##### 









UNITED STATES



Washington, D.C. 20549


FORM 10-Q/A

(Mark One)

|                                                   |  |                                                                                           
|-------------------------------------------------- |  | ------------------------------------------------------------------------------------------
|                                                  
|                                                  
|                                                  
|                                                  
|[X]                                                |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
	15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended
	September 30, 2001
|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.

(Exact name of registrant as specified in its
charter)


|                                                                                     |  |                                               
|------------------------------------------------------------------------------------ |  | ----------------------------------------------
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|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 the issuers classes of common stock, as of the latest
practicable date.

|                                                  |  |                              |             | 
|------------------------------------------------- |  | ---------------------------- | ----------- | 
|                                                  |  | Number of Shares Outstanding
|Title of Class                                    |  | on October 31, 2001         
|                                                  |  |                             
|Class A Common Stock, $0.001 par value            |  |                              | 762,647,372 | 
|Class B Nonvoting Common Stock, $0.001 par
	value |  |                              | 35,660,000  | 



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##### 



The registrant hereby amends Item 2 of its
quarterly report on Form 10-Q for the quarter ended September
30, 2001 in its entirety as follows:

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

Overview

The following is a discussion and analysis of:



| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our consolidated financial condition and results
        of operations for the nine-and three-month periods ended
        September 30, 2001 and 2000; and
|
| |  | significant factors that could affect our
        prospective financial condition and results of operations.                                              

You should read this discussion in conjunction
with our 2000 annual report on Form 10-K and our subsequent
quarterly reports on Form 10-Q. Historical results may not
indicate future performance. See Forward Looking
Statements.

Our consolidated financial statements include the
accounts of Nextel International, Inc. and its consolidated
subsidiaries. However, additional more detailed and focused
information relating to Nextel International may be found in the
periodic and other reports filed by Nextel International with
the Securities and Exchange Commission pursuant to the rules
under the Securities Exchange Act of 1934.

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 integrated Digital Enhanced Network, or 
 iDEN(R), technology.

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



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | digital mobile telephone service;                                                                               
|
| |  | digital two-way radio dispatch service, which is
        marketed as Nextel Direct Connect(R)
        service;



| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Internet applications, mobile messaging services,
        e-mail and advanced business applications, which are marketed as
        Nextel Wireless Web services;



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | advanced calling features, such as three-way
        calling, voicemail, call forwarding and additional line service;
|
| |  | international roaming capabilities, which are
        marketed as Nextel WorldwideSM; and                          
|
| |  | text and numeric paging.                                                                                             

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, provides
wireless communications services in and around various major
metropolitan market areas in Latin America and the Philippines,
referred to as its managed markets. Additionally, Nextel
International has investments in wireless communications
providers in Canada and Japan and owns analog specialized mobile
radio companies in Chile.

As of September 30, 2001:



| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we provided service to about 8,165,600 digital
        handsets in the United States;                                                                                                                                                                                                           
|
| |  | our digital mobile network and the compatible
        digital mobile network of Nextel Partners, Inc., our affiliate
        providing service in small and medium sized markets, was
        operational in 191 of the top 200 metropolitan statistical areas
        in the United States; and
|
| |  | Nextel International provided service to about
        1,189,500 digital handsets in its managed markets.                                                                                                                                                                                       

2



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##### 



In July 2001, we initiated operations in our
sixth customer care center near Bremerton, Washington and expect
it to be fully operational by the end of 2001.

In July 2001, we launched an enhanced Nextel
Direct Connect service that allows any Nextel subscriber to
instantly communicate with any other Nextel subscriber in the
same local dispatch calling area in some of our markets. We
expect to offer this improved service in all of our markets by
the end of 2001. We also have announced plans for our next
enhancement to Nextel Direct Connect which will allow any two or
more Nextel subscribers traveling to a market outside of their
home calling area to continue to use Nextel Direct Connect with
each other and with other Nextel subscribers in the visited
market. This traveling Nextel Direct Connect feature is expected
to be available in 2002 and is the next step in our planned
introduction of a nationwide Nextel Direct Connect feature. See
Forward Looking Statements.

In September 2001, we announced that
Paul N. Saleh had been named our Executive Vice President
and Chief Financial Officer. He replaces John S.
Brittain, Jr., who remains our Vice President and
Treasurer. In September 2001, J. Timothy Bryan, Chief
Financial Officer of Eagle River, Inc., an affiliate of
Craig O. McCaw, joined our board of directors as a designee
of Digital Radio, L.L.C. In October 2001, Daniel F.
Akerson resigned from our board of directors and also from his
position as chairman of the board of directors of Nextel
International.

In October 2001, Motorola and we announced
an anticipated significant technology upgrade to our iDEN
digital mobile network, which Motorola is developing for our
expected deployment in 2003. We expect that this upgrade will
effectively double our voice capacity and leverage our existing
infrastructure more efficiently. We also announced a compression
technology enhancement expected to be rolled out in 2002 to
deliver packet data service more efficiently at perceived higher
speeds. See Forward Looking Statements.

Results of Operations

Operating revenues.

|                          |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |    |  
|------------------------- | ------------------ | --------------------- | ----- | ------------ |  | ------------- | -- | ------------ | - | ------------- | ----- | ------- |  |  | -- | --- | - | - | ----- | ----- |  |  | --- | -- | -
|                          |                    |                       |       |              |  |               |    |              |   |              
|                          |                    |                       |       | % of         |  |               |    | % of         |   | Change from  
|                          |                    |                       |       | Consolidated |  |               |    | Consolidated |   | Previous Year
|                          |                    | September 30,         |       | Operating    |  | September 30, |    | Operating    |   |              
|                          |                    | 2001                  |       | Revenues     |  | 2000          |    | Revenues     |   | Dollars       |       | Percent
|                          |                    |                       |       |              |  |               |    |              |   |               |       |        
|                          |                    |                      
|                          |                    | (dollars in millions)
|Nine Months Ended         |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   
|                         
|                         
|                         
|                         
|Domestic                  |                    | $                     | 5,132 |              |  |               | 91 | %            |   | $             | 3,856 |         |  |  | 95 | %   |   | $ | 1,276 |       |  |  | 33  | % 
|                         
|                         
|                         
|                         
|International             |                    |                       | 486   |              |  |               | 9  | %            |   |               | 212   |         |  |  | 5  | %   |   |   | 274   |       |  |  | 129 | % 
|                         
|                         
|                         
|                         
|Intercompany eliminations |                    |                       | (3    | )            |  |               |   |              |   |               |      |         |  |  |   |     |   |   | (3    | )     |  |  |    |   
|                          |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   
|                          | Operating revenues |                       | $     | 5,615        |  |               |    | 100          | % |               | $     | 4,068   |  |  |    | 100 | % |   | $     | 1,547 |  |  |     | 38 | %
|                          |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   
|Three Months Ended        |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   
|                         
|                         
|                         
|                         
|Domestic                  |                    | $                     | 1,807 |              |  |               | 91 | %            |   | $             | 1,437 |         |  |  | 94 | %   |   | $ | 370   |       |  |  | 26  | % 
|                         
|                         
|                         
|                         
|International             |                    |                       | 186   |              |  |               | 9  | %            |   |               | 91    |         |  |  | 6  | %   |   |   | 95    |       |  |  | 104 | % 
|                         
|                         
|                         
|                         
|Intercompany eliminations |                    |                       | (1    | )            |  |               |   |              |   |               |      |         |  |  |   |     |   |   | (1    | )     |  |  |    |   
|                          |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   
|                          | Operating revenues |                       | $     | 1,992        |  |               |    | 100          | % |               | $     | 1,528   |  |  |    | 100 | % |   | $     | 464   |  |  |     | 30 | %
|                          |                    |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |     |   |   |       |       |  |  |     |   

