NEXTEL Communications Inc. 2004

1. NEXTEL Communications Inc. 2004 Dustin Nadeau, Donatas Sumyla and Jaime Rodriguez Bus 411, March 2006 Dustin, Donny and Jaime

2. Existing Condition Nextel overview Industry overview History, Key Facts, Goals and Objectives Nextel and Proposed Vision and Mission External opportunities and threats CPM EFE Financial Ratios Internal strengths and weaknesses IFE Analysis SWOT Matrix SPACE BCG IE matrix Grand Strategy Matrix QSPM Possible strategies Recommendations Strategic implementation and desired results Show Cost Annual objectives (goal) and polices Evaluation Procedure Current Update Overview • Analysis • SWOT Matrix • SPACE • BCG • IE matrix • Grand Strategy Matrix • QSPM • Possible strategies • Recommendations • Strategic implementation and desired results • Show Cost • Annual objectives (goal) and polices • Evaluation Procedure • Current Update Dustin, Donny and Jaime

3. Nextel Overview • Nextel Communication, Inc. provides fully integrated, wireless digital communications services using the Nextel brand name in mid-sized and rural markets throughout the United States. The Company offers four distinct wireless services in a single wireless handset. These services include International and Nationwide Direct Connect, digital cellular voice, short messaging and cellular Internet access, which provides users with wireless access to the Internet and an organization's internal databases, as well as other applications, including e-mail Dustin, Donny and Jaime

4. Nextel Overview • Partnership with many different companies including IBM, EDS, Sun Microsystems, UNISYS, SAIC, and JPS Communications. • Corporate infrastructure includes: • Nextel Partners • NII Holdings • Motorola (the major cellular phone manufacturer for Nextel) • Nextel Worldwide™ • Affiliated through entertainment with NASCAR, NFL, NHL, and the PGA Tour providing up to the minute updates on your favorite teams, racers, or golfers. • Nextel Communications, Inc. helps people get things done with the industry’s most differentiated products, services and solutions. Together with Nextel Partners, Inc., Nextel serves 297 of the top 300 markets, where approximately 262 million people live or work. • NASDAQ National Market under the symbol NXTL. Dustin, Donny and Jaime

5. History • In 1987 Morgan O'Brien founded a company called Fleet Net. Renamed Nextel in 1993, the company rapidly established itself as a nationwide force in the world of wireless communications. • In less than year's time, Nextel merged with Dial Call and OneComm, acquired all of Motorola's SMR licenses in the U.S • By mid-1995, Nextel was on point to serve all of the nation's top 50 markets. • In September 1996, the company introduced Motorola's breakthrough iDEN technology. This marked the first combination of enhanced digital cellular, two-way radio and text/numeric paging in one phone which became the famed Nextel phone. • By the year 2000, the company had connected to countries around the world and introduced its “always connected” wireless data solution. Soon to follow were its signature Nationwide Direct Connect walkie-talkie service, IP broadband access, and a steady stream of feature rich Internet ready phones and smart devices. Dustin, Donny and Jaime

6. Stock Price Performance Dustin, Donny and Jaime

7. Industry Overview • Cell phones are becoming primary communication devices (~200M domestic users) • Flooded with cellular phone companies in the last 10 years • Intense competition (mergers) • Consumers are changing from land lines to cellular phones for reducing long-distance charges and convenience • Over 70% of homes in America currently have access to the Internet and use it on a regular basis, and it is estimated by around 2010 around 60% will have broadband access • Cellular phones have transformed from large analog devices to small and sleek instruments of communication that are digital, can be used as a walkie-talkie, a text messaging device, a video conference device, a picture taking device, and even a music device now. • Industry downfall in 2002 • Most of the U.S. is cellular phone integrated • Lack of coverage in remote areas Dustin, Donny and Jaime

8. Compare to Industry Dustin, Donny and Jaime

9. Key facts • About 12.9M subscribers in the United States alone • 2003 revenue $10,820M • 1-yr. growth revenue rate 24% • 17,000 employees (growth rate 14%) • Introduced walkie-talkie technology and GPS capabilities on a cellular phone • First company to offer live streaming video and updates on sporting events, such as NASCAR (primary sponsor) • Does not use towers as means for phone signal but uses satellites Dustin, Donny and Jaime

10. Nextel Domestic PresenceData from Nextel Partner Annual Report 2003: Dustin, Donny and Jaime

11. Goals & Objectives • Nextel will continue to push its walkie-talkie service as its chief competitive advantage; it will have to increase its coverage area and make pricing competitive. It also expects to leverage its relationship with NASCAR to boost its market share and brand awareness. • For Nextel to become the dominant player in the wireless communications industry, it will have to focus on retaining customers while encouraging people to switch over. • Nextel is also looking to expand to rural areas of the United States where there is less competition. • Nextel is repurchasing debt to reduce interest expense and risk, and distribution channels are also being expanded so more people can easily sign onto Nextel service. • Customer-centered operations will continue to be a focus so that high-value customers can be retained and customer churn rate will lower. Dustin, Donny and Jaime

12. Vision • Enhancing the diversity of Nextel’s workforce and promoting and inclusive work environment to better serve our diverse employees, customers, suppliers, and business partners. Dustin, Donny and Jaime

13. Mission • Mission: Our Inclusion Advisory Council (IAC) and senior leadership team will achieve our vision by incorporating inclusion into all that we do by: recruiting and retaining a talented, diverse employee base; recognizing and appreciating all employee’s perspectives and talents; fostering an environment that enables all employees reach their highest potential; building diversity awareness throughout the organization; promoting supplier diversity. Moreover, we intend to cultivate and increase domestic business and shareholder value by developing a world class supplier diversity program that aggressively engage us diverse value added suppliers, creating a sustainable competitive advantage. Dustin, Donny and Jaime

