<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 September 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 November 5, 1999, the number of shares of Class A and Class B common stock
of NEXTLINK Communications, Inc. issued and outstanding was 74,334,495 and
58,746,550 , 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 SEPTEMBER 30, 1999 ARE UNAUDITED)

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30,              DECEMBER 31,
                                                                              1999                       1998
                                                                         ----------------          -----------------
<S>                                                                      <C>                       <C>
                                ASSETS
Current assets:

     Cash and cash equivalents.....................................        $     497,919             $     319,496
     Marketable securities.........................................            1,146,055                 1,158,566
     Accounts receivable, net......................................               63,454                    36,115
     Other current assets..........................................               30,621                    16,480
     Pledged securities............................................                   --                    21,500
                                                                           -------------             -------------
         Total current assets......................................            1,738,049                 1,552,157
Property and equipment, net........................................              953,576                   594,408
Investment in fixed wireless licenses..............................              926,678                    67,352
Other assets, net..................................................              408,644                   269,189
                                                                           -------------             -------------
         Total assets..............................................        $   4,026,947             $   2,483,106
                                                                           =============             =============

            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:

     Accounts payable..............................................        $      44,907             $      61,175
     Accrued expenses..............................................               69,975                    45,056
     Accrued interest payable......................................               84,930                    34,670
     Current portion of long-term obligations......................                1,988                     2,755
                                                                           -------------             -------------
         Total current liabilities.................................              201,800                   143,656
Long-term debt.....................................................            3,057,067                 2,013,192
Other long-term liabilities........................................               38,087                    16,553
                                                                           -------------             -------------
         Total liabilities.........................................            3,296,954                 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
   $411,555, 8,043,386 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......................              597,597                   556,168
Shareholders' equity (deficit):
     Common Stock, par value $0.02 per share, stated at amounts paid
       in; Class A, 400,000,000 shares authorized, 73,939,549 and
       48,340,234 shares issued and outstanding in 1999 and 1998,
       respectively; Class B, 60,000,000 shares authorized, 58,746,550
       and 60,595,804 shares issued and outstanding in 1999 and 1998,
       respectively................................................            1,118,535                   354,525
     Deferred compensation.........................................              (89,065)                  (11,370)
     Accumulated other comprehensive income........................              110,347                        --
     Accumulated deficit...........................................           (1,007,421)                 (589,618)
                                                                           -------------             -------------
         Total shareholders' equity (deficit)......................              132,396                  (246,463)
                                                                           -------------             -------------
         Total liabilities and shareholders' equity (deficit)......        $   4,026,947             $   2,483,106
                                                                           =============             =============
</TABLE>



 See accompanying notes to unaudited interim consolidated financial statements.


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                        SEPTEMBER 30,                      SEPTEMBER 30,
                                               -----------------------------        ---------------------------
                                                    1999             1998              1999             1998
                                               -----------       -----------        -----------     -----------
<S>                                            <C>               <C>                <C>             <C>
Revenue                                        $    75,059     $    37,817          $   184,302     $    96,392

Costs and expenses:

     Operating...........................           59,328          32,828              156,395          85,448
     Selling, general and administrative.           71,322          41,565              182,755         109,599
     Deferred compensation...............            2,535           1,720                4,711           3,104
     Depreciation........................           25,290          11,334               67,429          26,243
     Amortization........................            3,166           3,444               11,177          10,898
                                               -----------     -----------          -----------     -----------
         Total costs and expenses........          161,641          90,891              422,467         235,292
                                               -----------     -----------          -----------     -----------
Loss from operations.....................          (86,582)        (53,074)            (238,165)       (138,900)

Interest income..........................           24,428          21,559               61,713          56,116
Interest expense.........................          (79,419)        (37,434)            (190,172)        (99,050)
                                               -----------     -----------          -----------     -----------
Net loss.................................      $  (141,573)    $   (68,949)         $  (366,624)    $  (181,834)
                                               ===========     ===========          ===========     ===========

Preferred stock dividends and accretion of
     preferred stock redemption obligation,
     including issue costs...............          (17,525)        (15,734)             (51,179)        (42,613)
                                               -----------     -----------          -----------     -----------

Net loss applicable to common shares.....      $  (159,098)    $   (84,683)         $  (417,803)    $  (224,447)
                                               ===========     ===========          ===========     ===========

Net loss per share (basic and diluted)...      $     (1.27)    $     (0.79)         $     (3.41)    $     (2.09)
                                               ===========     ===========          ===========     ===========
Shares used in computation of net loss per
     share...............................      125,376,694     107,767,264          122,357,342     107,316,650
                                               ===========     ===========          ===========     ===========
</TABLE>


 See accompanying notes to unaudited interim consolidated financial statements.


