<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


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

                  For the quarterly period ended June 30, 1999

                        Commission file number: 000-22939


                          NEXTLINK Communications, Inc.
                            NEXTLINK CAPITAL, INC.
-------------------------------------------------------------------------------
               (Exact name of registrant as specified in its charter)

          Delaware                                        91-1738221
         Washington                                       91-1716062
-------------------------------------------------------------------------------
 (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                      Identification No.)


  500 108th Avenue NE, Suite 2200, Bellevue, WA                 98004
-------------------------------------------------------------------------------
      (Address of principal executive offices)                (Zip Code)


                                 (425) 519-8900
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---

As of August 5, 1999, the number of shares of Class A and Class B common
stock of NEXTLINK Communications, Inc. issued and outstanding was 36,592,657
and 29,453,275 , respectively, and there were 1,000 shares of common stock of
NEXTLINK Capital, Inc., all of which 1,000 shares were held by NEXTLINK
Communications, Inc.

NEXTLINK Capital, Inc. meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the
reduced disclosure format.

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1(a).  FINANCIAL STATEMENTS

                          NEXTLINK COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                   (AMOUNTS AS OF JUNE 30, 1999 ARE UNAUDITED)

<TABLE>
<CAPTION>
                                                                            JUNE 30,                  DECEMBER 31,
                                                                              1999                        1998
                                                                         ----------------          -----------------
<S>                                                                      <C>                       <C>
                                ASSETS
Current assets:
     Cash and cash equivalents.....................................        $     611,534             $     319,496
     Marketable securities.........................................            1,231,421                 1,158,566
     Accounts receivable, net......................................               49,635                    36,115
     Other current assets..........................................               21,467                    16,480
     Pledged securities............................................                   --                    21,500
                                                                           -------------             -------------
         Total current assets......................................            1,914,057                 1,552,157
Property and equipment, net........................................              823,190                   594,408
Investment in fixed wireless licenses..............................              900,627                    67,352
Other assets, net..................................................              452,187                   269,189
                                                                           -------------             -------------
         Total assets..............................................        $   4,090,061             $   2,483,106
                                                                           =============             =============


            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Accounts payable..............................................        $      46,540             $      61,175
     Accrued expenses..............................................               46,464                    45,056
     Accrued interest payable......................................               40,391                    34,670
     Current portion of long-term obligations......................                2,673                     2,755
                                                                           -------------             -------------
         Total current liabilities.................................              136,068                   143,656
Long-term debt.....................................................            3,036,639                 2,013,192
Other long-term liabilities........................................               15,019                    16,553
                                                                           -------------             -------------
         Total liabilities.........................................            3,187,726                 2,173,401
Commitments and contingencies
Redeemable preferred stock, par value $0.01 per share, 25,000,000
   shares authorized; 14% Preferred, aggregate liquidation preference
   $397,638, 7,771,388 and 7,254,675 shares issued and outstanding in
   1999 and 1998, respectively; 6 1/2% Convertible Preferred, aggregate
   liquidation preference $200,000; 4,000,000 shares issued and
   outstanding in 1999 and 1998, respectively......................              583,322                   556,168
Shareholders' equity (deficit):
     Common Stock, par value $0.02 per share, stated at amounts paid
       in; Class A, 110,334,000 shares authorized, 36,484,600 and
       24,170,117 shares issued and outstanding in 1999 and 1998,
       respectively; Class B, 44,133,600 shares authorized, 29,453,275
       and 30,297,902 shares issued and outstanding in 1999 and 1998,
       respectively................................................            1,029,219                   354,525
     Deferred compensation.........................................              (10,181)                  (11,370)
     Accumulated other comprehensive income........................              148,298                        --
     Accumulated deficit...........................................             (848,323)                 (589,618)
                                                                           -------------             -------------
         Total shareholders' equity (deficit)......................              319,013                  (246,463)
                                                                           -------------             -------------
         Total liabilities and shareholders' equity (deficit)......        $   4,090,061             $   2,483,106
                                                                           =============             =============
</TABLE>

See accompanying notes to unaudited interim consolidated financial statements.

<PAGE>

                          NEXTLINK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                          JUNE 30,                             JUNE 30,
                                              -------------------------------        ----------------------------
                                                  1999                1998               1999             1998
                                              -----------          ----------        -----------      -----------
<S>                                           <C>                 <C>                <C>              <C>
Revenue..................................     $    60,657          $   32,030        $   109,243      $    58,575

Costs and expenses:
     Operating...........................          53,368              28,070             97,067           52,620
     Selling, general and administrative.          59,099              36,077            111,433           68,034
     Deferred compensation...............           1,117                 760              2,176            1,384
     Depreciation........................          23,102               8,415             42,139           14,909
     Amortization........................           4,195               3,765              8,011            7,454
                                              -----------          ----------        -----------      -----------
         Total costs and expenses........         140,881              77,087            260,826          144,401
                                              -----------          ----------        -----------      -----------
Loss from operations.....................         (80,224)            (45,057)          (151,583)         (85,826)

Interest income..........................          17,522              22,822             37,285           34,557
Interest expense.........................         (60,063)            (38,338)          (110,753)         (61,616)
                                              -----------          ----------        -----------      -----------
Net loss.................................     $  (122,765)         $  (60,573)       $  (225,051)     $  (112,885)
                                              ===========          ==========        ===========      ===========

Preferred stock dividends and accretion of
     preferred stock redemption obligation,
     including issue costs...............         (17,054)            (15,328)           (33,654)         (26,879)
                                              -----------          ----------        -----------      -----------
Net loss applicable to common shares.....     $  (139,819)         $  (75,901)       $  (258,705)     $  (139,764)
                                              ===========          ==========        ===========      ===========

Net loss per share (basic and diluted)...     $     (2.24)         $    (1.42)       $     (4.41)     $     (2.61)
                                              ===========          ==========        ===========      ===========
Shares used in computation of net loss per
     share...............................      62,440,898          53,609,120         58,671,982       53,545,671
                                              ===========          ==========        ===========      ===========
</TABLE>

See accompanying notes to unaudited interim consolidated financial statements.

<PAGE>

                          NEXTLINK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED
                                                                                         JUNE 30,
                                                                        --------------------------------------------
                                                                              1999                      1998
                                                                        -----------------         ------------------
<S>                                                                     <C>                       <C>
OPERATING ACTIVITIES:
Net loss............................................................      $   (225,051)             $   (112,885)

Adjustments to reconcile net loss to net cash used in operating
     activities:
     Deferred compensation expense..................................             2,176                     1,384
     Equity in loss of affiliate....................................             1,049                     1,643
     Depreciation and amortization..................................            50,150                    22,363
     Accretion of interest on senior notes..........................            23,447                     9,578
Changes in assets and liabilities:
     Accounts receivable............................................           (13,520)                   (4,253)
     Other assets...................................................            (5,796)                   (3,541)
     Accounts payable...............................................           (19,325)                  (13,539)
     Accrued expenses and other liabilities.........................            (4,873)                   12,676
     Accrued interest payable.......................................             5,721                     9,672
                                                                          ------------              ------------
Net cash used in operating activities...............................          (186,022)                  (76,902)

INVESTING ACTIVITIES:
Purchase of property and equipment..................................          (261,174)                 (126,652)
Assets acquired in network lease agreement..........................                --                   (92,000)
Investment in fixed wireless licenses (net of cash received)........          (482,905)                  (67,354)
Maturity of pledged securities......................................            21,135                    19,636
Purchase of marketable securities...................................        (3,497,315)               (2,505,500)
Maturity of marketable securities...................................         3,402,711                 1,860,567
                                                                          ------------              ------------
Net cash used in investing activities...............................          (817,548)                 (911,303)
</TABLE>

                                 -- Continued --

<PAGE>


                          NEXTLINK COMMUNICATIONS, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED
                                                                                         JUNE 30,
                                                                        --------------------------------------------
                                                                              1999                      1998
                                                                        -----------------         ------------------
<S>                                                                     <C>                       <C>
FINANCING ACTIVITIES:
Net proceeds from issuance of redeemable preferred stock............      $         --              $    193,824
Repayment of note payable and other obligations.....................            (1,534)                   (8,734)
Proceeds from issuance of common stock upon exercise of stock
  options...........................................................            12,459                       555
Dividends paid on convertible preferred stock.......................            (6,500)                   (3,250)
Proceeds from issuance of senior notes (net of discount)............         1,000,000                   734,323
Proceeds from sale of common stock..................................           311,183                        --
Costs incurred in connection with financing.........................           (20,000)                  (17,157)
                                                                          -------------             -------------
Net cash provided by financing activities...........................         1,295,608                   899,561
                                                                          -------------             -------------
Net increase (decrease) in cash and cash equivalents................           292,038                   (88,644)

Cash and cash equivalents, beginning of period......................           319,496                   389,074
                                                                          -------------             -------------
Cash and cash equivalents, end of period............................      $    611,534              $    300,430
                                                                          =============             ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Noncash financing and investing activities:
     Redeemable preferred stock dividends, paid in redeemable
       preferred shares.............................................      $     25,836              $     22,515
                                                                          ============              ============
     Accrued redeemable preferred stock dividends, payable in
       redeemable preferred shares, and accretion of preferred stock
       redemption obligation and issue costs........................      $      1,318              $      1,114
                                                                          ============              ============
     Common stock issued in acquisitions............................      $    350,648              $      5,727
                                                                          ============              ============

Cash paid for interest..............................................      $     85,211              $     42,121
                                                                          ============              ============
</TABLE>

See accompanying notes to unaudited interim consolidated financial statements.

