##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION



FORM 10-Q

(Mark One)

|                                              |  |                                                                                          
|--------------------------------------------- |  | -----------------------------------------------------------------------------------------
|                                             
|                                             
|                                             
|                                             
|[X]                                           |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended March 31, 2000
|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(State or other jurisdiction of
	incorporation or organization)            |  | 36-3939651(I.R.S. Employer Identification No.)
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|2001 Edmund Halley Drive, Reston, Virginia(Address of principal executive offices) |  | 20191(Zip Code)                               
|Registrants telephone number, including area code: (703) 433-4000                

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

|                                                 |  |                              |             | 
|------------------------------------------------ |  | ---------------------------- | ----------- | 
|                                                 |  | Number of Shares Outstanding
|Title of Class                                   |  | on April 28, 2000           
|                                                 |  |                             
|Class A Common Stock, $0.001 par value           |  |                              | 361,340,018 | 
|Class B Nonvoting Common Stock, $0.001 par value |  |                              | 17,830,000  | 



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TABLE OF CONTENTS



|        |                                                                                                |  |  |  |  |  |  | 
|------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I 
|        | Item 1. Financial Statements -- Unaudited.                                                    
|        | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|        | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|PART II
|        | Item 1. Legal Proceedings.                                                                    
|        | Item 2. Changes in Securities.                                                                
|        | Item 6. Exhibits and Reports on Form 8-K.                                                     
|        | SIGNATURE                                                                                     
|        | EXHIBIT INDEX                                                                                 



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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

INDEX

| |          |  |  |                        |  |                                                                       |  |  |    |  |  | 
| | -------- |  |  | ---------------------- |  | --------------------------------------------------------------------- |  |  | -- |  |  | 
| |          |  |  |                        |  | Page No.                                                             
| |          |  |  |                        |  |                                                                      
| | Part I   |  |  | Financial Information.
| |          |  |  | Item 1.                |  | Financial Statements  Unaudited.                                     |  |  |    | 
| |          |  |  |                        |  | Condensed Consolidated Balance Sheets                                |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | As of March 31, 2000 and December 31, 1999.                           |  |  | 3  | 
| |          |  |  |                        |  | Condensed Consolidated Statements of Operations                      |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | For the Three Months Ended March 31, 2000 and 1999.                   |  |  | 4  | 
| |          |  |  |                        |  | Condensed Consolidated Statement of Changes in Stockholders Equity  |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | For the Three Months Ended March 31, 2000.                            |  |  | 5  | 
| |          |  |  |                        |  | Condensed Consolidated Statements of Cash Flows                      |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | For the Three Months Ended March 31, 2000 and 1999.                   |  |  | 6  | 
|
|
|
|
| |          |  |  |                        |  | Notes to Condensed Consolidated Financial Statements.                 |  |  | 7  | 
| |          |  |  | Item 2.                |  | Managements Discussion and Analysis of Financial Condition and       |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | Results of Operations.                                                |  |  | 11 | 
|
|
|
|
| |          |  |  | Item 3.                |  | Quantitative and Qualitative Disclosures About Market Risk.           |  |  | 21 | 
|
|
|
|
| | Part  II |  |  | Other Information.    
|
|
|
|
| |          |  |  | Item 1.                |  | Legal Proceedings.                                                    |  |  | 23 | 
|
|
|
|
| |          |  |  | Item 2.                |  | Changes in Securities.                                                |  |  | 23 | 
|
|
|
|
| |          |  |  | Item 6.                |  | Exhibits and Reports on Form 8-K.                                     |  |  | 23 | 



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##### Table of Contents






PART I




Item 1.  Financial Statements  Unaudited.

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2000 and December 31, 1999


(in millions)


Unaudited


|                                                                                       |                                                                                      |                            |        |        |        |   |        |        |        | 
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | -------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                                       |                                                                                      | 2000                       |        | 1999  
|                                                                                       |                                                                                      |                            |        |       
|ASSETS                                                                                 |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Current assets                                                                         |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cash and cash equivalents, of which $74 and $1,365 is restricted                     |                            | $      | 5,200  |        |   | $      | 4,701  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Short-term investments                                                               |                            |        | 1,140  |        |   |        | 1,107  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accounts and notes receivable, less allowance for doubtful
	accounts
	of $73 and $75 |                            |        | 658    |        |   |        | 619    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Subscriber unit and accessory inventory                                              |                            |        | 109    |        |   |        | 113    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Prepaid expenses and other                                                           |                            |        | 110    |        |   |        | 80     |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | Total current assets       |        |        | 7,217  |   |        |        | 6,620  | 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Property, plant and equipment, net of accumulated depreciation
	
	of $1,901 and $1,687 |                                                                                      |                            | 6,718  |        |        |   | 6,152  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Intangible assets, net of accumulated amortization of $993 and
	 $1,007                |                                                                                      |                            | 4,549  |        |        |   | 4,551  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Investments and other assets                                                           |                                                                                      |                            | 1,112  |        |        |   | 1,087  |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | $                          | 19,596 |        |        | $ | 18,410 |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|LIABILITIES AND STOCKHOLDERS EQUITY                                                   |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Current liabilities                                                                    |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accounts payable                                                                     |                            | $      | 1,083  |        |   | $      | 981    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accrued expenses and other                                                           |                            |        | 788    |        |   |        | 659    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Current portion of long-term debt and finance obligation                             |                            |        | 63     |        |   |        | 1,191  |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | Total current liabilities  |        |        | 1,934  |   |        |        | 2,831  | 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Long-term debt                                                                         |                                                                                      |                            | 11,840 |        |        |   | 9,760  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Finance obligation                                                                     |                                                                                      |                            | 574    |        |        |   | 552    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Deferred income taxes                                                                  |                                                                                      |                            | 812    |        |        |   | 799    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Other                                                                                  |                                                                                      |                            | 79     |        |        |   | 80     |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | Total liabilities          |        |        | 15,239 |   |        |        | 14,022 | 
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|Contingencies (Note 4)                                                                 |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Minority interest                                                                      |                                                                                      |                            | 44     |        |        |   | 44     |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Mandatorily redeemable preferred stock                                                 |                                                                                      |                            | 1,751  |        |        |   | 1,770  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Stockholders equity                                                                   |                                                                                      |                            |        |        |        |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Convertible preferred stock, 8 shares issued and outstanding                         |                            |        | 291    |        |   |        | 291    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Common stock, class A, 361 and 351 shares issued and outstanding                     |                            |        |       |        |   |        |       |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Common stock, class B, nonvoting convertible, 18 shares issued
	and outstanding      |                            |        |       |        |   |        |       |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Paid-in capital                                                                      |                            |        | 8,362  |        |   |        | 8,047  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accumulated deficit                                                                  |                            |        | (6,122 | )      |   |        | (5,739 | )     
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Treasury stock, at cost                                                              |                            |        | (5     | )      |   |        | (6     | )     
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Deferred compensation, net                                                           |                            |        | (24    | )      |   |        | (23    | )     
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accumulated other comprehensive income                                               |                            |        | 60     |        |   |        | 4      |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | Total stockholders equity |        |        | 2,562  |   |        |        | 2,574  | 
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       
|                                                                                       |                                                                                      | $                          | 19,596 |        |        | $ | 18,410 |       
|                                                                                       |                                                                                      |                            |        |        |        |   |        |       

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

3



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2000 and 1999


(in millions, except per share amounts)


Unaudited


|                                                                                |                                                                     |      |       |       |   |   |       |       |  
|------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---- | ----- | ----- | - | - | ----- | ----- | -
|                                                                                |                                                                     | 2000 |       | 1999 
|                                                                                |                                                                     |      |       |      
|Operating revenues                                                              |                                                                     | $    | 1,079 |       |   | $ | 664   |      
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Operating expenses                                                              |                                                                     |      |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cost of revenues                                                    |      |       | 214   |   |   |       | 163   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Selling, general and administrative                                 |      |       | 637   |   |   |       | 466   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                                       |      |       | 280   |   |   |       | 228   |  
|                                                                                |                                                                     |      |       |       |   |   |       |      
|                                                                                |                                                                     |      | 1,131 |       |   |   | 857   |      
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Operating loss                                                                  |                                                                     |      | (52   | )     |   |   | (193  | )    
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Other income (expense)                                                          |                                                                     |      |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest expense                                                    |      |       | (278  | ) |   |       | (198  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest income                                                     |      |       | 83    |   |   |       | 4     |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Debt conversion expense                                             |      |       | (23   | ) |   |       |      |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Equity in losses of unconsolidated affiliates                       |      |       | (35   | ) |   |       | (6    | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency transaction gains (losses), net                    |      |       | 12    |   |   |       | (67   | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other, net                                                          |      |       | 6     |   |   |       | 11    |  
|                                                                                |                                                                     |      |       |       |   |   |       |      
|                                                                                |                                                                     |      | (235  | )     |   |   | (256  | )    
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Loss before income tax benefit and extraordinary item                           |                                                                     |      | (287  | )     |   |   | (449  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit                                                              |                                                                     |      | 8     |       |   |   | 10    |      
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Loss before extraordinary item                                                  |                                                                     |      | (279  | )     |   |   | (439  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Extraordinary item  loss on early retirement of
	debt, net of income tax of $0 |                                                                     |      | (104  | )     |   |   |      |      
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Net loss                                                                        |                                                                     |      | (383  | )     |   |   | (439  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Mandatorily redeemable preferred stock dividends                                |                                                                     |      | (52   | )     |   |   | (46   | )    
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Loss attributable to common stockholders                                        |                                                                     | $    | (435  | )     |   | $ | (485  | )    
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Loss per share attributable to common stockholders, basic and
	diluted          |                                                                     |      |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loss before extraordinary item attributable to common
	stockholders |      | $     | (0.89 | ) |   | $     | (1.66 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Extraordinary item                                                  |      |       | (0.28 | ) |   |       |      |  
|                                                                                |                                                                     |      |       |       |   |   |       |      
|                                                                                |                                                                     | $    | (1.17 | )     |   | $ | (1.66 | )    
|                                                                                |                                                                     |      |       |       |   |   |       |      
|Weighted average number of common shares outstanding                            |                                                                     |      | 371   |       |   |   | 292   |      
|                                                                                |                                                                     |      |       |       |   |   |       |      

