Craig McCaw to invest $1.1 billion in Nextel

April 06, 1995|By New York Times News Service

Craig O. McCaw, the billionaire who has been looking for a new project ever since he sold his company to AT&T, has finally found one: Nextel Communications, a one-time high flier in wireless communications that has been flirting with death in recent months.

Mr. McCaw announced yesterday that he and his family would invest $300 million immediately and as much as $1.1 billion in Nextel over the next six years. If he exercises all his options under his agreement with Nextel, he would own about 23 percent of the company and become its largest shareholder.

Nextel, for its part, said yesterday that it would drastically scale back its ambitious goal of building the equivalent of a nationwide cellular-telephone network. Instead, it will focus much more narrowly on building private dispatch networks for business customers who want to link mobile workers.

Investors were delighted by Mr. McCaw's move and sent Nextel's shares soaring more than 25 percent.

Saying he had "been there and done that," Mr. McCaw made it clear yesterday that he had no interest in re-entering the cellular-phone business in which he made his fortune.

Rather, he said, he wanted to offer a new range of specialized voice and data services that could link construction crews, airline mechanics or truck fleets.

Mr. McCaw's forthcoming investment in Nextel caught most people in the industry by surprise, though it was hardly the first time he has done so. Armed with more than $1 billion in AT&T stock, he emerged as a big bidder in the federal government's auction of radio licenses for personal communication services, bewildering his rivals about his goals. Then, just as abruptly, he pulled out of the auction without a hint of explanation.

Still, yesterday's news was the best in months for Nextel, which has been struggling ever since MCI Communications called off plans last year to invest $1.3 billion in it.

Nextel lost $150 million in 1994 on $84 million in revenue, virtually all of which came from old-fashioned fleet dispatch services that are now being altered with digital technology. Nextel's stock, which reached a peak of $54.25 last fall, collapsed after the MCI deal was abandoned and was trading at $13.25 Tuesday.

Yesterday, Nextel's shares jumped $3.375, to $16.625, and itwas the most active Nasdaq stock. Investors were encouraged both by the expectation of new capital and by the prospect of association with Mr. McCaw, who defied conventional wisdom in the 1980s by borrowing billions to construct what became the biggest cellular-phone company.

Mr. McCaw made it clear that he had no intention of rebuilding McCaw Cellular Communications, which was sold to AT&T last year for $11.5 billion. "My excitement is not to go do what I did before, but to go and find something that makes a new contribution in the communications marketplace," he said.

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