed was approximately
$45.8 million and $20.9 million, respectively.



| |                   
| | ------------------
| | Stock Option Grant

On January 29, 1999, pursuant to an
employment agreement we entered into with one of our officers,
we issued 210,000 options for our unrestricted Class A
common stock with an exercise price of $1.67 per share which was
more than the estimated fair value at that time ($1.25 per
share). These options vested immediately. The agreement provides
that we will be required to purchase the unexercised options on
the fourth anniversary for an aggregate purchase price of
$500,000 if directed to do so by the officer. Beginning with the
period after January 29, 1999, the date of issuance of
these shares, we recognized compensation expense on a
straight-line basis over the four year life of the put contract
(up to a maximum of $500,000) adjusted for actual exercises, if
any, by the executive.

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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                
| | -------------------------------
| | Nonqualified Stock Option
	Plan

In January 1999, we adopted the Nonqualified
Stock Option Plan (the Plan). Under the Plan, the
Board of Directors may grant nonqualified stock options to
eligible employees at a price equal to the fair market value as
of the date of grant. Options have a term of up to 10 years
and those granted under the Plan during 1999 and 2000 vest over
3 years with  1/3 vesting at the end of each
year. No more than 30% of the number of authorized options will
be granted in any year and no options under this plan may be
granted after January 1, 2003. For the options granted
October 31, 2001, the vesting period was changed to four
years with  1/4 vesting each year on October 31.
Prior to the initial public offering, grants under this plan
were considered compensatory and were accounted for on a basis
similar to stock appreciation rights. At the initial public
offering (February 25, 2000), the intrinsic value of the
outstanding options was recorded and is being amortized over the
remaining vesting periods. We recognized compensation expense
for the years ended December 31, 1999, 2000 and 2001 of
approximately $700,000, $24.3 million and
$10.1 million, respectively.

Subsequent to the initial public offering, there
have been no stock option grants in which the exercise price of
the options has been less than the fair market value at the time
of the grants.

The following table summarizes all stock options
granted, exercised and canceled by us including options issued
outside of the nonqualified stock option plan.

|                               |           |                   |            |                    |   |                |                |                 |  |   |      |       | 
|------------------------------ | --------- | ----------------- | ---------- | ------------------ | - | -------------- | -------------- | --------------- |  | - | ---- | ----- | 
|                               |           |                   |            |                    |   | Weighted      
|                               |           | Number of Options |            |                    |   | Average       
|                               |           | Outstanding       |            | Option Price Range |   | Exercise Price
|                               |           |                   |            |                    |   |               
|Outstanding December 31, 1998  |           |                   |           |                    |   |                |               |                 |  |   |     |      
|                               | Granted   |                   |            | 5,066,400          |   |                |                | $1.67 - $1.85   |  |   | $    | 1.78  | 
|                               | Exercised |                   |            |                   |   |                |                |                |  |   |      |      | 
|                               | Canceled  |                   |            | (16,800            | ) |                |                | $1.67           |  |   | $    | 1.67  | 
|                               |           |                   |            |                    |   |                |                |                 |  |   |      |      
|Outstanding December 31, 1999  |           |                   | 5,049,600  |                    |   |                | $1.67 - $1.85  |                 |  | $ | 1.78 |      
|                               | Granted   |                   |            | 3,974,402          |   |                |                | $14.13 - $29.06 |  |   | $    | 17.02 | 
|                               | Exercised |                   |            | (85,000            | ) |                |                | $1.67           |  |   | $    | 1.67  | 
|                               | Canceled  |                   |            | (453,900           | ) |                |                | $1.67 - $14.13  |  |   | $    | 1.84  | 
|                               |           |                   |            |                    |   |                |                |                 |  |   |      |      
|Outstanding December 31, 2000  |           |                   | 8,485,102  |                    |   |                | $1.67 - $29.06 |                 |  | $ | 8.85 |      
|                               | Granted   |                   |            | 3,915,775          |   |                |                | $4.95 - $19.56  |  |   | $    | 6.23  | 
|                               | Exercised |                   |            | (322,375           | ) |                |                | $1.67 - $1.85   |  |   | $    | 1.77  | 
|                               | Canceled  |                   |            | (488,752           | ) |                |                | $1.85 - $29.06  |  |   | $    | 11.51 | 
|                               |           |                   |            |                    |   |                |                |                 |  |   |      |      
|Outstanding December 31, 2001  |           |                   | 11,589,750 |                    |   |                | $1.67 - $29.06 |                 |  | $ | 8.05 |      
|                               |           |                   |            |                    |   |                |                |                 |  |   |      |      
|Exercisable, December 31, 2001 |           |                   | 3,937,026  |                    |   |                | $1.67 - $29.06 |                 |  | $ | 6.54 |      
|                               |           |                   |            |                    |   |                |                |                 |  |   |      |      

77



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##### Table of Contents



NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table is a summary of the stock
options outstanding at December 31, 2001

|                |  |                     |            |                     |  |                  |           |             |  |                  |       |  |  |  |           |  |  |   |       | 
|--------------- |  | ------------------- | ---------- | ------------------- |  | ---------------- | --------- | ----------- |  | ---------------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |  |                     |            |                    
|                |  | Options Outstanding |            | Options Exercisable
|                |  |                     |            |                    
|Range of        |  | Number              |            | Weighted Average    |  | Weighted Average |           | Number      |  | Weighted Average
|Exercise Prices |  | Outstanding         |            | Remaining Life      |  | Exercise Price   |           | Exercisable |  | Exercise Price  
|                |  |                     |            |                     |  |                  |           |             |  |                 
|$ 1.67 - $ 1.85 |  |                     | 4,070,727  |                     |  |                  | 7.7 years |             |  | $                | 1.78  |  |  |  | 2,708,393 |  |  | $ | 1.78  | 
|$ 4.95 - $10.43 |  |                     | 3,520,775  |                     |  |                  | 9.8 years |             |  | $                | 5.40  |  |  |  |          |  |  |   |      | 
|$11.31 - $15.30 |  |                     | 315,500    |                     |  |                  | 9.3 years |             |  | $                | 13.20 |  |  |  | 16,000    |  |  | $ | 14.24 | 
|$16.13 - $20.87 |  |                     | 3,602,665  |                     |  |                  | 9.0 years |             |  | $                | 16.89 |  |  |  | 1,185,722 |  |  | $ | 16.89 | 
|$22.00 - $29.06 |  |                     | 80,083     |                     |  |                  | 8.7 years |             |  | $                | 24.43 |  |  |  | 26,911    |  |  | $ | 24.47 | 
|                |  |                     |            |                     |  |                  |           |             |  |                  |       |  |  |  |           |  |  |   |       | 
|                |  |                     | 11,589,750 |                     |  |                  | 8.8 years |             |  | $                | 8.05  |  |  |  | 3,937,026 |  |  | $ | 6.54  | 
|                |  |                     |            |                     |  |                  |           |             |  |                  |       |  |  |  |           |  |  |   |       | 