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

4



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in
Stockholders Equity

For the Three Months Ended March 31, 2000


(in millions)


Unaudited


|                          |                                                  |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       |     |     |  | 
|------------------------- | ------------------------------------------------ | -------------------------------------------------------------------- | ------------------------ | ------------ |  | ------------ | --- | ------- |  | ------ | --- | ------ | - | ------- | - |  | - |  | -- |  |  | - | - |  |  | - | ----- | --- | --- |  | 
|                          |                                                  |                                                                      |                          |              |  |              |     |        
|                          |                                                  | Convertible                                                          |                          | Class A      |  | Class B      |     |        
|                          |                                                  | Preferred Stock                                                      |                          | Common Stock |  | Common Stock |     |        
|                          |                                                  |                                                                      |                          |              |  |              |     | Paid-in
|                          |                                                  | Shares                                                               |                          | Amount       |  | Shares       |     | Amount  |  | Shares |     | Amount |   | Capital
|                          |                                                  |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |        
|Balance, January  1, 2000 |                                                  |                                                                      | 8                        |              |  | $            | 291 |         |  |        | 351 |        |   | $       |  |  |   |  | 18 |  |  | $ |  |  |  | $ | 8,047 |    
|                         
|                         
|                         
|                         
|                          | 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                                                  |                          |              |  |              |     |         |  |        |     |        | 3 |         |   |  |  |  |    |  |  |   |   |  |  |   |       |     | 46  | 
|                         
|                         
|                         
|                         
|                          |                                                  | Employee stock purchase plan                                         |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       |     | 3   | 
|                         
|                         
|                         
|                         
|                          |                                                  | Conversion of debt securities and preferred stock                    |                          |              |  |              |     |         |  |        |     |        | 7 |         |   |  |  |  |    |  |  |   |   |  |  |   |       |     | 311 | 
|                         
|                         
|                         
|                         
|                          | Deferred compensation, net                       |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       | 7   |    
|                         
|                         
|                         
|                         
|                          | Mandatorily redeemable preferred stock dividends |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       | (52 | )  
|                          |                                                  |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       |    
|Balance, March 31, 2000   |                                                  |                                                                      | 8                        |              |  | $            | 291 |         |  |        | 361 |        |   | $       |  |  |   |  | 18 |  |  | $ |  |  |  | $ | 8,362 |    
|                          |                                                  |                                                                      |                          |              |  |              |     |         |  |        |     |        |   |         |   |  |   |  |    |  |  |   |   |  |  |   |       |    

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      |     |      |  
|------------------------- | ------------------------------------------------ | -------------------------------------------------------------------- | ------------------------ | -------------- | - | -------- | - | ------------ | - | ------------- | -- | ---------- | - | ----- | --- | -- | - | - | --- |  | -- | - | ---- | - | -- | - | ----- | ---- | --- | ---- | -
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |           
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   | Accumulated   |    |           
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   | Other         |    |           
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   | Comprehensive |    |           
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   | Income (Loss) |    |           
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |              
|                          |                                                  |                                                                      |                          | Treasury Stock |   |          |   | Unrealized   |   | Cumulative    |    |           
|                          |                                                  | Accumulated                                                          |                          |                |   | Deferred |   | Gain on      |   | Translation   |    |           
|                          |                                                  | Deficit                                                              |                          | Shares         |   | Amount   |   | Compensation |   | Investments   |    | Adjustment |   | Total
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |      
|Balance, January  1, 2000 |                                                  | $                                                                    | (5,739                   | )              |   |          |  |              |   | $             | (6 | )          |   | $     | (23 | )  |   | $ | 142 |  |    | $ | (138 | ) |    | $ | 2,574 |     
|                         
|                         
|                         
|                         
|                          | Net loss                                         |                                                                      |                          | (383           | ) |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       | (383 | )  
|                         
|                         
|                         
|                         
|                          |                                                  | Unrealized gain on available-for-sale securities, net of income
	tax |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  | 37 |   |      |   |    |   |       |      | 37  |     
|                         
|                         
|                         
|                         
|                          |                                                  | Foreign currency translation adjustment                              |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   | 19 |   |       |      | 19  |     
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |     
|                          |                                                  |                                                                      | Total comprehensive loss |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      |     | (327 | )
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |     
|                          | Issuance of common stock:                        |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      |    
|                         
|                         
|                         
|                         
|                          |                                                  | Exercise of options                                                  |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      | 46  |     
|                         
|                         
|                         
|                         
|                          |                                                  | Employee stock purchase plan                                         |                          |                |   |          |   |              |  |               |    |            | 1 |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      | 4   |     
|                         
|                         
|                         
|                         
|                          |                                                  | Conversion of debt securities and preferred stock                    |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |      | 311 |     
|                         
|                         
|                         
|                         
|                          | Deferred compensation, net                       |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     | (1 | ) |   |     |  |    |   |      |   |    |   |       | 6    |    
|                         
|                         
|                         
|                         
|                          | Mandatorily redeemable preferred stock dividends |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       | (52  | )  
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |     
|Balance, March 31, 2000   |                                                  | $                                                                    | (6,122                   | )              |   |          |  |              |   | $             | (5 | )          |   | $     | (24 | )  |   | $ | 179 |  |    | $ | (119 | ) |    | $ | 2,562 |     
|                          |                                                  |                                                                      |                          |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |  |    |   |      |   |    |   |       |     

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

5



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2000 and 1999


(in millions)


