##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION



FORM 10-K

|                                            |  |                                                                                          
|------------------------------------------- |  | -----------------------------------------------------------------------------------------
|[X]                                         |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended December 31, 1999
|OR                                         
|[   ]                                       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934
|                                            |  | For the transition period from    to                                                     
|Commission file number 0-19656             

NEXTEL COMMUNICATIONS, INC.



|                                                                |  |                                      
|--------------------------------------------------------------- |  | -------------------------------------
|                                                               
|                                                               
|                                                               
|                                                               
|Delaware                                                        |  | 36-3939651                           
|(State or other jurisdiction of
	incorporation or organization) |  | (I.R.S. Employer
	Identification No.)
|                                                               
|                                                               
|                                                               
|                                                               
|2001 Edmund Halley Drive, Reston, VA                            |  | 20191                                
|(Address of principal executive offices)                        |  | (Zip Code)                           

Registrants telephone number, including area code: (703) 433-4000

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  [X]     No  [   ]

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 herein by reference in Part III of
this Form 10-K or any amendment to this
Form 10-K.  [   ]

Based on the closing sales price on March 17, 2000, the
aggregate market value of the voting and non-voting common stock
held by nonaffiliates of the registrant was $46,241,147,670.

On March 17, 2000, the number of shares outstanding of the
registrants Class A Common Stock and Class B
Non-Voting Common Stock, $0.001 par value, was 357,213,460 and
17,830,000, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement relating to the Annual Meeting of
 Stockholders scheduled to be held on or about May 25, 2000
are incorporated in Part III, Items 10, 11, 12 and 13.









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TABLE OF CONTENTS



|                                                                                             |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                      
|Item 1. Business                                                                            
|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.                   
|SIGNATURES                                                                                  



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NEXTEL COMMUNICATIONS, INC.






PART I





Item 1.  Business

A.  Introduction

Unless the context requires otherwise, references to
Nextel, us, our, or
we are intended to include Nextel Communications,
Inc. and its consolidated subsidiaries. Our principal executive
and administrative facility is located at 2001 Edmund Halley
Drive, Reston, Virginia 20191, and our telephone number is
(703) 433-4000.

B.  Overview

We provide a wide array of digital wireless communications
services throughout the United States. We offer a differentiated,
 integrated package of digital wireless communications services
under the Nextel brand name, primarily to business users. Our
digital mobile network constitutes one of the largest integrated
wireless communications systems utilizing a single transmission
technology in the United States. This digital technology,
developed by Motorola, Inc., is referred to as the integrated
Digital Enhanced Network or iDEN® technology.

A customer using our digital mobile network is able to access:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile telephone service;                                                                                                              
|
| |  | digital two-way radio dispatch service, which provides instant
	conferencing capabilities and is marketed as Nextel Direct
	Connect® service;
|
| |  | paging; and                                                                                                                                    
|
| |  | short-messaging service.                                                                                                                       

We refer to the handset device on which we deliver these services
 as a subscriber unit. As of December 31, 1999:



| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we provided service to about 4,515,700 digital subscriber units
	in the United States; and                                                                                                                                                                    
|
| |  | our digital mobile network or the compatible digital mobile
	network of Nextel Partners, Inc., a joint venture in which we are
	 a participant, was operational in areas in and around 94 of the
	top 100 metropolitan statistical areas in the United States.

The number of our digital subscriber units in service has
increased significantly in recent years, reflecting increased
sales in existing markets as well as the commencement of our
digital mobile network service in new markets. The following
table summarizes the approximate number of our digital subscriber
 units in service at the dates indicated:

|                         |  |              |           |      |  |      |           |  |  |  |           | 
|------------------------ |  | ------------ | --------- | ---- |  | ---- | --------- |  |  |  | --------- | 
|                         |  |             
|                         |  | December 31,
|                         |  |             
|                         |  | 1999         |           | 1998 |  | 1997
|                         |  |              |           |      |  |     
|Digital subscriber units |  |              | 4,515,700 |      |  |      | 2,789,900 |  |  |  | 1,270,700 | 

In 1999, we announced plans to provide our customers access to
the Internet and new digital two-way mobile data services through
 our Nextel OnlineSM service offering. The first steps
 in this program were undertaken in 1999 as three new subscriber
units developed and manufactured by Motorola, the
i1000plus, the i500plus and
the i700plus, were introduced. We expect these
new subscriber units to be the first in a product line that
incorporates micro-browsers and enables wireless Internet
services, by supplying web-based applications and content
directly to our subscribers. We currently plan to commercially
launch Nextel Online service for Internet capable subscriber
units in the second quarter of 2000.

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In April 2000, we expect to launch our Nextel WorldwideSM service offering with the introduction of the
i2000 subscriber unit. The i2000, being manufactured by
Motorola, is a dual mode subscriber unit that operates on both
the iDEN technology used by Nextel and the Global System for
Mobile Communications, referred to as GSM, digital wireless
technology that has been established as the current digital
cellular communications standard in Europe and elsewhere. The
i2000 will allow seamless digital roaming in about 65 countries
worldwide with the convenience of one phone, one number and one
bill.

In addition to our domestic operations, we have ownership
interests in international wireless companies through our
substantially wholly owned subsidiary, Nextel International, Inc.
 Nextel International, through its subsidiaries and affiliates,
provides wireless communications services in and around various
major metropolitan market areas in Latin America, Asia and
Canada. Along with Nextel International, we provide our service
in ten of the worlds 25 largest cities.

As of December 31, 1999, Nextel Internationals
proportionate share of international digital subscriber units in
service, based on its ownership interests in its subsidiaries and
 affiliates, was estimated to be about 403,500, which includes
total international digital subscriber units on networks in
operation in Argentina, Brazil, Canada, Japan, Mexico, Peru, the
Philippines and Shanghai, Peoples Republic of China. As of
December 31, 1999, an estimated 1,245,600 total
international digital subscriber units were in service on the
commercial networks then being operated by Nextel
Internationals subsidiaries and affiliates.

Our consolidated financial statements include financial
information reflecting the assets, liabilities and results of
operations relating to Nextel International and its consolidated
subsidiaries as of the relevant dates and periods indicated in
those statements. For selected financial information concerning
our domestic operations, the operations of Nextel International
and our operations on a consolidated basis, see Note 16 to the
consolidated financial statements. Additional, more detailed and
focused information relating to Nextel International may be found
 in the periodic and other reports filed by Nextel International
with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and the related rules. Except as noted above
 and as otherwise indicated, the description of our business in
this document refers to our United States operations.

C.  1999 New Products, Customer Service Improvements
 and Network Enhancement

In 1999, we set as our primary goals to (1) develop new and
differentiated products and services, (2) improve the
customer experience and (3) expand and improve the coverage
of our digital mobile network with the objectives of:



| |   |                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | leveraging our new and differentiated products and services to
	achieve increased penetration in our targeted business customer
	base in markets where our digital mobile network was operating or
	 was planned to be operating in early 1999;     
|
| |  | providing more rapid and consistent service to our growing
	customer base across a number of important areas of contact,
	thereby fostering enhanced customer satisfaction and addressing
	some of the controllable causes of customer turnover; and
|
| |  | improving the quality and performance of our digital mobile
	network by providing:                                                                                                                                                                  



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | more comprehensive coverage within our markets;                                                   
|
| |  | greater penetration in targeted business districts; and                                           
|
| |  | significant increases in system capacity while maintaining
	acceptable system performance metrics,



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | enabling us to meet the growing system usage and communication
	needs of our customers on a cost-effective basis.

In 1999, we announced our Nextel Online service offering. Nextel
Online (1) will offer our customers access to the Internet
through their subscriber units (currently expected to launch
commercially in the second quarter of 2000), (2) will enable
 customers to use new digital two-way mobile data services

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In preparation for the commercial launch of Nextel Online, we
took steps to assure that many of our existing customers already
would have subscriber units capable of accessing these services.
We introduced three new Internet-ready subscriber units in 1999:
the i1000plus, the i500plus, and the i700plus. Our new
plus series subscriber units incorporate
micro-browsers and enable wireless Internet services and other
business applications. At the close of 1999, more than
1 million subscribers had Internet ready subscriber units,
representing nearly 25 percent of the total domestic
subscriber units. The new i1000plus, introduced in May 1999,
combines all the features of the i1000 subscriber
unit  see-through flip cover, caller ID, and
speakerphone  with web capability for access to Nextel
 Online services. The i500plus, introduced in August 1999,
provides customers a less expensive alternative with enhanced
voice features available on higher-end subscriber units. The
i700plus, designed to be more rugged than our other subscriber
units, was introduced in the Atlanta, Georgia, and Birmingham,
Alabama, markets in late 1999, and became available nationally in
 January 2000.

As part of our commitment to improving the customer experience,
we opened a new customer care center in Hampton Roads, Virginia
in 1999, for a total of four centers nationwide, which has helped
 us handle the core needs of our growing customer base.
Additionally, in 1999 we expanded and improved the process of
centralized activations of subscriber units purchased through our
 indirect dealers, thereby significantly reducing the time
between a customers purchase of the subscriber unit and its
 activation for use, which both reduced fulfillment costs and
resulted in increased revenue generating usage. Another of our
newly developed customer care programs, Nextel Door-to-Door
Express, which began as a pilot program in the summer of 1999,
offers to repair or replace the subscriber units of customers in
good standing, free of charge, with the convenience of an
overnight pickup and a 48-hour turnaround back to the
customers location. This program is designed to increase
customer satisfaction with our repair and replacement processes,
as well as to minimize the time that the customer is deprived of
a functioning, revenue generating subscriber unit.

The growth in our digital mobile network coverage and capacity,
and the related significant increases in the number of our
digital subscriber units in service and in system minutes of use,
 which began in 1997, continued and accelerated through 1998 and
1999. This growth contributed significantly to our achievement of
 positive operating income for our domestic operations during the
 fourth quarter of 1999. In particular, for the year ended
December 31, 1999, we:



| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased our digital subscriber units in service from 2,789,900
	to 4,515,700;                                                                                                   
|
| |  | increased our monthly total system minutes of use by about 94%,
	from about 9.3  billion during 1998 to about
	18.0 billion during 1999;                                          
|
| |  | added almost 2,700 new cell sites, a 44% increase over the prior
	year, for a total of about 8,800 digital cell sites in operation
	on the digital mobile network at year end; and
|
| |  | increased our switching capacity by 53%, adding 16 switches to
	our digital mobile network during 1999, for a total of 46
	switches in service at December 31, 1999.              

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To further expand our network, we also completed a transaction
with SpectraSite Holdings, Inc. to purchase 2,000 of our towers
and build up to 1,700 new towers, and established Nextel Partners
 as our exclusive provider of Nextel branded digital wireless
communications services in targeted mid-sized and smaller-sized
markets throughout the United States.

D.  Business Strategy

For 2000, our principal business objectives are to:



| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | continue to offer high-capacity, high quality, advanced
	communications services on our digital mobile network to our
	customers in our metropolitan markets throughout the United
	States and provide more comprehensive coverage within these
	markets while expanding our coverage in ancillary markets and
	heavily traveled corridors between our markets;
|
| |  | augment our digital mobile network by effectively implementing
	our Nextel Online service offering, providing customers with
	Internet access and business to business data applications;                                                                                                                                                                      
|
| |  | enhance our digital mobile network to assure the quality and
	performance of new service offerings and to strengthen our
	competitive position; and                                                                                                                                                                                                            
|
| |  | further progress toward becoming a major participant in the
	global wireless communications business.                                                                                                                                                                                                                                                          

Our strategic efforts will continue to include the accelerated
deployment of our digital mobile network and the aggressive
marketing of digital wireless services.

We believe that the following elements of our business strategy
and characteristics of our business distinguish our wireless
service offerings from those of our competitors in the wireless
communications marketplace:

1.  We Provide a Differentiated, Integrated Package of
 Wireless Services, Including Our Unique Nextel Direct Connect
Feature. Our digital mobile network service provides a
bundled product offering accessible through a single subscriber
unit, currently consisting of:



| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile telephone service;                                                                                                           
|
| |  | digital two-way radio dispatch service, which provides instant
	conferencing capabilities and is marketed as Nextel Direct
	Connect service;
|
| |  | paging; and                                                                                                                                 
|
| |  | short-messaging services.                                                                                                                   

We believe that, for customers who already subscribe to or who
would benefit by access to multiple wireless services, the
convenience of combining multiple wireless communications options
 in a single subscriber unit and of consolidating all wireless
service charges into a single package price and billing statement
 are important features that distinguish us from many of our
competitors.

Our market research indicates that a sizeable portion of business
 users communications involves contacting others within the
 same organization. We believe that our Nextel Direct Connect
service is especially well suited to address these intracompany
wireless communications needs. The Nextel Direct Connect service,
 which gives customers the ability to instantly set up a
conference on either a private (i.e., one-to-one) or group
 (i.e., one-to-many) basis, is a service that is not
included in any integrated service package currently available
from competing cellular and personal communications services,
referred to as PCS, operators. To further expand the flexibility
and convenience offered by our Nextel Direct Connect service to
users outside a single organization but within a single industry
or interest group in a particular dispatch service area, we
pioneered the Nextel Business NetworkSM concept.
Nextel Business Networks extend Nextel Direct Connect service
beyond a companys employees to suppliers or other parties
involved in the same industry. About 1.5 million domestic
digital subscriber units in service as of December 31,

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We expect to further differentiate our unique package of services
 with the anticipated addition of wireless Internet connectivity
and new digital two-way mobile data services. Our new
plus series subscriber units each incorporate
micro-browsers and enable wireless Internet access and other
business applications directly from the subscriber unit. We
currently expect to commercially launch Nextel Online service for
 Internet capable subscriber units in the second quarter of 2000.

In April 2000, we expect to launch our Nextel Worldwide
service offering with the introduction of the i2000 subscriber
unit. The i2000, being manufactured by Motorola, is a dual mode
subscriber unit that operates on both the iDEN technology used by
 Nextel and the GSM digital wireless technology that has been
established as the current digital cellular communications
standard in Europe and elsewhere. The i2000 will allow seamless
digital roaming in about 65 countries worldwide with the
convenience of one phone, one number and one bill. International
roaming charges will be billed to our customers Nextel
bill, and customers will be supported while roaming by Nextel
Customer Care which will be available 24 hours a day, 7 days
 a week, 365 days per year. To further our international
reach, Nextel International has developed and is implementing
marketing plans tailored to each country in which it does
business. Nextel International is also continuing to expand its
network coverage and capacity, which resulted in a 174% increase
in digital subscriber units in service for its consolidated
entities for 1999 over 1998.

2.  We Focus on the Business Customer. Our
corporate marketing strategy focuses on targeting business users
that we believe will be likely to perceive and appreciate the
potential for our wireless communication service capabilities to
increase efficiencies and reduce costs in those users
business activities. We originally concentrated our sales efforts
 on a number of distinct occupational groupings of mobile
workers, but we have been broadening our primary targeted
customer population to include a much wider group of business
users, in particular focusing on white collar and professional
occupations with the introduction of the compact, feature-rich
i1000 and i1000plus subscriber units.

3.  We Offer Innovative Pricing Features. We
offer pricing that we believe differentiate our services from
those of many of our competitors. Our pricing packages offer our
customers simplicity and predictability on their wireless
telecommunications billing by combining unlimited Direct Connect
minutes with the following price features:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a flat rate plan marketed as the Nextel National Business Plan
	SM, which offers a predetermined mix of cellular and
	long distance minutes for one flat rate;                                                                                                                                                                                                                                                                                                                                                                
|
| |  | one airtime rate, regardless of the time of day a call is made;                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | no roaming charges assessed for mobile telephone services
	provided to our customers traveling anywhere on our digital
	mobile network or the compatible digital mobile network of Nextel
	 Partners outside the customers home market in the United
	States, and in some parts of Canada (through our roaming
	agreement with Clearnet Communications, Inc., which operates a
	digital network employing the iDEN technology in and around
	certain major metropolitan markets, including Toronto, Montreal
	and Vancouver);
|
| |  | billing based on the actual number of seconds of airtime used
	after the first minute, in contrast to the common cellular
	industry practice of rounding all calls up to the next minute;
	and                                                                                                                                                                                                                                                                                                                                
|
| |  | special pricing plans that allow some customers to aggregate the
	total number of account minutes for all subscriber units and
	reallocate the aggregate minutes among those subscriber units.                                                                                                                                                                                                                                                                                                                                

4.  Our Marketing Program and Distribution Channels. Our marketing program and related advertising campaigns
are designed to:



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | enhance brand name awareness;                                                                                                   
|
| |  | stimulate additional interest in and demand for our services by
	stressing their versatility, value, simplicity and quality; and

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| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | expand our use of lower cost distribution channels, such as sales
	 of our subscriber units through nextel.com.

We use both direct and indirect sales forces as part of our
strategy to increase the number of subscriber units placed in
service on our digital mobile network. We expect to expand and
enhance both direct and indirect distribution channels as we
further penetrate existing markets, expand our geographic reach
in those markets and expand our coverage in ancillary markets and
 heavily traveled corridors between markets. To further our
international reach, Nextel International has developed and is
implementing marketing plans tailored to each country in which it
 does business.

5.  We have Strategic Relationships with Craig O.
McCaw, Motorola and Microsoft. Through December 31,
1999, Craig O. McCaw and members of the McCaw family have
invested more than $965 million in our stock through
purchases of our equity securities from Nextel and Motorola. As
of December 31, 1999, Mr. McCaw and his affiliates
beneficially owned about 14% of our common equity, giving effect
to the conversion of the preferred stock and the exercise of all
presently exercisable options issued by us to, and held by,
Digital Radio, L.L.C. or other controlled affiliates of
Mr. McCaw. We also benefit from Mr. McCaws more than
25 years experience in the wireless communications business.
 Mr. McCaw currently serves as a member of our board of
directors and also as Chairman of the operations committee of our
 board of directors, which is responsible for formulating key
aspects of our business strategy. See
 J. Agreements with Significant
Stockholders  1.  McCaw Interests.

We have a number of important strategic and commercial
relationships with Motorola. Motorola provides the iDEN
infrastructure and subscriber unit equipment used throughout our
domestic markets and in most of the international markets served
by Nextel Internationals subsidiaries and affiliates. We
also work closely with Motorola to improve existing products and
develop new technologies such as the iDEN technology that we use
in our digital mobile network. As of December 31, 1999,
Motorola was the beneficial owner of about 15% of our common
equity, giving effect to the conversion of shares of our
class B nonvoting common stock. See
 J. Agreements with Significant
Stockholders  2.  Motorola.

On May 27, 1999, Microsoft Corporation purchased about
17 million shares of our class A common stock for a
cash investment of $600 million, representing a per share
price of $36.00. In connection with this transaction, we entered
into agreements under which Microsoft is to provide certain
Internet portal services and related assistance in connection
with our Nextel Online service offering. As of December 31,
1999, Microsoft was the beneficial owner of almost 5% of our
common equity.

E.  Fiscal Year 1999 Domestic Transactions and
Developments

1.  Debt Extinguishment. During the fourth
quarter of 1999, we utilized a portion of the proceeds from our
9.375% senior notes due 2009 to repurchase and redeem prior to
final maturity $546 million of our outstanding notes issued
prior to 1997. On December 30, 1999, we redeemed our outstanding
10.25% senior notes, 12.25% senior notes and 11.5% senior notes.
In December 1999, we issued notices to redeem prior to final
 maturity all of our remaining outstanding senior notes issued
prior to 1997. We completed these redemption transactions on
January 15, 2000 for our 10.125% senior notes and
February 15, 2000 for our 9.75% senior notes.

2.  9.375% Senior Notes. In
November 1999, we completed the issuance and sale in a
private placement of $2.0 billion in principal amount of our
 9.375% senior notes due 2009. These notes were subsequently
exchanged for a series of notes with identical terms registered
with the Securities and Exchange Commission in
February 2000. The sale of these notes generated about $1.96
 billion in net cash proceeds. Cash interest on these notes will
be payable on May 15 and November 15 of each year
commencing May 15, 2000. These notes are redeemable at our
option at any time on or after November 15, 2004, at
specified redemption prices plus accrued interest. Up to 35% of
the original principal amount of these notes may be redeemed
(using the proceeds of qualifying sales of our capital stock) on
or prior to November 15, 2002, at our option under specified
 circumstances, at 109.375% of their principal amount plus
accrued and unpaid interest to the date of redemption. These
notes are senior

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3.  New Bank Financing. Nextel, Nextel Finance
 Company, one of our wholly owned subsidiaries, and some of our
other subsidiaries entered into definitive agreements effective
November 12, 1999, with respect to an amended and restated
secured bank credit facility that provided for up to
$5.0 billion of secured financing, consisting of a
$1.5 billion revolving loan and $3.5 billion of term
loans. The maturity date of the $1.5 billion revolving loan
and $1.7 billion portion of the term loans is
December 31, 2007. The remaining $1.8 billion of term
loans mature in equal $900 million portions on June 30,
 2008, and December 31, 2008. The maturity dates of the loans can
 accelerate if our credit ratings are below specified levels and
the aggregate amount of specified debt obligations that mature
before June 30, 2009, and the redemption price of redeemable
 stock that is mandatorily redeemable before June 30, 2009,
exceed specified amounts. Borrowings under this bank credit
facility bear interest payable quarterly, at variable rates
calculated based on either the U.S. prime rate or the London
Interbank Offered Rate, referred to as LIBOR. At December 31,
1999, we had borrowed an aggregate of about $2.7 billion of
the $5.0 billion in committed available financing under this bank
 credit facility. See  G. Post Fiscal Year 1999
Transactions and Developments  1. Incremental Bank
Financing.

4.  Equity Offering. On November 5, 1999,
 we completed the public offering and sale of 33,781,785 shares
of our class A common stock at a price of $83.8125 per share. All
 of the shares sold were offered by us and we received net
proceeds of about $2.8 billion from this offering.

5.  Board of Directors Developments. On
October 15, 1999, Mr. Keisuke Nakasaki resigned from
his position on our board of directors, reducing the boards
 size to nine. Mr. Nakasaki had occupied his position on the
 board of directors as result of rights granted to an affiliate
of Nippon Telegraph and Telephone Corp. in connection with and
linked to that affiliates equity investment in Nextel. As a
 result of its reduced equity ownership, this affiliate no longer
 possesses these rights. Subsequently, on November 24, 1999,
 we announced the appointment of Janet Hill, Vice President of
Alexander & Associates, Inc., a corporate consulting firm in
Washington, D.C., to our board of directors, increasing the
boards size to ten.

6.  Option Exercise by Digital Radio. On
July 28, 1999, Digital Radio, L.L.C., an entity controlled
by Mr. McCaw, exercised in full its option to purchase
15 million shares of our class A common stock for an
aggregate cash purchase price of $278 million. See
 J. Agreements with Significant
Stockholders  1. McCaw Interests.

7.  Management Changes. On July 15, 1999,
 Daniel F. Akerson stepped down from his position as our Chief
Executive Officer and Timothy M. Donahue, formerly our President
and Chief Operating Officer, became our President and Chief
Executive Officer. Mr. Akerson continues to serve as
Chairman of our board of directors and also as a member of the
operations committee of the board of directors. On
September 22, 1999, Mr. Akerson became Chairman of the
board of directors and Chief Executive Officer of NEXTLINK
Communications, Inc., a publicly held competitive local exchange
carrier controlled by Mr. McCaw.

8.  4.75% Convertible Senior Notes. In
June 1999, we completed the issuance and sale in a private
placement of $600 million in principal amount of our 4.75%
convertible senior notes due 2007, generating about
$588 million of net cash proceeds. These notes, and the
class A common stock underlying these securities, were
subsequently registered with the Securities and Exchange
Commission pursuant to an effective registration statement in
December 1999. Cash interest is payable on these notes
semi-annually on January 1 and July 1 of each year commencing on
January 1, 2000. These notes are convertible at the option
of the holders into class A common stock at any time prior
to redemption, repurchase or maturity at a conversion price of
$47.308 per share, subject to adjustment. These notes are
redeemable at our option at any time on or after July 6,
2002 at specified redemption prices plus accrued interest. These
notes are senior unsecured indebtedness of ours and rank equal in
 right of payment with all our other unsubordinated, unsecured
indebtedness.

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9.  Agreement with U.S. Department of Justice.
 On June 14, 1999, we reached an agreement with the U.S.
Department of Justice regarding settlement of our challenges to
the consent decree entered in 1995 by the United States District
Court for the District of Columbia in the case, United States
of America v. Motorola, Inc. and Nextel Communications, Inc.
The consent decree prohibited us from owning or managing more
than a limited amount of 900 MHz frequencies in thirteen of the
largest markets in the United States. Under the terms of the
modified final judgment relating to the settlement entered by the
 District Court for the District of Columbia in late 1999, we
will, subject to specified limitations, be permitted to acquire
ownership of or rights to use 108 of the 200 available channels
in the 900 MHz frequency range allocated for specialized mobile
radio and other uses, in most of the thirteen markets that were
subject to restrictions in the consent decree. In some of those
major markets located near national boundaries, where only 100
channels are available in the 900 MHz frequency range, we will be
 permitted to acquire up to 54 of those channels. Additionally,
the consent decree and any related restrictions on our
utilization of additional 900 MHz channels in those markets will
terminate on October 30, 2000. As a component of the overall
 settlement, we were not permitted to complete our agreement to
acquire the 900 MHz channels in the consent decree markets held
by Geotek Communications, Inc. However, the Department of Justice
 withdrew its objections to our acquisition of Geoteks 900
MHz channel holdings outside the thirteen markets subject to the
restrictions of the consent decree, which we completed in
February 2000.

10.  NEXTBAND Transaction. On June 3,
1999, we sold our 50% interest in NEXTBAND Communications, L.L.C.
 to NEXTLINK Communications for about $138 million in cash and
recognized a gain of about $70 million, which is included in
 other income (expense) in our statement of operations.

11.  Microsoft Transaction. On May 27,
1999, Microsoft Corporation purchased about 17 million
shares of our class A common stock for a cash investment of
$600 million, representing a per share price of $36.00. The
agreements related to the transaction establish certain transfer
restrictions that apply to the shares purchased by Microsoft and
include an investor standstill provision. Additionally, we agreed
 to provide specified registration rights that apply to those
shares. In connection with this transaction, we entered into
agreements under which Microsoft is to provide certain Internet
portal services and related assistance in connection with our
Nextel Online service offering.

12.  Towers Transaction. On April 20,
1999, we and some of our subsidiaries and SpectraSite Holdings
and some of its subsidiaries consummated agreements under which
we transferred specified telecommunications towers and related
assets to SpectraSite, which we then leased back. In the
transaction, we received $560 million in cash, which we
reflected as a finance obligation on our balance sheet at that
time, and received about an 18% ownership interest in
SpectraSite, which has since been reduced to about 11% as of
February 29, 2000 as a result of the issuance of additional
shares by SpectraSite, including in connection with their initial
 public offering. In connection with the transaction, we entered
into an agreement for SpectraSite to construct additional towers
in the United States to support expansion of our digital mobile
network and the compatible digital mobile network of Nextel
Partners. During the second half of 1999, we received about an
additional $27 million for the transfer of additional towers
 which we then leased back.

13.  Nextel Partners Transactions. On
January 29, 1999, we entered into agreements with Nextel
Partners and certain other parties, including Motorola and Eagle
River Investments, L.L.C., an affiliate of Mr. McCaw,
relating to the capitalization, governance, financing and
operation of Nextel Partners. Nextel Partners is constructing and
 operating a digital mobile network utilizing the technology
developed by Motorola employed in our digital mobile network. In
connection with this transaction, we sold assets, and transferred
 certain Federal Communications Commission licenses, to Nextel
Partners. In exchange, at the date of transfer Nextel Partners
issued to us equity representing about a 29% voting interest in
Nextel Partners and having an agreed value of $131 million
and paid us about $132 million in cash related to the assets
 sold and the reimbursement of costs and net operating expenses.
On September 9, 1999, pursuant to the agreements, Nextel
Partners exercised its option to acquire specified additional
territories and assets from us and related Federal Communications
 Commission licenses (which we are in the process of
transferring), and we received an aggregate consideration of
about $19 million consisting of approximately

8



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The agreements with Nextel Partners establish circumstances in
which Nextel Partners will have the option to acquire specified
additional territories and related Federal Communications
Commission licenses from us. In addition, these agreements also
establish circumstances in which we will have the right or the
obligation to purchase the remaining equity interests in Nextel
Partners at specified prices.

F.  Fiscal Year 1999 International Transactions and
Developments

1.  Issuances of Preferred Stock. In a series
of transactions during 1999, Nextel International received
$200 million in proceeds from the issuance of 2,000 shares
of its series A exchangeable redeemable preferred stock to a
 wholly owned subsidiary of Nextel.

2.  Nextel International Motorola Incremental
Facility. On December 16, 1999, Motorola Credit
Corporation entered into a secured loan agreement under which
Motorola Credit agreed to provide up to about $57 million in
 an incremental term loan to Nextel International for working
capital purposes. The loan, fully drawn in January 2000,
will mature December 31, 2001 and will bear interest at
variable rates based upon either the U.S. prime rate or LIBOR.
Borrowings under this facility are secured by a pledge of all the
 shares of stock of Clearnet Communications held by Nextel
International.

3.  Brazilian Motorola Financing. In 1999,
Nextel Internationals Brazilian subsidiary notified
Motorola Credit of its noncompliance with some of the financial
covenants under its $125 million equipment financing
agreement. Motorola Credit agreed to waive compliance with the
financial covenants. In March 2000, Motorola Credit and this
 subsidiary entered into an amendment to the equipment financing
agreement. As of December 31, 1999, $104 million was
outstanding under this facility and this subsidiary is in
compliance with all financial covenants contained in the
facility, as amended.

4.  Argentina Bank Credit Facility. In 1999,
Nextel Internationals Argentine subsidiary, Nextel
Argentina, S.R.L., notified the administrative agent under its
$100 million bank credit facility of its anticipated
noncompliance with some of the financial covenants under the
facility. Nextel Argentina received waivers from the lenders
under this facility and in December entered into an amended
facility to modify several of the financial covenants. As of
December 31, 1999, $100 million was outstanding under
this facility and this subsidiary is in compliance with all
financial covenants contained in the facility, as amended.

In May 1999, Motorola Credit agreed to provide up to $50
million in loans to Nextel Argentina as incremental term loans
under the bank credit facility described above for the purchase
from Motorola of qualifying digital mobile network equipment and
related services. As of December 31, 1999, $8 million
of these incremental term loans had been borrowed under this
facility.

5.  Nextel International Financing. On
February 4, 1999, Nextel International and Motorola Credit
entered into definitive agreements providing for
$225 million in secured financing. The loans under this
facility are scheduled to be repaid in eight equal semi-annual
installments beginning June 30, 2001, will mature
December 31, 2004 and bear interest at variable rates based
on either the U.S. prime rate or LIBOR. The facility is secured
by, among other things, a pledge of the shares of stock of some
of Nextel Internationals direct and indirect subsidiaries
and affiliates. The availability of borrowings under this
facility is subject to the satisfaction or waiver of applicable
borrowing conditions. In the fourth quarter of 1999, Nextel
International notified Motorola Credit of its anticipated
noncompliance with some of the financial covenants under this
financing agreement. In December 1999, Motorola Credit
agreed to waive compliance with the financial covenants. In
March 2000, Motorola Credit and Nextel International entered
 into an amended and restated agreement. As of December 31,
1999, $139 million was outstanding under this facility and
Nextel International is in compliance with all financial
covenants contained in the facility, as amended.

6.  Management Changes. On March 24,
2000, Steven M. Shindler was appointed Interim Chief
Executive Officer of Nextel International. Mr. Shindler has
been a director on Nextel Internationals board

9



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7.  Brazil Currency Devaluation. During 1999,
there were significant fluctuations in the value of the Brazilian
 currency, the real, relative to the U.S. dollar due primarily to
 the devaluation of the real beginning in January 1999. As a
result of the devaluation of the real, we recorded a negative
cumulative translation adjustment of about $127 million as
other comprehensive income (loss) in our consolidated
statements of stockholders equity during 1999. We also
recognized foreign currency transaction losses of
$57 million principally related to these same factors in our
 statement of operations during 1999.

For additional information concerning transactions and
developments relating to Nextel International during 1999,
including those summarized above, see Nextel Internationals
 Annual Report on Form 10-K for the year ended
December 31, 1999 filed with the Securities and Exchange
Commission.

G.  Post Fiscal Year 1999 Transactions and
Developments

1.  Incremental Bank Financing. On
March 15, 2000, we, some of our subsidiaries and some of our
 lenders established the $1.0 billion incremental senior
secured term loan under our existing bank credit facility. As a
result, the total amount of borrowings available under our bank
credit facility increased from $5.0 billion to
$6.0 billion. We borrowed the entire amount of this
incremental $1.0 billion term loan on March 15, 2000.
The maturity date of this loan is March 31, 2009, although
the maturity date can accelerate if our credit ratings are below
specified levels and the aggregate amount of specified debt
obligations that mature before June 30, 2009, and the
redemption price of redeemable stock that is mandatorily
redeemable before June 30, 2009, exceed specified amounts.
Loans under the bank credit facility bear interest payable
quarterly, at variable rates calculated based on either the U.S.
prime rate or LIBOR.

2.  Announcement of Stock Split. On
February 22, 2000, we announced a 2-for-1 common stock split
 to be effective upon stockholder approval of a proposed increase
 in our authorized equity capitalization at the annual
stockholders meeting scheduled for May 25, 2000. Assuming
receipt of required stockholder approval, we expect the new
shares of common stock will be distributed on June 6, 2000
to stockholders of record as of May 26, 2000.

3.  Initial Public Offerings of SpectraSite and of
Nextel Partners. On February 4, 2000, SpectraSite
consummated the initial public offering of its common stock. On
February 25, 2000, Nextel Partners consummated the initial
public offering of its common stock. After giving effect to these
 transactions (including the conversion of some shares of
nonvoting stock we held into additional shares of voting common
stock of Nextel Partners), we, through our subsidiaries,
beneficially own about 11% of SpectraSite and about 33% of Nextel
 Partners.

4.  5.25% Convertible Senior Notes. In
February 2000, we completed the issuance and sale in a
private placement of an aggregate of $1.15 billion in
principal amount of our 5.25% convertible senior notes due 2010,
generating about $1.13 billion of net cash proceeds. Cash
interest is payable on these notes semi-annually on
January 15 and July 15 of each year commencing
July 15, 2000. These notes are convertible at the option of
the holders into class A common stock at any time prior to
redemption, repurchase or maturity at a conversion price of
$148.80 per share, subject to adjustment. These notes are
redeemable at our option at any time on or after January 18,
 2003 at specified redemption prices plus accrued interest. These
 notes are senior unsecured indebtedness of ours and rank equal
in right of payment with all our other unsubordinated, unsecured
indebtedness.

10



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Because these notes were issued in a private placement, they may
not be offered or sold in the United States absent an effective
registration statement or an applicable exemption from the
registration requirements of the Securities Act. In the event
that these notes are not registered with the Securities and
Exchange Commission prior to August 31, 2000, additional
incremental interest on the principal amount of these notes will
accrue until they are registered or other requirements are met.

5.  Purchase of Motorola Internationals Common
Equity Shares in Companies in Brazil, Peru and Chile.
Nextel International recently has agreed in principle with
Motorola International Development Corporation to purchase, for
about $72.6 million in cash all of their shares in the
following companies:

  Nextel del Peru, S.A.,

  Nextel S.A. (Brazil); and



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | three analog SMR companies wholly owned by Motorola International
	 Development Corporation and operating in Chile.

If these transactions are completed, Nextel International would
acquire 190 SMR channels in Chile and increase its equity
ownership interest in Nextel Peru from 64% to 95% and in
Nextels Brazilian operating subsidiary from 88% to 92%.
Consummation of these transactions is subject to execution of
definitive agreements and satisfaction or waiver of various
conditions.

H.  Wireless Industry Overview

1.  Development of the Wireless Communications
Industry. Todays wireless communications industry
began in 1970 when the Federal Communications Commission, known
as the FCC, reallocated 115 MHz of radio spectrum in the 800/900
MHz bands from the federal government and UHF television to land
mobile service use to provide high-quality, high-capacity
communications services to vehicle-mounted and hand-held portable
 telephones and other two-way radio units. The FCC has allocated
50 MHz for cellular service, which were allocated in equal blocks
 to two cellular operators in each metropolitan statistical area
or rural statistical area, and 46 MHz for private radio services,
 including specialized mobile radio, otherwise known as SMR. The
remaining 19 MHz are divided among six different services.
Because of regulatory delays, the first commercial cellular
systems were not operational until 1983. Since then, however,
growth in the industry has been rapid, with about 76 million
 wireless phone units (consisting of analog cellular, digital
cellular and PCS units) in service at June 30, 1999. The
first SMR systems became operational in 1974, and SMR units in
service had grown to about 6 million by December 31,
1999 (consisting of both analog and digital SMR units). The
number of other private radio users is estimated to be about
16 million as of December 31, 1999.

2.  SMR and Cellular/ PCS Telephony. The
cellular telephone industry was created by the FCC as a regulated
 duopoly. The FCC awarded only two licenses to provide cellular
service in the service area of any given metropolitan statistical
 area or rural statistical area. Subsequently, the FCC allocated
120 MHz of spectrum in the 1.8-2.2 GHz band for the provision of
PCS, which include mobile wireless communications services
similar to those provided over our digital mobile network. The
FCC has awarded three 30 MHz and three 10 MHz PCS licenses for
this PCS spectrum through a competitive bidding process. Since
August 10, 1996, SMR operators have been subject to the same
 common carrier obligations as cellular and PCS operators,
although a more limited amount of spectrum is assigned to a
single SMR licensee as compared to cellular and PCS licensees.
See  K. Regulation for additional
information. Within the limitations of available spectrum and
technology, SMR operators are authorized to provide mobile
communications services to business and individual users,
including the bundled products already offered by us, as well as
wireless Internet connectivity and digital two-way mobile data
services.

I.  Our Digital Mobile Network

1.  Digital Mobile Network Services. We are
designing and constructing our digital mobile network to support
the full complement of digital wireless services described above.
 See  B. Overview. Additionally, we are
scheduled to offer our customers wireless access to the Internet
and new digital two-way mobile data services in the second
quarter of 2000.

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Our digital mobile network provides customers desiring mobile
telephone service with access to features competitive with those
offered by other current wireless communications services, such
as the hand-off of calls from one site to another and
 in-building signal penetration for improved portable
 performance in selected high usage areas. In addition to the
mobile telephone and two-way radio dispatch functions, our
digital mobile network has been designed to include a signaling
or paging capability, which also has been built into each
subscriber unit, to enable a customer to receive alphanumeric
short-text messages. In the fourth quarter of 1999, we delivered
an average of more than 2.5 million text messages per month.
 Our digital mobile network offers customers additional features,
 such as voicemail, call hold, call waiting, no-answer or
busy-signal transfer, call forwarding, three way calling and two
lines. Working together with Motorola and others, we have adapted
 our iDEN-based packet data network to enable wireless Internet
connectivity and new digital two-way mobile data services.

Nextel International, through its subsidiaries and affiliates, is
 constructing and operating digital networks employing iDEN
technology on 800 MHz spectrum holdings in major metropolitan
market areas located in Argentina, Brazil, Mexico, Peru and the
Philippines and on 1.5 GHz spectrum holdings in major Japanese
market areas, including Tokyo. We have entered into
interoperability agreements with Clearnet Communications and with
 Communiçaciones Nextel del Mexico S.A. de C.V., a
subsidiary of Nextel International, to provide, among other
things, for coordination of customer identification and
validation necessary to facilitate cross-border roaming service
in North America.

We have roaming agreements currently in effect with Nextel
Partners (covering all of the United States market areas in which
 Nextel Partners currently (or will in the future) provide
iDEN-based digital mobile services) and Clearnet Communications
(in Canadian market areas where Clearnet Communications offers
iDEN-based digital mobile services). In April 2000, we plan
to launch our Nextel Worldwide service offering with the
introduction of Motorolas i2000 subscriber unit. The i2000
is a dual mode subscriber unit that operates on both the iDEN
technology used by Nextel and the GSM 900 standard and will allow
 seamless digital roaming in over 65 countries worldwide with the
 convenience of one phone, one number and one bill.

2.  Digital Mobile Network Technology. Our
digital mobile network, as currently deployed, combines the
advanced iDEN technology developed and designed by Motorola, with
 a low-power, multi-site transmitter/receiver configuration that
permits frequency reuse. The iDEN technology 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
PCS operators in the United States. The design of our existing
and proposed digital mobile network currently is premised on
dividing a service area into multiple sites having a typical
coverage area of from less than one mile to up to thirty miles in
 radius (depending on the terrain and the power setting). Each
site contains a low-power transmitter, receiver and control
equipment referred to as the base station. The base station in
each site is connected by microwave, fiber optic or telephone
line to a computer controlled switching center. The switching
center controls the automatic hand-off of cellular calls from
site to site as a subscriber travels, coordinates calls to and
from a subscriber unit and connects cellular calls to the public
switched telephone network. In the case of two-way dispatch, a
dispatch application processor provides a call setup and
identifies the target radio and connects the subscriber
initiating the call to the other subscriber (in the case of a
private call) or to a number of other subscribers (in the case of
 a group call) to whom the call is directed in the requested
service areas. Northern Telecom, Inc. has supplied the mobile
telephone switches for our digital mobile network. At
December 31, 1999, we had 46 operational switches and about
8,800 cell sites constructed and in operation in our digital
mobile network.

Currently, there are three principal digital technology formats
that are deployed by providers of cellular telephone service or
by certain PCS providers or licensees in the United States. One
such format is Time Division Multiple Access, referred to as
TDMA, digital transmission technology, a version of which, known
as three-time slot TDMA, has been and is expected to
be deployed by certain cellular operators. The second principal
format, known as Code Division Multiple Access, referred to as
CDMA, digital transmission technology, has been and is expected
to be deployed by certain other cellular and PCS operators. The
third principal format, known as GSM-PCS, is an updated,
up-banded, PCS-adapted

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Although TDMA, CDMA and GSM-PCS are digital transmission
technologies, and thus share certain basic characteristics and
areas of contrast to analog transmission technology, these
transmission technologies are not compatible or interchangeable
with each other. Although Motorolas proprietary iDEN
technology is based on the TDMA technology format, it differs in
a number of significant respects from the TDMA technology
versions being assessed or deployed by cellular operators and PCS
 licensees in the United States, which differences may have
important consequences.

The implementation of digital mobile network design and
technology significantly increases the capacity of our existing
SMR channels. This increase in capacity is accomplished in two
ways.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | First, each channel is capable of carrying (1) up to six
	voice and/or control paths by employing six-time slot TDMA
	digital technology or (2) up to three voice and control
	paths by employing the three-time slot TDMA digital technology.
	Each voice is converted into a stream of data bits that are
	compressed before being transmitted, allowing each of the
	time-slotted voice and control paths to be transmitted on the
	same channel without causing interference. Upon receipt of the
	coded voice data bits, the subscriber unit decodes the voice
	signal. Using the iDEN technology, we achieve about six times
	improvement in channel utilization capacity for channels used for
	 two-way dispatch service and about three times improvement in
	channel utilization capacity for channels used for mobile
	telephone service.
|
| |  | Second, a system design is employed that reuses each channel many
	 times throughout the market area in a manner similar to that
	used in the cellular industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

The use of six-time slot TDMA technology for two-way dispatch
service and three-time slot TDMA technology for mobile telephone
service, in combination with reuse of our licensed frequencies in
 a cellular-type system design, permits us to utilize our current
 holdings of SMR spectrum more efficiently.

3.  Technology Commitments. Pursuant to our
equipment purchase agreements with Motorola first entered into in
 1991, as subsequently amended, Motorola provides the iDEN
infrastructure and subscriber unit equipment throughout our
markets. In 1999, we and Motorola further memorialized our
infrastructure and subscriber unit purchase arrangements by
entering into several supply agreements. These agreements set
forth the prices we must pay to purchase and license this
equipment as well as a structure to develop new features and make
 long-term improvements to our network. Motorola is recognized as
 the overall integrator of our digital mobile network elements
and has committed to make some components of our network
available to us. We and Motorola have also agreed to warranty and
 maintenance programs and specified indemnity arrangements. We
expect to rely principally on Motorola for the manufacture of a
substantial portion of the equipment necessary to construct our
digital mobile network and subscriber unit equipment for the next
 several years. See  M.  Risk
Factors  5. We Rely on Motorola for Substantially All
of Our Equipment and Technology, and Any Failure of Motorola To
Perform Would Adversely Affect Our Operating Results. In
addition, under some circumstances, we have agreed to purchase
50% of our infrastructure equipment from Motorola.

We continuously review alternate technologies as they are
developed. To date, however, it has not been regarded as
necessary or as a commercially feasible strategy to adapt
currently available alternative technologies to operate on our
present spectrum position. Having been the high bidder on 475
economic area licenses in the 800 MHz SMR auction held in 1997,
we have the opportunity to operate on up to an average of 10 MHz
of contiguous spectrum in nearly every major market in the United
 States. By relocating incumbent operators out of this spectrum,
we have access to contiguous channel blocks, similar to our
cellular and PCS competitors. We continue to pursue regulatory
initiatives that would provide SMR operators, including us, with
additional rights to use contiguous blocks of spectrum. See
 K. Regulation. The availability of a
 significant block of contiguous spectrum would permit the
introduction of a broader range of technology options not
available on non-contiguous spectrum blocks.

13



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4.  System Construction. The first step
required to achieve the build-out of the digital mobile network
in a market is the completion of the radio design plan, which
typically takes about four months. This stage involves the
selection of specific areas in the market for the placement of
base station sites and the identification of specific frequencies
 that will be employed at each site in the initial configuration.
 Sites are selected on the basis of:



| |   |                                               
| | - | ----------------------------------------------
| |  | their proximity to targeted customers;        
|
| |  | the ability to acquire and build the site; and
|
| |  | frequency propagation characteristics.        