|                                     |  |       |  |  |  |   |  |          |  |         |  |  |  |  |   |  |  |  |       |  |  |  |    |  
|------------------------------------ |  | ----- |  |  |  | - |  | -------- |  | ------- |  |  |  |  | - |  |  |  | ----- |  |  |  | -- | -
|                                     |  |       |  |  |  |   |  |          |  |        
|Digital handsets in service at end   |  |       |  |  |  |   |  |          |  |        
|of period for consolidated           |  |       |  |  |  |   |  | Handsets |  | Percent
|subsidiaries (handsets in thousands) |  |       |  |  |  |   |  |          |  |        
|Domestic                             |  | 8,166 |  |  |  |  |  |          |  | 6,157   |  |  |  |  |  |  |  |  | 2,009 |  |  |  | 33 | %
|                                    
|                                    
|                                    
|                                    
|International                        |  | 1,189 |  |  |  |  |  |          |  | 639     |  |  |  |  |  |  |  |  | 550   |  |  |  | 86 | %

The increase in domestic operating revenues from
the nine months ended September 30, 2000 to the nine months
ended September 30, 2001 consists of a $1.24 billion
or 35% increase in wireless service and other revenues to
$4.8 billion and a $34 million or 11% increase in
revenues from digital handset and accessory sales to
$332 million. The increase in domestic operating revenues
from the three months ended September 30, 2000 to the three
months ended September 30, 2001 consists of a
$359 million or 27% increase in wireless

3



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##### 



service and other revenues to $1.69 billion
and an $11 million or 10% increase in revenues from digital
handset and accessory sales to $118 million. We continue to
sell handsets at prices below our cost to attract new customers
and as handset upgrade and retention inducements for existing
customers. Additionally, as competition has intensified, the
prices at which we sell handsets to our new and existing
customers have generally declined from the nine months ended
September 30, 2000. Accordingly, revenues from domestic
digital handset and accessory sales have not increased in
proportion to the increase in the number of handsets sold. To
mitigate this effect, during the second quarter of 2001, we
began to raise prices on existing handsets and introduce more
feature rich and higher priced handsets, in an effort to limit
the level of subsidy offered to attract and retain customers in
our targeted segments. However, in order to stimulate sales of
slow-moving handset models, we continue to rely on various
customer inducements, including reductions in the sales prices
of affected handset models.


Domestic service and other revenues increased
principally as a result of a 33% increase in domestic handsets
in service. Average monthly revenue per domestic handset
decreased from about $74 during the first nine months of 2000 to
about $71 during the first nine months of 2001. Additionally, as
compared to the same periods in 2000, average monthly minutes of
use per subscriber increased 19% in the nine months ended
September 30, 2001 to about 560 minutes. We attribute both
the decrease in average monthly revenue per domestic handset and
the increase in minutes of use per subscriber to the
introduction of pricing plans designed to provide additional
value to our customers. These new pricing plans, developed in
part to meet competitive demands, generally provide lower
per-minute rates made available in conjunction with fixed-rate
service plans. These plans typically include a fixed amount of
interconnect minutes combined with an unlimited or fixed amount
of digital two-way radio service, unlimited Nextel Wireless Web
services or free long distance service, all for a stated package
price. The growth in handsets in service is the result of a
number of factors, principally:



| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the introduction of more competitive service
	pricing plans targeted at meeting more of our customers
	needs, including a variety of fixed-rate plans offering bundled
	monthly minutes and other integrated services and features;
|
| |  | our differentiated products and services,
	including Nextel Direct Connect and Nextel Wireless Web;                                                                                                                                 
|
| |  | increased brand name recognition through
	increased advertising and marketing campaigns;                                                                                                                                            
|
| |  | aggressive handset pricing promotions;                                                                                                                                                                                              
|
| |  | increased sales force and marketing staff; and                                                                                                                                                                                      
|
| |  | improved quality of service.                                                                                                                                                                                                        

We expect our average monthly revenue per
domestic handset may continue to decrease in the future:



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | as we continue to migrate existing customers to
	lower priced service offering packages;
|
| |  | if competitive pressures require us to:                                                 



| |   |                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | further restructure our service offering packages
	to offer more value;                                                                                                                                                                                
|
| |  | reduce our service offering prices; or                                                                                                                                                                                                                 
|
| |  | respond to particular short-term, market specific
	situations, such as special introductory pricing or packages
	that may be offered by providers launching their service, or
	particular new product or service offerings, in a particular
	market; or



| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | if we expand our marketing efforts to attract
	non-business users as customers.

The increase in international operating revenues
from the nine months ended September 30, 2000 to the nine
months ended September 30, 2001 consists of a
$266 million or 135% increase in wireless service and other
revenues to $463 million and an $8 million or 53%
increase in revenues from digital handset and accessory sales to
$23 million. The increase in international operating
revenues from the three months ended September 30, 2000 to
the three months ended September 30, 2001 consists of a
$92 million or 107% increase

4



---



##### 



in wireless service and other revenues to
$178 million and a $3 million or 60% increase in
revenues from digital handset and accessory sales to
$8 million. Operating revenues increased primarily as a
result of an 86% increase in the number of digital handsets in
service in Nextel Internationals managed markets from
September 30, 2000 to September 30, 2001, particularly
in the Mexican and Brazilian markets. Additionally, the
successful introduction of higher priced service plans,
primarily in Mexico, contributed to the increase, but was
partially offset by more competitive pricing plans in our other
international markets offering lower per-minute rates.


Cost of revenues.

|                          |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |    |  
|------------------------- | ---------------- | --------------------- | ----- | ------------ |  | ------------- | -- | ------------ | - | ------------- | ----- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | --- | -- | -
|                          |                  |                       |       |              |  |               |    |              |   |              
|                          |                  |                       |       | % of         |  |               |    | % of         |   | Change from  
|                          |                  |                       |       | Consolidated |  |               |    | Consolidated |   | Previous Year
|                          |                  | September 30,         |       | Operating    |  | September 30, |    | Operating    |   |              
|                          |                  | 2001                  |       | Revenues     |  | 2000          |    | Revenues     |   | Dollars       |       | Percent
|                          |                  |                       |       |              |  |               |    |              |   |               |       |        
|                          |                  |                      
|                          |                  | (dollars in millions)
|Nine Months Ended         |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   
|                         
|                         
|                         
|                         
|Domestic                  |                  | $                     | 1,868 |              |  |               | 33 | %            |   | $             | 1,432 |         |  |  | 35 | %  |   | $ | 436 |     |  |  | 30  | % 
|                         
|                         
|                         
|                         
|International             |                  |                       | 249   |              |  |               | 5  | %            |   |               | 117   |         |  |  | 3  | %  |   |   | 132 |     |  |  | 113 | % 
|                         
|                         
|                         
|                         
|Intercompany eliminations |                  |                       | (3    | )            |  |               |   |              |   |               |      |         |  |  |   |    |   |   | (3  | )   |  |  |    |   
|                          |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   
|                          | Cost of revenues |                       | $     | 2,114        |  |               |    | 38           | % |               | $     | 1,549   |  |  |    | 38 | % |   | $   | 565 |  |  |     | 36 | %
|                          |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   
|Three Months Ended        |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   
|                         
|                         
|                         
|                         
|Domestic                  |                  | $                     | 639   |              |  |               | 32 | %            |   | $             | 538   |         |  |  | 35 | %  |   | $ | 101 |     |  |  | 19  | % 
|                         
|                         
|                         
|                         
|International             |                  |                       | 94    |              |  |               | 5  | %            |   |               | 49    |         |  |  | 3  | %  |   |   | 45  |     |  |  | 92  | % 
|                         
|                         
|                         
|                         
|Intercompany eliminations |                  |                       | (1    | )            |  |               |   |              |   |               |      |         |  |  |   |    |   |   | (1  | )   |  |  |    |   
|                          |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   
|                          | Cost of revenues |                       | $     | 732          |  |               |    | 37           | % |               | $     | 587     |  |  |    | 38 | % |   | $   | 145 |  |  |     | 25 | %
|                          |                  |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |     |   