Unaudited


|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |      |     |     |      |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | --- | --- | ----- | ---- | --- | --- | ---- | -
|                                                             |                                                                                  | 2000                                                                               |                                              | 1999                                     
|                                                             |                                                                                  |                                                                                    |                                              |                                          
|Cash flows from operating activities                         |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net loss                                                                         |                                                                                    | $                                            | (383                                      | )   |     | $     | (439 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Adjustments to reconcile net loss to net cash provided by
	operating activities: |                                                                                    |                                              |                                           |     |     |       |      |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Amortization of deferred financing costs and accretion of senior
	redeemable notes |                                              |                                           | 100 |     |       |      | 110 |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Depreciation and amortization                                                      |                                              |                                           | 280 |     |       |      | 228 |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Provision for losses on accounts receivable                                        |                                              |                                           | 27  |     |       |      | 35  |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Deferred income tax benefit                                                        |                                              |                                           | (8  | )   |       |      | (10 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Extraordinary loss on retirement of debt                                           |                                              |                                           | 104 |     |       |      |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Debt conversion expense                                                            |                                              |                                           | 23  |     |       |      |    |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Net foreign currency transaction (gains) losses                                    |                                              |                                           | (12 | )   |       |      | 67  |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Equity in losses of unconsolidated affiliates                                      |                                              |                                           | 35  |     |       |      | 6   |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Other, net                                                                         |                                              |                                           | (5  | )   |       |      | (3  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  | Change in assets and liabilities:                                                  |                                              |                                           |     |     |       |      |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  |                                                                                    | Accounts and notes receivable                |                                           |     | (66 | )     |      |     | (31 | )   
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  |                                                                                    | Subscriber unit and accessory inventory      |                                           |     | 2   |       |      |     | (18 | )   
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  |                                                                                    | Other assets                                 |                                           |     | (16 | )     |      |     | 28  |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                  |                                                                                    | Accounts payable, accrued expenses and other |                                           |     | 119 |       |      |     | 126 |     
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                             |                                                                                  |                                                                                    |                                              | Net cash provided by operating activities |     |     | 200   |      |     |     | 99   |  
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Cash flows from investing activities                         |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Capital expenditures                                                             |                                                                                    |                                              | (647                                      | )   |     |       | (475 | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from maturities and sales of short-term investments                     |                                                                                    |                                              | 894                                       |     |     |       |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchases of short-term investments                                              |                                                                                    |                                              | (919                                      | )   |     |       |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Payments for acquisitions and purchase of licenses, net of cash
	acquired        |                                                                                    |                                              | (54                                       | )   |     |       | (15  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other investments in and advances to affiliates                                  |                                                                                    |                                              | (2                                        | )   |     |       | (11  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from sale of assets                                                     |                                                                                    |                                              |                                          |     |     |       | 138  |    
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                             |                                                                                  |                                                                                    |                                              | Net cash used in investing activities     |     |     | (728  | )    |     |     | (363 | )
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Cash flows from financing activities                         |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Issuance of debt securities                                                      |                                                                                    |                                              | 1,150                                     |     |     |       |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Borrowings under long-term credit facilities                                     |                                                                                    |                                              | 1,060                                     |     |     |       | 208  |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Retirement of debt securities                                                    |                                                                                    |                                              | (1,208                                    | )   |     |       |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Exercise of stock options, warrants and other                                    |                                                                                    |                                              | 46                                        |     |     |       | 15   |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Revolving line of credit repayments, net                                         |                                                                                    |                                              |                                          |     |     |       | (24  | )  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Deferred financing costs                                                         |                                                                                    |                                              | (28                                       | )   |     |       |     |    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other                                                                            |                                                                                    |                                              | 6                                         |     |     |       |     |    
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                             |                                                                                  |                                                                                    |                                              | Net cash provided by financing activities |     |     | 1,026 |      |     |     | 199  |  
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Effect of exchange rate changes on cash and cash equivalents |                                                                                  |                                                                                    | 1                                            |                                           |     |     | (10   | )   
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Net increase (decrease) in cash and cash equivalents         |                                                                                  |                                                                                    | 499                                          |                                           |     |     | (75   | )   
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents, beginning of period               |                                                                                  |                                                                                    | 4,701                                        |                                           |     |     | 321   |     
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Cash and cash equivalents, end of period                     |                                                                                  | $                                                                                  | 5,200                                        |                                           |     | $   | 246   |     
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|Supplemental disclosure of cash flow information             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Cash paid for interest                                                           |                                                                                    | $                                            | 152                                       |     |     | $     | 46   |    
|                                                             |                                                                                  |                                                                                    |                                              |                                           |     |     |       |     

6



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited


Note 1.  Basis of Presentation.

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

Our unaudited condensed consolidated financial statements have
been prepared under the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments that are
necessary for a fair presentation of the results for the interim
periods. All adjustments made were normal recurring accruals.

You should read the condensed consolidated financial statements
in conjunction with the consolidated financial statements and
notes of Nextel contained in our Annual Report on Form 10-K
for the year ended December 31, 1999, and Nextel
International, Inc.s Annual Report on Form 10-K for
the year ended December 31, 1999, for matters related to the
 operations of Nextel International, an indirect, substantially
wholly-owned subsidiary. You should not expect the results of
operations of interim periods to be an indication of the results
for a full year.

Restricted Cash and Cash Equivalents.Nextel
International and its subsidiaries held cash and cash equivalents
 of $74 million at March 31, 2000 and $100 million
 at December 31, 1999 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 included
$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 3.)

Supplemental Cash Flow Information.

|                     |                                                               |               |     |      |  |   |     |     |  
|-------------------- | ------------------------------------------------------------- | ------------- | --- | ---- |  | - | --- | --- | -
|                     |                                                               |              
|                     |                                                               | Three Months 
|                     |                                                               | Ended        
|                     |                                                               | March 31,    
|                     |                                                               |              
|                     |                                                               | 2000          |     | 1999
|                     |                                                               |               |     |     
|                     |                                                               |              
|                     |                                                               | (in millions)
|                    
|                    
|                    
|                    
|Capital expenditures |                                                               |               |     |      |  |   |     |    
|                    
|                    
|                    
|                    
|                     | Cash paid for capital expenditures                            |               | $   | 647  |  |   | $   | 475 |  
|                    
|                    
|                    
|                    
|                     | Change in capital expenditures accrued and unpaid or financed |               |     | 130  |  |   |     | (49 | )
|                     |                                                               |               |     |      |  |   |     |    
|                     |                                                               | $             | 777 |      |  | $ | 426 |    
|                     |                                                               |               |     |      |  |   |     |    
|Interest costs       |                                                               |               |     |      |  |   |     |    
|                    
|                    
|                    
|                    
|                     | Interest expense                                              |               | $   | 278  |  |   | $   | 198 |  
|                    
|                    
|                    
|                    
|                     | Interest capitalized                                          |               |     | 15   |  |   |     | 9   |  
|                     |                                                               |               |     |      |  |   |     |    
|                     |                                                               | $             | 293 |      |  | $ | 207 |    
|                     |                                                               |               |     |      |  |   |     |    

Digital Subscriber Unit and Accessory Sales and Related
Costs.The loss generated from the sale of the 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
expenses and

7



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                                            |  |              |     |      |  |   |     |  
|------------------------------------------- |  | ------------ | --- | ---- |  | - | --- | -
|                                            |  |             
|                                            |  | Three Months
|                                            |  | Ended       
|                                            |  | March 31,   
|                                            |  |             
|                                            |  | 2000         |     | 1999
|                                            |  |              |     |     
|Subscriber unit and accessory sales         |  | $            | 128 |      |  | $ | 111 |  
|                                           
|                                           
|                                           
|                                           
|Cost of subscriber unit and accessory sales |  |              | 225 |      |  |   | 198 |  
|                                            |  |              |     |      |  |   |     |  
|                                            |  | $            | (97 | )    |  | $ | (87 | )
|                                            |  |              |     |      |  |   |     |  

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 certain derivatives embedded in other
contracts, and for hedging activities by requiring that all
derivatives be recognized on 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.

Reclassifications and Other.Certain prior period
amounts have been reclassified to conform to our current year
presentation. During the first quarter of 2000, we changed the
estimated useful lives of some of our digital mobile network and
non-network assets. The effect of this change in estimate was an
increase in depreciation expense of about $13 million in the
 first quarter of 2000.

Note 2.  Significant Transactions and Developments.

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 approval of a
proposed increase in our authorized equity capitalization at the
annual stockholders meeting scheduled for May 25, 2000.
Assuming receipt of required shareholder 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. The
financial statements do not reflect the effect of the proposed
stock split.

8



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3.  Long-Term Debt.

|                                                                                                                                                        |  |               |        |              |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | -
|                                                                                                                                                        |  | March 31,     |        | December 31,
|                                                                                                                                                        |  | 2000          |        | 1999        
|                                                                                                                                                        |  |               |        |             
|                                                                                                                                                        |  |              
|                                                                                                                                                        |  | (in millions)
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|9.75% Senior Redeemable Discount Notes due 2004, net of
	unamortized discount of $0                                                                     |  | $             |       |              |  | $ | 876    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|10.125% Senior Redeemable Discount Notes due 2004, net of
	unamortized discount of $40                                                                  |  |               |       |              |  |   | 254    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|13.0% Senior Redeemable Discount Notes due 2007, issued by
	 Nextel International, net of unamortized discount of $229 and
	$252                        |  |               | 722    |              |  |   | 699    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|10.65% Senior Redeemable Discount Notes due 2007, net of
	unamortized discount of $189 and $205                                                         |  |               | 651    |              |  |   | 635    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|9.75% Senior Serial Redeemable Discount Notes due 2007,
	net of unamortized discount of $245 and $267                                                   |  |               | 884    |              |  |   | 862    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|4.75% Convertible Senior Notes due 2007                                                                                                                 |  |               | 354    |              |  |   | 600    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|9.95% Senior Serial Redeemable Discount Notes due 2008,
	net of unamortized discount of $396 and $425                                                   |  |               | 1,231  |              |  |   | 1,202  |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|12.125% Senior Serial Redeemable Discount Notes due 2008,
	issued by Nextel International, net of unamortized discount of
	$219 and $234                |  |               | 511    |              |  |   | 496    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|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  |              |  |   | 2,000  |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|5.25% Convertible Senior Notes due 2010                                                                                                                 |  |               | 1,150  |              |  |   |       |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Bank credit facility                                                                                                                                    |  |               | 3,650  |              |  |   | 2,650  |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Nextel International vendor credit facilities                                                                                                           |  |               | 312    |              |  |   | 243    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Nextel Argentina bank credit facility                                                                                                                   |  |               | 100    |              |  |   | 100    |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Nextel Argentina incremental borrowing facility                                                                                                         |  |               | 11     |              |  |   | 8      |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Other                                                                                                                                                   |  |               | 3      |              |  |   | 4      |  
|                                                                                                                                                        |  |               |        |              |  |   |        |  
|                                                                                                                                                        |  |               | 11,875 |              |  |   | 10,925 |  
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|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 redeemed in 2000 |  |               | (35    | )            |  |   | (1,165 | )
|                                                                                                                                                        |  |               |        |              |  |   |        |  
|                                                                                                                                                        |  | $             | 11,840 |              |  | $ | 9,760  |  
|                                                                                                                                                        |  |               |        |              |  |   |        |  

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 in net cash proceeds. Cash
interest is payable on these notes semiannually 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. 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.