14. Proposed Vision At Nextel our vision is to increase market share in the wireless communication market and to build a trifold commitment to people, service and values; by providing innovating solutions through various wireless technologies and maximizing costumers satisfaction we want to continue to fuel our growth and generate stronger financial results. Dustin, Donny and Jaime

15. Proposed Mission We value our customers and treat them with respect providing friendly and effective service which includes the best quality wireless and Direct Connect™ services available in all US metropolitan and rural areas, and also in the Latin and European markets. We believe that our employees are a valuable asset and we will achieve win-win results through the power of teamwork. Dustin, Donny and Jaime

16. Key Ratios (1of 2) • Average monthly revenue per handset/unit in service, or ARPU, is an industry metric that measures service revenues per period divided by the weighted average number of handsets in commercial service during that period, excluding the impact of Boost Mobile. • ARPU can be calculated and reconciled to our consolidated statements of operations as follows: Dustin, Donny and Jaime

17. Key Ratio (2 of 2) • Lifetime Revenue per Subscriber, or LRS, is an industry metric calculated by dividing ARPU by the customer churn rate. • LRS is an indicator of the expected lifetime revenue of our subscribers, assuming that churn and ARPU remain constant as indicated. • LRS is calculated as follows: Dustin, Donny and Jaime

18. Finance PerformanceData from Nextel Annual report 2003: Dustin, Donny and Jaime

19. Compare to Telecommunication SectorData from Annual Report 2003: Dustin, Donny and Jaime

20. SWOT Analysis Dustin, Donny and Jaime

21. OPPORTUNITIES Potential global expansion, specially into Latino America and Europe Potential gain of customers and market share in rural areas Foreign currencies gaining strength compared to American dollar Prepaid plan to convenience younger market Increase in use of wireless service THREATS Potential market penetration in the walkie-talkie service market Ease of changing cell phone carriers Other companies merging to penetrate market even further If suit is lost against Verizon they could lose walkie-talkie rights Consumers are demanding lower prices, therefore the ARPU will continue to shrink Weak consumer spending External opportunities and threats Dustin, Donny and Jaime

22. EFE Matrix Dustin, Donny and Jaime

23. Competitive Profile Matrix (CPM) Dustin, Donny and Jaime

24. STRENGTHS Nextel Direct Connect: major competitive advantage overall the competitors Market Development, including NASCAR 10-year $700-750 M agreement. Use of Satellites Large number of service innovations (i.e. Push to talk™ GPS, streaming video) Nextel’s Churn is the lowest in the market Large number of affiliations and partnerships (specially important with Motorola) Possession of high value costumers: highest ARPU in the market WEAKNESSES Low Market share Financial instability ARPU is going down in the last 3 years Low service provided in rural areas High cost of some of their plans Internal strengths and weaknesses Dustin, Donny and Jaime

25. IFE Matrix Dustin, Donny and Jaime

26. Key Ratios Dustin, Donny and Jaime

27. Space Matrix * Y axis: - Financial Strength: + 1 - Environmental Stability: - 2 => Y coordinate: - 1 STRATEGY: COMPETITIVE * X axis: - Competitive Advantage: - 4 => X coordinate: + 1 - Industry Strength + 5 Conservative Aggressive Defensive Competitive Dustin, Donny and Jaime

28. BCG Matrix STARS QUESTION MARKS CASH COWS DOGS Dustin, Donny and Jaime

29. IE Matrix I II III IV VI V VII VIII IX Dustin, Donny and Jaime

30. The Grand Strategy Matrix Potential Strategies: • Market Development • Market Penetration • Product Development • Horizontal Integration • Forward Integration • Concentric Diversification Nextel Communication Dustin, Donny and Jaime

31. Possible Strategies Dustin, Donny and Jaime

32. QSPM Dustin, Donny and Jaime

33. QSPM Dustin, Donny and Jaime

34. Decisions • Primary: Introduce prepaid plans focusing on younger population market (Market penetration) • Alternative: • Merger with a big company in the sector • Expansion in the Latin market • Acquire smaller wireless providers Dustin, Donny and Jaime

35. Showing Cost Dustin, Donny and Jaime

36. Implementation • Objectives • Increase income by 15% in the first year and 30% in the overall period of 3 years • Keep the net profit margin above the industry average (10%) • Increase total domestic revenue by 30% due to increase in number of domestic subscribers • Avoid a decrease of more than 5% of ARPU • Decrease long–term debt • Use increased income to pay down long-term debt • Reduce long-term debt by reducing interest payments and increasing equity Dustin, Donny and Jaime

37. Goals & Policies • Decrease operating costs by 5% • Increase production efficiency by 30% this year • Establish customer satisfaction rate of 97% • Increase marketing expenditure by 15% to be sure the whole young market is targeted Dustin, Donny and Jaime

38. Evaluations • Financial reports annually and quarterly if necessary • Customer feedback program • Establish top level management meetings to assure the annual and quarterly goals are achieved • Determine corrective actions after the first year if annual objectives weren’t accomplished Dustin, Donny and Jaime

39. Current Update • At the end of year 2004 a merge between Nextel and Sprint was announced • Finally, operations were launched in the middle of 2005 • For the fiscal year ended 31 December 2005, Sprint Nextel Corporation's revenues increased 26% to $34.68B Dustin, Donny and Jaime