The increase in cost of revenues from the nine
months ended September 30, 2000 to the nine months ended
September 30, 2001 for our domestic operations consists of
a $247 million or 35% increase in cost of providing
wireless services to $955 million and a $189 million
or 26% increase in cost of digital handset and accessory sales
to $913 million. The increase in cost of revenues from the
three months ended September 30, 2000 to the three months
ended September 30, 2001 for our domestic operations
consists of a $77 million or 29% increase in cost of
providing wireless services to $341 million and a
$24 million or 9% increase in cost of digital handset and
accessory sales to $298 million. Cost of digital handset
and accessory sales increased primarily due to the increase in
the number of handsets sold to new and existing customers, and
to a lesser extent, the increase in the percentage of higher
cost handsets sold.

Domestic cost of service revenues increased
primarily as a result of increased costs incurred related to
variable interconnect fees on higher minutes of use and
increased costs incurred related to direct switch and
transmitter and receiver site costs including rent, utility and
fixed interconnection fees. Total system minutes of use grew 66%
from the nine months ended September 30, 2000 to the nine
months ended September 30, 2001 principally due to the
larger number of handsets in service as well as the 19% increase
in average monthly minutes of use per subscriber in the nine
months ended September 30, 2001 compared to the same period
in 2000. The transmitter and receiver site and switch costs
increased due to a 31% increase in transmitter and receiver
sites and related equipment and an 11% increase in the number of
switches we placed in service from September 30, 2000 to
September 30, 2001.

The increase in international cost of revenues
from the nine months ended September 30, 2000 to the nine
months ended September 30, 2001 consists of a
$79 million or 152% increase in cost of providing wireless
services to $131 million, and a $53 million or 82% increase
in cost of digital handset and accessory sales to
$118 million. The increase in international cost of
revenues from the three months ended September 30, 2000 to
the three months ended September 30, 2001 consists of a
$27 million or 123% increase in cost of providing wireless
services to $49 million, and an $18 million or 67%
increase in cost of digital handset and accessory

5



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##### 



sales to $45 million. The increase in the
cost of providing international wireless services is primarily
attributable to:




| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in costs related to variable
	interconnect fees on significantly increased minutes of use, as
	well as higher fixed interconnect costs per minute, primarily in
	Brazil; and                                                                     
|
| |  | an increase in site ground lease and utility
	expenses incurred due to a 65% increase in the number of
	transmitter and receiver sites placed in service by Nextel
	Internationals consolidated subsidiaries from
	September 30, 2000 to September 30, 2001.

The increase in international cost of digital
handset and accessory sales is primarily due to the increase in
the number of digital handsets sold, partially offset by a
decrease in the average cost Nextel International paid for the
handsets sold.

We expect the amount of cost of revenues to
increase as we place more sites and switches into service to add
capacity and coverage to our networks, as customer usage of the
digital mobile networks increases and as we sell more handsets
and accessories to new customers and provide handset upgrade and
retention inducements to existing customers, partially offset by
a reduction in the average cost we expect to pay for the
handsets sold. See Forward Looking Statements.

Selling, general and administrative
expenses.

|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |    |  
|----------------------------------- | -------------------------- | --------------------- | ----- | ------------ |  | ------------- | -- | ------------ | - | ------------- | ----- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | -- | -- | -
|                                    |                            |                       |       |              |  |               |    |              |   |              
|                                    |                            |                       |       | % of         |  |               |    | % of         |   | Change from  
|                                    |                            |                       |       | Consolidated |  |               |    | Consolidated |   | Previous Year
|                                    |                            | September 30,         |       | Operating    |  | September 30, |    | Operating    |   |              
|                                    |                            | 2001                  |       | Revenues     |  | 2000          |    | Revenues     |   | Dollars       |       | Percent
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |        
|                                    |                            |                      
|                                    |                            | (dollars in millions)
|Nine Months Ended                   |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 2,236 |              |  |               | 40 | %            |   | $             | 1,642 |         |  |  | 40 | %  |   | $ | 594 |     |  |  | 36 | % 
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|Domestic                            |                            | $                     | 924   |              |  |               | 17 | %            |   | $             | 745   |         |  |  | 18 | %  |   | $ | 179 |     |  |  | 24 | % 
|                                   
|                                   
|                                   
|                                   
|International                       |                            |                       | 163   |              |  |               | 3  | %            |   |               | 104   |         |  |  | 3  | %  |   |   | 59  |     |  |  | 57 | % 
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                    | Selling and marketing      |                       | $     | 1,087        |  |               |    | 20           | % |               | $     | 849     |  |  |    | 21 | % |   | $   | 238 |  |  |    | 28 | %
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|Domestic                            |                            | $                     | 978   |              |  |               | 17 | %            |   | $             | 702   |         |  |  | 17 | %  |   | $ | 276 |     |  |  | 39 | % 
|                                   
|                                   
|                                   
|                                   
|International                       |                            |                       | 170   |              |  |               | 3  | %            |   |               | 91    |         |  |  | 2  | %  |   |   | 79  |     |  |  | 87 | % 
|                                   
|                                   
|                                   
|                                   
|Intercompany eliminations           |                            |                       | 1     |              |  |               |   |              |   |               |      |         |  |  |   |    |   |   | 1   |     |  |  |   |   
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                    | General and administrative |                       | $     | 1,149        |  |               |    | 20           | % |               | $     | 793     |  |  |    | 19 | % |   | $   | 356 |  |  |    | 45 | %
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|Three Months Ended                  |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 763   |              |  |               | 38 | %            |   | $             | 582   |         |  |  | 38 | %  |   | $ | 181 |     |  |  | 31 | % 
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|Domestic                            |                            | $                     | 296   |              |  |               | 15 | %            |   | $             | 249   |         |  |  | 16 | %  |   | $ | 47  |     |  |  | 19 | % 
|                                   
|                                   
|                                   
|                                   
|International                       |                            |                       | 59    |              |  |               | 3  | %            |   |               | 41    |         |  |  | 3  | %  |   |   | 18  |     |  |  | 44 | % 
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                    | Selling and marketing      |                       | $     | 355          |  |               |    | 18           | % |               | $     | 290     |  |  |    | 19 | % |   | $   | 65  |  |  |    | 22 | %
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|Domestic                            |                            | $                     | 346   |              |  |               | 17 | %            |   | $             | 258   |         |  |  | 17 | %  |   | $ | 88  |     |  |  | 34 | % 
|                                   
|                                   
|                                   
|                                   
|International                       |                            |                       | 62    |              |  |               | 3  | %            |   |               | 34    |         |  |  | 2  | %  |   |   | 28  |     |  |  | 82 | % 
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   
|                                    | General and administrative |                       | $     | 408          |  |               |    | 20           | % |               | $     | 292     |  |  |    | 19 | % |   | $   | 116 |  |  |    | 40 | %
|                                    |                            |                       |       |              |  |               |    |              |   |               |       |         |  |  |    |    |   |   |     |     |  |  |    |   