<PAGE>


                          NEXTLINK COMMUNICATIONS, INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of NEXTLINK
Communications, Inc., a Delaware corporation, and its majority-owned
subsidiaries (collectively referred to as the Company). The Company, through
predecessor entities, was formed on September 16, 1994 and, through its
subsidiaries, provides high-quality telecommunications services in selected
markets in the United States. The Company is a majority-owned subsidiary of
Eagle River Investments, L.L.C.

     The Company's financial statements include 100% of the assets, liabilities
and results of operations of subsidiaries in which the Company has a controlling
interest of greater than 50%. The Company's investments in unconsolidated
companies in which the Company has a 20% interest or more are accounted for on
the equity method. Investments in entities in which the Company has voting
interests of not more than 20% are accounted for on the cost method. All
significant intercompany accounts and transactions have been eliminated.

     The interim financial statements are unaudited and have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. These
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Company's 1998 Form 10-K as filed with the Securities and Exchange Commission on
March 29, 1999.

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

2.   STRATEGIC AGREEMENT

     In January 1999, the Company entered into a strategic agreement with Covad
Communications Group, Inc. Pursuant to this agreement, the Company will become a
preferred provider to Covad for local transport and colocation services for
Covad's regional data centers. The Company has also invested $20.0 million in
Covad under this agreement, and Covad will become the Company's preferred
provider of Digital Subscriber Line, or DSL, services where the Company elects
not to provide its own such services. Covad is a leading provider of high-speed
digital communications services using DSL technology.

     For the six months ended June 30, 1999, the Company's unrealized gain on
its $20.0 million equity investment in Covad was $150.0 million. This unrealized
gain was reported as "other comprehensive income" in accordance with SFAS No.
130,"Reporting Comprehensive Income".

3.   ACQUISITIONS

     In April 1999, NEXTLINK acquired WNP Communications, Inc. for $698.2
million. Of this amount, $157.7 million was paid in cash to the FCC for license
fees, including interest. The remainder was paid to stockholders of WNP, and
consisted of $190.1 million in cash and 5,715,831 shares of Class A common
stock. In this transaction, the Company acquired 39 A block LMDS wireless
licenses covering an area where approximately 98 million people live or work and
one B block LMDS wireless license covering an area where approximately 16
million people live or work. The Company plans to use the fixed wireless
licenses acquired in the WNP transaction to extend the reach of its fiber
networks and to connect additional customers directly to its fiber networks.

<PAGE>

     In June 1999, the Company acquired Nextel Communications, Inc.'s 50%
interest in NEXTBAND Communications L.L.C. for $137.7 million in cash. The
Company had already held a 50% interest in NEXTBAND and, as a result of this
acquisition, the Company now wholly owns NEXTBAND. NEXTBAND owns 13 A block
LMDS licenses and 29 B block licenses.

4.   FINANCINGS

     DEBT

     On June 1, 1999, the Company completed the sale of 10 3/4% Senior Notes
and 12 1/4% Senior Discount Notes, both due June 1, 2009. Proceeds from the
sale of the 10 3/4% Notes and the 12 1/4% Notes, net of discounts,
underwriting commissions, advisory fees and expenses totaled approximately
$979.5 million. Interest payments on the 10 3/4% Notes are due semi-annually.
The 10 3/4% Notes are redeemable at the option of the Company, in whole or in
part after June 1, 2004. The 12 1/4% Notes were issued at a discount from
their principal amount to generate gross proceeds to the Company of
approximately $325.0 million. The 12 1/4% Notes accrete at a rate of 12 1/4%
compounded semi-annually, to an aggregate principal amount of approximately
$588.9 million by June 1, 2004. No cash interest will accrue on the 12 1/4%
Notes until June 1, 2004. Interest will become payable in cash semi-annually
beginning December 1, 2004. The 12 1/4% Notes are redeemable at the option of
the Company, in whole or in part, at any time after June 1, 2004.

     The indentures pursuant to which the 10 3/4% Notes and the 12 1/4% Notes
are issued contain certain covenants that, among other things, limit the ability
of the Company and its subsidiaries to incur additional indebtedness, issue
stock in subsidiaries, pay dividends or make other distributions, repurchase
equity interests or subordinated indebtedness, engage in sale and leaseback
transactions, create certain liens, enter into certain transactions with
affiliates, sell assets of the Company and its subsidiaries, and enter into
certain mergers and consolidations.

     In the event of a change in control or asset disposition of the Company as
defined in the indentures, holders of the Notes will have the right to require
the Company to purchase their Notes, in whole or in part, at a price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of purchase. The Notes are senior unsecured obligations of
the Company, and are subordinated to all current and future indebtedness of the
Company's subsidiaries, including trade payables.

     COMMON STOCK

     On June 1, 1999, the Company completed the sale of 7,600,000 shares of
Class A common stock at $76.00 per share. Of the total shares sold, 4,232,050
were offered by the Company and 3,367,950 were offered by certain shareholders
who previously owned interests in WNP. Gross proceeds to the Company from the
offering totaled $321.6 million, and proceeds net of underwriting discounts,
advisory fees and estimated expenses aggregated approximately $310.5 million.

5.   RELATED PARTY TRANSACTIONS

     In June 1999, the Company acquired the assets of NEXTLINK, Inc., a
company owned by Craig O. McCaw, the Company's largest and controlling
shareholder, through a merger transaction. NEXTLINK, Inc. owned approximately
1% minority interests in each of the following subsidiaries of the Company:
NEXTLINK California, Inc., NEXTLINK Ohio, Inc., NEXTLINK Pennsylvania,
Inc., NEXTLINK Tennessee, Inc., NEXTLINK Washington, Inc., NEXTLINK Solutions,
Inc., NEXTLINK Interactive, Inc., NEXTLINK Utah, Inc., Mindshare, LLC, and
NEXTLINK New York, Inc. The Company issued 268,903 shares of Class B common
stock in exchange for the minority interests. As part of this transaction, Mr.
McCaw also received 266,466 shares of the Company's Class B common stock, the
number of shares of Class B common stock previously owned by NEXTLINK, Inc.
The transaction was accounted for as a purchase of minority interests between
entities under common control and, as such, the minority interests were
recorded at NEXTLINK, Inc.'s historical cost.

6.   RECLASSIFICATIONS

     Certain reclassifications have been made to prior period amounts in order
to conform to the current presentation.

<PAGE>

7.   REPORTABLE SEGMENTS

     The Company's interactive voice response segment contributed the
following percentages to the Company's total:

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                                JUNE 30,                       JUNE 30,
                                                                       ----------------------------   ----------------------------
                                                                          1999            1998           1999            1998
                                                                       ------------    ------------   ------------    ------------
<S>                                                                    <C>             <C>            <C>             <C>
     Revenue.........................................................       7.1%           14.8%           8.3%           16.1%
     Net loss (excluding corporate overhead).........................       1.4%            0.8%           1.9%            1.0%
</TABLE>

8.   SUBSEQUENT EVENTS

     STRATEGIC AGREEMENT

     In July 1999, the Company entered into a strategic agreement with
SPEEDUS.com, Inc., a facilities based high-speed Internet service provider.
Pursuant to this agreement, the Company purchased 150 MHz of broadband fixed
wireless spectrum in New York, New York for $20.0 million, and invested an
additional $20.0 million in exchange for 2,000,000 shares of SPEEDUS.com's
common stock. As part of this strategic alliance, NEXTLINK will provide
colocation, transport and access services to SPEEDUS.com. Additionally,
SPEEDUS.com will have access to the Company's network testing facilities.