Site procurement efforts include obtaining leases and permits,
and in many cases, zoning approvals. This site acquisition
process for a systems initial construction in a market,
depending on the number of sites, typically takes from two to
eighteen months. Preparation of each site for equipment
installation, including construction of equipment shelters,
towers and power systems, grounding, ventilation and air
conditioning, typically takes six weeks, while equipment
installation, testing and pre-operational systems optimization
generally takes an additional six weeks prior to commencing
system operation. Following commencement of system operations in
a selected market, we expect to continually add new sites to this
 system in order to improve coverage and capacity. See
 M. Risk Factors  16. Our
Forward Looking Statements Are Subject to a Variety of Factors
that Could Cause Actual Results to Differ Materially From Current
 Beliefs. In an effort to improve our digital mobile
network and expedite network deployment in existing markets, in
new markets and in heavily traveled corridors between markets, we
 completed a transaction in 1999 for SpectraSite to purchase 2000
 of our towers and build up to 1,700 new towers (See
 E. Fiscal Year 1999 Domestic Transactions
and Developments  12. Towers Transaction) and
signed a master lease agreement for the co-location of sites on
Crown Castle International Corporations domestic
communications towers.

5.  Marketing. Our marketing strategy focuses
principally on targeting business users that we believe will be
likely to perceive and appreciate the potential for our wireless
communication service capabilities to increase efficiencies and
reduce costs in their business activities. We continue to believe
 that our ability to deliver a full line of integrated mobile
communications services using a single, multi-function subscriber
 unit on our digital mobile network significantly differentiates
us from other providers of wireless communications services. The
progress of our digital mobile network services marketing efforts
 is and will continue to depend upon numerous factors, including:



| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | system performance;                                                                                                     
|
| |  | subscriber equipment performance; and                                                                                   
|
| |  | the ability to deliver services that satisfy customer needs and
	expectations, including wireless Internet connectivity.

We review our business and marketing plans in light of:



| |   |                                                    
| | - | ---------------------------------------------------
| |  | perceived opportunities;                           
|
| |  | actual experiences in the marketplace;             
|
| |  | availability of financial and other resources; and 
|
| |  | overall economic and/or competitive considerations.

14



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As a result of these reviews, we may from time to time determine
to change, refine or redirect our plans. See
 M.  Risk Factors  16. Our
Forward Looking Statements Are Subject to a Variety of Factors
that Could Cause Actual Results to Differ Materially From Current
 Beliefs.

6.  Competition. We may compete with the two
established cellular licensees and may compete with as many as
six PCS licensees in each of the markets where our digital mobile
 network operates. Additional licensees may enter these markets
operating systems utilizing frequencies obtained in contemplated
FCC auction proceedings, including those involving 700 MHz
frequency allocations and those involving auctions or re-auction
of 1.9 GHz PCS frequency allocations, each of which is scheduled
to occur later in 2000. 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, some of
which have financial resources, subscriber bases and name
recognition greater than we do. PCS operators currently compete
and likely will continue to compete with us in providing some or
all of the services available through our digital mobile network.
 Additionally, we expect that existing PCS and cellular service
providers will continue to upgrade their systems to provide
digital wireless communications services competitive with those
available on our digital mobile network. Moreover, cellular
companies have been granted authority to participate in dispatch
services and wireline companies have been granted authority to
participate in SMR services. We also expect our digital mobile
network business to face competition from other technologies and
services developed and introduced in the future. See
 M. Risk Factors  3. Our Future
Performance Will Depend on Our Ability to Succeed in the Highly
Competitive Wireless Communications Industry and
 16. Our Forward Looking Statements Are
Subject to a Variety of Factors that Could Cause Actual Results
to Differ Materially From Current Beliefs.

The FCC has reallocated spectrum for use by emerging
telecommunications technologies, such as PCS and satellite
systems and has authorized a consortium of communications
companies to provide telecommunications services from
geo-stationary and low-earth-orbit satellites. We cannot predict
how these technologies or future technologies will develop or
what impact, if any, they will have on our ability to compete for
 wireless communications services customers.

J.  Agreements with Significant Stockholders

1.  McCaw Interests. Under the terms of a
securities purchase agreement dated as of April 4, 1995, as
amended, among Nextel, Digital Radio, L.L.C. and Mr. McCaw
and certain other related agreements:



| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Digital Radio purchased on April 5, 1995 from us, about
	1.2 million shares of our class A common stock for an
	aggregate purchase price of about $15 million; and
|
| |  | Digital Radio purchased from us on July 28, 1995, for an
	aggregate purchase price of $300 million, an aggregate of
	8.2 million units consisting of a total of:  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | about 8.2 million shares of our class A convertible
	redeemable preferred stock, par value $0.01 per share, referred
	to as the class A preferred stock;                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | 82 shares of our class B convertible preferred stock, par value
	$0.01 per share, referred to by us as the class B preferred
	 stock; and                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | options to acquire an aggregate of up to 35 million shares
	of our class A common stock at exercise prices ranging from
	$15.50 to $21.50 per share (15 million, including
	3.4 million shares transferred in November 1997, of
	which were purchased on July 28, 1999 for an aggregate cash
	purchase price of approximately $278 million, 15 million of
	which were purchased on July 28, 1997 for an aggregate cash
	purchase price of approximately $233 million and 5 
	million, including 1.5 million shares transferred in
	November 1997, exercisable through July 2001).

In addition, in connection with the agreements relating to the
exercise of the options exercised on July 28, 1997, an
affiliate of Mr. McCaw, Option Acquisition, L.L.C.,
purchased options to acquire up to 25 million shares of our
class A common stock at exercise prices of either $16.00 per
 share or $18.00 per

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Additionally, in connection with these equity investments, we
reached an agreement with Digital Radio and Mr. McCaw on a
number of matters relating to the ownership, acquisition and
disposition of the class A preferred stock and the class B
preferred stock, including without limitation, the granting of
registration and antidilutive rights to Digital Radio and
specified affiliates and limitations on investments by Digital
Radio and its affiliates in excess of about 45% of our voting
securities. Finally, on July 28, 1995, pursuant to
agreements between Digital Radio and Motorola entered into our
connection with the original securities purchase agreement,
Digital Radio purchased 4 million shares of our class A
common stock from Motorola and Motorola granted to Digital Radio
the option to purchase up to an additional 9 million shares
of class A common stock held by Motorola. See
 2. Motorola for subsequent related
events.

Pursuant to the original securities purchase agreement, our
certificate of incorporation and our by-laws, we, Digital Radio
and Mr. McCaw have established certain arrangements relating
 to our corporate governance associated with those investments,
including, without limitation, matters relating to Digital
Radios right to elect a minimum of three representatives to
 our board of directors (or that number of directors representing
 not less than 25% of all of the members of the board of
directors, if greater). We also agreed to create a five-member
operations committee of the board of directors and Digital Radio
is entitled to have a majority of the members of this committee
selected from among its representatives on the board of
directors.

The operations committee has the authority to formulate key
aspects of our business strategy, including decisions relating to
 the technology we use, acquisitions, operating and capital
budgets, marketing and strategic plans, approval of financing
plans and endorsement of nominees to the board of directors and
its committees, as well as nomination and oversight of certain
executive officers. Currently, the three Digital Radio designees
on the board of directors also serve as members of the operations
 committee, of which Mr. McCaw is the Chairman. The board of
directors, by a majority vote, may override actions taken or
proposed by the operations committee, although doing so would
give rise to a $25 million liquidated damages payment to
Digital Radio and the commencement of the accrual of a 12%
dividend payable on the stated value of all outstanding shares of
 class A preferred stock (an aggregate stated value of about
$291 million). However, the board of directors, by a defined
 super-majority vote, retains the power to override actions taken
 or proposed by the operations committee without triggering these
 obligations. In addition, the board of directors also may act to
 terminate the operations committee, although this action by the
board of directors would, in certain circumstances, result in the
 obligation to make the liquidated damages payment and result in
the commencement of the dividend accrual.

The securities purchase agreement with Mr. McCaw, our
certificate of incorporation and our by-laws also delineate a
number of circumstances, chiefly involving or resulting from
certain events with respect to Digital Radio or Mr. McCaw,
in which the operations committee could be terminated but the
liquidated damages payment and dividend accrual would not be
required.

The shares of class A preferred stock are redeemable at our
option, and the shares of class B preferred stock are mandatorily
 convertible, in the event of a change of control of our company
(as defined in the terms of that stock). Further, Digital Radio
has agreed that, subject to limited exceptions (including
existing securities holdings and relationships), until one year
after the termination of the operations committee, neither
Digital Radio nor its controlled affiliates will participate in
other two-way terrestrial-based mobile wireless communications
systems in any part of North America or South America, unless
those opportunities first have been presented to and waived or
rejected by us in accordance with the provisions of the
securities purchase agreement.

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Pursuant to an agreement entered into by us and Motorola in
connection with our securities purchase agreement with Digital
Radio and Mr. McCaw, Motorola has agreed to support the
decisions and recommendations of the operations committee and to
vote the shares of common stock held by it accordingly, subject
to:



| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the right of any Motorola-designated members of the board of
	directors to vote in a manner consistent with their fiduciary
	duties; and                                                                                                                                    
|
| |  | the right of Motorola to vote its shares as it determines
	necessary with respect to issues that conflict with
	Motorolas corporate ethics or that present conflicts of
	interest, or in order to protect the value or marketability of
	our common stock held by Motorola.

Concurrently with the execution of the securities purchase
agreement with Digital Radio and Mr. McCaw, we entered into
a management support agreement with Eagle River, Inc., an
affiliate of Digital Radio, pursuant to which Eagle River
provides management and consulting services to us, the board of
directors and the operations committee from time to time as
requested. In consideration of the services to be provided to us
under the management support agreement, we entered into an
incentive option agreement granting to Eagle River the option to
purchase an aggregate of 1 million shares of class A
common stock at an exercise price of $12.25 per share. This
option expires on April 4, 2005, and is presently
exercisable with respect to 800,000 shares and becomes fully
exercisable on April 4, 2000. Additionally, pursuant to the
management support agreement, we agreed to reimburse Eagle River
for all out-of-pocket costs, plus up to $200,000 per year for all
 allocable overhead costs reasonably incurred by Eagle River in
connection with the performance of its obligations under this
agreement. Payments in the amount of about $150,000 were made to
Eagle River pursuant to this agreement during 1999.

2.  Motorola. On July 28, 1995, we
acquired all of Motorolas 800 MHz SMR licenses in the
continental United States in exchange for 41.7 million
shares of class A common stock and 17.8 million shares of
nonvoting class B common stock. As a result of the agreement
relating to that acquisition, Motorola currently has the right to
 nominate two persons for election as members of our board of
directors. Motorola has exercised this right only with respect to
 one director. We are also party to agreements with Motorola
pursuant to which we purchase Motorola infrastructure equipment
and digital subscriber units. See  I.  Our
Digital Mobile Network  3. Technology
Commitments. The agreements relating to the acquisition of
Motorolas SMR licenses also provided for the purchase by us
 of a portion of Motorolas equity interest in Clearnet
Communications (which equity interest was purchased by us and is
now held by Nextel International) in exchange for
2.5 million shares of our class A common stock.

On July 28, 1995, Motorola sold to Digital Radio
4 million shares of our class A common stock at $12.25 per
share and granted Digital Radio the option to purchase up to an
additional 9 million shares of class A common stock, 2
million over two two-year periods and 5 million over the
final two-year period. Digital Radio exercised the first tranche
of this option on September 3, 1997, acquiring
2 million shares of our class A common stock at $15.50 per
share. The second tranche of this option was fully exercised on
August 28, 1999 at $18.50 per share, including options for
0.5 million shares transferred in November 1997. The
third tranche of options for 5 million shares becomes
exercisable at $21.50 per share during the 30-day period
commencing July 28, 2001, including 1.1 million options
 for shares transferred in November 1997. In addition,
Motorola has granted Digital Radio a right of first offer or a
right of first refusal to purchase shares of common stock that
are owned by Motorola.

K.  Regulation

1.  Domestic Regulation. The licensing,
operation, acquisition and sale of our SMR businesses are
regulated by the FCC pursuant to the Communications Act of 1934,
as amended. SMR regulations have undergone significant changes
and continue to evolve as new FCC rules and regulations are
adopted pursuant to the Omnibus Budget Reconciliation Act of
1993, referred to as OBRA 93, and the Telecommunications
Act of 1996, referred to as TCA 96, each of which amended
portions of the Communications Act. The rule changes have been
intended to provide SMR operators with a regulatory

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With regard to the licensing of our digital mobile network, our
FCC licensing subsidiaries have held two kinds of licenses to
deploy SMR radio channels in digital mode in each of their
markets. The first type of SMR license is known as an economic
area or EA license, which, like the spectrum licenses
 assigned to cellular and PCS providers, has been granted on a
geographic-area basis. The other type of SMR license, known as a
wide-area SMR license, has been granted on a
site-by-site basis. We hold thousands of these licenses. In
December of 1999, the FCC adopted new SMR wide-area construction
rules in response to a federal court decision requiring the FCC
to impose comparable construction requirements on both EA
licensees and wide-area licensees. These new rules generally
permit both types of licensees to meet their construction
requirements using a common system of benchmark dates tied to
their initial license grant dates: within three years of the
license grant date the licensee must provide coverage to one
third of the population in its licensed area, and within five
years of the grant date it must cover two thirds of the
population in its licensed area.

This act of regulatory parity will eliminate our need to build
out areas covered by numerous wide-area SMR licenses on a
site-by-site basis. To the extent that our wide-area licenses
authorize non-SMR channels, current rules require construction on
 a site-by-site basis, i.e., each and every site must be
constructed and operational without regard for population
coverage. On March 10, 2000, the FCC released a Public
Notice seeking comment on whether wide-area licenses for non-SMR
channels also should be subject to comparable population coverage
 requirements. Comments were due by March 27, 2000 and reply
 comments are due by April 6, 2000. These construction
deadlines also may be impacted by the completion of the
FCCs current rulemaking implementing the Balanced Budget
Act of 1997. This rulemaking may be adopted as soon as
April 2000. In late 1999, we were granted a waiver of the
FCCs rules to permit us to integrate a limited number of
business and industrial/land transportation channels into our
digital mobile network. These channels, obtained via assignments
from existing licensees as part of the relocation process
described below, provide us additional capacity in some urban
markets.

The FCC began assigning EA licenses in 1997, when it auctioned
the upper 200 800 MHz SMR channels in three blocks (20 channels,
60 channels and 120 channels) per EA throughout the U.S. in an
auction referred to as the Upper Channel Auction.
These licenses permit the licensee to construct and operate base
stations on any authorized channel throughout the licensed
geographic area and to make system modifications within the
service area without prior FCC approval, thus providing the same
operational flexibility provided to cellular and PCS licensees.
We were the high bidder on 475 of the 525 EA licenses auctioned
at the Upper Channel Auction, covering areas in all 50 states. As
 described above, our system must cover one-third of the
population of each licensed EA within three years and two-thirds
of the population of the economic area within five years, and we
must construct 50% of our licensed channels in at least one
location within each EA within three years. Given our existing
constructed analog and digital footprint, these build-out
requirements already have been achieved in a substantial number
of the EAs, and we anticipate meeting all required benchmarks
(which occur in 2001 and 2003).

We are authorized to relocate incumbent providers out of our
EA-licensed areas to the lower 800 MHz channels. Pursuant to the
FCCs relocation rules, we provided relocation notice to
incumbent providers on or before March 4, 1999 and are now
engaged in the relocation of numerous incumbent systems
nationwide. Relocation of these incumbents will provide us the
ability to reuse our EA channels more broadly throughout our
licensed geographic areas. Any incumbents that are not relocated
must be afforded co-channel interference protection.

The FCC has announced that it will hold auctions of the lower 230
 800 MHz SMR channels beginning on August 23, 2000 and
September 13, 2000. Until the start of those auctions, the
FCC has frozen all further awards of licenses on these channels.
Although auctioned on an EA basis, these licenses will be for
channel blocks of only five or 25 channels. After the auction of
the lower 800 MHz channels, incumbents on those channels will not
 be subject to relocation, and EA licensees must provide
co-channel protection to incumbents. Lower channel EA licensees
will be required to construct systems adequate to

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In 2000, the FCC is expected to auction additional spectrum that
can be used for providing commercial mobile radio services,
commonly know as CMRS, which includes SMR, cellular or PCS
services. The FCC has scheduled July 26, 2000 as the start
date for reauctioning reclaimed C and F block PCS licenses,
including those initially awarded to NextWave
Communications, Inc. and some of its affiliates which were
cancelled by the FCC after NextWave failed to timely make
payments as required by the terms of the license award. The
NextWave licenses are the subject of ongoing legal
challenges in bankruptcy court, and NextWave has
challenged the FCCs authority to cancel those licenses and
re-auction the spectrum at the FCC, in the U.S. Court of Appeals
for the District of Columbia Circuit, and in the U.S. Court of
Appeals for the Second Circuit. We and other entities with
significant business operations and net worth have expressed
interests in acquiring this spectrum and have sought permission
to participate in the re-auction through waivers or other similar
relief from the application of the FCCs current rules that
restrict eligibility to participate in auctions for C and F block
licenses to entities with total revenues and gross assets below
specified limits. The FCC has solicited comment on various proposals
on how it should re-auction this spectrum, including a proposal by
us. At this time it is unclear whether the scheduled re-auction
will be open to all interested parties or limited to small
businesses, whether it will include all the licenses identified
as candidates for re-auction by the FCC, and whether it will
proceed on its currently announced timetable.

Also scheduled for auction starting in June 2000 is the
spectrum currently used by the television channels 60-69, which
is located in the 700 MHz spectrum band and can be used for a
broad variety of commercial applications. However, under the
current rules the incumbent television licensees are not required
 to relinquish channels 60-69 until 2006, thus limiting the
usefulness of this spectrum for other purposes, including
wireless mobile communications, until that time.

As a CMRS provider, our use and aggregation of radio spectrum,
our technical operation and, in some cases, our relationships
with third parties, are regulated by the FCC. Since the
establishment of the CMRS regulatory framework, the FCC has
permitted cellular licensees and wireline companies the authority
 to participate in dispatch and SMR services, respectively, and
the FCC has imposed on us and other CMRS operators a 45 MHz CMRS
spectrum cap in non-rural areas and a 55 MHz CMRS spectrum cap in
 rural areas, thus limiting the amount of CMRS spectrum (e.g., cellular, PCS, and SMR) any single provider can hold in any
particular geographic area. However, no more than 10 MHz of SMR
spectrum in the 800 and 900 MHz SMR service can be attributed to
one entity under existing rules. Accordingly, only 10 MHz of SMR
spectrum is attributed to us in any one geographic area for
purposes of the cap.

The FCC also requires us to permit our services to be resold. In
1998, the FCC initiated an investigation into our resale
policies. We have provided timely responses to all FCC inquiries.
 The proceeding is pending. Additionally, the FCC requires
wireless carriers to permit manual roaming by users with
technically compatible equipment, to contribute to federal and
state universal service funds, to comply with requirements under
the Communications Assistance for Law Enforcement Act as well as
the disability access provisions of Section 255 of the TCA
96, and to comply with customer proprietary network
information use restrictions. Local telephone number portability
for wireless carriers was delayed until November 24, 2002.
Furthermore, the FCC is considering the imposition of an
automatic roaming obligation on all CMRS providers. In 1999, the
FCC adopted rules governing how wireless and other carriers bill
their customers and imposed on wireless carriers limited
additional requirements for billing disclosures. The FCC in 1999
also adopted rules requiring wireless service providers like us
to average, to some extent, the interstate long-distance rates
charged to customers. Each of these existing and potential
regulatory obligations could increase the costs of our and our
competitors operations.

The FCC requires that CMRS providers be capable of transmitting
calls for 911 assistance from individuals using teletext devices,
 primarily people with speech or hearing disabilities. The
obligation was

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We and other CMRS providers are also required to make enhanced
911, or E911, service available to customers in
cooperation with local rescue authorities. In the current phase,
Phase I of the E911 mandate, wireless carriers must improve upon
the traditional 911 emergency calling system by providing local
authorities not only with the content of each emergency call but
also the callers wireless phone number and approximate
location. In Phase II, which was originally scheduled to start on
 October 1, 2001, wireless carriers must improve upon the
accuracy of the location data. In late 1999, the FCC modified its
 E911 rules primarily to eliminate the right of CMRS carriers to
recover from the responsible public authority the costs of
providing E911 service in both Phase I and Phase II. In
 a separate action, the FCC increased the location accuracy
requirements of Phase II and accelerated the implementation
dates for certain carriers depending on their choice of
Phase II technology. Many participants in the wireless
industry, including service providers and handset manufacturers,
are seeking reconsideration of the Phase II requirements.
The FCC has yet to act on these petitions for reconsideration.
These decisions could have a significant adverse financial impact
 on wireless carriers, including us.

In addition, state commissions have become increasingly
aggressive in their efforts to conserve numbering resources.
These efforts may disproportionately impact wireless service
providers by imposing additional costs or limiting access to
numbering resources. The FCC recently granted a number of states
additional authority to implement number conservation measures
pending the adoption of FCC rules implementing number
conservation guidelines. These rules were adopted on
March 17, 2000. While the text of the order has not yet been
 released, press reports indicate that the FCC will require that
telephone numbers be allocated to wireline carriers in smaller
blocks and that all carriers will be held to higher standards to
demonstrate their need for additional numbers. The FCC also
indicated that wireless carriers, once they implement number
portability in November 2002, will also be assigned smaller
blocks of numbers. The FCC also initiated a rulemaking to examine
 aspects of its new rules, including cost recovery, appropriate
carrier utilization thresholds and whether the FCC should charge
carriers for telephone numbers. These actions may affect the
ability of all carriers, including us, to access telephone
numbers to assign to their customers.

A number of states and localities also are considering banning or
 restricting the use of wireless phones while driving a motor
vehicle. To date, no state has banned or limited wireless phone
usage but three localities (two in Pennsylvania and one in Ohio)
have mandated that drivers use hands-free accessories when using
their wireless phones while driving.

In its implementation of TCA 96, the FCC established new
federal universal service mechanisms that affect CMRS operators.
Under the new rules, wireless service providers potentially are
eligible to receive universal service subsidies for the first
time; however, they also are required to contribute to both
federal and state universal service funds. On October 8,
1999, in response to a ruling from U.S. Court of Appeals for the
Fifth Circuit, the FCC revised its rules for determining federal
universal service contributions to eliminate revenues from
intrastate services from its calculations. This action increased
the costs of providing interstate services, such as long distance
 for all telecommunications service providers.

As is true for cellular and PCS operators, the interconnection of
 subscriber calls from our network with the public switched
telephone network requires us to obtain certain exchange and
interexchange services from telephone companies. In 1996, the FCC
 established, and the U.S. Supreme Court generally upheld, a
national regulatory framework that sets pricing standards and
negotiation and arbitration guidelines for interconnection
agreements with incumbent local exchange carriers, known as
ILECs. Most significantly, the agreements entitle interconnecting
 carriers such as us to reciprocal compensation for
calls originated on an ILEC network and terminated on our
network. Previously, we were forced to compensate the ILECs for
their termination services but ILECs refused to pay us for
terminations of their

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A proceeding is pending at the FCC to determine how rate
integration requirements apply to typical CMRS offerings,
including single-rate plans. Until this proceeding is concluded,
the FCC will enforce long distance rate integration on our
services only where we separately state a long distance toll
charge and bill those charges to our customers. Like other phone
service providers, to the extent that we offer services subject
to the FCCs rate integration and averaging requirements,
our pricing flexibility is generally reduced.

Allegations of harmful effects from the use of cellular antenna
structures and phones prompted an industry-funded study
concerning the safety of the radio frequency energy emitted from
these devices. In August of 1997, the FCC also took action to
ensure radio frequency safety by updating and strengthening its
standards governing radio frequency exposure for communications
site workers and members of the general public. The updated rules
 also require FCC licensees, including us, to ensure that their
sites comply with the new standards by September 1, 2000. In
 February 2000, these rules were upheld by the U.S. Court of
 Appeals for the District of Columbia Circuit. In addition,
Congress preempted state and local regulation of radio frequency
energy from facilities used to provide wireless services to the
extent the facilities comply with the FCCs radio frequency
exposure limits. In late 1999, the FCC issued a news release
re-emphasizing its concern for radio frequency safety, and called
 on certain expert standard-setting committees to develop uniform
 procedures for testing radio frequency exposure, and warning
that in the absence of such private initiatives it will mandate
further action on its own motion.

We also are subject to limitations on foreign government
investment as set forth in the Communications Act, which
currently restricts foreign ownership or control over CMRS
licenses, including SMR licenses. In February 1997, the
United States entered into a World Trade Organization agreement
with respect to telecommunications. The agreement requires the
United States, among other things, to afford national
 treatment to foreign investors of World Trade Organization
countries seeking indirect ownership of CMRS licenses in the
United States. The FCCs rules implementing the agreement,
which became effective on February 9, 1998, permit
additional foreign investment and participation in the United
States wireless marketplace through ownership of FCC
licenses.

In October 1997, the FCC established uniform rules governing
 ILEC participation in broadband CMRS within each ILECs
landline telephone region, addressing incentives ILECs may have
to engage in anti-competitive practices against CMRS providers,
such as discriminatory interconnection, cost-shifting and
anti-competitive pricing. These rules will expire on
January 1, 2002 unless extended by the FCC. The FCC also is
considering new rules governing calling party pays, known as CPP,
 a mechanism that would allow CMRS providers to offer service
plans under which callers to CMRS customers would pay for the
calls that they make. Primarily at issue is whether ILECs should
be required to perform the billing and collection function for
CPP calls originated on their networks and whether CMRS carriers
should be required to transmit recorded messages to callers
notifying them that they may incur charges for originating the
CPP-enabled calls. Some proponents believe CPP could increase
traffic on wireless networks by encouraging wireless subscribers
to give out their wireless phone numbers. Implementing CPP
arrangements would create complicated billing and customer
relations issues for all wireless carriers.

January 28, 2000 was the effective date of new FCC rules
implementing a provision of TCA 96 that requires
telecommunications carriers to make their services accessible to
individuals with disabilities. The rules will require
modifications to wireless phones prospectively to make them
accessible to persons with disabilities. At this time, the extent
 to which we and our vendor Motorola will be required to make
these modifications is unclear.

In 1994, Congress enacted the Communications Assistance for Law
Enforcement Act, known as CALEA. CALEA essentially requires
telecommunications carriers, including us, to upgrade their
networks so that the FBI and other law enforcement agencies can
continue performing lawful wiretaps of suspects on the
carriers networks as they transition from analog to digital
 technology. The statute spawned legal disputes over a host of
issues, most centrally the issue of what technical capabilities
CALEA requires. By

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Future changes in regulation or legislation affecting digital
mobile network service and any allocation of additional spectrum
by Congress and the FCC could materially adversely affect our
business.

2.  Foreign Regulation. The licensing,
construction, ownership and operation of wireless communications
systems and radio frequency allocations are regulated by
governmental entities in the countries in which Nextel
Internationals subsidiaries and affiliates conduct
business. In addition, these matters and other aspects of
wireless communication system operations may be subject to public
 utility regulation in the jurisdiction where service is
provided. Changes in the current regulatory environments in such
countries or future judicial or legislative intervention could
have a material adverse affect on Nextel International and its
business and results of operations.

L.  Employees

At December 31, 1999, we had more than 15,000 full-time
employees. None of our employees are covered by a collective
bargaining agreement, and we believe that our relationship with
our employees is good.

M.  Risk Factors



| |    |                                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------
| | 1. | We Have a History of Net Losses and Negative Cash Flow and
	May Not Be Able to Satisfy Our Cash Needs from Operations.

We have never been profitable and have experienced negative cash
flow since our start in 1987. We had losses attributable to
common stockholders of about $1.5 billion during 1999. Our
accumulated deficit was about $5.7 billion at December 31,
1999. We expect that losses will continue over the next several
years. We cannot know when, if ever, net cash generated by our
internal business operations will support our growth and
continued operations.



| |    |                                                          
| | -- | ---------------------------------------------------------
| | 2. | We Will Need Substantial Amounts of Additional Financing.

a.  Reasons we will need cash.

We anticipate that we will need substantial amounts of cash for:



| |   |                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | capital expenditures to build and enhance our digital mobile
	network, including those to construct or modify network elements
	required for Nextel Online or to enable wireless Internet
	connectivity and other digital two-way mobile data applications;
|
| |  | operating expenses relating to our digital mobile network;                                                                                                                                                                                                 
|
| |  | potential acquisitions, including negotiated acquisitions of
	spectrum from third parties and any future FCC or other
	government-sponsored auctions of spectrum;                                                                                          
|
| |  | debt service requirements; and                                                                                                                                                                                                                             

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| |   |                                      
| | - | -------------------------------------
| |  | other general corporate expenditures.

We expect our cash needs will exceed our cash flows from
operating activities through 2000. In addition, we may need to
revise our business plan to respond to competitive and other
factors, so our need for cash may increase.



| |    |                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | Our current financing agreements are limited and contain
	restrictions on additional financings that may restrict growth
	and adversely affect operations.

Our long-term cash needs may be much greater than our cash on
hand and availability under our existing financing agreements. As
 a result, in the future we may have to raise substantial amounts
 of additional funds, in the form of equity or debt, to support
any significant acquisitions of additional spectrum, as well as
our currently expected growth and operations. If we are unable to
 do so, we may not be able to pursue or consummate potential
significant spectrum acquisitions or to expand the coverage and
capacity of our network to meet the demands of our anticipated
growth. Our inability to achieve contemplated levels of growth or
 to acquire additional spectrum required to support or provide
contemplated third generation or 3G
mobile wireless service offerings could adversely affect our
financial results.

Our bank credit facility as in effect on December 31, 1999
provided for total secured financing capacity of up to
$5.0 billion from our bank lenders, provided that we satisfy
 financial and other conditions. As of December 31, 1999, we
 had borrowed about $2.7 billion of this secured financing.
As of March 15, 2000, the total credit available under this
facility was increased from $5.0 billion to
$6.0 billion, when we established and borrowed the $1.0
billion incremental senior secured term loan under the bank
credit facility. The availability of additional financing under
our bank credit facility is also subject to the satisfaction of
covenants under indentures relating to our public notes. Our
access to additional funds may be limited by the terms of our
existing financing agreements, including:



| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | covenants that restrict the amount of additional borrowings,
	including additional borrowings under existing financing
	arrangements;
|
| |  | covenants that restrict our grant of liens on assets that affect
	our ability to obtain new secured financing; and                   
|
| |  | existing debt service requirements.                                                                                                  



| |    |                                                                                                                                                                                         
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Funding requirements for our international operations and
	growth may cause even greater cash needs, which may result in
	less funding available for our domestic growth and operations.

Based on Nextel Internationals assessment of the business
activity and related cash needs of its subsidiaries and
affiliates that are controlled by or that rely substantially on
Nextel International for further funding, Nextel International
believes that it will have to rely on external sources of funding
 to supply the cash needed to implement its business plan and
continue its operations through 2000. These external sources
primarily include borrowings under Nextel Internationals
existing bank and vendor credit lines and issuances of its
securities, including to us or our other subsidiaries. We,
therefore, currently expect that we may need to fund a
significant portion of Nextel Internationals cash needs in
2000. This would increase our own cash needs, which could result
in a lesser amount of cash available to us for domestic use.



| |    |                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | d. | To obtain additional spectrum, including spectrum that may
	be awarded in government-sponsored auctions, we may be required
	to raise additional capital.

If we were to acquire additional spectrum, including through
participation as a bidder or member of a bidding group in
government-sponsored auctions of spectrum, we may need to raise
significant amounts of additional capital for these purposes, as
well as to finance the pursuit of any new business opportunities
associated with our acquisitions of additional spectrum. The FCC
has publicly stated that specified PCS spectrum licenses
initially awarded to affiliates of NextWaveCommunications
 had automatically canceled and will be included in a re-auction
of spectrum scheduled to occur in July 2000. The FCC also
has publicly announced additional spectrum auctions scheduled to
occur in 2000.

23



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We cannot assure you:



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that any or all of these spectrum auctions will occur or, if so,
	on their currently announced schedules;                                                      
|
| |  | 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 of these auctions; or
|
| |  | what amounts would be required to be bid to prevail in any of
	these auctions.                                                                                 

We cannot assure you that we will be able to accomplish any
spectrum acquisition or that the necessary additional capital for
 that purpose will be available to us on acceptable terms, or at
all. If sufficient additional capital is not available, we may be
 unable to complete any spectrum acquisition or the amount of
funding available to us for our existing businesses would be
reduced.



| |    |                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | e. | Other factors may adversely affect our access to additional
	 financing, and we may have to curtail our business if we cannot
	access additional financing.

Our access to additional funds also may be limited by:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | general market conditions that adversely affect the availability
	or cost of financings;      
|
| |  | market conditions affecting the telecommunications industry in
	general; and                  
|
| |  | specific factors affecting our attractiveness as a borrower or
	investment vehicle, including:



| |     |                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | the terms of our arrangements with Motorola that relate to
	Motorolas ownership interest in us, and the terms of
	options and warrants issued to others, that may make equity
	financings more difficult;
|
| | (2) | the ability to relocate current spectrum licensees from some
	frequencies in order to remove them from spectrum as to which we
	were the highest bidder at an auction;                                    
|
| | (3) | the potential commercial opportunities and risks associated with
	implementation of our business plan;                                                                                                    
|
| | (4) | the markets perception of our performance and assets; and                                                                                                                                                
|
| | (5) | the actual amount of cash we need to pursue our business
	strategy.                                                                                                                                       



| |    |                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------
| | f. | Funding for our capital needs is not assured, and we may
	have to curtail our business if we cannot find adequate funding.

Except as described in this annual report, we currently have no
legally binding commitments or understandings with any third
parties to obtain any material amount of additional equity or
debt financing. We cannot assure you that we will be able to
obtain any additional financing in the amounts or at the times
that we may require the financing or, if we do obtain any
financing, that it would be on acceptable terms. As a result, we
cannot assure you that we will have adequate capital to implement
 future expansions and enhancements of our digital mobile
network, to maintain our current levels of operation or to pursue
 strategic acquisitions or other opportunities to increase our
spectrum holdings. Our failure to obtain sufficient additional
financing could result in the delay or abandonment of some or all
 of our development, expansion and acquisition plans and
expenditures, which could have an adverse effect on us.



| |    |                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------
| | 3. | Our Future Performance Will Depend on Our 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:



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If our wireless communications technology does not perform in
	a manner that meets customer expectations, we will be unable to
	attract and retain customers, which would adversely affect us.

24



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | 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 our digital mobile network. If we are unable to address and
	resolve satisfactorily performance or other transmission quality
	issues as they arise, or if these issues limit our ability to
	expand our network coverage or capacity as currently planned, or
	if these issues were to place us at a competitive disadvantage to
	 other wireless service providers in our markets, we may have
	difficulty attracting and retaining customers, which would
	adversely affect us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | If we cannot expand, provide and maintain our system coverage,
	 then our growth and operations would be adversely affected.
	We will not be able to provide roaming system coverage comparable
	 to that currently available through roaming arrangements from
	cellular and some PCS operators, unless and until a nationwide
	digital mobile network build-out is substantially completed. This
	 places us at a competitive disadvantage, as some other providers
	 currently have roaming agreements that provide coverage of each
	others markets throughout the United States, including
	areas where our network, or that of Nextel Partners, has not been
	 or will not be built. In addition, some of our competitors
	provide their customers with subscriber units with both digital
	and analog capability, which expands their coverage, while we
	have only digital capability. We cannot assure you that we,
	either alone or together with Nextel Partners, will be able to
	achieve sufficient 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 the enhanced
	multi-function wireless communications package we provide on our
	nationwide digital mobile network.
|
| |  | We do not have the extensive direct and indirect channels of
	distribution for our digital mobile network products and services
	 that some of our competitors have, which may adversely affect
	our operating results. Many of our competitors have
	established extensive networks of retail locations and multiple
	distribution channels, and so enjoy a competitive advantage over
	us in these areas. We have increased the proportion of our
	digital mobile network customers that we obtain through our
	indirect distributor network, and we currently anticipate that we
	 will continue to rely heavily on indirect distribution channels
	to achieve greater market penetration for our digital wireless
	service offerings. However, as we expand our retail subscriber
	base through increased reliance on indirect distribution
	channels, as price competition in the wireless industry
	intensifies, and as our product and service offerings begin to
	attract increasing numbers of individual and non-business users,
	our average revenue per digital subscriber unit may decrease and
	our customer retention may be adversely affected.                                                                                                                                 
|
| |  | Our inability to maintain pricing packages attractive to
	customers may adversely affect operating results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



| |    |                                                                                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | Some of our competitors are financially stronger than we
	are, which allows them to price their service packages at levels
	below those that we can or are willing to match.

Our ability to compete based on the price of our digital
subscriber units and service offerings will be limited. This
could adversely affect our growth.



| |    |                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------
| | b. | Our equipment is more expensive than some competitors,
	which may adversely our affect growth and operating results.

We currently market multi-function digital subscriber units,
providing mobile telephone and private and group dispatch
service, in addition to paging and alphanumeric short-text
messaging. Our subscriber units are, and are likely to remain,
significantly more expensive than analog subscriber units and
are, and are likely to remain, somewhat more expensive than
digital cellular or PCS subscriber units that do not incorporate
a comparable multi-function capability. Although we believe that
our multi-function subscriber units currently are competitively
priced compared to multi-function digital cellular and PCS
subscriber units, 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.

25



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##### Table of Contents





| |    |                                                  
| | -- | -------------------------------------------------
| | c. | We may face continuing pressure to reduce prices.

Over the past several years, as the number of wireless
communications providers in our market areas has increased, our
competitors prices in these markets have generally
decreased. 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;                                                                                                                                                                                                                                                                                                 
|
| |  | respond to particular short term, market specific situations, for
	 example, special introductory pricing or packages that may be
	offered by new providers launching their service in a particular
	market; or                                                                                                                                                                        
|
| |  | remain competitive if wireless service providers generally
	continue to reduce the prices charged to their customers.                                                                                                                                                                                                                                                                  
|
| |  | Our efforts to keep pace with technological change may be
	unsuccessful, which could adversely affect operating results.
	 Our digital technology could become obsolete. We rely on digital
	 technology that is not compatible with, and 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,
	in developing or improving the technology for our systems; and
|
| |  | adversely affect market acceptance of our services.                                                                                                                                              

We cannot assure you that our digital technology will
successfully compete with the other forms of digital and
non-digital communication systems. Further, new digital or
non-digital communication transmission technology may develop
that will cause our existing technology to be obsolete or
otherwise impair market acceptance of our technology.



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | Our growth may exceed the capabilities of our systems, hurting
	 our performance.



| |    |                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------
| | a. | We face limitations on our ability to increase subscribers,
	 which can limit our growth and performance.

Our ability to continue to increase the number of subscribers on
our digital mobile network depends on a variety of factors,
including:



| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the ability to successfully plan for additional system capacity
	at levels needed to meet anticipated new subscribers and the
	related increases in system usage;                                                                                  
|
| |  | the ability to obtain additional radio spectrum when and where
	required; and                                                                                                                                                                      
|
| |  | the availability of a sufficient quantity of cell sites, system
	infrastructure equipment and subscriber units, of the appropriate
	 models and types, to meet the demands and preferences of
	potential subscribers to the digital mobile network.



| |    |                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------
| | b. | We may face limitations on availability of cell sites and
	equipment, which can limit our growth and performance.

Although we believe we have secured sufficient cell sites at
appropriate locations in our markets to meet planned system
coverage and capacity targets, we cannot assure you that we will
meet those needs in the future. We generally have been able to
obtain adequate quantities of base radios and other system
infrastructure equipment from Motorola and other suppliers, and
adequate volumes and mix of subscriber units and related
accessories, to meet subscriber and system loading rates, but we
cannot assure you that quantities will be sufficient in the
future. Additionally, we have contractual arrangements with
Nextel International and Nextel Partners that contemplate that,
in the event of shortages of that equipment, available supplies
would be allocated proportionately among us and those entities.

26



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| |    |                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------
| | c. | We have potential systems limitations on adding customers,
	which can limit our growth and performance.

Even if our system is technically functional, other factors may
affect our ability to successfully add customers to our digital
mobile network including:



| |   |                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the adequacy and efficiency of our information systems, business
	processes and related support functions;                                                             
|
| |  | the length of time between customer order to activation of
	service on the digital mobile network, which currently is longer
	than that of some of our competitors; and
|
| |  | our ability to improve the efficiency and speed of the processes
	for our customer service and accounts receivable collection
	functions.                              

Customer reliance on our customer service functions may increase
as we add digital mobile network customers through indirect
distribution channels and through direct sales channels not
involving direct face-to-face contact with a sales
representative, for example, phone order sales or sales through
nextel.com. Our inability to timely and efficiently meet the
demands for our services could decrease or postpone subscriber
growth, or delay or otherwise impede billing and collection of
amounts owed, which would adversely affect our growth and
performance.



| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If competitors provide two-way radio dispatch services, we
	will lose a competitive advantage. Our two-way radio dispatch
	 services are currently not available through traditional
	cellular or PCS providers; however, if either PCS or cellular
	operators provide two-way radio dispatch or comparable services
	in the future, our competitive advantage may be impaired.

We cannot predict the competitive effect that any of these
factors, or any combination of these factors, will have on us, or
 whether we will compete successfully in the future.



| |    |                                                                                                     
| | -- | ----------------------------------------------------------------------------------------------------
| | 4. | Regulatory and Other Factors Could Delay or Prevent Us from
	 Offering Services in New Market Areas.

Before fully implementing our 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, obtain and free up frequency channels now devoted to
non-digital transmissions and begin systems optimization. These
processes 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. We cannot know when, if
ever, our digital technology will be available for commercial use
 in new markets or can be expanded in existing markets.



| |    |                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | We Rely on Motorola for Substantially All of Our Equipment
	and Technology, and Any Failure of Motorola To Perform Would
	Adversely Affect Our Operating Results.

There is a risk that 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. Motorola is currently our sole source for the
digital mobile network and subscriber unit equipment we use
throughout our markets. We expect to rely principally on Motorola
 for the manufacture of a substantial portion of the equipment
necessary to construct, enhance and maintain our digital mobile
network and subscriber unit equipment for the next several years.
 If Motorola does not provide the necessary equipment to us, then
 we may not be able to service our existing subscribers or add
new subscribers. We expect that for the next few years, Motorola
and competing manufacturers who are licensed by Motorola will be
the only manufacturers of subscriber equipment that is compatible
 with our digital mobile network. In late 1999, we entered into a
 memorandum of understanding with Kyocera Corporation of Japan
with the intent of having Kyocera supply us with a subscriber
unit compatible with our digital mobile network. It is
anticipated that Motorola will license its technology to Kyocera
to enable Kyocera to supply those subscriber units. However, we

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| |    |                                                                                                                        
| | -- | -----------------------------------------------------------------------------------------------------------------------
| | 6. | Agreements With Motorola Reduce Our Operational Flexibility
	 and May Adversely Affect Our Growth or Operating Results.

Our agreements with Motorola impose limitations and conditions on
 our ability to use other technologies. These terms may operate
to delay or prevent us from employing new or different
technologies that perform better or are available at a lower cost
 because of the additional economic costs and other impediments
to change arising under the Motorola agreements. For example, our
 equipment purchase agreement with Motorola provides that we must
 provide Motorola with notice of our determination that
Motorolas technology is no longer suited to our needs at
least six months before publicly announcing or entering into a
contract to purchase an alternate technology.

In addition, if Motorola manufacturers, or elects to manufacture,
 the alternate technology that we elect to deploy, we must give
Motorola the opportunity to supply 50% of our infrastructure
requirements for the alternate technology for three years.
Finally, if after a switch to an alternate technology we do not
maintain operational Motorola infrastructure equipment at the
majority of our cell sites that are deployed at the date the
switch to an alternate technology is first publicly announced,
Motorola may require that all financing provided by Motorola to
us be repaid.



| |    |                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------
| | 7. | Our Interests May Conflict With Those of Motorola. Any
	Conflict Could Adversely Our Growth, Operating Results or
	Strategic Flexibility.

Motorola and its affiliates engage in wireless communications
businesses, and may in the future engage in additional
businesses, which do or may compete with some or all of the
services we offer through our digital mobile network. Although we
 believe that our relationship with Motorola reflects the
realities of purchasing from a competitor, we cannot assure you
that the potential conflict of interest will not adversely affect
 us in the future. Motorolas right to nominate two people
for election to our board of directors could give them additional
 leverage in the event any conflict of interest were to arise. In
 addition, Motorola is one of our significant stockholders, which
 creates potential conflicts of interest, particularly with
regard to significant transactions.



| |    |                                                                                                    
| | -- | ---------------------------------------------------------------------------------------------------
| | 8. | Since We Operate in A Regulated Industry, We May Be
	Adversely Affected by Governmental Regulation.

The FCC regulates the licensing, operation, acquisition and sale
of our specialized mobile radio businesses. Future changes in
regulation or legislation and Congress and the FCCs
continued allocation of additional commercial mobile radio
services, which include SMR, cellular or PCS services, spectrum
could impose significant additional costs on us either in the
form of direct out of pocket costs or additional compliance
obligations. See  K. Regulation. These
regulations can also have the effect of introducing additional
competitive entrants to the already crowded wireless
communications marketplace.

Nextel Internationals operations are subject to similar
effects caused by operating in a regulated industry, since its
operations are regulated by the foreign countries in which its
business is conducted and are also subject to regional and local
regulation.



| |    |                                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------
| | 9. | We have Significant Intangible Assets, Which May Not Be
	Adequate to Satisfy Our Obligations in the Event of a
	Liquidation.

If we default on debt or if we were liquidated, the value of our
assets may not be sufficient to satisfy our obligations. We have
a significant amount of intangible assets, such as licenses
granted by the FCC. The value of these licenses will depend
significantly upon the success of our digital mobile network
business and the growth of the specialized mobile radio and
wireless communications industries in general. We had a net
tangible book value deficit of about $2.3 billion as of
December 31, 1999.

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##### Table of Contents





| |     |                                                           
| | --- | ----------------------------------------------------------
| | 10. | We Are Susceptible to Control by Significant Stockholders.

Motorola and entities controlled by Mr. McCaw hold
significant blocks of our outstanding stock. In addition, an
affiliate of Mr. McCaw may designate at least one fourth of
our board of directors and may select, from these McCaw
representatives on the board of directors, a majority of the
operations committee of our board of directors, which has
significant authority relating to our business strategy, budgets,
 financing arrangements and in the nomination and oversight of
specified executive officers. As a result, Mr. McCaw may
exert significant influence over our affairs. Presently, three of
 the ten members of our board of directors are designees of
Mr. McCaws affiliates. In addition, Daniel F. Akerson,
 formerly one of our executive officers, currently holds
positions with NEXTLINK Communications, which is controlled by
Mr. McCaw. Mr. Akerson continues to serve as chairman
of our board of directors and as a member of the operations
committee of the board, but he is not a designee of Mr.
McCaws affiliates. Under its agreements with us, Motorola
may nominate two directors to our board of directors. In
addition, Motorola has agreed to support the decisions and
recommendations of the operations committee and to vote its
shares of common stock accordingly, subject to specified
limitations.