Incremental Bank Financing.On March 15, 2000,
 we, along with some of our subsidiaries and some of our lenders,
 established the $1.0 billion incremental senior secured
term loan under our existing domestic bank credit facility. As a
result, the total amount of borrowings available under our bank
credit facility increased

9



---



##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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
either on the U.S. prime rate or the London Interbank Offering
Rate, referred to as LIBOR.

Conversion of 4.75% Convertible Senior Notes.In
late March 2000, we issued about 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 redemption, we paid
the note holders about $26 million in cash, representing
$3 million of accrued interest and $23 million of debt
conversion expense in the first quarter of 2000.

Debt Extinguishment.During the first quarter of
2000, we utilized a portion of the proceeds from our 9.375%
senior notes due 2009 to repurchase and redeem prior to final
maturity all of our outstanding 10.125% senior notes and all of
our outstanding 9.75% senior notes. As a result of the early
retirement of these senior notes repurchased and redeemed during
the first quarter of 2000, we recognized an extraordinary loss of
 about $104 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 of about $26 million.

Note 4.  Contingencies.

See Part II, Item 1. Legal Proceedings for a
discussion of certain lawsuits and other legal matters.

Note 5.  Mandatorily Redeemable Preferred Stock.

|                                                                                                                                                                                                                                                                                                                            |  |               |       |              |  |   |       | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------ |  | - | ----- | 
|                                                                                                                                                                                                                                                                                                                            |  | March 31,     |       | December 31,
|                                                                                                                                                                                                                                                                                                                            |  | 2000          |       | 1999        
|                                                                                                                                                                                                                                                                                                                            |  |               |       |             
|                                                                                                                                                                                                                                                                                                                            |  |              
|                                                                                                                                                                                                                                                                                                                            |  | (in millions)
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|Series D exchangeable preferred stock mandatorily
	redeemable 2009,13% cumulative annual dividend; 687,001 and
	665,376 shares issued; 686,990 and 665,365 shares outstanding;
	stated at liquidation value                                                                                                                 |  | $             | 706   |              |  | $ | 683   | 
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|Series E exchangeable preferred stock mandatorily
	redeemable 2010,11.125% cumulative annual dividend; 935,177
	and 909,871 shares issued; 935,163 and 909,857 shares
	outstanding; stated at liquidation value                                                                                                             |  |               | 948   |              |  |   | 922   | 
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                           
|Zero coupon convertible preferred stock mandatorily redeemable
	 2013,no dividend; convertible into 3,306,612 and 5,761,764
	shares of class A common stock; 339,345 and 591,308 shares issued
	 and outstanding; stated at fair value when issued plus accretion
	 of liquidation preference at 9.25% compounded quarterly |  |               | 97    |              |  |   | 165   | 
|                                                                                                                                                                                                                                                                                                                            |  |               |       |              |  |   |       | 
|                                                                                                                                                                                                                                                                                                                            |  | $             | 1,751 |              |  | $ | 1,770 | 
|                                                                                                                                                                                                                                                                                                                            |  |               |       |              |  |   |       | 

Conversion of Zero Coupon Convertible Preferred Stock
Mandatorily Redeemable 2013.In late March 2000, we
issued about 2.5 million shares of class A common stock upon
 the conversion of about $71 million in accreted value of
our zero coupon convertible preferred stock mandatorily
redeemable in 2013, representing the original stated conversion
rate of 9.7441 shares of class A common stock for each share of
zero coupon convertible preferred stock.

10



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 6.  Segment Reporting.

We operate in two business segments: domestic and international.
These reportable segments are strategic business units that are
in different phases of development and that we manage and have
financed separately based on the fundamental differences in their
 operations. We evaluate performance of these segments and
allocate resources to them based on earnings (losses) before
interest, taxes, depreciation and amortization and other
non-recurring charges, referred to as EBITDA.

|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|----------------------------------------------------- |  | -------------------------- | ------ | -------------------------- |  | ------------ | ----- | -------- |  | ------------- | ------ | ------------ |  | - | ------ | - |  | - | ----- | - |  | - | ------ | -
|                                                      |  |                            |        |                           
|                                                      |  | For the Three Months Ended |        | For the Three Months Ended
|                                                      |  | March 31, 2000             |        | March 31, 1999            
|                                                      |  | Domestic                   |        | International              |  | Consolidated |       | Domestic |  | International |        | Consolidated
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |             
|                                                      |  |                           
|                                                      |  | (in millions)             
|                                                     
|                                                     
|                                                     
|                                                     
|Operating revenues                                    |  | $                          | 1,032  |                            |  | $            | 47    |          |  | $             | 1,079  |              |  | $ | 644    |   |  | $ | 20    |   |  | $ | 664    |  
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|EBITDA                                                |  | $                          | 262    |                            |  | $            | (34   | )        |  | $             | 228    |              |  | $ | 82     |   |  | $ | (47   | ) |  | $ | 35     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Depreciation and amortization                         |  |                            | 247    |                            |  |              | 33    |          |  |               | 280    |              |  |   | 204    |   |  |   | 24    |   |  |   | 228    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |  |                            | (226   | )                          |  |              | (52   | )        |  |               | (278   | )            |  |   | (160   | ) |  |   | (38   | ) |  |   | (198   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest income                                       |  |                            | 83     |                            |  |              |      |          |  |               | 83     |              |  |   | 2      |   |  |   | 2     |   |  |   | 4      |  
|                                                     
|                                                     
|                                                     
|                                                     
|Equity in losses of unconsolidated affiliates         |  |                            | (28    | )                          |  |              | (7    | )        |  |               | (35    | )            |  |   | (1     | ) |  |   | (5    | ) |  |   | (6     | )
|                                                     
|                                                     
|                                                     
|                                                     
|Other income (expense), net                           |  |                            | (20    | )                          |  |              | 15    |          |  |               | (5     | )            |  |   | (2     | ) |  |   | (54   | ) |  |   | (56    | )
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|Loss before income tax benefit and extraordinary item |  | $                          | (176   | )                          |  | $            | (111  | )        |  | $             | (287   | )            |  | $ | (283   | ) |  | $ | (166  | ) |  | $ | (449   | )
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|Capital expenditures                                  |  | $                          | 661    |                            |  | $            | 116   |          |  | $             | 777    |              |  | $ | 377    |   |  | $ | 49    |   |  | $ | 426    |  
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|                                                      |  | As of March 31, 2000       |        | As of December 31, 1999   
|                                                      |  |                            |        |                           
|                                                     
|Property, plant and equipment, net                    |  | $                          | 6,077  |                            |  | $            | 641   |          |  | $             | 6,718  |              |  | $ | 5,613  |   |  | $ | 539   |   |  | $ | 6,152  |  
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  
|Identifiable assets                                   |  | $                          | 17,774 |                            |  | $            | 1,822 |          |  | $             | 19,596 |              |  | $ | 16,728 |   |  | $ | 1,682 |   |  | $ | 18,410 |  
|                                                      |  |                            |        |                            |  |              |       |          |  |               |        |              |  |   |        |   |  |   |       |   |  |   |        |  




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

A.  Overview.

The following discussion of our condensed consolidated financial
condition and results of operations for the three-month periods
ended March 31, 2000 and 1999, and significant factors that
could affect our prospective financial condition and results of
operations, should be read in conjunction with our 1999 Annual
Report on Form 10-K. Additional information regarding our
international operations is available in Nextel
Internationals 1999 Annual Report on Form 10-K.

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;

11



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| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | the Internet and new digital two-way mobile data services,
	marketed as Nextel OnlineSM service;
|
| |  | paging; and                                                                                       
|
| |  | short-messaging service.                                                                          

As of March 31, 2000:



| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we provided service to about 5,056,000 digital subscriber units
	in the United States, adding about 540,300 net subscriber units
	during the quarter; 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 96 of the
	top 100 metropolitan statistical areas in the United States.

On April 25, 2000, we commercially launched our Nextel
Online service offering in 43 major markets, including more than
750 cities across the United States, for Internet capable
subscriber units developed and manufactured by Motorola, the
i1000plus, the i500plus, and
the i700plus. These new subscriber units are
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.

On April 3, 2000, we launched 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
currently allows digital roaming in more than 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.
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. As of March 31, 2000, along with Nextel
International, we provided our service in ten of the worlds
 25 largest cities.