The increase in domestic selling and marketing
expenses from the nine and three months ended September 30,
2000 to the nine and three months ended September 30, 2001
primarily reflects increased costs incurred in connection with
higher sales of handsets including:



| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $61 million and $11 million, or an 18%
	and a 10%, increase in commissions and residuals earned by
	indirect dealers and distributors as a result of increased
	handset sales through these channels;    
|
| |  | $58 million and $14 million, or a 40%
	and a 29%, increase in advertising expenses due to aggressive
	marketing campaigns, including sports-related sponsorships and
	television commercials, directed at

6



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | growing our customer base and increasing brand
	awareness, as well as promoting our differentiated services,
	such as Nextel Direct Connect and Nextel Wireless Web;                                                                                                                                                                                                                     
|
| |  | $52 million and $23 million, or a 21%
	and a 27%, increase in sales and marketing payroll and related
	expenses including costs associated with our company-owned
	retail stores acquired in May 2001 and increased
	commissions attributable to a larger direct sales force and
	increased reliance on our lower cost distribution channels
	beginning in the third quarter of 2001; and
|
| |  | $8 million increase and $1 million
	decrease in other general marketing expenses.                                                                                                                                                                                                                                                                                                        

The increase in international selling and
marketing expenses from the nine and three months ended
September 30, 2000 to the nine and three months ended
September 30, 2001 is primarily due to increased direct
sales labor costs attributable to a larger direct sales force,
increased commissions from higher levels of digital handset
sales and increased advertising.

Domestic general and administrative expenses
increased from the nine and three months ended
September 30, 2000 to the nine and three months ended
September 30, 2001 primarily as a result of activities to
support a larger customer base, specifically:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $140 million and $60 million, or a 141%
	and a 154%, increase in bad debt expense, which has increased as
	a percentage of domestic operating revenues primarily due to the
	impact of a slowing economy and aggressive promotions in late
	2000 and early 2001, resulting in an ongoing increased focus on
	and strengthening of our credit policies and procedures,
	including modifying credit scoring models and requiring more
	forms of identification and deposits from more classes of
	customers;
|
| |  | $125 million and $35 million, or a 49%
	and a 35%, increase in expenses related to billing, collection,
	customer retention and customer care activities, including the
	costs associated with our fifth customer care center which
	commenced operations in January 2001 and our sixth customer
	care center which commenced operations in July  2001, as
	well as costs associated with the implementation of our new
	billing system, expected to be completed in mid-2002; and                        
|
| |  | $11 million increase and $7 million
	decrease in personnel, facilities and general corporate expenses.                                                                                                                                                                                                                                                                                                                                                                                                    

International general and administrative expenses
increased from the nine and three months ended
September 30, 2000 to the nine and three months ended
September 30, 2001 primarily due to an increase in billing
and customer care, information technology, facilities and other
general corporate expenses to support a growing customer base.
Additionally, international bad debt expense increased
$17 million and $9 million, or 142% and 300%, from the
nine and three months ended September 30, 2000 to the nine
and three months ended September 30, 2001 and has been
increasing as a percentage of revenues primarily as a result of
a weakening Brazilian economy.

The aggregate amount of domestic selling, general
and administrative expenses is expected to increase as a result
of a number of factors, including but not limited to:



| |   |                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing aggressive marketing and advertising
	campaigns designed to increase brand awareness in our
	traditional business and government markets, as well as to
	develop brand awareness in the non-business user market;                                                           
|
| |  | costs associated with operating recently acquired
	retail stores and opening additional retail stores in 2002;                                                                                                                                                                         
|
| |  | increasing commission and residual payments as we
	sell more handsets, partially offset by efforts to generate more
	handset sales through our lower cost distribution channels, such
	as company-owned retail stores, Internet sales through our
	website and telemarketing sales; and
|
| |  | increasing customer care costs as a result of our
	sixth customer care center, which is expected to become fully
	operational by the end of 2001.                                                                                                                                      

7



---



##### 



Segment earnings (losses).

|                          |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |    |  
|------------------------- | ---------------- | --------------------- | ----- | ------------ |  | ------------- | -- | ------------ | - | ------------- | ---- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | -- | -- | -
|                          |                  |                       |       |              |  |               |    |              |   |              
|                          |                  |                       |       | % of         |  |               |    | % of         |   | Change from  
|                          |                  |                       |       | Consolidated |  |               |    | Consolidated |   | Previous Year
|                          |                  | September 30,         |       | Operating    |  | September 30, |    | Operating    |   |              
|                          |                  | 2001                  |       | Revenues     |  | 2000          |    | Revenues     |   | Dollars       |      | Percent
|                          |                  |                       |       |              |  |               |    |              |   |               |      |        
|                          |                  |                      
|                          |                  | (dollars in millions)
|Nine Months Ended         |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   
|                         
|                         
|                         
|                         
|Domestic earnings         |                  | $                     | 1,362 |              |  |               | 24 | %            |   | $             | 977  |         |  |  | 24 | %  |   | $ | 385 |     |  |  | 39 | % 
|                         
|                         
|                         
|                         
|International losses      |                  |                       | (96   | )            |  |               | (2 | )%           |   |               | (100 | )       |  |  | (2 | )% |   |   | 4   |     |  |  | 4  | % 
|                         
|                         
|                         
|                         
|Intercompany eliminations |                  |                       | (1    | )            |  |               |   |              |   |               |     |         |  |  |   |    |   |   | (1  | )   |  |  |   |   
|                          |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   
|                          | Segment earnings |                       | $     | 1,265        |  |               |    | 22           | % |               | $    | 877     |  |  |    | 22 | % |   | $   | 388 |  |  |    | 44 | %
|                          |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   
|Three Months Ended        |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   
|                         
|                         
|                         
|                         
|Domestic earnings         |                  | $                     | 526   |              |  |               | 26 | %            |   | $             | 392  |         |  |  | 26 | %  |   | $ | 134 |     |  |  | 34 | % 
|                         
|                         
|                         
|                         
|International losses      |                  |                       | (29   | )            |  |               | (1 | )%           |   |               | (33  | )       |  |  | (2 | )% |   |   | 4   |     |  |  | 12 | % 
|                          |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   
|                          | Segment earnings |                       | $     | 497          |  |               |    | 25           | % |               | $    | 359     |  |  |    | 24 | % |   | $   | 138 |  |  |    | 38 | %
|                          |                  |                       |       |              |  |               |    |              |   |               |      |         |  |  |    |    |   |   |     |     |  |  |    |   

We define segment earnings as operating income
(loss) before depreciation, amortization, restructuring and
impairment charges. Based on the current stage of development of
each of our reportable segments, most of our operating revenues
and identifiable assets as well as all of our segment earnings
pertains to our domestic operations. In the first quarter of
2001, our domestic segment earnings decreased as a percentage of
consolidated operating revenues as compared to the same period
in 2000 primarily due to customer acquisition, retention and
handset upgrade activities. As described in Future Capital
Needs and Resources, beginning in the second quarter of
2001, we initiated various actions resulting in reduced costs
and increased domestic segment earnings. As a result of these
actions, domestic segment earnings as a percentage of
consolidated operating revenues for each of the three months
ended September 30, 2001 and June 30, 2001 has
improved to 26% as compared to 20% for the three months ended
March 31, 2001. However, as the growth rate of our domestic
customer base has been declining throughout the year, continued
improvement in segment earnings as a percentage of consolidated
operating revenues may be dependent in part on our abilities to
achieve increased economies of scale, control costs and drive
greater sales growth through our lower cost distribution
channels. If general economic conditions worsen or if our new
handset offerings are not well received, we may continue to see
declines in demand for our product and service offerings, which
may adversely affect our domestic segment earnings. See
Forward Looking Statements.