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     NINE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                        --------------------------------------------
                                                                              1999                      1998
                                                                        -----------------         ------------------
<S>                                                                    <C>                       <C>

OPERATING ACTIVITIES:

Net loss............................................................      $   (366,624)             $   (181,834)


Adjustments to reconcile net loss to net cash used in operating
  activities:

     Deferred compensation expense..................................             4,711                     3,104
     Equity in loss of affiliate....................................             5,185                     2,635
     Depreciation and amortization..................................            78,606                    37,141
     Accretion of interest on senior notes..........................            43,875                    18,940

Changes in assets and liabilities:

     Accounts receivable............................................           (27,339)                   (6,570)
     Other assets...................................................           (16,708)                   (8,231)
     Accounts payable...............................................           (21,461)                   (8,016)
     Accrued expenses and other liabilities.........................            17,951                    18,683
     Accrued interest payable.......................................            50,260                    21,735
                                                                          ------------              ------------
Net cash used in operating activities...............................          (231,544)                 (102,413)


INVESTING ACTIVITIES:

Purchase of property and equipment..................................          (395,953)                 (209,136)
Assets acquired in network lease agreement..........................                --                   (92,000)
Investment in fixed wireless licenses (net of cash received)........          (488,490)                  (67,354)
Investment in unconsolidated affiliates.............................                --                   (13,337)
Maturity of pledged securities......................................            21,135                    19,636
Purchase of marketable securities...................................        (2,545,574)               (3,347,468)
Maturity of marketable securities...................................         2,521,135                 2,916,258
                                                                          ------------              ------------
Net cash used in investing activities...............................          (887,747)                 (793,401)
</TABLE>




                                 -- Continued --



                                       4
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                     NINE MONTHS ENDED
                                                                                       SEPTEMBER 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.....................            (2,925)                   (7,346)
Proceeds from issuance of common stock upon exercise of stock options           20,356                     2,021
Dividends paid on convertible preferred stock.......................            (9,750)                   (6,500)
Proceeds from issuance of senior notes (net of discount)............         1,000,000                   734,323
Proceeds from sale of common stock..................................           310,533                        --
Costs incurred in connection with financing.........................           (20,500)                  (17,232)
                                                                          ------------              ------------
Net cash provided by financing activities...........................         1,297,714                   899,090
                                                                          ------------              ------------
Net increase in cash and cash equivalents...........................           178,423                     3,276


Cash and cash equivalents, beginning of period......................           319,496                   389,074
                                                                          ------------              ------------
Cash and cash equivalents, end of period............................      $    497,919              $    392,350
                                                                          ============              ============


SUPPLEMENTAL CASH FLOW DISCLOSURES:
Noncash financing and investing activities:
     Redeemable preferred stock dividends, paid in redeemable
       preferred shares.............................................      $     39,436              $     34,366
                                                                          ============              ============
     Accrued redeemable preferred stock dividends, payable in
       redeemable preferred shares, and accretion of preferred stock
       redemption obligation and issue costs........................      $      1,993              $      1,747
                                                                          ============              ============
     Common stock issued in acquisitions............................      $    350,648              $      5,727
                                                                          ============              ============

Cash paid for interest............................................        $    100,683              $     58,860
                                                                          ============              ============
</TABLE>


 See accompanying notes to unaudited interim consolidated financial statements.










                                       5
<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 Annual Report on 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 nine-month periods ended
September 30, 1999 are not necessarily indicative of the results to be expected
for the full year.

(2)      STRATEGIC AGREEMENTS

     In January 1999, the Company entered into a strategic agreement with Covad
Communications Group, Inc. Pursuant to this agreement, the Company is 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 is 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.

     In July 1999, the Company purchased 150 MHz of broadband fixed wireless
spectrum in New York, New York held by SPEEDUS.com, Inc., a facilities based
high-speed Internet service provider, and 2,000,000 shares of SPEEDUS.com's
common stock for a total of $40.0 million. As part of this transaction,
NEXTLINK agreed to provide colocation, transport and access services to
SPEEDUS.com. Additionally, SPEEDUS.com will have access to the Company's
network testing facilities.