For the year ended December 31, 1999,
compensation expense under SFAS 123 and APB Opinion
No. 25 was substantially identical. At December 31,
2000 and 2001, we accounted for our stock compensation plans
following the guidelines of ABP Opinion No. 25 and related
interpretations. Had compensation cost been determined based
upon the fair value of the awards granted in 2000 and 2001
consistent with the method defined in SFAS 123, our net
loss and basic loss per share would have increased to the pro
forma amounts indicated below:

|                                               |             |                    |       |          |   |   |      |          |  
|---------------------------------------------- | ----------- | ------------------ | ----- | -------- | - | - | ---- | -------- | -
|                                               |             |                   
|                                               |             | For the Year Ended
|                                               |             | December 31,      
|                                               |             |                   
|                                               |             | 2000               |       | 2001    
|                                               |             |                    |       |         
|Net loss                                       |             |                    |       |          |   |   |      |         
|                                               | As reported |                    | $     | (265,140 | ) |   | $    | (287,733 | )
|                                               |             |                    |       |          |   |   |      |         
|                                               | Pro forma   |                    | $     | (270,362 | ) |   | $    | (305,188 | )
|                                               |             |                    |       |          |   |   |      |         
|Basic and diluted loss per share               |             |                    |       |          |   |   |      |         
|                                               | As reported |                    | $     | (1.33    | ) |   | $    | (1.20    | )
|                                               |             |                    |       |          |   |   |      |         
|                                               | Pro forma   |                    | $     | (1.36    | ) |   | $    | (1.27    | )
|                                               |             |                    |       |          |   |   |      |         
|Weighted average fair value of options granted |             | $                  | 11.72 |          |   | $ | 9.63 |         
|                                               |             |                    |       |          |   |   |      |         

The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option-pricing
model as prescribed by SFAS 123 using the following
assumptions:

|                                |  |      |               |      |  |  |               | 
|------------------------------- |  | ---- | ------------- | ---- |  |  | ------------- | 
|                                |  | 2000 |               | 2001
|                                |  |      |               |     
|Expected stock price volatility |  |      | 69.4%         |      |  |  | 69.4%         | 
|Risk-free interest rate         |  |      | 4.57% - 6.66% |      |  |  | 4.57% - 6.66% | 
|Expected life in years          |  |      | 5 years       |      |  |  | 5 years       | 
|Expect dividend yield           |  |      | 0.00%         |      |  |  | 0.00%         | 

The Black-Scholes option-pricing model requires
the input of highly subjective assumptions and does not
necessarily provide a reliable measure of fair value.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the
ESPP) was made effective in April 2000 and provides
for the issuance of up to 3 million shares of Class A
common stock to employees participating in the plan. Eligible
employees may subscribe to purchase shares of Class A
common stock through payroll deductions of up to 10% of eligible
compensation. The purchase price is the lower of 85% of market
value at the beginning or the

78



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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

end of each quarter. The aggregate number of
shares purchased by an employee may not exceed $25,000 of fair
market value annually (subject to limitations imposed by
Section 423 of the Internal Revenue Code.) During 2000 and
2001, employees purchased 42,768 shares and
225,265 shares, respectively, of Class A Common Stock
for an aggregate value of approximately $791,000 and
$1.6 million, respectively.



| |                      
| | ---------------------
| | Employee Benefit Plan

We have a defined contribution plan pursuant to
Section 401(k) of the Internal Revenue Code covering all
eligible officers and employees. For the years ending
December 31, 1999 and 2000, we provided a matching
contribution of $0.50 for every $1.00 contributed by the
employee up to 2% of each employees salary. Mid-year 2001,
we increased the matching contribution to 3% of each
employees salary. Such contributions were approximately
$175,000, $404,000 and $741,000 for the years ended
December 31, 1999, 2000 and 2001, respectively. During the
same years, we had no other pension or post employment benefit
plans.



| |                        
| | -----------------------
| | Officer Note Receivable

On January 29, 1999, we advanced
$2.2 million to one of our officers. The note does not bear
interest and is collateralized by proceeds of the loan and the
restricted stock of the officer and is due on January 29,
2003. The advance was made to the same officer to whom the stock
option grant discussed in the paragraph entitled Stock
Option Grant was made. The advance was a separate
arrangement not related to the stock option grant discussed
above.

11.     Related Party
Transactions

Prior to January 29, 1999, Nextel WIP and
Eagle River funded our operations and accordingly all
transactions were considered to be related party transactions.
We made a return of capital payment to Nextel WIP of
$130.9 million representing the reimbursement of net
operating expenses of $15.1 million and capital
expenditures of $115.8 million incurred by the Nextel
Carve-Out operations prior to January 29, 1999. In order to
fund our operations prior to the Capitalization Transactions,
Nextel WIP and Eagle River advanced us $3.4 million
(as of December 31, 1998) to cover our costs during the
period. These advances did not bear interest and were repaid on
January 29, 1999.



| |                             
| | ----------------------------
| | Motorola Purchase Agreements

Pursuant to the equipment purchase agreements
between us and Motorola, and prior to the Capitalization
Transactions, pursuant to purchase agreements between
Nextel WIP and Motorola, Motorola provided the iDEN
infrastructure and subscriber handset equipment to us throughout
our markets (such equipment purchase agreements, are referred to
herein as the Equipment Purchase Agreements). We
expect to rely on Motorola for the manufacture of a substantial
portion of the equipment necessary to construct our portion of
the Nextel digital mobile network and handset equipment for the
foreseeable future. The Equipment Purchase Agreements govern our
rights and obligations regarding purchases of system
infrastructure equipment manufactured by Motorola and others.