International segment losses improved due to
increased operating revenues from growth in Nextel
Internationals customer base partially offset by increased
costs attributable to:



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the build-out of our international digital mobile
	networks, higher customer usage as well as higher fixed
	interconnect costs per minute, primarily in Brazil;
|
| |  | increased aggregate amounts of digital handset
	costs and related commissions resulting from increased handset
	sales; and                                     
|
| |  | increased general corporate expenses, including
	bad debt expense primarily in Brazil, to support the larger
	customer base.                                   

8



---



##### 



Depreciation and
amortization.

|                   |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |     | 
|------------------ | ----------------------------- | --------------------- | ----- | ------------ |  | ------------- | -- | ------------ | - | ------------- | --- | ------- |  |  | -- | -- | - | - | --- | --- |  |  | --- | --- | 
|                   |                               |                       |       |              |  |               |    |              |   |              
|                   |                               |                       |       | % of         |  |               |    | % of         |   | Change from  
|                   |                               |                       |       | Consolidated |  |               |    | Consolidated |   | Previous Year
|                   |                               | September 30,         |       | Operating    |  | September 30, |    | Operating    |   |              
|                   |                               | 2001                  |       | Revenues     |  | 2000          |    | Revenues     |   | Dollars       |     | Percent
|                   |                               |                       |       |              |  |               |    |              |   |               |     |        
|                   |                               |                      
|                   |                               | (dollars in millions)
|Nine Months Ended  |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    
|                  
|                  
|                  
|                  
|Depreciation       |                               | $                     | 1,089 |              |  |               | 20 | %            |   | $             | 756 |         |  |  | 19 | %  |   | $ | 333 |     |  |  | 44% |    
|                  
|                  
|                  
|                  
|Amortization       |                               |                       | 181   |              |  |               | 3  | %            |   |               | 142 |         |  |  | 3  | %  |   |   | 39  |     |  |  | 27% |    
|                   |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    
|                   | Depreciation and amortization |                       | $     | 1,270        |  |               |    | 23           | % |               | $   | 898     |  |  |    | 22 | % |   | $   | 372 |  |  |     | 41% | 
|                   |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    
|Three Months Ended |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    
|                  
|                  
|                  
|                  
|Depreciation       |                               | $                     | 389   |              |  |               | 20 | %            |   | $             | 268 |         |  |  | 18 | %  |   | $ | 121 |     |  |  | 45% |    
|                  
|                  
|                  
|                  
|Amortization       |                               |                       | 60    |              |  |               | 3  | %            |   |               | 47  |         |  |  | 3  | %  |   |   | 13  |     |  |  | 28% |    
|                   |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    
|                   | Depreciation and amortization |                       | $     | 449          |  |               |    | 23           | % |               | $   | 315     |  |  |    | 21 | % |   | $   | 134 |  |  |     | 43% | 
|                   |                               |                       |       |              |  |               |    |              |   |               |     |         |  |  |    |    |   |   |     |     |  |  |     |    

Depreciation increased from the nine and three
months ended September 30, 2000 to the nine and three
months ended September 30, 2001 primarily as a result of
placing into service, as well as modifying, additional switches
and transmitter and receiver sites in existing domestic and
international markets primarily to enhance the coverage and
capacity of our digital mobile networks. We expect the amount of
depreciation to continue to increase as we place additional
switches and transmitter and receiver sites into service.

The increase in amortization is primarily
attributable to international acquisition activities completed
during the second half of 2000. Domestic licenses acquired in
auctions in late 2000 as well as acquisitions occurring in 2001
also contributed to the increase.

Restructuring and impairment charges,
interest and other.

|                                                          |  |                       |        |              |  |               |     |              |  |               |      |         |  |  |     |    |  |   |      |   |  |  |     |   
|--------------------------------------------------------- |  | --------------------- | ------ | ------------ |  | ------------- | --- | ------------ |  | ------------- | ---- | ------- |  |  | --- | -- |  | - | ---- | - |  |  | --- | --
|                                                          |  |                       |        |              |  |               |     |              |  |              
|                                                          |  |                       |        | % of         |  |               |     | % of         |  | Change from  
|                                                          |  |                       |        | Consolidated |  |               |     | Consolidated |  | Previous Year
|                                                          |  | September 30,         |        | Operating    |  | September 30, |     | Operating    |  |              
|                                                          |  | 2001                  |        | Revenues     |  | 2000          |     | Revenues     |  | Dollars       |      | Percent
|                                                          |  |                       |        |              |  |               |     |              |  |               |      |        
|                                                          |  |                      
|                                                          |  | (dollars in millions)
|Nine Months Ended                                         |  |                       |        |              |  |               |     |              |  |               |      |         |  |  |     |    |  |   |      |   |  |  |     |   
|                                                         
|                                                         
|                                                         
|                                                         
|Restructuring and impairment charges                      |  | $                     | (169   | )            |  |               | (3  | )%           |  | $             |     |         |  |  |    |    |  | $ | (169 | ) |  |  |    |   
|                                                         
|                                                         
|                                                         
|                                                         
|Interest expense                                          |  |                       | (1,071 | )            |  |               | (19 | )%           |  |               | (912 | )       |  |  | (22 | )% |  |   | (159 | ) |  |  | (17 | )%
|                                                         
|                                                         
|                                                         
|                                                         
|Interest income                                           |  |                       | 178    |              |  |               | 3   | %            |  |               | 298  |         |  |  | 7   | %  |  |   | (120 | ) |  |  | (40 | )%
|                                                         
|                                                         
|                                                         
|                                                         
|Equity in losses of unconsolidated affiliates             |  |                       | (69    | )            |  |               | (1  | )%           |  |               | (106 | )       |  |  | (3  | )% |  |   | 37   |   |  |  | 35  | % 
|                                                         
|                                                         
|                                                         
|                                                         
|Foreign currency transaction (losses) gains,
	net         |  |                       | (71    | )            |  |               | (1  | )%           |  |               | 9    |         |  |  |    |    |  |   | (80  | ) |  |  | NM  |   
|                                                         
|                                                         
|                                                         
|                                                         
|Reduction in fair value of available-for-sale
	securities |  |                       | (188   | )            |  |               | (3  | )%           |  |               |     |         |  |  |    |    |  |   | (188 | ) |  |  |    |   
|                                                         
|                                                         
|                                                         
|                                                         
|Other, net                                                |  |                       | (12    | )            |  |               |    |              |  |               | 4    |         |  |  |    |    |  |   | (16  | ) |  |  | NM  |   
|                                                         
|                                                         
|                                                         
|                                                         
|Income tax benefit                                        |  |                       | 47     |              |  |               | 1   | %            |  |               | 24   |         |  |  | 1   | %  |  |   | 23   |   |  |  | 96  | % 
|                                                         
|                                                         
|                                                         
|                                                         
|Extraordinary gain (loss)                                 |  |                       | 469    |              |  |               | 8   | %            |  |               | (104 | )       |  |  | (3  | )% |  |   | 573  |   |  |  | NM  |   
|                                                         
|                                                         
|                                                         
|                                                         
|Loss attributable to common stockholders                  |  |                       | (1,063 | )            |  |               | (19 | )%           |  |               | (963 | )       |  |  | (24 | )% |  |   | (100 | ) |  |  | (10 | )%