     STOCK SPLIT

     On July 15, 1999, the Company announced that its board of directors had
approved a two-for-one stock split of the Company's Class A and Class B common
stock, to be effected in the form of a stock dividend. The split is subject to
shareholder approval of an increase in the Company's authorized number of
shares. The split is effective for shareholders of record at the close of
business on August 18, 1999.

<PAGE>

PART I.           FINANCIAL INFORMATION

Item 1(b).        FINANCIAL STATEMENTS



                             NEXTLINK CAPITAL, INC.
                                 BALANCE SHEETS
                   (AMOUNTS AS OF JUNE 30, 1999 ARE UNAUDITED)

<TABLE>
<CAPTION>
                                                                               JUNE 30,              DECEMBER 31,
                                                                                 1999                    1998
                                                                           -----------------       -----------------
<S>                                                                        <C>                     <C>
ASSETS
Cash in bank...........................................................      $         100           $       100
                                                                             =============           ===========


SHAREHOLDER'S EQUITY
Common stock, no par value,
     1,000 shares authorized, issued and outstanding...................      $         100           $       100
                                                                             =============           ===========
</TABLE>


                             NOTES TO BALANCE SHEETS

1.   DESCRIPTION

     NEXTLINK Capital, Inc. (NEXTLINK Capital) is a Washington corporation and a
wholly owned subsidiary of NEXTLINK Communications, Inc. (NEXTLINK). NEXTLINK
Capital was formed for the sole purpose of obtaining financing from external
sources and is a joint obligor on the 12 1/2% Senior Notes due April 15, 2006 of
NEXTLINK. NEXTLINK Capital was initially funded with a $100 contribution from
NEXTLINK and has had no operations to date.

2.   BASIS OF PRESENTATION

     The interim financial statements have been prepared without an audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
These consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Company's 1998 Form 10-K as filed with the Securities and Exchange Commission on
March 29, 1999.


<PAGE>

PART I.    FINANCIAL INFORMATION

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

OVERVIEW

     Since 1996, we have provided high-quality telecommunications services to
the rapidly growing business market. To serve our customers' broad and expanding
telecommunications needs, we have assembled a unique collection of
high-bandwidth, local and national network assets. We intend to integrate these
assets into a seamless network that will support the most advanced
communications technologies available, and make us the provider best positioned
to deliver the broad variety of data and voice applications our customers
require.

     To accomplish this:

     -   we have built 26 high bandwidth, or broadband, local networks in 15
         states, generally located in the central business districts of the
         cities we serve, and we are continuing to build additional networks;

     -   we have become the nation's largest holder of broadband fixed wireless
         spectrum with FCC licenses covering 95% of the population of the 30
         largest U.S. cities, which we will use to extend the reach of our
         networks to additional customers; and

     -   through INTERNEXT, we have acquired exclusive interests in a national
         broadband network now being built to traverse over 16,000 miles and
         to connect more than 50 cities, including all of the largest cities
         that our current and planned local networks serve.

     We currently operate local networks in 41 cities. We serve larger cities,
such as New York, Los Angeles, Chicago, Atlanta, the San Francisco Bay Area,
Denver, Dallas and Miami, medium-sized markets, such as Salt Lake City and
Nashville, and clusters of smaller markets in Orange County, California and
central Pennsylvania. We are currently building additional local networks, and
plan to have operational networks in most of the 30 largest U.S. cities by the
end of 2000. We launched service in San Diego during the first quarter of 1999,
Washington DC and Seattle during the second quarter of 1999, and Newark, New
Jersey in July 1999. The next phase of our expansion plan includes the launch of
service in Detroit, Boston, Phoenix and Houston by the end of 1999.

     Our networks typically encircle a city's central business district and
connect to our central offices. We build our own networks wherever possible,
which enables us to deliver higher quality services and will enable us to
deliver new services, which we expect will increase our operating margins.

     Our goal is to provide our customers with complete voice and data network
solutions for all of their communications needs, using our own fiber, switches
and other facilities to the greatest extent possible. To reduce our reliance on
the physical connection for the short distance--referred to as the "first
mile"--between our customers and our fiber optic networks, which is currently
often leased from the dominant carrier, we intend to increase the number of
customers connected directly to our networks. In some cases, we will
construct a new fiber optic extension from our network to the customer's
premises. In other cases, we will deploy a high-bandwidth wireless connection
between an antenna on the roof of the customer's premises and an antenna
attached to our fiber rings. These wireless connections offer high-quality
broadband capacity and often cost less than fiber to install. We expect to
deploy wireless first mile extensions in 25 markets by the end of 2000.

     Our networks support a variety of communications technologies, which
permits us to offer our customers a set of technology options to meet our
customers' changing needs, and introduce new technologies as they become
available. For example, we have begun to add new technologies to our networks
including Internet Protocol, or IP, routers and switches, and Asynchronous
Transfer Mode, or ATM, switches. ATM switches will enable us to meet the demands
of large, high-volume customers, while IP routers and switches will enable us to
carry Internet traffic more efficiently and to provide more services. However,
we intend to remain flexible in our technology choices, to serve our customers'
present needs and to take advantage of the future opportunities that
technological advances may bring.

     The table below provides selected key financial and operating data (dollars
are in thousands):

<PAGE>

<TABLE>
<CAPTION>
                                                                               AS OF AND
                                                                       FOR THE THREE MONTHS ENDED
                                                                                JUNE 30,
                                                                         1999              1998
                                                                    ---------------    --------------
    <S>                                                             <C>                <C>
    FINANCIAL DATA:
    Gross property and equipment..............................       $  946,458         $  424,007
    EBITDA (1) ...............................................       $  (51,810)        $  (32,117)

    OPERATING DATA (2):
    Route miles (3)...........................................            3,228              2,099
    Fiber miles (4)...........................................          263,559            152,225
    On-net buildings connected (5)............................              986                658
    Off-net buildings connected (6)...........................           16,850              8,448
    Switches installed........................................               25                 17
    Access lines in service (7)...............................          284,021            102,887
    Employees.................................................            2,952              1,765
</TABLE>

 (1)     EBITDA represents net loss before interest expense, interest income,
         depreciation, amortization and deferred compensation expense. EBITDA is
         commonly used to analyze companies on the basis of operating
         performance, leverage and liquidity. While EBITDA should not be
         construed as a substitute for operating income or a better measure of
         liquidity than cash flow from operating activities, which are
         determined in accordance with generally accepted accounting principles,
         it is included herein to provide additional information with respect to
         our ability to meet future debt service, capital expenditure and
         working capital requirements.
 (2)     The operating data includes 100% of the statistics of the Las Vegas
         network, which we manage and in which we have a 40% membership
         interest.
 (3)     Route miles refers to the number of miles of the telecommunications
         path in which our owned or leased fiber optic cables are installed.
 (4)     Fiber miles refers to the number of route miles installed along a
         telecommunications path, multiplied by our estimate of the number of
         fibers along that path.
 (5)     Represents buildings physically connected to our networks, excluding
         those connected by unbundled incumbent local exchange carrier (ILEC)
         facilities.
 (6)     Represents buildings connected to our networks through leased or
         unbundled ILEC facilities.
 (7)     Represents the number of access lines in service, including those
         lines that are provided through resale of services. We serviced 2,673
         resold access lines as of June 30, 1999. We define an access line as
         a telephone connection between a customer purchasing local telephone
         services and us. This connection does not include the concept of
         access line equivalents (ALEs), and is a one-for-one relationship
         with no multipliers used for trunk ratios, except for those trunks
         over which primary rate interface (PRI) service is provided, which
         are counted as 23 access lines.

<PAGE>

RESULTS OF OPERATIONS

     Revenue increased 89% to $60.7 million during the second quarter of 1999,
from $32.0 million in the same period in 1998. Year to date revenue of $109.2
million represented an 87% increase from the $58.6 million reported for the
comparable period in 1998. Revenue reported consisted of the following
components (in thousands):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                SIX MONTHS ENDED
                                                          JUNE 30,                         JUNE 30,
                                                    1999            1998             1999            1998
                                                 ------------    ------------    -------------    ------------
    <S>                                          <C>             <C>             <C>              <C>
    Bundled local and long distance, and
    dedicated services.........................  $    47,810     $    16,682      $   82,679      $    27,670
    Shared tenant services.....................        3,148           3,199           6,161            6,486
    Long distance telephone services...........        5,405           6,950          11,344           13,972
    Enhanced services..........................        4,294           5,199           9,059           10,447
                                                 -----------     -----------      ----------      -----------

    Total revenue..............................  $    60,657     $    32,030      $  109,243      $    58,575
                                                 ===========     ===========      ==========      ===========
</TABLE>

     The increase in total year to date revenue was driven by 199% growth in
revenues from bundled local and long distance services and dedicated services,
which resulted from an increase in customer access lines installed. Our
quarterly installation rate of customer access lines increased from 30,053 in
the second quarter of 1998 to 59,308 during the second quarter of 1999. As of
June 30, 1999, we had 284,021 access lines in service, compared to 102,887 as of
June 30, 1998. Enhanced revenue consists primarily of interactive voice response
(IVR) services.