For the years ended December 31, 1999, 2000
and 2001, we purchased approximately $40.7 million,
$154.7 million, and $178.0 million, respectively, of
infrastructure and other equipment, handsets, warranties and
services from Motorola.



| |                             
| | ----------------------------
| | The Joint Venture Agreements

We, OPCO and Nextel WIP entered into a joint
venture agreement (the Joint Venture Agreement)
dated January 29, 1999. The Joint Venture Agreement defined
the relationships, rights and obligations between the parties.
The Roaming Agreement provides that each party pays the others
monthly roaming fees

79



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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 years ended December 31,
1999, 2000 and 2001 we earned approximately $8.5 million,
$24.7 million and $58.1 million, respectively, from
Nextel customers roaming on our system and is included in
service revenues.

During 1999, 2000 and 2001, recorded as part of
cost of service revenues, we paid Nextel WIP
$4.9 million, $20.5 million and $58.4 million,
respectively, for services such as specified telecommunications
switching services, charges for our customers roaming on
Nextels system and other support costs.

Under the Transition Services Agreement, certain
accounting, payroll, customer care, purchasing, human resources
and billing functions are made available to OPCO. During 1999,
2000 and 2001, we were charged approximately $2.4 million,
$2.3 million and $3.0 million, respectively, for these
services. During 2000 the transition services still required
were limited to Nextel telemarketing and customer care,
fulfillment, activations and billing for the national accounts.
Nextel WIP also provided us access to certain back office
and information systems platforms on an ongoing basis. We pay to
Nextel a fee, based on Nextels cost, for these services.
For the years ended December 31, 1999, 2000 and 2001, we
were charged approximately $450,000, $1.1 million, and
$1.5 million, respectively. Both the transition and back
office information services are included in selling, general and
administrative expenses.

Under the Initial, Expansion and Option territory
capitalization transactions, Nextel transferred SMR licenses to
Nextel WIP License Corp., Nextel WIP Expansion Corp.
and Nextel WIP Expansion Two Corp. (All Delaware
corporations and wholly owned subsidiaries of Nextel WIP).
Nextel WIP transferred the stock of Nextel WIP License
Corp. and Nextel WIP Expansion Corp to us and upon approval
of the FCC transferred the stock of Nextel WIP Expansion
Two Corp. At December 31, 2001, approximately
$2.7 million of FCC licenses were reported in
long-term liabilities representing a credit owed to
Nextel WIP for the return of excess licenses.



| |                      
| | ---------------------
| | Business Relationship

In the ordinary course of business, we have
engaged the services of and leased tower space from a company
whose stockholder, president, chief executive officer and
chairman of the board of directors is one of our directors.
During 1999, 2000 and 2001 we paid this Company $805,000,
$6.2 million and $13.2 million for these services and
tower leases, respectively.



| |                                   
| | ----------------------------------
| | DLJ Merchant Banking
	Relationship

Donaldson, Lukfin & Jenrette Securities
Corporation served as an initial purchaser of our senior notes
and senior discount notes and received customary discounts and
commissions in connection with each such offering. Donaldson,
Lukfin & Jenrette Securities Corporation also acted as our
financial advisor and as arranger, and DLJ Capital Funding,
Inc., an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, acted as syndication agent, under our
credit facility, and received customary fees and reimbursements
in connection therewith. DLJ Merchant Banking and certain
related parties, all of which are affiliates of Donaldson,
Lufkin & Jenrette Securities Corporation, own a significant
amount of our equity through their affiliate, Credit Suisse, and
are represented on our Board of Directors. Donaldson, Lufkin
& Jenrette Securities Corporation was a co-lead manager of
the initial public offering of our Class A Common Stock,
and we may from time to time enter into other investment banking
relationships with it or one of our affiliates. The aggregate
amount of all fees paid to the Credit Suisse and the
DLJ Entities in connection with the capitalization
transactions from inception through December 31, 2001 is
approximately $29.9 million.

80



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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                        
| | -----------------------
| | Related Party Ownership

The following chart reflects ownership by major
related party shareholders as of December 31, 2001.

|                                                                              |  |                |                |          |  |          |       |   |  |  |       |  
|----------------------------------------------------------------------------- |  | -------------- | -------------- | -------- |  | -------- | ----- | - |  |  | ----- | -
|Major Shareholder                                                             |  | Class of Stock |                | Voting % |  | Equity %
|                                                                              |  |                |                |          |  |         
|Nextel WIP                                                                    |  |                | Common-Class B |          |  |          | 32.32 | % |  |  | 30.86 | %
|DLJ Merchant Banking Partners II, LP
	and affiliates (DLJ Merchant Banking) |  |                | Common-Class A |          |  |          | 11.66 | % |  |  | 11.14 | %
|Eagle River Investments, LLC                                                  |  |                | Common-Class A |          |  |          | 7.97  | % |  |  | 7.61  | %
|Motorola, Inc.                                                                |  |                | Common-Class A |          |  |          | 5.35  | % |  |  | 5.10  | %