     For the nine months ended September 30, 1999, the Company's net unrealized
gain on its equity investment in Covad and SPEEDUS.com was $113.3 million. The
net 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 11,431,662 shares of Class A
common stock.

                                       6
<PAGE>

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 and NEXTBAND transactions to extend the reach of its fiber
networks and to connect additional customers directly to its fiber networks.

     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 LMDS 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, beginning June
1, 2004 at established redemption prices which decline to 100% of the stated
principal amount thereof by June 1, 2007. 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 at established
redemption prices which decline to 100% of the stated principal amount thereof
by June 1, 2007.

     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 15,200,000 shares of
Class A common stock at $38.00 per share. Of the total shares sold, the Company
offered 8,464,100 and 6,735,900 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)      STOCK SPLIT

     On July 15, 1999, the Company declared a two-for-one stock split of the
Company's Class A and Class B common stock, effective for shareholders of
record at the close of business on August 18, 1999. The split was effected in
the form of a stock dividend and was paid on August 27, 1999. The accompanying
consolidated financial statements have been restated to reflect the stock
split.

                                       7
<PAGE>

(6)      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 537,806 shares of Class B common stock in exchange for
the minority interests. As part of this transaction, Mr. McCaw also received
532,932 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.

(7)      RECLASSIFICATIONS

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

(8)      REPORTABLE SEGMENTS

     The Company's interactive voice response segment contributed 8.9% and
8.5%, respectively, of the company's total revenue for the three and nine
month periods ended September 30, 1999, compared to 15.5% and 15.9%,
respectively, for the corresponding periods in 1998. This segment had net
income, excluding corporate overhead, of $1.7 million for the third quarter
of 1999 compared to $0.4 million in the same period in 1998. Year to date net
loss relating to the interactive voice response segment, excluding corporate
overhead, was $2.7 million and $0.7 million in 1999 and 1998, respectively.

(9)      SUBSEQUENT EVENT

     In November, the Company entered into a hedge transaction in order to
reduce its risk of significant market declines on certain highly volatile
equity securities. The Company has pledged $40.0 million in marketable
securities as collateral against the hedge options.

                                       8
<PAGE>


PART I.           FINANCIAL INFORMATION

Item 1(b).        FINANCIAL STATEMENTS


                             NEXTLINK CAPITAL, INC.
                                 BALANCE SHEETS

                (AMOUNTS AS OF SEPTEMBER 30, 1999 ARE UNAUDITED)

<TABLE>
<CAPTION>
                                                                            SEPTEMBER 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 Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission on March 29, 1999.



                                       9
<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 30 high bandwidth, or broadband, local networks in 18
          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 a joint venture, 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 47 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 services in San Diego, Seattle, and Washington D.C.
during the first half of 1999, in Newark, Detroit and Houston during the third
quarter of 1999, and, most recently, in Phoenix and Boston.

     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 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 fixed
wireless connections offer high-quality broadband capacity and, in most cases,
we expect to cost less than fiber to install. We expect to deploy fixed
wireless 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.

                                       10
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               AS OF AND
                                                                       FOR THE THREE MONTHS ENDED
                                                                             SEPTEMBER 30,
                                                                         1999              1998
                                                                    ---------------    --------------
<S>                                                                  <C>                <C>

    FINANCIAL DATA:
    Gross property and equipment..............................       $1,102,123         $  511,204
    EBITDA (1) ...............................................        $ (55,591)        $  (36,576)

    OPERATING DATA (2):
    Route miles (3)...........................................            3,905              2,150
    Fiber miles (4)...........................................          338,705            158,987
    On-net buildings connected (5)............................            1,163                736
    Off-net buildings connected (6)...........................           20,047              9,688
    Switches installed........................................               28                 18
    Access lines in service (7)...............................          349,154            134,107
    Employees.................................................            3,254              2,065
</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 1,916
          resold access lines as of September 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.

     In September 1999, we announced plans to move our corporate headquarters
from Bellevue, Washington to Northern Virginia. The move is expected to
primarily occur during the first half of 2000. We are currently in the
process of determining the personnel-related changes and corresponding costs
associated with our relocation.