If Mr. McCaw and Motorola choose to act together, they could
 have a sufficient number of members on our board of directors
and voting interest in us to exert significant influence over,
among other things:



| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | approval of amendments to our certificate of incorporation,
	mergers, sales of assets or other major corporate transactions as
	 well as other matters submitted for stockholder vote;
|
| |  | any takeover attempt; and                                                                                                                                                             
|
| |  | whether particular matters are submitted for a vote of our
	stockholders.                                                                                                             

Mr. McCaw and his affiliates have and, subject to the terms
of applicable agreements, may acquire an investment or other
interest in entities that provide wireless telecommunications
services that could potentially compete with us. Under the
relevant agreements, Mr. McCaw and his controlled affiliates
 may not, for one year after the termination of the operations
committee, participate in other two-way terrestrial-based mobile
wireless communications systems in any part of North America or
South America unless these opportunities have first been
presented to and waived or rejected by us.



| |     |                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | 11. | Our Commitments to Issue Additional Common Stock May
	Adversely Affect the Market Price of Our Common Stock and May
	Impair Our Ability to Raise Capital.

We currently have outstanding commitments in various forms,
including warrants, options and convertible securities, to issue
a substantial number of new shares of our common stock. The
shares subject to these issuance commitments, to some degree,
will be issued in transactions registered with the Securities and
 Exchange Commission and thus will be freely tradeable. In many
other instances, these shares are subject to grants of
registration rights that, if and when exercised, would result in
those shares becoming freely tradeable. We have also granted
registration rights with respect to a significant number of our
outstanding shares, including shares of common stock issuable
upon conversion of securities issued in some transactions. The
exercise of registration rights by persons holding those shares
would permit those persons to sell those shares without regard to
 the limitations of Rule 144 under the Securities Act of 1933. An
 increase in the number of shares of our common stock that will
become available for sale in the public market may adversely
affect the market price of our common stock and, as a result,
could impair our ability to raise additional capital through the
sale of our equity securities or convertible securities.



| |     |                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------
| | 12. | Concerns About Health Risks Relating to the Use of Portable
	 Handsets May Affect Our Prospects.

Portable communications devices have been alleged to pose health
risks, including cancer, due to radio frequency emissions from
these devices. Studies performed by wireless telephone equipment
manufacturers have investigated these allegations, and additional
 studies are ongoing. The actual or perceived risk of portable
communications devices could adversely affect us through a
reduced subscriber growth rate, a reduction in subscribers,
reduced network usage per subscriber or through reduced financing
 available to the mobile communications industry.

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| |     |                                                                                                
| | --- | -----------------------------------------------------------------------------------------------
| | 13. | Risks Relating to Our Joint Investments May Adversely
	Affect Our Growth and Operating Results.

We have entered into a contractual joint venture regarding our
ownership interests in and arrangements with Nextel Partners, and
 may enter into other joint ventures or similar arrangements in
the future. Outside the United States, several of our
international operations are conducted through entities having
one or more third-party owners, and some of these entities are
not controlled by us. There are risks in participating in
arrangements of these types, including the risk that the other
participants may at any time have economic, business or legal
interests or goals that are inconsistent with our goals or those
of the joint enterprise. There also is the risk that a
participant may be unable to meet its economic or other
obligations to the joint enterprise and that we may be required
to fulfill some or all of those obligations. We also may be or
become obligated to acquire all or a portion of the ownership
interest of some or all of the other participants in these joint
enterprises. In addition, to the extent that we participate in
international arrangements of these types, we will be subject to
various additional risks not present in domestic joint
enterprises.



| |     |                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------
| | 14. | Risks Relating to Our Foreign Operations May Adversely
	Affect Our Growth and Operating Results.

We currently own interests in and operate international wireless
companies through Nextel International. The risks that relate to
these foreign operations include:



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | political, economic and social conditions in the foreign
	countries where we conduct operations;                     
|
| |  | currency risks and exchange controls;                                                                                
|
| |  | potential inflation in the applicable foreign economies;                                                             
|
| |  | the impact of import duties on the cost or prices of
	infrastructure equipment and subscriber units;                 
|
| |  | foreign taxation of earnings and payments received by Nextel
	International from its subsidiaries and affiliates; and
|
| |  | regulatory changes affecting the telecommunications industry and
	wireless communications.                           

We cannot assure that the risks associated with our foreign
operations will not adversely affect our or Nextel
Internationals operating results or prospects, particularly
 as these operations expand in scope, scale and significance.



| |     |                                                                                 
| | --- | --------------------------------------------------------------------------------
| | 15. | Our Nextel Online Services Offering Is a New Service and
	May Not Be Successful.

Our Nextel Online services offering currently is nearing the end
of its pre-commercialization testing phase. Although we are
satisfied with the performance of the Nextel Online services
offering during this testing phase, and are encouraged by the
interest shown in this offering in controlled preliminary
customer trials, we cannot assure you that the Nextel Online
services offering will perform satisfactorily in full scale
commercial usage, or that we will not encounter delays or
difficulties in effecting the commercial launch of this offering,
 or that this offering will produce the levels of cost reduction
or of customer acceptance and incremental revenue that we hope to
 achieve. We have devoted considerable time and resources to the
development of the Nextel Online suite of wireless Internet
services and data applications with several purposes in mind.
First, we expect to use the resulting wireless data capability
and Internet connectivity to allow us to perform fulfillment and
other customer support services more economically, thereby
reducing our cost of conducting business. Second, we believe that
 our Nextel Online services offering will provide us with another
 important point of differentiation from our competitors, thereby
 helping us to attract and retain more customers. Finally, we are
 looking to this new offering to be a source of future
incremental revenue to counter the impact of increasing
competition in our markets on the pricing of our basic wireless
voice services packages.

We may not realize some or all of the benefits that we expected
in constructing and commercializing our Nextel Online services
offering:

30



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##### Table of Contents





| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | if we are unable to commercially implement and maintain this new
	services offering;                                    
|
| |  | if this new services offering produces adverse impacts on the
	performance or reliability of our digital mobile network;
|
| |  | if we or third party developers fail to develop successfully
	value added data applications for our customers;          
|
| |  | if a sufficient portion of our customer base is not attracted to
	this new services offering; or                        
|
| |  | if it otherwise does not achieve a satisfactory level of customer
	 acceptance.                                         

Any resulting customer dissatisfaction, or failure to realize
cost reductions or incremental revenue, could have an adverse
impact on our results of operations, future growth prospects and
perceived value.



| |     |                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------
| | 16. | Our Forward Looking Statements Are Subject to a Variety of
	Factors that Could Cause Actual Results to Differ Materially From
	 Current Beliefs.

Safe Harbor Statement under the Private Securities
 Litigation Reform Act of 1995: Some of the statements made
in this annual report are not historical or current facts, but
deal with potential future circumstances and developments. 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 that
involve risks and uncertainties. We warn you that these
forward-looking statements are only predictions, which are
subject to risks and uncertainties including financial
variations, changes in the regulatory environment, industry
growth and trend predictions. We have attempted to identify, in
context, some of the factors that we currently believe may cause
actual future experience and results to differ from our current
expectations regarding the relevant matter or subject area. The
operation and results of our wireless communications business
also may be subject to the effect of other risks and
uncertainties in addition to the other qualifying factors
identified in the above Risk Factors Section and
elsewhere in this annual report, including, but not limited to:



| |   |                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions in the geographic areas and
	occupational market segments that we are targeting for our
	digital mobile network service;                                                                                                                                                                         
|
| |  | the availability of adequate quantities of system infrastructure
	and subscriber equipment and components to meet our service
	deployment and marketing plans and customer demand;                                                                                                                                           
|
| |  | the success of efforts to improve and satisfactorily address any
	issues relating to our digital mobile network performance;                                                                                                                                                                                                 
|
| |  | the continued successful performance of the technology being
	deployed in our various market areas and the success of
	technology deployed in connection with our Nextel Online services
	 offering;                                                                                                                         
|
| |  | market acceptance of our new service offerings, including Nextel
	Online and Nextel Worldwide;                                                                                                                                                                                                                               
|
| |  | the ability to achieve and maintain market penetration and
	average subscriber revenue levels sufficient to provide financial
	 viability to our digital mobile network business;                                                                                                                                            
|
| |  | our ability to timely and successfully accomplish required
	scale-up of our billing, collection, customer care and similar
	back-room operations to keep pace with customer growth, increased
	 system usage rates and growth in levels of accounts receivables
	being generated by the digital mobile network customer base;
|
| |  | access to sufficient debt or equity capital to meet our operating
	 and financing needs;                                                                                                                                                                                                                                     
|
| |  | the quality and price of similar or comparable wireless
	communications services offered or to be offered by our
	competitors, including providers of cellular and personal
	communication services;                                                                                                                         
|
| |  | successful implementation of any year 2000 solutions in systems
	that are critical to our business operations;                                                                                                                                                                                                               

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| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | future legislation or regulatory actions relating to specialized
	mobile radio services, other wireless communications services or
	telecommunications generally; and                                                                                
|
| |  | other risks and uncertainties described from time to time in our
	reports and, with specific reference to risk factors relating to
	international operations, in Nextel Internationals reports,
	 filed with the Securities and Exchange Commission.

Item 2.  Properties

We currently lease our principal executive and administrative
offices, which are located at 2001 and 2003 Edmund Halley Drive,
in Reston, Virginia. This facility is about 330,000 square feet,
and the lease has an initial lease term of 10 years,
expiring July 10, 2009, with four five-year renewal options.
 We also lease facilities for some of our administrative
operations: about 249,000 square feet of space in Denver,
Colorado, under leases expiring in 2004 and 2008; about 160,000
square feet of space in Hampton Roads, Virginia, under leases
expiring in 2009 and 2010; about 116,000 square feet of space in
Rutherford, New Jersey, under a lease expiring in 2008; about
108,000 square feet of office space in Farmington, Michigan,
under a lease expiring in 2008; about 131,000 square feet of
office space in Herndon, Virginia, under a lease expiring in
2013; about 116,000 square feet of office space in Irvine,
California, under a lease expiring in 2005; and about 130,000
square feet of office space in McLean, Virginia, under a lease
expiring in 2002. None of the expiration dates for these
administrative space leases include extensions related to the
exercise of renewal options. We also lease office facilities for
sales, maintenance and administrative operations in our markets.
We have about 200 office leases in effect at December 31,
1999, with terms ranging from 1 to 10 years (not including
extensions related to the exercise of renewal options).

We lease cell sites for the transmission of our radio service
under various individual site leases as well as master site lease
 agreements. The terms of these leases generally range from
month-to-month to 20 years. As of December 31, 1999, we
 had about 8,800 constructed sites at leased locations in the
United States for our digital mobile network. We also own
properties and a limited number of transmission towers, apart
from those subject to our site lease and build arrangements with
SpectraSite, where management considers it is in our best
interest.

Item 3.  Legal Proceedings

In 1995, a lawsuit titled In Re Nextel Communications
Securities Litigation was filed in the United States District
 Court in the District of New Jersey. This litigation, which has
been pursued as a class action suit, amends and consolidates
three previously filed class action complaints and seeks damages
allegedly incurred by some stockholders and claimed to result
from defendants alleged violations of Section 10(b) of
 the Securities Exchange Act of 1934, as amended and
Rule 10b-5 under that act. The litigation also makes claims
of fraud and deceit. Specifically, the plaintiffs claim that
these damages resulted from some defendants allegedly false
 and misleading statements regarding the digital communications
technology developed by Motorola and deployed by us in our
digital mobile network. We believe that the claims against us are
 without merit. On or about February 23, 2000, the court
preliminarily approved an agreement among the parties pursuant to
 which the lawsuit would be settled and resolved on a classwide
basis. Notice of the proposed settlement is expected to be sent
to potential class members shortly, and a hearing to approve the
settlement is scheduled for June 15, 2000. The terms of this
 proposed settlement will not have a material effect on our
financial condition, results of operations or liquidity.

In 1994, a lawsuit titled Charles Dascal v. Morgan
OBrien, Becker, Gurman, Lukas, Meyers, OBrien and
McGowan, P.C. and Nextel Communications, Inc., was filed in
the Circuit Court of Dade County, Florida. The lawsuit, which was
 transferred to the United States District Court for the Southern
 District of Florida, sought compensatory damages, lost profits
and special damages based on the defendants alleged breach
of fiduciary duty, misappropriation of trade secrets, negligent
misrepresentation, fraud, conversion, civil theft, breach of good
 faith and fair dealing and unjust enrichment. The claims, which
primarily concerned alleged conduct by our current Vice Chairman
and former Chairman of the Board, Morgan

32



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##### Table of Contents





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

No matters were submitted to a vote of our security holders
during the fourth quarter of 1999.

Executive Officers of the Registrant

The following provides information regarding those persons
serving as our executive officers as of March 29, 2000.
These executive officers were elected to their present positions
by action of our board of directors to serve until their
successors have been elected. There is no family relationship
between any of our executive officers or between any of these
officers and any of our directors of Nextel.

Timothy M. Donahue. Mr. Donahue is 51 years old
and has served as our President and Chief Executive Officer since
 July 1999. Mr. Donahue has served as President since
joining us in February 1996 and also served as Chief
Operating Officer from February 1996 until July 1999.
Mr. Donahue has served as one of our directors since
June 1996. From 1986 to January 1996, Mr. Donahue
held various senior management positions with AT&T Wireless
Services, Inc. including Regional President for the Northeast.
Mr. Donahue serves as Chairman of the board of directors of
Nextel International, and as a director of Nextel Partners and
SpectraSite Holdings.

Daniel F. Akerson. Mr. Akerson is 51 years old
and has served as Chairman of our board of directors since
joining us on March 6, 1996. Mr. Akerson served as our
Chief Executive Officer from March 1996 until July 1999,
when he stepped down from this position. In September 1999,
Mr. Akerson became Chairman of the board of directors and
Chief Executive Officer of NEXTLINK Communications, Inc., a
publicly held competitive local exchange carrier controlled by
Mr. McCaw. From June 1993 until March 5, 1996,
Mr. Akerson served as a general partner of Forstmann Little
& Co., a private investment firm. While serving as a general
partner of Forstmann Little, Mr. Akerson also held the
positions of Chairman of the Board and Chief Executive Officer of
 General Instrument Corporation, a technology company acquired by
 Forstmann Little. From 1983 to 1993, Mr. Akerson held
various senior management positions with MCI Communications
Corporation, including President and Chief Operating Officer.
Mr. Akerson serves as a director of American Express
Company, America OnLine, Inc. and Nextel International.

Morgan E. OBrien. Mr. OBrien is
55 years old and has served as Vice Chairman of our board of
 directors since March 1996. Mr. OBrien also has
been one of our directors since co-founding Nextel in 1987. From
1987 to March 5, 1996, Mr. OBrien served as
Chairman of our board of directors, and from 1987 to
October 1994, Mr. OBrien also served as our
General Counsel.

Steven M. Shindler. Mr. Shindler is 37 years
old, joined us in May 1996 and serves as Executive Vice
President and Chief Financial Officer. As of March 24, 2000,
 Mr. Shindler was appointed to the additional post of
Interim Chief Executive Officer of Nextel International. Between
1987 and 1996, Mr. Shindler was an officer with Toronto
Dominion Bank, where most recently he was a Managing Director in
its Communications Finance Group. Mr. Shindler serves as a
director of Nextel International and SpectraSite Holdings.

Steven P. Dussek. Mr. Dussek is 43 years old and
 as of March 24, 2000 was appointed as our Executive Vice
President and Chief Operating Officer. From July 1999 until March
 2000, Mr. Dussek

33



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##### Table of Contents





Thomas Kelly. Mr. Kelly is 52 years old, joined
us in April 1996 and serves as Executive Vice President,
Marketing & Strategic Planning. Between 1993 and 1996,
Mr. Kelly was Regional Vice President of Marketing for
AT&T Wireless. Prior to joining AT&T Wireless,
Mr. Kelly worked for 12 years with the marketing
consulting firm of Howard Bedford Nolan, where he was most
recently an Executive Vice President.

Barry West. Mr. West is 54 years old, joined us
in March 1996 and serves as Senior Vice President and Chief
Technology Officer. Previously, Mr. West served in various
senior positions with British Telecom plc for more than five
years, most recently as Director of Value-Added Services and
Corporate Marketing at Cellnet, a cellular communications
subsidiary of British Telecom. Mr. West serves as a director
 of U.S. Wireless Corp.

Robert S. Foosaner. Mr. Foosaner is 57 years
old, joined us in April 1992 and serves as our Senior Vice
President and Chief Regulatory Counsel.

Thomas J. Sidman. Mr. Sidman is 45 years old,
joined us in October 1994 and serves as Senior Vice
President and General Counsel. From January 1988 to
October 1994, Mr. Sidman was a partner of the law firm
Jones, Day, Reavis & Pogue, specializing in corporate and
securities law and mergers and acquisitions.

Lo van Gemert. Mr. van Gemert is 45 years old and has
 served as our Senior Vice President since July 1999 and as
President and Chief Operating Officer of Nextel International
since September 1999. From October 1996 to
August 1999, Mr. van Gemert served as President of
Nextels North Region. Before joining us in
October 1996, Mr. van Gemert served as Executive Vice
President at Rogers Cantel in Canada where he was responsible for
 PCS, paging, data and air-to-ground services. From 1980 to 1994,
 Mr. van Gemert held various senior management positions,
domestically and abroad, at Sony Corporation and BellSouth
Corporation.

William G. Arendt. Mr. Arendt is 42 years old
and has served as our Vice President and Controller since joining
 us in May 1997. From June 1996 until joining us,
Mr. Arendt was Vice President and Controller for Pocket
Communications, Inc., a personal communications services company.
 From September 1992 until June 1996, he was Controller
 for American Mobile Satellite Corporation.

John S. Brittain, Jr. Mr. Brittain is 41 years
old, joined us in March 1999 and serves as Vice President and
Treasurer. From 1994 to March 1999, Mr. Brittain was Senior
Vice President and Treasurer of Sothebys Holdings, Inc., an
 international art auction and related services firm. Prior to
joining Sothebys, Mr. Brittain was the Assistant
Corporate Treasurer of the Great Atlantic & Pacific Tea
Company and was an officer of The Chase Manhattan Bank.

34



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##### Table of Contents



PART II

Item 5.  Market for the Registrants
Common Stock and Related Security Holder Matters

A.  Market for Common Stock

Our class A common stock is traded on the Nasdaq National
Market under the trading symbol NXTL. The following
table lists, on a per share basis for the periods indicated, the
high and low closing sale prices for the common stock as reported
 by the Nasdaq National Market for the periods indicated:

|              |  |                                     |         |      |  |      |        |     |  |   |        |  |  |   |        | 
|------------- |  | ----------------------------------- | ------- | ---- |  | ---- | ------ | --- |  | - | ------ |  |  | - | ------ | 
|              |  |                                    
|              |  | Quarterly Common Stock Price Ranges
|              |  | Years Ended December 31,           
|              |  |                                    
|              |  |                                     |         |     
|              |  | 1999                                |         | 1998
|              |  |                                     |         |     
|Quarter Ended |  | High                                |         | Low  |  | High |        | Low
|              |  |                                     |         |      |  |      |        |    
|March 31      |  | $                                   | 38.438  |      |  | $    | 25.875 |     |  | $ | 33.750 |  |  | $ | 22.125 | 
|             
|             
|             
|             
|June 30       |  |                                     | 50.188  |      |  |      | 34.625 |     |  |   | 33.750 |  |  |   | 23.375 | 
|             
|             
|             
|             
|September 30  |  |                                     | 75.188  |      |  |      | 46.000 |     |  |   | 31.000 |  |  |   | 18.063 | 
|             
|             
|             
|             
|December 31   |  |                                     | 115.063 |      |  |      | 70.250 |     |  |   | 23.750 |  |  |   | 17.313 | 

B.  Number of Stockholders of Record

As of March 17, 2000, there were about 3,400 holders of
record of our class A common stock. We have authority to
issue shares of nonvoting common stock, which are convertible on
a share-for-share basis into shares of class A common stock.
 As of March 17, 2000, there was a single stockholder of
record holding all of the 17,830,000 outstanding shares of
nonvoting common stock.

C.  Dividends

We have not paid any dividends on our common stock and do not
plan to pay dividends on our common stock for the foreseeable
future. The indentures governing our public notes and our bank
credit agreement and other financing documents prohibit, and are
expected to continue to prohibit, us from paying dividends,
except in compliance with specified financial covenants. In
addition, some of the collateral security mechanisms and related
provisions associated with our bank credit agreement limit the
amount of cash available to make dividends, loans and cash
distributions to us from our subsidiaries that operate the
digital mobile network. Provisions in the indentures and loan
agreements to which Nextel International is a party also place
significant restrictions on our ability to receive cash from
Nextel International or any of its subsidiaries. Accordingly,
while these restrictions are in place, any profits generated by
these subsidiaries will not be available to us for, among other
things, payment of dividends.

We anticipate that for the foreseeable future any cash flow
generated from our operations will be used to develop and expand
our business and operations. Any future determination as to the
payment of dividends on our common stock will be at the
discretion of our board of directors and will depend upon our
operating results, financial condition and capital requirements,
contractual restrictions, general business conditions and other
factors that our board of directors deems relevant. There can be
no assurance that we will pay dividends on our common stock at
any time in the future. Under specific limited circumstances, we
may be obligated to pay dividends on our class A preferred stock
and, after specified dates, will be obligated to pay cash
dividends on our series D preferred stock and series E preferred
stock. See Part I, Item 1. Business  J.
Agreements with Significant Stockholders  1. McCaw
Interests.

D.  Recent Sales of Unregistered Securities

We sold securities that were not registered under the Securities
Act of 1933 in the following transactions during the fourth
quarter of 1999 and early portion of 2000:

1.  Notes Offering. On November 12, 1999,
 we completed the issuance and sale in a private placement of
$2.0 billion in principal amount of our 9.375% senior notes
due 2009. Goldman, Sachs &

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##### Table of Contents





2.  Convertible Notes Offering. In
February 2000, we completed the issuance and sale of about
$1.2 billion in aggregate principal amount of our 5.25%
convertible senior notes due 2010. These notes are convertible at
 the option of the holders into class A common stock at any
time prior to redemption, repurchase or maturity at a conversion
price of $148.80 per share, subject to adjustment. Morgan Stanley
 Dean Witter acted as placement agent and received about
$23 million in fees in connection with the sale of these
notes. Because these notes were issued in a private placement
transaction, they may not be offered or sold in the United States
 absent an effective registration statement or an applicable
exemption from the registration requirements of the Securities
Act.

These transactions were effected pursuant to the exemption of
Section 4(2) of the Securities Act and Rule 144A and
Regulation S under that act, in reliance upon the
representations of the placement agents in each of the offerings
described above.

Item 6.  Selected Financial Data

The following table sets forth selected consolidated financial
data for the periods indicated and should be read in conjunction
with the consolidated financial statements, related notes and
other financial information in this Form 10-K Annual Report.

Acquisitions. Our results were affected by business
 combinations, acquisitions and investments involving both
domestic and international companies. Additional information
regarding acquisitions completed in 1997 and 1998 can be found in
 Note 2 to the consolidated financial statements appearing in
Part II of this Form 10-K Annual Report.

Income Tax Provision. As a result of operating
results and the change in useful lives of some intangible assets,
 we increased our valuation allowance for deferred tax assets
resulting in a tax provision of about $259 million in 1997.

|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |   | 
|----------------------------------------------------------------------- | ------------------ | --------------------------------------- | ------ | ----- | - | ---- | ------ | ----- | - | ---- | ------ | ----- | - | - | ----- | - |  | - | ----- | - | 
|                                                                        |                    |                                        
|                                                                        |                    | Year Ended December 31,                
|                                                                        |                    |                                        
|                                                                        |                    | 1999                                    |        | 1998  |   | 1997 |        | 1996  |   | 1995
|                                                                        |                    |                                         |        |       |   |      |        |       |   |     
|                                                                        |                    |                                        
|                                                                        |                    | (in millions, except per share amounts)
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|RESULT OF OPERATIONS:                                                   |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Operating revenues                                                      |                    | $                                       | 3,326  |       |   | $    | 1,847  |       |   | $    | 739    |       |   | $ | 333   |   |  | $ | 172   |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Cost of revenues                                                        |                    |                                         | 697    |       |   |      | 516    |       |   |      | 289    |       |   |   | 248   |   |  |   | 152   |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Selling, general and administrative                                     |                    |                                         | 2,094  |       |   |      | 1,551  |       |   |      | 862    |       |   |   | 330   |   |  |   | 211   |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Depreciation and amortization                                           |                    |                                         | 1,004  |       |   |      | 832    |       |   |      | 526    |       |   |   | 401   |   |  |   | 236   |  
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|Operating loss                                                          |                    |                                         | (469   | )     |   |      | (1,052 | )     |   |      | (938   | )     |   |   | (646  | ) |  |   | (427  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Interest expense, net                                                   |                    |                                         | (782   | )     |   |      | (622   | )     |   |      | (378   | )     |   |   | (206  | ) |  |   | (90   | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Other (expense) income, net                                             |                    |                                         | (47    | )     |   |      | (37    | )     |   |      | 7      |       |   |   | (11   | ) |  |   | (15   | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Income tax benefit (provision)                                          |                    |                                         | 28     |       |   |      | 192    |       |   |      | (259   | )     |   |   | 307   |   |  |   | 201   |  
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|Loss before extraordinary item                                          |                    |                                         | (1,270 | )     |   |      | (1,519 | )     |   |      | (1,568 | )     |   |   | (556  | ) |  |   | (331  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Extraordinary item  loss on early retirement of debt                   |                    |                                         | (68    | )     |   |      | (133   | )     |   |      | (46    | )     |   |   |      |   |  |   |      |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Mandatorily redeemable preferred stock dividends                        |                    |                                         | (192   | )     |   |      | (149   | )     |   |      | (29    | )     |   |   |      |   |  |   |      |  
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|Loss attributable to common stockholders                                |                    | $                                       | (1,530 | )     |   | $    | (1,801 | )     |   | $    | (1,643 | )     |   | $ | (556  | ) |  | $ | (331  | )
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|Loss per share attributable to common stockholders, basic and
	diluted: |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Loss before extraordinary item attributable to common
	stockholders     |                    | $                                       | (4.58  | )     |   | $    | (5.98  | )     |   | $    | (6.41  | )     |   | $ | (2.50 | ) |  | $ | (2.31 | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Extraordinary item |                                         |        | (0.21 | ) |      |        | (0.48 | ) |      |        | (0.18 | ) |   |       |  |  |   |       |  | 
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|                                                                        |                    | $                                       | (4.79  | )     |   | $    | (6.46  | )     |   | $    | (6.59  | )     |   | $ | (2.50 | ) |  | $ | (2.31 | )
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  
|Weighted average number of common shares outstanding                    |                    |                                         | 319    |       |   |      | 279    |       |   |      | 249    |       |   |   | 223   |   |  |   | 143   |  
|                                                                        |                    |                                         |        |       |   |      |        |       |   |      |        |       |   |   |       |   |  |   |       |  

36



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##### Table of Contents



|                                                        |  |               |        |      |  |      |        |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------------------------------------- |  | ------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                                        |  |              
|                                                        |  | December 31, 
|                                                        |  |              
|                                                        |  | 1999          |        | 1998 |  | 1997 |        | 1996 |  | 1995
|                                                        |  |               |        |      |  |      |        |      |  |     
|                                                        |  |              
|                                                        |  | (in millions)
|                                                       
|                                                       
|                                                       
|                                                       
|BALANCE SHEET DATA:                                     |  |               |        |      |  |      |        |      |  |      |       |  |  |   |       |  |  |   |       | 
|                                                       
|                                                       
|                                                       
|                                                       
|Cash and cash equivalents, including restricted portion |  | $             | 4,701  |      |  | $    | 321    |      |  | $    | 302   |  |  | $ | 140   |  |  | $ | 341   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets, net                                  |  |               | 4,551  |      |  |      | 4,937  |      |  |      | 4,700 |  |  |   | 4,076 |  |  |   | 3,550 | 
|                                                       
|                                                       
|                                                       
|                                                       
|Total assets                                            |  |               | 18,410 |      |  |      | 11,573 |      |  |      | 9,228 |  |  |   | 6,472 |  |  |   | 5,547 | 
|                                                       
|                                                       
|                                                       
|                                                       
|Long-term debt, including current portion               |  |               | 10,925 |      |  |      | 7,719  |      |  |      | 5,046 |  |  |   | 2,785 |  |  |   | 1,689 | 
|                                                       
|                                                       
|                                                       
|                                                       
|Mandatorily redeemable preferred stock                  |  |               | 1,770  |      |  |      | 1,578  |      |  |      | 529   |  |  |   |      |  |  |   |      | 
|                                                       
|                                                       
|                                                       
|                                                       
|Stockholders equity                                    |  |               | 2,574  |      |  |      | 230    |      |  |      | 1,913 |  |  |   | 2,809 |  |  |   | 2,945 | 



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

A.  Overview

The following is a discussion and analysis of:



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | our consolidated financial condition and results of operations
	for each of the three years in the period ended December 31,
	 1999; and
|
| |  | significant factors that could affect our prospective financial
	condition and results of operations.                                   

Historical results may not indicate future performance. See
Part I, Item 1. Business 
M. Risk Factors  16. Our Forward Looking
Statements Are Subject to a Variety of Factors that Could Cause
Actual Results to Differ Materially From Current Beliefs.

Our consolidated financial statements include financial
information reflecting the assets, liabilities and results of
operations relating to Nextel International and its consolidated
subsidiaries as of the relevant dates or for the relevant
periods. However, additional more detailed and focused
information relating to Nextel International may be found in the
periodic and other reports filed by Nextel International with the
 Securities and Exchange Commission pursuant to the rules under
the Securities Exchange Act of 1934.

B.  Results of Operations

1.  Year Ended December 31, 1999 vs. Year Ended
December 31, 1998

a.  Operating Revenues.

Operating revenues include service revenues, which consist
primarily of charges for airtime usage and monthly network access
 fees from providing mobile wireless services.

|                   |               |                       |       |              |  |              |      |              |  |               |       |         |  |  |      |     |  |   |       |       |  |  |     |      | 
|------------------ | ------------- | --------------------- | ----- | ------------ |  | ------------ | ---- | ------------ |  | ------------- | ----- | ------- |  |  | ---- | --- |  | - | ----- | ----- |  |  | --- | ---- | 
|                   |               |                       |       |              |  |              |      |              |  |              
|                   |               |                       |       | % of         |  |              |      | % of         |  | Increase from
|                   |               |                       |       | Consolidated |  |              |      | Consolidated |  | Previous Year
|                   |               | December 31,          |       | Operating    |  | December 31, |      | Operating    |  |              
|                   |               | 1999                  |       | Revenues     |  | 1998         |      | Revenues     |  | Dollars       |       | Percent
|                   |               |                       |       |              |  |              |      |              |  |               |       |        
|                   |               |                      
|                   |               | (dollars in millions)
|                  
|                  
|                  
|                  
|Operating revenues |               | $                     | 3,326 |              |  |              | 100% |              |  | $             | 1,847 |         |  |  | 100% |     |  | $ | 1,479 |       |  |  | 80% |     
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |       | 3,222        |  |              |      | 97%          |  |               |       | 1,805   |  |  |      | 98% |  |   |       | 1,417 |  |  |     | 79%  | 
|                  
|                  
|                  
|                  
|                   | International |                       |       | 104          |  |              |      | 3%           |  |               |       | 42      |  |  |      | 2%  |  |   |       | 62    |  |  |     | 148% | 

Domestic operating revenues increased principally as a result of
a 62% increase in end-of-period domestic digital subscriber units
 in service from about 2,789,900 at December 31, 1998 to
about 4,515,700 at December 31, 1999. In addition, we
experienced a 94% increase in minutes of use along with an
increase in the average monthly revenue per digital subscriber
unit from about $69 during 1998 to about $73 during 1999. The
growth in digital subscriber units in service is the result of a
number of factors, principally:



| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | expanded network coverage and capacity;                                           
|
| |  | differentiated products and services including instant
	conferencing capabilities;
|
| |  | the increased number of indirect distribution channels;                           

37



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##### Table of Contents





| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | increased consumer awareness and acceptance of wireless
	communications;
|
| |  | pricing plans targeted at particular market segments; and               
|
| |  | increased sales force and marketing staff.                              

International operating revenues increased primarily as a result
of a 174% increase in end-of-period digital subscriber units in
service for its consolidated entities from about 101,900 at
December 31, 1998 to about 279,300 at December 31,
1999, reflecting the launch of digital wireless communications
services in major markets in Brazil, Argentina and Mexico in the
second half of 1998 and in Peru in the second quarter of 1999.

b.  Cost of Revenues.

Cost of revenues consists primarily of network operating costs,
including site rent and utilities, and interconnection fees
assessed by local exchange carriers.

|                 |               |                       |     |              |  |              |     |              |  |               |     |         |  |  |     |     |  |   |     |     |  |  |     |      | 
|---------------- | ------------- | --------------------- | --- | ------------ |  | ------------ | --- | ------------ |  | ------------- | --- | ------- |  |  | --- | --- |  | - | --- | --- |  |  | --- | ---- | 
|                 |               |                       |     |              |  |              |     |              |  |              
|                 |               |                       |     | % of         |  |              |     | % of         |  | Increase from
|                 |               |                       |     | Consolidated |  |              |     | Consolidated |  | Previous Year
|                 |               | December 31,          |     | Operating    |  | December 31, |     | Operating    |  |              
|                 |               | 1999                  |     | Revenues     |  | 1998         |     | Revenues     |  | Dollars       |     | Percent
|                 |               |                       |     |              |  |              |     |              |  |               |     |        
|                 |               |                      
|                 |               | (dollars in millions)
|                
|                
|                
|                
|Cost of revenues |               | $                     | 697 |              |  |              | 21% |              |  | $             | 516 |         |  |  | 28% |     |  | $ | 181 |     |  |  | 35% |     
|                
|                
|                
|                
|                 | Domestic      |                       |     | 656          |  |              |     | 20%          |  |               |     | 496     |  |  |     | 27% |  |   |     | 160 |  |  |     | 32%  | 
|                
|                
|                
|                
|                 | International |                       |     | 41           |  |              |     | 1%           |  |               |     | 20      |  |  |     | 1%  |  |   |     | 21  |  |  |     | 105% | 

Domestic cost of revenues increased primarily as a result of a
53% increase in the number of digital switches in service and a
44% increase in digital cell sites and related equipment we
placed in service during 1999, as well as increases in airtime
usage. Increased airtime usage resulted from increased subscriber
 units in service and increased average interconnect minutes of
use per customer. Domestic cost of revenues as a percentage of
consolidated operating revenues decreased due to the economies of
 scale achieved as a result of increases in system usage and
digital subscriber units placed in service during 1999.

The increase in international cost of revenues is attributable
primarily to the increase in the number of cell sites and
switches placed in service during 1999, as well as increases in
international expenses associated with increased airtime usage
resulting from additional subscriber units in service.

c.  Selling, General and Administrative
Expenses.

|                                    |                            |                       |       |              |  |              |     |              |  |               |       |         |  |  |     |     |  |   |     |     |  |  |     |     | 
|----------------------------------- | -------------------------- | --------------------- | ----- | ------------ |  | ------------ | --- | ------------ |  | ------------- | ----- | ------- |  |  | --- | --- |  | - | --- | --- |  |  | --- | --- | 
|                                    |                            |                       |       |              |  |              |     |              |  |              
|                                    |                            |                       |       | % of         |  |              |     | % of         |  | Increase from
|                                    |                            |                       |       | Consolidated |  |              |     | Consolidated |  | Previous Year
|                                    |                            | December 31,          |       | Operating    |  | December 31, |     | Operating    |  |              
|                                    |                            | 1999                  |       | Revenues     |  | 1998         |     | Revenues     |  | Dollars       |       | Percent
|                                    |                            |                       |       |              |  |              |     |              |  |               |       |        
|                                    |                            |                      
|                                    |                            | (dollars in millions)
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 2,094 |              |  |              | 63% |              |  | $             | 1,551 |         |  |  | 84% |     |  | $ | 543 |     |  |  | 35% |    
|                                   
|                                   
|                                   
|                                   
|                                    | Selling and marketing      |                       |       | 1,255        |  |              |     | 38%          |  |               |       | 954     |  |  |     | 52% |  |   |     | 301 |  |  |     | 32% | 
|                                   
|                                   
|                                   
|                                   
|                                    | General and administrative |                       |       | 839          |  |              |     | 25%          |  |               |       | 597     |  |  |     | 32% |  |   |     | 242 |  |  |     | 41% | 

The increase in selling, general and administrative expenses
consisted of an increase in domestic expenses of
$460 million and an increase in international expenses of
$83 million for the year ended December 31, 1999 as
compared to 1998.

We include the loss generated from the sale of digital subscriber
 units and related accessories in selling and marketing expenses,
 as the loss primarily represents marketing costs. The increase
in selling and marketing expenses primarily reflects increased
costs incurred in connection with higher consolidated sales of
digital subscriber units including:



| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $168 million of increased losses generated from increased
	consolidated sales of digital subscriber units and related
	accessories, including losses of $24 million relating to
	international digital subscriber unit sales;

38



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $111 million of increased domestic commissions and residuals
	 earned by indirect dealers and distributors as a result of
	increased digital subscriber unit sales through indirect
	distribution channels; and                                                                                                                                                           
|
| |  | $22 million of increased advertising and marketing expenses
	from international operations due to aggressive marketing
	campaigns directed at growing the customer base and increasing
	customer awareness of digital services primarily in major markets
	 launched in 1998, as well as an increase in the size of the
	international sales force to support this growth.

The increase in general and administrative expenses is primarily
attributable to the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $76 million of increased domestic expenses related to
	billing, collection and customer care activities as a result of a
	 larger customer base;                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | $85 million of increased domestic personnel, facilities and
	general corporate expenses primarily reflecting increased
	staffing for back-office activities required to serve the larger
	customer base;                                                                                                                                                                                                                                                                                                                                                         
|
| |  | $44 million of increased domestic bad debt expense related
	to the larger customer base; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | $37 million of increased international general and
	administrative expenses incurred to support the growth in our
	international markets, including a $26 million increase in
	bad debt expense resulting from a concerted program initiated in
	the first quarter of 1999 to enhance credit policies and
	aggressively review and take action on past due receivables.
	Following the institution of these initiatives, bad debt expense
	decreased $13 million from $23  million for the first
	half of 1999 to about $10 million for the second half of
	1999.

The aggregate amount of selling, general and administrative
expenses are expected to increase both domestically and
internationally as a result of a number of factors, including but
 not limited to:



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | continuing aggressive marketing and advertising campaigns;                                                                        
|
| |  | increasing sales and marketing, customer care and back-office
	support staffing; and                                              
|
| |  | increasing aggregate amounts of subscriber unit subsidies as we
	sell additional digital subscriber units and related accessories.

d.  Depreciation and Amortization

|                              |              |                       |       |              |  |              |     |              |  |               |     |         |  |  |     |     |  |   |     |     |  |  |     |     | 
|----------------------------- | ------------ | --------------------- | ----- | ------------ |  | ------------ | --- | ------------ |  | ------------- | --- | ------- |  |  | --- | --- |  | - | --- | --- |  |  | --- | --- | 
|                              |              |                       |       |              |  |              |     |              |  |              
|                              |              |                       |       | % of         |  |              |     | % of         |  | Increase from
|                              |              |                       |       | Consolidated |  |              |     | Consolidated |  | Previous Year
|                              |              | December 31,          |       | Operating    |  | December 31, |     | Operating    |  |              
|                              |              | 1999                  |       | Revenues     |  | 1998         |     | Revenues     |  | Dollars       |     | Percent
|                              |              |                       |       |              |  |              |     |              |  |               |     |        
|                              |              |                      
|                              |              | (dollars in millions)
|                             
|                             
|                             
|                             
|Depreciation and amortization |              | $                     | 1,004 |              |  |              | 30% |              |  | $             | 832 |         |  |  | 45% |     |  | $ | 172 |     |  |  | 21% |    
|                             
|                             
|                             
|                             
|                              | Depreciation |                       |       | 791          |  |              |     | 24%          |  |               |     | 627     |  |  |     | 34% |  |   |     | 164 |  |  |     | 26% | 
|                             
|                             
|                             
|                             
|                              | Amortization |                       |       | 213          |  |              |     | 6%           |  |               |     | 205     |  |  |     | 11% |  |   |     | 8   |  |  |     | 4%  | 

Depreciation and amortization increased primarily due to the
increase in depreciation as a result of placing into service, as
well as modifying, additional cell sites and switches both in
existing domestic markets (primarily to enhance the coverage and
capacity of our digital mobile network) and in existing and new
international markets launched in the second half of 1998. System
 assets relating to the development and expansion of the digital
mobile networks, both domestically and internationally, represent
 the largest portion of capital expenditures during the period.
Depreciation begins when system assets are placed into service in
 the relevant markets.

39



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##### Table of Contents



e.  Segment Earnings, Interest Expense,
Interest Income and Other.

|                                              |                                     |                       |       |              |   |              |    |              |    |                 |       |         |   |  |     |    |    |   |      |     |   |  |     |     |   
|--------------------------------------------- | ----------------------------------- | --------------------- | ----- | ------------ | - | ------------ | -- | ------------ | -- | --------------- | ----- | ------- | - |  | --- | -- | -- | - | ---- | --- | - |  | --- | --- | --
|                                              |                                     |                       |       |              |   |              |    |              |    |                
|                                              |                                     |                       |       |              |   |              |    |              |    | Increase/      
|                                              |                                     |                       |       | % of         |   |              |    | % of         |    | (Decrease) from
|                                              |                                     |                       |       | Consolidated |   |              |    | Consolidated |    | Previous Year  
|                                              |                                     | December 31,          |       | Operating    |   | December 31, |    | Operating    |    |                
|                                              |                                     | 1999                  |       | Revenues     |   | 1998         |    | Revenues     |    | Dollars         |       | Percent
|                                              |                                     |                       |       |              |   |              |    |              |    |                 |       |        
|                                              |                                     |                      
|                                              |                                     | (dollars in millions)
|                                             
|                                             
|                                             
|                                             
|Segment earnings (losses)                     |                                     | $                     | 535   |              |   |              | 16 | %            |    | $               | (220  | )       |   |  | (12 | )% |    | $ | 755  |     |   |  | NM  |    
|                                             
|                                             
|                                             
|                                             
|                                              | Domestic                            |                       |       | 698          |   |              |    | 21           | %  |                 |       | (99     | ) |  |     | (5 | )% |   |      | 797 |   |  |     | NM  |   
|                                             
|                                             
|                                             
|                                             
|                                              | International                       |                       |       | (163         | ) |              |    | (5           | )% |                 |       | (121    | ) |  |     | (7 | )% |   |      | (42 | ) |  |     | (35 | )%
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |                                     |                       | 878   |              |   |              | 26 | %            |    |                 | 656   |         |   |  | 36  | %  |    |   | 222  |     |   |  | 34  | %  
|                                             
|                                             
|                                             
|                                             
|Interest income                               |                                     |                       | 96    |              |   |              | 3  | %            |    |                 | 34    |         |   |  | 2   | %  |    |   | 62   |     |   |  | 182 | %  
|                                             
|                                             
|                                             
|                                             
|Equity in losses of unconsolidated affiliates |                                     |                       | (73   | )            |   |              | (2 | )%           |    |                 | (12   | )       |   |  | (1  | )% |    |   | (61  | )   |   |  | NM  |    
|                                             
|                                             
|                                             
|                                             
|Foreign currency transaction (losses) gains   |                                     |                       | (61   | )            |   |              | (2 | )%           |    |                 | 10    |         |   |  | 1   | %  |    |   | (71  | )   |   |  | NM  |    
|Other, net                                    |                                     |                       |       |              |   |              |    |              |    |                 |       |         |   |  |     |    |    |   |      |     |   |  |     |    
|                                             
|                                             
|                                             
|                                             
|                                              | Realized gain on sale of investment |                       |       | 70           |   |              |    | 2            | %  |                 |       |        |   |  |     |   |    |   |      | 70  |   |  |     | NM  |   
|                                             
|                                             
|                                             
|                                             
|                                              | Other income (expense), net         |                       |       | 17           |   |              |    | 1            | %  |                 |       | (35     | ) |  |     | (2 | )% |   |      | 52  |   |  |     | 149 | % 
|                                             
|                                             
|                                             
|                                             
|Income tax benefit                            |                                     |                       | 28    |              |   |              | 1  | %            |    |                 | 192   |         |   |  | 10  | %  |    |   | (164 | )   |   |  | (85 | )% 
|                                             
|                                             
|                                             
|                                             
|Extraordinary loss                            |                                     |                       | 68    |              |   |              | 2  | %            |    |                 | 133   |         |   |  | 7   | %  |    |   | (65  | )   |   |  | (49 | )% 
|                                             
|                                             
|                                             
|                                             
|Loss attributable to common stockholders      |                                     |                       | 1,530 |              |   |              | 46 | %            |    |                 | 1,801 |         |   |  | 98  | %  |    |   | (271 | )   |   |  | (15 | )% 




NM  change not meaningful

We define segment earnings as earnings before interest, taxes,
depreciation and amortization and other non-recurring charges.
Domestic segment earnings are expected to grow due to an
increasing customer base and decreasing operating expenses as a
percentage of revenues due to the economies of scale achieved as
a result of increases in system usage. We expect international
segment losses to continue while we are building out our digital
mobile networks and expanding our presence in international
markets. Based on the current stage of development of each of our
 reportable segments, most of our operating revenues,
identifiable assets and segment earnings pertain to our domestic
operations.

The increase in interest expense resulted from the issuance of
senior notes during November 1998, June 1999 and
November 1999, as well as a higher average level of
borrowings under our domestic bank credit facility and Nextel
Internationals bank and vendor credit facilities.

The increase in interest income is primarily due to income
recognized on the investment of the net proceeds received in
November 1999 from both the public offering of class A
common stock and the issuance in a private placement of our
9.375% senior notes due 2009.

The increase in equity in losses of unconsolidated affiliates is
primarily due to our equity method investment in Nextel Partners
and increased losses in Nextel Communications Philippines and
Nexnet Co., Ltd. The increase in the foreign currency transaction
 loss is due primarily to the devaluation of the Brazilian real
relative to the U.S. dollar during 1999. A $70 million gain
was recognized in 1999 on the sale of our 50% ownership interest
in NEXTBAND Communications.