As of March 31, 2000, 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 497,200, 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
March 31, 2000, an estimated 1,474,400 international digital
 subscriber units were in service on the commercial networks then
 being operated by Nextel Internationals subsidiaries and
affiliates. Nextel International currently is pursuing a number
of transactions that would impact its ownership interests in
affiliates in Brazil, Peru and China. If all of these
transactions had occurred as of March 31, 2000, Nextel
Internationals subsidiaries and affiliates would have had a
 total of about 1,054,300 digital subscriber units in service, on
 a proforma basis, and Nextel Internationals share, based
on its proforma proportionate ownership interest, would have been
 462,100 digital subscriber units in service. Assuming that the
transactions that Nextel International currently is pursuing are
consummated during the second quarter, Nextel International
intends to report its digital subscriber unit net additions
during the second quarter using the proforma first quarter ending
 digital subscriber units in service as the starting reference
point.

B.  First Quarter Transactions and Developments.

1.  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 in net cash proceeds. Cash interest is
payable on these notes semiannually 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

12



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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 of 1933. 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.

2.  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 approval of a
proposed increase in our authorized equity capitalization at the
annual stockholders meeting scheduled for May 25, 2000.
Assuming receipt of required shareholder 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.  Incremental Bank Financing.On
March 15, 2000, we, along with some of our subsidiaries and
some of our lenders, established the $1.0 billion
incremental senior secured term loan under our existing domestic
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
either on the U.S. prime rate or LIBOR.

4.  Conversion of 4.75% Convertible Senior Notes.In late March 2000, we issued about 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 redemption, we paid
the note holders about $26 million in cash, representing
$3 million of accrued interest and $23 million of debt
conversion expense in the first quarter of 2000.

5.  Conversion of Zero Coupon Convertible Preferred
Stock Mandatorily Redeemable 2013.In late
March 2000, we issued about 2.5 million shares of class
 A common stock upon the conversion of about $71 million in
accreted value of our zero coupon convertible preferred stock
mandatorily redeemable in 2013, representing the original stated
conversion rate of 9.7441 shares of class A common stock for each
 share of zero coupon convertible preferred stock.

6.  Purchase of Motorola Internationals Common
Equity Shares in Companies in Brazil, Peru and Chile.On
March 31, 2000, Nextel International entered into a term
sheet agreement with Motorola International Development
Corporation regarding the terms and conditions under which Nextel
 International, or some of its subsidiaries, would purchase, for
about $78 million in cash, all of Motorola
Internationals shares in the following companies:



| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | Nextel del Peru, S.A.;                                                             
|
| |  | Nextel S.A. (Brazil); and                                                          
|
| |  | three SMR companies wholly owned by Motorola International and
	operating in Chile.

Consummation of the transactions contemplated by this term sheet
agreement is subject to various conditions, including the receipt
 of all necessary governmental and regulatory approvals. If these
 transactions are completed, Nextel International would acquire
SMR licenses in Chile and increase its equity ownership interest
in Nextel del Peru from about 64% to about 95% and in
Nextels Brazilian operating subsidiary from about 88% to
about 92%. We cannot predict whether or when Nextel International
 and Motorola International will enter into any definitive
agreements for the purchase of these shares or whether or when
consummation of any of those contemplated purchases might occur.

13



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##### Table of Contents



C.  Results of Operations.

The following discussion compares our condensed consolidated
financial condition and results of operations for the three-month
 periods ended March 31, 2000 and 1999, and describes
significant factors that could affect our prospective financial
condition and results of operations.

Historical results may not indicate future performance. See
F. Our Forward Looking Statements Are Subject to a
Variety of Factors that Could Cause Actual Results to Differ
Materially From Current Beliefs.

1.  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
|                   |               | March 31,             |       | Operating    |  | March 31, |     | Operating    |   |              
|                   |               | 2000                  |       | Revenues     |  | 1999      |     | Revenues     |   | Dollars       |     | Percent
|                   |               |                       |       |              |  |           |     |              |   |               |     |        
|                   |               |                      
|                   |               | (dollars in millions)
|                  
|                  
|                  
|                  
|Operating revenues |               | $                     | 1,079 |              |  |           | 100 | %            |   | $             | 664 |         |  |  | 100 | %  |   | $ | 415 |     |  |  | 63 | %  
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |       | 1,032        |  |           |     | 96           | % |               |     | 644     |  |  |     | 97 | % |   |     | 388 |  |  |    | 60  | %
|                  
|                  
|                  
|                  
|                   | International |                       |       | 47           |  |           |     | 4            | % |               |     | 20      |  |  |     | 3  | % |   |     | 27  |  |  |    | 135 | %

Domestic operating revenues increased principally as a result of
a 60% increase in end-of-period domestic digital subscriber units
 in service from about 3,152,900 at March 31, 1999 to about
5,056,000 at March 31, 2000. In addition, we experienced an
85% increase in total system minutes of use along with an
increase in the average monthly revenue per digital subscriber
unit from about $71 during the first quarter of 1999 to about $72
 during the first quarter of 2000. 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;                           
|
| |  | increased consumer awareness and acceptance of wireless
	communications;          
|
| |  | pricing plans targeted at particular market segments; and                         
|
| |  | increased sales force and marketing staff.                                        

Operating revenues for our international operations increased
primarily as a result of a 167% increase in end-of-period digital
 subscriber units in service for our consolidated international
entities, primarily in Brazil and Mexico, from 134,600 at
March 31, 1999 to 359,400 at March 31, 2000.

2.  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
|                 |               | March 31,             |     | Operating    |  | March 31, |    | Operating    |   |              
|                 |               | 2000                  |     | Revenues     |  | 1999      |    | Revenues     |   | Dollars       |     | Percent
|                 |               |                       |     |              |  |           |    |              |   |               |     |        
|                 |               |                      
|                 |               | (dollars in millions)
|                
|                
|                
|                
|Cost of revenues |               | $                     | 214 |              |  |           | 20 | %            |   | $             | 163 |         |  |  | 25 | %  |   | $ | 51 |    |  |  | 31 | % 
|                
|                
|                
|                
|                 | Domestic      |                       |     | 200          |  |           |    | 19           | % |               |     | 154     |  |  |    | 23 | % |   |    | 46 |  |  |    | 30 | %
|                
|                
|                
|                
|                 | International |                       |     | 14           |  |           |    | 1            | % |               |     | 9       |  |  |    | 2  | % |   |    | 5  |  |  |    | 56 | %

Domestic cost of revenues increased primarily as a result of a
77% increase in the number of digital switches in service and a
46% increase in digital cell sites and related equipment placed
in service from March 31, 1999 to March 31, 2000, as
well as increases in airtime usage. Increased airtime usage
resulted

14



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##### Table of Contents





The increase in international cost of revenues is attributable
primarily to an increase in the number of cell sites placed in
service from March 31, 1999 to March 31, 2000, as well
as increases in international expenses associated with increased
airtime usage resulting from additional subscriber units in
service.

3.  Selling, General and Administrative Expenses.

|                                    |                            |                       |     |              |  |           |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |    |    |  
|----------------------------------- | -------------------------- | --------------------- | --- | ------------ |  | --------- | -- | ------------ | - | ------------- | --- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | -- | -- | -
|                                    |                            |                       |     |              |  |           |    |              |   |              
|                                    |                            |                       |     | % of         |  |           |    | % of         |   | Increase from
|                                    |                            |                       |     | Consolidated |  |           |    | Consolidated |   | Previous Year
|                                    |                            | March 31,             |     | Operating    |  | March 31, |    | Operating    |   |              
|                                    |                            | 2000                  |     | Revenues     |  | 1999      |    | Revenues     |   | Dollars       |     | Percent
|                                    |                            |                       |     |              |  |           |    |              |   |               |     |        
|                                    |                            |                      
|                                    |                            | (dollars in millions)
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 637 |              |  |           | 59 | %            |   | $             | 466 |         |  |  | 70 | %  |   | $ | 171 |     |  |  | 37 | % 
|                                   
|                                   
|                                   
|                                   
|                                    | Selling and marketing      |                       |     | 388          |  |           |    | 36           | % |               |     | 284     |  |  |    | 43 | % |   |     | 104 |  |  |    | 37 | %
|                                   
|                                   
|                                   
|                                   
|                                    | General and administrative |                       |     | 249          |  |           |    | 23           | % |               |     | 182     |  |  |    | 27 | % |   |     | 67  |  |  |    | 37 | %

The increase in selling, general and administrative expenses
consisted of an increase in domestic expenses of
$162 million and an increase in international expenses of
$9 million.