                                       11
<PAGE>





RESULTS OF OPERATIONS


     Revenue increased 98% to $75.1 million during the third quarter of 1999,
from $37.8 million in the same period in 1998. Year to date revenue of $184.3
million represented a 91% increase from the $96.4 million reported for the
comparable period in 1998. Revenue reported consisted of the following
components (in thousands):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED               NINE MONTHS ENDED
                                                        SEPTEMBER 30,                    SEPTEMBER 30,
                                                    1999            1998             1999            1998
                                                 ------------    ------------    -------------    ------------
<S>                                              <C>             <C>              <C>             <C>
    Bundled local and long distance, and
    dedicated services.........................  $    59,537     $    21,672      $  142,216      $    49,342
    Shared tenant services.....................        3,478           3,091           9,639            9,577
    Long distance telephone services...........        5,380           6,798          16,724           20,769
    Enhanced services..........................        6,664           6,256          15,723           16,704
                                                 -----------     -----------      ----------      -----------
    Total revenue..............................  $    75,059     $    37,817      $  184,302      $    96,392
                                                 ===========     ===========      ==========      ===========
</TABLE>

     The increase in total year to date revenue was driven by 188% growth in
revenues from bundled local and long distance services and dedicated services,
which corresponded to an increase in customer access lines installed. Our
quarterly installation rate of customer access lines increased from 31,220 in
the third quarter of 1998 to 65,133 during the third quarter of 1999. As of
September 30, 1999, we had 349,154 access lines in service, compared to 134,107
as of September 30, 1998. Revenue from our stand-alone long distance
telephone services continues to decline as we convert those customers onto
our local networks and begin servicing those customers with our bundled local
and long distance products. Enhanced services revenue consists primarily of
revenue generated from our 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. We launched services in San Diego, Washington D.C. and Seattle
during the first half of 1999, Newark, Detroit and Houston during the third
quarter of 1999, and most recently, in Phoenix and Boston. 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 81% during the third quarter of 1999 to $59.3
million, an increase of $26.5 million over the same period in 1998. For the nine
months ended September 30, 1999, operating expense rose $70.9 million or 83%
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 72% and 67%, respectively, for the
three and nine-month periods ended September 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.

                                       12
<PAGE>

     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. We
expect deferred compensation expense to increase in future periods as a result
of compensatory stock options issued during the third quarter of 1999.

     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 112% in the third 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 third quarter of 1999 totaled $2.8 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 nine months of 1999, we used $231.5 million in cash for
operating activities, compared to $102.4 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 nine months of
1999, we invested $396.0 million in property and equipment and $522.5 million in
acquisitions of telecommunications assets and investments in telecommunications
businesses. During the same period in 1998, we invested $209.1 million in
property and equipment, and $172.7 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;

                                       13
<PAGE>

     -    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:

     -    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 September 30, 1999, we had unrestricted cash and investments of
approximately $1,644.0 million.

     In July 1999, we purchased 150 MHz of broadband fixed wireless spectrum
in New York, New York held by SPEEDUS.com, Inc., a facilities based high-speed
Internet service provider and 2,000,000 shares of SPEEDUS.com's common stock
for a total of $40.0 million. Of this amount, $20.0 million was paid in cash
in July 1999. The remaining $20.0 million was paid upon closing in October
1999. As part of this transaction, we agreed to provide co-location, transport
and access services to SPEEDUS.com. Additionally, SPEEDUS.com will have access
to our network testing facility.

     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.

     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 11,431,662 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. 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 are
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 is 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 LLC. 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.

                                       14
<PAGE>

     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, in whole or in part, beginning after June 1, 2004
at established redemption prices which decline to 100% of the stated principal
amount thereof by June 1, 2007. 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 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, in whole or in part, at
any time after June 1, 2004 at established redemption prices which decline to
100% of the stated principal amount thereof by June 1, 2007.

     On June 1, 1999, we completed the sale of 15,200,000 shares of Class A
common stock at $38.00 per share. Of the total shares sold, we offered 8,464,100
and 6,735,900 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
September 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 has assessed the impact of the Year 2000, and has adopted a formal
Year 2000 plan, or the Plan. The purpose of the Plan is 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.

                                       15
<PAGE>

     The Plan is divided into four major project areas: the portion of the
external Public Service Telephone Network, or PSTN, operated or controlled by
NEXTLINK 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:

     -    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.