We recorded an income tax benefit of $28 million (an
effective tax rate of about 2%) in 1999, compared to
$192 million (an effective tax rate of about 11%) in 1998.
The change in the effective tax rate primarily resulted from a
change in the tax law in 1998 which extended the net operating
loss carryforward period from 15 to 20 years for losses
generated in or after 1998; therefore, in 1998, more income tax
benefit was recorded reflecting the increase in the net operating
 loss carryforward period. In specified circumstances, Statement
of Financial Accounting Standards No. 109, Accounting
for Income Taxes, limits the recognition of income tax
benefits for net operating losses to the amount of deferred tax
liabilities that are expected to reverse within the statutory
carryforward period. We increased the valuation allowance related
 to net operating losses by $448 million in 1999 and
$487 million in 1998 since a significant portion of our
deferred tax liabilities will reverse after existing net
operating losses expire. The

40



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##### Table of Contents





During the fourth quarter of 1999, we utilized a portion of the
proceeds from the 9.375% senior notes to repurchase and redeem
$546 million of our outstanding notes issued prior to 1997.
As a result of the early retirement of the senior notes
repurchased and redeemed during the fourth quarter of 1999, we
recognized an extraordinary loss of about $68 million,
representing the excess of the purchase price over the carrying
values of the repurchased and redeemed notes and the write-off of
 associated unamortized deferred financing costs.

2.  Year Ended
December 31, 1998 vs. Year Ended December 31, 1997

a.  Operating Revenues.

|                   |               |                       |       |              |  |              |      |              |  |               |     |         |  |  |      |     |  |   |       |       |  |  |      |      | 
|------------------ | ------------- | --------------------- | ----- | ------------ |  | ------------ | ---- | ------------ |  | ------------- | --- | ------- |  |  | ---- | --- |  | - | ----- | ----- |  |  | ---- | ---- | 
|                   |               |                       |       |              |  |              |      |              |  |              
|                   |               |                       |       | % of         |  |              |      | % of         |  | Increase from
|                   |               |                       |       | Consolidated |  |              |      | Consolidated |  | Previous Year
|                   |               | December 31,          |       | Operating    |  | December 31, |      | Operating    |  |              
|                   |               | 1998                  |       | Revenues     |  | 1997         |      | Revenues     |  | Dollars       |     | Percent
|                   |               |                       |       |              |  |              |      |              |  |               |     |        
|                   |               |                      
|                   |               | (dollars in millions)
|                  
|                  
|                  
|                  
|Operating revenues |               | $                     | 1,847 |              |  |              | 100% |              |  | $             | 739 |         |  |  | 100% |     |  | $ | 1,108 |       |  |  | 150% |     
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |       | 1,805        |  |              |      | 98%          |  |               |     | 726     |  |  |      | 98% |  |   |       | 1,079 |  |  |      | 149% | 
|                  
|                  
|                  
|                  
|                   | International |                       |       | 42           |  |              |      | 2%           |  |               |     | 13      |  |  |      | 2%  |  |   |       | 29    |  |  |      | 223% | 

Domestic operating revenues for 1998 increased from 1997
principally as a result of a 120% increase in end-of-period
domestic digital subscriber units in service from about 1,270,700
 at December 31, 1997, to about 2,789,900 at
December 31, 1998. The increase in operating revenues
primarily reflects the increased number of subscriber units in
service in both new and existing markets and an increase in
minutes of use producing an increase in the average monthly
revenue per digital subscriber unit from about $66 in 1997 to
about $69 in 1998. The growth in digital subscriber units in
service is the result of a number of factors, including
principally our increased sales force and marketing staff,
increased distribution channels, expanded network capacity,
increased consumer awareness and acceptance of wireless
communications and pricing plans targeted at particular market
segments. International operating revenues increased primarily as
 a result of increased units in service in Brazil, Argentina and
Mexico, chiefly due to the launch of digital services in major
markets in those countries during the second half of 1998.

b.  Cost of Revenues.

|                 |               |                       |     |              |  |              |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |    |     |  
|---------------- | ------------- | --------------------- | --- | ------------ |  | ------------ | -- | ------------ | - | ------------- | --- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | -- | --- | -
|                 |               |                       |     |              |  |              |    |              |   |              
|                 |               |                       |     | % of         |  |              |    | % of         |   | Increase from
|                 |               |                       |     | Consolidated |  |              |    | Consolidated |   | Previous Year
|                 |               | December 31,          |     | Operating    |  | December 31, |    | Operating    |   |              
|                 |               | 1998                  |     | Revenues     |  | 1997         |    | Revenues     |   | Dollars       |     | Percent
|                 |               |                       |     |              |  |              |    |              |   |               |     |        
|                 |               |                      
|                 |               | (dollars in millions)
|                
|                
|                
|                
|Cost of revenues |               | $                     | 516 |              |  |              | 28 | %            |   | $             | 289 |         |  |  | 39 | %  |   | $ | 227 |     |  |  | 79 | %  
|                
|                
|                
|                
|                 | Domestic      |                       |     | 496          |  |              |    | 27           | % |               |     | 282     |  |  |    | 38 | % |   |     | 214 |  |  |    | 76  | %
|                
|                
|                
|                
|                 | International |                       |     | 20           |  |              |    | 1            | % |               |     | 7       |  |  |    | 1  | % |   |     | 13  |  |  |    | 186 | %

Domestic cost of revenues for 1998 increased from 1997 primarily
as a result of an 82% increase in the number of switches placed
in service and a greater than 50% increase in cell sites and
related equipment placed into service during 1998, as well as
increases in airtime usage and digital subscriber units in
service. The improvement in cost of revenues as a percentage of
revenues primarily resulted from economies of scale achieved as a
 result of increases in system usage and digital subscriber units
 placed in service in 1998.

41



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##### Table of Contents



c.  Selling, General and Administrative
Expenses.

|                                    |                            |                       |       |              |  |              |    |              |   |               |     |         |  |  |     |    |   |   |     |     |  |  |    |    |  
|----------------------------------- | -------------------------- | --------------------- | ----- | ------------ |  | ------------ | -- | ------------ | - | ------------- | --- | ------- |  |  | --- | -- | - | - | --- | --- |  |  | -- | -- | -
|                                    |                            |                       |       |              |  |              |    |              |   |              
|                                    |                            |                       |       | % of         |  |              |    | % of         |   | Increase from
|                                    |                            |                       |       | Consolidated |  |              |    | Consolidated |   | Previous Year
|                                    |                            | December 31,          |       | Operating    |  | December 31, |    | Operating    |   |              
|                                    |                            | 1998                  |       | Revenues     |  | 1997         |    | Revenues     |   | Dollars       |     | Percent
|                                    |                            |                       |       |              |  |              |    |              |   |               |     |        
|                                    |                            |                      
|                                    |                            | (dollars in millions)
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 1,551 |              |  |              | 84 | %            |   | $             | 862 |         |  |  | 117 | %  |   | $ | 689 |     |  |  | 80 | % 
|                                   
|                                   
|                                   
|                                   
|                                    | Selling and marketing      |                       |       | 954          |  |              |    | 52           | % |               |     | 515     |  |  |     | 70 | % |   |     | 439 |  |  |    | 85 | %
|                                   
|                                   
|                                   
|                                   
|                                    | General and administrative |                       |       | 597          |  |              |    | 32           | % |               |     | 347     |  |  |     | 47 | % |   |     | 250 |  |  |    | 72 | %

The increase in selling, general and administrative expenses for
1998 over 1997 consisted of an increase in domestic expenses of
$573 million and an increase in international expenses of
$116 million.

We include the loss generated from the sale of digital subscriber
 units and related accessories in selling and marketing expenses,
 as the loss primarily represents marketing costs. The increase
in selling and marketing expenses consisted primarily of
increased costs incurred in connection with higher levels of
consolidated sales of digital subscriber units, including:



| |   |                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $121 million of increased domestic dealer commissions and
	residuals earned by indirect distributors as a result of
	increased unit sales through indirect distribution channels;                                                               
|
| |  | $103 million of increased losses generated from consolidated
	 sales of digital subscriber units and related accessories,
	including a loss of $12  million relating to international
	digital subscriber unit sales;                           
|
| |  | $93 million of increased domestic salaries, commissions and
	related personnel costs associated with increased internal sales
	and marketing staffing;                                                                                          
|
| |  | $68 million of increased domestic advertising, telemarketing
	 and other marketing expenses attributable to the aggressive
	national and regional marketing campaigns that began in
	March 1997 and largely continued through most of
	1998; and
|
| |  | $54 million of increased advertising and marketing expenses
	related to international operations as a result of the launch of
	digital service in Brazil in the second quarter of 1998 and
	Argentina and Mexico in the third quarter of 1998.  

The loss on digital subscriber unit and related accessory sales
for 1998 increased 68% to $254 million, compared to
$151 million for 1997 and decreased as a percentage of
revenue. The increase in the loss on digital subscriber unit and
related accessory sales compares favorably to the 120% increase
in ending domestic digital subscriber units in service due to
decreases in subsidies and discounts on a per unit basis offered
to customers purchasing digital subscriber units and related
accessories.

The increase in general and administrative expenses is
attributable to the following:



| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | $94 million of increased personnel, facilities and general
	corporate expenses reflecting increased staffing for back-office
	activities;
|
| |  | $44 million of increased general and administrative expenses
	 to support the growth of international operations;                        
|
| |  | $87 million of increased expenses related to billing and
	collection activities as a result of a larger customer
	base; and              
|
| |  | $25 million of increased consolidated bad debt expense.                                                                                  

We recognized consolidated bad debt expense of $82 million
for the year ended December 31, 1998 (of which
$7 million was attributable to Nextel International)
compared to $57 million for the year ended December 31,
 1997 (of which $1 million was attributable to Nextel
International). We initiated a comprehensive and aggressive
program with respect to our domestic operations for more
stringent credit reviews and the collection of past due
receivables in the second half of 1997, including involuntarily

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d.  Depreciation and Amortization.

|                              |              |                       |     |              |  |              |    |              |   |                 |     |         |  |  |    |    |   |   |     |     |   |  |    |     |   
|----------------------------- | ------------ | --------------------- | --- | ------------ |  | ------------ | -- | ------------ | - | --------------- | --- | ------- |  |  | -- | -- | - | - | --- | --- | - |  | -- | --- | --
|                              |              |                       |     |              |  |              |    |              |   |                
|                              |              |                       |     |              |  |              |    |              |   | Increase/      
|                              |              |                       |     | % of         |  |              |    | % of         |   | (Decrease) from
|                              |              |                       |     | Consolidated |  |              |    | Consolidated |   | Previous Year  
|                              |              | December 31,          |     | Operating    |  | December 31, |    | Operating    |   |                
|                              |              | 1998                  |     | Revenues     |  | 1997         |    | Revenues     |   | Dollars         |     | Percent
|                              |              |                       |     |              |  |              |    |              |   |                 |     |        
|                              |              |                      
|                              |              | (dollars in millions)
|                             
|                             
|                             
|                             
|Depreciation and amortization |              | $                     | 832 |              |  |              | 45 | %            |   | $               | 526 |         |  |  | 71 | %  |   | $ | 306 |     |   |  | 58 | %  
|                             
|                             
|                             
|                             
|                              | Depreciation |                       |     | 627          |  |              |    | 34           | % |                 |     | 282     |  |  |    | 38 | % |   |     | 345 |   |  |    | 122 | % 
|                             
|                             
|                             
|                             
|                              | Amortization |                       |     | 205          |  |              |    | 11           | % |                 |     | 244     |  |  |    | 33 | % |   |     | (39 | ) |  |    | (16 | )%

The increase in depreciation expense reflects:



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the effect of the placing into service during 1998 additional
	operational cell sites and switches in new and existing domestic
	and international markets; and
|
| |  | the effect of business acquisitions completed during 1998 and the
	 last quarter of 1997.                                                                      

System assets relating to the development and expansion of the
digital mobile network represented the largest portion of capital
 expenditures during the period. Depreciation begins when systems
 assets are placed into service in the relevant markets.

Beginning in the fourth quarter of 1997, we extended the
amortization period applicable to our FCC licenses and certain
goodwill derived from our domestic acquisitions from
20 years to 40 years. We believe that some events
occurred throughout 1997 and became specifically apparent during
the fourth quarter of 1997 that supported the extension of the
useful lives of both the FCC licenses and domestic goodwill.
These events provided specific evidence that our long-term
domestic business plan was more likely to be achieved, resulting
in the ability to economically utilize these assets over a longer
 period (i.e., 40 years) than was originally
foreseeable. Specifically, our technology was modified throughout
 1995, 1996 and 1997 to resolve concerns regarding the
performance of our wireless technology experienced when the
technology was initially deployed. The new product and digital
technology became firmly established in October 1997 when we
 reached 1 million domestic digital subscriber units in
service and noted increases in average revenue per subscriber
unit. Further, we raised substantial capital during 1996 and
1997, enhancing our ability to complete the domestic digital
mobile network build-out in accordance with our then current
business plan. The combination of our proven technology, customer
 acceptance and financial support have allowed us to build our
digital mobile network and provide substantially more than the
minimal level of service necessary to assure the renewal of our
FCC licenses. The majority of our FCC licenses have been obtained
 through business acquisitions. Our experience is that the value
attributed to the net assets acquired in these business
acquisitions, excluding the FCC licenses, and liabilities assumed
 is generally small, reflecting the less significant value we
attach to those net assets and liabilities. As a result, the
purchase price offered to the seller reflects primarily the value
 of the licenses acquired. Any resulting goodwill is amortized
over the same life as our FCC licenses because we believe the two
 are closely related and provide benefits to us over the same
periods. Therefore, in the fourth quarter of 1997, we extended
the life of goodwill to coincide to the life of our FCC licenses,
 and as a result, amortization expense for 1998 decreased 16%.

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e.  Interest Expense, Interest Income and
Other.

|                                         |  |                       |       |              |  |              |    |              |  |                 |       |         |  |  |     |    |  |   |     |   |  |  |     |  
|---------------------------------------- |  | --------------------- | ----- | ------------ |  | ------------ | -- | ------------ |  | --------------- | ----- | ------- |  |  | --- | -- |  | - | --- | - |  |  | --- | -
|                                         |  |                       |       |              |  |              |    |              |  |                
|                                         |  |                       |       |              |  |              |    |              |  | Increase/      
|                                         |  |                       |       | % of         |  |              |    | % of         |  | (Decrease) from
|                                         |  |                       |       | Consolidated |  |              |    | Consolidated |  | Previous Year  
|                                         |  | December 31,          |       | Operating    |  | December 31, |    | Operating    |  |                
|                                         |  | 1998                  |       | Revenues     |  | 1997         |    | Revenues     |  | Dollars         |       | Percent
|                                         |  |                       |       |              |  |              |    |              |  |                 |       |        
|                                         |  |                      
|                                         |  | (dollars in millions)
|                                        
|                                        
|                                        
|                                        
|Interest expense                         |  | $                     | 656   |              |  |              | 36 | %            |  | $               | 408   |         |  |  | 55  | %  |  | $ | 248 |   |  |  | 61  | %
|                                        
|                                        
|                                        
|                                        
|Interest income                          |  |                       | 34    |              |  |              | 2  | %            |  |                 | 30    |         |  |  | 4   | %  |  |   | 4   |   |  |  | 13  | %
|                                        
|                                        
|                                        
|                                        
|Other, net                               |  |                       | (37   | )            |  |              | (2 | )%           |  |                 | 7     |         |  |  | 1   | %  |  |   | (44 | ) |  |  | NM  |  
|                                        
|                                        
|                                        
|                                        
|Income tax benefit (provision)           |  |                       | 192   |              |  |              | 10 | %            |  |                 | (259  | )       |  |  | (35 | )% |  |   | 451 |   |  |  | 174 | %
|                                        
|                                        
|                                        
|                                        
|Extraordinary loss                       |  |                       | 133   |              |  |              | 7  | %            |  |                 | 46    |         |  |  | 6   | %  |  |   | 87  |   |  |  | 189 | %
|                                        
|                                        
|                                        
|                                        
|Loss attributable to common stockholders |  |                       | 1,801 |              |  |              | 98 | %            |  |                 | 1,643 |         |  |  | 222 | %  |  |   | 158 |   |  |  | 10  | %




NM  change not meaningful

The increase in interest expense for 1998 from 1997 resulted from
 the issuance of senior notes during 1997 and 1998, as well as a
higher average level of borrowings under the domestic bank credit
 facility and Nextel Internationals bank and vendor credit
facilities. The increase was partially offset by a decrease in
the weighted average interest rate on the total outstanding debt,
 which was a result of:



| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the refinancing of the domestic vendor credit facility during the
	 first quarter of 1998; and                                                                                                                                                                              
|
| |  | the retirement of a portion of the 11.5% senior notes due 2003
	and the 12.25% senior notes due 2004 during the fourth quarter of
	 1997 and substantially all of the remaining amounts outstanding
	under these two senior notes series during the second quarter of
	1998.

The increase in interest income for 1998 from 1997 is primarily
attributable to income recognized on the investment of the net
proceeds received from our sale of the series E preferred stock
and the senior notes issued in February 1998.

In the fourth quarter of 1997, we entered into an interest rate
protection agreement to lock in interest rates on 10-year
U.S. Treasury notes in anticipation of a future debt
issuance. During the quarter ended September 30, 1998,
management determined that this anticipated transaction was not
likely to occur before the interest rate protection agreement
expiration date. The interest rate protection agreement was
terminated on September 29, 1998 and we recognized
approximately $47 million of other expense within the
statement of operations for the quarter ended September 30,
1998.

We recorded an income tax benefit of $192 million (an
effective tax rate of 11%) in 1998, compared to a provision of
$259 million (an effective tax rate of 20%) in 1997. A
change in the tax law for 1998 extended the net operating loss
carryforward period from 15 to 20 years for losses generated
 in or after 1998. Income tax benefits in 1998 were derived from
the recognition of net operating losses generated in 1998 that
can be carried forward twenty years and that can be recognized
against existing deferred tax liabilities. In certain
circumstances, Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes, limits the
 recognition of income tax benefits for net operating losses to
the amount of deferred tax liabilities that are expected to
reverse within the statutory carryforward period. We increased
the valuation allowance related to net operating losses by
$487 million in 1998 and $767 million in 1997 since a
significant portion of our deferred tax liabilities will reverse
after existing net operating losses expire. The financial
statement limitation on the recognition of income tax benefits
for net operating losses will not have an impact on our ability
to use our net operating losses for income tax purposes.

In April 1998, we purchased $294 million in book value
of our 11.5% senior notes due 2003 and $333 million in book
value of our 12.25% senior notes due 2004 at a cost in excess of
related carrying amounts. As a result, we recorded an
extraordinary loss of $133 million related to the early
retirement of debt. The extraordinary loss represented the
difference between the purchase price and the book value of those
 two series of senior notes on the date of purchase plus
unamortized deferred financing costs.

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C.  Liquidity and Capital Resources

We had losses attributable to common stockholders of
$1.5 billion for 1999 and $1.8 billion for 1998. The
operating expenses and capital expenditures associated with
developing, enhancing and operating the digital mobile network
have more than offset operating revenues. Our operating expenses,
 debt service obligations and anticipated capital expenditures
are expected to continue to more than offset operating revenues
for the next several years. We have consistently used external
sources of funds, primarily from equity issuances and debt
incurrences, to fund operations, capital expenditures,
acquisitions and other non-operating needs. For the next several
years, we intend to use existing cash and short-term investments,
 anticipated available credit under the existing credit
facilities, earnings before interest, taxes, depreciation and
amortization from our domestic operations and externally
generated funds from debt and equity sources, as discussed below,
 to cover our currently anticipated future needs.

a.  Cash Flows

During 1999, working capital increased by $3.9 billion to
$3.8 billion primarily due to the receipt in
November 1999 of $2.8 billion in proceeds from a public
 offering and sale of class A common stock and the private
placement of $2.0 billion of senior notes.

Net cash provided by operating activities of $324 million
during 1999 improved by $660 million compared to net cash
used in operating activities of $336 million during 1998.
The improvement in net cash provided by operating activities is
primarily attributable to domestic operations and reflects
increasing operating revenues and improved domestic operating
results.

Capital expenditures to fund the continued expansion of our
domestic digital mobile network continue to represent the largest
 use of funds for investing activities. Net cash used in
investing activities during 1999 increased $367 million
compared to 1998, primarily due to the $1.0 billion increase
 in purchases of short term investments offset by a
$113 million decrease in cash paid for capital expenditures,
 a $243 million decrease in the payments for acquisitions
and purchases of licenses, the receipt of $280 million
related to both the sale of our interest in NEXTBAND
Communications, L.L.C, a joint venture, and the sale of assets to
 Nextel Partners and reimbursement of costs and operating
expenses by Nextel Partners. Cash payments for capital
expenditures totaled $1.9 billion during 1999 and $2.1
billion during 1998, including $145 million during 1999 and
$371 million during 1998 for international operations.

Net cash provided by financing activities during 1999 consisted
primarily of gross proceeds from:



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | $2.8 billion in proceeds from the public offering of class A
	 common stock;                                                      
|
| |  | $2.6 billion in proceeds from the issuance of debt
	securities;                                                                   
|
| |  | $1.1 billion in borrowings under our bank and vendor credit
	facilities;                                                          
|
| |  | $600 million in proceeds from the sale of restricted class A
	 common stock to Microsoft; and                                     
|
| |  | $587 million in proceeds from SpectraSite Holdings, Inc. in
	connection with the transfer of specified telecommunications
	towers;

offset by the utilization of cash to retire $546 million in
debt securities and to repay $423 million on the revolving
line of credit under our domestic bank credit facility.

In addition to the above financings, we raised about
$1.2 billion in gross proceeds from the private placement in
 January 2000 of our 5.25% convertible senior notes due
2010.

D.  Future Capital Needs and Resources

We anticipate that, for the foreseeable future, significant
amounts of our available cash will be utilized for:



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | capital expenditures for the construction and enhancement of our
	digital mobile network, both domestically and internationally;

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| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | operating expenses relating to our digital mobile network, both
	domestically and internationally;                                    
|
| |  | potential acquisitions including any negotiated acquisitions of
	spectrum from third parties and any future FCC auctions of
	spectrum;
|
| |  | debt service requirements; and                                                                                                        
|
| |  | other general corporate expenditures.                                                                                                 

We anticipate that cash utilized for capital expenditures and
other investing activities will continue to exceed our positive
cash flows from domestic operating activities throughout 2000, as
 we build out, expand and enhance our digital mobile network. See
 Part I, Item 1. Business  M. Risk
Factors  16. Our Forward Looking Statements Are
Subject to a Variety of Factors that Could Cause Actual Results
to Differ Materially From Current Beliefs.

As of December 31, 1999, our domestic bank credit facility
provided for total secured financing capacity of up to
$5.0 billion, subject to the satisfaction or waiver of
applicable borrowing conditions. This facility consists of a
$1.5 billion revolving loan and $3.5 billion in term
loans that mature over a period from December 31, 2007 to
December 31, 2008. The total credit available under the
facility was increased effective March 15, 2000, from
$5.0 billion to $6.0 billion, when we established the
$1.0 billion incremental senior secured term loan under the
existing bank credit facility. We borrowed the entire amount of
this $1.0 billion incremental term loan on March 15,
2000. The maturity date of the $1.0 billion incremental term
 loan is March 31, 2009. At December 31, 1999, we had
borrowed $2.7 billion of our then available financing under
the bank credit facility. As of March 15, 2000,
$3.7 billion of debt was outstanding under the amended and
restated bank credit facility. Amounts outstanding under this
bank credit facility are secured by liens on assets of
substantially all of our domestic subsidiaries and bear interest
payable quarterly at an adjustable rate calculated based either
on the U.S. prime rate or LIBOR. The maturity dates of the
loans can accelerate if our credit ratings are below specified
levels and the aggregate amount of specified debt obligations
that mature before June 30, 2009, and the redemption price
of redeemable stock that is mandatorily redeemable before
June 30, 2009, exceed specified amounts. The availability of
 financing under this bank credit facility is subject to
requirements under the indentures governing our public notes and
the terms applicable to some of our preferred stock. At
December 31, 1999, we were able to access the entire
$5.0 billion available under the bank credit facility in
compliance with the debt incurrence covenants contained in our
indentures and under the relevant terms of our applicable issues
of preferred stock.

As of December 31, 1999, $139 million had been borrowed
 by Nextel International under its equipment financing facility
with Motorola Credit Corporation, leaving $86 million
available for future borrowings under that facility.
Additionally, as of December 31, 1999, $104 million had
 been borrowed by McCaw International (Brazil), Ltd. under its
vendor financing agreement with Motorola Credit, leaving
$21 million available for future borrowings. As of
December 31, 1999, Nextel Argentina S.R.L. had borrowed
$100 million under its original bank credit facility
(representing all amounts available) and had borrowed
$8 million of the $50 million in incremental term loans
 that are available under that facility as a result of amendments
 entered into in May 1999, leaving $42 million
available for future borrowings. In January 2000, Nextel
International borrowed the full $57 million in incremental
term loans available under the loan agreement entered into with
Motorola Credit.

Currently, we expect to increase the level of our domestic and
international capital expenditures during 2000. This increase is
expected to be driven by several factors, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the contemplated expansion of digital mobile network coverage
	around most major domestic and selected international market
	areas, as well as in heavily traveled corridors between markets;                                                                                                                                                                                                                     
|
| |  | the contemplated construction of additional cell sites to
	increase system capacity and improve system quality, and the
	installation of related switching equipment, in existing markets
	of Nextel and Nextel International, including the installation of
	 system infrastructure and cell sites sufficient to meet expected
	 increases in system demand four to six months ahead of
	anticipated growth;  and

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| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the installation of system capital hardware and software items in
	 connection with the planned initial commercial launch of our
	wireless data service offerings nationwide in 2000.

Taking these anticipated capital expenditures into account for
both Nextel and Nextel International, and assuming that a
significant amount of Nextel Internationals funding needs
for calendar year 2000 will be satisfied with funds invested
 or advanced by us, and based upon the combined anticipated
operating cash flow of the existing and expected wireless
businesses and currently available cash resources, we believe
that we will be able to fully fund both our domestic and
international operations through calendar year 2000. This
conclusion is premised on the availability of funds from the
following sources as of December 31, 1999 and thereafter:



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated cash and short term investments on hand as of
	December 31, 1999 of $4.5 billion, excluding
	$1.3 billion then held in trust, and since paid out, for the
	 redemption of two series of our notes issued before 1997;                          
|
| |  | the availability of $3.3 billion of incremental funding over
	 the amounts outstanding as of December 31, 1999 under our
	domestic bank credit facility, including the $1.0 billion of
	 incremental term loan financing borrowed by us on March 15,
	 2000;
|
| |  | the availability of approximately $206 million in funding
	under Nextel Internationals financing agreements described
	above, including the $57 million of incremental term loans
	borrowed in January 2000;  and                                          
|
| |  | the gross proceeds of about $1.2 billion from the
	January 2000 private placement of our 5.25% convertible
	senior notes due 2010.                                                                                                                          

If our or Nextel Internationals business plans change, or
if economic conditions in our or their markets generally or
competitive practices in the mobile wireless telecommunications
industry change materially from those currently prevailing or
from those now anticipated in the next calendar year, or if other
 presently unexpected circumstances are encountered that have a
material effect on the cash flow or profitability of the domestic
 or international mobile wireless businesses conducted by us or
Nextel International, the anticipated cash needs of those
businesses, and the conclusions as to the adequacy of the
available sources, each also could change significantly. Finally,
 the above estimates and conclusions specifically exclude the
impact of any significant acquisition transaction, or the pursuit
 of any significant new business opportunity not now
contemplated, by us or Nextel International. Any acquisition or
new business opportunity could involve significant additional
funding needs in excess of the identified currently available
sources, and could require us, Nextel International or both to
raise additional equity and debt funding to meet those needs.

The availability of borrowings under the domestic bank credit
facility and Nextel Internationals financing agreements is
subject to certain conditions and limitations, and we cannot
provide assurance that those conditions will continue to be met.
The instruments relating to our financing arrangements and
preferred stock contain provisions that operate to limit the
amount of borrowings that we may incur. The terms of the domestic
 bank credit facility and Nextel Internationals financing
agreements also require us and our subsidiaries at specified
times to maintain compliance with specified operating and
financial covenants or ratios, including certain covenants and
ratios specifically related to leverage, which become more
stringent over time. In addition, our capital needs, and our
ability to adequately address those needs through debt or equity
funding sources, are subject to a variety of factors that cannot
presently be predicted with certainty, for example, the
commercial success of our domestic and international digital
mobile networks, the amount and timing of our capital
expenditures and operating losses, the volatility and demand of
the equity and debt markets, and the market price of our common
stock.

We have had and may in the future have discussions with third
parties regarding potential equity investments and debt financing
 arrangements to satisfy actual or anticipated financing needs.
At present, other than the existing equity or debt financing
arrangements that have been consummated or are described in this
annual report, we have no legally binding commitments or
understandings with any third parties to obtain any material
amount of equity or debt financing. Under the terms of the
agreements

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E.  Effect of Inflation and Foreign Currency
Exchange

Inflation is not a material factor affecting our business.
General operating expenses such as salaries, employee benefits
and lease costs are, however, subject to normal inflationary
pressures. From time to time, we may experience price changes in
connection with the purchase of certain system infrastructure and
 subscriber equipment, but we do not currently believe that any
of these price changes will be material to our business.

The net assets of the subsidiaries of Nextel International are
subject to foreign currency exchange risks since they are
primarily maintained in local currency. Additionally, the
long-term debt of Nextel International and its subsidiaries is
almost entirely in U.S. dollar denominated form, which also
exposes such entities to local foreign exchange risks. Certain
subsidiaries conduct business in countries in which the rate of
inflation is significantly higher than that of the United States.
 Nextel International will seek to protect its earnings from
inflation and possible currency devaluation by trying to
periodically adjust the relevant subsidiaries prices in
local currencies. However, we cannot provide assurance that any
significant devaluation of a foreign currency against the
U.S. dollar could be offset, in whole or in part, by a
corresponding price increase. While Nextel International
routinely assesses its foreign currency exposure, Nextel
International has not entered into any hedging transactions.

F.  Year 2000 Issues

We did not experience any significant malfunctions or errors in
our operating or business systems when the date changed from 1999
 to 2000. Based on operations since January 1, 2000, we do
not expect any significant impact to our on-going business as a
result of Year 2000 issues. However, it is
possible that the full impact of the date change, which was of
concern due to the possibility that Nextels computer
programs that had date-sensitive software may have recognized a
date using 00 as the year 1900 rather than the
year 2000, has not been fully recognized. For example, it
could be possible that year 2000 or similar issues, such as
leap year-related problems, may occur and impair our ability to
process transactions, send invoices, maintain payroll or engage
in similar normal business activities such as financial closings
at month or quarterly end. We believe that any of these types of
problems that may be encountered are likely to be minor and
correctable. In addition, we could still be negatively affected
if our customers or suppliers are adversely affected by
year 2000 or similar issues. We are not currently aware of
any significant year 2000 or similar problems that have
arisen for our customers and suppliers.

G.  Effect of New Accounting Standards

1.  Statement of Financial Accounting Standards
No. 133

In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
Activities, which establishes accounting and reporting
standards for derivative instruments (including certain
derivatives embedded in other contracts) and for hedging
activities by requiring that all derivatives be recognized in the
 balance sheet and measured at fair value. In June 1999, the
 FASB issued SFAS No. 137, Deferral of the Effective
Date of FASB Statement No. 133  an Amendment of
FASB Statement No. 133, which

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2.  Statement of Position 98-1

In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. This statement establishes
accounting standards for costs incurred in the acquisition or
development and implementation of computer software. These new
standards require the capitalization of certain software
implementation costs relating to software acquired or developed
and implemented for internal use. The adoption of this statement,
 effective January 1, 1999, had no impact on our financial
position or results of operations.

3.  Statement of Position 98-5

In April 1998, the AICPA issued Statement of
Position 98-5, Reporting on the Costs of Start-Up
Activities. This statement requires costs of start-up
activities and organization costs to be expensed as incurred. The
 adoption of this statement, effective January 1, 1999, had
no impact on our financial position or results of operations.




Item 7A.  Quantitative and Qualitative
Disclosures about Market Risk

We use mandatorily redeemable preferred stock, senior notes,
finance obligations and bank and vendor credit facilities to
finance our operations. These on-balance sheet financial
instruments, to the extent they provide for variable rates of
interest, expose us to interest rate risk. Our primary interest
rate risk exposure results from changes in LIBOR or the
U.S. prime rate which are used to determine the interest
rates that are applicable to borrowings under our bank and vendor
 credit agreements. We use off-balance sheet derivative financial
 instruments, including interest rate swap and collar agreements,
 to partially hedge interest rate exposure associated with
on-balance sheet financial instruments. All of our derivative
financial instrument transactions are entered into for
non-trading purposes. The terms and characteristics of the
derivative instruments are matched with the existing on-balance
sheet instruments and thus do not constitute speculative or
leveraged positions independent of these exposures.

Nextel Internationals revenues are denominated in foreign
currencies while a significant portion of its operations are
financed through senior discount notes and bank and vendor credit
 facilities which are denominated in U.S. dollars. As a
result, fluctuations in exchange rates relative to the
U.S. dollar, primarily those related to the Brazilian real,
Mexican peso and the Argentine peso, expose us to foreign
currency exchange rate risk.

As of December 31, 1999, we held about $1.1 billion of
debt securities in the form of commercial paper and
U.S. government securities as short-term investments
classified as available-for-sale in accordance with SFAS
No. 115, Accounting for Certain Investments in Debt
and Equity Securities. As the weighted average maturity
from the date of purchase was less than four months, these
short-term investments do not expose us to a significant amount
of interest rate risk.

Nextel International holds an available-for-sale investment in
the common stock of Clearnet Communications, Inc., a publicly
traded company, that had a fair value of $288 million as of
December 31, 1999. In accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity
Securities, this investment is reported at its market value
 in our financial statements. Negative fluctuations in Clearnet
Communications stock price expose us to equity price risk.
A 10% decline in the stock price would result in a
$29 million decrease in the fair value of our investment in
Clearnet Communications, which would be recorded in other
comprehensive income (loss) in stockholders equity.

The information below summarizes our sensitivity to market risks
associated with fluctuations in interest rates and foreign
currency exchange rates as of December 31, 1999 in
U.S. dollars. To the extent that our financial instruments
expose us to interest rate and foreign currency exchange risk,
these instruments are presented within each market risk category
in the table below. The table presents principal

49



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##### Table of Contents







| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | quoted market prices for mandatorily redeemable preferred stock
	and senior notes;                                       
|
| |  | carrying value for the bank and vendor credit facilities at
	December 31, 1999, as interest rates are reset periodically;
|
| |  | estimates for the finance obligation based on interest rates for
	current term loans with similar terms; and             
|
| |  | estimates obtained from dealers to settle interest rate swap and
	collar agreements.                                     

Notes 8, 9 and 12 to the consolidated financial statements
contain descriptions of our senior notes, bank and vendor credit
facilities, interest rate risk management agreements and
mandatorily redeemable preferred stock and should be read in
conjunction with the table below. A description of significant
changes in outstanding amounts of mandatorily redeemable
preferred stock, senior notes, finance obligation and available
bank borrowings that occurred in 1999 is included in Part I,
Item 1. Business  E. Fiscal Year 1999
Domestic Transactions and Developments and
 F. Fiscal Year 1999 International Transactions
and Developments. The senior note issuances, finance
obligation transaction and the increase in the amounts
outstanding under the amended bank and vendor credit agreements
increased the amount of fixed and variable obligations due in
each period presented. The decrease in the notional amount
maturing in 2001 for variable to fixed rate interest rate swaps
is attributable to the termination of one swap in accordance with
 its original terms. There was not a realized gain or loss
associated with this termination.

|                                                                                 |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------------- |  | -------------------------- | ----- | ---- |  | ---- | --- | ---- |  | ---- | --- | ---------- |  | ----- | --- | ----- |  | - | --- | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                                 |  |                            |       |      |  |     
|                                                                                 |  | Year of Maturity           |       |      |  |     
|                                                                                 |  |                            |       |      |  | Fair
|                                                                                 |  | 2000                       |       | 2001 |  | 2002 |     | 2003 |  | 2004 |     | Thereafter |  | Total |     | Value
|                                                                                 |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |      
|                                                                                 |  |                            |       |      |  |     
|                                                                                 |  | (U.S. dollars in millions) |       |      |  |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|I. Interest Rate Sensitivity                                                     |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|Mandatorily Redeemable Preferred Stock, Long- Term Debt and
	Finance Obligations |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Fixed Rate                                                                       |  | $                          | 1,197 |      |  | $    | 31  |      |  | $    | 34  |            |  | $     | 38  |       |  | $ | 34  |   |  | $ | 11,431 |   |  | $ | 12,765 |   |  | $ | 12,231 |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Interest Rate                                                            |  |                            | 10    | %    |  |      | 8   | %    |  |      | 8   | %          |  |       | 8   | %     |  |   | 8   | % |  |   | 10     | % |  |   | 10     | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Variable Rate                                                                    |  |                            | 33    |      |  |      | 79  |      |  |      | 116 |            |  |       | 193 |       |  |   | 226 |   |  |   | 2,354  |   |  |   | 3,001  |   |  |   | 3,001  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Interest Rate                                                            |  |                            | 10    | %    |  |      | 10  | %    |  |      | 10  | %          |  |       | 9   | %     |  |   | 9   | % |  |   | 9      | % |  |   | 9      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest Rate Swaps:                                                             |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Variable to Fixed                                                                |  |                            |       |      |  |      | 150 |      |  |      |     |            |  |       | 100 |       |  |   |     |   |  |   | 570    |   |  |   | 820    |   |  |   | (38    | )
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Pay Rate                                                                 |  |                            |       |      |  |      | 5   | %    |  |      |     |            |  |       | 6   | %     |  |   |     |   |  |   | 8      | % |  |   | 7      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Receive Rate                                                             |  |                            |       |      |  |      | 6   | %    |  |      |     |            |  |       | 6   | %     |  |   |     |   |  |   | 6      | % |  |   | 6      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Variable to Variable                                                             |  |                            | 50    |      |  |      | 100 |      |  |      |     |            |  |       | 400 |       |  |   |     |   |  |   |        |   |  |   | 550    |   |  |   | 3      |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Pay Rate                                                                 |  |                            | 6     | %    |  |      | 6   | %    |  |      |     |            |  |       | 5   | %     |  |   |     |   |  |   |        |   |  |   | 6      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Receive Rate                                                             |  |                            | 6     | %    |  |      | 6   | %    |  |      |     |            |  |       | 6   | %     |  |   |     |   |  |   |        |   |  |   | 6      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest Rate Collars:                                                           |  |                            |       |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Collars                                                                          |  |                            |       |      |  |      |     |      |  |      |     |            |  |       | 200 |       |  |   |     |   |  |   |        |   |  |   | 200    |   |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Cap                                                                      |  |                            |       |      |  |      |     |      |  |      |     |            |  |       | 7   | %     |  |   |     |   |  |   |        |   |  |   | 7      | % |  |   |        |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Average Floor                                                                    |  |                            |       |      |  |      |     |      |  |      |     |            |  |       | 4   | %     |  |   |     |   |  |   |        |   |  |   | 4      | % |  |   |        |  

50



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##### Table of Contents



|                                       |  |                            |    |      |  |      |    |      |  |      |    |            |  |       |    |       |  |   |    |   |  |   |       |   |  |   |       |   |  |   |       | 
|-------------------------------------- |  | -------------------------- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---------- |  | ----- | -- | ----- |  | - | -- | - |  | - | ----- | - |  | - | ----- | - |  | - | ----- | 
|                                       |  |                            |    |      |  |     
|                                       |  | Year of Maturity           |    |      |  |     
|                                       |  |                            |    |      |  | Fair
|                                       |  | 2000                       |    | 2001 |  | 2002 |    | 2003 |  | 2004 |    | Thereafter |  | Total |    | Value
|                                       |  |                            |    |      |  |      |    |      |  |      |    |            |  |       |    |      
|                                       |  |                            |    |      |  |     
|                                       |  | (U.S. dollars in millions) |    |      |  |     
|                                      
|                                      
|                                      
|                                      
|II. Foreign Exchange  Rate Sensitivity |  |                            |    |      |  |      |    |      |  |      |    |            |  |       |    |       |  |   |    |   |  |   |       |   |  |   |       |   |  |   |       | 
|                                      
|                                      
|                                      
|                                      
|Long-Term Debt:                        |  |                            |    |      |  |      |    |      |  |      |    |            |  |       |    |       |  |   |    |   |  |   |       |   |  |   |       |   |  |   |       | 
|                                      
|                                      
|                                      
|                                      
|Fixed Rate                             |  | $                          | 1  |      |  | $    | 1  |      |  | $    | 1  |            |  |       |    |       |  |   |    |   |  | $ | 1,681 |   |  | $ | 1,684 |   |  | $ | 1,078 | 
|                                      
|                                      
|                                      
|                                      
|Average Interest Rate                  |  |                            | 14 | %    |  |      | 14 | %    |  |      | 14 | %          |  |       |    |       |  |   |    |   |  |   | 13    | % |  |   | 13    | % |  |   |       | 
|                                      
|                                      
|                                      
|                                      
|Variable Rate                          |  |                            | 33 |      |  |      | 79 |      |  |      | 90 |            |  | $     | 90 |       |  | $ | 59 |   |  |   |       |   |  |   | 351   |   |  |   | 351   | 
|                                      
|                                      
|                                      
|                                      
|Average Interest Rate                  |  |                            | 10 | %    |  |      | 10 | %    |  |      | 10 | %          |  |       | 10 | %     |  |   | 10 | % |  |   |       |   |  |   | 10    | % |  |   |       | 




Item 8.  Financial Statements and Supplementary
 Data

Our consolidated financial statements are filed under this item,
beginning on page F-1 of this Annual Report on Form 10-K.
The financial statement schedules required under
Regulation S-X are filed pursuant to Item 14 of this
Annual Report on Form 10-K.






|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements with Accountants on Accounting
	and Financial Disclosure

None.

51



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##### Table of Contents






PART III




Item 10.  Directors and Executive Officers of
the Registrant

The information required in this item regarding our directors is
incorporated in this item by reference from the definitive Proxy
Statement for our 2000 Annual Meeting, which is scheduled to be
filed with the Securities and Exchange Commission on or before
April 24, 2000, under the caption Election of
Directors. The information required in this item regarding
executive officers required 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. The information required by
this item regarding compliance with Section 16(a) of the
Securities and 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 the same definitive 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 definitive Proxy Statement for our 2000 Annual
 Meeting, which is scheduled to be filed with the Securities and
Exchange Commission on or before April 24, 2000, under the
captions Election of Directors  Compensation of
Directors and Executive Compensation.




Item 12.  Security Ownership of Certain
Beneficial Owners and Management

The information required by this item is incorporated in this
item by reference from the definitive Proxy Statement for our
2000 Annual Meeting, which is scheduled to be filed with the
Securities and Exchange Commission on or before April 24,
2000, under the caption Securities Ownership of Certain
Beneficial Owners and Management.




Item 13.  Certain Relationships and Related
Transactions

The information required by this item is incorporated in this
item by reference from the definitive Proxy Statement for our
2000 Annual Meeting, which is scheduled to be filed with the
Securities and Exchange Commission on or before April 24,
2000, under the caption Certain Relationships and Related
Transactions.

52



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##### Table of Contents






PART IV




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

(a)  (1)  The following Financial Statements are
included in Part II Item 8:

|                                                                                                                  |  |      |     | 
|----------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                  |  | Page
|                                                                                                                  |  |     
|Independent Auditors Report                                                                                      |  |      | F-2 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Consolidated Balance Sheets as of December 31, 1999 and
	1998.                                                    |  |      | F-3 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Consolidated Statements of Operations for the Years Ended
	December 31, 1999, 1998 and 1997.                      |  |      | F-4 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Consolidated Statements of Changes in Stockholders Equity
	for the Years Ended December 31, 1999, 1998 and 1997. |  |      | F-5 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Consolidated Statements of Cash Flows for the Years Ended
	December 31, 1999, 1998 and 1997.                      |  |      | F-6 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Notes to Consolidated Financial Statements                                                                        |  |      | F-7 | 



| |     |                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The following Financial Statement Schedules are submitted with
	this Annual Report on Form 10-K and are included in this
	item in Item 14(d) below. Schedules other than those listed
	below are omitted because they are either not required or not
	applicable. below. Schedules other than those listed below are
	omitted because they are either not required or not applicable.

|            |  |  |      | 
|----------- |  |  | ---- | 
|           
|           
|           
|           
|Schedule I  |  |  | F-41 | 
|           
|           
|           
|           
|Schedule II |  |  | F-45 | 



| |     |                                                                                    
| | --- | -----------------------------------------------------------------------------------
| | (3) | List of  Refer to Exhibit Index, which is
	incorporated in this item by reference.

(b)  Reports on Form 8-K:



| |     |                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Current Report on Form 8-K dated October 20, 1999, and
	filed with the Commission on October 21, 1999, reporting
	under Item 5, our third quarter results and changes to our
	board of directors.                                                                                        
|
| | (2) | Current Report on Form 8-K dated and filed with the
	Commission on November 8, 1999, reporting under Item 5,
	 our announcement of the offering of $2.0 billion of 9.375%
	senior notes.                                                                                                 
|
| | (3) | Current Report on Form 8-K dated and filed with the
	Commission on November 12, 1999, reporting under
	Item 5, our completion of the offering of $2.0 billion
	of 9.375% senior notes.                                                                                                   
|
| | (4) | Current Report on Form 8-K dated November 30, 1999, and
	 filed with the Commission on December 1, 1999, reporting
	under Item 5, changes to our board of directors and our
	issuance of notice to redeem some outstanding notes.                                                        
|
| | (5) | Current Report on Form 8-K dated and filed with the
	Commission on December 16, 1999, reporting under
	Item 5, our issuance of notice to redeem some other
	outstanding notes.                                                                                                           
|
| | (6) | Current Report on Form 8-K dated and filed with the
	Commission on December 21, 1999, reporting under
	Item 5, our filing with the FCC a Petition for Expedited
	Declaratory Ruling regarding certain actions we then proposed to
	take involving the bankruptcy of NextWave Telecom Inc.
|
| | (7) | Current Report on Form 8-K dated December 22, 1999 and
	filed with the Commission on December 23, 1999, reporting
	under Item  5, our intention to withdraw the Petition
	mentioned in (6) above and certain related actions.                                                            
|
| | (8) | Current Report on Form 8-K dated and filed with the
	Commission on December 23, 1999, reporting under
	Item 5, our issuance of notice to redeem some other
	outstanding notes.                                                                                                           

(c)  Exhibits listed above in Item 14(a)(3) are
included herein.