9



---



##### 



|                                                          |  |                       |      |              |  |               |     |              |  |               |      |         |  |  |     |    |  |   |      |   |  |  |      |   
|--------------------------------------------------------- |  | --------------------- | ---- | ------------ |  | ------------- | --- | ------------ |  | ------------- | ---- | ------- |  |  | --- | -- |  | - | ---- | - |  |  | ---- | --
|                                                          |  |                       |      |              |  |               |     |              |  |              
|                                                          |  |                       |      | % of         |  |               |     | % of         |  | Change from  
|                                                          |  |                       |      | Consolidated |  |               |     | Consolidated |  | Previous Year
|                                                          |  | September 30,         |      | Operating    |  | September 30, |     | Operating    |  |              
|                                                          |  | 2001                  |      | Revenues     |  | 2000          |     | Revenues     |  | Dollars       |      | Percent
|                                                          |  |                       |      |              |  |               |     |              |  |               |      |        
|                                                          |  |                      
|                                                          |  | (dollars in millions)
|Three Months Ended                                        |  |                       |      |              |  |               |     |              |  |               |      |         |  |  |     |    |  |   |      |   |  |  |      |   
|                                                         
|                                                         
|                                                         
|                                                         
|Impairment charge                                         |  | $                     | (147 | )            |  |               | (7  | )%           |  | $             |     |         |  |  |    |    |  | $ | (147 | ) |  |  |     |   
|                                                         
|                                                         
|                                                         
|                                                         
|Interest expense                                          |  |                       | (354 | )            |  |               | (18 | )%           |  |               | (333 | )       |  |  | (22 | )% |  |   | (21  | ) |  |  | (6   | )%
|                                                         
|                                                         
|                                                         
|                                                         
|Interest income                                           |  |                       | 43   |              |  |               | 2   | %            |  |               | 111  |         |  |  | 7   | %  |  |   | (68  | ) |  |  | (61  | )%
|                                                         
|                                                         
|                                                         
|                                                         
|Equity in losses of unconsolidated affiliates             |  |                       | (24  | )            |  |               | (1  | )%           |  |               | (35  | )       |  |  | (2  | )% |  |   | 11   |   |  |  | 31   | % 
|                                                         
|                                                         
|                                                         
|                                                         
|Foreign currency transaction (losses) gain,
	net          |  |                       | (16  | )            |  |               | (1  | )%           |  |               | 3    |         |  |  |    |    |  |   | (19  | ) |  |  | NM   |   
|                                                         
|                                                         
|                                                         
|                                                         
|Reduction in fair value of available-for-sale
	securities |  |                       | (188 | )            |  |               | (9  | )%           |  |               |     |         |  |  |    |    |  |   | (188 | ) |  |  |     |   
|                                                         
|                                                         
|                                                         
|                                                         
|Other, net                                                |  |                       | (1   | )            |  |               |    |              |  |               | 18   |         |  |  | 1   | %  |  |   | (19  | ) |  |  | (106 | )%
|                                                         
|                                                         
|                                                         
|                                                         
|Income tax benefit                                        |  |                       | 20   |              |  |               | 1   | %            |  |               | 8    |         |  |  | 1   | %  |  |   | 12   |   |  |  | 150  | % 
|                                                         
|                                                         
|                                                         
|                                                         
|Extraordinary gain                                        |  |                       | 469  |              |  |               | 24  | %            |  |               |     |         |  |  |    |    |  |   | 469  |   |  |  |     |   
|                                                         
|                                                         
|                                                         
|                                                         
|Loss attributable to common stockholders                  |  |                       | (209 | )            |  |               | (10 | )%           |  |               | (236 | )       |  |  | (15 | )% |  |   | 27   |   |  |  | 11   | % 





---

NMNot Meaningful


In May 2001, we announced a restructuring to
reduce domestic payroll and other operating costs by
implementing a 5% workforce reduction and streamlining our
operations. The workforce reduction, completed during the second
quarter, affected about 800 employees across the entire domestic
organization. As a result of the restructuring, we recorded a
$22 million charge in the second quarter of 2001 consisting
of $15 million related to severance and fringe benefits and
$7 million related to the write-off of information
technology development projects that we abandoned as a result of
the reduced headcount. We expect any savings in operating
expenses as a result of the workforce reduction will be offset
by operating expenses attributable to headcount increases in our
direct sales force and existing and new customer care centers,
as well as costs associated with our recently acquired retail
stores.

In connection with Nextel Internationals
continuing efforts to tailor its operations to more closely
align with anticipated sources of financing, and following its
most recent review of economic conditions, operating performance
and other relevant factors relating to its Philippine operating
company, Nextel International decided to discontinue incremental
funding to its Philippine operating company during the third
quarter of 2001. As a result, Nextel International recognized a
pretax impairment charge of $147 million in the third
quarter of 2001.

The increase in interest expense from the nine
and three months ended September 30, 2000 to the nine and
three months ended September 30, 2001 resulted primarily
from the issuance of our senior notes in January 2001 and
our convertible notes in May 2001 and Nextel
Internationals issuance of its senior notes in
August 2000, as well as a higher average level of
outstanding borrowings under our credit facilities, offset by a
reduction in the weighted average interest rate for our domestic
bank credit facility.

The decrease in interest income from the nine and
three months ended September 30, 2000 to the nine and three
months ended September 30, 2001 is primarily due to a
decrease in interest rates during 2001 as well as a lower
average cash balance in 2001.

The decrease in equity in losses of
unconsolidated affiliates from the nine months ended
September 30, 2000 to the nine months ended
September 30, 2001 is due to $6 million of decreased
losses attributable to our equity method investment in Nextel
Partners, Inc. The remaining decrease is attributable to
our Philippine affiliate, which we began consolidating in the
third quarter of 2000, and to our Japanese investment, which was
written off in the fourth quarter of 2000. The decrease in
equity in losses of unconsolidated affiliates from the three
months ended September 30, 2000 to the three months ended
September 30, 2001 is due to decreased

10



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##### 



losses in our Japanese investment of $14 million
offset by $3 million of increased losses attributable to
our equity method investment in Nextel Partners.


The foreign currency transaction loss in 2001 is
due primarily to the weakening of the Brazilian real relative to
the U.S. dollar as a result of the current economic environment
in both Brazil and Argentina. During the third quarter of 2001,
Nextel International recorded a translation adjustment of
$11 million as part of the cumulative translation
adjustment related to intercompany loans between a subsidiary of
Nextel International and its foreign operating company in Brazil
as a result of Nextel Internationals determination that
these intercompany loans are of a long-term investment nature.
Prior to August 2001, the effect of exchange rate changes
on these intercompany loans was reported as foreign currency
transaction (losses) gains, net in our consolidated
statements of operations. The foreign currency transaction gain
in 2000 is primarily attributable to the strengthening of the
Brazilian real.