                                       16
<PAGE>

     PHASE III

     The third phase, which is the remediation phase, is scheduled to be
completed by November 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 for each of the four major Plan project
areas:

<TABLE>
<CAPTION>
                                                                      REMEDIATION PLAN
     PROJECT                                                          PERCENT COMPLETED
     -------                                                          --------------------
<S>                                                                  <C>
     PSTN..................................................                   99%
     Embedded Systems......................................                  100%
     Enterprise Applications...............................                   95%
     Facilities............................................                   73%
</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 74%
complete with the hardware portion of the Interactive Plan and 84% 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.
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. 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 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


                                       17
<PAGE>

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 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 has developed contingency plans that deal
with internal aspects of the Year 2000 problem. The Company's contingency plans
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 assessed 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 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 composition of teams that are assigned to deal
with such problems vary according to the nature, significance, and location of
the problem.

INFORMATION REGARDING FORWARD LOOKING STATEMENTS

     Some statements and information contained in the foregoing "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
not historical facts, but are "forward-looking statements", as such term is
defined in the Private Securities Litigation Reform Act of 1995. 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. We wish to caution you that these
forward-looking statements are only predictions, and actual events or results
may differ materially as a


                                       18
<PAGE>

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 and
other reports and filings made with the Securities and Exchange Commission,
including, but not limited to, the following:

     -    our ability to quickly and efficiently build networks, as well as the
          ability of Level 3 to build the national network in which INTERNEXT
          has an interest;

     -    the ability of equipment vendors to develop fixed wireless radios,
          transceivers and related equipment designed to work at LMDS
          frequencies, and our ability to deploy fixed wireless connections;

     -    the development of IP technology that can be integrated into
          telecommunications networks;

     -    our ability to attract and retain customers;

     -    the quality and price of similar or comparable communications
          services, and the downward pressure such competition may place on
          prices for such services;

     -    our ability to raise additional capital to meet operating and
          financing needs;

     -    our ability to negotiate and renegotiate interconnection agreements in
          all of our markets on favorable terms, to obtain and maintain local
          permits and rights-of-way, and to comply with federal, state and local
          regulations;

     -    our ability to ensure that computer systems and applications will
          function properly beyond 1999; and

     -    general economic conditions.

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.



                                       19
<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
                30,400,000 shares of Class A common stock, $0.02 par value per
                share, were sold in an initial public offering at a price of
                $8.50 per share. Of the 30,400,000 shares of Class A Common
                Stock sold, 24,000,000 shares were sold by NEXTLINK and
                6,400,000 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 4,560,000 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 September 30, 1999.

Item 3.       DEFAULTS UPON SENIOR SECURITIES

                None.

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

                The Company held its annual meeting of shareholders on August
                25, 1999. The following matters were voted upon at the meeting:

                Proposal 1: The following directors were elected:

<TABLE>
<CAPTION>
                                NOMINEE                  Votes For          Votes Withheld
                                -------                 -----------         --------------
<S>                                                    <C>                  <C>
                    William A. Hoglund..............   327,036,898                   96,306
                    Steven W. Hooper................   327,037,087                   96,117
                    Nicolas Kauser..................   327,060,074                   73,130
                    Craig O. McCaw..................   325,191,947                1,941,257
                    Sharon L. Nelson................   327,060,413                   72,791
                    Gregory J. Parker...............   327,039,503                   93,701
                    Wayne M. Perry..................   327,037,373                   95,831
                    Jeffrey S. Raikes...............   327,060,874                   72,330
                    Dennis Weibling.................   327,037,373                   95,831
</TABLE>

                Proposal 2: The amendment to NEXTLINK's Certificate of
                Incorporation to increase the authorized common stock from
                154,467,600 to 460,000,000 shares, divided into two classes,
                400,000,000 shares of Class A common stock and 60,000,000 shares
                of Class B common stock, was approved, as follows:

                                       20
<PAGE>

     -    by Class A common stock, voting as a separate class, with 29,693,421
          votes for, 3,396,620 votes against, and 10,138 abstentions;

     -    by Class B common stock, voting as a separate class, with 294,032,750
          votes for, no votes against, and no abstentions; and

     -    by both classes common stock, voting together as a single class, with
          323,726,445 votes for, 3,396,620 votes against, and 10,138
          abstentions.