(d)  Financial Statement Schedules listed above in
Item 14(a)(2) are included in this item.

53



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##### Table of Contents






SIGNATURES

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



| |                            
| | ---------------------------
| | NEXTEL COMMUNICATIONS, INC.



| |     |                       
| | --- | ----------------------
| | By: | /s/ STEVEN M. SHINDLER

| | 
| | 
| | 



| |                                                      
| | -----------------------------------------------------
| | Steven M. Shindler                                   
| | Executive Vice President and Chief Financial
	Officer

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/ DANIEL F. AKERSONDaniel F. Akerson   |  | Chairman of the Board of Directors                                                  |  | March 30, 2000
|/s/ TIMOTHY M. DONAHUETimothy M. Donahue |  | President, Chief Executive Officer
	and Director                                    |  | March 30, 2000
|/s/ STEVEN M. SHINDLERSteven M. Shindler |  | Executive Vice President and Chief Financial Officer (Principal
	Financial Officer) |  | March 30, 2000
|/s/ WILLIAM G. ARENDTWilliam G. Arendt   |  | Vice President and Controller
	(Principal Accounting Officer)                       |  | March 30, 2000
|/s/ MORGAN E. OBRIENMorgan E. OBrien   |  | Vice Chairman of the Board                                                          |  | March 30, 2000
|/s/ KEITH J. BANEKeith J. Bane           |  | Director                                                                            |  | March 30, 2000
|/s/ WILLIAM E. CONWAYWilliam E. Conway   |  | Director                                                                            |  | March 30, 2000
|/s/ CRAIG O. MCCAWCraig O. McCaw         |  | Director                                                                            |  | March 30, 2000
|/s/ JANET HILLJanet Hill                 |  | Director                                                                            |  | March 30, 2000
|/s/ WILLIAM A. HOGLUNDWilliam A. Hoglund |  | Director                                                                            |  | March 30, 2000
|/s/ DENNIS M. WEIBLINGDennis M. Weibling |  | Director                                                                            |  | March 30, 2000
|/s/ FRANK M. DRENDELFrank M. Drendel     |  | Director                                                                            |  | March 30, 2000

54



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##### Table of Contents



Exhibit Index

|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 3.1.1 |                     |  | Restated Certificate of Incorporation of Nextel (filed on
	July 31, 1995 as Exhibits No. 4.1.1 and 4.1.2 to
	Nextels Post-Effective Amendment No. 1 on
	Form S-8 to Registration Statement No. 33-91716 on
	Form S-4 (the Nextel S-8 Registration Statement)
	 and incorporated herein by reference).                                                                                                         
|        | 3.1.2 |                     |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of 13%
	 Series D Exchangeable Preferred Stock and Qualifications,
	Limitations and Restrictions Thereof (filed on July 21, 1997
	 as Exhibit 4.1 to the Current Report on Form 8-K dated
	 on July 21, 1997 and incorporated herein by reference).                                        
|        | 3.1.3 |                     |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of
	11.125% Series E Exchangeable Preferred Stock and
	Qualifications, Limitations and Restrictions Thereof (filed on
	February 12, 1998 as Exhibit 4.1 to the Current Report
	on Form 8-K dated on February 11, 1998 (the
	February 11 Form 8-K) and incorporated
	herein by reference).
|        | 3.1.4 |                     |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of
	Zero Coupon Convertible Preferred Stock due 2013 and
	Qualifications, Limitations and Restrictions Thereof (filed on
	February 10, 1999 as Exhibit 4.16 to Nextels
	Registration Statement on Form S-4 (the
	February 1999 Form S-4) and incorporated
	herein by reference).        
|        | 3.2   |                     |  | Amended and Restated By-Laws of Nextel (filed on July 31,
	1995 as Exhibit No. 4.2 to the Nextel S-8 Registration
	Statement and incorporated herein by reference).                                                                                                                                                                                                                                              
|        | 4.1.1 |                     |  | Indenture for Senior Discount Notes due 2007, dated as of
	March 6, 1997, between McCaw International, Ltd. and The
	Bank of New York, as Trustee (filed on March 31, 1997 as
	Exhibit 4.24 to Nextels Annual Report on
	Form 10-K for the year ended December 31, 1996 (the
	1996 Form 10-K) and incorporated herein by
	reference).                                                                         
|        | 4.1.2 |                     |  | Warrant Agreement, dated as of March 6, 1997, between Nextel
	 International, Inc. and The Bank of New York (filed on
	March 31, 1997 as Exhibit 4.26 to the 1996
	Form 10-K and incorporated herein by reference).                                                                                                                                                                                              
|        | 4.2   |                     |  | Indenture dated September 17, 1997 between Nextel
	Communications, Inc. and Harris Trust and Savings Bank, as
	Trustee, relating to Nextels 10.65% Senior Redeemable
	Discount Notes due 2007 (filed on September 22, 1997 as
	Exhibit 4.1 to Nextels Current Report on Form 8-K
	 dated September 22, 1997 and incorporated herein by
	reference).                                                            
|        | 4.3   |                     |  | Indenture, dated as of October 22, 1997, between Nextel
	Communications, Inc. and Harris Trust and Savings Bank, as
	Trustee, relating to Nextels 9.75% Senior Serial Redeemable
	 Discount Notes due 2007 (filed on October 23, 1997 as
	Exhibit 4.1 to Nextels Current Report on Form 8-K
	 dated October 23, 1997 and incorporated herein by
	reference).                                                   
|        | 4.4   |                     |  | Indenture, dated as of February 11, 1998, between Nextel
	Communications, Inc. and Harris Trust and Savings Bank, as
	Trustee, relating to Nextels 9.95% Senior Serial Redeemable
	 Discount Notes due 2008 (filed on February 12, 1998 as
	Exhibit 4.2 to the February 11 Form 8-K and
	incorporated herein by reference).                                                                                     
|        | 4.5   |                     |  | Indenture, dated as of November 4, 1998, between Nextel
	Communications, Inc. and Harris Trust and Savings Bank, as
	Trustee, relating to Nextels 12.0% Senior Serial Redeemable
	 Notes due 2008 (filed on February 10, 1999 as Exhibit 
	 4.13.1 to the February 1999 Form S-4 and incorporated
	herein by reference).                                                                                        

55



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##### Table of Contents



|        |         |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | ------- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                    
|Number  |         | Exhibit Description
|        |         |                    
|        | 4.6     |                     |  | Indenture for 12.125% Senior Discount Notes due 2008, dated
	March 12, 1998, between Nextel International, Inc. and The
	Bank of New York, as Trustee (filed on May 14, 1998 as
	Exhibit 4.1 to Nextel International Inc.s Quarterly
	Report on Form 10-Q for the quarter ended March 31,
	1998 and incorporated herein by reference).                                                                                                                                                                                      
|        | 4.7     |                     |  | Indenture, dated as of June 16, 1999, by and between Nextel
	and Harris Trust and Savings Bank, as Trustee, relating to
	Nextels 4.75% Convertible Senior Notes due 2007 (filed as
	Exhibit 4.1 to the Current Report on Form 8-K dated and
	 filed on June 23, 1999 and incorporated herein by
	reference).                                                                                                                                                                                                                
|        | 4.8     |                     |  | Indenture, dated as of November 12, 1999, between Nextel and
	 Harris Trust and Savings Bank, as Trustee, relating to
	Nextels 9.375% Senior Notes due 2009 (filed as
	Exhibit 4.1 to the quarterly report on Form 10-Q for
	the quarter ended September 30, 1999 (the 1999 Third
	Quarter 10-Q) and incorporated herein by reference).                                                                                                                                                                                   
|        | 4.9.1   |                     |  | Indenture, dated as of January 26, 2000, between Nextel and
	Harris Trust and Savings Bank, as Trustee, relating to
	Nextels 5.25% Convertible Senior Notes due 2010 (filed on
	January 26, 2000 as Exhibit 4.1 to the Current Report
	on Form 8-K dated as of January 26, 2000 and
	incorporated herein by reference).                                                                                                                                                                                                     
|        | 4.9.2   |                     |  | Registration Rights Agreement, dated as of January 26, 2000,
	 between Nextel and Morgan Stanley & Co. Incorporated
	relating to Nextels 5.25% Convertible Senior Notes due 2010
	 (filed on January 26, 2000 as Exhibit 10.1 to the
	Current Report on Form 8-K dated as of January 26, 2000
	 and incorporated herein by reference).                                                                                                                                                                                      
|        | 4.10    |                     |  | Amended and Restated Credit Agreement, dated as of November 
	 9, 1999, among Nextel, Nextel Finance Company, the other
	Restricted Companies party thereto, the Lenders Party thereto,
	Toronto Dominion (Texas) Inc., as Administrative Agent, and The
	Chase Manhattan Bank as Collateral Agent (filed as
	Exhibit 4.3 to the 1999 Third Quarter 10-Q and incorporated
	herein by reference).                                                                                                                             
|        | 4.11    |                     |  | Tranche D Term Loan Agreement dated March 15, 2000 among
	Nextel, Nextel Finance Company, the other Restricted Companies
	party thereto, the Lenders Party thereto, Toronto Dominion
	(Texas) Inc., as Administrative Agent, and The Chase Manhattan
	Bank as Collateral Agent (filed as Exhibit  4.1 to the
	Current Report on Form 8-K dated as of March  15, 2000
	and incorporated herein by reference).                                                                                                                 
|        | 10.1*   |                     |  | Letter Agreement between Motorola, Inc. and Nextel, dated as of
	November 4, 1991 (filed on November 15, 1991 as
	Exhibit 10.47 to the Registration Statement
	No. 33-43415 on Form S-1 (the S-1 Registration
	Statement) and incorporated herein by reference).                                                                                                                                                                                                                                                           
|        | 10.2.1* |                     |  | 1991 Enhanced Specialized Mobile Radio System Purchase Agreement
	between Motorola, Inc. and Nextel, dated as of November 4,
	1991 (filed on November 15, as Exhibit 10.48 to the S-1
	 Registration Statement and incorporated herein by reference).                                                                                                                                                                                                                                                                        
|        | 10.2.2* |                     |  | Amendment, dated August 4, 1994, to the Enhanced Specialized
	 Mobile Radio System Equipment Purchase Agreement, between Nextel
	 and Motorola, dated November 1, 1991, as amended and to the
	 Letter Agreement, between Nextel and Motorola, dated
	November 4, 1991, as amended (collectively the
	Equipment Purchase Agreements) (filed as
	Exhibit 10.02 to the Registration Statement (No. 33-91716)
	on Form S-4 of ESMR, Inc. (the ESMR Form S-4
	Registration Statement) and incorporated herein by
	reference).
|        | 10.2.3* |                     |  | Second Amendment to Equipment Purchase Agreements, dated
	April 4, 1995 (filed as Exhibit 10.03 to the ESMR
	Form  S-4 Registration Statement and incorporated herein by
	Reference).                                                                                                                                                                                                                                                                                                                                        

56



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|        |         |                     |  |                                                                                                                                                                                                                                                                                                                                                       
|------- | ------- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                    
|Number  |         | Exhibit Description
|        |         |                    
|        | 10.2.4* |                     |  | Amendment 004 to Enhanced Specialized Mobile Radio System
	Purchase Agreement, dated as of April 28, 1996, between
	Nextel and Motorola, Inc. (filed on July 5, 1996 as
	Exhibit 99.1 to Nextels Current Report on
	Form 8-K dated July 5, 1996 and incorporated herein by
	reference).                                                              
|        | 10.2.5* |                     |  | Nextel/ Motorola Agreement (relating to equipment purchase),
	dated March 27, 1997 (filed on May 14, 1997 as
	Exhibit  10.1 to Nextels Quarterly Report on
	Form 10-Q for the quarter ended March 31, 1997 and
	incorporated by reference herein).                                                                                                   
|        | 10.2.6* |                     |  | IDEN Infrastructure [*] Supply Agreement between Motorola, Inc.,
	and Nextel Communications, Inc. dated as of April 13, 1999
	(filed as Exhibit 10.2 to the Quarterly Report on
	Form 10-Q for the quarter ended June 30, 1999 and
	incorporated herein by reference).                                                                                
|        | 10.2.7* |                     |  | Amendment dated as of December 29, 1999, to the iDEN
	Subscriber Supply Agreement dated as of November 4, 19991
	between Nextel Communications and Motorola (filed herewith).                                                                                                                                                                         
|        | 10.2.8* |                     |  | Amendment 001 dated December 29, 1999, to the iDEN
	Infrastructure [*] Supply Agreement dated April 13, 1999
	between Nextel Communications and Motorola (filed herewith).                                                                                                                                                                            
|        | 10.2.9* |                     |  | Amendment 002 dated December 30, 1999, to the iDEN
	Infrastructure [*] Supply Agreement dated April 13, 1999
	between Nextel Communications and Motorola (filed herewith).                                                                                                                                                                            
|        | 10.3.1  |                     |  | Agreement and Plan of Contribution and Merger, dated August 
	 4, 1994, as amended, by and among Nextel, Motorola, Inc., EMSR,
	Inc., ESMR Sub, Inc. and Others (filed on April 28, 1995 as
	Exhibit 2.01 to the ESMR Form S-4 Registration
	Statement and incorporated herein by reference).                                                         
|        | 10.3.2  |                     |  | Registration Rights Agreement, dated July 28, 1995, by and
	between Nextel and Motorola (filed on November 14, 1995 as
	Exhibit 10.8 to Nextels Quarterly Report on Form 10-Q
	for the quarter ended September 30, 1995 and incorporated
	herein by reference).                                                                                      
|        | 10.4.1  |                     |  | Warrant Agreement between Motorola, Inc. and Nextel, dated
	November 1, 1991 (filed on November 15, 1991 as
	Exhibit  10.53 to the S-1 Registration Statement and
	incorporated herein by reference).                                                                                                                                                 
|        | 10.4.2  |                     |  | Amendment, dated as of April 26, 1996, to Warrant Agreement
	between Motorola, Inc. and Nextel (f/k/a Fleet Call, Inc.) (filed
	 on August 14, 1996 as Exhibit 10.2 to Nextels
	Quarterly Report on Form 10-Q for the quarter ended
	June  30, 1996 and incorporated herein by reference).                                                           
|        | 10.5.1  |                     |  | Warrant Acquisition Agreement, dated as of July 14, 1993, by
	 and between OneComm Corporation and The Chase Manhattan Bank
	(National Association), and Form of Stock Purchase Warrant (filed
	 as Exhibit 10.42 to the S-1 Registration Statement of
	OneComm Corporation (file no. 353-63748) and incorporated herein
	by reference).              
|        | 10.5.2  |                     |  | Registration Rights Agreement, dated July 28, 1995, by and
	among Nextel, The Chase Manhattan Bank (National Association),
	Canadian Imperial Bank of Commerce and Fleet National Bank (filed
	 on April 1, 1996 as Exhibit 10.57 to Nextels
	Annual Report on Form 10-K for the year ended
	December 31, 1995 and incorporated herein by reference).
|        | 10.6.1  |                     |  | Securities Purchase Agreement between Nextel, Digital Radio,
	L.L.C and Craig O. McCaw, dated April 4, 1995 (filed on
	 April 11, 1995 as Exhibit 2.1 to Nextels Current
	 Report on Form 8-K dated April 10, 1995 and
	incorporated herein by reference).                                                                                           

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|        |          |                     |  |                                                                                                                                                                                                                                                                                                                                                                          
|------- | -------- | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |                    
|Number  |          | Exhibit Description
|        |          |                    
|        | 10.6.2   |                     |  | Incentive Option Agreement, dated April 4, 1995, between
	Nextel and Eagle River, Inc. filed as Exhibit 99.3 to
	Nextels Current Report on Form 8-K dated
	April 10, 1995 and filed on April 11, 1995 and
	incorporated herein by reference).                                                                                                                           
|        | 10.6.3   |                     |  | Forms of Option Agreements dated April 6, 1995 between
	Nextel, Digital Radio, L.L.C. and Craig O. McCaw (filed on
	March 31, 1997 as Exhibit 10.26 to the 1996 Annual
	Report on Form 10-K and incorporated herein by reference).                                                                                                                                       
|        | 10.6.4   |                     |  | Form of Registration Rights Agreement, dated July 28, 1995,
	by and among Nextel and Digital Radio, L.L.C. (filed on
	March 31, 1997 as Exhibit 10.38 to the 1996
	Form 10-K and incorporated herein by reference).                                                                                                                                                      
|        | 10.6.5   |                     |  | First Amendment to Registration Rights Amendment (amending that
	certain Registration Rights Agreement dated June 29, 1995)
	by and among Digital Radio, L.L.C., and Option Acquisition,
	L.L.C., dated as of June 18, 1997 (filed on July 9,
	1997 as Exhibit 10.7 to the Current Report on Form  8-K (the
	 July 9, 1997 8-K) and incorporated herein by
	reference).
|        | 10.7     |                     |  | Option Exercise and Lending Commitment Agreement by and among
	Nextel and Digital Radio, L.L.C., dated as of June  16, 1997
	 (filed on July 9, 1997 as Exhibit 10.1 to the
	July 9, 1997 8-K and incorporated herein by reference).                                                                                                                                     
|        | 10.8.1   |                     |  | Option Purchase Agreement by and among Nextel, Unrestricted
	Subsidiary Funding Company and Option Acquisition, L.L.C., dated
	as of June 16, 1997 (filed on July 9, 1997 as
	Exhibit 10.3 to the July 9, 1997 Form 8-K and
	incorporated herein by reference).                                                                                                          
|        | 10.8.2   |                     |  | Option Agreement (First New Option) by and between Option
	Acquisition, L.L.C., and Nextel, dated as of June 18, 1997
	(filed on July 9, 1997 as Exhibit 10.4 to the
	July 9, 1997 Form 8-K and incorporated herein by
	reference).                                                                                                                                      
|        | 10.8.3   |                     |  | Option Agreement (Second New Option) by and between Option
	Acquisition, L.L.C., and Nextel, dated as of June 18, 1997
	(filed on July 9, 1997 as Exhibit 10.5 to the
	July 9, 1997 Form 8-K and incorporated herein by
	reference).                                                                                                                                     
|        | 10.8.4   |                     |  | Registration Rights Agreement (Option Acquisition) by and among
	Nextel and Option Acquisition, L.L.C., dated as of June 18,
	1997 (filed on July 9, 1997 as Exhibit 10.6 to the
	July 9, 1997 Form 8-K and incorporated herein by
	reference).                                                                                                                          
|        | 10.9***  |                     |  | Form of Indemnification Agreement, and Exhibits thereto between
	Nextel and each of its directors (filed on June 24, 1992 as
	Exhibit 10.56 to Nextels Annual Report on Form 
	10-K for the year ended March 31, 1992 and incorporated
	herein by reference).                                                                                                           
|        | 10.10*** |                     |  | Employment Agreement, dated as of March 26, 1992, between
	Nextel and Robert Foosaner (filed on May 27, 1993 as
	Exhibit 10.41 to Nextels Annual Report on
	Form 10-K for the year ended March 31, 1993 and
	incorporated herein by reference).                                                                                                                         
|        | 10.11*** |                     |  | The Nextel Stock Option Plan (filed on December 21, 1992 as
	Exhibit 4(c) to Nextels Registration Statement
	No.  33-56080 on Form S-8 and incorporated herein by
	reference).                                                                                                                                                                                          
|        | 10.12.1* | **                  |  | Nextel Communications, Inc. Amended and Restated Incentive Equity
	 Plan (filed on November 15, 1999 as Exhibit 10.3 to
	Nextels quarterly report on form 10-Q for the quarter ended
	 September 30, 1999 and incorporated herein by reference).                                                                                                                        
|        | 10.13*** |                     |  | Nextel Associate Stock Purchase Plan (filed on June 21, 1996
	 as Exhibit 4.3 to Nextels Registration Statement
	No.  333-06523 on Form S-8 and incorporated herein by
	reference).                                                                                                                                                                                     
|        | 10.14*** |                     |  | Nextel Communications, Inc. Cash Compensation Deferral Plan
	(filed on December 17, 1997 as Exhibit 4.1 to
	Nextels Registration Statement No 333-42537 on
	Form S-8 and incorporated herein by reference).                                                                                                                                                             

58



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|        |          |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -------- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |                    
|Number  |          | Exhibit Description
|        |          |                    
|        | 10.15.1* | **                  |  | Employment Agreement dated as of March 5, 1996 between
	Daniel Akerson and Nextel (filed on March 31, 1997 as
	Exhibit 10.35 to the 1996 Form 10-K and incorporated
	herein by reference).                                                                                                                                                                                                                                                                                          
|        | 10.15.2* | **                  |  | Letter Amendment to Employment Agreement dated as of March 
	24, 1998 between Daniel Akerson and Nextel (filed on March 
	31, 1998 as Exhibit 10.20.2 to Nextels Annual Report
	on Form 10-K for the year ended December 31, 1997 (the
	1997 Form 10-K) and incorporated herein by
	reference).                                                                                                                                                                                  
|        | 10.15.3* | **                  |  | Letter Amendment to Employment Agreement, dated as of
	February 26, 1999, between Daniel Akerson and Nextel (filed
	on March 30, 1999 as Exhibit 10.15.3 to Nextels
	Annual Report on Form 10-K for the year ended
	December 31, 1998 (the 1998 10-K) and
	incorporated herein by reference).                                                                                                                                                                                    
|        | 10.15.4* | **                  |  | Non-Negotiable Unsecured Promissory Note, dated March 10,
	1999, issued by Daniel Akerson to a subsidiary of Nextel (filed
	as Exhibit 10.15.4 to the 1998 10-K and incorporated herein
	by reference).                                                                                                                                                                                                                                                                             
|        | 10.16.1* | **                  |  | Employment Agreement, dated February 1, 1996, between Tim
	Donahue and Nextel, (filed on March 31, 1997 as
	Exhibit  10.36 to the 1996 Form 10-K and incorporated
	herein by reference).                                                                                                                                                                                                                                                                                            
|        | 10.16.2* | **                  |  | Addendum to Employment Agreement between Tim Donahue and Nextel,
	dated March 24, 1997 (filed on March 31, 1997 as
	Exhibit 10.37 to the 1996 Form 10-K and incorporated herein
	by reference).                                                                                                                                                                                                                                                                                     
|        | 10.17.1  |                     |  | Joint Venture Agreement by and among Nextel Partners, Inc.,
	Nextel Partners Operating Corp., and Nextel WIP Corp., dated as
	of January 29, 1999 (filed on February 24, 1999 as
	Exhibit 10.1 to the Current Report on Form 8-K dated
	February 24, 1999 (the February 24 8-K) and
	 incorporated herein by reference).                                                                                                                                                          
|        | 10.17.2  |                     |  | Shareholders Agreement among Nextel Partners, Inc., and the
	 Shareholders named therein, dated as of January 29, 1999
	(filed on February 24, 1999 as Exhibit 10.2 to the
	February 24 8-K and incorporated herein by reference).                                                                                                                                                                                                                                                 
|        | 10.17.3  |                     |  | Agreement Specifying Obligations of, and Limiting Liability and
	Recourse to, Nextel, dated as of January 29, 1999 (filed on
	February 24, 1999 as Exhibit 10.3 to the
	February 24 8-K and incorporated herein by reference).                                                                                                                                                                                                                                                      
|        | 10.18    |                     |  | Investment Agreement by and between Nextel Communications, Inc.
	and Microsoft Corporation dated as of May 7, 1999 (including
	 the form of Registration Rights Agreement attached as
	Exhibit A thereto) (filed as Exhibits 10.1 and 10.2
	respectively, to the Current Report on Form 8-K dated
	May 12, 1999 and filed on May 13, 1999 and incorporated
	 herein by reference).                                                                                                  
|        | 10.19    |                     |  | Master Site Lease Agreement between Nextel of New York, Inc.
	Nextel Communications of the Mid-Atlantic, Inc., Nextel South
	Corp., Nextel of Texas, Inc. Nextel West Corp., and Nextel of
	California, Inc. and Tower Asset Sub Inc. and Landlord Parties As
	 Defined Therein (filed on April 29, 1999 As
	Exhibit 10.33 to the Registration Statement No. 
	333-67043 On Form S-4 (the SpectraSite Holdings S-4
	Registration Statement) and incorporated herein by
	reference)
|        | 10.20    |                     |  | Master Site Commitment Agreement between 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. and Tower Asset Sub Inc. (filed
	 on April 29, 1999 as Exhibit 10.34 to the SpectraSite
	Holdings S-4 Registration Statement and incorporated herein by
	reference)                   

59



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|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 10.21 |                     |  | NEXTBAND Interests Purchase Agreement, dated as of March 3,
        1999, by and between Nextel Spectrum Acquisition Corp. and
        NEXTLINK Communications, Inc. (including the Form of Registration
         Rights Agreement attached as Exhibit A thereto) (filed as
        Exhibit 10.1 to the Current Report on Form 8-K dated
        and filed on April 11, 1999 and incorporated herein by
        reference).
|        | 21    |                     |  | Subsidiaries of Nextel (filed as Exhibit 21 hereto).                                                                                                                                                                                                                                                                                                                                                                       
|        | 23    |                     |  | Consent of Deloitte & Touche LLP (filed as
        Exhibit 23 hereto).                                                                                                                                                                                                                                                                                                                                                     
|        | 27**  |                     |  | Financial Data Schedule (filed as Exhibit 27 hereto).                                                                                                                                                                                                                                                                                                                                                                      
|        | 99.1  |                     |  | Memorandum Opinion and Order of the FCC, dated as of
        February 13, 1991 (filed on December 5, 1992 as
        Exhibit  28.1 to the S-1 Registration Statement and
        incorporated herein by reference).                                                                                                                                                                                                        
|        | 99.2  |                     |  | Letter from Motorola, Inc. to Nextel dated as of January 
        13, 1992 (filed on January 16, 1992 as Exhibit 28.2 to
        the S-1 Registration Statement and incorporated herein by
        reference).                                                                                                                                                                                                             
|        | 99.3  |                     |  | Order entered by the United States District Court for the
        District of Columbia on July 25, 1995 approving the proposed
         consent decree between the Antitrust Division of the United
        States Justice Department, Motorola, Inc. and Nextel (filed on
        April 1, 1996 as Exhibit 99.3 to the 1995
        Form 10-K and incorporated herein by reference).                                      






|    |                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Portions of this Exhibit have been omitted and filed separately
        with the Commission pursuant to a request for confidential
        treatment.
|   
|**  | Submitted only with the electronic filing of this document with
        the Commission pursuant to Regulation S-T under the
        Securities Act.  
|   
|*** | Management contract or compensatory plan or arrangement.                                                                                             

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Index to Consolidated Financial Statements and

Financial Statement Schedules


|                                  |                                                                                                                  |      |     |      | 
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ---- | --- | ---- | 
|                                  |                                                                                                                  | Page
|                                  |                                                                                                                  |     
|INDEPENDENT AUDITORS REPORT      |                                                                                                                  |      | F-2 |     
|                                 
|                                 
|                                 
|                                 
|CONSOLIDATED FINANCIAL STATEMENTS |                                                                                                                  |      |     |     
|                                 
|                                 
|                                 
|                                 
|                                  | Consolidated Balance Sheets as of December 31, 1999 and 1998                                                     |      |     | F-3  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Consolidated Statements of Operations for the Years Ended
	December 31, 1999, 1998 and 1997                      |      |     | F-4  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Consolidated Statements of Changes in Stockholders Equity
	for the Years Ended December 31, 1999, 1998 and 1997 |      |     | F-5  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Consolidated Statements of Cash Flows for the Years Ended
	December 31, 1999, 1998 and 1997                      |      |     | F-6  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Notes to Consolidated Financial Statements                                                                       |      |     | F-7  | 
|                                 
|                                 
|                                 
|                                 
|FINANCIAL STATEMENT SCHEDULES     |                                                                                                                  |      |     |     
|                                 
|                                 
|                                 
|                                 
|                                  | Schedule I  Condensed Financial Information of
	Registrant                                                      |      |     | F-41 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Schedule II  Valuation and Qualifying Accounts                                                                  |      |     | F-45 | 

F-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Stockholders and Board of Directors of



We have audited the accompanying consolidated balance sheets of
Nextel Communications, Inc. and subsidiaries (the
Company) as of December 31, 1999 and 1998, 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, 1999. Our audits also
 included the financial statement schedules listed in the Index
at Item 14(a)(2). These consolidated financial statements
and financial statement schedules are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and financial
statement schedules based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit 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, such consolidated financial statements present
fairly, in all material respects, the financial position of
Nextel Communications, Inc. and subsidiaries at December 31,
 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted
accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth
therein.

DELOITTE & TOUCHE LLP

McLean, Virginia






F-2



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 1999 and 1998


(in millions)


|                                                     |                                                                                   |                            |        |        |        |   |        |        |       | 
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------- | ------ | ------ | ------ | - | ------ | ------ | ----- | 
|                                                     |                                                                                   | 1999                       |        | 1998  
|                                                     |                                                                                   |                            |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|ASSETS                                              
|                                                    
|                                                    
|                                                    
|                                                    
|Current assets                                       |                                                                                   |                            |        |        |        |   |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash and cash equivalents (of which $1,365 and $121 is
	restricted)               |                            | $      | 4,701  |        |   | $      | 321    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Short-term investments                                                            |                            |        | 1,107  |        |   |        |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accounts and notes receivable, net                                                |                            |        | 619    |        |   |        | 443    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Subscriber unit and accessory inventory                                           |                            |        | 113    |        |   |        | 63     |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Assets held for sale                                                              |                            |        |       |        |   |        | 132    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Prepaid expenses and other                                                        |                            |        | 80     |        |   |        | 93     |      
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | Total current assets       |        |        | 6,620  |   |        |        | 1,052 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Property, plant and equipment, net                   |                                                                                   |                            | 6,152  |        |        |   | 4,915  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Intangible assets, net                               |                                                                                   |                            | 4,551  |        |        |   | 4,937  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Investments and other assets                         |                                                                                   |                            | 1,087  |        |        |   | 669    |       
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | $                          | 18,410 |        |        | $ | 11,573 |       
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|LIABILITIES AND STOCKHOLDERS EQUITY                
|                                                    
|                                                    
|                                                    
|                                                    
|Current liabilities                                  |                                                                                   |                            |        |        |        |   |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accounts payable                                                                  |                            | $      | 981    |        |   | $      | 636    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accrued expenses and other                                                        |                            |        | 659    |        |   |        | 537    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Current portion of long-term debt and finance obligation                          |                            |        | 1,191  |        |   |        | 9      |      
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | Total current liabilities  |        |        | 2,831  |   |        |        | 1,182 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Long-term debt                                       |                                                                                   |                            | 9,760  |        |        |   | 7,710  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Finance obligation                                   |                                                                                   |                            | 552    |        |        |   |       |       
|                                                    
|                                                    
|                                                    
|                                                    
|Deferred income taxes                                |                                                                                   |                            | 799    |        |        |   | 771    |       
|                                                    
|                                                    
|                                                    
|                                                    
|Other                                                |                                                                                   |                            | 80     |        |        |   | 73     |       
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | Total liabilities          |        |        | 14,022 |   |        |        | 9,736 | 
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|Commitments and contingencies(Notes 2, 8, 11 and 15) |                                                                                   |                            |        |        |        |   |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|Minority interest                                    |                                                                                   |                            | 44     |        |        |   | 29     |       
|                                                    
|                                                    
|                                                    
|                                                    
|Mandatorily redeemable preferred stock               |                                                                                   |                            | 1,770  |        |        |   | 1,578  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Stockholders equity                                 |                                                                                   |                            |        |        |        |   |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Convertible preferred stock, 8 shares issued and outstanding                      |                            |        | 291    |        |   |        | 291    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Common stock, class A, 351 and 272 shares issued, 351 and
	271 shares outstanding |                            |        |       |        |   |        |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Common stock, class B, nonvoting convertible, 18 shares
	issued and outstanding   |                            |        |       |        |   |        |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Paid-in capital                                                                   |                            |        | 8,047  |        |   |        | 4,379  |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accumulated deficit                                                               |                            |        | (5,739 | )      |   |        | (4,401 | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Treasury stock, at cost                                                           |                            |        | (6     | )      |   |        | (13    | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Deferred compensation, net                                                        |                            |        | (23    | )      |   |        | (2     | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accumulated other comprehensive income (loss)                                     |                            |        | 4      |        |   |        | (24    | )    
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | Total stockholders equity |        |        | 2,574  |   |        |        | 230   | 
|                                                     |                                                                                   |                            |        |        |        |   |        |       
|                                                     |                                                                                   | $                          | 18,410 |        |        | $ | 11,573 |       
|                                                     |                                                                                   |                            |        |        |        |   |        |       

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

F-3



---



##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 1999, 1998 and 1997


(in millions, except per share amounts)


|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |       |  
|------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---- | ------ | ----- | - | ---- | ------ | ----- | - | - | ------ | ----- | -
|                                                                                |                                                                     | 1999 |        | 1998  |   | 1997
|                                                                                |                                                                     |      |        |       |   |     
|Operating revenues                                                              |                                                                     | $    | 3,326  |       |   | $    | 1,847  |       |   | $ | 739    |      
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Operating expenses                                                              |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cost of revenues                                                    |      |        | 697   |   |      |        | 516   |   |   |        | 289   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Selling, general and administrative                                 |      |        | 2,094 |   |      |        | 1,551 |   |   |        | 862   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                                       |      |        | 1,004 |   |      |        | 832   |   |   |        | 526   |  
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                                |                                                                     |      | 3,795  |       |   |      | 2,899  |       |   |   | 1,677  |      
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Operating loss                                                                  |                                                                     |      | (469   | )     |   |      | (1,052 | )     |   |   | (938   | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Other income (expense)                                                          |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest expense                                                    |      |        | (878  | ) |      |        | (656  | ) |   |        | (408  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest income                                                     |      |        | 96    |   |      |        | 34    |   |   |        | 30    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Equity in losses of unconsolidated affiliates                       |      |        | (73   | ) |      |        | (12   | ) |   |        | (13   | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency transaction (losses) gains                         |      |        | (61   | ) |      |        | 10    |   |   |        | 6     |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other, net                                                          |      |        | 87    |   |      |        | (35   | ) |   |        | 14    |  
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                                |                                                                     |      | (829   | )     |   |      | (659   | )     |   |   | (371   | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Loss before income tax benefit (provision) and
	extraordinary item              |                                                                     |      | (1,298 | )     |   |      | (1,711 | )     |   |   | (1,309 | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit (provision)                                                  |                                                                     |      | 28     |       |   |      | 192    |       |   |   | (259   | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Loss before extraordinary item                                                  |                                                                     |      | (1,270 | )     |   |      | (1,519 | )     |   |   | (1,568 | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Extraordinary item  loss on early retirement of
	debt, net of income tax of $0 |                                                                     |      | (68    | )     |   |      | (133   | )     |   |   | (46    | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Net loss                                                                        |                                                                     |      | (1,338 | )     |   |      | (1,652 | )     |   |   | (1,614 | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Mandatorily redeemable preferred stock dividends                                |                                                                     |      | (192   | )     |   |      | (149   | )     |   |   | (29    | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Loss attributable to common stockholders                                        |                                                                     | $    | (1,530 | )     |   | $    | (1,801 | )     |   | $ | (1,643 | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Loss per share attributable to common stockholders, basic and
	diluted:         |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loss before extraordinary item attributable to common
	stockholders |      | $      | (4.58 | ) |      | $      | (5.98 | ) |   | $      | (6.41 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Extraordinary item                                                  |      |        | (0.21 | ) |      |        | (0.48 | ) |   |        | (0.18 | )
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|                                                                                |                                                                     | $    | (4.79  | )     |   | $    | (6.46  | )     |   | $ | (6.59  | )    
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      
|Weighted average number of common shares outstanding                            |                                                                     |      | 319    |       |   |      | 279    |       |   |   | 249    |      
|                                                                                |                                                                     |      |        |       |   |      |        |       |   |   |        |      

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

F-4



---



##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY

For the Years Ended December 31, 1999, 1998 and 1997


(in millions)


|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  |  | 
|-------------------------- | ------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------ | ------------ | - | ------------ | --- | ------ | -- | ------ | --- | ------ | -- | - | - | - | - |  | -- |  |  | - | - |  |  |  | 
|                           |                                                   |                                                                             |                          |              |   |             
|                           |                                                   | Convertible                                                                 |                          | Class A      |   | Class B     
|                           |                                                   | Preferred Stock                                                             |                          | Common Stock |   | Common Stock
|                           |                                                   |                                                                             |                          |              |   |             
|                           |                                                   | Shares                                                                      |                          | Amount       |   | Shares       |     | Amount |    | Shares |     | Amount
|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |       
|Balance, December 31, 1996 |                                                   |                                                                             | 8                        |              |   | $            | 300 |        |    |        | 211 |        |    | $ |  |   |   |  | 18 |  |  | $ |  | 
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |              |   |              |     |        |    |        |     |        | 18 |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |              |   |              |     |        |    |        |     |        | 19 |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Consent solicitation                                                        |                          |              |   |              |     |        |    |        |     |        | 4  |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Conversion of preferred stock                                               |                          |              |  |              |     |        | (9 | )      |     |        | 1  |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           | Repurchase of Comcast option                      |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of McCaw option to purchase common stock |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   | 
|Balance, December 31, 1997 |                                                   |                                                                             | 8                        |              |   |              | 291 |        |    |        | 253 |        |    |   |  |   |   |  | 18 |  |  |   |  | 
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized loss on available-for-sale securities, net of income
        tax |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |              |   |              |     |        |    |        |     |        | 4  |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |              |   |              |     |        |    |        |     |        | 5  |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Option Acquisition exercise                                                 |                          |              |   |              |     |        |    |        |     |        | 10 |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           | Deferred compensation                             |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   | 
|Balance, December 31, 1998 |                                                   |                                                                             | 8                        |              |   |              | 291 |        |    |        | 272 |        |    |   |  |   |   |  | 18 |  |  |   |  | 
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |              |   |              |     |        |    |        |     |        | 28 |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           |                                                   | Public offering, net of issuance costs                                      |                          |              |   |              |     |        |    |        |     |        | 34 |   |   |   |  |  |    |  |  |   |   |  |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of restricted stock                      |                                                                             |                          |              |   |              |     |        |    |        |     | 17     |    |   |   |  |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          |              |   |              |     |        |    |        |     |       |    |   |   |  |   |  |    |  |  |   |   |  | 
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   |  | 
|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   | 
|Balance, December 31, 1999 |                                                   |                                                                             | 8                        |              |   | $            | 291 |        |    |        | 351 |        |    | $ |  |   |   |  | 18 |  |  | $ |  | 
|                           |                                                   |                                                                             |                          |              |   |              |     |        |    |        |     |        |    |   |   |   |   |  |    |  |  |   |   | 

|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   |  | 
|-------------------------- | ------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------ | ----------- | ----- | -------------- | ------ | -------- | - | ------------ | - | - | -- | - | --- | -- | - | - | --- | --- | - |  | 
|                           |                                                   |                                                                             |                          |             |       |                |        |         
|                           |                                                   |                                                                             |                          |             |       | Treasury Stock |        |         
|                           |                                                   | Paid-in                                                                     |                          | Accumulated |       |                |        | Deferred
|                           |                                                   | Capital                                                                     |                          | Deficit     |       | Shares         |        | Amount   |   | Compensation
|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |             
|Balance, December 31, 1996 |                                                   | $                                                                           | 3,673                    |             |       | $              | (1,135 | )        |   |              | 2 |   |    | $ | (31 | )  |   | $ | (12 | )  
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |             |       |                |        | (1,614   | ) |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |             | 256   |                |        |          |   |              |   |   |   |   |     |    | 2 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |             | (2    | )              |        |          |   |              |   |   | (1 | ) |     |    | 5 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |             | 388   |                |        |          |   |              |   |   |   |   |     |    | 1 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Consent solicitation                                                        |                          |             | 63    |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Conversion of preferred stock                                               |                          |             | 9     |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           | Repurchase of Comcast option                      |                                                                             |                          | (25         | )     |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           | Issuance of McCaw option to purchase common stock |                                                                             |                          | 25          |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          | 21          |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     | 4   |  
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          | (29         | )     |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |    
|Balance, December 31, 1997 |                                                   |                                                                             | 4,379                    |             |       |                | (2,749 | )        |   |              | 1 |   |    |   | (23 | )  |   |   | (8  | )  
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |             |       |                |        | (1,652   | ) |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized loss on available-for-sale securities, net of income
        tax |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |             | 28    |                |        |          |   |              |   |   |   |   |     |    | 2 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |             |      |                |        |          |   |              |   |   |   |   |     |    | 8 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |             | 121   |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Option Acquisition exercise                                                 |                          |             |      |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           | Deferred compensation                             |                                                                             |                          |            |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     | 6   |  
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          | (149        | )     |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |    
|Balance, December 31, 1998 |                                                   |                                                                             | 4,379                    |             |       |                | (4,401 | )        |   |              | 1 |   |    |   | (13 | )  |   |   | (2  | )  
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |             |       |                |        | (1,338   | ) |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   |                                                                             | Total comprehensive loss |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   |  | 
|                          
|                          
|                          
|                          
|                           | Issuance of common stock:                         |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |             | 467   |                |        |          |   |              |   |   |   |   |     |    |  |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |             | 3     |                |        |          |   |              |   |   | (1 | ) |     |    | 9 |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           |                                                   | Public offering, net of issuance costs                                      |                          |             | 2,752 |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |   | 
|                          
|                          
|                          
|                          
|                           | Issuance of restricted stock                      |                                                                             |                          | 600         |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          | 38          |       |                |        |          |   |              |   |  |    |   |     | (2 | ) |   |     | (21 | )
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          | (192        | )     |                |        |          |   |              |   |   |    |   |     |    |   |   |     |     |  
|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |    
|Balance, December 31, 1999 |                                                   | $                                                                           | 8,047                    |             |       | $              | (5,739 | )        |   |              |  |   |    | $ | (6  | )  |   | $ | (23 | )  
|                           |                                                   |                                                                             |                          |             |       |                |        |          |   |              |   |   |    |   |     |    |   |   |     |    

|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |       |        |  
|-------------------------- | ------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------ | -------------------- |  | ----------- | --- | ----- | --- | - | ---- | - | ---- | - | ----- | ------ | ----- | ------ | -
|                           |                                                   |                                                                             |                          |                      |  |            
|                           |                                                   |                                                                             |                          | Accumulated Other    |  |            
|                           |                                                   |                                                                             |                          | Comprehensive (Loss) |  |            
|                           |                                                   |                                                                             |                          | Income               |  |            
|                           |                                                   |                                                                             |                          |                      |  |            
|                           |                                                   | Notes                                                                       |                          | Unrealized           |  |             |     |      
|                           |                                                   | Receivable                                                                  |                          | Gain                 |  | Cumulative  |     |      
|                           |                                                   | from                                                                        |                          | (Loss) on            |  | Translation |     |      
|                           |                                                   | Stockholders                                                                |                          | Investments          |  | Adjustment  |     | Total
|                           |                                                   |                                                                             |                          |                      |  |             |     |      
|Balance, December 31, 1996 |                                                   | $                                                                           | (1                       | )                    |  | $           | 15  |       |     | $ |     |   |      | $ | 2,809 |       
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (1,614 | )    
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |                      |  |             |     |       | 8   |   |      |   |      |   |       |        | 8     |       
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           |                                                   |                                                                             | Total comprehensive loss |                      |  |             |     |       |     |   |      |   |      |   |       |        |       | (1,606 | )
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           | Issuance of common stock:                         |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |      
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 258   |       
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 3     |       
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 389   |       
|                          
|                          
|                          
|                          
|                           |                                                   | Consent solicitation                                                        |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 63    |       
|                          
|                          
|                          
|                          
|                           |                                                   | Conversion of preferred stock                                               |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |      |       
|                          
|                          
|                          
|                          
|                           | Repurchase of Comcast option                      |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (25    | )    
|                          
|                          
|                          
|                          
|                           | Issuance of McCaw option to purchase common stock |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | 25     |      
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          | 1                    |  |             |     |       |     |   |      |   |      |   |       | 26     |      
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (29    | )    
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|Balance, December 31, 1997 |                                                   |                                                                             |                         |                      |  |             | 23  |       |     |   |     |   |      |   | 1,913 |       
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (1,652 | )    
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized loss on available-for-sale securities, net of income
        tax |                          |                      |  |             |     |       | (23 | ) |      |   |      |   |       |        | (23   | )     
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |                      |  |             |     |       |     |   |      |   | (24  | ) |       |        | (24   | )     
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           |                                                   |                                                                             | Total comprehensive loss |                      |  |             |     |       |     |   |      |   |      |   |       |        |       | (1,699 | )
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           | Issuance of common stock:                         |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |      
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 30    |       
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 8     |       
|                          
|                          
|                          
|                          
|                           |                                                   | Acquisitions                                                                |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 121   |       
|                          
|                          
|                          
|                          
|                           |                                                   | Option Acquisition exercise                                                 |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |      |       
|                          
|                          
|                          
|                          
|                           | Deferred compensation                             |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | 6      |      
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (149   | )    
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|Balance, December 31, 1998 |                                                   |                                                                             |                         |                      |  |             |    |       |     |   | (24  | ) |      |   | 230   |       
|                          
|                          
|                          
|                          
|                           | Net loss                                          |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (1,338 | )    
|                          
|                          
|                          
|                          
|                           |                                                   | Unrealized gain on available-for-sale securities, net of income
        tax |                          |                      |  |             |     |       | 142 |   |      |   |      |   |       |        | 142   |       
|                          
|                          
|                          
|                          
|                           |                                                   | Foreign currency translation adjustment                                     |                          |                      |  |             |     |       |     |   |      |   | (114 | ) |       |        | (114  | )     
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           |                                                   |                                                                             | Total comprehensive loss |                      |  |             |     |       |     |   |      |   |      |   |       |        |       | (1,310 | )
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|                           | Issuance of common stock:                         |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        |      
|                          
|                          
|                          
|                          
|                           |                                                   | Exercise of options and warrants                                            |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 467   |       
|                          
|                          
|                          
|                          
|                           |                                                   | Employee stock purchase plan                                                |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 12    |       
|                          
|                          
|                          
|                          
|                           |                                                   | Public offering, net of issuance costs                                      |                          |                      |  |             |     |       |     |   |      |   |      |   |       |        | 2,752 |       
|                          
|                          
|                          
|                          
|                           | Issuance of restricted stock                      |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | 600    |      
|                          
|                          
|                          
|                          
|                           | Deferred compensation and other                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | 15     |      
|                          
|                          
|                          
|                          
|                           | Redeemable preferred stock dividends              |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       | (192   | )    
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       
|Balance, December 31, 1999 |                                                   | $                                                                           |                         |                      |  | $           | 142 |       |     | $ | (138 | ) |      | $ | 2,574 |       
|                           |                                                   |                                                                             |                          |                      |  |             |     |       |     |   |      |   |      |   |       |       