On September 30, 2001, Nextel International
recognized a $188 million reduction in fair value of its
investment in TELUS Corporation, as Nextel International
determined the decline in fair value of this investment to be
other-than-temporary.

The extraordinary gain in 2001 relates to the
purchase by Nextel Communications, Inc. of some of Nextel
Internationals senior notes during the third quarter of
2001. The extraordinary loss in 2000 relates to the early
retirement of some of our senior notes during the first quarter
of 2000.

Liquidity and Capital Resources

We had losses attributable to common stockholders
of $1.06 billion for the nine months ended
September 30, 2001 and $963 million for the nine
months ended September 30, 2000. The operating expenses and
capital expenditures associated with developing, enhancing and
operating our digital mobile networks have more than offset
operating revenues. Our anticipated capital expenditures, debt
service obligations and operating expenses 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 debt incurrences and equity issuances, to
fund capital expenditures, acquisitions and other nonoperating
needs.

Cash Flows.Net cash provided by operating activities of $772 million
during the nine months ended September 30, 2001 improved by
$167 million compared to net cash provided by operating
activities of $605 million during the nine months ended
September 30, 2000. This improvement in net cash provided
by operating activities is primarily attributable to domestic
operations, reflecting improved domestic performance resulting
from the economies of scale achieved from the growth in our
customer base.

Capital expenditures to fund the continued
expansion and enhancement of our digital mobile networks
continue to represent the largest use of our funds for investing
activities. Net cash used in investing activities of $2.64
billion during the nine months ended September 30, 2001
decreased as compared to $4.2 billion during the nine
months ended September 30, 2000 primarily due to:



| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a $2.51 billion increase in net proceeds
	from short-term investing activities as compared to
	$1.58 billion in net cash used to purchase short-term
	investments in 2000; offset by
|
| |  | a $374 million increase in cash paid for
	capital expenditures;                                                                                                                     
|
| |  | a $288 million increase in cash paid for
	licenses, acquisitions and other investments; and                                                                                         
|
| |  | a $287 million decrease in proceeds from
	sales of assets primarily attributable to the sale-leaseback
	transaction in 2000 involving some of our owned switch equipment.           

Cash payments for capital expenditures totaled
$2.67 billion during the nine months ended
September 30, 2001 and $2.3 billion during the nine
months ended September 30, 2000, including
$489 million during 2001 and $277 million during 2000
for international capital expenditures. Cash paid for capital
expenditures during the nine months ended September 30,
2001 increased primarily due to an increase in network
construction activity resulting in an increase in the number of
switches and transmitter and receiver sites and related
equipment placed in service in our international operations in
2001 compared to 2000. The increase in cash

11



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##### 



paid for licenses, acquisitions and other
investments is primarily due to $405 million paid in 2001
to Arch Wireless, Mobex and Motorola for the acquisition of
800 MHz and 900 MHz licenses and related assets, as
well as $32 million to Lets Talk Cellular &
Wireless, Inc. for the purchase of retail stores. The
increase was offset by a decrease in international acquisition
activities as a result of $252 million used in 2000 for
acquisitions in Brazil, Peru and Chile.


Net cash provided by financing activities of
$2.3 billion during 2001 consisted primarily of
$2.22 billion in net proceeds from the private placement of
our 9.5% senior serial redeemable notes due 2011 and our 6%
convertible senior notes due 2011. Net cash provided by
financing activities of $2.55 billion during 2000 was
primarily attributable to $1.75 billion in net proceeds
from the sale of debt securities and $1.85 billion in
proceeds from borrowings under our domestic bank credit
facility, offset by $1.21 billion for the retirement of
debt securities.

Future Capital Needs and Resources

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



| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the expansion and enhancement of our domestic
	digital mobile network, including potential payments in
	connection with any implementation of enhancements to our
	existing iDEN technology to increase voice capacity and deliver
	packet data service at higher speeds;
|
| |  | operating expenses relating to our domestic
	digital mobile network;                                                                                                                                                                                                     
|
| |  | potential acquisitions, including any negotiated
	acquisitions, of spectrum from third parties and any future
	governmental 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 through the remainder of 2001 and 2002, as
we build out, expand and enhance our digital mobile network. See
Forward Looking Statements.

During the first quarter of 2001, our domestic
operations began to feel the impact of a slowing economy, and
the growth rate of our customer base has been declining
throughout the year. In the first quarter, we also incurred
higher operating costs in our business primarily attributable to
customer acquisition and retention and handset upgrade
activities. As a result, we experienced lower segment earnings
from our domestic business in the first quarter of 2001 as
compared to the fourth quarter of 2000. To respond to and
counter these developments, we initiated various actions
beginning in the second quarter of 2001, including:



| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reducing the average subsidy on our handsets by
	increasing the selling prices of some of our existing handsets
	and introducing new feature rich and higher priced handsets;                                                                                         
|
| |  | implementing strategies designed to lower
	commission costs on domestic handset sales;                                                                                                                                                                                
|
| |  | focusing more of our customer acquisition
	activities on lower cost distribution channels such as
	company-owned retail stores that were acquired in May 2001,
	Internet sales through our website and telemarketing sales; and                                       
|
| |  | reducing payroll and other operating costs by
	restructuring and streamlining our domestic organization to
	improve operating efficiencies by implementing a 5% workforce
	reduction, while continuing to invest in our customer care
	centers and direct sales force.

As a result of these factors, domestic operating
costs decreased as a percentage of operating revenues and
segment earnings improved in the second and third quarters of
2001 as compared to the first quarter. However, we cannot be
sure that our actions will continue to be successful in further
improving domestic segment earnings during the fourth quarter of
2001. See Forward Looking Statements.

12



---



##### 



As of September 30, 2001, 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 $4.5 billion in term
loans that mature over a period from December 31, 2007 to
March 31, 2009. At September 30, 2001, the entire
$4.5 billion of term loans available under our bank credit
facility was outstanding. Amounts outstanding under this bank
credit facility are secured by liens on assets of substantially
all our domestic subsidiaries and bear interest payable
quarterly at an adjustable rate calculated based either on the
U.S. prime rate or the U.S. London Interbank Offered Rate, or
LIBOR. The maturity dates of the loans can accelerate if the
aggregate amount of specified debt obligations that mature
before June 30, 2009, including the redemption price of
redeemable stock that is mandatorily redeemable before
June 30, 2009, exceed specified amounts. However, no such
acceleration would occur if the long-term debt rating for
specified outstanding and unsecured indebtedness of Nextel is at
least BBB- by Standard & Poors Ratings Services or Baa3
by Moodys Investors Service, Inc. 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. As of
September 30, 2001, we were able to access the entire
$6.0 billion available under our bank credit agreement in
compliance with our financial ratio tests, the debt incurrence
covenants contained in our indentures and the relevant terms of
applicable issues of preferred stock.

We are currently in the early stages of
developing our detailed business plans and related budgets for
calendar year 2002. We are not likely to finalize these
processes and the resulting detailed business plans and related
budgets until late 2001 or early 2002. Moreover, we may later
revise any such plans and budgets in light of competitive
factors in the relevant markets, new business opportunities,
including additional spectrum acquisitions and other strategic
or opportunistic transactions or investments, prevailing
conditions in domestic and international debt and equity capital
markets and the actual operating results and apparent prospects
of our business.