     Effective October 19, 1999, our Board of Directors approved amendments to
     the NEXTLINK Communications, Inc. Stock Option Plan to authorize an
     additional 5,000,000 shares of our Class A common stock to be issued under
     the plan, increasing the maximum number of shares authorized for issuance
     under the plan to 41,000,000, adjusted for NEXTLINK's recent 100% stock
     dividend. The amendment also provides that the maximum number of shares of
     Class A stock with respect to which options may be granted to any
     individual in any calendar year is limited to the maximum number of shares
     authorized under the plan. These amendments also have been approved by one
     of our stockholders, Eagle River Investments, L.L.C. Eagle River holds
     37,743,574 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 a written consent in lieu of stockholder
     meetings dated October 19, 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. The
     amendments will become effective 20 days after the date on which we mail
     the information statement to stockholders of NEXTLINK in accordance with
     rules of the Securities and Exchange Commission.

Item 5.       OTHER INFORMATION

                None.

Item 6.       EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          3.1  Certificate of Incorporation of NEXTLINK Communications, Inc. (1)

          3.2  Certificate of Amendment of Certificate of Incorporation of
               NEXTLINK Communications, Inc.

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

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

          3.5  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

                                       21
<PAGE>

               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)

          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)

                                       22
<PAGE>

          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.(3)

          4.16 Indenture dated June 1, 1999, between NEXTLINK Communications,
               Inc. and Untied States Trust Company of New York, as Trustee,
               relating to the 10 3/4% Senior Notes, due 2009.

          4.17 Indenture dated June 1, 1999, between NEXTLINK Communications,
               Inc. and U.S. Trust Company of Texas, as Trustee, relating to the
               12 1/4% Senior Discount Notes, due 2009.

          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. (13)

          10.6 Guaranty Agreement, dated July 18, 1998, between NEXTLINK
               Communications, Inc. and Level 3 Communications, LLC. (13)

          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. and
               WNP Communications, Inc. (11)

         10.11 Employment Agreement, effective September 21, 1999, by and
               between Daniel Akerson and NEXTLINK Communications, Inc.

          27   Financial Data Schedule

--------------------
(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).

                                       23
<PAGE>

(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
     Registrations 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 quarterly
     report on Form 10-Q for the quarterly period ended September 30, 1998 of
     NEXTLINK Communications and NEXTLINK Capital, Inc. (Commission File
     No. 000-22939).

(b)      Reports on Form 8-K

              None.


                                       24
<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: November 15, 1999            By: /s/ KATHLEEN H. ISKRA
                                       ----------------------------------------
                                   Kathleen H. Iskra
                                   Vice President and Chief Financial  Officer
                                   (Principal financial and accounting officer)



                                   NEXTLINK Capital, Inc.



Date: November 15, 1999            By: /s/ KATHLEEN H. ISKRA
                                       ---------------------------------------
                                   Kathleen H. Iskra
                                   Vice President and Chief Financial  Officer
                                   (Principal financial and accounting officer)



                                       25
<PAGE>


                          NEXTLINK COMMUNICATIONS, INC.
                                  EXHIBIT INDEX


EXHIBIT NO.       DESCRIPTION
-----------       -----------

3.1  Certificate of Incorporation of NEXTLINK Communications, Inc. (1)

3.2  Certificate of Amendment of Certificate of Incorporation of NEXTLINK
     Communications, Inc.

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

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

3.5  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)

                                       26
<PAGE>

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.(3)

4.16 Indenture dated June 1, 1999, between NEXTLINK Communications, Inc. and
     Untied States Trust Company of New York, as Trustee, relating to the 10
     3/4% Senior Notes, due 2009.

4.17 Indenture dated June 1, 1999, between NEXTLINK Communications, Inc. and
     U.S. Trust Company of Texas, as Trustee, relating to the 12 1/4% Senior
     Discount Notes, due 2009.

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. (13)

10.6 Guaranty Agreement, dated July 18, 1998, between NEXTLINK Communications,
     Inc. and Level 3 Communications, LLC. (13)

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 the 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. and WNP
      Communications, Inc. (11)

10.11 Employment Agreement, effective September 21, 1999, by and between Daniel
      Akerson and NEXTLINK Communications, Inc.

27   Financial Data Schedule

-----------

(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).



                                       27
<PAGE>

(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 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).


                                       28