The increase in selling and marketing expenses primarily reflects
 increased costs incurred in connection with higher consolidated
sales of digital subscriber units including:



| |   |                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $49 million of increased consolidated advertising and
	marketing expenses, including $8 million relating to
	international operations, due to aggressive marketing campaigns
	directed at growing the customer base;                     
|
| |  | $45 million of increased domestic commissions and residuals
	earned by indirect dealers and distributors as a result of
	increased digital subscriber unit sales through, and increased
	reliance on, indirect distribution channels; and
|
| |  | $10 million of increased losses generated from increased
	consolidated sales of digital subscriber units and related
	accessories, including increased losses of $7 million
	relating to international digital subscriber unit sales.    

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



| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $40 million of increased domestic expenses related to
	billing, collection, customer care and customer retention
	activities to support a larger customer base;                                                   
|
| |  | $33 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; offset by
|
| |  | $6 million of decreased international expenses primarily due
	 to decreases in bad debt expenses.                                                                                                                 

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

15



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##### Table of Contents



4.  Depreciation and Amortization.

|                              |              |                       |     |              |  |           |    |              |   |                 |     |         |  |  |    |    |   |   |    |    |   |  |    |     |   
|----------------------------- | ------------ | --------------------- | --- | ------------ |  | --------- | -- | ------------ | - | --------------- | --- | ------- |  |  | -- | -- | - | - | -- | -- | - |  | -- | --- | --
|                              |              |                       |     |              |  |           |    |              |   |                
|                              |              |                       |     |              |  |           |    |              |   | Increase/      
|                              |              |                       |     | % of         |  |           |    | % of         |   | (Decrease) from
|                              |              |                       |     | Consolidated |  |           |    | Consolidated |   | Previous Year  
|                              |              | March 31,             |     | Operating    |  | March 31, |    | Operating    |   |                
|                              |              | 2000                  |     | Revenues     |  | 1999      |    | Revenues     |   | Dollars         |     | Percent
|                              |              |                       |     |              |  |           |    |              |   |                 |     |        
|                              |              |                      
|                              |              | (dollars in millions)
|                             
|                             
|                             
|                             
|Depreciation and amortization |              | $                     | 280 |              |  |           | 26 | %            |   | $               | 228 |         |  |  | 34 | %  |   | $ | 52 |    |   |  | 23 | %  
|                             
|                             
|                             
|                             
|                              | Depreciation |                       |     | 233          |  |           |    | 22           | % |                 |     | 175     |  |  |    | 26 | % |   |    | 58 |   |  |    | 33  | % 
|                             
|                             
|                             
|                             
|                              | Amortization |                       |     | 47           |  |           |    | 4            | % |                 |     | 53      |  |  |    | 8  | % |   |    | (6 | ) |  |    | (11 | )%

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 in existing
 domestic and international markets primarily to enhance the
coverage and capacity of our digital mobile network. 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.

During the first quarter of 2000, we changed the estimated useful
 lives of some of our digital mobile network and non-network
assets. The effect of this change in estimate was an increase in
depreciation expense of about $13 million in the first
quarter of 2000.

5.  Segment Earnings (Losses), Interest Expense,
Interest Income and Other.

|                                                  |               |                       |     |              |   |           |    |              |    |                 |     |         |   |  |     |    |    |   |     |     |   |  |     |     |    | 
|------------------------------------------------- | ------------- | --------------------- | --- | ------------ | - | --------- | -- | ------------ | -- | --------------- | --- | ------- | - |  | --- | -- | -- | - | --- | --- | - |  | --- | --- | -- | 
|                                                  |               |                       |     |              |   |           |    |              |    |                
|                                                  |               |                       |     |              |   |           |    |              |    | Increase/      
|                                                  |               |                       |     | % of         |   |           |    | % of         |    | (Decrease) from
|                                                  |               |                       |     | Consolidated |   |           |    | Consolidated |    | Previous Year  
|                                                  |               | March 31,             |     | Operating    |   | March 31, |    | Operating    |    |                
|                                                  |               | 2000                  |     | Revenues     |   | 1999      |    | Revenues     |    | Dollars         |     | Percent
|                                                  |               |                       |     |              |   |           |    |              |    |                 |     |        
|                                                  |               |                      
|                                                  |               | (dollars in millions)
|                                                 
|                                                 
|                                                 
|                                                 
|Segment earnings (losses)                         |               | $                     | 228 |              |   |           | 21 | %            |    | $               | 35  |         |   |  | 5   | %  |    | $ | 193 |     |   |  | NM  |    
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Domestic      |                       |     | 262          |   |           |    | 24           | %  |                 |     | 82      |   |  |     | 12 | %  |   |     | 180 |   |  |     | 220 | % 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | International |                       |     | (34          | ) |           |    | (3           | )% |                 |     | (47     | ) |  |     | (7 | )% |   |     | (13 | ) |  |     | (28 | )%
|                                                 
|                                                 
|                                                 
|                                                 
|Interest expense                                  |               |                       | 278 |              |   |           | 26 | %            |    |                 | 198 |         |   |  | 30  | %  |    |   | 80  |     |   |  | 40  | %  
|                                                 
|                                                 
|                                                 
|                                                 
|Interest income                                   |               |                       | 83  |              |   |           | 8  | %            |    |                 | 4   |         |   |  | 1   | %  |    |   | 79  |     |   |  | NM  |    
|                                                 
|                                                 
|                                                 
|                                                 
|Debt conversion expense                           |               |                       | 23  |              |   |           | 2  | %            |    |                 |    |         |   |  |    |    |    |   | 23  |     |   |  | NM  |    
|                                                 
|                                                 
|                                                 
|                                                 
|Equity in losses of unconsolidated
	affiliates    |               |                       | 35  |              |   |           | 3  | %            |    |                 | 6   |         |   |  | 1   | %  |    |   | 29  |     |   |  | NM  |    
|                                                 
|                                                 
|                                                 
|                                                 
|Foreign currency transaction gains
	(losses), net |               |                       | 12  |              |   |           | 1  | %            |    |                 | (67 | )       |   |  | (10 | )% |    |   | 79  |     |   |  | 118 | %  
|                                                 
|                                                 
|                                                 
|                                                 
|Other, net                                        |               |                       | 6   |              |   |           | 1  | %            |    |                 | 11  |         |   |  | 2   | %  |    |   | (5  | )   |   |  | (45 | )% 
|                                                 
|                                                 
|                                                 
|                                                 
|Income tax benefit                                |               |                       | 8   |              |   |           | 1  | %            |    |                 | 10  |         |   |  | 2   | %  |    |   | (2  | )   |   |  | (20 | )% 
|                                                 
|                                                 
|                                                 
|                                                 
|Extraordinary loss                                |               |                       | 104 |              |   |           | 10 | %            |    |                 |    |         |   |  |    |    |    |   | 104 |     |   |  | NM  |    
|                                                 
|                                                 
|                                                 
|                                                 
|Loss attributable to common
	stockholders         |               |                       | 435 |              |   |           | 40 | %            |    |                 | 485 |         |   |  | 73  | %  |    |   | (50 | )   |   |  | (10 | )% 
|                                                  |               | NM-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 June and November of 1999 and January of
2000, as well as a higher average level of borrowings under our
domestic bank credit agreement and Nextel Internationals
bank and vendor credit facilities.

16



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##### Table of Contents



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 of our 9.375% senior notes due 2009
 and proceeds received in January 2000 from the private
placement of our 5.25% convertible senior notes due 2010.

The debt conversion expense of $23 million resulted from
payments to induce the conversion of $246 million of our
4.75% convertible senior notes due 2007. See B. 
 First Quarter Transactions and Developments.

The increase in equity in losses of unconsolidated affiliates is
due to increased losses attributable to our equity investment in
Nextel Partners, Inc. and to our affiliates in the Philippines
and Japan. The increase in the foreign currency transaction gain
is due primarily to the strengthening of the Brazilian real
relative to the U.S. dollar during the first quarter of 2000.

During the first quarter of 2000, we utilized a portion of the
proceeds from our 9.375% senior notes to repurchase and redeem
prior to final maturity all of our outstanding 10.125% senior
notes and all of our outstanding 9.75% senior notes. As a result
of the early retirement of these senior notes repurchased and
redeemed during the first quarter of 2000, we recognized an
extraordinary loss of about $104 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.

D.  Liquidity and Capital Resources.

We had losses attributable to common stockholders of
$435 million during the first quarter of 2000 and
$485 million during the first quarter of 1999. The operating
 expenses and capital expenditures associated with developing,
enhancing and operating our digital mobile network have more than
 offset our 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 nonoperating 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.

Cash Flows

Working capital increased by $1.5 billion to
$5.3 billion at March 31, 2000 compared to working
capital of $3.8 billion at December 31, 1999 primarily
as a result of the $1.0 billion of proceeds generated from
borrowings in March 2000 under our domestic bank credit facility.

Net cash provided by operating activities of $200 million
for the three months ended March 31, 2000 improved by
$101 million compared to net cash provided by operating
activities of $99 million for the three months ended
March 31, 1999. The increase in net cash provided by
operating activities consisted of a domestic increase of
$65 million and an increase in international operations of
$36 million. The improvement in the cash provided by
operating activities reflects increasing operating revenues and
improved domestic financial performance coupled with strengthened
 cost controls and improved cash management.