12.     Quarterly
Financial Data (Unaudited)

Selected quarterly consolidated financial
information for the years ended December 31, 2000 and 2001
is as follows (dollar in thousands, except per share amounts):

|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |      |  
|---------------------------------------- | ----------------------------------------------------------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | - | ------- | ---- | - | - | ------- | ---- | -
|                                         |                                                                               | First   |         | Second  |   | Third   |         | Fourth 
|2000                                     |                                                                               | Quarter |         | Quarter |   | Quarter |         | Quarter
|                                         |                                                                               |         |         |         |   |         |         |        
|Total revenues                           |                                                                               | $       | 15,501  |         |   | $       | 26,512  |         |   | $ | 40,504  |      |   | $ | 53,353  |     
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Operating expenses                       |                                                                               | $       | 57,564  |         |   | $       | 76,609  |         |   | $ | 89,645  |      |   | $ | 113,992 |     
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Loss before extraordinary item           |                                                                               | $       | (51,865 | )       |   | $       | (55,814 | )       |   | $ | (58,709 | )    |   | $ | (75,267 | )   
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Extraordinary item                       |                                                                               | $       |        |         |   | $       | (23,485 | )       |   | $ |        |      |   | $ |        |     
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Loss attributable to common stockholders |                                                                               | $       | (55,156 | )       |   | $       | (80,062 | )       |   | $ | (59,503 | )    |   | $ | (76,086 | )   
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Basic and diluted loss per share:        |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|                                         | Loss per share before extraordinary item
	attributable to common stockholders |         | $       | (.55    | ) |         | $       | (.24    | ) |   | $       | (.25 | ) |   | $       | (.32 | )
|                                         | Extraordinary item                                                            |         |         |        |   |         |         | (.10    | ) |   |         |     |   |   |         |     |  
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     
|Loss per share                           |                                                                               | $       | (.55    | )       |   | $       | (.34    | )       |   | $ | (.25    | )    |   | $ | (.32    | )   
|                                         |                                                                               |         |         |         |   |         |         |         |   |   |         |      |   |   |         |     

|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |       |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                 |                                                                            | First   |         | Second  |   | Third   |         | Fourth 
|2001                                                             |                                                                            | Quarter |         | Quarter |   | Quarter |         | Quarter
|                                                                 |                                                                            |         |         |         |   |         |         |        
|Total revenues                                                   |                                                                            | $       | 65,546  |         |   | $       | 85,933  |         |   | $ | 105,125 |       |   | $ | 120,760 |      
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Operating expenses                                               |                                                                            | $       | 110,448 |         |   | $       | 136,762 |         |   | $ | 152,461 |       |   | $ | 170,016 |      
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Loss before cumulative effect of change in
	accounting principle |                                                                            | $       | (63,587 | )       |   | $       | (70,969 | )       |   | $ | (73,212 | )     |   | $ | (78,178 | )    
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Cumulative effect of change in accounting
	principle             |                                                                            | $       | (1,787  | )       |   | $       |        |         |   | $ |        |       |   | $ |        |      
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Loss attributable to common stockholders                         |                                                                            | $       | (66,199 | )       |   | $       | (71,829 | )       |   | $ | (74,108 | )     |   | $ | (79,101 | )    
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Basic and diluted loss per share:                                |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|                                                                 | Loss per share before cumulative effect of change
	in accounting principle |         | $       | (0.26   | ) |         | $       | (0.29   | ) |   | $       | (0.30 | ) |   | $       | (0.33 | )
|                                                                 | Cumulative effect of change in accounting                                  |         |         | (0.01   | ) |         |         |        |   |   |         |      |   |   |         |      |  
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Loss per share                                                   |                                                                            | $       | (0.27   | )       |   | $       | (0.29   | )       |   | $ | (0.30   | )     |   | $ | (0.33   | )    
|                                                                 |                                                                            |         |         |         |   |         |         |         |   |   |         |       |   |   |         |      

81



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NEXTEL PARTNERS, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

13.     Valuation and
Qualifying Accounts

|                             |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |       | 
|---------------------------- | ------------------------------- | -------------- | - | --------- |  | ---------- | - | ---------- |  |  | - | ------ |  |  | - | ----- | 
|                             |                                 | Balance at     |   |           |  |            |   | Balance at
|                             |                                 | Beginning of   |   | Costs and |  |            |   | End of    
|                             |                                 | Period         |   | Expenses  |  | Write-Offs |   | Period    
|                             |                                 |                |   |           |  |            |   |           
|                             |                                 |               
|                             |                                 | (In thousands)
|Year Ended December 31, 1999 |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      
|                             | Allowance for doubtful accounts |                | $ | 254       |  |            | $ | 1,833      |  |  | $ | 894    |  |  | $ | 1,193 | 
|                             |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      
|Year Ended December 31, 2000 |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      
|                             | Allowance for doubtful accounts |                | $ | 1,193     |  |            | $ | 4,521      |  |  | $ | 4,316  |  |  | $ | 1,398 | 
|                             |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      
|Year Ended December 31, 2001 |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      
|                             | Allowance for doubtful accounts |                | $ | 1,398     |  |            | $ | 14,929     |  |  | $ | 12,259 |  |  | $ | 4,068 | 
|                             |                                 |                |   |           |  |            |   |            |  |  |   |        |  |  |   |      

14.     Subsequent
Events (Unaudited)

On February 5, 2002, we closed the
transaction to amend our $150 million credit facility to
provide for an additional $50 million term loan.

In March 2002, we entered into agreements to
purchase additional 800 MHz SMR frequencies covering
portions of the Rio Grande area of Texas, subject to FCC
approval and other standard closing conditions, for aggregate
consideration of approximately $32 million.

82



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##### Table of Contents






Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

For information with respect to our directors,
see our definitive Proxy Statement (Proxy Statement)
for our 2002 Annual Meeting of Shareholders to be held
May 14, 2002 (Annual Meeting), under the
caption Election of Directors, which is incorporated
herein by reference.

The information required in this item regarding
our executive officers is set forth in Part I of this
Form 10-K Annual Report under the heading Executive
Officers of the Registrant, which information is
incorporated herein by reference.

Information regarding compliance with
Section 16(a) of the Securities Exchange Act of 1934 by our
directors and executive officers and holders of ten percent of a
registered class of our equity securities is incorporated in
this item by reference from our Proxy Statement under the
caption Section 16(a) Beneficial Ownership Reporting
Compliance.




Item 11.     Executive
Compensation

The information required by this item regarding
compensation of executive officers and directors is incorporated
herein by reference from the Proxy Statement for our Annual
Meeting, under the captions Election of
Directors  Director Compensation and
Additional Information Relating to Directors and Officers
of the Company  Compensation of Executive
Officers.




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

For information with respect to the security
ownership of directors and executive officers, see the Proxy
Statement for our Annual Meeting, under the caption
Securities Ownership of Certain Beneficial Owners and
Management, which in incorporated herein by reference.