     We began offering switched local and long distance services in our first
seven markets in July 1996, 18 markets during 1997 and 12 additional markets
during 1998. Most recently, we launched services in San Diego during the
first quarter of 1999, Washington DC and Seattle during the second quarter of
1999, and in Newark, N.J. in July 1999. In addition, since January 1995,
NEXTLINK has offered private leased line, or dedicated services.

     Operating expenses consist of costs directly related to providing
facilities-based network and enhanced communications services and also include
salaries and benefits and related costs of operations and engineering personnel.
Operating expenses increased 90% during the second quarter of 1999 to $53.4
million, an increase of $25.3 million over the same period in 1998. For the six
months ended June 30, 1999, operating expense rose $44.4 million or 84% over the
same period in 1998. These increases primarily resulted from:

      -  increased network costs related to provisioning higher volumes of
         local, long distance and enhanced services;

      -  an increase in the number of our employees; and

      -  an increase in other related costs primarily to expand our local and
         long distance service businesses in our existing and planned markets.

     Selling, general and administrative expenses include salaries and related
personnel costs, facilities expenses, sales and marketing, information systems
costs, consulting and legal fees and equity in loss of affiliates. Selling,
general and administrative expenses increased 64% for both the three and
six-month periods ended June 30, 1999 as compared to the corresponding periods
in 1998. The increase was primarily due to an increase in the number of our
employees, as well as other costs associated with the expansion of our local and
long distance service businesses in our existing and planned markets.

    We record deferred compensation expense for compensatory stock options
issued under our Stock Option Plan over their vesting periods, based on the
excess of the fair value at the date of grant over their exercise prices.

<PAGE>

     Depreciation expense increased primarily due to placement in service of
additional telecommunications network assets, including switches, fiber optic
cable, network electronics and related equipment. We expect depreciation expense
to continue to increase as we expand our networks and install additional
equipment associated with voice and data technologies.

     Interest expense increased 57% in the second quarter of 1999 over the same
period in the prior year due to an increase in our average outstanding
indebtedness over the respective periods. For more information, see "Liquidity
and Capital Resources." Pursuant to Statement of Financial Accounting Standards
No. 34, we capitalize a portion of our interest costs as part of the
construction cost of our communications networks. Capitalized interest during
the second quarter of 1999 totaled $3.5 million. Interest income results from
investment of excess cash and securities.


LIQUIDITY AND CAPITAL RESOURCES

     Our business is capital intensive and, as such, has required and will
continue to require substantial capital investment. We build high capacity
networks with broad market coverage, a strategy that initially increases our
level of capital expenditures and operating losses and requires us to make a
substantial portion of our capital investments before we realize any revenue
from them. These capital expenditures, together with the associated early
operating expenses, will continue to result in negative cash flow unless and
until we are able to establish an adequate customer base. We believe, however,
that over the long term this strategy will enhance our financial performance by
increasing the traffic flow over our networks.

     During the first six months of 1999, we used $186.0 million in cash for
operating activities, compared to $76.9 million for the same period in the prior
year. The increase was primarily due to a substantial increase in our activities
associated with the continued development and expansion of local and long
distance service operations. In addition, during the first six months of 1999,
we invested $261.2 million in property and equipment and $502.9 in acquisitions
of telecommunications assets and investments in telecommunications businesses.
During the same period in 1998, we invested $126.7 million in property and
equipment, and $159.4 million in acquisitions of telecommunications assets and
investments in telecommunications businesses.

     We expect to make substantial capital expenditures in 1999 and beyond
relating to our existing and planned network development and operations. These
expenditures include:

       - the purchase and installation of switches, routers, servers and other
         data-related equipment and related electronics in existing networks and
         in networks to be constructed or acquired in new or adjacent markets;

       - the purchase and installation of fiber optic cable and electronics to
         expand existing networks and develop new networks, including the
         connection of new buildings;

       - the development of our comprehensive information technology platform;

       - the purchase and installation of equipment associated with the
         deployment of LMDS using our LMDS spectrum;

       - funding of the INTERNEXT venture described below, and related
         expenses we expect to incur in building our national network;

       - the purchase and installation of equipment associated with
         deployment of Digital Subscriber Line, or DSL services; and

       - the funding of operating losses and working capital.

     Our strategic plan calls also for expansion into additional market areas.
This expansion will require significant additional capital for:

<PAGE>

      - potential acquisitions of businesses or assets;

      - design, development and construction of new networks; and

      - the funding of operating losses and working capital during the
        start-up phase of each market.

     As of June 30, 1999, we had unrestricted cash and investments of
approximately $1,843.0 million.

     In July 1999, we entered into a strategic agreement with SPEEDUS.com Inc.,
a facilities based high-speed Internet service provider. Pursuant to this
agreement, we purchased 150 MHz of broadband fixed wireless spectrum in New
York, New York for $20.0 million, and invested an additional $20.0 million in
exchange for 2,000,000 shares of SPEEDUS.com's common stock. The $40.0 million
total consideration for the transaction was paid in cash in July 1999. As part
of this strategic alliance, we will provide co-location, transport and access
services to SPEEDUS.com. Additionally, SPEEDUS.com will have access to our
network testing facility.

     In April 1999, we acquired WNP Communications, Inc. for $698.2 million. Of
this amount, $157.7 million was paid in cash to the FCC for license fees,
including interest. The remainder was paid to stockholders of WNP, and consisted
of $190.1 million in cash and 5,715,831 shares of Class A common stock. In this
transaction, we acquired 39 A block local multipoint distribution services, or
LMDS, wireless licenses covering an area where approximately 98 million people
live or work and one B block LMDS wireless license covering an area where
approximately 16 million people live or work.

     In June 1999, we acquired Nextel Communications, Inc.'s 50% interest in
NEXTBAND, a joint venture formed in January 1998 by us and Nextel, for $137.7
million in cash. NEXTBAND owns LMDS licenses in 42 markets throughout the U.S.
The purchase price was determined based on a formula derived from the purchase
price paid in the WNP merger. We plan to use our fixed wireless licenses to
extend the reach of our fiber networks and to connect additional customers
directly to our fiber networks. Deploying the technologies associated with our
LMDS strategy will require additional capital expenditures.

     In January 1999, we entered into a strategic agreement with Covad
Communications Group, Inc., a leading provider of high-speed digital
communications services using DSL technology. Pursuant to this agreement, we
will become a preferred provider to Covad for local transport and colocation
services for Covad's regional data centers. We also invested $20.0 million in
Covad under this agreement, and Covad will become a preferred provider to us of
DSL services, where we elect not to provide such services ourselves.

     In July 1998, we formed INTERNEXT L.L.C., which is beneficially owned 50%
each by us and Eagle River Investments L.L.C., and is managed by us. INTERNEXT
entered into an agreement with Level 3 Communications, Inc. Level 3 is
constructing a national fiber optic network that is expected to cover more
than 16,000 route miles with six or more conduits and connect 50 cities in the
United States and Canada. Pursuant to this agreement, INTERNEXT will receive
an exclusive interest in 24 fibers in a shared, filled conduit, one entire
empty conduit and the right to 25% of the fibers pulled through the sixth and
any additional conduits in the network. INTERNEXT will pay $700.0 million in
exchange for these rights, the majority of which will be payable as segments
of the network are completed and accepted by INTERNEXT, which is expected to
occur substantially during 2000 and 2001. NEXTLINK has guaranteed 50% of the
financial obligations of INTERNEXT under this agreement and, together with
Eagle River, has also guaranteed the performance of certain other obligations
of INTERNEXT.

     On June 1, 1999, we completed the sale of 10 3/4% Senior Notes and 12 1/4%
Senior Discount Notes, both due June 1, 2009. We received proceeds from the sale
of the 10 3/4% Notes and the 12 1/4% Notes, net of discounts, underwriting
commissions, advisory fees and expenses totaling approximately $979.5 million.
Interest payments on the 10 3/4% Notes are due semi-annually. We have the option
to redeem the 10 3/4% Notes at any time after June 1, 2004. The 12 1/4% Notes
were issued at a discount from their principal amount to generate aggregate
gross proceeds of approximately $325.0 million. The 12 1/4% Notes accrete at a
rate of 12 1/4% compounded semi-annually, to an aggregate principal amount of
approximately $588.9 million by June 1, 2004. No cash interest will accrue on
the

<PAGE>

12 1/4% Notes until June 1, 2004. Interest will become payable in cash
semi-annually beginning December 1, 2004. We have the option to redeem the
12 1/4% Notes at any time after June 1, 2004.