Capital expenditures to fund the continued expansion of our
digital mobile network continue to represent the largest use of
our funds for investing activities. Net cash used in investing
activities for the three-month period ended March 31, 2000
increased $365 million compared to the same period in 1999
primarily due to the $172 million increase in cash paid for
capital expenditures and the $138 million decrease in
proceeds from the sale of assets. Cash payments for capital
expenditures totaled $647 million for the three months ended
 March 31, 2000 and $475 million for the three-month
period ended March 31, 1999, including $71 million for
the first quarter of 2000 and $43 million for the first
quarter of 1999 in capital expenditures for international
operations.

17



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##### Table of Contents



Net cash provided by financing activities for the three months
ended March  31, 2000 consisted primarily of
$1.15 billion in gross proceeds from the issuance of debt
securities and $1.0 billion in proceeds from borrowings
under our domestic bank credit facility, offset by
$1.2 billion for the retirement of debt securities.

E.  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;                                     
|
| |  | 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 Federal Communications
	 Commission auctions of spectrum;
|
| |  | debt service requirements; and                                                                                                                                       
|
| |  | other general corporate expenditures.                                                                                                                                

We anticipate that our cash utilization 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 F. Our Forward Looking Statements Are Subject
to a Variety of Factors that Could Cause Actual Results to Differ
 Materially From Current Beliefs.

As of March 31, 2000, our domestic bank credit facility
provided for total secured financing capacity of up to
$6.0 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, as well as a $1.0 billion
incremental term loan borrowed on March 15, 2000, maturing
March 31, 2009. As of March 31, 2000, we had borrowed
$3.7 billion of our 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.
Under the current bank credit agreement, as amended, we are able
to access the entire $6.0 billion available in compliance
with our financial ratio tests, the debt incurrence covenants
contained in our indentures and the relevant terms of our
applicable issues of preferred stock.

As of March 31, 2000, $151 million had been borrowed by
 Nextel International under its equipment financing with Motorola
 Credit Corporation, leaving $74 million available for
future borrowings under that facility. Additionally, as of
March 31, 2000, $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 March 31, 2000,
Nextel Argentina S.R.L. had borrowed the full $100 million
under its original bank credit facility and had borrowed
$11 million of the $50 million in incremental term
loans that are available under that facility, leaving $39 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, all of which was outstanding at March 31,
2000.

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



| |   |                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the contemplated construction of additional cell sites to
	increase system capacity, improve system quality, and expand our
	digital mobile network coverage around most major domestic and
	selected international market areas, as well as in heavily
	traveled corridors between markets;

18



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the installation of switching equipment, other system
	infrastructure equipment and cell sites in the existing markets
	of Nextel and Nextel International sufficient to meet expected
	increases in system demand four to six months ahead of
	anticipated growth; and
|
| |  | the installation of system capital hardware and software items in
	 connection with the commercial launch of wireless data services
	nationwide during 2000.                                                                                                           

Taking such anticipated capital expenditures into account in both
 the Nextel and Nextel International organizations, 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 March 31, 2000 and thereafter:



| |   |                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated cash and cash equivalents and short-term investments
	 on hand as of March 31, 2000 of about $6.3 billion;                                       
|
| |  | the availability of about $2.3 billion of incremental
	funding over the amounts outstanding as of March 31, 2000
	under our domestic bank credit facility; and
|
| |  | the availability of about $134 million in funding under
	Nextel Internationals financing agreements described above.                                         

If our or Nextel Internationals business plans change, or
if economic conditions in either of 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 current
 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 or
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
quarterly report and our Annual Report on Form 10-K for the
year ended December 31, 1999, 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 between us and Motorola pursuant to which we
acquired substantially all of Motorolas domestic 800 MHz
specialized mobile radio licenses in 1995, we have agreed, under
certain circumstances, not to grant superior governance rights to
 any third-party investor without

19



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##### Table of Contents







|   |                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------
|F. | 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.A number of the
 statements made in the foregoing Managements
Discussion and Analysis of Financial Condition and Results of
Operations 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 relevant qualifying factors
identified in the foregoing Managements Discussion
and Analysis of Financial Condition and Results of
Operations section, 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 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 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 receivable
	being generated by the digital mobile network customer base;                                                                                                              
|
| |  | access to sufficient debt or equity capital to meet 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 that are
	critical to our business operations;                                                                                                                                                                                                                                                                                                                                       
|
| |  | 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 registration statements filed with the Securities and
	 Exchange Commission including our Annual Report on
	Form 10-K for the year ended December 31, 1999 and,
	with specific reference to risk factors relating to international
	 operations in Nextel International, Inc.s reports filed
	with the Securities and Exchange Commission, including Nextel

20



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##### Table of Contents



| |  |                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Internationals Annual Report on Form 10-K for the year
	 ended December 31, 1999 and its Quarterly Report on
	Form 10-Q for the quarter ended March 31, 2000.




Item 3.  Quantitative and Qualitative
Disclosures About Market Risk.

We primarily use mandatorily redeemable preferred stock, senior
notes 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 financial instruments are
matched with the existing on-balance sheet financial 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 portion of its operations are financed through
 senior redeemable 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
Argentine peso, expose us to foreign currency exchange rate risk.

As of March 31, 2000, we held about $1.1 billion of
debt securities in the form of commercial paper, U.S. government
securities and certificates of deposit as short-term investments
classified as available-for-sale in accordance with Statement of
Financial Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. As the weighted
average maturity from the date of purchase was less than five
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. As of March 31, 2000, Nextel
Internationals investment had a fair value of
$345 million. In accordance with SFAS No. 115, this
investment is recorded at its market value in our financial
statements. Negative fluctuations in Clearnets stock price
expose us to equity price risk. A 10% decline in the stock price
would result in a $35 million decrease in the fair value of
Nextel Internationals investment in Clearnet.

The information below summarizes our sensitivity to market risks
associated with fluctuations in interest rates and foreign
currency exchange rates as of March 31, 2000 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 cash flows and related
 interest rates by year of maturity for our mandatorily
redeemable preferred stock, senior notes, finance obligation and
bank and vendor credit facilities in effect at March 31,
2000 and, in the case of the mandatorily redeemable preferred
stock and senior notes, excludes the potential exercise of the
relevant redemption or conversion features. This table also
assumes that we will repay our senior notes to levels necessary
to avoid an earlier repayment obligation with respect to our
domestic bank credit agreement. See Item 2.
Managements Discussion and Analysis of Financial Condition
and Results of Operations  E. Future Capital Needs and
 Resources. For interest rate swap and collar agreements,
the table presents notional amounts and the related reference
interest rates by year of maturity. Fair values included in this
section have been determined based on:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | quoted market prices for mandatorily redeemable preferred stock
	and senior notes;                                    
|
| |  | carrying value for the bank and vendor credit facilities at
	March 31, 2000, as interest rates are reset periodically;
|
| |  | estimates for the finance obligation based on interest rates for
	current term loans with similar terms; and          

21



---



##### Table of Contents





| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | estimates obtained from dealers to settle interest rate swap and
	collar agreements.

Descriptions of our mandatorily redeemable preferred stock,
senior notes, bank and vendor credit facilities, and interest
rate risk management agreements are contained in Notes 8, 9
and 12 to the consolidated financial statements contained in our
1999 Annual Report on Form 10-K and should be read in
conjunction with the following table. The change in the total and
 fair values of our mandatorily redeemable preferred stock,
long-term debt, finance obligation and interest rate swaps and
collars as compared to December 31, 1999 reflect the
January 2000 issuance of convertible notes, additional
borrowings under our bank and vendor credit facilities, the
retirement of two series of our debt securities, the
March 2000 conversion of some of our 4.75% convertible
senior notes due 2007 and some of our zero coupon convertible
preferred stock due 2010 and the changes in the applicable market
 conditions.