Item 13.     Certain
Relationships and Related Transactions

For information with respect to certain
relationships and related transactions, see the Proxy Statement
for our Annual Meeting under the caption Certain
Relationships and Related Transactions, which is
incorporated herein by reference.

83



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##### Table of Contents






PART IV




Item 14.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K

(a) Financial Statements.

The following Financial Statements are included
in Part II Item 8:

|                                                                                                                  |  |      |    | 
|----------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                  |  | Page
|                                                                                                                  |  |     
|Report of Independent Public Accountants                                                                          |  |      | 54 | 
|Consolidated Balance Sheets as of
	December 31, 2000 and 2001                                                     |  |      | 55 | 
|Consolidated Statement of Operations for the
	Years Ended December 31, 1999, 2000 and 2001                        |  |      | 56 | 
|Consolidated Statements of Changes in
	Stockholders Equity for the Years Ended December 31,
	1999, 2000 and 2001 |  |      | 57 | 
|Consolidated Statements of Cash Flows for the
	Years Ended December 31, 1999, 2000 and 2001                       |  |      | 59 | 
|Notes to Consolidated Financial Statements                                                                        |  |      | 60 | 

(b) Financial Statement Schedules.

Financial Statement Schedules not included herein
have been omitted because they are either not required, not
applicable, or the information is otherwise included herein.

(c) Exhibits.




EXHIBIT INDEX

| |             |  |  |                                                                                                                                                                                                                                               
| | ----------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1(8)      |  |  | Restated Certificate of Incorporation.                                                                                                                                                                                                        
| | 3.2*        |  |  | Bylaws.                                                                                                                                                                                                                                       
| | 4.1         |  |  | See Exhibits 3.1 and 3.2.                                                                                                                                                                                                                     
| | 10.1*       |  |  | Purchase Agreement, dated January 22, 1999,
	by and among the Company, Donaldson, Lufkin & Jenrette
	Securities Corporation, Barclays Capital Inc., First Union
	Capital Markets, BNY Capital Markets, Inc. and Nesbitt Burns
	Securities Inc.
| | 10.2**      |  |  | Amended and Restated Shareholders Agreement
	by and among the Company and the stockholders named therein.                                                                                                                                    
| | 10.2(a)(16) |  |  | Amendment No. 1 to Amended and Restated
	Shareholders Agreement dated effective as of
	February 22, 2000 by and among the Company and the
	stockholders named therein.                                                                       
| | 10.2(b)(20) |  |  | Amendment No. 2 to Amended and Restated
	Shareholders agreement dated March 20, 2001 by and
	among Nextel Partners, Inc. and the stockholders named therein.                                                                                 
| | 10.2(c)(21) |  |  | Amendment No. 3 to Amended and Restated
	Shareholders Agreement dated April 18, 2001 by and
	among Nextel Partners, Inc. and the stockholders named therein.                                                                                 
| | 10.2(d)(22) |  |  | Amendment No. 4 to Amended and Restated
	Shareholders Agreement dated July 25, 2001 by and
	among Nextel Partners, Inc. and the stockholders named therein.                                                                                  
| | 10.3*       |  |  | Joint Venture Agreement, dated as of
	January 29, 1999, by and among the Company, Nextel Partners
	Operating Corp., and Nextel WIP Corp.                                                                                                      
| | 10.4*       |  |  | Interim Management Agreement, dated as of
	January 29, 1999, by and between Nextel Partners Operating
	Corp. and Nextel WIP Corp.                                                                                                             
| | 10.5*       |  |  | Analog Management Agreement, dated as of
	January 29, 1999, by and between Nextel Partners Operating
	Corp. and Nextel WIP Corp.                                                                                                              
| | 10.6*       |  |  | Trademark License Agreement, dated as of
	January 29, 1999, by and between Nextel Partners Operating
	Corp. and Nextel WIP Corp.                                                                                                              
| | 10.7*       |  |  | Roaming Agreement, dated as of January 29,
	1999, by and between Nextel Partners Operating Corp. and Nextel
	WIP Corp.                                                                                                                        

