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October 18, 2005 6:21 pm

Nextel bolstered in valuation battle

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Sales and subscriber numbers at Nextel Partners, the US mobile carrier that serves second tier markets, grew strongly in the third quarter, bolstering the company’s position in its valuation battle with Sprint Nextel, the recently merged US telecommunications group.

Nextel Partners said third-quarter sales increased 32 per cent to $445.2 and net new subscribers increased by 27 per cent, or 107,200, from a year earlier.

The company is locked in a legal battle with Sprint Nextel, the third largest US mobile operator, over the value of its ‘put’ option in Nextel Partners.

The $36bn takeover of Nextel Communications by Sprint triggered a provision in a seven-year-old agreement between Nextel Partners and Nextel that enabled Nextel Partners to force Sprint Nextel to acquire the 68 per cent of its affiliate that it does not already own.

However, the two companies have differed over how to interpret the valuation clause in their agreement. Earlier this month Sprint Nextel filed a lawsuit in Delaware asking a judge to intervene over the methods used to determine the value of the stake.

Average revenue per user increased by $1 from the second quarter to $69 while customer churn, or the average percentage of customers that cancelled service, was unchanged at 1.3 per cent from the prior quarter. The company ended the third quarter with 1.91m digital subscribers.

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