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

F-5



---



##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 1999, 1998 and 1997


(in millions)


|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |        |     |      |        |  
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------------- | ----- | ---- | ------ | ------ | ---- | ---- | ------ | ------ | --- | ---- | ------ | -
|                                                              |                                                                                            | 1999                                                                                                                              |                                              | 1998                                                |       | 1997
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |     
|Cash flows from operating activities:                         |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Net loss                                                                                   |                                                                                                                                   | $                                            | (1,338                                              | )     |      | $      | (1,652 | )    |      | $      | (1,614 | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Adjustments to reconcile net loss to net cash provided by (used
	in) operating activities: |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |        |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Amortization of deferred financing costs and accretion of senior
	redeemable discount notes, net of capitalized accreted interest |                                              |                                                     | 409   |      |        |        | 491  |      |        |        | 303 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Depreciation and amortization                                                                                                     |                                              |                                                     | 1,004 |      |        |        | 832  |      |        |        | 526 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Provision for losses on accounts receivable                                                                                       |                                              |                                                     | 152   |      |        |        | 82   |      |        |        | 57  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Deferred income tax (benefit) provision                                                                                           |                                              |                                                     | (28   | )    |        |        | (192 | )    |        |        | 259 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Extraordinary loss on retirement of debt                                                                                          |                                              |                                                     | 68    |      |        |        | 133  |      |        |        | 46  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Gain on sale of equity in joint venture                                                                                           |                                              |                                                     | (70   | )    |        |        |     |      |        |        |    |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Equity in losses of unconsolidated affiliates                                                                                     |                                              |                                                     | 73    |      |        |        | 12   |      |        |        | 13  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Net foreign currency transaction loss (gain)                                                                                      |                                              |                                                     | 61    |      |        |        | (10  | )    |        |        | (6  | )   
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Loss on interest rate protection agreement                                                                                        |                                              |                                                     |      |      |        |        | 47   |      |        |        |    |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Other, net                                                                                                                        |                                              |                                                     | 19    |      |        |        | 20   |      |        |        | 19  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Change in assets and liabilities, net of effects from
	acquisitions:                                                              |                                              |                                                     |       |      |        |        |      |      |        |        |     |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                                                                   | Accounts and notes receivable                |                                                     |       | (337 | )      |        |      | (298 | )      |        |     | (205 | )     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                                                                   | Subscriber unit and accessory inventory      |                                                     |       | (65  | )      |        |      | 20   |        |        |     | (69  | )     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                                                                   | Other assets                                 |                                                     |       | 5    |        |        |      | (15  | )      |        |     | (37  | )     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                                                                   | Accounts payable, accrued expenses and other |                                                     |       | 371  |        |        |      | 194  |        |        |     | 303  |       
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                              |                                                                                            |                                                                                                                                   |                                              | Net cash provided by (used in) operating activities |       |      | 324    |        |      |      | (336   | )      |     |      | (405   | )
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|Cash flows from investing activities:                         |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Capital expenditures                                                                       |                                                                                                                                   |                                              | (1,947                                              | )     |      |        | (2,060 | )    |      |        | (1,554 | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Purchases of short-term investments                                                        |                                                                                                                                   |                                              | (1,101                                              | )     |      |        | (95    | )    |      |        | (234   | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from maturities and sales of short-term investments                               |                                                                                                                                   |                                              |                                                    |       |      |        | 224    |      |      |        | 108    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from sale of assets                                                               |                                                                                                                                   |                                              | 294                                                 |       |      |        |       |      |      |        |       |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Payments for acquisitions and purchase of licenses, net of cash
	acquired                  |                                                                                                                                   |                                              | (97                                                 | )     |      |        | (340   | )    |      |        | (265   | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Other investments and advances to affiliates                                               |                                                                                                                                   |                                              | (43                                                 | )     |      |        | (164   | )    |      |        | (60    | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Payments for equipment made on behalf of affiliate                                         |                                                                                                                                   |                                              |                                                    |       |      |        | (92    | )    |      |        |       |    
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                              |                                                                                            |                                                                                                                                   |                                              | Net cash used in investing activities               |       |      | (2,894 | )      |      |      | (2,527 | )      |     |      | (2,005 | )
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|Cash flows from financing activities:                         |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Sale of common stock and exercise of stock options, warrants and
	other                    |                                                                                                                                   |                                              | 3,819                                               |       |      |        | 30     |      |      |        | 283    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Issuance of debt securities                                                                |                                                                                                                                   |                                              | 2,600                                               |       |      |        | 1,697  |      |      |        | 1,700  |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Borrowings under long-term credit facilities                                               |                                                                                                                                   |                                              | 1,077                                               |       |      |        | 1,019  |      |      |        | 250    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Repayments under long-term credit facilities                                               |                                                                                                                                   |                                              |                                                    |       |      |        | (152   | )    |      |        |       |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from financing obligation                                                         |                                                                                                                                   |                                              | 587                                                 |       |      |        |       |      |      |        |       |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Retirement of debt securities                                                              |                                                                                                                                   |                                              | (546                                                | )     |      |        | (741   | )    |      |        | (283   | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Revolving line of credit (repayments) borrowings, net                                      |                                                                                                                                   |                                              | (423                                                | )     |      |        | 222    |      |      |        | 231    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Issuance of redeemable preferred stock                                                     |                                                                                                                                   |                                              |                                                    |       |      |        | 900    |      |      |        | 500    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Deferred financing costs                                                                   |                                                                                                                                   |                                              | (139                                                | )     |      |        | (105   | )    |      |        | (139   | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Other                                                                                      |                                                                                                                                   |                                              | (9                                                  | )     |      |        | 12     |      |      |        | 30     |    
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|                                                              |                                                                                            |                                                                                                                                   |                                              | Net cash provided by financing activities           |       |      | 6,966  |        |      |      | 2,882  |        |     |      | 2,572  |  
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|Effect of exchange rate changes on cash and cash equivalents: |                                                                                            |                                                                                                                                   | (16                                          | )                                                   |       |      |       |        |      |      |       |       
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|Net increase in cash and cash equivalents                     |                                                                                            |                                                                                                                                   | 4,380                                        |                                                     |       |      | 19     |        |      |      | 162    |       
|                                                             
|                                                             
|                                                             
|                                                             
|Cash and cash equivalents, beginning of period                |                                                                                            |                                                                                                                                   | 321                                          |                                                     |       |      | 302    |        |      |      | 140    |       
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       
|Cash and cash equivalents, end of period                      |                                                                                            | $                                                                                                                                 | 4,701                                        |                                                     |       | $    | 321    |        |      | $    | 302    |       
|                                                              |                                                                                            |                                                                                                                                   |                                              |                                                     |       |      |        |        |      |      |        |       

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

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Summary of Operations and Significant Accounting
 Policies

As used in these consolidated financial statements, references to
 Nextel, us, our or
we are intended to include Nextel Communications,
Inc. and its subsidiaries.

Operations. We provide a wide array of digital
wireless communications services throughout the United States,
utilizing frequencies licensed by the Federal Communications
Commission, referred to as the FCC. We offer a differentiated,
integrated package of digital wireless communications services
under the Nextel brand name, primarily to business users. Our
digital mobile network uses iDEN, or integrated Digital Enhanced
Network, technology developed by Motorola, Inc.

A customer using our digital mobile network is able to access:



| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile telephone service;                                                                                                             
|
| |  | digital two-way radio dispatch service, which provides instant
	conferencing capabilities and is marketed as Nextel Direct
	Connect service;
|
| |  | paging; and                                                                                                                                   
|
| |  | short-messaging service.                                                                                                                      

We refer to the handset device on which we deliver these services
 as a subscriber unit.

In addition to our domestic operations, we have ownership
interests in international wireless companies through our
substantially wholly owned subsidiary Nextel International, Inc.
Nextel International, through its subsidiaries and affiliates,
owns and operates wireless communications systems in and around
major metropolitan market areas in Latin America, Asia and
Canada. Together with Nextel International, we provide services
in ten of the worlds 25 largest cities.

Use of Estimates. The preparation of financial
statements in conformity with generally accepted accounting
principles 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 Nextel
Communications, Inc. and its majority-owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation. To facilitate the timely reporting
of consolidated results, the accounts of Nextel
Internationals foreign subsidiaries are consolidated on a
one-month lag based on a fiscal year ending November 30.

We use the equity method to account for unconsolidated
investments in companies in which we exercise significant
influence over operating and financial policies but do not have a
 controlling interest and use the cost method to account for
nonmarketable equity investments in unconsolidated companies in
which we do not exercise significant influence over operating or
financial policies and do not have a controlling interest.

Foreign Currency. Results of operations for foreign
 investments are translated from the designated functional
currency to the U.S. dollar using average exchange rates
during the period, while assets and liabilities are translated at
 the exchange rate in effect at the reporting date. Resulting
gains or losses from translating foreign currency financial
statements are included as a component of accumulated other
comprehensive income (loss) in stockholders equity.
The financial statements of the following foreign subsidiaries
were prepared using the U.S. dollar as the functional
currency due to the economic environments in which they operate:
McCaw International (Brazil) Ltd. during 1997, Comunicaciones

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Nextel de Mexico S.A. de C.V. during 1997 and 1998, and Nextel
del Peru S.A. during 1998 and 1999. As a result, during the
specified years, the transactions of these operations that are
denominated in foreign currencies have been remeasured in
U.S. dollars, and any resulting gains or losses are included
 in other income (expense) in the statement of operations.

During 1999, there were significant fluctuations in the value of
the Brazilian real relative to the U.S. dollar, due
primarily to the devaluation of the real beginning in
January 1999. As a result of the devaluation of the real, we
 recorded a negative cumulative translation adjustment as other
comprehensive income (loss) in stockholders equity of
about $127 million during the year ended December 31,
1999. Additionally, we recognized foreign currency transaction
losses of $57 million in the statement of operations during
1999 related to the Brazilian operations due to the same factors.

Cash and Cash Equivalents. Cash equivalents consist
 of time deposits and highly liquid short-term investments with
remaining maturities of three months or less at the time of
purchase.

Nextel International and its subsidiaries held cash and cash
equivalents of $100 million at December 31, 1999 and
$121 million at December 31, 1998 that were not
available to fund any of the cash needs of our domestic
operations due to restrictions contained in the indentures
related to the 10-year discount notes issued by Nextel
International in March 1997 and March 1998. At
December 31, 1999, restricted cash also includes
$1,265 million held in an irrevocable trust to effect the
redemption of our 10.125% senior redeemable discount notes in
January 2000 and the redemption of our 9.75% senior
redeemable discount notes in February 2000 (See
Note 8).

Supplemental Cash Flow Information. We incurred
capital expenditures of $2,081 million (including an
increase of $134 million in amounts that were accrued and
unpaid or financed) during 1999, $2,281 million (including
an increase of $221 million in amounts that were accrued and
 unpaid or financed) during 1998, and $1,598 million
(including an increase of $44 million in amounts that were
accrued and unpaid or financed) during 1997.

Total interest costs were $924 million during 1999 of which
$46 million was capitalized, were $711 million during
1998 of which $55 million was capitalized and were
$451 million during 1997 of which $43 million was
capitalized. Cash paid for interest during the years ended
December 31, 1999, 1998 and 1997 was $358 million,
$151 million and $105 million. No cash was paid for
income taxes during any of the three years in the period ended
December 31, 1999.

Investments. Marketable debt securities with
original maturities greater than three months and less than one
year are classified as short-term investments. Our short-term
investments at December 31, 1999 consist of commercial paper
 and U.S. government securities.

Marketable equity securities intended to be held more than one
year are classified as investments and other assets. All of our
investments in debt and marketable equity securities are
classified as available-for-sale as of the balance sheet date and
 are reported at fair value. Unrealized gains and losses, net of
tax, are recorded as other comprehensive income (loss) in
stockholders equity. We report realized gains or losses, as
 determined on a specific identification basis, and declines in
value, if any, judged to be other than temporary on
available-for-sale securities in other income (expense). Because
they do not have readily determinable fair values, we record
restricted investments in publicly traded companies and
investments in privately held companies at cost, adjusted for
other-than-temporary declines in value, if any.

Subscriber Unit and Accessory Inventory. Subscriber
 units are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method. Cost for the
related accessories is determined by the weighted average method.

F-8



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Property, Plant and Equipment. We record property,
plant and equipment, including improvements that extend useful
lives, at cost, while maintenance and repairs are charged to
operations as incurred. We calculate depreciation and
amortization using the straight-line method based on estimated
useful lives of up to 31 years for buildings, 3 to
10 years for the digital mobile network equipment and 3 to
7 years for office equipment, furniture and fixtures and
other. We amortize leasehold improvements 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 development, 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. We capitalize interest and
 labor applicable to the construction of and significant
improvements to the digital mobile network.

Intangible Assets. As a result of customer
acceptance and support of the financial community which became
specifically apparent in the fourth quarter of 1997, we increased
 the amortization period from 20 years to 40 years for
all of our domestic FCC licenses and the excess of purchase price
 over the fair value of net assets acquired
(goodwill) related to all domestic acquisitions.
International licenses and the excess of purchase price over the
fair value of net assets acquired related to our international
acquisitions are amortized on a straight-line basis over
20 years. The change in the estimated useful lives of these
intangible assets had the effect of decreasing amortization
expense by $28 million for the quarter and year ended
December 31, 1997.

The FCC licenses are issued on both a site-specific and wide-area
 basis, enabling wireless carriers to provide service either in
specific 800 MHz economic areas or 900 MHz metropolitan trading
areas in the United States. Currently, FCC licenses are issued
for a period of ten years, and are subject to construction and
operational requirements. The FCC has routinely granted license
renewals providing the licensees have complied with applicable
rules and 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 FCC licenses.

We amortize customer lists over their expected useful lives,
which is generally 3 years. Other intangible assets with
useful lives of up to 20 years include non-compete
agreements which are amortized over the lives of the related
agreements, generally 2 to 5 years; and trademarks which are
 amortized over 10 years for international operations and
20 years for domestic operations.

Revenue Recognition. We recognize revenue for
airtime and other services over the service period, net of
credits and adjustments. We establish an allowance for doubtful
accounts sufficient to cover probable losses.

Digital Subscriber Unit and Accessory Sales and Related
Costs. The loss generated from the sale of subscriber
units used on our digital mobile network primarily results from
our subsidy of digital subscriber units and accessories and
represents marketing costs. Consolidated digital subscriber unit
and accessory sales and the related cost of sales, including
current period order fulfillment and installation related

F-9



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


expenses and write downs of digital subscriber unit inventory and
 related accessories for shrinkage and obsolescence, are
classified within selling, general and administrative expenses as
 follows:

|                                            |  |                         |      |      |  |      |      |   |  |   |      |  
|------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                            |  |                        
|                                            |  | Year Ended December 31,
|                                            |  |                        
|                                            |  | 1999                    |      | 1998 |  | 1997
|                                            |  |                         |      |      |  |     
|                                            |  |                        
|                                            |  | (in millions)          
|                                           
|                                           
|                                           
|                                           
|Subscriber unit and accessory sales         |  | $                       | 460  |      |  | $    | 448  |   |  | $ | 246  |  
|                                           
|                                           
|                                           
|                                           
|Cost of subscriber unit and accessory sales |  |                         | 882  |      |  |      | 702  |   |  |   | 397  |  
|                                            |  |                         |      |      |  |      |      |   |  |   |      |  
|                                            |  | $                       | (422 | )    |  | $    | (254 | ) |  | $ | (151 | )
|                                            |  |                         |      |      |  |      |      |   |  |   |      |  

We recognize sales of subscriber units and accessories when the
subscriber units and accessories are delivered to the customer.
Some of our subscriber unit sales are made through independent
distributors under agreements allowing rights of return on
merchandise unsold by the distributors, and as a result, sales
are recorded when distributors sell the merchandise.

Stock-based Compensation. We account for
stock-based compensation for employees in accordance with
Accounting Principles Board Opinion No. 25, Accounting
 for Stock Issued to Employees, and comply with the
disclosure provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based
Compensation. Under APB No. 25, compensation expense
is based on the difference, if any, on the measurement date,
between the fair value of the class A common stock and the
relevant exercise price. We account for stock issued to
non-employees in accordance with the provisions of SFAS
No. 123 and other applicable accounting principles.
Stock-based compensation expense of $16 million during 1999,
 $5 million during 1998 and $6 million during 1997 has
been charged to operations.

Advertising Costs. Costs related to advertising and
 other promotional expenditures are expensed as incurred.
Advertising costs totaled about $191 million during 1999,
$166 million during 1998 and $85 million during 1997.

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 these benefits is
considered to be more likely than not.

Loss per Share Attributable to Common Stockholders, Basic
and Diluted. Basic earnings per share includes no
dilution and is computed by dividing the loss attributable to
common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share
reflects the potential dilution of securities that could share in
 the earnings of an entity. As presented, our basic and diluted
loss per share attributable to common stockholders is based on
the weighted average number of common shares outstanding during
the period and does not include other potential common shares
(including shares issuable upon exercise of options, warrants or
conversion rights) since their effect would be antidilutive due
to our losses. Our weighted average number of common shares
outstanding does not include the effect of the proposed stock
split described in Note 18.

Reclassifications. Certain prior year amounts have
been reclassified to conform to the current year presentation.

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

F-10



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Motorola, Inc. is currently our sole source for the digital
mobile network and subscriber unit equipment we use throughout
our markets. We expect to rely principally on Motorola for the
manufacture of a substantial portion of the equipment necessary
to construct, enhance and maintain our digital mobile network and
 subscriber unit equipment for the next several years. If
Motorola does not provide the necessary equipment to us, then we
may not be able to service our existing customers or add new
customers. We expect that for the next few years, Motorola and
competing manufacturers who are licensed by Motorola will be the
only manufacturers of subscriber unit equipment that is
compatible with our digital mobile network. In late 1999, we
entered into a memorandum of understanding with Kyocera
Corporation of Japan with the intent of having Kyocera supply us
with a subscriber unit compatible with our digital mobile
network. It is anticipated that Motorola will license its
technology to Kyocera to enable Kyocera to supply those
subscriber units. However, we cannot predict when or whether
Kyocera and Motorola will enter into an appropriate license
agreement or that we and Kyocera will be able to negotiate a
mutually acceptable definitive agreement for Kyoceras
supply and our purchase of those subscriber units.

New Accounting Pronouncements. In June 1998,
the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for
 Derivative Instruments and Hedging Activities, which
establishes accounting and reporting standards for derivative
instruments, including some derivatives embedded in other
contracts, and for hedging activities by requiring that all
derivatives be recognized in the balance sheet and measured at
fair value. In June 1999, the FASB issued SFAS No. 137,
 Deferral of the Effective Date of FASB Statement
No. 133  an Amendment of FASB Statement
No. 133, which deferred the effective date for us
until January 1, 2001. We are in the process of evaluating
the potential impact of this standard on our financial position
and results of operations.

In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for
Internal Use. This statement establishes accounting
standards for costs incurred in the acquisition or development
and implementation of computer software. These new standards
require the capitalization of software implementation costs
relating to software acquired or developed and implemented for
internal use. The adoption of this statement, effective
January 1, 1999, had no impact on our financial position or
results of operations.

In April 1998, the AICPA issued Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities. This
statement requires costs of start-up activities and organization
costs to be expensed as incurred. The adoption of this statement,
 effective January 1, 1999, had no impact on our financial
position or results of operations.

2.  Significant Business Combinations, Investments
and Other Transactions

Domestic Transactions

Nextel Partners Transactions. On January 29,
1999, we entered into agreements with Nextel Partners, Inc. and
other parties, including Motorola and Eagle River Investments,
L.L.C., an affiliate of Mr. Craig O. McCaw, one of our
principal stockholders, relating to the capitalization,
governance, financing and operation of Nextel Partners. Nextel
Partners is constructing and operating a digital mobile network
utilizing the iDEN technology used in our digital mobile network.
 In connection with this transaction, we sold assets and have
transferred specified FCC licenses to Nextel Partners. In
exchange, at the date of transfer, Nextel Partners issued to us
equity representing about a 29% voting interest in Nextel
Partners and having an agreed value of $131 million and paid
 us about $132 million in cash related to the assets sold
and the reimbursement of costs and net operating expenses. The
net book value of the assets sold was classified as assets held
for sale as of December 31, 1998. On September 9, 1999,
 as permitted by

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


the agreements, Nextel Partners exercised its option to acquire
from us specified additional territories, assets and related FCC
licenses (which we are in the process of transferring), and we
received an aggregate consideration of about $19 million,
consisting of about $10 million in cash and $9 million
in equity. Also on September 9, 1999, we made an additional
$13 million cash equity investment in Nextel Partners to
avoid dilution of our 29% voting interest. As a result of Nextel
Partners initial public offering on February 25, 2000,
 our voting interest increased to 33% due to the conversion of a
portion of our investment in Nextel Partners from nonvoting
preferred stock to voting class B common stock.

The agreements with Nextel Partners establish circumstances in
which Nextel Partners will have the option to acquire specified
additional territories and related FCC licenses from us. In
addition, these agreements also establish circumstances in which
we will have the right or the obligation to purchase the
remaining equity interests in Nextel Partners at specified
prices.

Towers Transactions. On April 20, 1999, we and
 some of our subsidiaries completed agreements with SpectraSite
Holdings, Inc. and some of its subsidiaries under which we
transferred specified telecommunications towers and related
assets to SpectraSite, which we then leased back. In this
transaction, we received $560 million in cash, which we
reflected as a finance obligation on our balance sheet at that
time, and received about an 18% ownership interest in
SpectraSite, which has subsequently been diluted. See
Note 6.

In connection with the transaction, we entered into an agreement
for SpectraSite to construct additional towers in the United
States to support expansion of our digital mobile network and the
 compatible digital mobile network of Nextel Partners. During the
 second half of 1999, we received an additional $27 million
for the transfer of additional towers, which we then leased back.
 Due to our continuing involvement related to our ownership
interest in SpectraSite, these sale-leaseback transactions are
accounted for by the financing method.

Microsoft Transaction. On May 27, 1999,
Microsoft Corporation purchased about 17 million shares of
our class A common stock for a cash investment of
$600 million, representing a per share price of $36.00. The
agreements related to the transaction establish transfer
restrictions that apply to the shares purchased by Microsoft and
include an investor standstill provision. Additionally, we agreed
 to provide specified registration rights that apply to those
shares. In connection with this transaction, we entered into
agreements under which Microsoft is to provide specified Internet
 portal services and related assistance in connection with our
Nextel Online services offering.

Equity Offering. On November 5, 1999, we
completed the public offering and sale of 33,781,785 shares
of our class A common stock at a price of $83.8125 per
share. All of the shares sold were offered by us, and we received
 net proceeds of about $2.8 billion from this offering.

Domestic Acquisitions

During 1998, we acquired several businesses for a total purchase
price of $204 million, consisting of $81 million in
cash and about 5 million shares of our class A common
stock, having an aggregate value of $119 million on the
applicable contract date.

In November 1997, the merger with Pittencrieff
Communications, Inc., a wireless communications services provider
 in Texas, Oklahoma, New Mexico and Arizona, was consummated, in
which the stockholders of Pittencrieff received about
6 million shares of our class A common stock (or rights
 to receive such stock) having an aggregate value of about
$170 million at closing.

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


International Acquisitions

Nextel Argentina. In January 1998, Nextel
International acquired a 50% voting interest in Nextel Argentina
S.R.L. from Wireless Ventures of Argentina, L.L.C. for a purchase
 price of $46 million in cash. As a result of the purchase,
the effective ownership interest in Nextel Argentina increased
from 50% to 100%. Nextel International began consolidating the
accounts of Nextel Argentina effective February 1, 1998.

McCaw International (Brazil). In January 1997,
 Nextel International purchased 81% of the outstanding capital
stock of McCaw International (Brazil) from Telcom Ventures, LLC
and various affiliated and unaffiliated investors, collectively,
with Telcom Ventures, referred to as the Founders Group. McCaw
International (Brazil) owns, through Nextel S.A., a 95% ownership
 interest in Nextel Telecomunicações Ltda., the
principal operating company in Brazil. Under a shareholders
agreement among the shareholders of McCaw International (Brazil)
dated January 29, 1997, the Founders Group, acting through
Telcom Ventures, had the right to defer until April 29, 1999
 the contribution of its pro rata share of any capital
contributions that Nextel International made to McCaw
International (Brazil) up to that date without suffering any
dilution of the Founders Groups ownership interest or right
 to receive dividends and other cash or noncash distributions.
The Founders Group ultimately did not make these capital
contributions by April 29, 1999 in accordance with the
relevant terms of the shareholders agreement, which has resulted
in the proportionate dilution of its equity interest in McCaw
International (Brazil). Consequently, Nextel Internationals
 capital contributions to McCaw International (Brazil) through
April 29, 1999 have increased its ownership interest in
McCaw International (Brazil) to about 92% of contributed capital
and have diluted the ownership interest of the Founders Group in
McCaw International (Brazil) to about 8% of contributed capital.
The capital contributions, in turn, have increased Nextel
Internationals ownership in Nextel
Telecomunicações, through Nextel S.A., to about 88%.
Telcom Ventures, in its individual capacity as a member of the
Founders Group, is disputing the resulting reduction in its
ownership in McCaw International (Brazil). See Note 11.

The Founders Group has the right at any time between
October 31, 2001 and November 1, 2003, or at any time
after a change of control of McCaw International (Brazil), to
require McCaw International (Brazil) to redeem the Founders
Groups entire interest at its appraised fair market value
at the time of exercise as defined in the agreement. The
redemption price is payable in cash, or, at McCaw International
(Brazil)s election, publicly traded common stock of any
entity owning 50% or more of McCaw International (Brazil) or a
combination thereof.

Nextel de Mexico. During 1997, through a series of
transactions, Nextel International increased its equity interest
in Comunicaciones Nextel de Mexico, S.A. de C.V. from 30% to 100%
 for consideration of $132 million. As a result of such
transactions, Nextel International began consolidating Nextel de
Mexico in September 1997.

Nextel del Peru. In 1998, Nextel International
acquired a 70% interest in Nextel del Peru S.A. for a purchase
price of $28 million. Motorola International Development
Corporation, an indirect wholly owned subsidiary of Motorola,
held a 20% interest in Nextel del Peru.

On October 30, 1998, Nextel International sold about 10% of
the outstanding shares of Nextel del Peru to Motorola
International Development Corporation for about $6 million.
Additionally, as a result of the decision of the other minority
stockholder of Nextel del Peru not to contribute its pro rata
share of capital contributions to Nextel del Peru during 1998 and
 1999, this stockholders equity interest in Nextel del Peru
 has been diluted and Nextel Internationals and Motorola
International Development Corporations equity interests in
Nextel del Peru have increased. Following the closing of that
transaction, and giving effect to the dilution of the equity
interest of the other minority stockholder during 1999 and 1998,
Nextel International held about 64% at December 31, 1999 and
 about 62% at December 31, 1998 of

F-13



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


the outstanding shares of Nextel del Peru, and Motorola
International Development Corporation held about 31% of the
outstanding shares of Nextel del Peru as of December 31,
1999 and 1998.

Motorola International Development Corporation has the right to
cause Nextel del Peru to acquire all shares of Nextel del Peru
held by Motorola International Development Corporation and its
affiliates at the appraised fair market value if Nextel del Peru
does not purchase digital mobile network equipment from Motorola,
 provided that the digital mobile network equipment is
technologically competitive and is offered to Nextel del Peru on
competitive terms.

Acquisitions

The total purchase price and net assets acquired for domestic and
 international acquisitions completed during the years indicated
below are as follows (there were no significant acquisitions
completed during 1999):

|                             |                                    |               |     |      |   |   |     |      |  
|---------------------------- | ---------------------------------- | ------------- | --- | ---- | - | - | --- | ---- | -
|                             |                                    |              
|                             |                                    | December 31, 
|                             |                                    |              
|                             |                                    | 1998          |     | 1997
|                             |                                    |               |     |     
|                             |                                    |              
|                             |                                    | (in millions)
|                            
|                            
|                            
|                            
|Direct cost of acquisitions: |                                    |               |     |      |   |   |     |     
|                            
|                            
|                            
|                            
|                             | Cash and accrued transaction costs |               | $   | 126  |   |   | $   | 154  |  
|                            
|                            
|                            
|                            
|                             | Common stock, warrants and options |               |     | 119  |   |   |     | 383  |  
|                            
|                            
|                            
|                            
|                             | Intangible assets                  |               |     | 2    |   |   |     |     |  
|                             |                                    |               |     |      |   |   |     |     
|                             |                                    | $             | 247 |      |   | $ | 537 |     
|                             |                                    |               |     |      |   |   |     |     
|Net assets acquired:         |                                    |               |     |      |   |   |     |     
|                            
|                            
|                            
|                            
|                             | Working capital  net              |               | $   | (7   | ) |   | $   | (29  | )
|                            
|                            
|                            
|                            
|                             | Property, plant and equipment      |               |     | 46   |   |   |     | 52   |  
|                            
|                            
|                            
|                            
|                             | Intangible assets                  |               |     | 233  |   |   |     | 700  |  
|                            
|                            
|                            
|                            
|                             | Other assets                       |               |     | 6    |   |   |     | 7    |  
|                            
|                            
|                            
|                            
|                             | Long-term debt                     |               |     |     |   |   |     | (15  | )
|                            
|                            
|                            
|                            
|                             | Deferred income taxes              |               |     | (31  | ) |   |     | (178 | )
|                             |                                    |               |     |      |   |   |     |     
|                             |                                    | $             | 247 |      |   | $ | 537 |     
|                             |                                    |               |     |      |   |   |     |     

Pro Forma Results. Since results of operations for
the years ended December 31, 1998 and 1997 were not
materially affected by the acquisitions consummated in 1998 and
1997, pro forma results are not presented. All of the
acquisitions described above were accounted for by the purchase
method. As a result, assets and liabilities have been reflected
at fair value at the date of acquisition. We include the
operating results of the acquired companies in our consolidated
statements of operations from their acquisition dates.

3.  Accounts and Notes Receivable

|                                     |  |               |     |      |  |   |     |  
|------------------------------------ |  | ------------- | --- | ---- |  | - | --- | -
|                                     |  |              
|                                     |  | December 31, 
|                                     |  |              
|                                     |  | 1999          |     | 1998
|                                     |  |               |     |     
|                                     |  |              
|                                     |  | (in millions)
|                                    
|                                    
|                                    
|                                    
|Trade                                |  | $             | 626 |      |  | $ | 488 |  
|                                    
|                                    
|                                    
|                                    
|Notes receivable and other           |  |               | 68  |      |  |   | 18  |  
|                                    
|                                    
|                                    
|                                    
|Less allowance for doubtful accounts |  |               | (75 | )    |  |   | (63 | )
|                                     |  |               |     |      |  |   |     |  
|                                     |  | $             | 619 |      |  | $ | 443 |  
|                                     |  |               |     |      |  |   |     |  

F-14



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


4.  Property, Plant and Equipment

|                                                   |  |               |        |      |  |   |        |  
|-------------------------------------------------- |  | ------------- | ------ | ---- |  | - | ------ | -
|                                                   |  |              
|                                                   |  | December 31, 
|                                                   |  |              
|                                                   |  | 1999          |        | 1998
|                                                   |  |               |        |     
|                                                   |  |              
|                                                   |  | (in millions)
|                                                  
|                                                  
|                                                  
|                                                  
|Land                                               |  | $             | 4      |      |  | $ | 4      |  
|                                                  
|                                                  
|                                                  
|                                                  
|Buildings and improvements                         |  |               | 99     |      |  |   | 72     |  
|                                                  
|                                                  
|                                                  
|                                                  
|Digital mobile network equipment                   |  |               | 5,825  |      |  |   | 4,308  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Office equipment, furniture and fixtures and other |  |               | 653    |      |  |   | 513    |  
|                                                  
|                                                  
|                                                  
|                                                  
|Less accumulated depreciation and amortization     |  |               | (1,687 | )    |  |   | (1,202 | )
|                                                   |  |               |        |      |  |   |        |  
|                                                   |  |               | 4,894  |      |  |   | 3,695  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Construction in progress                           |  |               | 1,258  |      |  |   | 1,220  |  
|                                                   |  |               |        |      |  |   |        |  
|                                                   |  | $             | 6,152  |      |  | $ | 4,915  |  
|                                                   |  |               |        |      |  |   |        |  

5.  Intangible Assets

|                                                                |  |               |        |      |  |   |       |  
|--------------------------------------------------------------- |  | ------------- | ------ | ---- |  | - | ----- | -
|                                                                |  |              
|                                                                |  | December 31, 
|                                                                |  |              
|                                                                |  | 1999          |        | 1998
|                                                                |  |               |        |     
|                                                                |  |              
|                                                                |  | (in millions)
|                                                               
|                                                               
|                                                               
|                                                               
|Licenses                                                        |  | $             | 4,139  |      |  | $ | 4,299 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Excess of purchase price over fair value of net assets acquired |  |               | 1,262  |      |  |   | 1,284 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Customer lists                                                  |  |               | 146    |      |  |   | 210   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other                                                           |  |               | 11     |      |  |   | 61    |  
|                                                                |  |               |        |      |  |   |       |  
|                                                                |  |               | 5,558  |      |  |   | 5,854 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Less accumulated amortization                                   |  |               | (1,007 | )    |  |   | (917  | )
|                                                                |  |               |        |      |  |   |       |  
|                                                                |  | $             | 4,551  |      |  | $ | 4,937 |  
|                                                                |  |               |        |      |  |   |       |  

F-15



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


6.  Investments and Other Assets

|                                                                                              |  |               |       |      |  |   |     | 
|--------------------------------------------------------------------------------------------- |  | ------------- | ----- | ---- |  | - | --- | 
|                                                                                              |  |              
|                                                                                              |  | December 31, 
|                                                                                              |  |              
|                                                                                              |  | 1999          |       | 1998
|                                                                                              |  |               |       |     
|                                                                                              |  |              
|                                                                                              |  | (in millions)
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Investments in affiliates  equity method, at cost less
	 equity in net losses of $80 and $18 |  | $             | 249   |      |  | $ | 186 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Marketable equity securities available-for-sale                                               |  |               | 288   |      |  |   | 68  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Nonmarketable equity securities, at cost                                                      |  |               | 54    |      |  |   | 17  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Debt issuance costs                                                                           |  |               | 338   |      |  |   | 246 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Other assets                                                                                  |  |               | 158   |      |  |   | 152 | 
|                                                                                              |  |               |       |      |  |   |     | 
|                                                                                              |  | $             | 1,087 |      |  | $ | 669 | 
|                                                                                              |  |               |       |      |  |   |     | 

|                                         |                |                                                         |  |      |    |   |  |  |    |  
|---------------------------------------- | -------------- | ------------------------------------------------------- |  | ---- | -- | - |  |  | -- | -
|                                         |                |                                                        
|                                         |                | Percentage                                             
|                                         |                | Ownership                                              
|                                         |                | December 31,                                           
|                                         |                |                                                        
|                                         |                | 1999                                                    |  | 1998
|                                         |                |                                                         |  |     
|Equity Method Investments                |                |                                                         |  |      |    |   |  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Domestic:      |                                                         |  |      |    |   |  |  |   
|                                        
|                                        
|                                        
|                                        
|                                         |                | Nextel Partners, Inc.                                   |  |      | 38 | % |  |  |   |  
|                                        
|                                        
|                                        
|                                        
|                                         |                | NEXTBAND Communications, L.L.C                          |  |      |   |   |  |  | 50 | %
|                                        
|                                        
|                                        
|                                        
|                                         | International: |                                                         |  |      |    |   |  |  |   
|                                        
|                                        
|                                        
|                                        
|                                         |                | Nextel Communications Philippines, Inc.                 |  |      | 38 | % |  |  | 38 | %
|                                        
|                                        
|                                        
|                                        
|                                         |                | Nexnet Co., Ltd. (Japan)                                |  |      | 21 | % |  |  | 21 | %
|                                        
|                                        
|                                        
|                                        
|Nonmarketable Equity Securities, at cost |                |                                                         |  |      |    |   |  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Domestic:      |                                                         |  |      |    |   |  |  |   
|                                        
|                                        
|                                        
|                                        
|                                         |                | SpectraSite Holdings, Inc.                              |  |      | 15 | % |  |  |   |  
|                                        
|                                        
|                                        
|                                        
|                                         | International: |                                                         |  |      |    |   |  |  |   
|                                        
|                                        
|                                        
|                                        
|                                         |                | Shanghai CCT-McCaw Telecommunications Systems Co., Ltd. |  |      | 12 | % |  |  | 12 | %
|                                        
|                                        
|                                        
|                                        
|Marketable Equity Securities             |                |                                                         |  |      |    |   |  | 
|                                        
|                                        
|                                        
|                                        
|                                         | International: |                                                         |  |      |    |   |  |  |   
|                                        
|                                        
|                                        
|                                        
|                                         |                | Clearnet Communications, Inc. (Canada)                  |  |      | 14 | % |  |  | 15 | %

For equity method investments, the percentage ownership
represents the percentage of the investees earnings or
losses recognized.

7.  Fair Value of Financial Instruments

The estimated fair values of financial instruments have been
determined by us, using available market information and
appropriate valuation methodologies. However, considerable
judgment is required in interpreting market data to develop the
estimates of fair value. As a result, the estimates presented
below are not necessarily indicative of the amounts that we could
 realize or be required to pay in a current

F-16



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


market exchange. The use of different market assumptions as well
as estimation methodologies may have a material effect on the
estimated fair value amounts.

|                                                                           |  |               |        |            |  |          |        |            |  |   |       |   |  |   |       |  
|-------------------------------------------------------------------------- |  | ------------- | ------ | ---------- |  | -------- | ------ | ---------- |  | - | ----- | - |  | - | ----- | -
|                                                                           |  |              
|                                                                           |  | December 31, 
|                                                                           |  |              
|                                                                           |  |               |        |           
|                                                                           |  | 1999          |        | 1998      
|                                                                           |  |               |        |           
|                                                                           |  | Carrying      |        | Estimated  |  | Carrying |        | Estimated 
|                                                                           |  | Amount        |        | Fair Value |  | Amount   |        | Fair Value
|                                                                           |  |               |        |            |  |          |        |           
|                                                                           |  |              
|                                                                           |  | (in millions)
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Escrow deposits and notes receivable within Investments and other
	 assets |  | $             | 72     |            |  | $        | 72     |            |  | $ | 71    |   |  | $ | 71    |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Marketable equity securities within Investments and other assets           |  |               | 288    |            |  |          | 288    |            |  |   | 68    |   |  |   | 68    |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Long-term debt                                                             |  |               | 10,925 |            |  |          | 11,469 |            |  |   | 7,719 |   |  |   | 7,350 |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Interest rate risk management agreements                                   |  |               | (51    | )          |  |          | (35    | )          |  |   | (60   | ) |  |   | (119  | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Mandatorily redeemable preferred stock                                     |  |               | 1,770  |            |  |          | 3,275  |            |  |   | 1,578 |   |  |   | 1,492 |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Finance obligation                                                         |  |               | 578    |            |  |          | 488    |            |  |   |      |   |  |   |      |  

Cash and Cash Equivalents, Short-term Investments, Accounts
 and Notes Receivable, Escrow Deposits, Accounts Payable and
Accrued Expenses. The carrying amounts of these items are
 a reasonable estimate of their fair value.

Marketable Equity Securities. We estimate the fair
value of these securities based on quoted market prices. At
December 31, 1999 and 1998, marketable equity securities
consist of the following:

|                    |                                                                 |               |   |       |  |                  |   |     |  |  |   |     |  
|------------------- | --------------------------------------------------------------- | ------------- | - | ----- |  | ---------------- | - | --- |  |  | - | --- | -
|                    |                                                                 |               |   | Fair  |  | Gross Unrealized
|                    |                                                                 | Cost          |   | Value |  | Gain (Loss)     
|                    |                                                                 |               |   |       |  |                 
|                    |                                                                 |              
|                    |                                                                 | (in millions)
|                   
|                   
|                   
|                   
|1999                |                                                                 |               |   |       |  |                  |   |     |  |  |   |    
|                   
|                   
|                   
|                   
|Available for sale: |                                                                 |               |   |       |  |                  |   |     |  |  |   |    
|                   
|                   
|                   
|                   
|                    | Equity securities, included within Investments and other assets |               | $ | 69    |  |                  | $ | 288 |  |  | $ | 219 |  
|                   
|                   
|                   
|                   
|                   
|1998                |                                                                 |               |   |       |  |                  |   |     |  |  |   |    
|                   
|                   
|                   
|                   
|Available for sale: |                                                                 |               |   |       |  |                  |   |     |  |  |   |    
|                   
|                   
|                   
|                   
|                    | Equity securities, included within Investments and other assets |               |   | 69    |  |                  |   | 68  |  |  |   | (1  | )

Nonmarketable Equity Securities. It is not
practicable to value our investments in Shanghai CCT McCaw and
our restricted investment in SpectraSite, both accounted for
using the cost method, because quoted market prices are not
available or are not relevant. If our investment in SpectraSite
did not currently have effective restrictions on our ability to
sell, the value based on quoted market prices would have been
$152 million as of December 31, 1999, with a carrying
value of $38 million.

Long-Term Debt. We estimate the fair value of these
 securities based on quoted market prices of our senior notes.
Carrying value approximates fair value for our bank and vendor
credit facilities, as interest rates are reset periodically.

Interest Rate Risk Management Agreements. The fair
value of these agreements is based on estimates obtained from
dealers to settle the interest rate swap and collar agreements.

Mandatorily Redeemable Preferred Stock. We estimate
 the fair value of these securities based on quoted market
prices.

Finance Obligation. We estimate the fair value of
the finance obligation based on interest rates available for
similar term loan borrowings.

F-17



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


8.  Long-Term Debt

|                                                                                                                                                                                                             |  |               |        |      |  |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------ | ---- |  | - | ----- | -
|                                                                                                                                                                                                             |  |              
|                                                                                                                                                                                                             |  | December 31, 
|                                                                                                                                                                                                             |  |              
|                                                                                                                                                                                                             |  | 1999          |        | 1998
|                                                                                                                                                                                                             |  |               |        |     
|                                                                                                                                                                                                             |  |              
|                                                                                                                                                                                                             |  | (in millions)
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|11.5% Senior Redeemable Discount Notes due 2003,net of
	unamortized discount of $0                                                                                                                           |  | $             |       |      |  | $ | 36    |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|9.75% Senior Redeemable Discount Notes due 2004,net of
	unamortized discount of $0 and $13                                                                                                                   |  |               | 876    |      |  |   | 1,114 |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|10.125% Senior Redeemable Discount Notes due 2004,net of
	unamortized discount of $40 and $67                                                                                                                |  |               | 254    |      |  |   | 342   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|12.25% Senior Redeemable Discount Notes due 2004,net of
	unamortized discount of $1                                                                                                                          |  |               |       |      |  |   | 8     |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|10.25% Senior Redeemable Discount Notes due 2005,net of
	unamortized discount of $22                                                                                                                         |  |               |       |      |  |   | 93    |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|13.0% Senior Redeemable Discount Notes due 2007,(issued
	by Nextel International), net of unamortized discount of $252 and
	 $337                                                                            |  |               | 699    |      |  |   | 614   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|10.65% Senior Redeemable Discount Notes due 2007,net of
	unamortized discount of $205 and $268                                                                                                               |  |               | 635    |      |  |   | 572   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|9.75% Senior Serial Redeemable Discount Notes due 2007,
	net of unamortized discount of $267 and $345                                                                                                        |  |               | 862    |      |  |   | 784   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|4.75% Convertible Senior Notes due 2007                                                                                                                                                                      |  |               | 600    |      |  |   |      |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|9.95% Senior Serial Redeemable Discount Notes due 2008,
	net of unamortized discount of $425 and $536                                                                                                        |  |               | 1,202  |      |  |   | 1,091 |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|12.125% Senior Serial Redeemable Discount Notes due 2008,
	(issued by Nextel International), net of unamortized discount of
	$234 and $289                                                                   |  |               | 496    |      |  |   | 441   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|12.0% Senior Serial Redeemable Notes due 2008,net of
	unamortized discount of $4 and $4                                                                                                                      |  |               | 296    |      |  |   | 296   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|9.375% Senior Serial Redeemable Notes due 2009                                                                                                                                                               |  |               | 2,000  |      |  |   |      |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Bank credit facility,interest payable quarterly at an
	adjusted rate calculated based either on the U.S. prime rate
	 or LIBOR (8.63% to 9.75%  1999; 7.06% to
	10.50%  1998)                              |  |               | 2,650  |      |  |   | 2,118 |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Nextel International vendor credit facilities,interest
	payable semiannually at an adjusted rate calculated based either
	on the U.S. prime rate or LIBOR (10.28% to
	11.00%  1999; 10.25% to 11.0%  1998) |  |               | 243    |      |  |   | 111   |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Nextel Argentina bank credit facility,interest payable
	quarterly at an adjusted rate calculated based either on the ABR
	or the Eurodollar rate (8.13% to 9.00%  1999; 8.75% to
	 9.50%  1998)            |  |               | 100    |      |  |   | 83    |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Nextel Argentina incremental borrowing facility,interest
	payable quarterly at an adjusted rate calculated based either on
	the ABR or the Eurodollar rate (10.50% to 12.25% 
	1999)                        |  |               | 8      |      |  |   |      |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Other                                                                                                                                                                                                        |  |               | 4      |      |  |   | 16    |  
|                                                                                                                                                                                                             |  |               |        |      |  |   |       |  
|                                                                                                                                                                                                             |  |               | 10,925 |      |  |   | 7,719 |  
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Less current portion, including $1,130 in 1999 associated with
	the 9.75% senior notes due 2004 and the 10.125% senior notes due
	2004 called for redemption                                                 |  |               | (1,165 | )    |  |   | (9    | )
|                                                                                                                                                                                                             |  |               |        |      |  |   |       |  
|                                                                                                                                                                                                             |  | $             | 9,760  |      |  | $ | 7,710 |  
|                                                                                                                                                                                                             |  |               |        |      |  |   |       |  

F-18



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Senior Redeemable Notes Issued Before 1997

The 11.5% senior redeemable discount notes due 2003 were callable
 beginning September 1, 1998. Cash interest on these notes
accrued beginning September 1, 1998 and was payable
semiannually beginning March 1, 1999. All of these
outstanding notes were redeemed on December 30, 1999.