84



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| |          |  |  |                                                                                                                                                                                                                                                                  
| | -------- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.8*    |  |  | Switch Sharing Agreement, dated as of
	January 29, 1999, by and between Nextel Partners Operating
	Corp. and Nextel WIP Corp.                                                                                                                                    
| | 10.9*   |  |  | Transition Services Agreement, dated as of
	January 29, 1999, by and between Nextel Partners Operating
	Corp. and Nextel WIP Corp.                                                                                                                               
| | 10.10*  |  |  | iDEN (Registered Trademark) Infrastructure
	Equipment Purchase Agreement, dated as of January 29, 1999,
	by and between Motorola, Inc. and Nextel Partners Operating Corp.                                                                                       
| | 10.11*  |  |  | Subscriber Purchase and Distribution Agreement,
	dated as of January 29, 1999, by and between Motorola, Inc.
	and Nextel Partners Operating Corp.                                                                                                                
| | 10.12*   |  |  | Agreement Specifying Obligations of, and Limiting
	Liability and Recourse to, Nextel, dated as of January 29,
	1999, among the Company, Nextel Partners Operating Corp. and
	Nextel Communications, Inc.                                                         
| | 10.13*   |  |  | Asset and Stock Transfer and Reimbursement
	Agreement, dated as of January 29, 1999, by and between
	Nextel Partners Operating Corp. and Nextel WIP Corp.                                                                                                        
| | 10.14*   |  |  | Employment Agreement, dated as of
	January 29, 1999, between the Company and John Chapple.                                                                                                                                                                       
| | 10.15*   |  |  | Employment Agreement, dated as of
	January 29, 1999, between the Company and John Thompson.                                                                                                                                                                      
| | 10.16*   |  |  | Stock Option Agreement, dated as of
	January 29, 1999, between the Company and John Thompson.                                                                                                                                                                    
| | 10.17*   |  |  | Non-negotiable Promissory Note, dated
	January 29, 1999, by John Thompson to the Company.                                                                                                                                                                        
| | 10.18*   |  |  | 1999 Nonqualified Stock Option Plan of the
	Company.                                                                                                                                                                                                             
| | 10.19*   |  |  | Form of Restricted Stock Purchase Agreement,
	dated as of November 20, 1998, between the Company and John
	Chapple, John Thompson, David Thaler, David Aas, Perry Satterlee
	and Mark Fanning.                                                                   
| | 10.20*   |  |  | Form of Amendment No. 1 to Restricted Stock
	Purchase Agreement, dated as of January 29, 1999, between the
	Company and John Chapple, John Thompson, David Thaler, David
	Aas, Perry Satterlee and Mark Fanning.                                                 
| | 10.21*   |  |  | Employment Agreement, dated as of
	January 29, 1999, between the Company and David Aas.                                                                                                                                                                          
| | 10.22*   |  |  | Employment Agreement, dated as of
	January 29, 1999, between the Company and Perry Satterlee.                                                                                                                                                                    
| | 10.23*   |  |  | Employment Agreement, dated as of
	January 29, 1999, between the Company and David Thaler.                                                                                                                                                                       
| | 10.24*   |  |  | Subscription and Contribution Agreement, dated as
	of January 29, 1999, among the Company and the Buyers named
	therein.                                                                                                                                         
| | 10.25(1) |  |  | Indenture dated January 29, 1999 by and
	between Nextel Partners and The Bank of New York, as trustee,
	relating to the 14% Senior Discount Notes due 2009.                                                                                                      
| | 10.26(2) |  |  | Registration Rights Agreement dated as of
	January 29, 1999 by and among Nextel Partners, Donaldson,
	Lufkin & Jenrette Securities Corporation, Barclays Capital
	Inc., First Union Capital Markets, BNY Capital Markets, Inc. and
	Nesbitt Burns Securities Inc.
| | 10.27(3) |  |  | Amended and Restated Credit Agreement dated as of
	September 9, 1999 by and among Nextel Partners Operating
	Corp., DLJ Capital Funding, Inc., The Bank of New York, Bank of
	Montreal and certain other financial institutions.                                 
| | 10.28(4) |  |  | Borrower Security and Pledge Agreement dated as
	of January 29, 1999 by and between Nextel Partners
	Operating Corp. and Bank of Montreal.                                                                                                                       
| | 10.29(5) |  |  | Subsidiary Security and Pledge Agreement dated as
	of January 29, 1999 by and among the subsidiaries of Nextel
	Partners and Bank of Montreal.                                                                                                                   
| | 10.30(6) |  |  | Parent Guaranty and Pledge Agreement dated as of
	January 29, 1999 by and between Nextel Partners and Bank of
	Montreal.                                                                                                                                         
| | 10.31(7) |  |  | Subsidiary Guaranty dated as of January 29,
	1999 by and among the subsidiaries of Nextel Partners and Bank
	of Montreal.                                                                                                                                        

85



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| |           |  |  |                                                                                                                                                                                                                                                                                                                                                                                         
| | --------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.32**   |  |  | Restricted Stock Purchase Agreement dated
	September 9, 1999 by and between Nextel Partners and Donald
	J. Manning.                                                                                                                                                                                                                                                                     
| | 10.33**   |  |  | Agreement in Support of Charter Obligations dated
	as of January 29, 1999 by and between Nextel Partners and
	Nextel WIP Corp.                                                                                                                                                                                                                                                          
| | 10.34**   |  |  | Assignment and Assumption of Lease dated as of
	August 1, 1999 by and between Nextel WIP Lease Corp. and
	Eagle River Investments, LLC.                                                                                                                                                                                                                                                 
| | 10.35**   |  |  | Lease Agreement dated May 11, 1999 by and
	between Nextel WIP Lease Corp. and McCarran Center, LC.                                                                                                                                                                                                                                                                                      
| | 10.36**   |  |  | First Amendment to Lease dated as of
	September 10, 1999 by and between Nextel WIP Lease Corp.
	and McCarran Center, LC.                                                                                                                                                                                                                                                                
| | 10.37**   |  |  | Lease Agreement dated as of March 25, 1999
	by and between Nextel WIP Lease Corp. and Nesbitt Operating
	Associates, L.P.                                                                                                                                                                                                                                                               
| | 10.38**   |  |  | Employment Agreement dated as of January 29,
	1999 by and between Nextel Partners Operating Corp. and Mark P.
	Fanning.                                                                                                                                                                                                                                                                 
| | 10.39**   |  |  | Letter Agreement dated October 13, 1999 by
	and among Nextel WIP Corp., Nextel Partners Operating Corp. and
	Nextel Partners, Inc.                                                                                                                                                                                                                                                      
| | 10.40**   |  |  | Expansion Territory Management Agreement dated as
	of September 9, 1999 by and between Nextel Partners
	Operating Corp. and Nextel WIP Corp.                                                                                                                                                                                                                                            
| | 10.41**   |  |  | Expansion Territory Asset Transfer and
	Reimbursement Agreement dated as of September 9, 1999 by and
	between Nextel Partners Operating Corp. and Nextel WIP Corp.                                                                                                                                                                                                                      
| | 10.42**   |  |  | Assignment and Security Agreement dated as of
	September 9, 1999 by Nextel Partners Operating Corp. in
	favor of Bank of Montreal.                                                                                                                                                                                                                                                      
| | 10.43**   |  |  | First Amendment to Analog Management Agreement
	dated as of September 9, 1999 by and between Nextel WIP
	Corp. and Nextel Partners Operating Corp.                                                                                                                                                                                                                                      
| | 10.44**   |  |  | Form of Warrant for the Purchase of Shares of
	Class A Common Stock of Nextel Partners dated
	January 29, 1999.                                                                                                                                                                                                                                                                         
| | 10.45**   |  |  | Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                           
| | 10.46**   |  |  | Form of Indemnity Agreement.                                                                                                                                                                                                                                                                                                                                                            
| | 10.47**   |  |  | Letter Agreement dated October 13, 1999 by
	and among Nextel Communications, Inc., Nextel of New York, Inc.,
	Nextel Communications of the Mid-Atlantic, Inc., Nextel South
	Corp., Nextel of Texas, Inc., Nextel West Corp., Nextel of
	California, Inc., Tower Parent Corp., SpectraSite Holdings,
	Inc., Tower Asset Sub, Inc., Nextel Partners Operating Corp. and
	Nextel Partners.
| | 10.48**   |  |  | Supplement No. 1 to iDEN Infrastructure
	Equipment Purchase Agreement dated September 1999 by and between
	Nextel Partners Operating Corp. and Motorola, Inc.                                                                                                                                                                                                                           
| | 10.49**   |  |  | Expansion Subscription and Contribution Agreement
	dated as of September 9, 1999 by and among Nextel Partners
	and the Buyers named therein.                                                                                                                                                                                                                                            
| | 10.50(9)  |  |  | Indenture, dated as of March 10, 2000, by
	and between Nextel Partners, Inc. and The Bank of New York, as
	Trustee, relating to the 11% Senior Notes due 2010.                                                                                                                                                                                                                          
| | 10.51(10) |  |  | Purchase Agreement for $200,000,000 11% Senior
	Notes due 2010, dated February 28, 2000 by and between
	Nextel Partners, Inc. and Donaldson, Lufkin & Jenrette
	Securities Corporation.                                                                                                                                                                                                 
| | 10.52(11) |  |  | Registration Rights Agreement, dated as of
	March 10, 2000, by and among Nextel Partners, Inc. and
	Donaldson, Lufkin & Jenrette Securities Corporation.                                                                                                                                                                                                                                
| | 10.53(12) |  |  | Amendment No. 1 to Credit Agreement and
	Parent Guaranty and Pledge Agreement, dated as of March 10,
	2000, by and among Nextel Partners, Inc., Nextel Partners
	Operating Corp., DLJ Capital Funding, Inc., The Bank of New
	York, Bank of Montreal and Donaldson, Lufkin & Jenrette
	Securities Corporation.                                                                          
| | 10.54(17) |  |  | Registration Rights Agreement dated effective as
	of February 22, 2000 by and among the Company and the
	stockholders named therein.                                                                                                                                                                                                                                                    