We anticipate that 2001 domestic capital
expenditures will be approximately $2.5 billion and
therefore expect to increase the level of domestic capital
expenditures during the fourth quarter of 2001 as compared to
the third quarter. In the future, our domestic capital spending
is expected to be driven by several factors including:



| |   |                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the contemplated construction of additional
	transmitter and receiver sites to increase system capacity and
	maintain system quality and the installation of related
	switching equipment in the existing domestic core market
	coverage areas;
|
| |  | the contemplated enhancement of our digital
	mobile network coverage around most major domestic market areas;                                                                                                                                  
|
| |  | the contemplated enhancements to our existing
	iDEN technology to increase voice capacity and deliver packet
	data service at higher speeds; and                                                                                               
|
| |  | any future enhancement of our digital mobile
	network by employing contemplated 3G technology.                                                                                                                                               

We have historically provided Nextel
International with significant financial support. In April and
July 2001, through a wholly owned subsidiary, we
contributed an aggregate of $500 million to Nextel
International in exchange for 5,000 shares of its series A
exchangeable redeemable preferred stock. Nextel International
will require a significant amount of capital to fund its
operations and any planned network build-out for at least the
next several years. However, Nextel International has advised us
that, based upon its current capital commitments and anticipated
cash needs, Nextel International presently has available cash
resources to fund its operations only through the remainder of
2001.

In view of Nextel Internationals currently
available cash resources and its lack of funding sources, Nextel
International has determined to pursue a less aggressive growth
strategy that targets conservation of cash resources by slowing
enhancement and expansion of its networks and reducing
subscriber growth and operating expenses. Nextel International
is exploring various potential sources of financing, including
public or private debt or equity financing and sales of
non-strategic assets, including potential sale-leaseback
transactions, to meet its current and future funding
requirements. We cannot be sure Nextel International will be

13



---



##### 



successful in achieving its cash conservation
targets. Further, we cannot be sure that Nextel International
will be successful in raising sufficient additional funds to
finance its operations at the time additional funds will be
needed or at all. See Forward Looking Statements.


If Nextel International cannot obtain sufficient
funds when needed or successfully restructure its indebtedness
and other financial obligations, it may be required to sell
strategic assets, reorganize under applicable law or take other
measures. In addition, in these events, it may be required to
write-down the carrying values of its long-lived assets,
including property, plant and equipment, licenses, goodwill and
other intangible assets, to their estimated fair values, which
may have a material adverse impact on our consolidated financial
position and results of operations. Although we have no legal
obligation to make any investments in, or otherwise advance
funds to, Nextel International, to the extent Nextel
International is unable to obtain necessary funding from other
sources, we may provide Nextel International with funds of up to
$250 million, but any such investment will be conditioned
on, among other matters, Nextel Internationals ability to
complete a satisfactory restructuring of its indebtedness and
other financial obligations and Nextel Internationals
obtaining additional funding from other sources, including sales
of non-strategic assets. Any funding that we elect to provide to
Nextel International may reduce the amount of funding available
for our domestic operations.

Based on available cash resources and the
anticipated cash needs of our operations for capital
expenditures and acquisitions and the anticipated operating cash
flow of our wireless businesses, we believe that we will be able
to fully fund our domestic operations through calendar year
2002. See Forward Looking Statements. In making this
assessment, we have considered:



| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated cash, cash equivalents and
	short-term investments on hand as of September 30, 2001 of
	$4.23 billion;            
|
| |  | the availability of $1.5 billion of
	incremental funding over the amounts outstanding under our
	domestic bank credit facility;
|
| |  | the anticipated level of domestic capital
	expenditures during the remainder of 2001 and 2002;                                 
|
| |  | our domestic debt service requirements during the
	remainder of 2001 and 2002; and                                             
|
| |  | the potential investment of up to
	$250 million into Nextel International.                                                     

If our business plans change, or if economic
conditions in any of our markets generally or competitive
practices in the mobile wireless telecommunications industry
change materially from those currently prevailing or from those
now anticipated, or if other presently unexpected circumstances
are encountered that have a material effect on the cash flow or
profitability of the mobile wireless businesses conducted by us,
the anticipated cash needs of our businesses, and the
conclusions as to the adequacy of the available sources, each
also could change significantly. Finally, our conclusion that we
will be able to fully fund our domestic operations through 2002
does not take into account the impact of our participation in
any auctions for the purchase of licenses other than those
already concluded or any significant acquisition transactions or
the pursuit of any significant new business opportunities other
than those currently being pursued by us. Any acquisition or new
business opportunity could involve significant additional
funding needs in excess of the identified currently available
sources, and could require us to raise additional equity and
debt funding to meet those needs.

The availability of borrowings under our domestic
bank credit facility is subject to certain conditions and
limitations, and we cannot be sure that those conditions will 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 relevant
subsidiaries, and Nextel International and its relevant
subsidiaries, at specified times to maintain compliance with
specified operating and financial covenants or ratios, including
specified covenants and ratios related to leverage, which become
more stringent over time.

14



---



##### 



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 we cannot
presently predict 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 income or 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, we have no legally
binding commitments or understandings with any third parties to
obtain any material amount of equity or debt financing. Our
ability to incur additional indebtedness, including, in certain
circumstances, indebtedness incurred under our domestic bank
credit agreement, is and will be limited by the terms of our
financing agreements and the terms of some series of our
outstanding preferred stock.

Forward Looking Statements

Safe Harbor Statement under the
Private Securities Litigation Reform Act of
1995.A number of 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 may involve
risks and uncertainties. We caution 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 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 availability and cost of acquiring additional
	spectrum;                                                                                                                                         
| 
| | the timely development and availability of new
	handsets with expanded applications and features;                                                                                                    
| 
| | the success of efforts to improve and
	satisfactorily address any issues relating to our digital mobile
	network performance;                                                                        
| 
| | the successful implementation and performance of
	the technology being deployed or to be deployed in our various
	market areas, including technologies relating to our Nextel
	Wireless Web services;
| 
| | market acceptance of our new handset and service
	offerings, including our Nextel Wireless Web services and Nextel
	Worldwide;                                                                       
| 
| | the timely delivery and successful implementation
	of new technologies deployed in connection with any future
	enhanced iDEN or third generation (3G) services we
	may offer;                      
| 
| | the ability to achieve market penetration and
	average subscriber revenue levels sufficient to provide
	financial viability to our digital mobile network business;                                  

15



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to timely and successfully accomplish
	required scale-up of our billing, collection, customer care and
	similar back-office operations to keep pace with customer
	growth, increased system usage rates and growth in levels of
	accounts receivables 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;                                                                                                                                                                                     
|
| |  | legislation or regulatory actions relating to
	specialized mobile radio services, other wireless communications
	services or telecommunications generally; and                                                                                                                                                                                                                           
|
| |  | other risks and uncertainties described from time
	to time in our reports and, with specific reference to risk
	factors relating to international operations, in Nextel
	Internationals reports, filed with the Securities and
	Exchange Commission, including our annual reports on
	Form 10-K for the year ended December 31, 2000 and our
	subsequent quarterly reports on Form 10-Q.

16



---



##### 



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)

Date:  November 15, 2001


17