The 9.75% senior redeemable discount notes due 2004 were callable
 beginning February 15, 1999. Accrual of cash interest on
these notes commenced on February 15, 1999 and was payable
semiannually beginning August 15, 1999. As described below,
all of these outstanding notes were redeemed on February 15,
 2000 and are classified in the current portion of long-term debt
 as of December 31, 1999.

The 10.125% senior redeemable discount notes due 2004 were
callable beginning January 15, 1999. Accrual of cash
interest on these notes commenced on January 15, 1999 and
was payable semiannually beginning July 15, 1999. As
described below, all of these outstanding notes were redeemed on
January 15, 2000 and are classified in the current portion
of long-term debt as of December 31, 1999.

The 12.25% senior redeemable discount notes due 2004 were
callable beginning April 15, 1999. Cash interest on these
notes accrued beginning on April 15, 1999 and was payable
semiannually beginning October 15, 1999. All of these
outstanding notes were redeemed on December 30, 1999.

The 10.25% senior redeemable discount notes due 2005 were
callable beginning December 15, 1998. Accrual of cash
interest on these notes commenced on December 15, 1998 and
was payable semiannually beginning June 15, 1999. All of
these outstanding notes were redeemed on December 30, 1999.

Each of the notes issued before 1997 was an unsecured obligation
that ranked equal in right of payment with all our other
unsubordinated, unsecured indebtedness.

Indenture Amendments. In 1997, we concluded a
solicitation to obtain the consent of the requisite number of
holders of the five series of senior notes issued prior to 1997
to amendments and waivers to specific provisions of the
indentures governing these senior notes. The amendments included
specified modifications to the debt incurrence limitations to
allow us to incur additional indebtedness and modifications to
make the terms and covenants uniform among the old indentures
relating to these notes.

Debt Extinguishment. In 1997, we utilized about
$283 million of the proceeds from the issuance of the 9.75%
senior notes due 2007 to repurchase $183 million in
principal amount at maturity of our 11.5% senior notes and
$110 million in principal amount at maturity of our 12.25%
senior notes at a cost in excess of related carrying amounts. As
a result, we recognized an extraordinary loss of $46 million
 related to the early retirement of debt, representing the excess
 of the purchase price over the carrying value of the repurchased
 notes and the write-off of associated unamortized deferred
financing costs of about $11 million.

In April 1998, we concluded a cash tender offer and related
consent solicitation with respect to all of the remaining
outstanding 11.5% and 12.25% senior notes. We paid about
$741 million for the tendered notes (representing both the
purchase price of the tendered notes and related consent fees)
utilizing a portion of the proceeds from the issuance of the
9.95% senior notes. As a result of the early retirement of the
tendered notes, we recognized an extraordinary loss of
$133 million, representing the excess of the purchase price
over the carrying values of the tendered notes and the write-off
of associated unamortized deferred financing costs of about
$19 million.

During the fourth quarter of 1999, we utilized a portion of the
proceeds from the 9.375% senior notes to repurchase and redeem
prior to final maturity $546 million of our outstanding
notes issued prior to 1997. On December 30, 1999, we
redeemed our outstanding 10.25% senior notes, 12.25% senior notes
 and 11.5% senior notes. As a result of the early retirement of
the senior notes repurchased and redeemed during the fourth
quarter of 1999, we recognized an extraordinary loss of about
$68 million, representing

F-19



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


the excess of the purchase price over the carrying values of the
repurchased and redeemed notes and the write-off of associated
unamortized deferred financing costs of about $11 million.

In December 1999, we issued notices to redeem prior to final
 maturity all of our outstanding 10.125% senior notes and all of
our outstanding 9.75% senior notes, with Nextel being released as
 primary obligor on January 15, 2000 for the 10.125% senior
notes and on February 15, 2000 for the 9.75% senior notes.
On December 30, 1999, $1,265 million was placed in an
irrevocable trust to effect these redemptions. As a result of
this transaction, we will recognize an extraordinary loss of
about $104 million in the first quarter of 2000,
representing the excess of the purchase price over the carrying
values of the redeemed notes and the write-off of associated
unamortized deferred financing costs of about $26 million.

Senior Redeemable Notes

13.0% Senior Redeemable Discount Notes. In
March 1997, Nextel International completed the sale of
951,463 units, generating $482 million in net proceeds. Each
 unit is comprised of a 10-year senior discount note with a
principal due at maturity of $1,000 and one warrant to purchase
0.38748 shares of Nextel Internationals common stock
at an exercise price of $9.99 per share any time after
March 6, 1998 and prior to March 6, 2007. The warrants
entitle the holders to purchase an aggregate of about
368,673 shares of Nextel International common stock that
approximates less than 1% of the current outstanding shares of
Nextel International on a fully diluted basis and were valued at
$15 million based on the difference between the gross
proceeds and the present value of the accreted amount of the bond
 at time of first call including the call premium. Cash interest
will not accrue prior to April 15, 2002 and will be payable
semiannually beginning October 15, 2002 at a rate of
13% per year. These notes are redeemable in whole or in
part, at Nextel Internationals option, at any time on or
after April 15, 2002 at specified redemption prices plus
accrued and unpaid interest. Up to 35% of the aggregate accreted
value of these outstanding senior notes may be redeemed (using
the proceeds of one of more sales of qualified Nextel
International equity securities) prior to April 15, 2000, at
 the option of Nextel International under specified
circumstances, at 113% of their accreted value on the date of
redemption. The 13.0% senior notes are senior unsecured
indebtedness of Nextel International and rank equal in right of
payment with all other unsubordinated, unsecured indebtedness of
Nextel International.

10.65% Senior Redeemable Discount Notes. In
September 1997, we completed the sale of $840 million
in principal amount at maturity of 10.65% senior redeemable
discount notes due 2007, generating $486 million in net cash
 proceeds. Cash interest will not accrue prior to
September 15, 2002 and will be payable semiannually
beginning March 15, 2003 at a rate of 10.65% per year.
The 10.65% senior notes are redeemable in whole or in part, at
our option, on or after September 15, 2002 at specified
redemption prices plus accrued and unpaid interest. Up to
33 1/3% of the aggregate accreted value of these outstanding
 senior notes may be redeemed (using the proceeds of one or more
sales of our qualified equity securities) prior to
September 15, 2000, at our option under specified
circumstances, at 110.65% of their accreted value on the date of
redemption. The 10.65% senior notes are senior unsecured
indebtedness of ours and rank equal in right of payment with all
our other unsubordinated, unsecured indebtedness.

9.75% Senior Serial Redeemable Discount Notes. In
October 1997, we completed the sale of $1,129 million
in principal amount at maturity of 9.75% senior serial redeemable
 discount notes due 2007, generating $682 million in net
cash proceeds. Cash interest will not accrue prior to
October 31, 2002 and will be payable semiannually beginning
April 30, 2003, at a rate of 9.75% per year. The 9.75%
senior notes are redeemable in whole or in part, at our option,
on or after October 31, 2002 at specified redemption prices
plus accrued and unpaid interest. Up to 33 1/3% of the
aggregate accreted value of these outstanding senior notes may be
 redeemed (using the proceeds of one or more sales of our
qualified equity securities) prior to October 31, 2000, at
our option under specified circumstances, at 109.75% of their
accreted value

F-20



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


on the date of redemption. The 9.75% senior notes are senior
unsecured indebtedness of ours and rank equal in right of payment
 with all our other unsubordinated, unsecured indebtedness.

9.95% Senior Serial Redeemable Discount Notes. In
February 1998, we completed the sale of $1,627 million
in principal amount at maturity of 9.95% senior serial redeemable
 discount notes due 2008, generating $976 million in net
cash proceeds. Cash interest will not accrue prior to
February 15, 2003, and will be payable semiannually
beginning August 15, 2003 at a rate of 9.95% per year.
The 9.95% senior notes are redeemable in whole or in part, at our
 option, at any time on or after February 15, 2003 at
specified redemption prices plus accrued and unpaid interest. Up
to 35% of the aggregate accreted value of these outstanding
senior notes may be redeemed (using the proceeds of one or more
sales of our qualified equity securities) on or prior to
February 15, 2001, at our option under specified
circumstances, at 109.95% of their accreted value on the date of
redemption. The 9.95% senior notes are senior unsecured
indebtedness of ours and rank equal in right of payment with all
our other unsubordinated, unsecured indebtedness.

12.125% Senior Serial Redeemable Discount Notes. In
 March 1998, Nextel International completed the sale of
$730 million in principal amount at maturity of 12.125%
senior serial redeemable discount notes due 2008, generating
$387 million in net cash proceeds. Cash interest will not
accrue prior to April 15, 2003, and will be payable
semiannually beginning October 15, 2003 at a rate of
12.125% per year. The 12.125% senior notes are redeemable in
 whole or in part, at Nextel Internationals option, at any
time on or after April 15, 2003 at specified redemption
prices plus accrued and unpaid interest. Up to 35% of the
aggregate accreted value of these outstanding senior notes may be
 redeemed (using the proceeds of one or more sales of qualified
Nextel International equity securities) prior to April 15,
2001, at the option of Nextel International under specified
circumstances, at 112.125% of their accreted value on the date of
 redemption. The 12.125% senior notes are senior unsecured
indebtedness of Nextel International and rank equal in right of
payment with all other unsubordinated, unsecured indebtedness of
Nextel International.

12.0% Senior Serial Redeemable Notes. In
November 1998, we completed the sale of $300 million in
 principal amount of 12.0% senior serial redeemable notes due
2008, generating $289 million in net cash proceeds. Cash
interest is payable semiannually beginning May 1, 1999 at a
rate of 12.0% per year. The 12.0% senior notes are
redeemable in whole or in part, at our option, on or after
November 1, 2003 at specified redemption prices plus accrued
 and unpaid interest. Up to 35% of the original principal amount
of these senior notes may be redeemed (using the proceeds of one
or more sales of our qualified equity securities) on or prior to
November 1, 2001, at our option under specified
circumstances, at 112% of their principal amount, plus accrued
and unpaid interest to the date of redemption. The 12.0% senior
notes are senior unsecured indebtedness of ours and rank equal in
 right of payment with all our other unsubordinated, unsecured
indebtedness.

9.375% Senior Serial Redeemable Notes. In
November 1999, we completed the issuance and sale in a
private placement of $2.0 billion in principal amount of
9.375% senior serial redeemable notes due 2009, generating
$1,960 million in net proceeds. These notes were
subsequently exchanged for a series of notes with identical terms
 registered with the Securities and Exchange Commission in
February 2000. Cash interest is payable on May 15 and
November 15 of each year, commencing May 15, 2000, at a rate
 of 9.375% per year. The 9.375% senior notes are redeemable
at our option, in whole or in part, at any time on or after
November 15, 2004 at specified redemption prices. Up to 35%
of the original principal amount of these senior notes may be
redeemed (using the proceeds of one or more sales of our
qualified equity securities) on or prior to November 15,
2002, at our option under specified circumstances, at 109.375% of
 their principal amount, plus accrued and unpaid interest to the
date of redemption. The 9.375% senior notes are senior unsecured
indebtedness of ours and rank equal in right of payment with all
our other unsubordinated, unsecured indebtedness.

F-21



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Convertible Senior Notes

4.75% Convertible Senior Notes. In June 1999,
we completed the issuance and sale in a private placement of
$600 million in principal amount of our 4.75% convertible
senior notes due 2007, generating $588 million of net cash
proceeds. These notes, and the shares of class A common
stock underlying these notes, were subsequently registered with
the Securities and Exchange Commission under an effective
registration statement in December 1999. Cash interest is payable
 semiannually on January 1 and July 1 of each year commencing
January 1, 2000. The notes are convertible at the option of
the holders into class A common stock at any time after the
date of original issuance and prior to redemption, repurchase or
maturity at a conversion price of $47.308 per share, subject
 to adjustment. The notes are redeemable at our option at any
time on or after July 6, 2002 at specified redemption prices
 plus accrued interest. The notes are senior unsecured
indebtedness of ours and rank equal in right of payment with all
our other unsubordinated, unsecured indebtedness.

Bank and Vendor Credit Facilities

Domestic Facilities. In March 1998, Nextel,
Nextel Finance Company, one of our wholly owned subsidiaries, and
 some of our other domestic subsidiaries entered into definitive
agreements with respect to a secured credit facility arranged by
a group of banks. The bank credit facility in effect through
November 1999 provided for up to $3.5 billion of secured
financing (consisting of a $1.5 billion revolving loan and
$2.0 billion in term loans). The term loans matured from
March 31, 2006 through March 31, 2007 (with principal
repayments beginning September 30, 2001). Borrowings under
the 1998 bank credit facility were secured by liens on assets of
some of our domestic subsidiaries. At December 31, 1998,
substantially all of our domestic assets were pledged in
connection with this bank credit facility.

Effective on November 12, 1999, we entered into definitive
agreements with respect to an amended and restated secured bank
credit facility, which initially provided for up to
$5.0 billion of secured financing, consisting of a
$1.5 billion revolving loan and $3.5 billion in term
loans. The maturity date of the $1.5 billion revolving loan
and a $1.7 billion portion of the term loans is December 31,
 2007. The remaining $1.8 billion in term loans mature in equal
$900 million portions on June 30, 2008, and
December 31, 2008. Commitment fees of 0.375% to
1.00% per year (depending on the ratio of our total
indebtedness outstanding to annualized cashflow) are charged on
the average unused balance and recorded to interest expense as
incurred. On March 15, 2000, an additional $1.0 billion
 incremental term loan was activated and borrowed under this bank
 credit facility, with the total amount of borrowings available
under the bank credit facility increasing from $5.0 billion to
$6.0 billion. The maturity dates of the loans can accelerate
 if our credit ratings are below specified levels and the
aggregate amount of specified debt obligations that mature before
 June 30, 2009, and the redemption price of redeemable stock
 that is mandatorily redeemable before June 30, 2009, exceed
 specific amounts. Borrowings under the amended and restated bank
 credit facility are secured by liens on assets of substantially
all of our domestic subsidiaries and bear interest payable
quarterly, at variable rates calculated based on either the
U.S. prime rate or the London Interbank Offered Rate,
referred to as LIBOR. All of our outstanding notes contain
provisions that may limit the amount of borrowings available
under the amended and restated bank credit facility in specified
circumstances. The availability of borrowings under this facility
 is subject to the satisfaction or waiver of applicable borrowing
 conditions. At December 31, 1999, we were able to access
the entire $5.0 billion available under the bank credit
facility.

The bank credit facility contains covenants which limit our
ability and some of our subsidiaries ability to incur
additional indebtedness; create liens; pay dividends or make
distributions in respect of our or their capital stock or make
specified other restricted payments; consolidate, merge or sell
all or substantially all of our or their assets; guarantee
obligations of other entities; enter into hedging agreements;
enter into transactions with affiliates or related persons or
engage in any business other than the telecommunications

F-22



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


business. Except for distributions for specified limited
purposes, these covenants impose limitations which restrict the
distribution of substantially all of our subsidiaries net
assets to Nextel Communications, Inc. Additionally, the
agreements require compliance with financial ratio tests.

International Facilities. In 1997, McCaw
International (Brazil), Ltd. and Motorola Credit Corporation, a
subsidiary of Motorola, entered into an equipment financing
agreement by which Motorola Credit Corporation agreed to provide
up to $125 million in multi-draw term loans to McCaw
International (Brazil) to be used to acquire digital mobile
network equipment and related services from Motorola. The
financing is repayable in U.S. dollars in semiannual
installments over 42 months beginning June 30, 2000 and
 bears interest at an adjustable rate equal to either the
U.S. prime rate plus 2.5% or LIBOR plus 4.625%. The loans
are secured by a first priority lien on substantially all of
McCaw International (Brazil)s assets, a pledge of all of
the stock of McCaw International (Brazil) and its subsidiaries,
and guarantees by Nextel International of 94% and Motorola
International Development Corporation of 6% of McCaw
International (Brazil)s obligations under this financing.
The financing contains specified financial and operating
covenants. In the event of noncompliance with specified financial
 covenants, McCaw International (Brazil) may cure any such
noncompliance by receiving additional equity contributions. The
availability of borrowings under this facility is subject to the
satisfaction or waiver of applicable borrowing conditions. As of
December 31, 1999, $104 million had been borrowed under
 this facility. In 1999, McCaw International (Brazil) notified
Motorola Credit of its noncompliance with some of the financial
covenants applicable to this facility. Motorola Credit agreed to
waive compliance with the financial covenants. On March 24,
2000, McCaw International (Brazil) entered into an amendment with
 Motorola Credit, which, among other things, eliminates the 1999
issues with respect to financial covenant compliance and
addresses cure mechanisms for any future financial covenant
compliance issues.

In 1998, Nextel Argentina entered into a senior secured bank
credit facility which, as amended, provides up to
$100 million in term loans. Borrowings under this bank
credit facility are subject to the satisfaction or waiver of
specified conditions and are secured by a pledge of the stock of
Nextel Argentina and a first priority lien on substantially all
of Nextel Argentinas assets. Loans under this bank credit
facility bear interest at a rate equal to either (1) the ABR
 plus 2.75% (ABR is the highest of the U.S. prime rate, the
base certificate of deposit or CD rate plus 1% or the federal
funds rate plus 0.5%) or (2) the Eurodollar rate plus 3.75%
(the Eurodollar rate is LIBOR multiplied by the statutory reserve
 rate). These loans will be repaid in quarterly installments
beginning September 30, 2000 through March 31, 2003.
The first nine installments will be equal to 1/18 of the
then-outstanding balance, and the final installment will be in an
 amount equal to the then-outstanding balance. This bank credit
facility also contains financial and operating covenants. In
1999, Nextel Argentina notified the administrative agent of its
anticipated noncompliance with some of the financial covenants
under this facility. Nextel Argentina received waivers from the
lenders under this facility and in December entered into an
amended facility to modify several of the financial covenants.
Nextel Argentina is in compliance with all financial covenants
contained in this facility, as amended.

Effective May 26, 1999, Motorola Credit agreed to provide up
 to $50 million in loans to Nextel Argentina as incremental
term loans under the bank credit facility described above for
purchases from Motorola of digital mobile network equipment and
related services.

On February 4, 1999, Nextel International and Motorola
Credit entered into agreements providing for $225 million of
 secured term loan financing consisting of (i) up to
$100 million in loans to reimburse Nextel International for
payments made to Motorola Credit after January 1, 1997 for
the purchase of digital mobile network equipment and related
services by or for the benefit of its operating subsidiaries, and
 (ii) up to $225 million in loans, less the amount of
reimbursement loans advanced to (a) finance the cost of
digital mobile network equipment and related services and
(b) repay the principal amounts outstanding under the
existing financing facilities between Motorola Credit and Nextel
Communications

F-23



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Philippines, Inc. The financing is payable in eight equal
semiannual installments beginning June 30, 2001, will mature
 December 31, 2004, and bears interest at variable rates
based upon either the U.S. prime rate or LIBOR. The facility
 is secured by, among other things, a pledge of the shares of
stock of some of Nextel Internationals direct and indirect
subsidiaries. The availability of borrowings under this facility
is subject to the satisfaction or waiver of applicable borrowing
conditions. As of December 31, 1999, $139 million had
been borrowed under this facility, including $100 million of
 the reimbursement loans. In the fourth quarter of 1999, Nextel
International notified Motorola Credit of its anticipated
noncompliance with some of the financial covenants applicable to
this facility for the fourth quarter of 1999. In
December 1999, Motorola Credit agreed to waive compliance
with the financial covenants. On March 22, 2000, Nextel
International entered into an amendment with Motorola Credit,
which, among other things, eliminates the 1999 issues with
respect to financial covenant compliance and addresses cure
mechanisms for any future financial covenant compliance issues.

On December 16, 1999, Motorola Credit and Nextel
International entered into a secured loan agreement under which
Motorola Credit will provide up to about $57 million in
incremental term loans to Nextel International for working
capital purposes. The loans, fully drawn in January 2000,
will mature December 31, 2001 and will bear interest at
variable rates based upon either the U.S. prime rate or
LIBOR.

Deferred Financing Costs

We paid $139 million during 1999, $105 million during
1998 and $139 million in 1997 in deferred financing costs
related to the issuances of senior notes and bank and vendor
credit facilities, as described above. These debt issuance costs
are amortized as interest expense over the terms of the
underlying obligation.

Future Maturities of Long-Term Debt and Finance Obligation

For the years subsequent to December 31, 1999, scheduled
annual maturities of long-term debt and finance obligations
outstanding as of December 31, 1999 under existing long-term
 debt and finance obligation agreements are as follows (in
millions):

|                                                                    |  |   |        |  
|------------------------------------------------------------------- |  | - | ------ | -
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|2000, including $1,130 associated with notes called for
	redemption |  | $ | 1,191  |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|2001                                                                |  |   | 111    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|2002                                                                |  |   | 151    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|2003                                                                |  |   | 231    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|2004                                                                |  |   | 260    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Thereafter                                                          |  |   | 10,986 |  
|                                                                    |  |   |        |  
|                                                                    |  |   | 12,930 |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Less unamortized discount                                           |  |   | (1,427 | )
|                                                                    |  |   |        |  
|                                                                    |  | $ | 11,503 |  
|                                                                    |  |   |        |  

9.  Interest Rate Risk Management Agreements

We use derivative financial instruments consisting of interest
rate swap and collar agreements to manage our exposure to adverse
 movements in interest rates. We currently do not hedge foreign
currency translation of assets or liabilities or foreign currency
 transactions. We do not use financial instruments for trading or
 other speculative purposes. While these instruments are subject
to fluctuations in value, these

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


fluctuations are generally offset by fluctuations in the value of
 the underlying instrument or anticipated transaction. The use of
 derivative financial instruments is monitored through regular
communication with senior management. The counterparties expose
us to credit loss in the event of nonperformance; however, this
credit risk is minimized by dealing with a group of major
financial institutions with which we have other financial
relationships. Therefore, we do not anticipate nonperformance by
these counterparties.

We attempt to achieve a desired proportion of fixed versus
floating rate debt by using interest rate swap and collar
agreements to change the interest rate characteristics of some of
 our debt obligations. Interest rate swap agreements have the
effect of converting some of our variable rate obligations to
fixed or other variable rate obligations. In an interest rate
swap, we agree to exchange, at specified intervals, the
difference between a variable interest rate and either a fixed or
 another variable interest rate calculated by reference to a
notional principal amount. Interest rate collar agreements
consist of both an interest rate cap and floor and enable us to
lock in a predetermined interest rate range. In an interest rate
cap, if interest rates rise above a specified level, we receive
the differential calculated based on a notional principal amount.
 In an interest rate floor, if interest rates fall below a
specified level, we will pay the differential. The resulting
amount to be paid or received based on the interest rate
differential is accrued as interest rates change and is reflected
 as an adjustment to interest expense over the life of the swap
or collar. The incremental effect on interest expense for the
years ended December 31, 1999, 1998 and 1997 was not
material. Most of the pay fixed, receive floating interest rate
swaps and all of the collar agreements contain provisions that
reduce or eliminate the effectiveness of these agreements if
interest rates rise above specified levels. The interest rate
swap agreement for $100 million of notional amount of our
pay fixed, receive floating interest rate swaps contains a
provision that terminates the swap if the three month LIBOR
exceeds 6.24% on any quarterly reset date. The interest rate swap
 agreements for $150 million of notional amount of our pay
fixed, receive floating interest rate swaps contain a provision
that terminates the swap if the three month LIBOR exceeds 6.49%
on any quarterly reset date. The collar agreements contain
provisions that eliminate the counterpartys obligation to
make payments to us if the three month LIBOR exceeds 6.68% on any
 quarterly reset date. The fair value of the swap and collar
agreements is not recognized in the consolidated financial
statements (except for the loss associated with terminating the
interest rate protection agreement as discussed below), since
these agreements meet the criteria for matched swap accounting.
The notional amounts of interest rate swap and collar agreements
total $1.6 billion at December 31, 1999 and 1998. At
December 31, 1999, based on estimates obtained from dealers,
 we would be obligated to pay an aggregate of $35 million to
 settle these contracts, which is an estimate of fair value.
However, we do not currently intend to terminate any of these
agreements.

In 1997, we entered into an interest rate protection agreement to
 hedge interest rates on 10-year U.S. Treasury notes in
anticipation of a future debt issuance with terms identical to
the 10.65% senior notes and 9.75% senior notes. The interest rate
 protection agreement was terminated on September 29, 1998
since management determined that this anticipated transaction was
 not likely to occur before the interest rate protection
agreement expired. As a result, we recognized a loss of about
$47 million as other expense within our statement of
operations. The obligation resulting from the termination of this
 agreement was incorporated into a new interest rate swap
agreement, which is payable quarterly through March 31,
2006. About $51 million as of December 31, 1999 and
$60 million as of December 31, 1998 is accrued in other
 long-term liabilities related to this obligation.

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


The following table summarizes our interest rate swap and collar
agreements at December 31, 1999:

|                                         |  |               |     |       |  |                  |     |      |  |         |           |  |  |  |     |   |  |  |     |  
|---------------------------------------- |  | ------------- | --- | ----- |  | ---------------- | --- | ---- |  | ------- | --------- |  |  |  | --- | - |  |  | --- | -
|                                         |  |               |     |       |  |                 
|                                         |  |               |     |       |  | Weighted Average
|                                         |  |               |     |       |  |                 
|                                         |  | Notional      |     | Fair  |  |                  |     | Pay  |  | Receive
|                                         |  | Amount        |     | Value |  | Maturity         |     | Rate |  | Rate   
|                                         |  |               |     |       |  |                  |     |      |  |        
|                                         |  |               |     |       |  |                  |     |     
|                                         |  | (in millions) |     |       |  |                  |     |     
|                                        
|                                        
|                                        
|                                        
|Pay fixed rate, receive floating rate    |  | $             | 820 |       |  | $                | (38 | )    |  |         | 5.1 years |  |  |  | 7.3 | % |  |  | 6.1 | %
|                                        
|                                        
|                                        
|                                        
|Pay floating rate, receive floating rate |  |               | 550 |       |  |                  | 3   |      |  |         | 2.6 years |  |  |  | 5.6 | % |  |  | 6.1 | %

|        |  |  |     |  |  |  |   |      |  |       |           |  |  |  |     |   |  |  |     |  
|------- |  |  | --- |  |  |  | - | ---- |  | ----- | --------- |  |  |  | --- | - |  |  | --- | -
|        |  |  |     |  |  |  |   | Cap  |  | Floor
|        |  |  |     |  |  |  |   | Rate |  | Rate 
|        |  |  |     |  |  |  |   |      |  |      
|Collars |  |  | 200 |  |  |  |  |      |  |       | 3.5 years |  |  |  | 5.7 | % |  |  | 4.5 | %

10.  Income Taxes

The components of the income tax benefit (provision) were as
 follows:

|                               |         |               |    |      |   |      |     |     |  |   |      |      |  
|------------------------------ | ------- | ------------- | -- | ---- | - | ---- | --- | --- |  | - | ---- | ---- | -
|                               |         |              
|                               |         | Year Ended   
|                               |         | December 31, 
|                               |         |              
|                               |         | 1999          |    | 1998 |   | 1997
|                               |         |               |    |      |   |     
|                               |         |              
|                               |         | (in millions)
|                              
|                              
|                              
|                              
|Current:                       |         |               |    |      |   |      |     |     |  |   |      |     
|                              
|                              
|                              
|                              
|                               | Foreign |               | $  | (3   | ) |      | $   |    |  |   | $    |     |  
|                               |         |               |    |      |   |      |     |     |  |   |      |     
|Deferred:                      |         |               |    |      |   |      |     |     |  |   |      |     
|                              
|                              
|                              
|                              
|                               | Federal |               |    | 28   |   |      |     | 170 |  |   |      | (267 | )
|                              
|                              
|                              
|                              
|                               | State   |               |    |     |   |      |     |    |  |   |      |     |  
|                              
|                              
|                              
|                              
|                               | Foreign |               |    | 3    |   |      |     | 22  |  |   |      | 8    |  
|                               |         |               |    |      |   |      |     |     |  |   |      |     
|                               |         |               | 28 |      |   |      | 192 |     |  |   | (259 | )   
|                               |         |               |    |      |   |      |     |     |  |   |      |     
|Income tax benefit (provision) |         | $             | 28 |      |   | $    | 192 |     |  | $ | (259 | )   
|                               |         |               |    |      |   |      |     |     |  |   |      |     

The reconciliation of taxes computed at the statutory rate to the
 income tax benefit (provision) is as follows:

|                                     |  |                         |      |      |  |      |      |   |  |   |      |  
|------------------------------------ |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                     |  |                        
|                                     |  | Year Ended December 31,
|                                     |  |                        
|                                     |  | 1999                    |      | 1998 |  | 1997
|                                     |  |                         |      |      |  |     
|                                     |  |                        
|                                     |  | (in millions)          
|                                    
|                                    
|                                    
|                                    
|Income tax benefit at statutory rate |  | $                       | 454  |      |  | $    | 599  |   |  | $ | 458  |  
|                                    
|                                    
|                                    
|                                    
|State tax benefit, net               |  |                         | 49   |      |  |      | 50   |   |  |   | 62   |  
|                                    
|                                    
|                                    
|                                    
|Amortization of goodwill             |  |                         | (10  | )    |  |      | (10  | ) |  |   | (17  | )
|                                    
|                                    
|                                    
|                                    
|Increase in valuation allowance      |  |                         | (423 | )    |  |      | (439 | ) |  |   | (767 | )
|                                    
|                                    
|                                    
|                                    
|Other                                |  |                         | (42  | )    |  |      | (8   | ) |  |   | 5    |  
|                                     |  |                         |      |      |  |      |      |   |  |   |      |  
|                                     |  | $                       | 28   |      |  | $    | 192  |   |  | $ | (259 | )
|                                     |  |                         |      |      |  |      |      |   |  |   |      |  

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Deferred tax assets and liabilities consist of the following:

|                           |                               |               |        |       |  |   |        |       | 
|-------------------------- | ----------------------------- | ------------- | ------ | ----- |  | - | ------ | ----- | 
|                           |                               |              
|                           |                               | December 31, 
|                           |                               |              
|                           |                               | 1999          |        | 1998 
|                           |                               |               |        |      
|                           |                               |              
|                           |                               | (in millions)
|                          
|                          
|                          
|                          
|Deferred tax assets:       |                               |               |        |       |  |   |        |      
|                          
|                          
|                          
|                          
|                           | Operating loss carryforwards  |               | $      | 2,126 |  |   | $      | 1,817 | 
|                          
|                          
|                          
|                          
|                           | Deferred interest             |               |        | 98    |  |   |        | 34    | 
|                          
|                          
|                          
|                          
|                           | Foreign affiliates            |               |        | 29    |  |   |        | 22    | 
|                          
|                          
|                          
|                          
|                           | Other                         |               |        | 57    |  |   |        | 46    | 
|                           |                               |               |        |       |  |   |        |      
|                           |                               |               | 2,310  |       |  |   | 1,919  |      
|                          
|                          
|                          
|                          
|Valuation allowance        |                               |               | (1,766 | )     |  |   | (1,318 | )    
|                           |                               |               |        |       |  |   |        |      
|                           |                               |               | 544    |       |  |   | 601    |      
|                           |                               |               |        |       |  |   |        |      
|Deferred tax liabilities:  |                               |               |        |       |  |   |        |      
|                          
|                          
|                          
|                          
|                           | Property, plant and equipment |               |        | 83    |  |   |        | 111   | 
|                          
|                          
|                          
|                          
|                           | Intangibles                   |               |        | 1,127 |  |   |        | 1,208 | 
|                          
|                          
|                          
|                          
|                           | Other                         |               |        | 133   |  |   |        | 53    | 
|                           |                               |               |        |       |  |   |        |      
|                           |                               |               | 1,343  |       |  |   | 1,372  |      
|                           |                               |               |        |       |  |   |        |      
|Net deferred tax liability |                               | $             | 799    |       |  | $ | 771    |      
|                           |                               |               |        |       |  |   |        |      

At December 31, 1999, we had about $5.2 billion of
consolidated net operating loss carryforwards for federal income
tax purposes which expire through 2019. Additionally, we had
about $376 million of net operating loss carryforwards
subject to Section 382 of the Internal Revenue Code, which
expire through 2017. Section 382 restricts the utilization
of net operating losses and other carryover tax attributes upon
the occurrence of an ownership change. The utilization of tax net
 operating losses may be subject to specified limitations.

At December 31, 1999, our foreign subsidiaries had net
operating loss carryforwards for income tax purposes in the
following countries which expire through 2009: $91 million
for Mexico, $120 million for Argentina, and $24 million
 for Peru. Additionally, our foreign subsidiaries had about
$176 million of net operating loss carryforwards for
Brazilian income tax purposes which have no expiration date and
can only be utilized up to the limit of 30% of taxable income for
 the year. Our foreign subsidiaries may be limited in their
ability to use foreign tax net operating losses in any single
year depending on their ability to generate sufficient taxable
income.

A significant portion of our deferred tax liabilities will
reverse after current net operating losses expire. After
considering this and other factors, including recent operating
results, we increased our valuation allowance by
$448 million in 1999, $487 million in 1998 and
$767 million in 1997.

11.  Commitments and Contingencies

Operating Lease Commitments. We lease various
equipment and office facilities under capital and operating
leases. Leases for cell sites generally range from month-to-month
 to 20 years or are cancelable after a short notice period.
Office facilities and equipment other than cell sites are leased
under agreements with terms ranging from 1 to 10 years. The
leases normally provide for the payment of minimum annual rentals
 and some leases include provisions for renewal options of up to
10 years.

During December 1998, we completed a sale-leaseback
transaction involving some owned switch equipment which is
accounted for as an operating lease. Total net proceeds were
about $110 million,

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


resulting in a pre-tax gain of about $5 million. The gain,
which has been deferred, is being amortized on a straight-line
basis over the seven-year lease term.

For years subsequent to December 31, 1999, future minimum
payments for all operating lease obligations that have initial
noncancelable lease terms exceeding one year, net of rental
income, are as follows (in millions):

|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|          
|          
|          
|2000       |  | $ | 217   | 
|          
|          
|          
|          
|2001       |  |   | 212   | 
|          
|          
|          
|          
|2002       |  |   | 194   | 
|          
|          
|          
|          
|2003       |  |   | 156   | 
|          
|          
|          
|          
|2004       |  |   | 111   | 
|          
|          
|          
|          
|Thereafter |  |   | 228   | 
|           |  |   |       | 
|           |  | $ | 1,118 | 
|           |  |   |       | 

Total rental expense, net of rental income, was about
$231 million during 1999, $182 million during 1998 and
$119 million during 1997.

Legal Contingencies. In 1995, a lawsuit titledIn Re Nextel Communications Securities Litigation was filed
in the United States District Court in the District of New
Jersey. This litigation, which has been pursued as a class action
 suit, amends and consolidates three previously filed class
action complaints and seeks damages allegedly incurred by some
stockholders and claimed to result from defendants alleged
violations of Section 10(b) of the Securities Exchange Act
of 1934, as amended, and Rule 10b-5 under that act. The
litigation also makes claims of fraud and deceit. Specifically,
the plaintiffs claim that these damages resulted from some
defendants allegedly false and misleading statements
regarding the digital communications technology developed by
Motorola and deployed by us in our digital mobile network. We
believe that the claims against us are without merit. On or about
 February 23, 2000, the court preliminarily approved an
agreement among the parties pursuant to which the lawsuit would
be settled and resolved on a classwide basis. Notice of the
proposed settlement is expected to be sent to potential class
members shortly, and a hearing to approve the settlement is
scheduled for June 15, 2000. The terms of this proposed
settlement will not have a material effect on our financial
condition, results of operations or liquidity.

In 1994, a lawsuit titledCharles Dascal v. Morgan
OBrien, Becker, Gurman, Lukas, Meyers, OBrien and
McGowan, P.C. and Nextel Communications, Inc., was filed in
the Circuit Court of Dade County, Florida. The lawsuit, which was
 transferred to the United States District Court for the Southern
 District of Florida, sought compensatory damages, lost profits
and special damages based on the defendants alleged breach
of fiduciary duty, misappropriation of trade secrets, negligent
misrepresentation, fraud, conversion, civil theft, breach of good
 faith and fair dealing and unjust enrichment. The claims, which
primarily concerned alleged conduct by our current Vice Chairman
and former Chairman of the Board, Morgan OBrien, in the
1970s and early 1980s prior to the formation of Nextel, asserted
that business plans allegedly formulated by the plaintiff
relating to the development of a wireless communications system
were disclosed to, and had been improperly used by, the
defendants. Our board of directors determined that Morgan
OBrien in his capacities as an officer, director and
authorized representative of Nextel, was entitled to
indemnification in respect of this matter. We had filed
counterclaims against Mr. Dascal and had also filed
third-party claims against Tel Air Network, Inc. and
Knight-Ridder, Inc. On October 25, 1999, we entered into an
agreement under which the lawsuit was resolved. The lawsuit was
dismissed with prejudice on November 3, 1999. The terms of
this settlement did not have a material effect on our financial
condition, results of operations or liquidity.

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


On August 16, 1999, McCaw International (Brazil) and Nextel
International filed a motion for judgment in the Circuit Court
for the City of Alexandria, Virginia, against Telcom Ventures,
seeking a declaration from the court: (i) that the Founders
Groups option to pay its pro rata share of capital
contributions was not properly exercised; (ii) that the
Founders Groups ownership interest in McCaw International
(Brazil) has fallen below 10% and that, as a result, the Founders
 Group is no longer entitled to designate a director to serve on
the McCaw International (Brazil) board of directors; and
(iii) that the director previously designated by the
Founders Group must resign from the McCaw International (Brazil)
board of directors. On September 15, 1999, Telcom Ventures
filed its answer denying the material allegations made in the
motion for judgment, and asserted a counterclaim alleging that
Nextel International breached a fiduciary duty to Telcom Ventures
 and that McCaw International (Brazil) breached a contract with
Telcom Ventures by allegedly issuing shares for less than fair
market value without the informed consent of the director
designated by the Founders Group. Telcom Ventures
counterclaim seeks damages in the amount of $100 million,
plus punitive damages. Nextel International and McCaw
International (Brazil) have timely filed a denial of the material
 allegations made in the counterclaim. Although we cannot predict
 the outcome of this proceeding, we believe the claims against us
 are without merit. Nextel International intends to vigorously
defend against these claims.

Letters of Credit. Outstanding letters of credit
totaled $32 million at December 31, 1999 and
$33 million at December 31, 1998.

12.  Mandatorily Redeemable Preferred Stock

|                                                                      |                                                                                                                                                                                                                            |               |       |      |  |   |       |     | 
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ----- | ---- |  | - | ----- | --- | 
|                                                                      |                                                                                                                                                                                                                            |              
|                                                                      |                                                                                                                                                                                                                            | December 31, 
|                                                                      |                                                                                                                                                                                                                            |              
|                                                                      |                                                                                                                                                                                                                            | 1999          |       | 1998
|                                                                      |                                                                                                                                                                                                                            |               |       |     
|                                                                      |                                                                                                                                                                                                                            |              
|                                                                      |                                                                                                                                                                                                                            | (in millions)
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Series D exchangeable preferred stock mandatorily
	redeemable 2009    |                                                                                                                                                                                                                            |               |       |      |  |   |       |    
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | 13% cumulative annual dividend; 665,376 and 585,473  shares
	issued; 665,365 and 585,460 shares outstanding, stated at
	liquidation value                                                                                  |               | $     | 683  |  |   | $     | 601 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Series E exchangeable preferred stock mandatorily
	redeemable 2010    |                                                                                                                                                                                                                            |               |       |      |  |   |       |    
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | 11.125% cumulative annual dividend; 909,871 and 815,314 
	shares issued; 909,857 and 815,299 shares outstanding;
	stated at liquidation value                                                                              |               |       | 922  |  |   |       | 827 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Zero coupon convertible preferred stock mandatorily redeemable
	 2013 |                                                                                                                                                                                                                            |               |       |      |  |   |       |    
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | no dividend; convertible into 5,761,764 shares of
	class  A common stock; 591,308 shares issued and
	outstanding; stated at fair value when issued plus accretion of
	liquidation preference at 9.25% compounded quarterly |               |       | 165  |  |   |       | 150 | 
|                                                                      |                                                                                                                                                                                                                            |               |       |      |  |   |       |    
|                                                                      |                                                                                                                                                                                                                            | $             | 1,770 |      |  | $ | 1,578 |    
|                                                                      |                                                                                                                                                                                                                            |               |       |      |  |   |       |    

Series D Preferred Stock. In July 1997,
we issued 500,000 shares of our 13% series D exchangeable
preferred stock due 2009, liquidation preference of
$1,000 per share, generating about $482 million in net
cash proceeds. Dividends on the series D preferred stock accrue
at an annual rate of 13% of the liquidation preference, are
cumulative from the date of issuance and are payable quarterly in
 cash or, on or prior to July 15, 2002, at our option in
additional shares of series D preferred stock. Accrued but unpaid
 dividends were about $18 million at December 31, 1999
and $16 million at December 31, 1998. The series D
preferred stock is mandatorily redeemable on July 15, 2009
at the liquidation preference plus accrued and unpaid dividends,
and is redeemable in whole or in part, at our option after
December 15, 2005, at a price equal to the liquidation
preference plus accrued and unpaid dividends, and, in some
circumstances, after July 15, 2002 at specified redemption
prices. Up to 35% of the series D preferred stock may be redeemed
 (using the proceeds of one or more sales of class A common
stock) on or prior to July 15, 2000, in whole or in part, at
 our option in specified circumstances, at 113% of the
liquidation preference plus accrued and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


unpaid dividends. The series D preferred stock is also
exchangeable, in whole but not in part, at our option after
December 15, 2005 and in some circumstances sooner, into our
 subordinated debentures.

Series E Preferred Stock. In
February 1998, we issued 750,000 shares of our 11.125%
series E exchangeable preferred stock due 2010, liquidation
preference of $1,000 per share, generating about
$728 million in net cash proceeds. Dividends on the series E
 preferred stock accrue at an annual rate of 11.125% of the
liquidation preference, are cumulative from the date of issuance
and are payable quarterly in cash or, on or prior to
February 15, 2003 at our option, in additional shares of
series E preferred stock. At both December 31, 1999 and
1998, accrued but unpaid dividends were about $12 million.
The series E preferred stock is mandatorily redeemable on
February 15, 2010 at the liquidation preference plus accrued and
unpaid dividends, and is redeemable in whole or in part, at our
option at any time after December 15, 2005, at a price equal
 to the liquidation preference plus accrued and unpaid dividends,
 and, in some circumstances, after February 15, 2001 at
specified redemption prices. Up to 35% of the series E preferred
stock may be redeemed (using the proceeds of one or more sales of
 class A common stock) on or prior to February 15,
2001, in whole or in part, at our option in specified
circumstances, at 111.125% of the liquidation preference plus
accrued and unpaid dividends. The series E preferred stock is
also exchangeable, in whole but not in part, at our option after
December 15, 2005 and in some circumstances sooner, into our
 subordinated debentures.

Zero Coupon Preferred Stock. In December 1998,
 we issued 591,308 shares of our zero coupon convertible
preferred stock due 2013, liquidation preference of
$1,000 per share at maturity generating about
$145 million in net cash proceeds. The zero coupon preferred
 stock had an initial liquidation preference of $253.675 per
 share. No dividends will be payable with respect to the zero
coupon preferred stock; however, the liquidation preference will
accrete from the issuance date at an annual rate of 9.25%
compounded quarterly. The zero coupon preferred stock is
convertible at the option of the holders prior to redemption or
maturity into our class A common stock at a conversion rate
of 9.7441 common shares per share of zero coupon preferred stock
(subject to adjustment upon the occurrence of specified events).
The zero coupon preferred stock is redeemable at our option
beginning December 23, 2005 and may be tendered by the
holders for acquisition by us on December 23, 2005 and 2008.
 The zero coupon preferred stock is mandatorily redeemable on
December 23, 2013 at the fully accreted liquidation
preference of $1,000 per share. We may elect, subject to the
 satisfaction of specified requirements, to pay any redemption or
 tender price with class A common stock.

13.  Capital Stock and Stock Rights

Under our certificate of incorporation, we have the authority to
issue 613,883,948 shares of capital stock, divided into nine
 classes as follows (See Note 18):



| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | 515,000,000 shares of class A voting common stock, par
	value $0.001 per share;                     
|
| |  | 35,000,000 shares of class B nonvoting common stock,
	par value $0.001 per share;                   
|
| |  | 26,941,933 shares of class A convertible redeemable
	preferred stock, stated value $36.75 per share;
|
| |  | 82 shares of class B convertible preferred stock,
	stated value $1.00 per share;                    
|
| |  | 26,941,933 shares of class C convertible redeemable
	preferred stock, stated value $36.75 per share;
|
| |  | 1,600,000 shares of series D preferred stock, described in
	Note 12;                                
|
| |  | 2,200,000 shares of series E preferred stock described in
	Note 12;                                 
|
| |  | 800,000 shares of zero coupon preferred stock described in
	Note 12; and                            
|
| |  | 5,400,000 shares of undesignated preferred stock.                                                   

F-30



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


The following is a summary description of our capital stock.

Common Stock

Holders of common stock are entitled to share equally, share for
share, if dividends are declared on the common stock, whether
payable in cash, property or securities. There is no provision
for cumulative voting with respect to the election of directors.

Class A Common Stock. The holders of
class A common stock are entitled to one vote per share on
all matters submitted for action by the stockholders.

Class B Common Stock. The holders of the
nonvoting class B common stock have no right to vote on any
matters submitted for action by the stockholders, except as
follows. The holders of the nonvoting class B common stock
do have the right to vote as a separate class, with each share
having one vote, on:



| |   |                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------
| |  | any merger, consolidation, reorganization or reclassification of
	our company or our shares of capital stock;
|
| |  | any amendment to the certificate of incorporation; or                                                        
|
| |  | any liquidation, dissolution or winding up of our company.                                                   

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 the actual or expected occurrence
of any Voting Conversion Event as defined in our
certificate of incorporation.