|                                                                               |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------ |  | -------------------------- | -- | ---- |  | ---- | --- | ---- |  | ---- | --- | ---------- |  | ----- | --- | ----- |  | - | --- | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                               |  |                            |    |      |  |     
|                                                                               |  | 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 Obligation |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Fixed Rate                                                                     |  | $                          | 18 |      |  | $    | 33  |      |  | $    | 37  |            |  | $     | 40  |       |  | $ | 37  |   |  | $ | 12,107 |   |  | $ | 12,272 |   |  | $ | 11,780 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Interest Rate                                                          |  |                            | 8  | %    |  |      | 8   | %    |  |      | 8   | %          |  |       | 8   | %     |  |   | 8   | % |  |   | 9      | % |  |   | 9      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Variable Rate                                                                  |  |                            | 33 |      |  |      | 140 |      |  |      | 119 |            |  |       | 207 |       |  |   | 239 |   |  |   | 3,335  |   |  |   | 4,073  |   |  |   | 4,073  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Interest Rate                                                          |  |                            | 11 | %    |  |      | 11  | %    |  |      | 11  | %          |  |       | 10  | %     |  |   | 9   | % |  |   | 9      | % |  |   | 9      | % |  |   |        |  
|Interest Rate Swaps                                                            |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Variable to Fixed                                                              |  |                            |   |      |  |      | 150 |      |  |      |    |            |  |       | 100 |       |  |   |    |   |  |   | 570    |   |  |   | 820    |   |  |   | (31    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|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   | %    |  |      |    |            |  |       | 6   | %     |  |   |    |   |  |   |       |   |  |   | 6      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Receive Rate                                                           |  |                            | 6  | %    |  |      | 6   | %    |  |      |    |            |  |       | 6   | %     |  |   |    |   |  |   |       |   |  |   | 6      | % |  |   |        |  
|Interest Rate Collars                                                          |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Collars                                                                        |  |                            |   |      |  |      |    |      |  |      |    |            |  |       | 200 |       |  |   |    |   |  |   |       |   |  |   | 200    |   |  |   | 1      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Cap                                                                    |  |                            |   |      |  |      |    |      |  |      |    |            |  |       | 7   | %     |  |   |    |   |  |   |       |   |  |   | 7      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Floor                                                                  |  |                            |   |      |  |      |    |      |  |      |    |            |  |       | 4   | %     |  |   |    |   |  |   |       |   |  |   | 4      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|II. Foreign Exchange Rate Sensitivity                                          |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|Long-Term Debt                                                                 |  |                            |    |      |  |      |     |      |  |      |     |            |  |       |     |       |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Fixed Rate                                                                     |  |                            | 1  |      |  |      | 1   |      |  |      | 1   |            |  |       |    |       |  |   |    |   |  |   | 1,681  |   |  |   | 1,684  |   |  |   | 1,118  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Interest Rate                                                          |  |                            | 14 | %    |  |      | 14  | %    |  |      | 14  | %          |  |       |    |       |  |   |    |   |  |   | 13     | % |  |   | 13     | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Variable Rate                                                                  |  |                            | 33 |      |  |      | 140 |      |  |      | 94  |            |  |       | 94  |       |  |   | 62  |   |  |   |       |   |  |   | 423    |   |  |   | 423    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Average Interest Rate                                                          |  |                            | 11 | %    |  |      | 11  | %    |  |      | 11  | %          |  |       | 11  | %     |  |   | 11  | % |  |   |       |   |  |   | 11     | % |  |   |        |  

22



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##### Table of Contents






PART II




Item 1.  Legal Proceedings.

Nextel is involved in certain legal proceedings that are
described in our 1999 Annual Report on Form 10-K. During the
 three months ended March 31, 2000, there were no material
changes in the status of or developments regarding those legal
proceedings that have not been previously disclosed in our 1999
Annual Report on Form 10K.




Item 2.  Changes in Securities.

(a)  Inapplicable.

(b)  Inapplicable.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | In February 2000, we completed the issuance and sale of
	$1.15 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 of 1933. This transaction was effected pursuant to the
	exemption of Section  4(2) of the Securities Act of 1933 and
	 Rule 144A under that act, in reliance upon the
	representations of the placement agent.



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In late March 2000, we issued 5,195,206 shares of class A
	common stock upon the conversion of about $246 million of
	our 4.75% convertible senior notes due 2007, at a conversion
	price of $47.308 per share.                                                                                                       
|
| | In late March 2000, we issued 2,455,153 shares of class A
	common stock upon the conversion of 251,963 shares of our zero
	coupon convertible preferred stock mandatorily redeemable 2013,
	at a conversion rate of 9.7441 shares of class A common stock for
	 each share of zero coupon convertible preferred stock.
|
| | These shares were issued to the converting noteholders and
	preferred stockholders mentioned above pursuant to the exemption
	of Section 3(a)(9) of the Securities Act of 1933 in reliance
	 upon the representations of the former noteholders and preferred
	 stockholders.                                         




Item 6.  Exhibits and Reports on Form 8-K.

(a)  List of Exhibits.

|        |  |                                                                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                 
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                 
|4.1     |  | Indenture, dated as of January 26, 2000 by and between
	Nextel and Harris Trust and Savings Bank, as trustee, relating to
	 Nextels 5.25% Convertible Senior Notes due 2010 (filed as
	Exhibit 4.1 to the Current Report on Form 8-K dated and
	 filed on January 26, 2000 and incorporated herein by
	reference).             
|4.2     |  | Registration Rights Agreement, dated as of January 26, 2000,
	 by and between Nextel and Morgan Stanley & Co. Incorporated
	relating to Nextels 5.25% Convertible Senior Notes due 2010
	 (filed as Exhibit 10.1 to the Current Report on
	Form 8-K dated and filed on January 26, 2000 and
	incorporated herein by reference).

23



---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.3     |  | 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 and filed on March 15,
	 2000 and incorporated herein by reference).                                                   
|4.4     |  | Amendment 1 dated April 26, 2000 to the Amended and Restated
	 Credit Agreement dated as 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  4.1 to the Current
	Report on Form 8-K dated and filed on May 5, 2000 and
	incorporated herein by reference).
|27*     |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                                                                                                                              






|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Submitted only with the electronic filing of this document with
	the Securities and Exchange Commission pursuant to
	Regulation S-T under the Securities Act.



| |     |                     
| | --- | --------------------
| | (b) | Reports on Form 8-K.



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | Current Report on Form 8-K dated and filed on
	January 21, 2000 with the Securities and Exchange Commission
	 reporting under Item 5 the announcement of a private
	placement of $1.0 billion of our 5.25% convertible senior
	notes due 2010.                                                                                                                                                                                             
|
| | (ii)  | Current Report on Form 8-K dated and filed on
	January 26, 2000 with the Securities and Exchange Commission
	 reporting under Item 5 the completion of a private
	placement of $1.0 billion of our 5.25% convertible senior
	notes due 2010.                                                                                                                                                                                               
|
| | (iii) | Current Report on Form 8-K dated and filed on
	February 3, 2000 with the Securities and Exchange Commission
	 reporting under Item 5 the completion of a private
	placement of an additional $150 million of our 5.25%
	convertible senior notes due 2010.                                                                                                                                                                                 
|
| | (iv)  | Current Report on Form 8-K dated and filed on
	February 22, 2000 with the Securities and Exchange
	Commission reporting under Item 5 the announcement of our
	summary financial results and other data for the quarter and year
	 ended December 31, 1999, as well as a 2-for-1 stock split
	to be effective upon shareholder approval of a proposed increase
	in our authorized equity capitalization at the annual
	shareholders meeting.
|
| | (v)   | Current Report on Form 8-K dated and filed on
	February 28, 2000 with the Securities and Exchange
	Commission reporting under Item 5 the commitment obtained
	from Chase Securities Inc. to activate the $1.0 billion
	incremental senior secured credit facility under our existing
	bank credit agreement.                                                                                                                               
|
| | (vi)  | Current Report on Form 8-K dated and filed on March 15,
	 2000 with the Securities and Exchange Commission reporting under
	 Item 5 the establishment and funding of the
	$1.0 billion incremental senior secured credit facility
	under our existing domestic bank credit facility.                                                                                                                                                       

24



---



##### Table of Contents






SIGNATURE

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



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



| |     |                      
| | --- | ---------------------
| | By: | /s/ WILLIAM G. ARENDT



| |  |                  
| |  | -----------------
| |  | William G. Arendt

| |                               
| | ------------------------------
| | Vice President and Controller 
| | (Principal Accounting Officer)

25



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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1     |  | Indenture, dated as of January 26, 2000 by and between
	Nextel and Harris Trust and Savings Bank, as trustee, relating to
	 Nextels 5.25% Convertible Senior Notes due 2010 (filed as
	Exhibit 4.1 to the Current Report on Form 8-K dated and
	 filed on January 26, 2000 and incorporated herein by
	reference).                                                                                                                                                   
|4.2     |  | Registration Rights Agreement, dated as of January  6, 2000,
	 by and between Nextel and Morgan Stanley & Co. Incorporated
	relating to Nextels 5.25% Convertible Senior Notes due
	 2010 (filed as Exhibit 10.1 to the Current Report on
	Form 8-K dated and filed on January 26, 2000 and
	incorporated herein by reference).                                                                                                                                      
|4.3     |  | 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 and filed on March 15, 2000
	and incorporated herein by reference).                                                     
|4.4     |  | Amendment 1 dated April 26, 2000 to the Amended and Restated
	 Credit Agreement dated as 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  4.1 to the Current
	Report on Form 8-K dated and filed on May 5, 2000 and
	incorporated herein by reference).
|27*     |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Submitted only with the electronic filing of this document with
	the Securities and Exchange Commission pursuant to
	Regulation S-T under the Securities Act.

26