86



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| |              |  |  |                                                                                                                                                                                                                                                                                                                                                        
| | ------------ |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.55(23)   |  |  | iDEN (Registered Trademark) Infrastructure Supply
	Agreement dated effective as of November 1, 2000 by and
	between Motorola, Inc. and Nextel Partners Operating Corp.                                                                                                                                                                                 
| | 10.56(23)    |  |  | Amendment No. 2 to Credit Agreement and
	Parent Guaranty and Pledge Agreement dated as of
	January 25, 2001 by and among Nextel Partners, Inc., Nextel
	Partners Operating Corp, various consenting obligors, various
	financial institutions, Credit Suisse First Boston, The Bank of
	New York and The Bank of Montreal.                             
| | 10.57(13)    |  |  | Indenture, dated as of July 27, 2000, by and
	between Nextel Partners, Inc. and The Bank of New York, as
	Trustee, relating to the 11% Senior Notes due 2010.                                                                                                                                                                                          
| | 10.58(14)    |  |  | Purchase Agreement for $200,000,000 11% Senior
	Notes due 2010, dated July 18, 2000 by and among Nextel
	Partners, Inc., Donaldson, Lufkin & Jenrette Securities
	Corporation, Deutsche Bank Securities Inc. and CIBC World
	Markets Corp.                                                                                                             
| | 10.59(15)    |  |  | Registration Rights Agreement, dated as of
	July 27, 2000, by and among Nextel Partners, Inc.,
	Donaldson, Lufkin & Jenrette Securities Corporation,
	Deutsche Bank Securities Inc. and CIBC World Markets Corp.                                                                                                                                       
| | 10.60(24)    |  |  | Lease Agreement dated May 2001 between The St.
	Joe Company and Nextel WIP Corporation.                                                                                                                                                                                                                                                                
| | 10.61(25)    |  |  | First Amendment to IPO Approval and Lockup
	Agreement, dated April 18, 2001 among Nextel WIP Corp.,
	Nextel Partners, Inc., DLJ Merchant Banking Partners, IL, LP,
	Madison Dearborn Capital Partners II L.P., Eagle River
	Investments, LLC, John Chapple, John Thompson, David Thaler,
	Dave Aas, Perry Satterlee, Mark Fanning, and Don Manning.    
| | 10.61(a)(26) |  |  | Second Amendment to IPO Approval and Lockup
	Agreement dated July 25, 2001 among Nextel WIP Corp.,
	Nextel Partners, Inc., DLJ Merchant Banking Partners, II L.P.,
	Madison Dearborn Capital Partners II L.P., Eagle River
	Investments, LLC, John Chapple, John Thompson, David Thaler,
	David Aas, Perry Satterlee, Mark Fanning, and Donald Manning.
| | 10.62(18)    |  |  | Indenture, dated as of December 4, 2001, by
	and between Nextel Partners, Inc. and The Bank of New York, as
	Trustee, relating to the 12 1/2% Senior Notes due 2009.                                                                                                                                                                                   
| | 10.63(a)(19) |  |  | Registration Rights Agreement, dated as of
	December 4, 2001, between and among Nextel Partners, Inc.,
	Credit Suisse First Boston Corporation and Deutsche Banc Alex.
	Brown, Inc. relating to the 12 1/2% senior notes due 2009.                                                                                                                     
| | 10.64        |  |  | Amendment No. 3 and Consent to Credit
	Agreement, dated as of January 21, 2001, by and among
	Nextel Partners Operating Corp., Credit Suisse First Boston.,
	The Bank of New York, and Bank of Montreal.                                                                                                                                               
| | 21(27)       |  |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                                                           
| | 23.1         |  |  | Consent of Arthur Andersen LLP.                                                                                                                                                                                                                                                                                                                        
| | 24.1         |  |  | Powers of Attorney (included on signature page
	hereof).                                                                                                                                                                                                                                                                                               
| | 99.1         |  |  | Letter regarding Arthur Andersen LLP assurances.                                                                                                                                                                                                                                                                                                       



---



|  |                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Confidential portions omitted and filed
	separately with the Commission pursuant to an application for
	confidential treatment pursuant to Rule 406 under the
	Securities Act of 1933, as amended.



|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Incorporated by reference to the Exhibit of the
	same number to Registration Statement on Form S-4 declared
	effective July 30, 1999 (File Number 333-78459).



|   |                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | Incorporated by reference to the Exhibit of the
	same number to Registration Statement on Form S-1 declared
	effective February 22, 2000 (File No. 333-95473).



|    |                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to Exhibit 4.1 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).
|   
|(2) | Incorporated by reference to Exhibit 4.2 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).
|   
|(3) | Incorporated by reference to Exhibit 10.2 to
	the Report on Form 8-K dated September 9, 1999 (File
	Number 333-78459).                    
|   
|(4) | Incorporated by reference to Exhibit 4.4 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).