Preferred Stock

In 1995, we consummated a securities purchase agreement with
Digital Radio, L.L.C., an affiliate of Mr. Craig O.
McCaw, under which Digital Radio purchased, for an aggregate
price of $300 million, units consisting of about
8.2 million shares of class A preferred stock (of which
 7.9 million were outstanding as of December 31, 1999
and 1998), each with a stated value of $36.75 per share, and
 82 shares of class B preferred stock with a stated
value of $1.00 per share.

Class A Convertible Redeemable Preferred Stock. Each share of class A preferred stock is convertible at
 the election of the holder into three shares of class A
common stock. Upon the occurrence of specified events, the shares
 of class A preferred stock automatically convert into
shares of class A common stock on a three-for-one basis or
into shares of class C preferred stock on a one-for-one
basis. Shares of class A preferred stock are also redeemable
 solely at our option at a redemption price equal to the stated
value of class A preferred stock plus the amount of any
accrued or declared but unpaid dividends, upon the occurrence of
specified events. The class A preferred stock only pays
dividends under limited circumstances. Holders of class A
preferred stock are entitled to three votes per share on all
matters submitted for action by the stockholders except for the
election of directors. The holders of class A preferred
stock, voting separately as a class, are entitled to elect three
class A directors or 25% of the members of our board of
directors. Such directors will comprise the majority of the
members of the operations committee.

Class B Convertible Preferred Stock. Shares of
 nonvoting class B preferred stock are automatically
converted on a one-for-one basis into shares of class A
common stock if Digital Radios equity interest in us falls
below specified levels or if specified transfers of class B
preferred stock occur.

Class C Convertible Redeemable Preferred Stock. Shares of class C preferred stock, with a stated value
of $36.75 per share, are issuable upon conversion of
class A preferred stock upon specified events, on a share
for share basis. The terms of the class C preferred stock
are substantially the same as the terms of

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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


the class A preferred stock except that holders of
class C preferred stock have no special voting rights in the
 election of directors, including the appointment of directors to
 the operations committee.

Ranking

In the event of any liquidation, dissolution or winding up of
Nextel or upon the distribution of the assets of Nextel, all
assets and funds remaining after payment in full of the debts and
 liabilities of Nextel, and after the payment to the holders of
the then outstanding preferred stock of the full preferential
amounts to which they were entitled, would be divided and
distributed among the holders of the class A common stock
and nonvoting class B common stock ratably.

Common Stock Reserved for Issuance

As of December 31, 1999, we had reserved class A common
 stock for future issuance as detailed below.

|                                                    |  |            
|--------------------------------------------------- |  | -----------
|                                                   
|                                                   
|                                                   
|                                                   
|Class A preferred stock conversion rights           |  | 23,718,000 
|                                                   
|                                                   
|                                                   
|                                                   
|Class B common stock conversion rights              |  | 17,830,000 
|                                                   
|                                                   
|                                                   
|                                                   
|Options held by affiliates and warrants outstanding |  | 6,119,600  
|                                                   
|                                                   
|                                                   
|                                                   
|Zero coupon preferred stock conversion rights       |  | 5,761,800  
|                                                   
|                                                   
|                                                   
|                                                   
|4.75% convertible debt conversion rights            |  | 12,682,800 
|                                                   
|                                                   
|                                                   
|                                                   
|Employee options outstanding                        |  | 20,851,800 
|                                                   
|                                                   
|                                                   
|                                                   
|Employee options available for grant                |  | 11,395,100 
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred and restricted shares                      |  | 513,000    
|                                                   
|                                                   
|                                                   
|                                                   
|Employee Stock Purchase Plan                        |  | 3,859,700  
|                                                   
|                                                   
|                                                   
|                                                   
|Acquisitions                                        |  | 4,464,800  
|                                                    |  |            
|                                                    |  | 107,196,600
|                                                    |  |            

14.  Stock and Employee Benefit Plans

Employee Stock Option Plan. Our Incentive Equity
Plan provides for the issuance of up to 45 million shares of
 class A common stock to officers and employees. Generally,
nonqualified stock options outstanding under our stock option
plan:



| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | are granted at prices equal to or exceeding the market value of
	the stock on the grant date;
|
| |  | vest ratably over a three to five year service period; and                                   
|
| |  | expire ten years subsequent to award.                                                        

If an option holders employment is involuntarily terminated
 within one year after the effective date of a change of control
of Nextel, then that holders unvested options and other
equity awards will immediately vest or otherwise become payable,
subject to some limitations.

F-32



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


A summary of the Incentive Equity Plan activity is as follows:

|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |       | 
|------------------------------ | -------------------------------------- | ------ | ---------- | ----------- | - | -------------- | ---- | ----- |  | - | - | - | ------ | ------ |  | - | ----- | ----- | 
|                               |                                        | Shares |            |             |   |                |      |       |  |  
|                               |                                        |        |            |             |   |                |      |       |  |  
|                               |                                        |        |            |             |   | Weighted      
|                               |                                        |        |            | Option      |   | Average       
|                               |                                        |        |            | Price Range |   | Exercise Price
|                               |                                        |        |            |             |   |               
|Outstanding, December 31, 1996 |                                        |        | 12,255,069 |             |   | $              | 1.75 |       |  |  |   | $ | 42.97  |        |  | $ | 16.50 |      
|                              
|                              
|                              
|                              
|                               | Granted                                |        |            | 6,087,340   |   |                |      | 13.88 |  |   |  |   |        | 26.94  |  |   |       | 15.78 | 
|                              
|                              
|                              
|                              
|                               | Issued in connection with acquisitions |        |            | 200,240     |   |                |      | 17.88 |  |   |  |   |        | 64.82  |  |   |       | 23.83 | 
|                              
|                              
|                              
|                              
|                               | Exercised                              |        |            | (2,550,543  | ) |                |      | 1.75  |  |   |  |   |        | 20.12  |  |   |       | 9.51  | 
|                              
|                              
|                              
|                              
|                               | Canceled                               |        |            | (787,617    | ) |                |      | 2.82  |  |   |  |   |        | 40.25  |  |   |       | 16.95 | 
|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |      
|Outstanding, December 31, 1997 |                                        |        | 15,204,489 |             |   |                | 1.75 |       |  |  |   |   | 64.82  |        |  |   | 17.32 |      
|                              
|                              
|                              
|                              
|                               | Granted                                |        |            | 8,308,633   |   |                |      | 18.91 |  |   |  |   |        | 31.19  |  |   |       | 26.29 | 
|                              
|                              
|                              
|                              
|                               | Issued in connection with acquisitions |        |            | 20,907      |   |                |      |       |  |   |   |   |        | 5.71   |  |   |       | 5.71  | 
|                              
|                              
|                              
|                              
|                               | Exercised                              |        |            | (1,555,168  | ) |                |      | 1.75  |  |   |  |   |        | 26.56  |  |   |       | 11.79 | 
|                              
|                              
|                              
|                              
|                               | Canceled                               |        |            | (1,685,345  | ) |                |      | 13.46 |  |   |  |   |        | 64.82  |  |   |       | 21.46 | 
|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |      
|Outstanding, December 31, 1998 |                                        |        | 20,293,516 |             |   |                | 2.82 |       |  |  |   |   | 42.97  |        |  |   | 20.64 |      
|                              
|                              
|                              
|                              
|                               | Granted                                |        |            | 9,099,487   |   |                |      | 28.44 |  |   |  |   |        | 108.00 |  |   |       | 34.40 | 
|                              
|                              
|                              
|                              
|                               | Exercised                              |        |            | (5,981,425  | ) |                |      | 3.50  |  |   |  |   |        | 40.75  |  |   |       | 18.36 | 
|                              
|                              
|                              
|                              
|                               | Canceled                               |        |            | (2,559,742  | ) |                |      | 2.82  |  |   |  |   |        | 84.75  |  |   |       | 26.33 | 
|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |      
|Outstanding, December 31, 1999 |                                        |        | 20,851,836 |             |   |                | 4.17 |       |  |  |   |   | 108.00 |        |  |   | 26.38 |      
|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |      
|Exercisable, December 31, 1999 |                                        |        | 4,584,051  |             |   |                | 4.17 |       |  |  |   |   | 42.97  |        |  |   | 19.95 |      
|                               |                                        |        |            |             |   |                |      |       |  |   |   |   |        |        |  |   |       |      

Following is a summary of the status of employee stock options
outstanding at December 31, 1999:

|                 |  |             |            |             |  |             |           |             |  |                |       |  |  |  |           |  |  |   |       | 
|---------------- |  | ----------- | ---------- | ----------- |  | ----------- | --------- | ----------- |  | -------------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                 |  |             |            | Outstanding |  | Outstanding |           |             |  | Exercisable   
|                 |  | Outstanding |            | Weighted    |  | Average     |           | Exercisable |  | Weighted      
|Exercise         |  | Number of   |            | Life        |  | Exercise    |           | Number of   |  | Average       
|Price Range      |  | Shares      |            | Remaining   |  | Price       |           | Shares      |  | Exercise Price
|                 |  |             |            |             |  |             |           |             |  |               
|$ 4.17  $ 18.94 |  |             | 6,306,479  |             |  |             | 6.1 years |             |  | $              | 15.16 |  |  |  | 3,017,009 |  |  | $ | 15.04 | 
|                
|                
|                
|                
|19.09    30.28  |  |             | 6,256,559  |             |  |             | 8.1 years |             |  |                | 26.12 |  |  |  | 1,185,168 |  |  |   | 26.04 | 
|                
|                
|                
|                
|30.56            |  |             | 6,601,702  |             |  |             | 9.1 years |             |  |                | 30.56 |  |  |  | 3,260     |  |  |   | 30.56 | 
|                
|                
|                
|                
|30.75    49.56  |  |             | 814,941    |             |  |             | 6.6 years |             |  |                | 38.06 |  |  |  | 378,614   |  |  |   | 39.93 | 
|                
|                
|                
|                
|50.00   108.00  |  |             | 872,155    |             |  |             | 9.6 years |             |  |                | 66.86 |  |  |  |          |  |  |   |      | 
|                 |  |             |            |             |  |             |           |             |  |                |       |  |  |  |           |  |  |   |       | 
|                 |  |             | 20,851,836 |             |  |             | 7.8 years |             |  |                | 26.38 |  |  |  | 4,584,051 |  |  |   | 19.95 | 
|                 |  |             |            |             |  |             |           |             |  |                |       |  |  |  |           |  |  |   |       | 

The Incentive Equity Plan also provides for the grant of deferred
 shares at no cost to selected employees generally in
consideration of future services. These deferred shares generally
 vest over a two to four year service period. An accelerated
vesting schedule may be triggered in the event of a change in
control of Nextel. During the year ended December 31, 1999,
we granted 513,000 deferred shares having a weighted average fair
 value at grant date of $50.97.

Employee Stock Purchase Plan. Under the 1996
Employee Stock Purchase 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
 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). A total of 5 million shares are
authorized for purchase under the plan. The Employee Stock
Purchase Plan will terminate on the tenth anniversary of its
adoption. Treasury shares were issued during the following years
at the weighted average prices per share as indicated: 1999
 432,225 shares at $25.40; 1998  421,642 shares at $
20.38; and 1997  279,045 shares at $12.81.

F-33



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Options Held by Affiliates and Warrants Outstanding. The following is a summary of issued and outstanding options
 held by affiliates (see Note 15) and warrants for the
purchase of class A common stock:

|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |       | 
|----------------------------------------- | -------------------------------------- | ------ | ---------- | -------------- | - | - | ----- | ----- |  | - | - | - | ----- | ----- | 
|                                          |                                        |        |            |               
|                                          |                                        |        |            | Exercise Price
|                                          |                                        |        |            |               
|                                          |                                        | Shares |            | Low            |   |   |       | High 
|                                          |                                        |        |            |                |   |   |       |      
|Issued and outstanding, December 31, 1996 |                                        |        | 70,691,691 |                |   | $ | 2.00  |       |  |  |   | $ | 43.16 |      
|                                         
|                                         
|                                         
|                                         
|                                          | Granted                                |        |            | 25,068,276     |   |   |       | 15.13 |  |   |  |   |       | 18.00 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Issued in connection with acquisitions |        |            | 151,539        |   |   |       | 20.09 |  |   |  |   |       | 56.95 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Repurchased                            |        |            | (25,000,000    | ) |   |       |       |  |   |   |   |       | 16.00 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Exercised                              |        |            | (15,092,816    | ) |   |       | 2.00  |  |   |  |   |       | 15.50 | 
|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |      
|Issued and outstanding, December 31, 1997 |                                        |        | 55,818,690 |                |   |   | 2.00  |       |  |  |   |   | 56.95 |      
|                                         
|                                         
|                                         
|                                         
|                                          | Issued in connection with acquisitions |        |            | 7,748          |   |   |       |       |  |   |   |   |       | 59.66 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Exercised                              |        |            | (27,501,738    | ) |   |       | 3.50  |  |   |  |   |       | 18.00 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Expired                                |        |            | (179,502       | ) |   |       |       |  |   |   |   |       | 43.16 | 
|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |      
|Issued and outstanding, December 31, 1998 |                                        |        | 28,145,198 |                |   |   | 3.50  |       |  |  |   |   | 59.66 |      
|                                         
|                                         
|                                         
|                                         
|                                          | Exercised                              |        |            | (22,024,597    | ) |   |       | 3.50  |  |   |  |   |       | 43.16 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Expired                                |        |            | (981           | ) |   |       |       |  |   |   |   |       | 43.16 | 
|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |      
|Issued and outstanding, December 31, 1999 |                                        |        | 6,119,620  |                |   |   | 12.25 |       |  |  |   |   | 59.66 |      
|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |      
|Exercisable, December 31, 1999            |                                        |        | 5,919,620  |                |   |   | 12.25 |       |  |  |   |   | 59.66 |      
|                                          |                                        |        |            |                |   |   |       |       |  |   |   |   |       |      

In 1992, we entered into stock purchase and option agreements, as
 amended and restated in 1995, with a wholly owned subsidiary of
Comcast Corporation. Under the terms of this option, the Comcast
subsidiary was granted a five-year option to acquire an
additional 25 million shares of class A common stock at an
exercise price of $16.00 per share. In March 1997, one of
our wholly owned subsidiaries repurchased the option from the
Comcast subsidiary for an aggregate purchase price of
$25 million.

Fair Value Disclosures. The fair value of each
option, deferred share and employee stock purchase plan grant is
estimated on the measurement date using the Black-Scholes
option-pricing model as prescribed by SFAS No. 123 using the
 following assumptions:

|                                |  |             |  |             |  |            
|------------------------------- |  | ----------- |  | ----------- |  | -----------
|                                |  | 1999        |  | 1998        |  | 1997       
|                                |  |             |  |             |  |            
|Expected stock price volatility |  | 51%         |  | 51%         |  | 53%        
|                               
|                               
|                               
|                               
|Risk-free interest rate         |  | 4.7%  6.5% |  | 4.6%  6.7% |  | 6.0%  7.1%
|                               
|                               
|                               
|                               
|Expected life in years          |  | 2  5       |  | 8           |  | 8          
|                               
|                               
|                               
|                               
|Expected dividend yield         |  | 0.00%       |  | 0.00%       |  | 0.00%      

The assumed expected life of an employee stock purchase plan
grant, however, is 0.25 years.

F-34



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Consistent with the provisions of SFAS No. 123, had
compensation costs been determined based on the fair value of the
 awards granted in 1999, 1998 and 1997, our loss and loss per
common share attributable to common stockholders would have been
as follows:

|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |        |  
|----------------------------------------------------------------------- | ----------- | ------------------------ | ----- | ------ | - | ---- | ----- | ------ | - | - | ----- | ------ | -
|                                                                        |             |                         
|                                                                        |             | Years Ended December 31,
|                                                                        |             |                         
|                                                                        |             | 1999                     |       | 1998   |   | 1997
|                                                                        |             |                          |       |        |   |     
|Loss attributable to common stockholders (in millions):                 |             |                          |       |        |   |      |       |        |   |   |       |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | As reported |                          | $     | (1,530 | ) |      | $     | (1,801 | ) |   | $     | (1,643 | )
|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |       
|                                                                        | Pro forma   |                          | $     | (1,631 | ) |      | $     | (1,883 | ) |   | $     | (1,685 | )
|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |       
|Loss per share attributable to common stockholders, basic and
	diluted: |             |                          |       |        |   |      |       |        |   |   |       |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | As reported |                          | $     | (4.79  | ) |      | $     | (6.46  | ) |   | $     | (6.59  | )
|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |       
|                                                                        | Pro forma   |                          | $     | (5.11  | ) |      | $     | (6.76  | ) |   | $     | (6.76  | )
|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |       
|Weighted average fair value of options granted                          |             | $                        | 17.38 |        |   | $    | 16.60 |        |   | $ | 10.91 |       
|                                                                        |             |                          |       |        |   |      |       |        |   |   |       |       

Our stock options are nontransferable (except to family members
or by will, as provided for in the Incentive Equity Plan), and
the actual value of the stock options that an employee may
realize, if any, will depend on the excess of the market price on
 the date of exercise over the exercise price.

Nextel International Stock Plans. In
June 1997, Nextel Internationals board of directors
adopted the Nextel International Employee Stock Option Plan,
under which Nextel Internationals employees participate.
Generally, options outstanding under the Nextel International
Employee Stock Option Plan (i) are granted at fair value,
based on periodic valuations of Nextel International using
valuation techniques; (ii) vest ratably over a four-year
service period; and (iii) expire ten years subsequent to
award.

Under the Nextel International Stock Appreciation Rights Plan,
selected employees and agents of Nextel International were
granted rights (not an equity interest) to share in the future
appreciation in the value of Nextel International. In conjunction
 with adoption of the Nextel International Employee Stock Option
Plan, Nextel Internationals board of directors also
approved a plan to terminate the Stock Appreciation Rights Plan.
Each holder of previously granted stock appreciation rights was
given the option to exchange the stock appreciation rights for
stock options to be granted under the Nextel International
Employee Stock Option Plan. As of December 31, 1998, 5,000
stock appreciation rights and as of December 31, 1997,
25,000 stock appreciation rights were outstanding, all of which
were exchanged for Nextel International options as of
December 31, 1999.

Employee Benefit Plans. We maintain a defined
contribution plan pursuant to Section 401(k) of the Internal
 Revenue Code covering all eligible officers and employees.
Participants may contribute up to 15% of their compensation. We
provide a matching contribution of 50% of the first 4% of salary
contributed by the employee. Our contributions were about
$5 million during 1999, $4 million during 1998 and
$3 million during 1997.

Effective December 31, 1997, we adopted a nonqualified Cash
Compensation Deferral Plan to provide specified eligible
employees and directors the opportunity to defer cash
compensation in excess of amounts permitted under our 401(k)
defined contribution plan. Eligible employees may defer up to 90%
 of base salary and 100% of annual bonus; we may (but are not
obligated to) make discretionary contributions. Distribution
payments are made at retirement, death, disability or termination
 of employment. The Cash Compensation Deferral Plan is unfunded
and all benefits will be paid from our general assets. About
$4 million as of December 31, 1999 and $2 million
as of December 31, 1998 is included in other liabilities,
representing deferrals made by participating employees and
earnings based on hypothetical investment elections.

F-35



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


15.  Related Party Transactions

Our equipment purchase agreements with Motorola govern our rights
 and obligations regarding purchases of digital mobile network
equipment manufactured by Motorola. We have minimum purchase
commitments under these agreements that if not met subject us to
penalties based on a percentage of the commitment shortfall.

We acquired about $1,717 million during 1999,
$1,540 million during 1998 and $1,086 million during
1997 of digital mobile network and other equipment, subscriber
units, warranties, rent and services from Motorola. Amounts
payable to Motorola, classified within accounts payable, accrued
expense and other, were about $438 million at
December 31, 1999 and $455 million at December 31,
1998.

In 1997, one of our unrestricted subsidiaries acquired 49% of the
 capital stock and some assets of a Brazilian indirect wholly
owned subsidiary of Motorola and in 1998 purchased the remaining
51% of the capital stock of this subsidiary. The aggregate total
consideration we paid in these transactions was $22 million.

We paid about $2 million during 1999 and $1 million
during 1998 to NEXTLINK Communications, Inc., a publicly traded
company controlled by Mr. Craig O. McCaw, for telecommunications
services. The Chairman of our board of directors is the Chairman
of the Board and Chief Executive Officer of NEXTLINK
Communications. Two other members of our board of directors also
serve on the board of directors of NEXTLINK Communications.

We paid about $14 million during 1999, $8 million
during 1998 and $1 million during 1997 to CommScope, Inc.
for coaxial cables and related equipment for our antenna sites
and had about $1 million of amounts payable by us to
CommScope outstanding at both December 31, 1999 and 1998.
One of our directors is Chairman and Chief Executive Officer of
CommScope.

In February 1998, the FCC commenced an auction of Local
Multipoint Distribution Service spectrum. In connection with this
 auction, we entered into a joint venture through NEXTBAND
Communications, L.L.C. with NEXTLINK Communications. We had a 50%
 interest in NEXTBAND. At the conclusion of the spectrum auction,
 NEXTBAND had submitted $135 million in winning bids. Under
the terms of the joint venture, we made $68 million in
payments to the FCC representing our share of the bid amount. In
June 1999, we sold our 50% interest in NEXTBAND to NEXTLINK
for $138 million in cash and recognized a gain of
$70 million, which is included in other income
(expense) in our statement of operations.

Nextel Partners. During 1999, under a roaming
agreement between Nextel WIP Corp., a wholly owned subsidiary of
Nextel, and Nextel Partners Operating Corporation, a wholly owned
 subsidiary of Nextel Partners, Nextel earned about
$1 million from customers of Nextel Partners roaming on our
digital mobile network and was charged about $9 million for
our customers roaming on Nextel Partners digital mobile
network. Roaming revenues earned are included in operating
revenues and roaming fees charged are included in cost of
service.

As a result of the transition services agreement between Nextel
WIP and Nextel Partners Operating Corporation, we for a limited
period provided Nextel Partners specified services such as
accounting, payroll, customer care, purchasing, human resources
and billing functions, and charged Nextel Partners about
$3 million in 1999. This amount was recorded as a reduction
in selling, general and administrative expenses. Nextel WIP
provides specified telecommunications switching services to
Nextel Partners under a switch sharing agreement entered into
between Nextel WIP and Nextel Partners Operating Corporation.
During 1999, for these services Nextel WIP earned about $2
million, which is recorded as a reduction to cost of services.

F-36



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


As of December 31, 1999, we had a net payable due to Nextel
Partners of about $2 million as a result of these
intercompany agreements.

Digital Radio. In 1995, under three separate option
 agreements, Digital Radio L.L.C., an affiliate of Mr. Craig
 O. McCaw, obtained the right to purchase for cash up to
35 million shares of class A common stock at exercise prices
 ranging from $15.50 to $21.50 per share for periods of two to
six years. In July 1997, Digital Radio exercised in full the
 outstanding option that was scheduled to expire on that date to
purchase 15 million shares of class A common stock for an
aggregate purchase price of $233 million. On July 28,
1999, Digital Radio exercised in full the outstanding option that
 was scheduled to expire on that date to purchase 15 million
 shares of class A common stock for an aggregate purchase price
of $278 million.

In November 1997, Digital Radio exercised its right to
convert 257,284 shares of class A preferred stock into 771,852
shares of class A common stock.

In 1995, we also entered into a management support agreement with
 Eagle River, Inc., an affiliate of Mr. Craig O. McCaw, to
provide management and consulting services from time to time as
requested. In consideration for these services, we entered into
an incentive option agreement granting Eagle River an option to
purchase an aggregate of up to 1 million shares of class A
common stock at an exercise price of $12.25 per share. This
option expires on April 4, 2005, and is presently
exercisable with respect to 800,000 shares and becomes
exercisable for the remaining 200,000 shares on April 4,
2000. For the years ended December 31, 1999, 1998 and 1997
about $7 million, $1 million, and $5 million of
compensation expense was recorded in connection with these
agreements. During 1999, 1998, and 1997, we paid Eagle River
about $150,000, $111,400 and $504,000 under the terms of this
agreement for management support services and reimbursement of
expenses.

In connection with the agreements relating to the commitment by
Digital Radio to exercise the option to purchase 15 million
shares of class A common stock in July 1997, we reached an
agreement with Option Acquisition, L.L.C., an affiliate of
Mr. Craig O. McCaw, under which Option Acquisition
acquired, for an aggregate purchase price of $25 million, an
 option to purchase 15 million shares of class A common
stock at $16.00 per share and a second option to purchase
10 million shares of class A common stock at $18.00 per
 share. In July 1998, Option Acquisition exercised its
options in a cashless transaction, resulting in the issuance of
9,953,821 shares of class A common stock.

In 1998, an affiliate of Digital Radio sold an aircraft to a
subsidiary of Nextel for about $8 million in cash and 50,000
 shares of our class A common stock.

16.  Segment Information

We operate in two business segments: domestic and international.
These reportable segments are strategic business units that are
in different phases of development that we manage and have
financed separately based on the fundamental differences in their
 operations. We evaluate performance based on

F-37



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


earnings (losses) before interest, taxes, depreciation and
amortization and other non-recurring charges, referred to as
EBITDA.

|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|------------------------------------------------------- |  | ------------- | ------ | ------------- |  | ------------ | ----- | - |  | - | ------ | -
|                                                        |  | Domestic      |        | International |  | Consolidated
|                                                        |  |               |        |               |  |             
|                                                        |  |              
|                                                        |  | (in millions)
|                                                       
|                                                       
|                                                       
|                                                       
|1999                                                    |  |               |        |               |  |              |       |   |  |   |        |  
|                                                       
|                                                       
|                                                       
|                                                       
|Operating revenues                                      |  | $             | 3,222  |               |  | $            | 104   |   |  | $ | 3,326  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|EBITDA                                                  |  |               | 698    |               |  |              | (163  | ) |  |   | 535    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation and amortization                           |  |               | 896    |               |  |              | 108   |   |  |   | 1,004  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense                                        |  |               | (698   | )             |  |              | (180  | ) |  |   | (878   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Interest income                                         |  |               | 87     |               |  |              | 9     |   |  |   | 96     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity in losses of unconsolidated affiliates           |  |               | (42    | )             |  |              | (31   | ) |  |   | (73    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Other income (expense), net                             |  |               | 73     |               |  |              | (47   | ) |  |   | 26     |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Loss before income tax benefit and extraordinary item   |  | $             | (778   | )             |  | $            | (520  | ) |  | $ | (1,298 | )
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Property, plant and equipment, net                      |  | $             | 5,613  |               |  | $            | 539   |   |  | $ | 6,152  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Identifiable assets                                     |  | $             | 16,728 |               |  | $            | 1,682 |   |  | $ | 18,410 |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Capital expenditures                                    |  | $             | 1,908  |               |  | $            | 173   |   |  | $ | 2,081  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|1998                                                    |  |               |        |               |  |              |       |   |  |   |        |  
|                                                       
|                                                       
|                                                       
|                                                       
|Operating revenues                                      |  | $             | 1,805  |               |  | $            | 42    |   |  | $ | 1,847  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|EBITDA                                                  |  |               | (99    | )             |  |              | (121  | ) |  |   | (220   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation and amortization                           |  |               | 776    |               |  |              | 56    |   |  |   | 832    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense                                        |  |               | (549   | )             |  |              | (107  | ) |  |   | (656   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Interest income                                         |  |               | 17     |               |  |              | 17    |   |  |   | 34     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity in losses of unconsolidated affiliates           |  |               |       |               |  |              | (12   | ) |  |   | (12    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Other (expense) income, net                             |  |               | (44    | )             |  |              | 19    |   |  |   | (25    | )
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Loss before income tax benefit and extraordinary item   |  | $             | (1,451 | )             |  | $            | (260  | ) |  | $ | (1,711 | )
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Property, plant and equipment, net                      |  | $             | 4,384  |               |  | $            | 531   |   |  | $ | 4,915  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Identifiable assets                                     |  | $             | 9,972  |               |  | $            | 1,601 |   |  | $ | 11,573 |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Capital expenditures                                    |  | $             | 1,905  |               |  | $            | 376   |   |  | $ | 2,281  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|1997                                                    |  |               |        |               |  |              |       |   |  |   |        |  
|                                                       
|                                                       
|                                                       
|                                                       
|Operating revenues                                      |  | $             | 726    |               |  | $            | 13    |   |  | $ | 739    |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|EBITDA                                                  |  |               | (391   | )             |  |              | (21   | ) |  |   | (412   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation and amortization                           |  |               | 508    |               |  |              | 18    |   |  |   | 526    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense                                        |  |               | (351   | )             |  |              | (57   | ) |  |   | (408   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Interest income                                         |  |               | 10     |               |  |              | 20    |   |  |   | 30     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity in losses of unconsolidated affiliates           |  |               | (1     | )             |  |              | (12   | ) |  |   | (13    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Other income (expense), net                             |  |               | 12     |               |  |              | 8     |   |  |   | 20     |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Loss before income tax provision and extraordinary item |  | $             | (1,229 | )             |  | $            | (80   | ) |  | $ | (1,309 | )
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Property, plant and equipment, net                      |  | $             | 3,090  |               |  | $            | 136   |   |  | $ | 3,226  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Identifiable assets                                     |  | $             | 8,105  |               |  | $            | 1,123 |   |  | $ | 9,228  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  
|Capital expenditures                                    |  | $             | 1,496  |               |  | $            | 102   |   |  | $ | 1,598  |  
|                                                        |  |               |        |               |  |              |       |   |  |   |        |  

F-38



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


17.  Quarterly Financial Data (Unaudited)

|                                                                              |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|----------------------------------------------------------------------------- |  | --------------------------------------- | ----- | ------ |  | ----- | ----- | ------ |  | - | ----- | - |  | - | ----- | -
|                                                                              |  | First                                   |       | Second |  | Third |       | Fourth
|                                                                              |  |                                         |       |        |  |       |       |       
|                                                                              |  |                                        
|                                                                              |  | (in millions, except per share amounts)
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|1999                                                                          |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Operating revenues                                                            |  | $                                       | 664   |        |  | $     | 793   |        |  | $ | 889   |   |  | $ | 980   |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Operating loss                                                                |  |                                         | (193  | )      |  |       | (134  | )      |  |   | (86   | ) |  |   | (56   | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Income tax benefit                                                            |  |                                         | 10    |        |  |       | 7     |        |  |   | 8     |   |  |   | 3     |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss before extraordinary item                                                |  |                                         | (439  | )      |  |       | (268  | )      |  |   | (312  | ) |  |   | (251  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss attributable to common stockholders                                      |  |                                         | (485  | )      |  |       | (315  | )      |  |   | (361  | ) |  |   | (369  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss per share before extraordinary item attributable to common
	stockholders |  | $                                       | (1.66 | )      |  | $     | (1.04 | )      |  | $ | (1.10 | ) |  | $ | (0.85 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Extraordinary item (Note 8)                                                   |  |                                         |      |        |  |       |      |        |  |   |      |   |  |   | (0.19 | )
|                                                                              |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|Basic and diluted loss per share attributable to common
	stockholders         |  | $                                       | (1.66 | )      |  | $     | (1.04 | )      |  | $ | (1.10 | ) |  | $ | (1.04 | )
|                                                                              |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|1998                                                                          |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Operating revenues                                                            |  | $                                       | 327   |        |  | $     | 422   |        |  | $ | 506   |   |  | $ | 592   |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Operating loss                                                                |  |                                         | (290  | )      |  |       | (266  | )      |  |   | (244  | ) |  |   | (252  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Income tax benefit                                                            |  |                                         | 34    |        |  |       | 49    |        |  |   | 45    |   |  |   | 64    |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss before extraordinary item                                                |  |                                         | (387  | )      |  |       | (359  | )      |  |   | (402  | ) |  |   | (371  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss attributable to common stockholders                                      |  |                                         | (415  | )      |  |       | (531  | )      |  |   | (442  | ) |  |   | (413  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loss per share before extraordinary item attributable to common
	stockholders |  | $                                       | (1.53 | )      |  | $     | (1.45 | )      |  | $ | (1.56 | ) |  | $ | (1.43 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Extraordinary item (Note 8)                                                   |  |                                         |      |        |  |       | (0.49 | )      |  |   |      |   |  |   |      |  
|                                                                              |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|Basic and diluted loss per share attributable to common
	stockholders         |  | $                                       | (1.53 | )      |  | $     | (1.94 | )      |  | $ | (1.56 | ) |  | $ | (1.43 | )
|                                                                              |  |                                         |       |        |  |       |       |        |  |   |       |   |  |   |       |  

The sum of the per share amounts may not equal the annual amounts
 because of the changes in the weighted-average number of shares
outstanding during the year.

18.  Subsequent Events

5.25% Convertible Senior Notes. In
February 2000, we completed the issuance and sale in a
private placement of about $1.15 billion in principal amount
 of 5.25% convertible senior notes due 2010, generating about
$1.13 billion in net proceeds. Cash interest is payable
semiannually on January 15 and July 15 of each year
commencing on July 15, 2000. The notes are convertible at
the option of the holders into class A common stock at any time
after the date of original issuance and prior to redemption,
repurchase or maturity at a conversion price of $148.80 per
share, subject to adjustment. The notes are redeemable at any
time on or after January 18, 2003 at our option at specified
 redemption prices plus accrued interest. The notes are senior
unsecured indebtedness of ours and rank equal in right of payment
 with all our other unsubordinated, unsecured indebtedness. We
have agreed to specific registration rights with respect to these
 notes. If the 5.25% convertible senior notes are not registered
with the Securities and Exchange Commission by August 31,
2000, the interest on the notes will increase by 0.5% per year
until the notes are registered or until specific other conditions
 are satisfied.

Proposed stock split. On February 22, 2000, we
 announced a 2-for-1 common stock split to be effected in the
form of a stock dividend. Upon stockholder consideration and
approval of a proposed increase in our authorized equity
capitalization at the annual stockholders meeting scheduled for
May 25,

F-39



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


2000, the new shares will be distributed on June 6, 2000 to
stockholders of record as of May 26, 2000. The financial
statements do not reflect the effect of the proposed stock split.

Conversion of 4.75% Convertible Senior Notes. In
late March 2000, we issued 5 million shares of class A
common stock upon the conversion of about $246 million of
our 4.75% convertible senior notes, representing a conversion
price of $47.308 per share. In order to induce conversion of
these notes prior to June 6, 2002, the first date on which
we could force conversion by calling the convertible notes for
redemption, we paid the note holders about $26 million in
cash, which will be charged to other expense in the first quarter
 of 2000. The financial statements do not reflect the effect of
the conversion.

F-40



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC.

(Parent Only)


SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF
REGISTRANT

Condensed Balance Sheets


As of December 31, 1999 and 1998


(in millions)


|                                                                      |                                                                             |                           |        |       |       |   |       |    |    | 
|--------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------- | ------ | ----- | ----- | - | ----- | -- | -- | 
|                                                                      |                                                                             | 1999                      |        | 1998 
|                                                                      |                                                                             |                           |        |      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|ASSETS                                                               
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current assets                                                        |                                                                             |                           |        |       |       |   |       |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash and cash equivalents, including restricted portion of $1,265
	 in 1999 |                           | $      | 3,964 |       |   | $     | 1  |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Short-term investments                                                      |                           |        | 1,067 |       |   |       |   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Other receivables                                                           |                           |        | 8     |       |   |       |   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Prepaids and other current assets                                           |                           |        | 19    |       |   |       | 13 |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   
|                                                                      |                                                                             | Total current assets      |        |       | 5,058 |   |       |    | 14 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Property, plant and equipment, net                                    |                                                                             |                           | 92     |       |       |   | 115   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Intangible assets, net                                                |                                                                             |                           | 1      |       |       |   | 1     |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Deferred income taxes                                                 |                                                                             |                           | 122    |       |       |   | 111   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investments in subsidiaries                                           |                                                                             |                           | 8,598  |       |       |   | 6,612 |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other assets                                                          |                                                                             |                           | 180    |       |       |   | 161   |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   
|                                                                      |                                                                             | $                         | 14,051 |       |       | $ | 7,014 |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|LIABILITIES AND STOCKHOLDERS EQUITY                                 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current liabilities                                                   |                                                                             |                           |        |       |       |   |       |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts payable, accrued expenses and other                                |                           | $      | 221   |       |   | $     | 94 |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Current portion of long-term debt                                           |                           |        | 1,130 |       |   |       |   |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   
|                                                                      |                                                                             | Total current liabilities |        |       | 1,351 |   |       |    | 94 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Due to subsidiaries                                                   |                                                                             |                           | 2,757  |       |       |   | 773   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term debt                                                        |                                                                             |                           | 5,595  |       |       |   | 4,336 |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other liabilities                                                     |                                                                             |                           | 4      |       |       |   | 3     |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Series D exchangeable preferred stock mandatorily
	redeemable 2009    |                                                                             |                           | 683    |       |       |   | 601   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Series E exchangeable preferred stock mandatorily
	redeemable 2010    |                                                                             |                           | 922    |       |       |   | 827   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Zero coupon convertible preferred stock mandatorily redeemable
	 2013 |                                                                             |                           | 165    |       |       |   | 150   |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stockholders equity                                                  |                                                                             |                           | 2,574  |       |       |   | 230   |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   
|                                                                      |                                                                             | $                         | 14,051 |       |       | $ | 7,014 |   
|                                                                      |                                                                             |                           |        |       |       |   |       |   

F-41



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC.

(Parent Only)


SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

Condensed Statements of Operations


For the Years Ended December 31, 1999, 1998 and 1997


(in millions)


|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |        |  
|------------------------------------------------------------------------------- | ------------------------------------------------------- | ---- | ------ | ------ | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                                                                |                                                         | 1999 |        | 1998   |   | 1997
|                                                                                |                                                         |      |        |        |   |     
|Operating expenses                                                              |                                                         |      |        |        |   |      |        |        |   |   |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Selling, general and administrative                     |      | $      | 71     |   |      | $      | 183    |   |   | $      | 142    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                           |      |        | 25     |   |      |        | 7      |   |   |        | 4      |  
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|                                                                                |                                                         |      | 96     |        |   |      | 190    |        |   |   | 146    |       
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Other income (expense)                                                          |                                                         |      |        |        |   |      |        |        |   |   |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest expense ($124 intercompany in 1999)            |      |        | (636   | ) |      |        | (411   | ) |   |        | (276   | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest income ($125 intercompany in 1997)             |      |        | 62     |   |      |        | 10     |   |   |        | 128    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Intercompany management fee                             |      |        | 71     |   |      |        | 183    |   |   |        | 142    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Equity in net losses of subsidiaries                    |      |        | (675   | ) |      |        | (1,168 | ) |   |        | (1,403 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other, net                                              |      |        | (7     | ) |      |        | (1     | ) |   |        |       |  
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|                                                                                |                                                         |      | (1,185 | )      |   |      | (1,387 | )      |   |   | (1,409 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Loss before income tax benefit (provision) and extraordinary
	item              |                                                         |      | (1,281 | )      |   |      | (1,577 | )      |   |   | (1,555 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit (provision)                                                  |                                                         |      | 11     |        |   |      | 58     |        |   |   | (13    | )     
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Loss before extraordinary item                                                  |                                                         |      | (1,270 | )      |   |      | (1,519 | )      |   |   | (1,568 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Extraordinary item  loss on early retirement of
	debt, net of income tax of $0 |                                                         |      | (68    | )      |   |      | (133   | )      |   |   | (46    | )     
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Net loss                                                                        |                                                         |      | (1,338 | )      |   |      | (1,652 | )      |   |   | (1,614 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Mandatorily redeemable preferred stock dividends                                |                                                         |      | (192   | )      |   |      | (149   | )      |   |   | (29    | )     
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Loss attributable to common stockholders                                        |                                                         | $    | (1,530 | )      |   | $    | (1,801 | )      |   | $ | (1,643 | )     
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Comprehensive loss, net of income tax:                                          |                                                         |      |        |        |   |      |        |        |   |   |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net loss                                                |      | $      | (1,338 | ) |      | $      | (1,652 | ) |   | $      | (1,614 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Unrealized gain (loss) on available-for-sale securities |      |        | 142    |   |      |        | (23    | ) |   |        | 8      |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency translation adjustment                 |      |        | (114   | ) |      |        | (24    | ) |   |        |       |  
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       
|Comprehensive loss                                                              |                                                         | $    | (1,310 | )      |   | $    | (1,699 | )      |   | $ | (1,606 | )     
|                                                                                |                                                         |      |        |        |   |      |        |        |   |   |        |       

F-42



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC.

(Parent Only)


SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

Condensed Statements of Cash Flows


For the Years Ended December 31, 1999, 1998 and 1997


(in millions)


|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |        |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | ----------------------------------------- | ----- | ------ | ------ | ---- | -- | ------ | ------ | - | -- | ------ | ------ | -
|                                                     |                                                                            | 1999                                      |       | 1998   |        | 1997
|                                                     |                                                                            |                                           |       |        |        |     
|Cash flows from operating activities:                |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net loss                                                                   |                                           | $     | (1,338 | )      |      | $  | (1,652 | )      |   | $  | (1,614 | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustment to reconcile net loss to net cash used in operating
	activities |                                           |       | 508    |        |      |    | 530    |        |   |    | 377    |       
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                     |                                                                            | Net cash used in operating activities     |       |        | (830   | )    |    |        | (1,122 | ) |    |        | (1,237 | )
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|Cash flows from investing activities:                |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investments in and advances to affiliates                                  |                                           |       | 55     |        |      |    | (190   | )      |   |    | (347   | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Payments for acquisitions, net of cash acquired                            |                                           |       |       |        |      |    | (42    | )      |   |    | (6     | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Capital expenditures                                                       |                                           |       | (24    | )      |      |    | (75    | )      |   |    | (35    | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchase of short-term investments                                         |                                           |       | (1,059 | )      |      |    |       |        |   |    |       |       
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                     |                                                                            | Net cash used in investing activities     |       |        | (1,028 | )    |    |        | (307   | ) |    |        | (388   | )
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|Cash flows from financing activities:                |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Sale of stock and exercise of stock options, warrants and other            |                                           |       | 3,819  |        |      |    | 30     |        |   |    | 283    |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Issuance of debt securities                                                |                                           |       | 2,600  |        |      |    | 1,296  |        |   |    | 1,200  |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Retirement of debt securities                                              |                                           |       | (546   | )      |      |    | (741   | )      |   |    | (283   | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Issuance of preferred stock                                                |                                           |       |       |        |      |    | 900    |        |   |    | 500    |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Deferred financing costs                                                   |                                           |       | (52    | )      |      |    | (58    | )      |   |    | (119   | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                      |                                           |       |       |        |      |    | (1     | )      |   |    | 39     |       
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|                                                     |                                                                            | Net cash provided by financing activities |       |        | 5,821  |      |    |        | 1,426  |   |    |        | 1,620  |  
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|Net increase (decrease) in cash and cash equivalents |                                                                            |                                           | 3,963 |        |        |      | (3 | )      |        |   | (5 | )     
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |                                                                            |                                           | 1     |        |        |      | 4  |        |        |   | 9  |       
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       
|Cash and cash equivalents, end of period             |                                                                            | $                                         | 3,964 |        |        | $    | 1  |        |        | $ | 4  |       
|                                                     |                                                                            |                                           |       |        |        |      |    |        |        |   |    |       

F-43



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC.

(Parent Only)


SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

Notes to Condensed Financial Statements




| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | For accounting policies and other information, see the Notes to
	the Consolidated Financial Statements of Nextel Communications
	Inc. and Subsidiaries, included elsewhere herein.                                                                                                                                                                                                                                                                                              
|
| | 2. | The parent company accounts for its investments in subsidiaries
	by the equity method of accounting.                                                                                                                                                                                                                                                                                                                                                                            
|
| | 3. | The parent company income tax benefit (provision) represents
	 the difference between taxes computed on a consolidated basis
	and taxes calculated by the subsidiaries on a separate return
	basis.                                                                                                                                                                                                                                                                             
|
| | 4. | The parent company has an agreement with each of its wholly owned
	 subsidiaries whereby the parent company provides administrative
	services for each of its subsidiaries and charges the
	subsidiaries a fee equal to the actual costs incurred in
	performing these administrative services. The fees charged to the
	 subsidiaries for the performance of administrative services
	totaled $71 million during 1999, $183  million during
	1998 and $142 million during 1997.
|
| | 5. | Certain prior year amounts have been reclassified to conform with
	 the current presentation.                                                                                                                                                                                                                                                                                                                                                                                   

F-44



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

(in millions)


|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |    | 
|---------------------------- | ---------------------------------- | ---------- | - | ---------- |  | -------- | - | ---------- |  | --------- | - | - |  |  | - | ---- | - |  | - | -- | 
|                             |                                    |            |   |            |  | (1)      |   |            |  |          
|                             |                                    | Balance at |   | Charged to |  | Charged  |   |            |  | Balance  
|                             |                                    | Beginning  |   | Costs and  |  | to Other |   |            |  | at End of
|                             |                                    | of Period  |   | Expenses   |  | Accounts |   | Deductions |  | Period   
|                             |                                    |            |   |            |  |          |   |            |  |          
|Year Ended December 31, 1999 |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                            
|                            
|                            
|                            
|                             | Allowance for Doubtful Accounts    |            | $ | 63         |  |          | $ | 152        |  |           | $ |  |  |  | $ | (140 | ) |  | $ | 75 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                             | Reserve for Inventory Obsolescence |            | $ | 13         |  |          | $ | 12         |  |           | $ |  |  |  | $ | (6   | ) |  | $ | 19 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|Year Ended December 31, 1998 |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                            
|                            
|                            
|                            
|                             | Allowance for Doubtful Accounts    |            | $ | 57         |  |          | $ | 82         |  |           | $ | 1 |  |  | $ | (77  | ) |  | $ | 63 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                             | Reserve for Inventory Obsolescence |            | $ | 11         |  |          | $ | 22         |  |           | $ |  |  |  | $ | (20  | ) |  | $ | 13 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|Year Ended December 31, 1997 |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                            
|                            
|                            
|                            
|                             | Allowance for Doubtful Accounts    |            | $ | 11         |  |          | $ | 57         |  |           | $ | 7 |  |  | $ | (18  | ) |  | $ | 57 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   
|                             | Reserve for Inventory Obsolescence |            | $ | 8          |  |          | $ | 16         |  |           | $ | 1 |  |  | $ | (14  | ) |  | $ | 11 | 
|                             |                                    |            |   |            |  |          |   |            |  |           |   |   |  |  |   |      |   |  |   |   




|    |                                            
|--- | -------------------------------------------
|(1) | Primarily allowances of acquired companies.

F-45