     On June 1, 1999, we completed the sale of 7,600,000 shares of Class A
common stock at $76.00 per share. Of the total shares sold, 4,232,050 were
offered by us and 3,367,950 were offered by certain shareholders who
previously owned interests in WNP. Gross proceeds from the offering totaled
$321.6 million, and our proceeds net of underwriting discounts, advisory fees
and estimated expenses aggregated approximately $310.5 million.

     In addition, our operating flexibility with respect to certain business
matters is, and will continue to be, limited by covenants associated with our
outstanding senior notes. Among other things, these covenants limit the
ability of us and our subsidiaries to incur additional indebtedness, create
liens upon assets, apply the proceeds from the disposal of assets, make
dividend payments and other distributions on capital stock and redeem capital
stock. We are required to use the proceeds from the sale of our 10 3/4%
Senior Notes due 2008, 10 3/4% Senior Notes due 2009 and 12 1/4% Senior
Discount Notes due 2009 to fund 80% of the expenditures for the construction,
improvement and acquisition of new and existing networks and services and
direct and indirect investments in certain joint ventures, including
INTERNEXT, by covenants in the indentures under which these and other of our
notes were issued. Pending application of these proceeds, we are permitted to
invest them in marketable securities. We expect to fund the remainder of
these costs with the proceeds of other offerings.

     In addition, the terms of our 14% Senior Exchangeable Redeemable Preferred
Stock contain covenants that may limit our flexibility in incurring additional
indebtedness and issuing additional preferred shares. We were in compliance with
all covenants associated with our notes and the 14% preferred stock as of June
30, 1999.

IMPACT OF YEAR 2000

     Certain of our older computer systems and applications were written to
define a given year with abbreviated dates using the last two digits in a year
rather than the entire four digits. As a result, when computer systems attempt
to process dates both before and after January 1, 2000, two digit year fields
may create processing ambiguities that can cause errors and system failures.
For example, systems and applications may have time-sensitive software that
recognize an abbreviated year "00" as the year 1900 rather than the year 2000.
These errors or failures may have limited effects, or the effects may be
widespread, depending on the computer chip, system, or software, and its
location and function.

     STATE OF READINESS

     NEXTLINK is currently assessing the impact of the Year 2000, and has
adopted a formal Year 2000 plan, or the Plan.  The purpose of the Plan will be
to develop and perform reasonable steps intended to prevent our critical
operational functions from being impaired due to the Year 2000 problem.

     Our definition of Year 2000 compliance is the ability of all computer
systems and hardware to perform as intended regardless of date, and that all
data, including date fields, can and will be accessed, processed, maintained,
and updated without interruption and with expected results.

     The Plan is divided into four major project areas: the external Public
Service Telephone Network, or PSTN; Embedded Systems, which includes our
internal network as well as our telecommunications hardware and software;
Enterprise Applications, which includes our business operations programs, such
as billing and provisioning; and Facilities, which includes our buildings,
utilities, security, and other similar functions and systems. Implementation
of the Plan is coordinated throughout the Company by a Program Management Team,
which is comprised of cross-functional members and includes a business
continuity/contingency manager.  This team meets regularly with executive
management, and periodically advises the Audit Committee and the Board of
Directors on the status of the Plan.  We have also engaged a third party
consulting firm to assist in the completion of certain phases of the Plan.

     Our Plan is comprised of three phases:

     PHASE I

     In the first phase, inventory and enterprise assessment, which we
completed in December 1998, we:

<PAGE>

     -    produced an inventory of priority systems and equipment to
          determine the extent of testing required for Year 2000 readiness
          (generally defined as the ability of information systems to
          accurately process data from, into and between the twentieth and
          twenty-first centuries, including leap year calculations),

     -    designed a Company-wide Year 2000 communications plan,

     -    created a risk assessment and impact analysis from which Phase I and
          Phase II of the Plan were developed,

     -    sent written requests for Year 2000 certification statements to our
          vendors and suppliers, and

     -    began an ongoing program to provide Y2K information and
          documentation to our customers, PUCs, regulatory agencies, and other
          service providers through our company website and other means of
          communications.

     PHASE II

     In the second phase, strategy development and confirmation, which we
completed in April 1999, we:

     -    conducted a mission critical assessment of date sensitive devices
          and applications,

     -    developed detailed and comprehensive correction and remediation
          plans for achieving Year 2000 compliance,

     -    identified and began installing upgrades for software applications
          that we identified as not being Year 2000 compliant,

     -    substantially completed the inventory of our information technology,
          networks, and embedded systems, and

     -    received responses to our certification statements from
          approximately 95% of our vendors and suppliers who provide
          components of our information technology, networks and embedded
          systems.

     We will continue to inventory systems and contact vendors and suppliers as
needed.

<PAGE>

     PHASE III

     The third phase, which is the remediation phase, is scheduled to be
completed by September 30, 1999. This phase focuses on the remediation of
issues and execution of plans identified in Phase II.  Based on our estimates
of remediation to be completed, the following is a summary of the estimated
percentage of remediation completed to date for each of the four major Plan
project areas:

<TABLE>
<CAPTION>
                                         REMEDIATION PLAN
     PROJECT                            PERCENT COMPLETED
     -------                            -----------------
     <S>                                <C>
     PSTN                                      75%
     Embedded Systems                          80%
     Enterprise Applications                   85%
     Facilities                                25%
</TABLE>

     One of our subsidiaries, NEXTLINK Interactive, Inc., operates over
systems and operating platforms that are independent of those related to our
local and long distance services. As such, NEXTLINK Interactive has developed
its own Year 2000 Plan, or the Interactive Plan. Based on our estimates,
Interactive is 60% complete with the hardware portion of the Interactive Plan
and 20% complete with the applications portion of the Interactive Plan.
Interactive expects to be Year 2000 ready by December 31, 1999.

     The objective of this phase is to confirm that all mission critical
systems and applications will operate with minimal impact from the Year 2000
problem.

     COSTS TO ADDRESS YEAR 2000 ISSUES

     We have not incurred material historical costs for Year 2000 awareness,
inventory, assessment, analysis, conversion, or contingency planning.
Further, we anticipate that our future costs for these purposes will not be
material.

     Year 2000 costs are difficult to estimate accurately because of
unanticipated vendor delays, technical difficulties, and similar events.
Although management believes that its estimates are reasonable, we cannot
assure you that the actual costs of implementing the Plan will not differ
materially from the estimated costs or that we will not be materially
adversely affected by Year 2000 issues.  Furthermore, the estimated costs of
implementing the Plan do not consider the costs, if any, that might be
incurred as a result of Year 2000-related failures that occur despite our
implementation of the Plan.

     YEAR 2000 RISK FACTORS

     Between now and the year 2000 there will be increased competition for
people with the technical and managerial skills necessary to deal with the
Year 2000 problem. We believe that we employ an adequate number of personnel
skilled in dealing with the Year 2000 problem and have retained outside
consultants who bring additional skilled people to deal with the Year 2000
problem as it affects us. Nevertheless, we could face shortages of skilled
personnel or other resources, such as Year 2000 compliant computer chips.
These shortages might delay or otherwise impair our ability to assure that
our critical systems are Year 2000 compliant. Outside entities could face
similar problems that could materially affect us. We believe

<PAGE>

that the possible impact of the shortage of skilled people and resources is
not, and will not be, unique to us.

     We believe that our critical systems will be Year 2000 ready before
January 1, 2000. However, there is no assurance that the Plan will succeed in
accomplishing its purposes and unforeseen circumstances may arise during
implementation of the Plan that would materially and adversely affect us.

     We are taking reasonable steps to identify, assess, and, where
appropriate, replace devices that contain embedded chips. Despite these
reasonable efforts, we may not be able to find and remediate all embedded
chips in all of our systems. Further, outside entities on which we depend
also may not be able to find and remediate all embedded chips in their
systems. Some chips that are not Year 2000 compliant may create system
disruptions or failures, which may, in turn, cause disruptions or failures in
other systems. These cascading problems could impair our ability to serve our
customers and otherwise fulfill contractual and legal obligations. We believe
that the possible adverse impact of the embedded chip problem is not, and will
not be, unique to us.