87



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##### Table of Contents





|    |                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Incorporated by reference to Exhibit 4.5 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).   
|   
|(6) | Incorporated by reference to Exhibit 4.6 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).   
|   
|(7) | Incorporated by reference to Exhibit 4.7 to
	Registration Statement on Form S-4 declared effective
	July 30, 1999 (File Number 333-78459).   
|   
|(8) | Incorporated by reference to Exhibit 3.1.1
	to Registration Statement on Form S-1 declared effective
	February 22, 2000 (File No. 333-95473).
|   
|(9) | Incorporated by reference to Exhibit 10.52
	to Form 10-Q filed on May 10, 2000.                                                              



|     |                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to Exhibit 10.51
	to Form 10-Q filed on May 10, 2000.                                                                   
|    
|(11) | Incorporated by reference to Exhibit 10.50
	to Form 10-Q filed on May 10, 2000.                                                                   
|    
|(12) | Incorporated by reference to Exhibit 10.53
	to Form 10-Q filed on May 10, 2000.                                                                   
|    
|(13) | Incorporated by reference to Exhibit 10.50
	to Registration Statement on Form S-4, declared effective
	on August 9, 2000 (File No. 333-39386).    
|    
|(14) | Incorporated by reference to Exhibit 10.51
	to Registration Statement on Form S-4, declared effective
	on August 9, 2000 (File No. 333-39386).    
|    
|(15) | Incorporated by reference to Exhibit 10.52
	to Registration Statement on Form S-4, declared effective
	on August 9, 2000 (File No. 333-39386).    
|    
|(16) | Incorporated by reference to Exhibit 10.2(a)
	to Registration Statement on Form S-4 declared effective on
	November 15, 2000 (File No. 333-48470).
|    
|(17) | Incorporated by reference to Exhibit 10.54
	to Registration Statement on Form S-4 declared effective on
	November 15, 2000 (File No. 333-48470).  
|    
|(18) | Incorporated by reference to Exhibit 4.1 to
	Form 8-K filed on December 6, 2001.                                                                  
|    
|(19) | Incorporated by reference to Exhibit 4.2 to
	Form 8-K filed on December 6, 2001.                                                                  
|    
|(20) | Incorporated by reference to Exhibit 10.2(b)
	to Form 10-Q filed May 11, 2001.                                                                    
|    
|(21) | Incorporated by reference to Exhibit 10.2(c)
	to Form 10-Q filed May 11, 2001.                                                                    
|    
|(22) | Incorporated by reference to Exhibit 10.2(d)
	to Form 10-Q filed November 13, 2001.                                                               
|    
|(23) | Incorporated by reference to the Exhibit of the
	same number to Form 10-K filed March 28, 2001.                                                   
|    
|(24) | Incorporated by reference to Exhibit 10.60
	to Form 10-Q filed August 13, 2001.                                                                   
|    
|(25) | Incorporated by reference to Exhibit 10.6 to
	Form 10-Q filed May 11, 2001.                                                                       
|    
|(26) | Incorporated by reference to Exhibit 10.6(a)
	to Form 10-Q filed August 13, 2001.                                                                 
|    
|(27) | Incorporated by reference to Exhibit 21 to
	Form S-4 filed February 8, 2002.                                                                      

(d) Reports on Form 8-K.

Form 8-K filed on December 6, 2001

88



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                      
| | ---------------------
| | NEXTEL PARTNERS, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ JOHN D. THOMPSON

| |                                       
| | --------------------------------------
| |                                       
| | John D. Thompson                      
| | Chief Financial Officer and
	Treasurer

Date: March 22, 2002


POWER OF ATTORNEY

Each person whose individual signature appears
below hereby authorizes and appoints John Chapple and John
Thompson, and each of them, with full power of substitution and
resubstitution and full power to act without the other, as his
true and lawful attorney-in fact and agent to act in his name,
place below, and to file, any and all amendments to this
Form 10-K Annual Report, including any an all amendments
thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing, ratifying and confirming
all that said attorneys-in-fact and agents or any of them or
their or his substitute or substitutes may lawfully do or cause
to be done by virtue thereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated below:

|                                         |  |                                                                                     |  |               
|---------------------------------------- |  | ----------------------------------------------------------------------------------- |  | --------------
|Signature                                |  | Title                                                                               |  | Date          
|                                         |  |                                                                                     |  |               
|/s/ JOHN CHAPPLEJohn Chapple             |  | Chief Executive Officer, President (Principal
	Executive Officer) and Director      |  | March 22, 2002
|/s/ JOHN D. THOMPSONJohn D. Thompson     |  | Chief Financial Officer and Treasurer (Principal
	Financial and Accounting Officer) |  | March 22, 2002
|/s/ TIMOTHY M. DONAHUETimothy M. Donahue |  | Director                                                                            |  | March 22, 2002
|/s/ ANDREW H. RUSHAndrew H. Rush         |  | Director                                                                            |  | March 22, 2002
|/s/ ANDREW E. SINWELLAndrew E. Sinwell   |  | Director                                                                            |  | March 22, 2002
|/s/ DENNIS M. WEIBLINGDennis M. Weibling |  | Director                                                                            |  | March 22, 2002
|/s/ STEVEN B. DODGESteven B. Dodge       |  | Director                                                                            |  | March 22, 2002

89