     We cannot ensure that suppliers upon which we depend for essential
supplies and services will convert and test their critical systems and
processes in a timely manner. Failure or delay by all or some of these
entities, including federal, state, or local governments and other exchange
carriers, to make their systems and processes Year 2000 compliant could create
substantial disruptions having a material adverse effect on our operations.

     In a recent Securities and Exchange Commission release regarding Year
2000 disclosure, the Securities and Exchange Commission stated that public
companies must disclose the most reasonably likely worst case Year 2000
scenario. Although it is not possible to assess the likelihood of any of the
following events, each must be included in a consideration of worst case
scenarios: widespread failure of electrical, gas, and similar supplies serving
us; widespread disruption of the services provided by common communications
carriers; similar disruption to the means and modes of transportation for us
and our employees, contractors, suppliers, and customers; significant
disruption to our ability to gain access to, and remain working in, office
buildings and other facilities; the failure of substantial numbers of our
critical computer hardware and software systems, including both internal
business systems and systems controlling operational facilities such as
electrical generation, transmission, and distribution systems; and the failure
of outside entities' systems, including systems related to banking and finance.
Among other things, we could face substantial claims by customers or loss of
revenue due to service interruptions, inability to fulfill contractual
obligations or to bill customers accurately and on a timely basis, and
increased expenses associated with litigation, stabilization of operations
following critical system failures, and the execution of contingency plans. We
could also experience an inability by customers and others to pay, on a timely
basis or at all, obligations owed to us. Under these circumstances, the
adverse effects on us would be material, although not quantifiable at this
time. Further, the cumulative effect of these failures could have a
substantial adverse effect on the economy, domestically and internationally.
The adverse effect on us from a domestic or global recession or depression
also could be material, although not quantifiable at this time.

     We will continue to monitor business conditions to assess and quantify
material adverse effects, if any, that may result from the Year 2000 problem.

     CONTINGENCY PLANS

     As part of the Plan, NEXTLINK is developing contingency plans that deal
with internal aspects of the Year 2000 problem. The Company's contingency plans
will contemplate an assessment of all its critical internal information
technology systems and its internal operational systems that use
computer-based controls. In addition, the Company will assess any critical
disruptions due to Year 2000-related failures that are external to the
Company. These processes will begin January 1, 2000, and will continue as long
as circumstances require.

     The Company's contingency plans will include the creation of teams that
will be prepared to respond immediately and as necessary to critical Year 2000
problems as soon as they become known. The

<PAGE>

composition of teams that are assigned to deal with such problems will vary
according to the nature, significance, and location of the problem.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements", as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events or
results may differ materially as a result of risks that we face, including those
set forth under "Outlook: Issues and Uncertainties" in our Form 10-K filed with
the SEC on March 29, 1999. These forward-looking statements can be identified by
the use of forward-looking terminology such as "believes", "expects", "plans",
"may", "will", "would," "could," "should", or "anticipates" or the negative of
these words or other variations of these words or other comparable words, or by
discussions of strategy that involve risks and uncertainties. Such
forward-looking statements include, but are not limited to:

       - the number of markets we expect to serve, the expected number of
         addressable business lines in markets in which we currently provide
         service and the markets in which we expect to provide service;

       - our expectations regarding our ability to attract and retain customers;

       - our beliefs regarding certain competitive advantages, including that of
         our national end-to-end network, the introduction of IP and ATM
         technologies, our management structure and provisioning processes and
         systems;

       - our belief regarding financial performance due to increased traffic
         flow over our networks;

       - our plans to install additional switches, data networking capabilities
         such as IP and ATM facilities and high speed technologies such as DSL;

       - our plans to implement and deploy wireless first mile connections;

       - our ability to maintain technological flexibility;

       - our expectation regarding the development of a national network and
         the implementation of a national network end-to-end strategy;

       - our anticipated capital expenditures, funding thereof and levels of
         indebtedness and our expectations regarding additional indebtedness;
         and

       - statements with respect to our Year 2000 project.


NEW ACCOUNTING STANDARD

     In April 1998, the AICPA released Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" (SOP 98-5). The new standard requires that all
entities expense costs of start-up activities as those costs are incurred. SOP
98-5 defines "start-up costs" as those costs directly related to pre-operating,
pre-opening, and organization activities. This standard must be adopted in
fiscal years beginning after December 15, 1998. The adoption of SOP 98-5 did not
have a material impact on the Company's financial position.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     NEXTLINK currently has instruments sensitive to market risk relating to
exposure to changing interest rates and market prices. There have been no
material changes in market risk since December 31, 1998.

<PAGE>

PART II.      OTHER INFORMATION

Item 1.       LEGAL PROCEEDINGS

                The Company is not currently a party to any legal proceedings,
                other than regulatory and other proceedings that are in the
                normal course of its business.

Item 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

                NEXTLINK filed a registration statement on Form S-1 (File No.
                333-32001) which became effective on September 26, 1997, whereby
                15,200,000 shares of Class A Common Stock, $0.02 par value per
                share, were sold in an initial public offering at a price of $17
                per share. Of the 15,200,000 shares of Class A Common Stock
                sold, 12,000,000 shares were sold by NEXTLINK and 3,200,000
                shares were sold by a selling shareholder. NEXTLINK did not
                receive any of the proceeds from the sale of shares by the
                selling shareholder. In addition, the underwriters of the IPO,
                led by Salomon Brothers Inc., exercised an option to purchase
                2,280,000 additional shares of Class A Common Stock at the same
                price per share. Net proceeds to NEXTLINK from the IPO totaled
                approximately $226.8 million, after deducting underwriting
                discounts, advisory fees and expenses aggregating approximately
                $16.0 million. NEXTLINK intends to use substantially all of the
                net proceeds from the IPO for expenditures relating to the
                expansion of existing networks and services, the development and
                acquisition of new networks and services and the funding of
                operating losses and working capital. None of the net proceeds
                from the IPO had been used by NEXTLINK as of June, 30 1999.

Item 3.       DEFAULTS UPON SENIOR SECURITIES

                None.

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                Our Board of Directors has approved amendments to the
                NEXTLINK Communications, Inc. Stock Option Plan to authorize
                an additional 8,145,304 shares of our Class A common stock
                to be issued under the plan. These amendments also have been
                approved by one of our stockholders, Eagle River Investments,
                L.L.C. Eagle River holds 18,871,787 shares of our Class B
                common stock, which represents shares with a majority of the
                total number of votes attributable to all shares of
                outstanding common stock. Our common stock is the only
                outstanding class of capital stock of NEXTLINK entitled to
                vote on this matter. Eagle River approved the Board's action
                by written consents in lieu of stockholder meetings dated
                February 22, 1999 and May 3, 1999, pursuant to Section 228(a)
                of the Delaware General Corporation Law. Because we are a
                corporation organized under the laws of the State of
                Delaware, our stockholders may take action by written consent
                without a meeting. The Board has not solicited any proxies or
                consents from any other stockholders in connection with this
                action. On May 26, 1999, we mailed an information statement
                regarding this action to stockholders of record on that date
                in accordance with rules of the Securities and Exchange
                Commission. The increase in number of authorized shares
                available under the Stock Option Plan became effective 20
                days after the date on which the information statement was
                mailed to stockholders of NEXTLINK.

Item 5.       OTHER INFORMATION

                None.


Item 6.       EXHIBITS AND REPORTS ON FORM 8-K

                (a)      Exhibits

<TABLE>
                        <C>       <S>
                         3.1      Certificate of Incorporation of NEXTLINK
                                  Communications, Inc. (1)

</TABLE>
<PAGE>

<TABLE>
                        <C>       <S>
                         3.2      By-laws of NEXTLINK Communications, Inc. (1)

                         3.3      Articles of Incorporation of NEXTLINK
                                  Capital, Inc. (2)

                         3.4      By-laws of NEXTLINK Capital, Inc. (2)

                         4.1      Certificate of Designations of the Powers,
                                  Preferences and Relative, Participating,
                                  Optional and Other Special Rights of 14%
                                  Senior Exchangeable  Redeemable Preferred
                                  Shares and Qualifications, Limitations and
                                  Restrictions Thereof. (1)

                         4.2      Form of stock certificate of 14% Senior
                                  Exchangeable Redeemable Preferred Shares.
                                  (3)

                         4.3      Certificate of Designations of Powers,
                                  Preferences and Relative, Participating,
                                  Optional and Other Special Rights of 6 1/2%
                                  Cumulative Convertible Preferred Stock and
                                  Qualifications, Limitations and
                                  Restrictions Thereof. (1)

                         4.4      Form of Stock Certificate of 6 1/2% Cumulative
                                  Convertible Preferred Stock. (12)

                         4.5      Form of Stock Certificate of Class A common
                                  stock. (9)

                         4.6      Indenture, dated as of April 25, 1996, by
                                  and among NEXTLINK Communications, Inc.,
                                  NEXTLINK Capital, Inc. and United States
                                  Trust Company of New York, as Trustee,
                                  relating to 12 1/2% Senior Notes due April
                                  15, 2006, including form of global note. (2)

                         4.7      First Supplemental Indenture, dated as of
                                  January 31, 1997, by and among NEXTLINK
                                  Communications, Inc., NEXTLINK
                                  Communications, L.L.C., NEXTLINK Capital
                                  and United States Trust Company of New
                                  York, as Trustee. (3)

                         4.8      Second Supplemental Indenture, dated June
                                  3, 1998, amending Indenture dated April 25,
                                  1996, by and among NEXTLINK Communications,
                                  Inc., NEXTLINK Capital, Inc. and United
                                  States Trust Company of New York, as
                                  Trustee. (1)

                         4.9      Indenture dated September 25, 1997, between
                                  United States Trust Company, as Trustee and
                                  NEXTLINK Communications, Inc., relating to
                                  the 9 5/8% Senior Notes due 2007. (12)

                         4.10     First Supplemental Indenture, dated June 3,
                                  1998, amending Indenture dated September
                                  25, 1997, by and between NEXTLINK
                                  Communications, Inc. and United States
                                  Trust Company of New York, as Trustee. (1)

                         4.11     Indenture, dated March 3, 1998, between
                                  United States Trust Company, as Trustee and
                                  NEXTLINK Communications, Inc., relating to
                                  the 9% Senior Notes due 2008. (5)

                         4.12     First Supplemental Indenture, dated June 3,
                                  1998, amending Indenture dated March 3,
                                  1998, by and between NEXTLINK
                                  Communications, Inc. and United States
                                  Trust Company of New York as Trustee. (1)

</TABLE>
<PAGE>

<TABLE>
                        <C>       <S>
                         4.13     Indenture dated April 1, 1998 between
                                  United Trust Company, as Trustee and
                                  NEXTLINK Communications, Inc. relating to
                                  the 9.45% Senior Discount Notes due 2008. (5)

                         4.14     First Supplemental Indenture, dated June 3,
                                  1998, amending Indenture dated April 1,
                                  1998, by and between NEXTLINK
                                  Communications, Inc. and United States
                                  Trust Company of New York, as Trustee. (1)

                         4.15     Indenture, dated November 12, 1998, by and
                                  among NEXTLINK Communications, Inc. and
                                  United States Trust Company of New York, as
                                  Trustee, relating to the 10 3/4% Senior Notes
                                  due 2008. (8)

                         4.16     Form of Indenture between NEXTLINK
                                  Communications, Inc. and United States Trust
                                  Company of New York, as Trustee, relating to
                                  the 10 3/4% Senior Notes due 2009. (13)

                         4.17     Form of Indenture between NEXTLINK
                                  Communications, Inc. and United States Trust
                                  Company of Texas, as Trustee, relating to
                                  the 12 1/4% Senior Discount Notes, Due 2009. (13)

                         10.1     Stock Option Plan of NEXTLINK
                                  Communications, Inc., as amended.

                         10.2     Employee Stock Purchase Plan of NEXTLINK
                                  Communications, Inc. (1)

                         10.3     Fiber Lease and Innerduct Use Agreement,
                                  dated as of February 23, 1998, by and
                                  between NEXTLINK Communications, Inc. and
                                  Metromedia Fiber Network. (5)

                         10.4     Amendment No. 1 to Fiber Lease and
                                  Innerduct Use Agreement, dated as of March
                                  4, 1998, by and between NEXTLINK
                                  Communications, Inc. and Metromedia Fiber
                                  Network, Inc. (5)

                         10.5     Cost Sharing and IRU Agreement, dated July 18,
                                  1998, between Level 3 Communications, LLC and
                                  INTERNEXT LLC. (14)

                         10.6     Guaranty Agreement, dated July 18, 1998,
                                  between NEXTLINK Communications, Inc. and Level
                                  3 Communications LLC. (14)

                         10.7     Registration Rights Agreement dated as of
                                  January 15, 1997, between the predecessor
                                  of NEXTLINK Communications, Inc. and the
                                  signatories listed therein. (3)

                         10.8     Registration Rights Agreement dated January
                                  14, 1999, between NEXTLINK Communications,
                                  Inc. and the Holders referred to therein. (7)

                         10.9     Consent and Indemnity Agreement of
                                  Stockholders, dated January 14, 1999, by
                                  and among NEXTLINK Communications, Inc.,
                                  WNP Communications, Inc. and certain
                                  holders of non-voting and voting common
                                  stock of WNP Communications, Inc. (10)

</TABLE>
<PAGE>

<TABLE>
                        <C>       <S>
                         10.10    Consent and Indemnity Agreement of
                                  Preferred Stockholders, dated January 14,
                                  1999, by and among NEXTLINK Communications,
                                  Inc., WNP Communications, Inc. and certain
                                  holders of Series A preferred stock of WNP
                                  Communications, Inc. (11)

                         27       Financial Data Schedule
</TABLE>

          ---------
          (1)   Incorporated herein by reference to the exhibit filed with
                the Registration Statement on Form S-4 of NEXTLINK
                Communications, Inc. (Commission File No. 333-53975).
          (2)   Incorporated herein by reference to the exhibit filed with
                the Registration Statement on Form S-4 of NEXTLINK
                Communications, L.L.C. (the predecessor of NEXTLINK
                Communications, Inc.) and NEXTLINK Capital, Inc. (Commission
                File No. 333-4603).
          (3)   Incorporated herein by reference to the exhibit filed with
                the Annual Report on Form 10-KSB for the year ended December
                31, 1996 of NEXTLINK Communications, Inc. and NEXTLINK
                Capital, Inc. (Commission File Nos. 333-04603 and
                333-04603-01).
          (4)   Incorporated herein by reference to the exhibit filed with
                the Registration Statement on Form S-1 of NEXTLINK
                Communications, Inc. (Commission File No. 333-32003).
          (5)   Incorporated herein by reference to the exhibit filed with
                the Annual Report on Form 10-KSB for the year ended December
                31, 1997 of NEXTLINK Communications, Inc. and NEXTLINK
                Capital, Inc. (Commission File Nos. 333-04603 and
                333-04603-01).
          (6)   Incorporated herein by reference to the exhibit filed with
                the quarterly report on Form 10-Q for the quarterly period
                ended March 31, 1998 of NEXTLINK Communications, Inc. and
                NEXTLINK Capital, Inc. (Commission File No. 000-22939).
          (7)   Incorporated herein by reference to the exhibits filed with
                the current report on form 8-K filed on January 19, 1999
                (Commission File No. 000-22939).
          (8)   Incorporated herein by reference to the exhibits filed with
                the Registration Statement on Form S-4 of NEXTLINK
                Communications, Inc. (Commission File No. 333-71749).
          (9)   Incorporated herein by reference to the exhibit filed with
                the Registration Statement on Form S-1 of NEXTLINK
                Communications, Inc. (Commission File No. 333-32001).
          (10)  Incorporated herein by reference to the exhibits filed the
                Registration Statement on Form S-4 of NEXTLINK
                Communications, Inc. (Commission File No. 333-75923)
          (11)  Incorporated herein by reference to the exhibits filed with
                the current report on Form 8-K filed on April 1, 1999
                (Commission File No. 000-22939).
          (12)  Incorporated herein by reference to the exhibits filed with
                the Registration Statement on Form S-3 of NEXTLINK
                Communications, Inc. (Commission File No. 333-77577).
          (13)  Incorporated herein by reference to the exhibit filed with
                the Registration Statement on Form S-3 of NEXTLINK
                Communications, Inc. (Commission File No. 333-77819)
          (14)  Incorporated herein by reference to the exhibit filed with
                the quarterly report on form 10-Q for the quarterly period
                ended September 30, 1998 of NEXTLINK Communications, Inc. and
                NEXTLINK Capital, Inc. (Commission File No. 000-22939).

(b)      Reports on Form 8-K

              Current report on Form 8-K, filed April 1, 1999, regarding the
              definitive agreement with a subsidiary of Nextel
              Communications, Inc. to acquire the 50% interest in NEXTBAND
              Communications that NEXTLINK does not currently own.

              Current report on Form 8-K, filed May 11, 1999, regarding the
              closing of the acquisition of WNP Communications, Inc.

<PAGE>

                                   SIGNATURES

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


                                  NEXTLINK Communications, Inc.


Date: August 16, 1999             By: /s/ Kathleen H. Iskra
                                      -----------------------------
                                  Kathleen H. Iskra
                                  Vice President, Chief Financial Officer
                                  and Treasurer
                                  (Principal financial and accounting officer)


                                  NEXTLINK Capital, Inc.

Date: August 16, 1999             By: /s/ Kathleen H. Iskra
                                      -----------------------------
                                  Kathleen H. Iskra
                                  Vice President, Chief Financial Officer
                                  and Treasurer
                                  (Principal financial and accounting officer)

<PAGE>

                          NEXTLINK COMMUNICATIONS, INC.
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
   NO.   DESCRIPTION
-------  -----------
<C>      <S>
3.1      Certificate of Incorporation of NEXTLINK Communications, Inc. (1)

3.2      By-laws of NEXTLINK Communications, Inc. (1)

3.3      Articles of Incorporation of NEXTLINK Capital, Inc. (2)

3.4      By-laws of NEXTLINK Capital, Inc. (2)

4.1      Certificate of Designations of the Powers, Preferences and Relative,
         Participating, Optional and Other Special Rights of 14% Senior
         Exchangeable Redeemable Preferred Shares and Qualifications,
         Limitations and Restrictions Thereof. (1)

4.2      Form of stock certificate of 14% Senior Exchangeable Redeemable
         Preferred Shares. (3)

4.3      Certificate of Designations of Powers, Preferences and Relative,
         Participating, Optional and Other Special Rights of 6 1/2%
         Cumulative Convertible Preferred Stock and Qualifications,
         Limitations and Restrictions Thereof. (1)

4.4      Form of Stock Certificate of 6 1/2% Cumulative Convertible Preferred
         Stock. (12)

4.5      Form of Stock Certificate of Class A common stock. (9)

4.6      Indenture, dated as of April 25, 1996, by and among NEXTLINK
         Communications, Inc., NEXTLINK Capital, Inc. and United States Trust
         Company of New York, as Trustee, relating to 12 1/2% Senior Notes
         due April 15, 2006, including form of global note. (2)

4.7      First Supplemental Indenture, dated as of January 31, 1997, by and
         among NEXTLINK Communications, Inc., NEXTLINK Communications,
         L.L.C., NEXTLINK Capital and United States Trust Company of New
         York, as Trustee. (3)

4.8      Second Supplemental Indenture, dated June 3, 1998, amending
         Indenture dated April 25, 1996, by and among NEXTLINK
         Communications, Inc., NEXTLINK Capital, Inc. and United States Trust
         Company of New York, as Trustee. (1)

4.9      Indenture dated September 25, 1997, between United States Trust
         Company, as Trustee and NEXTLINK Communications, Inc., relating to
         the 9 5/8% Senior Notes due 2007. (12)

4.10     First Supplemental Indenture, dated June 3, 1998, amending Indenture
         dated September 25, 1997, by and between NEXTLINK Communications,
         Inc. and United States Trust Company of New York, as Trustee. (1)

4.11     Indenture, dated March 3, 1998, between United States Trust Company,
         as Trustee and NEXTLINK Communications, Inc., relating to the 9%
         Senior Notes due 2008. (5)

4.12     First Supplemental Indenture, dated June 3, 1998, amending Indenture
         dated March 3, 1998, by and between NEXTLINK Communications, Inc.
         and United States Trust Company of New York as Trustee. (1)

</TABLE>

<PAGE>

<TABLE>
<C>      <S>
4.13     Indenture dated April 1, 1998 between United Trust Company, as
         Trustee and NEXTLINK Communications, Inc. relating to the 9.45%
         Senior Discount Notes due 2008. (5)

4.14     First Supplemental Indenture, dated June 3, 1998, amending Indenture
         dated April 1, 1998, by and between NEXTLINK Communications, Inc.
         and United States Trust Company of New York, as Trustee. (1)

4.15     Indenture, dated November 12, 1998, by and among NEXTLINK
         Communications, Inc. and United States Trust Company of New York, as
         Trustee, relating to the 10 3/4% Senior Notes due 2008. (8)

4.16     Form of Indenture between NEXTLINK Communications, Inc. and United
         States Trust Company of New York, as Trustee, relating to the
         10 3/4% Senior Notes due 2009. (13)

4.17     Form of Indenture between NEXTLINK Communications, Inc. and United
         States Trust Company of Texas, as Trustee, relating to the
         12 1/4% Senior Discount Notes, Due 2009. (13)

10.1     Stock Option Plan of NEXTLINK Communications, Inc., as amended.

10.2     Employee Stock Purchase Plan of NEXTLINK Communications, Inc. (1)

10.3     Fiber Lease and Innerduct Use Agreement, dated as of February 23,
         1998, by and between NEXTLINK Communications, Inc. and Metromedia
         Fiber Network. (5)

10.4     Amendment No. 1 to Fiber Lease and Innerduct Use Agreement, dated as
         of March 4, 1998, by and between NEXTLINK Communications, Inc. and
         Metromedia Fiber Network, Inc. (5)

10.5     Cost Sharing and IRU Agreement, dated July 18, 1998, between Level 3
         Communications, LLC and INTERNEXT LLC. (14)

10.6     Guaranty Agreement, dated July 18, 1998, between NEXTLINK
         Communications, Inc. and Level 3 Communications LLC. (14)

10.7     Registration Rights Agreement dated as of January 15, 1997, between
         the predecessor of NEXTLINK Communications, Inc. and the signatories
         listed therein. (3)

10.8     Registration Rights Agreement dated January 14, 1999, between
         NEXTLINK Communications, Inc. and the Holders referred to therein. (7)

10.9     Consent and Indemnity Agreement of Stockholders, dated January 14,
         1999, by and among NEXTLINK Communications, Inc., WNP
         Communications, Inc. and certain holders of non-voting and voting
         common stock of WNP Communications, Inc. (10)

10.10    Consent and Indemnity Agreement of Preferred Stockholders, dated
         January 14, 1999, by and among NEXTLINK Communications, Inc., WNP
         Communications, Inc. and certain holders of Series A preferred stock
         of WNP Communications, Inc. (11)

27       Financial Data Schedule
</TABLE>

---------
(1)      Incorporated herein by reference to the exhibit filed with the
         Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
         (Commission File No. 333-53975).
(2)      Incorporated herein by reference to the exhibit filed with the
         Registration Statement on Form S-4 of NEXTLINK Communications,
         L.L.C. (the predecessor of NEXTLINK Communications, Inc.) and
         NEXTLINK Capital, Inc. (Commission File No. 333-4603).
(3)      Incorporated herein by reference to the exhibit filed with the
         Annual Report on Form 10-KSB for the year ended December 31, 1996 of
         NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc. (Commission
         File Nos. 333-04603 and 333-04603-01).
(4)      Incorporated herein by reference to the exhibit filed with the
         Registration Statement on Form S-1 of NEXTLINK Communications, Inc.
         (Commission File No. 333-32003).

<PAGE>

(5)      Incorporated herein by reference to the exhibit filed with the
         Annual Report on Form 10-KSB for the year ended December 31, 1997 of
         NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc. (Commission
         File Nos. 333-04603 and 333-04603-01).
(6)      Incorporated herein by reference to the exhibit filed with the
         quarterly report on Form 10-Q for the quarterly period ended March
         31, 1998 of NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc.
         (Commission File No. 000-22939).
(7)      Incorporated herein by reference to the exhibits filed with the
         current report on form 8-K filed on January 19, 1999 (Commission
         File No. 000-22939).
(8)      Incorporated herein by reference to the exhibits filed with the
         Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
         (Commission File No. 333-71749).
(9)      Incorporated herein by reference to the exhibit filed with the
         Registration Statement on Form S-1 of NEXTLINK Communications, Inc.
         (Commission File No. 333-32001).
(10)     Incorporated herein by reference to the exhibits filed the
         Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
         (Commission File No. 333-75923)
(11)     Incorporated herein by reference to the exhibits filed with the
         current report on Form 8-K filed on April 1, 1999 (Commission File
         No. 000-22939).
(12)     Incorporated herein by reference to the exhibits filed with the
         Registration Statement on Form S-3 of NEXTLINK Communications, Inc.
         (Commission File No. 333-77577).
(13)     Incorporated herein by reference to the exhibit filed with the
         Registration Statement on Form S-3 of NEXTLINK Communications, Inc.
         (Commission File No. 333-77819)
(14)     Incorporated herein by reference to the exhibit filed with the
         quarterly report on form 10-Q for the quarterly period ended
         September 30, 1998 of NEXTLINK Communications, Inc. and NEXTLINK
         Capital, Inc. (Commission File No. 000-22939).